Hologic’s Cynosure Headwinds Could Impact 2018 Earnings



Hologic’s recent update on Cynosure headwinds

On September 12, Hologic (HOLX) provided an update on the financial impact of the suspension of its marketing and distribution of the company’s Vitalia handpieces and probes, which it announced in August. The company issued form 8-k on August 13 reporting its decision to suspend the marketing and distribution of the company’s Tempsure Vitalia handpieces and probes. It had also recalled the devices and unused probes the customers had purchased. The device, part of the company’s Cynosure division, was recalled on FDA (U.S. Food and Drug Administration) concerns around this class of products, which are used for vaginal rejuvenation procedures. The FDA sent letters to certain companies that manufactured these kinds of devices. Hologic also received an FDA letter in relation to another such device called Monalisa Touch laser.

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Updated fiscal 2018 guidance due to the impact of Cynosure headwinds

On September 12, Hologic announced that it expects to see a ~$15 million reduction in Cynosure revenues in fiscal 2018 in comparison to the guidance provided by the company during its Q3 2018 earnings release on July 31, which is shown in the table above. This is due to refunds and rebates related to TempSure systems, Vitalia handpieces, and probes, a reduction in Monalisa Touch sales, and lost fourth-quarter sales of Vitalia handpieces and probes.

However, for full fiscal 2018, Hologic reiterated its revenue guidance range of $3.205 billion–$3.220 billion, which it announced on July 31 on stronger Q3 performance trends in other businesses. The company continues to estimate fourth-quarter revenues in the range of $800 million to $815 million. However, Hologic expects a reduction in its operating income in the fiscal 2018 fourth quarter. For Q4, the company expects to register EPS (earnings per share) at the low end of its previously provided guidance range. Moreover, Hologic said it can’t predict when the TempSure Vitalia sales will be resumed.

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