Women’s health medtech specialist Hologic has hit the ground running in the new year, making two acquisitions in the first week of 2021.

On 4 January, Hologic closed its acquisition of Sometex Medical from E-Med Solutions for $64m. Sometex makes minimally invasive devices for breast tumour diagnosis, biopsy and treatment.

A day later, the company announced it had agreed to acquire Biotheranotics, a company that provides molecular diagnostic tests for breast and metastatic cancers, for approximately £230m. The deal is expected to close in February.

The company expects both acquisitions to boost its burgeoning breast cancer portfolio, which has been growing consistently.

Hologic breast and skeletal health solutions division president Jennifer Meade said the Somatex acquisition would “allow us to expand our biopsy portfolio… building a pipeline that will drive profitable growth and recurring revenue for our breast health business globally”.

On the Biotheranostics deal, Hologic diagnostics division president Kevin Thornal noted: “Acquiring Biotheranostics enables us to jump-start our entry into a large, fast-growing oncology adjacency that fits perfectly with our broader corporate focus and passion for women’s health.”

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Acquisitions expand Hologic’s presence in breast cancer

Somatex is expected to have generated approximately $13m of revenue in calendar 2020, including sales of Tumark markers to Hologic. The acquisition is expected to be slightly accretive to Hologic’s non-GAAP earnings per share starting in the company’s current fiscal year.

The acquisition will help Hologic expand its growing breast market portfolio and boost its European sales, taking advantage of Somatex’s direct channel in Germany.

Meanwhile, Biotheranostics generated approximately $33m of revenue in calendar 2020, with a projected revenue range of $30m to $40m projected for 2021. The acquisition is expected to be slightly dilutive to Hologic’s non-GAAP earnings per share in fiscal 2021, before breaking even in 2022 and becoming accretive thereafter.

Some analysts were surprised by the Biotheranostics acquisition, given that Hologic hasn’t focused hugely on genomics-based oncology in women’s health in the past. However, the deal fits well into Hologic’s wider portfolio, broadening its molecular diagnostics business into both the breast cancer and broader oncology market.

Preparing for a post-pandemic world

Hologic’s sales of Covid-19 tests pushed the company’s quarterly income to over $1.3bn by Q4 2020, a 55.6% increase on the year before. Its molecular diagnostics division alone saw a 376% increase in sales by the end of the fiscal year, raking in $818.9m.

The firm has now announced that its revenues have nearly doubled year-over-year in Q1 2021. It has already made approximately $1.6bn, an increase of 89% on the same quarter in 2020.

The company’s leadership has said it’s in no huge rush to lighten its pockets. It is instead looking to make carefully considered tuck-in acquisitions – in which the acquiring company merges the acquired company into one of its own divisions – as well as share buybacks.

However, Needham analyst Mike Matson has predicted that Hologic’s diagnostics growth will peak in Q2, and that the rest of the year could be tough for the company.

“We expect [Hologic]’s Diagnostics growth to peak in F2Q21,” he said, “before the vaccine roll-out combined with warmer spring weather cause Covid-19 infections to start to decline. [Hologic] starts to face very tough comps in F4Q21, and we expect its revenue growth to slow and potentially even turn negative.”

The company’s investments make sense for a firm preparing for a post-pandemic world. Sales of Covid-19 tests have bolstered Hologic’s business, but the day demand for them starts to decline isn’t far off. By gaining stronger footing in both non-invasive and molecular diagnostics markets, the company is aiming to stand strong when the revenue pipeline of Covid-19 tests runs dry.