In a positive development for Hologic’s (HOLX) breast health segment, the European Reference Organization (EUREF) Council for Quality Assured Breast Screening and Diagnostic Services has recently awarded Hologic’s Selenia Dimensions 2D digital mammography system with its ‘EUREF Mammographic Type Test’ certification. Earlier the company received another EUREF approval for its Selenia digital mammography system.
Hologic with its breast health product line is presently focusing on capturing new and unexplored international markets. It received several international standard certifications for its Selenia and Selenia Dimensions digital mammography systems which include International Organization for Standardization registration and European CE mark approval.
Also the company’s next generation Selenia Dimension’s 3D digital mammography system received approval from the US Food and Drug Administration (FDA) in February 2011. With the recent certification from the non-profit EUREF council Hologic is expected to strengthen its foothold in the huge European breast health market.
Hologic operates through four segments – Breast Health, Diagnostics, GYN (Gynecology) Surgical and Skeletal Health. The breast health being the largest segment (contributing 45% of Hologic’s total revenue with a growth of 9% year over year during the first quarter of fiscal 2011) provides a complete Mammography suite.
Its Selenia technology is a breast imaging platform that utilizes Tomosynthesis, to produce both the two dimensional (2D) and the next generation three dimensional (3D) full field digital mammography (FFDM) images for accurate detection and treatment of breast cancer. Presently this system is installed in more than 12 countries around the world.
The growth of Breast Health segment primarily came on the back of a rise in revenues from services related to its installed base of digital mammography systems, 2D/3D Dimensions product, the inclusion of Sentinelle Medical and Eviva and Celero breast biopsy products. We expect the Breast Health segment to capture the new and unexplored market and record higher revenues going forward.
Though we are confident about the growth prospects of Hologic’s Breast Health segment based on its recent initiatives, we are concerned about the Diagnostics segment that has been suffering for the past few quarters due to economic uncertainty, resulting in lower doctor visits. However, the situation is gradually stabilizing. Moreover, constrained capital spending is leading to lower sales, a trend that is expected to continue.
Presently we have a Neutral recommendation on Hologic.
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