Gen-Probe's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Gen-Probe (GPRO)

Q1 2012 Earnings Call

April 30, 2012 8:15 am ET


Deborah R. Gordon - Vice President of Investor Relations

Robert A. Cascella - Chief Executive Officer, President and Director

Glenn P. Muir - Chief Financial Officer, Executive Vice President of Finance & Administration and Director

Carl W. Hull - Chairman, Chief Executive Officer and President


William R. Quirk - Piper Jaffray Companies, Research Division

Bill Bonello - RBC Capital Markets, LLC, Research Division

David R. Lewis - Morgan Stanley, Research Division

Doug Schenkel - Cowen and Company, LLC, Research Division

Isaac Ro - Goldman Sachs Group Inc., Research Division

Amit Bhalla - Citigroup Inc, Research Division

Quintin J. Lai - Robert W. Baird & Co. Incorporated, Research Division

Richard Newitter - Leerink Swann LLC, Research Division

Nandita Koshal - Barclays Capital, Research Division

Brian Weinstein - William Blair & Company L.L.C., Research Division

Sara Michelmore - Brean Murray, Carret & Co., LLC, Research Division

Peter Lawson - Mizuho Securities USA Inc., Research Division



Good day, everyone, and welcome to the Hologic to acquire Gen-Probe Conference Call. Today's conference is being recorded. At this time, it is my pleasure to turn the conference over to Deb Gordon, VP of Investor Relations, Hologic. Please go ahead.

Deborah R. Gordon

Thank you, Nicole, and good morning. My name is Deborah Gordon, Vice President of Investor Relations at Hologic and let me start by thanking you for joining us on short notice for this morning's conference call. On this call, we will briefly discuss Hologic's second quarter fiscal 2012 and Gen-Probe's first quarter 2012 results. We will then spend a majority of our time discussing the very exciting news announced in a separate press release this morning about the combination of Hologic and Gen-Probe. Please note, the replay of this call will be archived on Hologic's and Gen-Probe's respective websites through Friday, May 18. In addition, please note that the press releases and the presentations we will be reviewing on today's call are available in the Investor Relations sections of each company's website.

Before we begin, I would like to inform you that certain statements made by Hologic and Gen-Probe during the course of this call may constitute forward-looking statements. These statements involve known and unknown risks and uncertainties that may cause the actual results to be materially different from any future results implied by such statements. Such factors include those referenced in Hologic's and Gen-Probe's safe harbor statements in their respective quarterly earnings releases and the joint announcement, all issued this morning and in the company's filings with the Securities and Exchange Commission. Also note, during this call, we will be discussing certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. A reconciliation of these non-GAAP financial measures to the related GAAP financial measures can also be found in both Hologic's and Gen-Probe's earnings releases, including the financial tables in the releases.

Please note that following our prepared remarks, we will open the call for questions as time permits. We need to strictly limit each participant to just one question. There are quite a few people in queue, and we would like as many of you as possible to have an opportunity to ask a question. Please feel free to go back into queue, and if time permits, we will be more than happy to take additional questions at that time. On the call today is Rob Cascella, Hologic's President and Chief Executive Officer; Glenn Muir, Hologic's Executive Vice President and Chief Financial Officer; and Carl Hull, Gen-Probe's Chairman of the Board and Chief Executive Officer. I would now like to turn the call over to Rob Cascella. Rob?

Robert A. Cascella

Well, thank you, Deb. Good morning and thank you, all for joining us on our call to discuss the combination of Hologic and Gen-Probe. As you have seen, this morning, we announced Hologic will be acquiring all of the outstanding shares of Gen-Probe for $82.75 per share in cash. The combination was unanimously approved by the Boards of Directors of both companies and will create a leading Diagnostics franchise focused on women's health. As you know, Gen-Probe is a leader in Molecular Diagnostic products and services that are used to diagnose human diseases, screen donated human blood, ensure transplant compatibility and aid in biomedical research. We believe Gen-Probe is an ideal partner and strategic fit to Hologic's existing Diagnostics business and that this combination complements our focus on women's health and adds diversification to our portfolio of leading products.

I'm very pleased to be joined by Carl Hull, Gen-Probe's CEO, to discuss the rationale and exciting opportunities resulting from this transaction. Before we get into the details of the transaction, Glenn Muir is going to briefly take you through our Q2 results, which were separately announced this morning. Carl will then walk through Gen-Probe's quarterly results as well, which were also announced this morning. We will then turn to the details of the transaction. Glenn?

Glenn P. Muir

Thanks, Rob. Consolidated revenues of $471.2 million in the quarter increased $32.5 million or 7.4% from last year and were within our guidance range. We saw growth in all 4 operating segments, marking the fourth consecutive quarter in which all business segments have contributed to year-over-year growth. The FX impact this quarter was immaterial.

Turning to our operating segments, Breast Health revenues increased $12.8 million or 6.2% from last year. Product revenue growth this quarter continued to benefit from the ongoing shift to our Dimensions mammography product line from the existing installed base, the Selenia system. Our Dimensions line continues to gain traction and represented 67% of digital mammography revenue and 57% of units this quarter. Tomosynthesis upgrades represented approximately 20% of total tomo unit sales in Q2. Our target continues to be to ship 500 to 700 tomo systems in the U.S. within the first 2 years of our approval. We are well on our way after one year. We are now at 35% of our goal, and we continue to expect that we will be at 60% of the way there by the end of this fiscal year.

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