Hologic (HOLX) Q4 2025: Interventional Revenue Climbs 32% as Breast Health Rebound Strengthens FY26 Outlook
Hologic’s interventional business delivered a 32% surge, marking a pivotal inflection in the broader breast health turnaround and confirming management’s commitment to mid-single-digit growth for 2026. Strategic commercial execution, product innovation, and operational discipline are converging to reset the company’s growth trajectory, with tariff mitigation and disciplined capital allocation bolstering financial flexibility for the coming year.
Summary
- Breast Health Inflection: Interventional and 3D gantry momentum signal a durable rebound, with new product launches on deck.
- Diagnostics Resilience: Panther Fusion adoption and molecular assay growth offset China and HIV headwinds.
- Margin Discipline: Tariff mitigation and cost controls support strong cash flow and strategic agility entering FY26.
Performance Analysis
Hologic’s Q4 performance exceeded the high end of guidance, with total revenue reaching $1.024 billion, driven by the diagnostics and breast health segments. Diagnostics revenue grew organically by 2.9%, excluding COVID-related sales, as Panther Fusion and molecular assays continued to gain traction. Despite tough comps and ongoing macro headwinds, the breast health business showed sequential improvement, with interventional sales up 31.8% and organic growth (excluding acquisitions) of 6%—a clear sign of commercial execution gains and portfolio expansion.
Gross margin contracted 80 basis points YoY to 60.3%, primarily due to product mix and a reserve for the discontinued FloraScan system, but remained robust by industry standards. Operating margin held above 30%, reflecting prudent expense management even as Endomag and Gynasonics integration diluted near-term profitability. Operating cash flow of $343 million underscored the company’s ability to generate capital for buybacks and future M&A.
- Interventional Outperformance: Endomag, breast surgery disposables, contributed nearly $20 million and is now accretive to organic growth.
- Tariff Headwind Mitigation: Expected quarterly tariff expense was halved to $10-12 million, protecting margin structure into FY26.
- International Expansion: Surgical revenue saw 25% growth outside the US, validating investments in global market access.
Segment performance revealed a business at an inflection point: Breast health returned to sequential growth, diagnostics is positioned for further menu expansion, and surgical is leveraging international momentum. The company’s ability to mitigate cost pressures and deliver above-guidance results points to operational resilience and a strengthening foundation for mid-single-digit growth targets.
Executive Commentary
"Progress in exceeding our near-term financial commitments. Progress in strengthening our breast health business. And progress toward accelerating overall company growth in the fourth quarter, as well as 26 and beyond. All in all, we are confident in our path and optimistic about our future."
Steve McMillan, Chairman, President & CEO
"Our strong profitability helps to drive excellent cash generation, as we delivered $343 million of operating cash flow in the third quarter. We finished the quarter with $1.88 billion in cash, and short-term investments on our balance sheet and a net leverage ratio of 0.6 times."
Carlene Oberton, Chief Financial Officer
Strategic Positioning
1. Breast Health Rebuild and Product Innovation
The breast health business is in the midst of a structural turnaround, fueled by a new commercial leadership team, tighter sales processes, and a focused end-of-life replacement strategy for legacy gantries. The launch of Genius AI Detection Pro, an artificial intelligence software suite for radiologists, and the upcoming Envision platform are expected to drive further differentiation and margin expansion. Endomag’s integration is already exceeding deal expectations, adding both recurring and higher-margin revenue streams.
2. Diagnostics Platform Expansion and Menu Diversification
Panther Fusion, Hologic’s PCR-based molecular diagnostics platform, is seeing increased adoption as labs consolidate testing workflows. The company is leveraging open access kits to allow labs to run their own tests, with incremental menu expansion (GI and hospital-acquired infections) planned for 2026 and beyond. Vaginitis assay adoption is growing, with significant runway as 60% of symptomatic women in the US remain untested, representing a large underpenetrated market.
3. Margin Management and Tariff Mitigation
Hologic’s supply chain and procurement teams have successfully reduced the expected quarterly tariff burden by half, demonstrating operational agility. This is critical as tariff headwinds could have otherwise eroded nearly 100 basis points of gross margin in FY26. The company is also discontinuing low-margin products (FloraScan), reallocating resources to higher-growth, higher-margin segments.
4. Capital Allocation and M&A Discipline
With over $1.8 billion in cash and a sub-1x net leverage ratio, Hologic retains significant strategic flexibility. Management remains focused on disciplined buybacks (over $750 million YTD) and targeted tuck-in acquisitions in women’s health, with no large deals imminent. The emphasis is on integrating recent acquisitions and maximizing organic growth from the expanded portfolio.
Key Considerations
This quarter marks a transition from stabilization to growth, with multiple levers in play across business segments. Management’s confidence in returning to mid-single-digit growth is grounded in tangible operational and commercial progress, though some headwinds remain.
Key Considerations:
- Commercial Execution Reset: New sales structure and leadership in breast health are delivering sequential gains and improved forecast visibility.
- Menu Expansion Opportunity: Panther Fusion and open access testing position diagnostics for incremental growth, though large-scale impact is expected post-2026.
- International Growth Leverage: Investments in global market access are paying off, especially in surgical, but China and Africa headwinds will linger into the first half of FY26.
- Product Discontinuation Impact: FloraScan exit will reduce low-margin revenue in 2026, modestly impacting top line but improving mix and focus.
- Tariff Volatility: While mitigation has reduced exposure, ongoing geopolitical risk could still pressure margins if conditions shift.
Risks
Macro headwinds in China and reduced HIV funding in Africa will continue to dampen diagnostics and cytology growth into the first half of FY26, with China revenue now running at only $10 million per quarter, down over 50% YoY. Tariff risk remains dynamic, and any reversal in mitigation could challenge gross margin. The slow rollout of new diagnostic platforms (Genius, Fusion menu) means growth is back-weighted, and product transitions in breast health require flawless execution to sustain momentum.
Forward Outlook
For Q4, Hologic guided to:
- Total revenue of $1.03 to $1.04 billion
- Non-GAAP EPS of $1.09 to $1.12
For full-year 2025, management raised guidance:
- Revenue: $4.081 to $4.091 billion
- Non-GAAP EPS: $4.23 to $4.26
Management expects mid-single-digit organic revenue growth in FY26, with breast health returning to growth, diagnostics facing continued international headwinds in the first half, and tariffs remaining a near-100 basis point gross margin drag. Q4 is expected to be the strongest quarter of revenue growth for the year, setting the stage for FY26 acceleration.
Takeaways
Hologic is exiting FY25 with clear momentum in breast health, diagnostics, and surgical, underpinned by commercial execution, product innovation, and operational discipline.
- Breast Health Turnaround: Interventional and gantry upgrades are driving a sequential rebound, with new AI and Envision launches poised to extend leadership and margin.
- Diagnostics Platform Strength: Panther Fusion adoption and menu expansion provide multi-year growth levers, even as international headwinds persist short term.
- Margin and Cash Flow Resilience: Tariff mitigation, disciplined expense management, and strong cash flow generation support ongoing buybacks and strategic flexibility for opportunistic M&A or reinvestment.
Conclusion
Hologic’s Q4 marks a strategic inflection, with the company moving past recent speed bumps and laying a foundation for sustainable mid-single-digit growth. Operational execution, focused innovation, and disciplined capital allocation position the company to capitalize on global women’s health trends and deliver shareholder value in FY26 and beyond.
Industry Read-Through
Hologic’s results highlight a broader sector trend: diagnostic and women’s health companies that combine commercial execution with platform innovation are best positioned to weather macro volatility and capitalize on underpenetrated markets. Tariff mitigation and operational flexibility are now essential for medtech players facing global supply chain risk. The shift toward AI-enabled diagnostics and recurring revenue models is accelerating, and companies with deep clinical evidence and integrated portfolios will have a strategic edge. International expansion remains a double-edged sword, with outsized growth potential but persistent geopolitical and funding risk, particularly in China and Africa.