Hologic, Inc. (Nasdaq: HOLX) is a manufacturer of diagnostic products, medical imaging systems, and surgical products dedicated to serving the healthcare needs of women. The company's business units are breast health (47% of revenue), diagnostics (32%), GYN surgical (16%), and skeletal health (5%). Hologic is expected to benefit from an aging baby boomer population and the increased demand for women's health products. However, the company is also expecting to incur new costs due to healthcare legislation in the U.S.
Hologic's breast health segment has grown due to the FDA approval and subsequent launch of its Dimensions 3D digital breast tomosynthesis technology. Hologic remains the market leader in digital mammography in the U.S., with record sales for breast biopsy. Hologic continues to grow sales of MRI breast coils and earns recurring revenue from service contracts. In Hologic's diagnostics segment, it has increased the adoption of its diagnostic imaging technology with double digit domestic market share growth. Hologic's surgical segment acquired Interlace, a manufacturer of hysteroscopic uterine fibroid tissue removal systems, in January 2011.
In the U.S., forty percent of white women over the age of 50 experience hip, spine, or wrist fractures sometime during the remainder of their lives. The lifetime risk of fractures will increase as people live longer. Moreover, the aging baby boomer generation will increase the demand for medical services. As women age, many will seek medical treatments that use Hologic's breast health, diagnostics, or surgical technologies.
The healthcare industry has undergone changes driven by efforts to reduce costs. The latest healthcare law requires the medical device industry to subsidize healthcare reform in the form of a 2.3% excise tax on U.S. sales of certain medical devices beginning in 2013. This excise tax will apply to Hologic's products, which will have a significant impact on its tax expenses, as U.S. net product sales represented 79% and 80% of the company's worldwide net product sales in 2010 and 2009.
The FDA down-classified 2D digital mammography systems from Class III to Class II. As a result, these systems require a 510(k) submission rather than a Pre-Market Approval, which will make it easier for other mammography vendors to gain approval in the United States. As a result, competition in the digital mammography market has intensified as more companies and products have entered this market.
Hologic's products compete on the basis of a number of factors including image quality, ease-of-use, product reliability, and price.