Hologic rebuilds M&A team to focus on tuck-ins
Hologic (NASDAQ:HOLX), the Marlborough, Massachusetts-based healthcare and diagnostics company, has reorganized its management structure to seek bolt-on acquisitions in the surgical space, according to CEO Stephen MacMillan.
In the Q&A session on Wednesday’s 4Q15 earnings call, Goldman Sachs analyst Joel Kaufman asked how Hologic felt about the M&A landscape in the surgical space.
“I think we feel pretty good,” MacMillan said.
The CEO noted that Hologic “blew up” its acquisitions activities when he arrived at the company around two years ago. MacMillan said it now had teams in place looking on a divisional basis for opportunities.
“Surgical is clearly an area that would be a great tuck-in acquisition opportunity for us. So we've rebuilt the team there to be focused on that as well,” he added.
Later on the call, William Blair analyst Brian Weinstein asked MacMillan to confirm that the company’s first use of cash would be debt paydown, then high-yield buybacks and finally tuck-in buys.
“Very well said,” the CEO replied.
Hologic develops, manufactures and supplies diagnostic products, medical imaging systems and surgical products. Its core business units focus on diagnostics, breast health, GYN surgical and skeletal health.
A report by this news service in late August listed Hologic as one of several potential suitors for Norcross, Georgia-based Guided Therapeutics (OTCBB:GTHP). Separate earlier reports by this news service suggested Hologic, among others, as potentially interested in medical device companies Novian Health, based in Chicago, Illinois and Malvern, Pennsylvania-based Neuronetics.
Hologic’s last notable acquisition was the purchase of Gen-Probe, a California-based provider of rapid nucleic acid tests. The deal was completed in August 2012 for a total net purchase price of approximately USD 3.8bn.
Since that deal, Hologic has focused its strategic efforts on disposals. Most recently, the company sold its Sentinelle Breast and Prostate Coils product lines in September 2014 for an undisclosed sum.
MacMillan was appointed CEO in December 2013.
Goldman Sachs and Perella Weinberg Partners were used for the Gen-Probe deal, with the former having advised on multiple earlier buys. Hologic has also used JPMorgan, EY, Jefferies and Deutsche Bank in the past decade.
Brown Rudnick was used for legal matters on Gen-Probe, as well as for several previous acquisitions, according to the Mergermarket M&A database. Hologic has also used Richards Layton & Finger and Jones Day on multiple occasions each.
According to Brown Rudnick’s website, partner Philip Flink has advised Hologic in numerous matters including venture capital financings, IPO, technology spin-offs, multiple follow-on offerings and the acquisition of several companies, both public and private.
Lawrence Levy has been one of Hologic’s directors since December 2005. He retired from the position of Senior Counsel at Brown Rudnick in January 2011.
On the call, Hologic reported USD 493m in cash and net debt of USD 3.1bn at year-end, with a current leverage ratio of 3.3x net debt to EBITDA. The company has a market capitalization of USD 11.bn.