Hologic Financial Model
Medical Devices Company Financials Example (Free Excel Download)
Hologic, Inc. is a leading medical technology company primarily focused on improving women's health and well-being through early detection and treatment.
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About this model
This model evaluates the standalone discounted cash flow (DCF) valuation and leveraged buyout (LBO) return profile of Hologic to assess the fairness of the pending $79 per share acquisition offer from Blackstone and TPG.
Hologic, Inc. is a leading medical technology company primarily focused on improving women's health and well-being through early detection and treatment. The company develops, manufactures, and supplies diagnostic products, medical imaging systems, and surgical products.
Business segments include:
- Diagnostics (approx. 44% of revenue): Molecular diagnostics, cytology, and perinatal testing.
- Breast Health (approx. 40% of revenue): 3D mammography capital equipment, interventional breast solutions, and related service contracts.
- GYN Surgical (approx. 14% of revenue): Minimally invasive products for gynecological conditions (e.g., MyoSure, NovaSure, Fluent).
- Skeletal Health (approx. 2% of revenue): Bone densitometry systems.
The United States accounts for approximately 75% of total revenue, with international markets contributing the remaining 25%. Hologic operates a "razor and blades" business model, placing capital equipment (like Panther diagnostic systems and 3D mammography machines) to generate highly profitable, recurring revenue from assays, disposables, and service contracts. The company holds a dominant competitive position in sexually transmitted infection (STI) testing and 3D mammography. In October 2025, Hologic agreed to be acquired by private equity firms Blackstone and TPG for $76 per share in cash plus a $3 contingent value right (CVR).
The downloadable Hologic financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
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All assumptions in one tab
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Statements always balancing
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Distinct schedules for clarity
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Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsHologic financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $5.63B | $4.86B | $4.03B | $4.03B | $4.10B |
| Gross profit | $3.80B | $3.00B | $2.07B | $2.23B | $2.12B |
| Operating income | $2.48B | $1.64B | $668.4M | $882.6M | $714.3M |
| Net income | $1.87B | $1.30B | $456.0M | $789.5M | $565.7M |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Hologic
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Diagnostics
- Segment name: Diagnostics
- Revenue driver formula: (Installed Base of Panther Systems x Utilization Rate x Price per Assay) + Cytology Volume x Price
- Historical growth rate: 4% to 6% organic CAGR (excluding COVID-19 impacts).
- Key growth levers and headwinds: Growth is driven by expanding the menu of assays run on the Panther system (e.g., BV/CV/TV and respiratory panels). The primary headwind is the steep decline in COVID-19 testing revenue, which previously inflated segment results.
- Pricing dynamics: Contractual pricing with large reference laboratories and hospitals; volume discounts apply.
- Revenue recognition notes: Assay revenue is recognised upon shipment or delivery; instrument leases are recognised over the lease term.
- Seasonality: Respiratory assays see higher volumes in the winter months (fiscal Q1 and Q2).
Breast Health
- Segment name: Breast Health
- Revenue driver formula: (Capital Equipment Placements x ASP) + (Installed Base x Service Contract Attach Rate x Annual Fee) + Interventional Disposables Volume x Price
- Historical growth rate: 2% to 4% CAGR.
- Key growth levers and headwinds: Upgrades to newer 3D mammography systems (Gantry replacements) and growth in the Endomagnetics acquisition drive revenue. Hospital capital expenditure constraints act as a headwind.
- Pricing dynamics: Highly competitive capital equipment bidding; service contracts provide stable, high-margin recurring revenue.
- Revenue recognition notes: Capital equipment recognised upon installation and customer acceptance; service revenue recognised rateably over the contract period.
- Seasonality: Fiscal Q4 (ending September) is typically the strongest quarter for capital equipment sales due to hospital budget cycles.
GYN Surgical
- Segment name: GYN Surgical
- Revenue driver formula: Procedure Volume (MyoSure, NovaSure, Fluent) x Price per Disposable Device
- Historical growth rate: 6% to 10% CAGR.
- Key growth levers and headwinds: Shift of procedures from hospitals to ambulatory surgical centres and physician offices. The recent acquisition of Gynesonics adds incremental growth.
- Pricing dynamics: Spot purchasing by hospitals and clinics based on negotiated catalogue prices.
- Revenue recognition notes: Recognised upon shipment of disposable devices.
- Seasonality: Generally stable, with slight dips in summer months due to elective procedure scheduling.
Skeletal Health
- Segment name: Skeletal Health
- Revenue driver formula: DXA System Placements x ASP
- Historical growth rate: Flat to 2% CAGR.
- Key growth levers and headwinds: Mature market with growth primarily driven by replacement cycles.
- Pricing dynamics: Standard capital equipment pricing.
- Revenue recognition notes: Recognised upon installation.
- Seasonality: Similar to Breast Health, skewed towards fiscal Q4.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Product costs (raw materials, manufacturing labour, overhead), service costs (field engineer labour, spare parts), and amortisation of acquired intangible assets.
- Gross margin range: GAAP gross margin ranges from 55% to 57%; Non-GAAP gross margin ranges from 60% to 62%.
- Key input costs and commodity exposures: Electronic components, plastics, and precious metals for capital equipment. Tariffs and supply chain disruptions can impact margins.
- How COGS scales with revenue: High operating leverage. The recurring revenue streams (assays, disposables) carry significantly higher gross margins than capital equipment sales.
Operating Expenses
- R&D: Typically 5% to 6% of revenue. Covers development of new assays, software updates for imaging systems, and next-generation surgical tools.
- SG&A: Typically 22% to 25% of revenue. Driven by a large direct sales force and marketing initiatives.
- Depreciation & Amortisation: Heavy amortisation burden due to historical acquisitions (Gen-Probe, Cytyc, Mobidiag). Amortisation of acquired intangibles is explicitly broken out on the income statement.
- Stock-Based Compensation: Runs at approximately 2% to 3% of revenue.
- Restructuring / one-time charges: Frequent charges related to facility closures (e.g., Manchester, England facility in 2025) and acquisition integration.
Margin Profile
- Gross margin: GAAP 55.6% (FY2025), Non-GAAP 60.9%.
- Operating margin: GAAP 22.6% (FY2025), Non-GAAP 31.2%.
- Net margin: GAAP 17.9%, Non-GAAP 24.3%.
- Margin trend: Non-GAAP operating margins expanded by 120 basis points in Q4 2025 due to operating leverage on revenue growth, despite gross margin pressure from tariffs and facility closures.
Balance Sheet Structure
- Total assets: Approximately $8.0 billion to $9.0 billion.
- Key asset categories: Cash and cash equivalents, accounts receivable, inventory, property and equipment, goodwill, and intangible assets.
- Goodwill & intangibles as % of total assets: Very high (typically >50%) due to a history of transformational and bolt-on acquisitions.
- Working capital profile:
- Days Sales Outstanding (DSO): 45 to 55 days.
- Days Inventory Outstanding (DIO): 70 to 85 days.
- Days Payable Outstanding (DPO): 40 to 50 days.
- Net working capital as % of revenue: Positive, typically 10% to 15%.
- The company requires moderate working capital to fund inventory for capital equipment and diagnostic assays.
- PP&E: Includes manufacturing facilities and Panther diagnostic instruments placed at customer sites under operating leases.
- Right-of-use assets / operating leases: Material but manageable, primarily related to office and manufacturing space.
Capital Expenditure & Investment
- Capex as % of revenue: 2.0% to 3.0%.
- Maintenance capex vs. growth capex: Roughly 40% maintenance, 60% growth (primarily placing new Panther instruments at customer sites to drive recurring assay revenue).
- Major capex programmes underway or planned: Expansion of manufacturing capacity for molecular diagnostics and surgical products.
- Capitalised software / development costs: Minimal compared to physical equipment placements.
- M&A pattern: Serial acquirer. Historically made transformational deals (Gen-Probe, Cytyc) but recently focused on bolt-on acquisitions (Endomagnetics, Gynesonics, Mobidiag).
- Typical acquisition multiple paid: Often 4x to 6x revenue for high-growth surgical or diagnostic assets.
Debt & Capital Structure
- Total debt: Approximately $2.5 billion to $3.0 billion.
- Debt/EBITDA ratio: Adjusted net leverage ratio is extremely low at 0.4x as of Q4 2025.
- Credit rating: Investment grade profile, though subject to review given the pending LBO.
- Key debt instruments: Senior unsecured notes (e.g., 2028 and 2029 maturities) and a revolving credit facility.
- Maturity profile: Well-laddered with no immediate near-term liquidity cliffs prior to the LBO announcement.
- Interest rate profile: Primarily fixed-rate senior notes.
- Covenants: Standard incurrence covenants; highly compliant due to low leverage.
- Share repurchase programme: Historically very active (e.g., repurchased 6.8 million shares in Q1 2025), but suspended following the Blackstone/TPG acquisition agreement.
- Dividend policy: The company does not pay a regular cash dividend.
Cash Flow Characteristics
- Operating cash flow conversion: Exceptionally strong. OCF / Net Income typically exceeds 1.5x due to heavy non-cash amortisation of acquired intangibles.
- Free cash flow margin: 20% to 25% of revenue.
- Major non-cash items: Amortisation of acquired intangible assets, depreciation, stock-based compensation, and deferred income taxes.
- Working capital cash flow impact: Mild use of cash as the business grows, primarily driven by inventory build for new product launches.
- Capex intensity: Low (2% to 3% of revenue), allowing for massive free cash flow generation.
- Cash tax rate vs. GAAP effective tax rate: Cash taxes are typically lower than the GAAP effective rate due to the tax deductibility of certain goodwill and intangible amortisation from historical acquisitions.
Sheet Structure
- Assumptions: Hardcoded drivers for revenue growth by segment, non-GAAP margin targets, tax rates, WACC, and LBO entry/exit assumptions.
- Scenarios: Toggles for Standalone Base Case, Standalone Downside, and LBO Transaction Case.
- Revenue Build: Detailed build for Diagnostics (split by COVID vs. Base), Breast Health, GYN Surgical, and Skeletal Health.
- Income Statement: GAAP to Non-GAAP reconciliation, explicitly separating Amortisation of Acquired Intangibles and Restructuring Charges.
- Balance Sheet: Standard assets, liabilities, and equity, with specific lines for Goodwill and Intangible Assets.
- Cash Flow Statement: Operating, Investing, and Financing sections, highlighting the add-back of intangible amortisation.
- Debt Schedule: Tranches of Senior Notes, Revolver, interest expense calculations, and mandatory paydowns.
- Working Capital & Capex: DSO, DIO, DPO schedules, and PP&E roll-forward including instrument placements.
- DCF Valuation: Unlevered free cash flow build, WACC calculation, terminal value, and implied share price.
- LBO Returns: Sources and uses for the $79/share Blackstone/TPG deal, pro-forma debt structure, and sponsor IRR calculation.
Key Financial Relationships
- `Diagnostics Revenue = Base Molecular Diagnostics Revenue + Cytology & Perinatal Revenue + COVID-19 Assay Revenue`
- `Breast Health Revenue = Breast Imaging Revenue + Interventional Breast Solutions Revenue`
- `Total Organic Revenue = Total Revenue - Revenue from Acquisitions (within first 12 months) - Divested Revenue`
- `Product Gross Profit = Product Revenue - Cost of Product Revenues`
- `Service Gross Profit = Service & Other Revenue - Cost of Service & Other Revenues`
- `Non-GAAP Gross Margin = (Total Revenue - Total COGS + Amortisation of Acquired Intangibles in COGS + Restructuring in COGS) / Total Revenue`
- `Non-GAAP Operating Income = GAAP Operating Income + Amortisation of Acquired Intangibles + Restructuring Charges + Impairment Charges`
- `Adjusted EBITDA = Non-GAAP Net Income + Interest Expense + Income Taxes + Depreciation`
- `Adjusted Net Leverage Ratio = (Total Debt - Cash and Cash Equivalents) / Adjusted EBITDA`
- `Free Cash Flow = Operating Cash Flow - Capital Expenditures`
- `LBO Purchase Equity Value = Fully Diluted Shares Outstanding x Offer Price ($79)`
- `LBO Enterprise Value = LBO Purchase Equity Value + Total Debt - Cash and Cash Equivalents`
Cross-Sheet Dependencies
- The Assumptions sheet dictates the growth rates and margin profiles used in the Revenue Build and Income Statement.
- The Revenue Build feeds the top line of the Income Statement and drives the accounts receivable balance on the Working Capital sheet.
- The Income Statement generates Net Income, which is the starting point for the Cash Flow Statement, and feeds Retained Earnings on the Balance Sheet.
- The Working Capital & Capex sheet calculates changes in NWC and capital expenditures, which feed the Cash Flow Statement and DCF Valuation.
- The Debt Schedule calculates interest expense for the Income Statement and ending debt balances for the Balance Sheet. It also provides the pro-forma debt levels required for the LBO Returns sheet.
- Circularity risk exists between the Debt Schedule (interest expense), Income Statement (net income), and Cash Flow Statement (cash available for debt paydown). A circularity breaker toggle must be included.
Sign Convention
- Revenue and Assets: Entered and displayed as positive numbers.
- Expenses and Outflows: Entered as positive numbers in their specific schedules (e.g., COGS, SG&A, Capex) but subtracted in aggregation formulas (e.g., Gross Profit = Revenue - COGS).
- Liabilities and Equity: Entered and displayed as positive numbers.
- Cash Flow Statement: Cash inflows are positive; cash outflows (e.g., capex, debt repayment, dividends) are negative.
Things Most Likely to Go Wrong
- Failing to separate COVID-19 testing revenue from base Diagnostics revenue will severely distort historical growth rates and future projections.
- GAAP vs. Non-GAAP confusion is the biggest risk. The model must explicitly add back the amortisation of acquired intangibles, or operating margins will appear artificially depressed.
- The pending Blackstone/TPG acquisition means historical share repurchase trends cannot be straight-lined into the future; share count should remain static in the standalone model.
- Capital equipment placements (Panther systems) sit in PP&E and are depreciated into COGS. Failing to link capex to COGS depreciation will misstate gross margins.
- The $3 CVR in the buyout offer is contingent on Breast Health revenue goals in FY2026 and FY2027. The LBO model must include a toggle to assume this is paid or unpaid.
- Foreign currency translation impacts historical revenue by 1% to 2% annually. The model should project on a constant currency basis but report in USD.
- Recent acquisitions (Gynesonics, Endomagnetics) create stub-period revenue that inflates YoY growth. Organic growth formulas must exclude these for the first 12 months.
- Restructuring charges are frequent and should be treated as non-recurring for valuation purposes, but cash costs must still hit the cash flow statement.
Validation Checks
- Non-GAAP Gross Margin must remain between 60.0% and 62.0% based on historical performance.
- Non-GAAP Operating Margin must remain between 30.0% and 32.0%.
- Adjusted Net Leverage Ratio should be exactly 0.4x in the final historical period (Q4 2025).
- Total Assets must equal Total Liabilities plus Equity in every projected period.
- Free Cash Flow conversion (FCF / Non-GAAP Net Income) should consistently exceed 1.0x.
- Capex as a percentage of revenue should not exceed 3.5% without triggering a flag.
- The LBO entry Enterprise Value must tie to the $79/share offer price multiplied by the fully diluted share count, plus net debt.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Diagnostics (ex-COVID) Growth | 4.5 | % | Mid-point of recent organic growth trends |
| COVID-19 Revenue | 0.0 | $M | Assumed to phase out entirely by FY2026 |
| Breast Health Growth | 3.0 | % | Historical average driven by replacement cycles |
| GYN Surgical Growth | 8.0 | % | Strong growth aided by Gynesonics acquisition |
| Skeletal Health Growth | 1.0 | % | Mature, low-growth segment |
| Non-GAAP Gross Margin | 60.9 | % | Actual Q4 2025 reported non-GAAP gross margin |
| R&D as % of Revenue | 5.5 | % | Historical average required to maintain product pipeline |
| SG&A as % of Revenue | 23.0 | % | Historical average to support direct sales force |
| Effective Tax Rate (Non-GAAP) | 18.5 | % | Typical non-GAAP effective tax rate for the company |
| Capex as % of Revenue | 2.5 | % | Historical average for maintenance and instrument placement |
| DSO (Days Sales Outstanding) | 50 | Days | Calculated from historical receivables and revenue |
| DIO (Days Inventory Outstanding) | 75 | Days | Calculated from historical inventory and COGS |
| DPO (Days Payable Outstanding) | 45 | Days | Calculated from historical payables and COGS |
| WACC | 8.5 | % | Standard discount rate for medical device peers |
| Terminal Growth Rate | 2.0 | % | Long-term GDP and healthcare spending growth |
| LBO Offer Price (Base + CVR) | 79.00 | $/Share | Announced Blackstone/TPG acquisition price |
| Fully Diluted Shares | 225.5 | Millions | Approximate Q3/Q4 2025 diluted share count |
Data Sources & Benchmarks
- Filings: SEC EDGAR for Hologic (HOLX) 10-K, 10-Q, and 8-K filings (specifically the FY2025 10-K and the October 2025 merger announcement).
- Investor Relations: Hologic IR website for quarterly earnings presentations and non-GAAP reconciliations.
- Key Peers: Becton, Dickinson and Company (BDX), Stryker Corporation (SYK), Boston Scientific (BSX), and Illumina (ILMN) for margin and multiple benchmarking.
- Industry Data: IQVIA for diagnostic testing volumes; American College of Radiology (ACR) for mammography screening trends.
- Consensus Estimates: FactSet or Bloomberg for standalone revenue and EPS estimates prior to the LBO announcement.
Sources
Do more with the Hologic model
Frequently asked
What is Hologic's core business and how does it generate revenue?+
Hologic is a leading medical technology company focused on women's health, developing diagnostic products, medical imaging systems, and surgical products. The company employs a "razor and blades" model, placing capital equipment to generate highly profitable, recurring revenue from assays, disposables, and service contracts.
Which business segments are the primary revenue drivers for Hologic?+
Hologic's primary revenue drivers are its Diagnostics segment, accounting for approximately 44% of revenue, and its Breast Health segment, contributing about 40%. These segments leverage capital equipment placements to secure recurring revenue streams from related assays, disposables, and service contracts.
What is the assumed revenue growth rate in the Hologic financial model?+
The Hologic financial model incorporates a Revenue_Growth assumption of approximately 4.6% for its forecast horizon. This growth rate is a critical input for projecting the company's future financial performance from FY2026 through FY2030.
What is the main objective of the Hologic financial model regarding valuation?+
The primary objective of the Hologic financial model is to conduct a standalone discounted cash flow (DCF) valuation of the company. This analysis aims to assess the fairness of the pending $79 per share acquisition offer from Blackstone and TPG.
Is an Excel financial model available for Hologic (HOLX) and what is its forecast period?+
Yes, an Excel financial model for Hologic (HOLX) is available for download. This general corporate model provides financial forecasts for the company from FY2026 through FY2030.
How is capital expenditure treated in Hologic's financial model?+
In Hologic's financial model, capital expenditure is assumed to be approximately 2.03% of revenue. A significant portion, about 60%, is growth capex, primarily allocated to placing new Panther diagnostic instruments at customer sites to drive future recurring assay revenue.
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