Hologic, Inc.
Q1 2021 Earnings Call Transcript

Published: 27 Jan 2021

[Company Representatives:]

Steve MacMillan - Chairman, President, Chief Executive Officer Karleen Oberton, - Chief Financial Officer Mike Watts - Vice President of Investor Relations, Corporate Communications

[Operator:]

Good afternoon, and welcome to Hologic's First Quarter Fiscal 2021 Earnings Conference Call. My name is Edwardo, and I am your operator for today's call. Today's conference call is being recorded. All lines have been placed on mute. I’d now like to introduce Mike Watts, Vice President of Investor Relations and Corporate Communications to begin the call.

[Mike Watts:]

Thank you, Edwardo. Good afternoon and thanks for joining us for Hologic’s first quarter fiscal 2021 earnings call. With me today are Steve MacMillan, the Company’s Chairman, President and CEO, and Karleen Oberton, our Chief Financial Officer. Steve and Karleen both have some prepared remarks, then we’ll have a question-and-answer session today.

[Steve MacMillan:]

Thank you, Mike, and good afternoon, everyone. We are pleased to discuss our financial results for the first quarter of fiscal 2021. We are off to a very strong start to the year across all our businesses and major geographies. Once again, our Diagnostics division delivered incredible performance by making a massive impact against COVID-19. And our Breast Health and Surgical businesses continue to strengthen, with each returning to growth in the United States, Europe and Asia-Pacific. So our performance was strong and broad-based across both divisions and geographies. As a result, our financial results were exceptional in the first quarter. Let’s provide a quick overview. Total revenue was $1.61 billion, with non-GAAP earnings per share of $2.86. Organic revenue more than doubled, up 104%, while EPS increased more than four-fold, as higher production volumes in Diagnostics enabled us to leverage our fixed cost base. Both revenue and EPS came in well ahead of our expectations at the beginning of the quarter. With that introduction, I’d like to cover three main topics in my remarks today, which will echo some of the themes from our presentation at the JPMorgan conference earlier this month. First, how our purpose-driven culture is contributing to, and we believe driving our excellent financial results; second, how we’re making a huge difference in the fight against COVID-19; and third, why we’ll be a stronger company on the other side of the pandemic.

[Karleen Oberton:]

Thank you Steve, and good afternoon everyone. In my remarks today, I’m going to provide an overview of our divisional sales results, walk through our income statement, briefly touch on a few other key financial metrics, and finish with our guidance for the second quarter of fiscal 2021. As Steve said, we are very pleased with our first quarter results, as revenue and EPS significantly exceeded our guidance. Reported revenue of $1.61 billion increased 87%. Organically, revenue grew 104%, driven by strong COVID sales and the continued improvement of our base business across all major geographies. Given the incredible demand for our COVID tests and the strong results in our base business, we were able to significantly improve profit, margins and cash flow. As a result, EPS of $2.86 in the first quarter increased 369%, well ahead of our expectations. Further, operating cash flow has continued to be extremely strong, which I’ll discuss in a moment. Before I do that, let me provide some detail on our divisional revenue results. In Diagnostics, our largest division, global revenue of $1.128 billion grew 256% in the first quarter driven by molecular, where sales increased 449%. In response to the unprecedented demand for COVID testing, we shipped about 30 million COVID tests to customers, generating revenue of $745 million globally. And excluding COVID, our base molecular business accelerated sequentially, as customers continue to see the benefit of our assay menu and the strength of Panther’s high throughput automation. Rounding out diagnostics, the cytology and perinatal businesses grew by 1% in the quarter, driven in part by a catch-up in cytology procedures at calendar year-end. In Breast Health, global revenue of $332.7 million was down slightly overall. However, performance improved compared to the fourth quarter and the business returned to slight growth in all geographies except for Latin America. The division’s performance was driven by the interventional business, which grew 15% in the quarter and was helped by the re-launch of our Brevera biopsy system. Although we were encouraged by sequential improvement in the capital environment and by healthy equipment sales at calendar year-end, overall spending remains challenged because of COVID. However, our intentional diversification to service and consumables, as well as several recent acquisitions, have helped mitigate pressures on capital. As an example, Breast Health service revenue, which is larger than capital sales, grew by mid-single-digits in the quarter. In Surgical, sales of $124 million grew 3.3%, a great result given headwinds on elective procedures from recently increasing COVID cases in some parts of the country. This result shows the strength and commitment of our Surgical sales force, as well as the benefit of several new products. Overall, in terms of geography, domestic sales of $1.14 billion increased 80% on a reported basis. On an organic basis, U.S. revenue was up 91%. Outside the United States, sales of $472 million increased 106% in constant currency. Organically, sales outside the U.S. grew 145%, a stellar result that reflects our growing international strength. Now let’s move on to the rest of the P&L for the first quarter . Gross margin of 77.2% increased 1,560 basis points, driven by sales of high-margin COVID tests and the divestiture of the lower-margin Cynosure business. Total operating expenses of $274.5 million decreased 5.1% in the first quarter. However, expenses actually increased when normalizing for the Cynosure sale, and about $6.5 million of credits from BARDA associated with the development of our COVID assays. These increases were driven by investments in R&D and marketing for future growth. In addition, expenses associated with our deferred compensation plan increased as a result of equity market gains. As a reminder, while this liability is marked to market, most of the expense is offset by a benefit we realized in other income in the quarter. In addition, our non-GAAP tax rate in the quarter was 21.75%, slightly lower than previously forecast driven by a favorable geographic mix of income, primarily from sales of COVID-19 assays outside the United States. Putting all this together, operating margin increased 3,270 basis points to 60.2%, and net margin increased 2,730 basis points to 46.6%. As a result, non-GAAP net income finished at $749.6 million, and non-GAAP earnings per share were $2.86, well ahead of expectations. Before we cover our 2021 second quarter guidance, I’ll quickly touch on a few other financial metrics. Driven by demand for our COVID tests, cash flow from operations was $650 million in the first quarter, a very strong result. In fact, this was about the same as our total cash flow from operations for all of fiscal 2019. Looked at another way, in just the last two quarters we have generated about $1.1 billion in operating cash flow, which gives us tremendous financial and strategic flexibility. For example, we repurchased nearly 1.5 million shares of stock for $101 million in the first quarter, and our Board recently approved a new $1 billion authorization, highlighting our commitment to capital deployment. And we were also able to strengthen our balance sheet by repaying our outstanding revolver balance of $250 million. As a reminder, we had borrowed against the revolver as a precautionary measure very early in the pandemic. Overall, we had $869 million of cash at the end of the first quarter. And with more than $1 billion of EBITDA for the quarter, our leverage ratio fell to 0.8 times. While we remain comfortable with a leverage ratio between two and three over the long-term, we also have no problem with a lower ratio in the short term. As you know, we are actively pursuing a number of division-led, tuck-in acquisitions and hope to use our cash to complete more deals this year, in addition to buying back our stock. Finally, ROIC was 26.7% on a trailing 12-month basis, a significant increase of 1,440 basis points. Before we open the call for questions, let me discuss our expectations for the second quarter of fiscal 2021. We anticipate that fiscal 2021 will be an excellent year for Hologic overall, but our business environment remains fluid due to the ongoing effects of the pandemic. Therefore, we are only providing a single quarter of guidance today. Let me also point out that our guidance does not include the impact of the pending Biotheranostics acquisition, which has not yet closed. In the second quarter of fiscal 2021, we expect excellent financial results again, with total revenue in the range of $1.5 to $1.56 billion. This represents an approximate doubling of organic revenue growth, to roughly 96% to 104%. Underlying this, we expect similar sales of our COVID tests to drive exceptional Diagnostics growth. As a reminder, most of our new molecular production capacity is expected to come on-line in the second half of our fiscal year. Blood screening revenue, which we back out of our organic calculations, is expected to be about $10 million in the quarter. In our other businesses, let me remind you that March quarter sales are typically down sequentially compared to the December period for our Breast, Surgical and base Diagnostics businesses, as capital sales and semi-elective procedures tend to be seasonally stronger at the end of the calendar year. In addition, our guidance incorporates headwinds related to customer spending constraints and restrictions on procedure volumes given rising COVID cases. While our customers are much better- prepared than they were last spring to manage through local increases in COVID prevalence, we have seen a recent slowdown in some elective surgeries. On the bottom line, we expect EPS of $2.56 to $2.68 in the second quarter, with extraordinary growth rates that significantly outpace revenue even as we increase investments for future growth. To put this in perspective, we expect to earn more in the second quarter alone than we did in the full year of 2019. This second quarter guidance is based on a tax rate of 21.75%, and diluted shares outstanding of 262 to 263 million for the quarter. I’d also like to point out that we expect other expenses, net, to increase to close to $25 million in the second quarter, as we don’t forecast gains or losses related to certain hedging activities like we saw in the first quarter. As you update your forecasts, let me remind you that macro uncertainty has increased in recent weeks due to the pandemic. While our visibility has improved compared to several months ago, we would still encourage you to model at the middle of our ranges, which incorporate both potential upsides and downsides. Before we open the call for questions, let me wrap up by saying that Hologic’s financial performance in the first quarter was terrific. We continue to make a huge impact fighting the COVID-19 pandemic and on women’s health globally. Further, I am confident that we have positioned ourselves to deliver exceptional long-term performance. With that, I will ask the operator to open the call for questions. Please limit your questions to one plus a related follow-up, then return to the queue. Operator, we are ready for the first question.

[Operator:]

Thank you. We'll now take our first question from Dan Leonard at Wells Fargo. Please go ahead.

[Dan Leonard:]

Thank you. So first question, you made a comment that your success for COVID testing outside of the U.S. has actually helped strengthen your other franchises. Could you elaborate a bit on that?

[Steve MacMillan:]

Yes, Dan, thank you. First off, it's funny how things go in full circle. As you know, over the last few years, we've acquired a number of our dealers in Europe on the Breast Health side and that gave us much more of a direct presence in a lot of the key countries, the UK, Germany, Spain, Portugal, just to name a few, and it’s really helped us strengthen our whole team in Europe. So we've been building relationships at a higher level. As COVID has hit, it's given us incredible access to a lot of the major governments. We've got contracts with just about every major government in Europe. And in so doing, we're now on their radar screen that they really – a lot of them didn't know about the Diagnostics business and how much of a leader we are in the sexually transmitted infections and other stuff. So we've been able, as we've been selling in COVID and giving them Panthers to really be booking new business that will come online as the Panthers go down, and really just being able to talk more about our cytology business, our HPV business, and really just a different level of relationship that we think is going to strengthen us significantly down the road.

[Dan Leonard:]

Okay, that's helpful. And then a bit of an unrelated follow-up. How would you characterize the M&A environment right now? I mean, during the pandemic, in diagnostics specifically, do you think it will be -- is it feasible to do something in your core infectious disease testing phase or do you think this is an environment where you really got to wait for the pandemic to subside before those types of assets become available? Thank you.

[Steve MacMillan:]

Great question, Dan. I think, we’d probably put it in a couple of different perspectives. First and foremost, I would say is as -- while we are obviously generating a ton of cash right now, we also have the luxury of being in an enormous position of strength and that our base businesses are performing. And I think the best way that you can be very disciplined on deals is when it's easy to walk away from anything because you don't need anything and you feel good about your underlying business. So then if we look at the market specifically, it's been fascinating to watch over the last eight months, right? First, everybody hunkered down back March, April, May, including ourselves. We had pushed things like the Acessa deal. We had even pushed out a few months and we'd had a relationship with Biotheranostics and kind of just wanted to see where our own cash flow was at that point in time. So now, obviously, there is a lot of companies that are fairly flushed with cash. There is also a fairly healthy IPO market right now. So there is a bit of froth out there I think and we want to be disciplined. So I would tell you, as excited as the deals we've done. I'm probably more proud of some deals we've gone pretty deep on over the last three, four months that we walked away from, really over valuation or other issues in diligence. And that's I think the maturing of our team here and that the fundamental strength. So I think we're in a position where if we can get the right assets at the right price with good ROICs, hey, that's great. And if we need to wait some things out or even miss some things, we're not going to get caught into bidding wars and overpay. So I do think it's a pretty vibrant market right now. We've had every banker beating us – beating our door down trying to sell us things as you can imagine, but staying very disciplined.

[Dan Leonard:]

I appreciate that color. Thank you.

[Operator:]

All right. We’ll now take our next question from Patrick Donnelly at Citi. Please go ahead.

[Patrick Donnelly:]

Great. Thanks, guys. Steve, maybe one for you. Just on the COVID testing side, I’m sure you get this a lot obviously. But just on the durability side, as we think out to the back-half, obviously, the vaccine is rolling out, a little choppy here, but it's going out. As you think about the back-half and the pie possibly beginning to naturally shrink there, all test aren't created equal. So I guess where do you see Hologic kind of landing in terms of when that pie starts shrinking? Do you get a bigger piece? How does that play out? And again, certainly, your capacity is expanding. What's the view of that split between COVID and non-COVID as we get through this year?

[Steve MacMillan:]

Sure, Patrick. You're hitting on clearly one of ‘the biggest questions. I believe very strongly that we will continue to improve our market share, right? In the beginning this was kind of the wild, wild west. The FDA granted a gazillion EUAs, everybody raced out to the market. At the end of the day, we have some very powerful and enduring assets that we believe will put us in a really good place over the long run. It starts frankly with Panther and the installed base. We know there is a ton of hospitals that in a bare minimum are going to want to continue to test everybody that comes in their doors for procedures. They have them on site, they'll be doing that. As we seek to get more people back to work and back-to-school, there is going to be a need for high-level testing that's asymptomatic. And I think again, what's been happening in the short-term, because there wasn't enough molecular tests in the beginning and the long turnaround times, there is a big emphasis on a lot of the rapid tests, particularly some of the antigen stuff and they're going to have a place. But at the end of the day, they're not indicated, most of them for asymptomatic screening and we keep learning more and more by the day. How much of this is asymptomatically being passed along? And when you look at a lot of these super spreader events, they are quite frankly being caused by using the wrong tests off label to try to determine whether people have something. And I think over time, what we always say to our team is the cream rises to the top. So you have Panther and it’s where it's located. You have an assay that's got incredible sensitivity specificity and one of the best labels. We also have the pooling indication. And once you get back into screening, call it, next fall, right, think about simple things. We want to get everybody back to school in the fall. The vaccines still aren't indicated for people under 16. So as we keep talking about vaccinating the country, children are going to be excluded from that. We're going to want to be doing asymptomatic screening and a lot of the antigen tests that people may say are great right now, they're not going to be as effective at picking up particularly asymptomatic indications. So we have that and then you just have the pure workflow advantage that should never be forgotten and that is the workflow of Panther, the random access automation ability to just make this as easy. The lab techs around the world have been running a marathon at sprint speed, they are exhausted. You can't walk in any lab and not hear from the lab director that their techs are just tired and they would much rather be able to be using Panther. And one of the fundamental realities is, we've been shipping so much, but not all of it has been with our full pen caps and that's part of the capacity we've been building up. And as we're able to provide more and more of our pen caps, it creates the full automation benefit that not everybody has even been fully getting yet. So, we have no idea, truly exactly how this is going to play out, but all the discussions we've been having with the Biden transition team has been continued about, “Hey, are you still building up more capacity?“ And we certainly are. We'll see how it all plays out. But I think like every market we compete in, we think we're going to be there standing.

[Patrick Donnelly:]

That's really helpful perspective, I appreciate that. And then maybe just one; you know I think Karleen mentioned it there at the end. You have seen a little bit of a recent slowdown in some elective surgeries, elective procedures, customers seeing rising COVID cases being a bit of a headwind. Can you just expand a little bit on kind of what you're seeing this quarter sequentially versus last quarter in terms of that slowdown and kind of where it's taking you guys and what the impact could be? Just want to make sure we have a good handle on that.

[Steve MacMillan:]

Yes. Overall, I would say it's really on the margin. We – frankly I think we finished the last quarter better than most. The fact that Surgical and Breast Health both ended up growing, which we wouldn't have expected. Whether they grow or stay flattish, we're probably talking little pieces here. We're seeing little pockets right in certain geographies; certainly, we’ll have a couple of slower days in the surgical business or in the Breast Health consumable business. So it's I'd call it, it's a little temporary outages, but fundamentally it's going to be tiny for us given that we've got the COVID offset and I think we just continue to focus on sharing it will, take care of itself here over time, but maybe slightly more muted this quarter on a couple of those businesses, but still overall good.

[Patrick Donnelly:]

Alright, that's good to hear. Thanks Steve.

[Steve MacMillan:]

Alright.

[Operator:]

We'll now take our next question from Chris Lin of Cowen. Please go ahead.

[Chris Lin:]

Hey, good afternoon and thanks for taking my question. Also, welcome back to the earnings call, Karleen.

[Karleen Oberton:]

Thank you.

[Steve MacMillan:]

Good job Chris remembering, alright.

[Chris Lin:]

Steve, in past quarters you provided an estimate on what percentage of Panther placements are expected to replace Tigris and also what percentage of Panther placements displace a competitor or enabled a new customer to begin testing? Do you have an update on those figures for us? Also, I know you test the record, the test of records metric to track assay adoption, but do you have an estimate on what percentage of Panthers placed over the past year are now also running non-COVID-19 tests?

[Michael Watts:]

Hey Chris, it’s Mike. Let me take a crack at that. I think on your first point we – what we said a few quarters ago is in the early days we placed a significant portion of our Panthers into some of our largest customers where they were going to replace Tigris’s over time and provide access to a broader menu, there’s four test approved on Tigris I think, now 18 on Panther if you include the two COVID test. We haven’t given an update on that since then, so I don’t have an update for a specific number for you today. I would tell you that by and large, we are focusing on our existing customers obviously and broadening our relationships with those customers. If you think about where our Panthers sit overall, you know most of them still in hospital labs and I think this gets back to one of the comments as Steve was making earlier about how getting testing closer to the patient is going to help us from a share perspective going forward for pre-op procedures, things like that. And then the second part of your question Chris, on TOR’s was what percentage of the new Panthers, isn’t it? Yes, I don’t know that number either, but I think as Steve said in his prepared remarks, that’s what the sales force is focused on, right. And we’ve talked a bit in the past about how we’re extra incentivizing our sales force to bring in new non-COVID business and they’ve done a great job of that. So I think as Steve said in the prepared remarks, I mean basically every Panther that we placed is being placed with an eye toward the future and that run rate of TORs. I mean we did $35 million last year, we talked about this. That was 50% more than we had ever done before, pretty excited about that, and now in the first quarter we do another $20 million. So don’t know if that will continue with that pace, but certainly at a good run rate here out of the SHU.

[Chris Lin:]

Okay, great. Then for my follow-up, I just wanted to go back to the topic of decentralization. One of your largest peers and hired throughput COVID-19 Diagnostics recently announced the acquisition of a molecular point-of-care platform. Beyond that acquisition I think this pandemic has also just highlighted the need for rapid but accurate diagnostic tools. Now given that Panther is in a unique position as a leading mid-to-high throughput molecular diagnostics platform, do you want to extend that leadership to a lower volume setting. Really, do you have any updated thoughts on that market opportunity?

[Steve MacMillan:]

Yes. We continue to look at different areas and different technologies Chris. I mean I’ll tell you, if we’ve been inundated we’d probably get five or 10 per day, little companies, different technologies coming our way. We’re certainly looking at some. We’re probably generally a little more focused in the labs that we’re – you know in our existing customers. We’re always looking on the fringe other ways to extend out from there. So we’ll continue to look at everything and stay disciplined on where we can get a good return and where we can bring value to the market.

[Chris Lin:]

Okay, great. Thanks for taking my questions.

[Operator:]

Alright, we’ll take our next question from Tycho Peterson at J.P. Morgan. Please go ahead.

[Tycho Peterson:]

Hey, thanks Steve. I’m going to stick with the durability seen. I’m just curious, you know in the last few weeks, obviously new strengths have emerged and then you’ve got the new administration making a big push here, so a couple of quick hits if you will. Where are you on a test for the new variants? And then as we think about mix, I think up till now you basically have been doing lots of stand-alone COVID. How do you think about combo assays, mix shifting over the course of the year, and then how do you think about the sustainability of the current pricing trends and reimbursement as it stands today?

[Steve MacMillan:]

Yes Tycho, thanks. I think in terms of the new variance, right now we feel very good that the way we’ve designed our test, you know we have basically designed ours with two targets to ensure there’s a backup target in case the virus mutates. So we continue to watch that but feel very good, and this is part of many advantages of having an incredibly sensitive and specific test to begin with, it targets the genomic regions that are less likely to mutate. So I think we feel very good about our ability to continue to catch those very well. And the second part of that was what again the multiplex.

[Tycho Peterson:]

[Steve MacMillan:]

I’m sorry. Yes, the multiplex, we figure come the fall – for this winter as we all know there’s basically been no flu season demand for our product. It’s virtually been entirely our single COVID test. I think come next fall, having a syndromic multi, multiple option is probably going to make more sense and you would expect that we’ll typically be there.

[Tycho Peterson:]

And pricing and reimbursement?

[Steve MacMillan:]

I think at least in the short term, we’re probably still reasonable. I think over the long run we’ve got to assume both of those will eventually come down. But I think at this point, particularly with the Biden administration extending the public health emergency through the end of 2021, we don’t see any real near-term pressure on reimbursement. I’m sure again, that will probably start to evolve as we go forward and it may evolve at different paces with different governments around the world as well, but so that ultimately will be some downward pressure certainly probably on pricing, but feel pretty good about where we are right now.

[Tycho Peterson:]

And then one on capital deployment for you’re putting up great numbers, your stock still trading around 10x EBITDA, so how are you thinking about buybacks? Would you consider an ASR?

[Steve MacMillan:]

Yes. We certainly did an ASR in conjunction with the Cynosure divestiture. In general, not a huge fan of those short of an event. I think we’ve been pretty good buyers of our stock. When you look back over the last, really five fiscal years, I think we’ve bought back over 30 million shares and been fairly consistent last year even more so. I think it continues to be an important part of our strategy, but probably more executed along the way, both offsetting dilution, as well as frankly we’ve been reducing our share count really now for a number of years.

[Tycho Peterson:]

Okay, thank you.

[Operator:]

Alright, we’ll now take our next question from Raj Denhoy at Jefferies. Please go ahead.

[Zachary Weiner:]

Hey, this is Zach on for Raj. Just a few from us. You started the year by announcing two acquisitions and a $1 billion buyback. Can you give any more detail on the potential timing of that share repurchase program? Should we expect it to start to come in post COVID? And then also, can you give any more color on potential deals size and/or timing of future deals?

[Karleen Oberton:]

Hi, this is Karleen, so let me just make a couple of comments in regards to capital allocation. Certainly we’re focused on deploying our free cash flow, which has grown tremendously over the last several quarters. Our priority is going to be that tuck-in M&A growth accretive assets and I think to build on the comments that Steve made, capital - share repurchase is going to be part of that strategy, but I would say the $1 billion authorization is over a five year period. So we would expect to utilize that on some regular cadence over that period of time.

[Steve MacMillan:]

Great! Next.

[Operator:]

We’ll now take our next question from Jack Meehan at Nephron Research. Please go ahead.

[Jack Meehan:]

Thank you. Good afternoon, guys.

[Steve MacMillan:]

Hey, Jack.

[Jack Meehan:]

Wanting to talk about the core business. So as you reflected on the quarter, how much do you think pent-up demand contributed across the three segments? I know you talked about some catch-up in cytology, but do you think there might have been some flush from hospitals in Breast Health and timed surgical procedures going back?

[Steve MacMillan:]

We think there was probably some catch-up. Again is it a few percentage points, is it saying – it’s hard to completely quantify Jack in terms of both cytology, as well as surgical and plus you have the year-end, people trying to get them in who have exceeded their Caps for the year, so you tend to have a pretty good time at year-end. In terms of capital a little hard to know; we saw a little bit of strength in pockets, certainly. I think the way we’re thinking about it overall is there’s still going to be some little puts and takes here as the markets settle back down in the coming quarters. Are we continuing to take market share? Are we continuing to get stronger? And none of it frankly is going to make a huge difference. Do we grow a 100% next quarter or 95%, it’s – we’re talking on the base business, what would be minor percentages in terms of the total.

[Karleen Oberton:]

Yes, the only thing I would add on that is that on the Brevera relaunch there was definitely some pent-up demand for capital for that relaunch and I think that really bodes well for that product moving forward and we think that will be a nice contributor to the Breast Health division.

[Zachary Weiner:]

Great! And then I was hoping to maybe give a little bit of color around expectations for new product launches throughout 2021. What do you have in the pipeline? Should we think kind of more incremental launches and how does the environment make you think about maybe doing larger moves in any other businesses for coming out of the R&D portfolio?

[Steve MacMillan:]

Yes, I think in terms of your – the first question, I think we’ve got you know consistently a lot of singles coming in new product development. Frankly we hit a Grand Slam in Diagnostics and put all of our energy and it’s hard for people to fully understand how much R&D and manufacturing and quality assurance resources went into getting all of both the assays out for COVID, as well as the additional label indications, things like pooling and they involve a lot of software. So we’re continuing even just on pathways to continue to strengthen there. In Breast Health we’ve got a number of things coming out using AI. We’ve got follow-ups from the SSI acquisition on ultrasound. You know Brevera is really in the process of rolling out. So we’ve got a lot of additional software and smaller things there. Then we’ve got obviously Acessa, the Pro-View product rolling in within the surgical business. So I think we feel very good about the cadence of those things rolling out. And then on the M&A front, I’ll probably go back to our – the comment I made in probably answering the first question or so, which is to me the best way to be disciplined in M&A is to have a great core business and all of our business’s right now are good. We’ve also got just really good teams able to do some great due diligence. We’ve really walked away from a number of things actually even over the last few months and we continue to work others. So I think we’re able to look a little bit bigger, certainly given the cash, but we don’t necessarily have big eyes or big needs and I think if anything, we’re probably likely to be building a little bit more of a cash position here in the near term as Karleen mentioned. We’ve generated a $1 billion of cash, just in the last two quarters. We certainly aren’t spending at that rate and that’s okay for right now, we’ll be patient and disciplined.

[Michael Watts:]

Hey Edwardo, I think we have…

[Zachary Weiner:]

Thank you guys.

[Michael Watts:]

Edwardo, I think we have time for may be one more question.

[Operator:]

Alright, we’ll now take our last question from Vijay Kumar at Evercore ISI. Please go ahead.

[Daniel Markowitz:]

Hi, this is Daniel on for Vijay. Thanks for taking the question. Your comment on the 150 Panther placements in the quarter with a strong order book, I’m just wondering on capacity for Panther production or in other words, how I should think about the unwind on that order book?

[Steve MacMillan:]

Sure, we’re continuing to produce Panthers at a similar rate right now to what we just placed, given that we still have very strong demand. I think probably later into calendar year ‘21, does that start to back down a little bit, probably given the extreme ramp-up, but we are continuing to produce at a similar rate right now.

[Daniel Markowitz:]

Thank you.

[Operator:]

Thank you. That is all the time we have for questions today. This now concludes Hologic's first quarter of fiscal 2021 earnings conference call. Have a good evening!