Good morning, everyone. Thanks for joining us at the Raymond James Institutional Investor Conference. I'm Andrew Cooper. I cover diagnostics and tools here for Raymond James. We're excited to have Hologic joining us this morning. The company is a leader in the women's health space spanning across several end product areas that we'll get into here in a moment. Pleased to be joined by CFO Karleen Oberton for a fireside chat. I also have Ryan Simon, who helps head up the IR effort. With that, we'll get right into it. Maybe just to start, Karleen, if you don't mind, for folks that are a little bit newer to the story, could you just take some time to give us a quick overview of who Hologic is, kind of at the core, the markets you play in, and what some of the key topics are in general? Sure. Well, first of all, Andrew, thanks for having us today. It's a pleasure to be here with all of you and to go through our story. So Hologic, a medical technology company uniquely focused on women's health, a company that we lead with our purpose, passion, and promise, our purpose to enable healthier lives everywhere, every day, our passion, which is to be champions of women's health globally, and our promise, which is the Science of Sure, which is our promise to physicians that we're going to give clinically differentiated products to them, quality products to them. I think for folks newer to the story, as we entered the pandemic, we focused on three things: how can we solve the most pressing need of the world, which was COVID testing at the time; make sure we take care of our employees through the pandemic, which we have. We have a highly engaged workforce. And how are we going to come out of the pandemic a stronger company? And we clearly have done that. Clearly, we're bigger, faster, stronger. Bigger in that we are on track to be over $4 billion in revenue, $4 in earnings for this year with very minimal COVID contribution prior to the last several years. Faster, we have a growth algorithm of growing the top line, excluding COVID, 5%-7% in earnings faster than that. And stronger in that we have close to $2 billion of cash on the balance sheet. We have a very clean, strong balance sheet, a very competitive credit agreement, which gives us lots of flexibility to continue to drive growth both organically and inorganically. Perfect. And don't worry, we're not going to spend a ton of time on COVID. I know after the last three years you're probably happy for that. I'm going to work down sort of the way it's structured in my model. So one that is a little bit more contentious than I feel like it normally is and probably doesn't get as much airtime outside of that is cytology and perinatal within the diagnostic segment. So USPSTF draft guidelines could come soon. Before we dive into the debate, excuse me, maybe just give us a little bit of your views on why there is a debate, what USPSTF is kind of seeking to do or seeks to do in general, and why this should or should not be a big deal for you. Yeah. So let me take it in a couple of pieces. So USPSTF, United States Preventive Services Task Force, the guidelines he's talking about are guidelines on cervical cancer screening. And this relates to Medicare and Medicaid, right? So under the Affordable Care Act, to the extent that a guideline has an A or a B rating from the USPSTF, then it has to be covered, and there's no cost sharing. The patient will get that screening without incremental cost. So currently, co-testing, which is Pap and HPV screening, has an A rating. It's basically A or B rating. Again, it has to be covered, and this is for Medicare and Medicaid. And so back in 2018, the USPSTF issued draft guidelines that didn't cover co-testing, right? So that is the concern. What happened? They issued those draft guidelines. Obviously, there was a big uprising of KOLs and women advocacy groups as to the importance of co-testing. And so ultimately, the final guidelines had co-testing in them. So the debate is, what are these new draft guidelines, again, going to look like? From our perspective, that outpouring, that co-testing is the best treatment for women for cervical cancer screening, there's no change in that. There's no new scientific data. So there should be no reason that co-testing would have a different rating than it has now. Okay, that's perfect. I guess kind of moving into what the impact could be if there is a change. Certainly, I don't think a death knell of the cytology business, right? But can you first sort of size that business today, remind investors how big it is, and then how do you think about clinicians balancing that potentially changed guideline versus however many years of sort of clinical experience with co-testing? So let me start with the latter half of that question. Today, 99% of the cervical cancer screening today in the U.S. is either co-testing or Pap alone. So back to that 2018 final guidelines, both HPV primary and co-testing have an A rating. Over five years later, only 1% of physicians are practicing HPV primary. So that tells you that physicians understand that co-testing is the best science to detect cancer, cervical cancer. And so even if the final guidelines were a little different, it's hard to believe that they would not be like a light switch impact on our cytology business. So to frame the cytology business, it's about $450 million annually. Globally, about 60% is in the U.S. So again, we don't believe there will be a meaningful change in the guidelines. And even if there is, again, that's Medicare and Medicaid. That doesn't mean commercial insurance will change coverage, which is the majority of our business. So if you think about the majority of women who are getting screened are under 65. Those are the women under kind of commercial insurance. That actually leads into the next question I wanted to ask, which is, on that payer side of the equation, it seems like there would be sort of a stalemate between clinicians who want to order something and payers who don't like to pay for anything if it's not in a guideline. How do you think about that playing out? And is it over the course of time, do these payers, the commercial payers, kind of end up going with what the clinicians prefer? I think that's always kind of a push-pull. So just would love your thoughts there. Well, I think if this were really a cost debate, HPV primary misses one in five cancers. So if you're missing a cancer earlier, you're ultimately having more costs for the healthcare system versus catching it early. I think the other reality is we are seeing rates of cervical cancer increase in the U.S. in younger women, right? So that, again, goes against why would you change? We need women to get screened, and they need to be co-tested to detect it earlier. I mean, it's really, if you think about it, cervical cancer used to be a leading killer of women. 35 years ago, the Pap test was induced, and we've essentially eradicated the disease. And now rates are increasing. That's because women are not getting screened. So I think there could be a push-pull. I think, again, physicians, despite HPV primary having the same rating for five years, it hasn't changed practice. I think women are great advocates for their own health. We see that in breast cancer. I think women and physicians will still advocate for the best screening for cervical cancer, which is co-testing. Perfect. Let's shift gears to molecular. Like I said, we're not going to spend a lot of time on COVID, but I will call out you pointed it to being mostly upside $60 million of assay revenue this year off a peak that was, what, north of $2 billion. So a heck of a job there helping the world through that. But let's talk about sort of what it's done to the rest of the business. So you added, call it, 7 years' worth of instruments in less than half that time, in the 3 sort of COVID years, pretty modest installs in fiscal 2023. So maybe just first, why should investors still feel good about that pace of growth in that business and the opportunity, despite a little bit of an air pocket just on the instrument side because you pulled so much forward? Yeah. So a couple of points. One, we fully expected a slowdown in Panther placements, so that wasn't a surprise to us. Second, we could not place another Panther for the next 2 years and still fundamentally grow a CAGR in our molecular business. Step back from it all. Our molecular diagnostics business is 80% bigger than it was in 2019, 80%. So I think that's kind of the headline that people are missing in that what it's really about is driving that utilization on those Panthers. We have a menu of 20 assays. The majority of our customers run less than four assays. And that's what we continue to drive is, how do we get that utilization with those existing customers? All those new Panthers that were placed during the pandemic, over 90% of them are running at least one other assay. That means it's under contract for probably likely five years. We're engaging with our customers along that 5-year period, seeing what other content can we get onto that Panther? Perfect. And goes right into my next question, which is, can you kind of help us break down if we assume molecular is either within or, we could say, the high end of sort of your 5-7 long-term algorithm, can you break that down in terms of that same store contribution versus new instruments versus maybe price or new menu? Kind of give us how you think about that buildup to that growth rate? Yeah, I would say prior to the pandemic, it was probably more of a combination of the new customers. As you noted, we had a higher kind of annual placement rate of Panthers. Now it's really that same sales store, as I talked about. So some of the metrics that we have talked about publicly is that if you went back to 2019, less than 20% of our customers were running 4 or more assays. That's probably closer to 30+, 40% now. So that is playing out. We talked about the new customers acquired during the pandemic, over 90%, at least one other assay, 55%, at least two other assays. So we're seeing that traction with the Panther, with the menu. And I think it's a combination. I think the utilization and the uptake is clearly being driven by some of our newer assays, notably BV/CV, with our fusion sidecar that adds some of the respiratory capability. So it's kind of broad-based, all the contributors of growth. Perfect. On the instrument side, just thinking about that big bolus of instruments that you did install, I think there was a heavier shift or heavier mix of international in that. Where you sit today, I mean, what did you learn with that big, big bolus of international placements? How do we think about those international markets now that you're a lot further along in that journey than you were in 2019? Yeah, I mean, I think we, as a medical device company, were clearly underindexed internationally, about 25% OUS, 75% US. So we've always been intentional in driving the international business, certainly faster than the US business. I think we haven't made a lot of headway on that mix, but because the US business continues to do really well, which is, I guess, a good problem to have. But yeah, always intentional with the international business, I think, different than the US. Obviously, each country is a little different with coverage, reimbursement. For us, I think it's a realization of leaning into key markets. We've had success in going direct. Usually, we have better market access, market development capabilities. I think with things like the Global Women's Health Index, really realizing that women aren't getting screened for STDs and other diseases that they should, that we're leveraging that data to work with government officials to elevate not only Hologic, but really the screening programs that should be in place. Perfect. And then just on molecular, one more in terms of thinking about the margins, right? You talk about the algorithm, maybe a little bit different in terms of the growth forward versus where we were pre-pandemic. What are the margin ramifications there? Really high contribution margins, I think, but a little bit of color there would be great. Yeah. So certainly, our molecular diagnostics business, gross margins are higher than the corporate average. And one of the benefits there is we do substantially all our manufacturing in our San Diego facility. So the more volume we drive through there, the more leverage we are able to obtain. But one of the things I talked about is international. The international molecular business is going to grow faster than the US, and that has a little bit of a little lower margin profile. So I don't think we're going to see a meaningful structural change because of that dynamic. Okay, perfect. And I lied, actually, one more kind of in molecular that I wanted to hit. Biotheranostics, you've called out some really impressive growth numbers. Can you give us a sense or remind us what those are, and then give us a sense for sort of the size of that business today? And should we expect growth in that ballpark to continue? How do you think about what the runway is there? Yeah. So when we bought Biotheranostics, they were probably doing about $20 million of revenue on a trailing basis. It's about a $100 million business now, so certainly some nice growth. I think we'll continue to see strong growth out of that. Probably the percentage is going to come down. Obviously, we're going off a larger base, but we still think it's early innings in regards to Biotheranostics and the opportunity there. And just, I mean, that was your first sort of bigger foray into running a lab instead of selling product into labs. So just, is that an area that now that you sit here, having digested that business a little bit, you're excited about expanding further into? Do we think about that being something organic, inorganic? Just give us a little bit of sense for how you think about that lab business as opposed to, again, sort of selling into labs. Yeah, I would say that over the longer term, there's probably opportunities both organically and inorganically. But I would say in the near term, we're focused on efficiencies within the lab. How do we drive a little more leverage out of that revenue line? So very different from the rest of our business. And so it's still a little bit of learning and probably a little investing in efficiency for that business. So that's a little longer-term play. Perfect. Now to sort of the historic bread and butter, breast health, I want to start a little bit with a margin question. So chip supply was a big issue. It's pretty normal, I think you'd say, at this point. You still have a decent amount of higher-priced chips from when it wasn't that you're working through. What's the right timeline to think about and sort of pacing to think about that as we move through fiscal 2024 in terms of maybe one way to ask it is, a gantry sold today, when was that chip acquired? And how do we think about sort of the pacing there? Yeah. So we're certainly still working through that bolus of chips that we secured at a much higher cost. I would say that we're going to work through that over the course of 2024, maybe a little dribble into 2025. But to put it in perspective, I would say, from a cost of goods, the chips were probably less than 10%, closer to 8% of the total cost of the gantry. Now it's probably closer to 15%, so not insignificant. Perfect. And now maybe shifting to one that we used to talk about a lot more. I feel like we haven't as much lately, but the U.S. is pretty well penetrated in terms of 3D Mammography. Remind us where that is. And then internationally, sort of same question, where are we today? And how do you think about continuing to push that gap closed from 2D to 3D? Yeah, we're certainly in the late innings there. I think we would say that we probably have over 80% share of 3D in the US. That's probably closer to 30% OUS, so probably more opportunity to close that gap outside the US. I think it's, again, late innings. I think it's probably there's 2,000 gantry 2D in the US to convert to 3D. Think about when 3D was approved, 2011, our 3D anyways. And really, the uptick in the conversion was that 2014, 2015 time frame. So we're getting into average life, 7-9 years, that kind of natural replacement. I don't think it's going to be seeing what we saw, 2D to 3D. I think it's going to be more gradual, which is what we want, right? So we've been innovating along the way so that we've had upgrades, image quality, software updates that we've been selling to the installed base. So the customer has improvements in the 3D that they maybe bought five years ago. And that was to drive more of a steady state of gantry placements while we elevate our service business, which is recurring, elevate our interventional business, which is more recurring in nature and driving the growth. Perfect. And when we think about what the next big mover in mammography could be, whether it's kind of the next 3D, if you will, in your head, is it more something on the AI front? Is it contrast enhanced, where I think you've had some news relatively recently, a tool for patients with dense breasts? That's a topic I feel like we're hearing more about. Just what is that sort of next leg after 3D? Yeah, I would say, certainly from a next-gen gantry perspective, like I indicated, I don't think it's a 2D to 3D difference. We certainly are working on a next-generation gantry that will be focused on image quality, workflow, patient experience. So continually work with healthcare providers to make sure we're putting a product out there that meets their needs. I think probably the next big thing is more on the AI side, which is, how do we continue to improve workflow? How do we identify more cancers, reduce false positives? And certainly, we have that with our Genius already. And I think those are the things that will be the next bit. I mean, that could be, if you think about one of the reasons we're underindexed internationally, is there aren't radiologists, right? There aren't enough radiologists, even if you had gantries, to read the images. How do we get AI to help? How do we move from assist to maybe autonomous in that AI could close out a screening and say, "You don't have to read it. It's clean." Those are the things that could actually move the needle in countries where we're lacking in radiologists and just outside the U.S. in general. I think there's an interesting sort of next question from that, which is, you touched on it. You've made a lot of progress in sort of growing the service business and the recurring interventional business. But what does potentially having one of the bigger growth drivers, something that's truly sort of software-oriented due to the sort of recurring nature of the business, and then also to the margin profile? Because presumably, once you've stood up an AI tool, there's not a whole heck of a lot of incremental cost for loading it onto the next customer. Yeah, I mean, certainly, traditional software, obviously, typically is recurring and comes at a higher margin profile. I think for us, it's, how does it work into reimbursement, right, for screening is part of kind of what we need to see play out. I think the technology is probably further than the system ready to absorb it. But hopefully, that would be accretive, but we're just not there yet. Okay. Maybe shifting a little bit into surgical, I guess first, can you give us a little bit of an overview of some of the main products there and then how we think about the growth deltas between NovaSure versus MyoSure? And I do want to touch on Fluent after that. Yeah. So she said our legacy product is NovaSure, which is for treatment of heavy menstrual bleeding. I would say that is a market that is declining, and I think we see that in NovaSure and expected, right? While it's declining in the US, we are seeing actually nice growth outside the US for that product. MyoSure and some of our laparoscopic products, particularly Acessa, treat fibroids. And MyoSure has been this amazing growth driver as physicians continue to use it to access more pathology, more procedures versus reverting to a hysterectomy. How do we treat these fibroids less invasively? So I think we'll see MyoSure continue to be a growth driver. Fluent management actually complements that MyoSure procedure in dealing with fluid, and that has been a great organic story. That's something we developed internally and believe that Fluent is definitely going to be a growth driver. Then finally, again, coupled with the Acessa, our laparoscopic from our recent acquisitions should be driving growth faster than those legacy products. Perfect. And like I said, I want to dive into Fluent a little bit because I think it is a big growth driver of late and one that we maybe don't spend as much time on as I think we could. So maybe just give us a sense for sort of the revenue run rate there. And then how much of that business is that recurring FloPak component versus the upfront sort of instrument itself? So outside the Fluent business, both the capital and the FloPak, the disposable is about a $100 million business with about 90% coming from the FloPak, recurring in nature. And so, like I said, Fluent is a really eloquent solution for what was in a procedure, kind of messy issue to deal with, and so feel good about what that's doing. Then where are we in terms of penetration with MyoSure? I think those products work really, really well together, but not necessarily every MyoSure user is using Fluent today. Where are we there and how much runway is left just within the base before we even think about sort of expanding further? Yeah, MyoSure is that real case of certainly, our DML, when we bought that, didn't have it as the size it is today. I think maybe it was a $100 million business, but several hundred million now. I think, again, that market, we continue to grow the number of procedures that are used with that product. And again, that Fluent complements that, makes it a more eloquent, easier procedure for physicians. So I think we're probably in mid to late innings on that, though, but feel great about it. Great. I want to shift a little bit to the P&L. Thinking back to fiscal 1Q, it felt like there was a little bit of desire to sort of defend where margins are today and then also to note, "Hey, we're going to continue investing. We're going to continue building the growth drivers that are there." I don't mean that as a negative, but I think the message to me was a little bit, "Hey, low 30s is pretty dang good." So with that in mind, I guess the question is, how or where do you sort of draw the line there? Is low 30s just where margins kind of will be if you want to invest to maintain that 5%-7% top line? Or can these investments help you increase that durable growth profile as we think longer term? Yeah. So let's take, I think, some of my opening remarks. If we're growing the revenue, the top line, 5%-7%, we're going to grow earnings faster. Think about that as probably close to 10%. We're going to use the whole P&L. It's not just margin expansion, right? It's going to be the revenue growth itself. It's going to be probably, can we do something on the tax rate, share repurchase, etc., etc.? So we're going to use all of the P&L to drive that. I think it is a balance of, one, we're starting from a point of very rich margins for our industry, but is that balance, how do we continue to feed that organic pipeline to drive that revenue growth? I think ultimately, in our space, if we can move the 5-7, that is what's going to drive more value, and certainly PE expansion than just driving the bottom line through margin expansion. But I think the other reality is when we talk about our growth drivers, organics and newer products are likely going to have a lower margin profile. It's international, which has a lower margin profile. In acquisitions, likely will have a lower margin profile, but that gives us room to improve over time. But that's the reality. Okay, helpful. I think you have maybe the best challenge a CFO can have in that there's a lot of cash. There's a lot of kind of potential to do things there in terms of the cash balance. You've got $500 million ASR this year. You still have pretty minimal net debt. Obviously, M&A is something you continue to look at, but I thought the Bolder deal was a little bit unique and really interesting. So maybe just walk us through how and why that deal made sense now, and then your willingness to continue stepping a little bit further afield, right? That moves a little bit beyond kind of women's health and kind of how you think about that with the investment dollars. Sure. So yes, we sit here, as I talked about, and it's a position of strength with a significant cash balance that allows us flexibility to do a lot of different things. I think the Maverix deal is an indication of being a stronger, larger company in that we're able to do these things a little more creative to investigate new spaces. So think about lung as a leading killer from cancer, probably some similarities to our businesses from screening and diagnostics where we have a point of strength, right, that we could bring to that business. So this Maverix deal gives us the opportunity to invest without taking on significant risk in a new area, potential for the company. And I would say that today, we're not just focused solely on women's health. So think about our diagnostics business. Our respiratory assays are not just for women. Think about our surgical business. Our CoolSeal, our vessel sealing capabilities are not just for women. So we're already kind of beyond women's health, although that is our purpose. And just on that M&A front too, I think in the past, you've talked about, "Hey, the aperture could get a little bit larger, a little bit bigger just with that cash balance." Like I mentioned, you've put some of that to work. So when you sit today, what's the ideal sort of deal look like in terms of size? Would you rather, "Hey, here's a big bite of the apple," or, "Here's a couple smaller bites"? Just how do we think about your preference from that perspective? Yeah, I think there's a preference for on-market products, right, where we can bring our commercial strength, our execution strength, our strong operational strength to grow a product faster than a smaller company could, right? So I think that's one of the things we look at. What are our strengths that we can leverage? What is our confidence in that revenue growth, right? So we want things that are ideally accretive to our revenue growth rate. But certainly, what I would say is the bigger we get, the more important accretion to earnings is going to be. So there is a balance of what we look at. But as I sit here today, if we do go bigger, it's going to be something high confidence in revenue and accretive to earnings. Just as you look at the landscape today, any changes of late? It does feel like capital markets are starting to open up for some of those earlier stage plays that were really conserving cash and potentially coming to market. Just how do you think about what you see come across the desk today in terms of what it was maybe 6 or 12 months ago? Yeah, I mean, certainly, we have business development teams in each of our divisions that are all out there identifying assets, cultivating relationships. So there's been a lot of activity, even though we haven't done a lot of deals. I don't think we've seen a significant change. We're hopeful that as we go through 2024, there'll be a little more activity for us. Great. Then we're at the end of time here, more or less. I like to kind of open it back up to you to share, whether it's what makes you excited to work at Hologic, what you think the market maybe is missing most right now in how it thinks about the company or any sort of parting thoughts otherwise. Yeah. So I would say I would close that. I feel really great about where the company is and excited for our future. I think we have talked about there is chip supply. There is a question on margins. There is the USPSTF guidelines. I think there's some noise out there, but I think if folks spend time to understand them and kind of look below that and see what we're really delivering from results, I think folks would be excited about Hologic and the prospect as well. Perfect. I agree with that. We will close there. We'll head down to Amarante One for the breakout session. Thank you. Thank you.