Shares of Hologic Inc. (HOLX) inched up 1.1% following the company’s recent announcement of major upper management churns, including some organizational restructuring.
Plagued by challenges like declining revenues in the core segment and the ongoing shift to 3D tomosynthesis technology leading to lower sales of legacy products, this global diagnostic, medical imaging and surgical product making company catering to women’s health expects this restructuring initiative to achieve corporate objectives including organic growth and executional excellence on a global level.
The company declared that Glenn Muir, Executive Vice President, Finance and Administration and Chief Financial Officer, is set to retire from his current position. However, Muir will stay with Hologic till the end of Nov 2014 to ensure seamless transition. The company is currently looking for Muir’s successor.
Bidding adieu to Muir, the company also announced the name of its new Chief Operating Officer (COO). According to Hologic, Eric Compton, worldwide President, Ortho Clinical Diagnostics for Johnson & Johnson (JNJ) has been appointed to this newly-established position of COO. Compton has earlier worked with The Procter & Gamble Company (PG).
Further, Claus Egstrand has been selected as the company’s Senior Vice President and General Manager, International. Based in London, Egstrand will look after the company’s overseas operations. Previously, Egstrand has worked with companies like Merck & Co., Inc., and Stryker Corporation (SYK). In addition, David Harding has been promoted to the post of Senior Vice President of Corporate Strategy from his earlier position as Hologic's Group Senior Vice President and General Manager of Women's Health. All these three new positions will be effective from Apr 14, 2014.
Over the past few quarters, Hologic has witnessed several challenges in the form of economic uncertainties in Europe, slower sales cycles and increasing pricing pressure.
Further, Hologic is banking on Gen-Probe offerings to expand margins. Product revenues in mammography were down slightly on a year-over-year basis primarily due to the ongoing shift to 3D systems. Further pricing pressure could also adversely affect this business. Moreover, shift of orders from the 2D to the 3D Dimensions tomosynthesis mammography systems proved challenging as customer readiness requirement for tomosynthesis is more extensive in the 3D systems than in the 2D version.
Nonetheless, Hologic is leaving no stone unturned to consolidate operations and realize potential synergies. Management seems to be strategically prepared to get over these challenges soon. The major goal of management is to sustain top- and bottom-line organic growth. The strategy for this is to accelerate the performance of the major growth drivers at the company, i.e. Diagnostics, Breast Health and Surgical, and establish a strong foothold globally. The new executive leadership structure, if they are of any indications, should help accelerate organic growth in each of the company’s businesses on a global basis, and improve operational and financial efficiency going ahead. Currently, Hologic carries a Zacks Rank #3 (Hold).