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Hologic expects facility closures in diagnostics division

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Dive Brief:

  • Hologic said it expects to close an unspecified number of international facilities as it discontinues certain products and shifts strategy in one of its diagnostics businesses.
  • The women’s health-focused company, in a February regulatory filing, did not say how many employees could be affected by the facility shutdowns. The company said it expects to incur severance costs of about $4 million to $8 million related to the actions.
  • Due to the anticipated closings, Hologic recorded accelerated depreciation of $7.2 million and a lease asset impairment charge of $12.5 million in its fiscal first quarter ended Dec. 30. The Marlborough, Massachusetts-based company said it has begun discussions with works councils, which are bodies that represent employees in many European countries, in connection with the restructuring.

Dive Insight:

Hologic, which also makes imaging systems and surgical devices, reported a decrease in total diagnostics revenue of about 20% in the first quarter. Like other diagnostic test makers, Hologic has seen sales volumes for COVID-19 assays decline significantly as the pandemic has waned.

But a Hologic spokesperson told MedTech Dive that the international site closures and the company’s COVID revenue are unrelated. 

“The international activity is not connected to COVID revenue,” spokesperson Bridget Perry said in a Wednesday email. 

The actions in the diagnostics division are expected to be completed by the end of calendar year 2024, Hologic said in the filing.

The international facility closures come two years after Hologic finalized a decision to shutter an operation in Danbury, Connecticut, where it makes breast health capital equipment products. Manufacturing of those products is being transferred to the company’s Newark, Delaware, facility, Hologic said. Research and development, sales, services support and administrative functions are being transferred to Newark and a facility in Marlborough, with the transition expected to be completed by the third quarter of fiscal 2025. 

The Danbury employees were notified of the closing in the first quarter of fiscal 2022, and most were given the option to relocate to the new locations, Hologic said. The company estimated total severance charges, including for retention, of about $5.9 million.

Hologic employed 6,990 full-time staff worldwide at the end of its fiscal year 2023 and 6,944 full-time workers at the end of fiscal 2022, according to the company’s annual reports.

Hologic Chief Financial Officer Karleen Oberton told The Wall Street Journal in a recent interview that the company has avoided large-scale layoffs by carefully managing hiring levels.

“We collectively had a philosophy that mass layoffs are a failure of leadership,” Oberton told the Journal.

Susan Kelly

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