Hologic, Inc. (HOLX) Earnings Call Transcript & Summary

Okay. Good morning. We're going to go ahead and get started. I'm Tycho Peterson from the Life Science team. It's my pleasure to introduce our next company this morning, Hologic. For people that want to do the breakout, you can submit questions through the website. And with that, let me turn it over to Steve.

Great. Thank you, Tycho, for having us. Even in this letter a couple of years ago, Larry Think wrote, society is demanding that companies, public or private, serve a social purpose. Well, we're here today, fully embracing that exact spirit. And not only that, we'll go a step further. We can argue today the Hologic, and I would argue, is the very epiphany of such a company. We're incredibly purpose-driven with a highly engaged team of employees waking up around the world every day wanting to make a positive difference in the world. And our intentions and successes are being felt by millions of people around the world every week, and thus, benefiting our shareholders as well. We've never been stronger. And the stronger we become, the more lives we are able to impact around the world every day. And so with that, as you see, the cover slide, is all about growing stronger by delivering on our purpose, passion and promise. So if we move through the safe harbor statement through the non-GAAP to the presentation outline, we'll really cover a few things here today. One is a little further introduction, building on what I just said. And then what we're doing to make a massive difference in the world today in the battle against COVID-19. But very importantly, how this is going to make us a much stronger company on the other side of the pandemic, and then we'll hit you with the financials and conclusion. So we can move now to Slide 5, what makes us tick. As I said, when you're part of Hologic, there's something pretty special, in that we have this strong purpose of enabling healthier lives everywhere, every day. But this passion of being the champions of global women's health. Think about it in simple terms. Every one of our employees is either a woman or has many women in their lives who have probably already been impacted or will be impacted by our technologies. And we know that when somebody has breast cancer, cervical cancer, sexually transmitted infections, fibroids, anything, abnormal uterine bleeding, we want them to be using our products. And certainly, in the world of COVID, we know if any of us are getting tested, you certainly want a Hologic test, and that promise around the science of sure. And these aren't just words on a wall, these are genuinely felt every day by our teams around the world. And if we shift then to the next slide on the investment thesis. We are the unrivaled leaders in women's health, making a huge global impact in the fight, and we are remarkably proud, and I would argue it will stem from the purpose that our people feel that all of our franchises in all of the geographies around the world returned to growth, as you may have seen, in our prerelease last week, clearly outgrowing the market, and we'll talk a little more about that. The other piece that we're incredibly focused on is building on our core businesses so that we're even stronger coming out of this. And so every decision we have made all through this last year around COVID has been with an eye to the future as well. And we do have a distinctive culture, rewarding performance and courage, and I'll touch on that in a little bit. We'll shift now to the presentation outlined as we go to the next piece, which is making a massive difference against COVID-19. And we thought the next slide, picture's worth a thousand words. I would like to tell you this slide was taken at 3:00 am on Saturday morning, May 2. In the very front of that, you can't read it from there, but with the people laid out, it says Aptima SARS-CoV-2. This is the R&D team that developed our second EUA, the application and developed the TMA assay, which has become a major contributor in the world. And this was our team literally at 3:00 am on a Saturday. You talk about purpose, this is what it's about, a diverse team of people that -- and I can't tell you how hard they were working through March and April and our team leader, Barbara Eaton right down there, in front with her proud team literally at 3 in the morning as we submitted that. And we have stories like that all around this company. We have engineers that flew to Korea and were sequestered on an army base while they installed Panthers. And I could go on and on and make this entire thing pictures showing how special our teams are. But we'll move now to the next slide, which is that we did develop 2 tests for COVID-19 in record time. And as one of the leading firms, obviously, this is critical. And I would tell you, when we first developed the Fusion test, we didn't even know if there would be a market beyond that. And this will be something else we touch on a little bit as we go through this, this morning. But at the end of the day, we made that decision to also develop the TMA assay. And when you talk about a purpose-driven organization, we've done the same thing before. We did it for Zika. We did it for H1N1. We did it for Ebola. And in many cases, the revenues and profits never even paid out on the investment. When you're purpose-driven, we didn't even think about those decisions. We just said the world needs us. We don't know what the models are going to bring, but we're going to develop them, and we're going to work around the clock to get these to market. And while our R&D teams were working, so were our supply chain teams to get ready to scale up the production. And today, we have an incredible test that is run on our Panthers. And as you go to the next slide, of leveraging this huge Panther installed base. Again, we want you to think about as past present future here. You see everything we were doing in the 5, 6, 7 years leading up to last year, our strategy was to be placing more Panthers around the world and then adding more menu to it, and that was driving very strong diagnostics growth. But what it also put us was in a position where we had over 1,800 Panthers, already installed around the world when the COVID-19 pandemic hit. And when people needed to get results and they had Panther sitting literally in all 50 states and in many countries around the world that gave us the opportunity to be there and deliver for our people that needed tests. And then what it further did is our teams ramped up dramatically the production of Panthers and installed -- we installed over 500 in fiscal 2020, as you can see there. And as we just announced on Friday, we also placed about another 150 just in the last quarter, which is our first fiscal quarter of '21. So again, on a very strong trajectory, all of which makes us that much stronger coming out of this. Shifting to the next slide, titled dramatically increased production. We're incredibly proud of what we've also done on this. And I'll just show you something quickly on the bottom of this slide. When you look at the 4Q '20, which is really the July to September period, we delivered 25 million COVID tests. Now for perspective, in the history of our company, we've never made much more than 21 million tests in a quarter on all of our products combined. So we continue to deliver on our base and added this on top of it more than we'd ever produced in total and continue to ramp that up here in Q1 and we continue to ramp production as we go forward. So that labs can deliver results when and where they are needed. We shift forward now to the next part, which is how we become a stronger company post pandemic. And that is, if we go to the slide that's titled long term need for COVID-19 testing. You may not be able to fully read the little cartoon over there on the right, so I'll read it for you. It's a doctor looking at his patient saying, at first glance, you have an arrow in your head. But just in case, we'll do a COVID-19 test just to make sure. And I think all of us trying to predict exactly what are the volumes going to be on a go-forward basis. Let me tell you right now. We can't tell you what they're going to be. What we can tell you is, so far, we've never seen a societal need for diagnostic testing unlike this. And we believe the emotional toll is going to last far longer. And I'll go back to this so far. If you look to date, when we made the decision in March and April, that we were going to dramatically expand our production by September, October for the fall, people will forget this now, but at that point in time, there were a lot of people thinking, well, it'll be done by then. This thing is going to run its course here in the spring, yes, why are you going to need that capacity? And we were questioned about expanding that capacity in the spring for even the fall. As the summer rolled out and things like some of the antigen tests and rapid tests got approved. The question is, okay, this is going to go down. You're not going to be persistent into the fall and winter. Then the question about vaccines, and we've been saying it from the outset, everybody thought as soon as vaccines came, testing is going to go away. I think everybody is now seeing the realities of rolling out vaccines, of distribution chains. There is so much more complexity. And so far, it may not always play out. But so far, every single time, something has happened, this market, we believe, continues to grow and continues to be strong. And while it will certainly come down at some point, we believe it's going to be stronger for longer. And fundamentally, what we also believe is that our product and in addition to the needs, but when you look at what we have in terms of an asymptomatic label, in terms of the geographic dispersion of our business, everything else, that there will be a need for Hologic testing. And ultimately, people will coalesce to the most efficient system and one of the best systems, which is our Aptima SARS-CoV-2 assay. So we feel very good about where we're going. As we shift to the additional slide here, Slide 14 of Panther placements that turbo charge the diagnostic business model. Again, as we mentioned, we're placing more Panthers. But in every case, as we've been responding to our customers' needs for more Panthers, we have also been booking more and more revenue on additional assays that they've not yet taken on. And so for example, even as our Panthers now start to replace TIGRIS, our TIGRIS system only has 4 assays approved on it. Our Panther system has 18 today and continues to grow. So as the COVID revenue comes down, we have a whole bunch of pipeline assays ready to go on Panthers that we're holding back and our customers are not putting on them. They had committed to buy them, but they're not putting on yet because they're running so much COVID testing. So we have a natural offset, will it be 100% offset? May be, may be not. Probably not. But at the end of the day, we have a lot of pent-up demand that we'll be kicking in on to these new product. Shifting to Slide 15. We also announced a couple of acquisitions last week. One was Biotheranostics. And the way we're thinking about our capital allocation right now is to take the revenue and profits and the cash that we're generating, but to continue to strengthen our business for the future. We've been approached by every banker under the sun wanting us to get more COVID business. And every company that wants us to distribute their product. At the end of the day, and we're still thinking about our core businesses and how we strengthen those. And so our Biotheranostics business, which is PCR testing in the breast cancer space, a great fit for us as we continue to broaden out our businesses over time. And speaking of the Breast Health business, our leadership across the continuum there, as you see, Slide 16. We've been talking about this for years as we've diversified that business, our Breast health business under Pete Valenti's incredible leadership. When he first joined the company to when he just retired a week or 2 ago, which was all about diversifying from a capital equipment business to following the patient across that continuum. And we've continued to do that, including with the Somatex acquisition and in the best -- the biopsy in breast conserving surgery space as we've been doing, and that has made our Breast Health business increasingly diverse, as you see on Slide 17, and has made it much more resilient to the fact that again, think about this, capital equipment business and many people were thinking would be really on the rails for a number of quarters here. And in the U.S., in Europe and Asia Pacific. We generated growth in our Breast Health business here in the quarter that we just reported, all because of diversifying this business and making it less dependent on just the gantries. The other business that's rebounded strongly is our Surgical business. And as you can see on Slide 18, this business was recovering very nicely on the quarterly growth rates through 1Q of last year and into that second quarter, we were on a 13% pace, still ended up about 4%. And then obviously, the bottom fell out there in that second quarter, really our third quarter, second calendar quarter. But we're remarkably pleased at how that business bounced back and actually just posted growth. And again, when we look at all the physician visit data and everything else, we don't think that was a growth category in a growth business necessarily, but our team did. And how did we do that? We're going to go to another slide of what we call a picture's worth a thousand words. And what you see in this slide, it may be a little hard to see there is our surgical sales leadership team early last year, really late the previous year. Obviously, it's pre-COVID. They're not all masked. They're not socially distanced. We can't wait to get back to that world again. But sitting on the front step in the middle of that picture is Essex Mitchell, who had joined our company as VP of Sales a few years ago and recently got promoted to President of our Surgical business. And what you have there is a highly engaged team that's dramatically accelerated the performance of our Surgical business. I'd also like to tell you that was taken in one of our manufacturing facilities. But I'd be wrong, I do think it was taking a brewery at a sales meeting, but anyway, the team is delivering and having fun along the way. And that provided incredible resilience, particularly when our Surgical business, literally in the first weeks of April last year had plummeted by 90%. And that's where that belief and trust and the purpose of our organization, the belief in our leadership kept them going. Shifting on to the next slide, called realizing our international detention. It's was only a few years ago, a few years into my tenure, when we were really struggling in international. You can see in the first 3 years, really had gone nowhere. And then finally, as we started to get the international leadership behind Sanjay Prabhakaran over in Asia Pacific and then Jan Verstreken joining in early '17, what we've really put together is sustained double-digit growth in our international franchises here and very, very aggressive. And we're now in positions of strength, even just a few years -- that we weren't just even a few years ago. So able to do a lot of things. And that brings us to the next slide here, which is our strong cash flow is creating a unique opportunity. And I think in real simple terms, obviously, we're very comfortable in our leverage of 2 to 3x. But as we're generating more cash right now, it doesn't mean we're going to necessarily have to feel the need to spend it. We're in a position of strength today that we can be very selective. And we haven't always been in that place, and in fact, too, this company has never been stronger. And the best way to do really good business development deals, in my mind, has always been have a strong foundational business that you don't need to do anything. And so now we are able to opportunistically supplement our businesses as we go. And that's really pursuing those growth accretive acquisitions. We also, as you saw, bought back some additional stock. We paid down some additional debt. So our balance sheet never healthier, and gosh knows, very, very different than where it sat in early 2013. Shifting to the final slides here, just the financials and conclusion. I want to go back to right here on slide, whatever it is, the organic revenues more than doubled, Slide 23. We are incredibly proud that literally every business, breast health -- except for Latin America, breast health grew globally. Surgical grew globally, Skeletal grew globally. And obviously, diagnostics, tremendous. But we think that is an incredible accomplishment because of the heart and soul of how our teams are showing up around the world every day. And we say, literally, in a lot of these geographies for Surgical and Breast Health, they were only marginally positive, 1% growth, whatever, but they were still growth. And it's because every single sale, every single support, every single person showing up every day for our customers. And as you take a longer-term look on Slide 24, for all the puts and takes, we divested blood screening, we acquired Cynosure, we divested Cynosure everything else, when you really play it out, it's been a fairly remarkably steady growth in revenue and obviously helped last year by our responses to the COVID crisis and everything else. And clearly, we're on track for a very good 2021. On the EPS side as well, some very strong growth in some of those early years there. Frankly, those are years, I wish we could have put more money into R&D, but we didn't necessarily have the teams or the program yet fully baked. And as over the last few years, as we started to fire on all cylinders, really able to show some very nice numbers. And we're going to end on a slide, and this is a slide of our leadership team in our Marlborough conference room, not in the room we usually meet it. This one is much bigger. But this was our Marlborough global leadership team or our global leadership team meeting in Marlborough, Massachusetts in August. And as you can see, our team showed up this year. I talked about our culture being a little different. What I'm also remarkably proud of and we didn't have a picture to show you is our Board of Directors actually met 3 of the 4 meetings last year in-person. We met in-person in March. And then after taking the June meeting virtual, they came to our facilities in September and did it again in December. And I opened on talking about our purpose and passion. And I will tell you that I am so proud of both our leadership team, every member of our company and even our Board of Directors who was incredibly engaged believe so strongly in our purpose. And in a year when a lot of people were not necessarily coming together, we believe this is making us even stronger for the future. And so we're going to end here on this is all about this company growing stronger by delivering on our purpose, passion and promise. We've never been stronger. We've never been prouder. And we have never been more united in what we are doing for this world. So thank you. And Tycho, we'll kick it back to you now.

All right. We'll jump into Q&A. Steve, I'll start with a pre-announcement. It seems like a lot of the upside relative to what you guided to was around the manufacturing scale-up. You did 30 million tests, you did 25 million the quarter 4. I know you've got the target of 75 million tests by the back half of '21 out there. But how should we think about the manufacturing scale-up? And separately, it looked like pricing also went up. I assume that's just mix shift per test more toward the syndromic versus stand-alone COVID testing, but can you also touch on pricing dynamics?

Yes. The -- on the back end of it, it's really more -- it's -- we've still been selling all of our base COVID product. So what we've been getting reasonable pricing for it. There was some mix in terms of smaller customers, other things. But overall, we feel very good about how that's been holding up. And really, it's been continuing to knock down the barriers. I can tell you, and it's part of -- as I think you know, we've been coming to work every day. And we've been able to work through issues in such incredible real time. The stuff Kevin Thornal has knocked off day in day -- hour by hour and what our operations teams in terms of tubes, caps, swabs, labels, just unbelievable amounts on supply chain, getting multi-tube units. Everything that we've been scaling, we find that another issue in the supply chain is going to hit us, we just keep knocking it down. I'm so proud of what our supply chain folks have done. So we're on track to continue that expansion. If you walk through -- I know you've been to our facility here in San Diego, it looks like a construction zone. We have so much stuff under construction. While we're expanding our capacity, the hallways are filled with boxes of incoming stuff, and our team is working literally around the clock to continue to scale it. So we will be continuing to scale it. I have a call later today. We could -- by the administration, asking us continued questions of, can we continue to scale our capacity and we are.

How about a test for the new variant? I mean should we think about kind of the menu evolving as COVID evolves?

Like everything, we will always evolve. I think it's part of where we feel really good about our existing molecular testing. This is where molecular testing, again, will prevail. When you need to figure these things out, understanding at the molecular level, not the protein level, is going to be so critical to these variants. It's why we think we're incredibly well poised as we go forth. And the ability to respond very quickly, given our technology, we can do that. But right now, we feel good that we capture those.

There were some interesting news recently at the Buffalo Bills partnered with BioReference Labs for asymptomatic testing before fans going to the stadium. I think a lot of people had assumed that would be kind of antigen testing. It's not. It's PCR. So like how do you think about that opportunity for kind of wider scale asymptomatic testing of some of these populations as we think about getting back to normal?

First off, as a long time Bill's fan, it was nice to see them back. And it was great to see some fans in the stadium. I know how much that means to especially the people of Buffalo. But at the end of the day, to get back to normal activities, it is going to be about screening asymptomatic people. We have a label for asymptomatic. And quite frankly, most tests today are being used off-label. If we could provide more capacity, we could probably help alleviate that. But I think it's why we feel so strongly that on an ongoing basis, we are going to be there. Because as we try to get people back-to-school, as we try to get back to, let's look to the day. There will be concerts again. There will be stadiums full again. But part of that is going to be really understanding asymptomatic people. And back to so much of the stuff right now. It is truthfully being used off-label. We are being used on-label. And then ultimately, we also have pooling. We have so many capabilities that should uniquely position us down the road to sustain this business on a much longer basis. And you know, the governments around the world are going to be very focused on population health, population screening, people will in be everything else. And right now, it's basically still -- always can't make enough tests as the demand is there for. Ultimately, it will soften. The demand will come down, but it will become a share gain. And I think we've proven ourselves as well. When you have the best label, when you have the best throughput, the turnaround times, the risk -- the accuracy of results, everything that we have, we should emerge as a major player as we always do.

I think you previously talked about COVID demand tailing off in the back half of this fiscal year, there was -- the vaccine gets rolled out more broadly. Is that still your view? Or do you think there could be maybe more durability than you'd previously assumed?

It's so hard to know. Common sense would say to me that the market has got to tail off come -- and just from a human health and societal standpoint, I want people to get vaccine. We want to get to some herd immunity, everything else. I think having said all of that, right, we're seeing where we will be on the vaccine curve with mutations, with everything else that certainly through this cold flu season in the Northern Hemisphere, I think we feel it's going to be incredibly robust for quite some time. As we go into spring and summer, you have to assume the marketplace is going to come down. We're certainly assuming there'll be some tapering of our own demand. But I think the truth is, we don't yet know. And I could envision a scenario where the market demand compresses dramatically. But our demand could stay pretty strong because we think we're going to be one of the players left standing. So again, from our pragmatic forecasting standpoint of being financially prudent, are we baking continued growth into our forecast, not necessarily. However, we're building the capacity to be there. And everything we've done from the early days as Tycho has been, I hate to say, but reacting the stuff in the moment. You know that we couldn't have given you numbers for the September quarter and even April and May, so we couldn't even imagine them the next quarter. And so we're kind of going quarter-to-quarter operationally. But we do believe, at a bare minimum, this is going to be our largest assay for quite some time.

How about the strategic placement of Panther? I know that's something you've been pretty vocal about. Are you trying to get them in accounts that have more durability? I think there's more of a bias into the U.S., about 60% or so of those placements. But how do you think about the placement of Panther system throughout the course of this year? Will they continue to be at kind of the higher throughput settings, the Quest and LabCorps? Or is there going to be some kind of mix shift dynamic?

We -- it's astounding the level of demand of Panther is continuing. We obviously just saw, we placed over 150 just in the last quarter alone. If I look at what we placed in fiscal '20 or calendar year '20 versus calendar year '19, just an astounding increase. And we continue to see it top to bottom across the board. The great part for us, it may not be fully baked in and understood is truly question LabCorp embracing Panther and shifting from TIGRIS to Panther. There are so many benefits from us over time, including not having to support 2 systems. But also we've now got them broadly adopting Panthers into their networks as they even realize. And things like the reimbursement change of the results have to be back within 48 hours to get that additional a $25 charge, everything else, you can't do that when you're flying everything all over the place. So even they've understood, you know what, we've got to have more Panthers in more locations. The hospitals that we operate with. The -- all of the other regional labs, very big. Internationally, our -- we are on the radar now of Ministers of Health and everything around the world in ways -- they never even knew who Hologic was 9 months ago. And now we're a major partner to them. And so right now, we can -- still can't make enough Panthers. I think the demand here will continue to be strong at least for the next few quarters, all of which is just going to continue to give us more runway to throw more assays on post this pandemic.

Well, it's great to see the core molecular business recover this quarter, too, right? So you are seeing some recovery there. Can you maybe just talk to menu build out priorities? I mean, you've got the 18 assays on Panther. What's kind of top of mind for your customers? And can you do it organically? Or do you need to complement with M&A?

Yes. It's both. First off, we've -- obviously, a lot of what we were working on, we sidelined to get the COVID assays done. And so everything that we already were working on is still in the pipeline to come. So we feel good about that. And yet now also, especially with the additional placements internationally. There are some smaller menu items that maybe we can contract or whatever, add because we've used so many of our R&D resources, and frankly, production resources, everybody -- quality, everybody has been so focused on COVID that we may use some external. And I think acquisition could play a role in some additional menu expansion as well.

Maybe on that note, Biotheranostics. Can you just talk a little bit about rationale for the deal? What does that do to the molecular TAM? And how do you think about synergies with the rest of the Breast Health business?

Sure. We see it as -- it's an area -- first off, Biotheranostics is a company we've been looking at for years. And I was talking to Allan Harris who worked on the deal. He joined us about 5.5 years ago. He had visited them literally in his first week on the job. So we've had a long relationship of watching what's happened to them and felt like they were getting to a point where we thought they've really built out a very nice business. It's right down the street from us, which is wonderful. And we wanted, frankly, to get into the CLIA lab space for a number of reasons. But I think this is such a perfect fit for us in that it's PCR technology. It's in breast cancer. It's on that, both Breast Health continuum that we have talked about, and it's core to our diagnostics business as well. So while it's a slightly different call point in terms of the primary piece of the medical oncologist, there's a lot of influence from the customers that we already talked to. So we view this as a great ability to expand our core and get into a CLIA lab, but also give us a chance to experiment with more products and develop some things prior to able to put them over on the IBDs. But just a market that, by the way, the breast cancer recurrent, the economics of it for the patient and for payers should be good as well as just the ability, especially to get women off of endocrine therapy after 5 years if they don't need it. And again, there are so many side effects of products that many men will diminish. But when you look at the ability to get women off of endocrine therapy, who do not need it anymore, that's a great, great improvement in their quality of life. And frankly, it's going to save the payers money. So there's a lot that we like about it, and the team and the cultures are very good. Kevin Thornal's gotten to know the leader over there. The teams literally doing diligence and everything else. We've had a relationship with them for quite some time.

Maybe just segueing into Breast Health overall. I think you noted in December that you're back to -- for screening 90% of pre-COVID levels. How do you think about kind of the continued recovery there, the CapEx environment? And some of the gives and takes for the rest of the year on Breast Health?

Yes. I think for pragmatic reasons, and again, I'm probably one of the few CEOs old enough who've lived through the '08, '09 downturn as a CEO. So clearly, and as Karleen and I spoke a lot in the very early periods here, expecting capital could really get ugly. And clearly, it got frozen here and there, but it is not as bad as we would have anticipated. Certainly still down. And I think as customers are figuring out how to reallocate and thinking about their CapEx budgets for '21 and '22, certainly still some pressure on the CapEx line, but nothing like what it was in the '08, '09 downturn. And then importantly, it really is the validation of the strategy. You've covered us long enough. You remember that our Breast Health business was always boom bust. And from the time we arrived and Pete Valenti joined me in early 2014, we said we were going to break the cycle of boom bust. And the ability of what we've done diversifying with Focal, Faxitron now, so that everything coming in and getting that business more global and more diversified really insulates us. So I would expect capital to still be down a bit here for the coming quarters, but down probably high singles, low double digits at worst, probably versus the down 30s and 40 -- the down 40% that we experienced back in the '08, '09 time period.

And you mentioned a number of the acquisitions you've done there. I mean, do you feel like you've got a complete portfolio and maybe the M&A emphasis will shift to diagnostics? Or is there still stuff to do in Breast Health?

Yes. I think there's always some things -- what's always fascinating and I think as you get into businesses and when you build them out in the way we've been building out Breast Health and the way we want to build our diagnostics, when you build them out incrementally from our core, and it's what we did in my Stryker days, it's what we're doing here with the notable exception of Cynosure that we learned from. When you're building out from your core, what happens is you see a market that's a little bit adjacent. We think it's like with Biotheranostics that you see something there, and then you get smart there. And then you start to see other things that start to pop up. So there are incremental steps that maybe if you went from here to there in one step, you wouldn't. I think Breast Health -- I thought we were done a few years ago, there wasn't much more. The team keeps finding new things. And we keep seeing new technologies evolve. And also when you're the leader in a space, you start to have more and more of the ideas come to you from other people. So I would say there will be still opportunities in Breast Health, that we're going to find more opportunities in Surgical. I feel really good about some of what that team is uncovering right now in addition to assess that. And then clearly, diagnostics continue to build out. We're building out smartly, not just, again, if I could tell you how many bankers we've had, nothing against bankers, you're praising on the other side. But everybody's been pitching us on ways to spend money here over the last 4 to 5 months once our success was obvious. We're staying really disciplined as we go forward.

Maybe one last one and closing GYN Surgical. It had a big swing in the first quarter, up 3% versus down 13%. Just talk to maybe the durability of that recovery? Are we kind of out of the woods at this point?

I think given even some of the recent setbacks of in COVID, you could see December countries starting to -- or states in the U.S. starting to shift back. We're clearly dependent on elective procedures and everything else. So how far it continues to grow, that may be a little muted here in the coming quarter. And having said that, we just love the underlying trajectory. That team is -- there is no way that market grew 3% last quarter, zero chance. So our team continues to win over customers and now having Acessa in the bag and additional MyoSure Fluent and Omni, we've been broadening out that business, and it just keeps getting stronger and stronger. So I'm not ready to say, hey, totally out of the woods, but that team as much as any. Really, the teams around the world just blew my mind as we watched the quarter unveil because I kept thinking there's no way Surgical is going to grow. There's no way Breast Health is going to grow. Last quarter, I kept challenging the teams. And day after day, week after week, the numbers just -- we're defining gravity a little bit. How long we continue to do that, we'll see, but I do believe it's back to -- even our Breast Health teams, our Surgical teams, they're so proud of what the company is doing. I fundamentally believe they're waking up with a bounce in their step, stronger, whether -- even if you're in the Surgical organization or the Breast Health organization because you know who you work for, and it's made a big difference.

Great. We got to wrap it up. We're at the end of the session. So Steve, thanks for taking the time. Enjoy the rest of the conference. Talk to you soon.

Great. Thanks, Tycho. Thanks for having us.