Hologic and CTI report improved fiscal results for first quarter 2004

Popularity of PET, digital mammography boosts product sales

Good news for the quarter past and a promising outlook for CTI Molecular Imaging and Hologic gave the industry reassurance that two bellwethers of technological progress-PET and digital mammography-are on track.

On Feb. 3, CTI Molecular Imaging reported that net revenues grew 22% to $74.1 million in the first quarter of fiscal 2004 and the company's backlog of standing orders for PET systems went up 50% to nearly $228 million. The same day, Hologic announced that revenues in the first quarter fiscal 2004 had produced net income of $1.04 million compared with a net loss of $1.08 million in the year-earlier period, and that bookings leaped to a record backlog of more than $57 million.

On the net revenue side, CTI was the star, achieving net revenues of nearly $14 million over last year's net of $60.6 million for the same period. Net income, however, lagged the previous year's performance. The company eked out just $0.7 million compared with $3.4 million in the prior fiscal year's first quarter due largely to a continuingly competitive marketplace.

Conversely, Hologic's total revenue sputtered, rising a modest 2% to $49.88 million in the quarter ended Dec. 27, 2003, compared with revenues of $49 million in the first quarter of fiscal 2003. Its net income, however, soared on improved margins achieved with its digital mammography system, Selenia, and decreasing expenses associated with planned reductions in the general radiography business.

Bright spots for both companies were their backlogs, which indicated increasing demand for both PET and digital mammography. Standing orders for CTI equipment rose to $227.7 million, an increase of $76.1 million over the previous year's quarter. Hologic carried forward a backlog of 74 digital mammography systems, a 41% increase in orders over the immediately preceding quarter.

During the first quarter, CTI shipped 26 scanners and booked orders for another 55. CTI's direct distribution arm, CTI Solutions, shipped five of these scanners and booked orders for another 19. The other scanners were supplied to Siemens and Hitachi, which sell CTI technology under their own labels. Particularly encouraging was the 16% growth in orders among these companies after several flat quarters in a row.

The overall backlog bookings might be attributed partly to the future availability of the company's new LSO (lutetium oxyorthosilicate) HI-REZ detector. The detector, which promises higher resolution and potentially faster scans, will begin shipping late in the second quarter.

The company's other PET-related business, PETNET, showed dramatic improvement, at least in volume. This part of the business, which supplies FDG to end users, jumped 50% in the number of doses sold over the prior year's quarter. This growth, however, was partially offset by a 4% sequential decline in average price.

Hologic focused on the rising popularity of its full-field digital mammography systems. The company installed and recognized as revenue 27 Selenia systems in the first quarter. It reorganized how it groups sales into four market segments: mammography, osteoporosis assessment, digital detectors, and all other. Management lumped into the latter segment Hologic's mini C-arm, conventional general radiography service, and digital general radiography systems businesses, reflecting its decision to focus on the sale of DirectRay detectors to OEMs incorporating those detectors in general radiography systems. At the same time it is phasing out its own sale of general radiography systems that would otherwise compete with these OEM products.

In this mix, mammography revenues increased 3% to $22.49 million for the first quarter of fiscal 2004 from $21.8 million for the same period in fiscal 2003. Osteoporosis assessment revenues dropped to $16.56 million for the first quarter compared with $16.64 million for the same period in fiscal 2003. Digital detector revenues increased 47% to $1.72 million from $1.17 million for the same period in fiscal 2003. All other revenues decreased 3% to $9.12 million from $9.4 million for the same year-earlier period.