Good afternoon, ladies and gentlemen, and welcome to the Hologic Inc. First Quarter Fiscal 2013 Earnings Conference Call. My name is Kelsey, and I'm your operator for today's conference. [Operator Instructions] I would now like to introduce Deborah Gordon, Vice President, Investor Relations, to begin the conference. Please go ahead, Ms. Gordon.

Thank you, Kelsey. Good afternoon, and thank you for joining us for Hologic's First Quarter Fiscal 2013 Earnings Call. The replay of this call will be archived on our website through Friday, February 22, and a copy of our press release discussing our first quarter results as well as our second quarter and fiscal 2013 guidance is available in the Overview section of the Investor Relations section of our website. Also in that section is a PowerPoint presentation related to the comments that will be made during today's opening remarks. Before we begin, I would like to inform you that certain statements made by Hologic during the course of this call may constitute forward-looking statements. These statements involve known and unknown risks and uncertainties that may cause the actual results to be materially different from any future results implied by such statements. Such factors include those referenced in our Safe Harbor statement in our first quarter earnings release and in the company's filings with the Securities and Exchange Commission. Also during this call, we will be discussing certain financial measures not prepared in accordance with Generally Accepted Accounting Principles, or GAAP. A reconciliation of these non-GAAP financial measures to the related GAAP financial measures can also be found in our first quarter earnings release, including the financial tables in that release. Please note, today's call will consist of opening remarks from management followed by a 30-minute question-and-answer session. So we do ask that you please limit your question to just one and, as the time permits, we'll be more than happy to take your questions at that time. I would now like to turn the call over to Rob Cascella, President and Chief Executive Officer.

Thanks, Deb. Good afternoon and thank you for dialing in to Hologic's first quarter call. Joining me on today's call are Glenn Muir, our Executive Vice President and CFO; and Peter Soltani, our Senior Vice President and General Manager of Breast Health. Today, we have a full agenda and a lot of things to comment on. I'd like to first start up by summarizing our first quarter performance; discuss the recent publication of the Oslo study and its implications on reimbursement; review the market adoption of our 3D tomo product; update you on the progress we're making in the integration of Gen-Probe, including recently announced organizational changes; discuss the sale of LIFECODES; review key products in our diagnostic franchise, including an update on the PANTHER rollout; and provide a brief review of some of the other key businesses. I'll then turn the call over to Glenn who will discuss financial results and provide an update on our guidance. We'll then open the call up for Q&A. So about the quarter, we believe we're off to a solid start for '13. We grew our adjusted revenues by 36.4% to $644.6 million, which was at the high end of our guidance range. Our 3 largest business units, Diagnostic, Breast Health and Surgical, all experienced year-over-year growth. Adjusted earnings-per-share were up 11% from a year ago to $0.38, which was $0.01 higher than our guidance. Importantly, these results were achieved despite continuing macroeconomic headwinds, as well as challenges posed by Hurricane Sandy, which we estimate impacted our total revenue by about $5 million during the quarter. We made great progress integrating Gen-Probe, which allowed us to accelerate planned organizational changes. We had a very, very successful RSNA with stronger customer interest in tomo, and we subsequently saw key clinical studies published, most notably…

Thank you, Rob. First quarter non-GAAP consolidated revenues increased to $644 million and include a net adjustment of $13.3 million, primarily related to our collaboration agreement with Novartis, reflecting the cash that was received for our share of product Novartis shipped to end-use customers in the quarter. As we discussed in detail on last quarter's earnings call, we believe adjusting revenues provides a more meaningful measure of our true sales in the quarter since if not for the purchase accounting adjustments, we would have recognized revenue on these cash receipts during the quarter. This treatment is consistent with our historical practice. Foreign currency had a negligible impact on consolidated revenues. And to provide a bit more color on an apples-to-apples basis, pro forma revenue growth was 3% when adjusted to include Gen-Probe for the full quarter of last year and to exclude discontinued businesses such as LIFECODES and Adiana in both quarters. In addition, we estimate that without the impact of Hurricane Sandy, revenues would have grown an additional 75 basis points. Turning to our operating segments, our Diagnostics revenues represented 49% of total company revenues this quarter, increasing $165 million or 107%. On a pro-forma basis, including Gen-Probe revenues from a year ago and excluding revenues from our discontinued businesses, the Diagnostics segment revenues increased low-single-digits in the current quarter. This was another good quarter for our Diagnostics segment as revenue growth was ahead of the guidance we shared on last quarter's call. Specifically, we forecasted that total Diagnostic revenues would double as compared to legacy Diagnostic revenues in the first quarter of last year. Our legacy Diagnostics business was driven by strong Molecular Diagnostics performance and the continued strength of our ThinPrep franchise in international markets. Legacy Molecular Diagnostics products revenue grew double-digit, driven by our HPV product…

Many thanks, Glenn. Well, we believe that there were several important accomplishments in the quarter, and we attribute all of those to truly the breadth and value of our diverse family of products and, obviously, the dedication of our associates. Although the environment remains challenging for all companies in our field, we are more confident than ever that Hologic has the right strategy, product portfolio and leadership to continue growing this company, strengthening our balance sheet and building shareholder value. I want to thank you all for participating on this call, and we'll now open the call up for questioning. So thank you, operator.

[Operator Instructions] Our first question will come from Tycho Peterson with JPMorgan. Tycho W. Peterson - JP Morgan Chase & Co, Research Division: Yes, you had called out a couple of things, Sandy and the ongoing kind of headwinds from the end of film to digital transitions. Can you just talk more specifically about the outlook for Breast Health though? Where are we in the cycle and what are some of the underlying trends in particular for the 2D business?

Yes, well, I think the good news, as we indicated, is that the market seems to be rapidly gravitating towards 3D. What that does in the short term is put certainly some headwinds on the 2D business relative to the normal replacement cycle. I think customers are waiting to buy 3D. And I think that things like the Oslo study are giving them the kind of ammunition that they need to go get budget approvals. And I also believe that the further we penetrate into that market, the competitive dynamic that's being created by the broader adoption of tomo is causing more and more customers to buy the products. So what we're seeing is that as we talked about, even last quarter, there may be some lumpiness in this early period of the rollout of this new piece of capital equipment. But all of the indicators appear very, very positive. And as a matter of fact, we, in our last call, said that we would nearly double the installed base in this fiscal year and we are saying today that we will, at a minimum, double our installed base of tomo products in the U.S. because we feel much more confident about the rollout of the product. Tycho W. Peterson - JP Morgan Chase & Co, Research Division: And then maybe just a quick follow-up. Can you talk about service dynamics there? Obviously, you're installing or upgrading the installed base. How do we think about the service business? Does that begin to slow once you move past the bolus of upgrades?

I think what happens with services, as long as the installed base continues to grow, the service revenue continues to grow as well. I think that you may see, and as we have said in the past, a slowing in the growth percent as more and more tomo units are installed because in fact, the tomo units will carry a 1-year warranty and the existing Selenias that are being decommissioned would come off of service contract. But that's actually the kind of trend that we would want to see, right? We would have a significant spike in equipment revenue and a tapering of the growth in services as a result of that.

Moving onto Isaac Ro with Goldman Sachs.

Just the first one, if you could maybe touch again with a little more color on the dynamic that you saw in the quarter, with customers holding off on tomo. Is that the way you quantify -- just as you look at conversations with your customers, some of the bigger ones that have bigger capital budgets, do you get a sense that there are sort of earmarks being held out over the next 12 to 18 months if clarity on reimbursement plays out?

So Isaac, this is Peter. So I think you have a number of questions there. So just a couple of observations. Again, as was noted earlier, our backlog of 3D product did increase quarter-over-quarter. So when you see just the -- and certainly the continuation of the general positive trends, certainly with the sort of the clinical data that was presented in RSNA along with Oslo. That's probably accelerated people not wanting to purchase 2D and, in fact, sort of deferring their decision until they can submit for additional budget dollars to go right to tomo. So all of those dynamics are a little bit complicated. But certainly, it's the kind of thing that we would expect to see. I think you had another question towards the end there, if you'd like to repeat that?

Sure. Just wondering if you'll offer any color commentary on -- especially with your larger customers, you said to which some of those customers have earmarked dollars if and when they have more clarity on reimbursement. Just trying to get a sense of how your visibility compares now than maybe then prior to Oslo?

Yes, I think what Peter's indication was of a backlog increase and more interest from an orders activity perspective is a strong indicator for us. I believe, and I think we believe very strongly, that this product is moving forward from a growth perspective with or without reimbursement. However, the broader adoption of this product, a year down the road or 2 years down the road is certainly going to be highly dependent on that. But we're not seeing any indication today nor have we backed away from the numbers that we gave earlier on about the amount of increase to our installed base because of the momentum that we see being developed in the market. It just simply takes longer to buy a tomo unit than it does to buy a 2D Digital Mammography unit for the reasons that we gave. It's a higher dollar amount, there is no reimbursement. So people are buying for budget dollars that we see happening as is evidenced by the fact that we have a 10% growth on our backlog.

Great. And if I could just ask one follow-up on the Diagnostics side of business. Can you maybe comment on the pricing and market share environment, especially for HPV and CT/NG? Just wondering, what you guys are seeing for pricing on both products and how you feel about market share?

Yes, I think on CT/GC, we have not seen an erosion in pricing. And in fact, we have not lost customers. We believe that our market share is stable. We're still market leaders by a substantial margin here in the United States. I think on the new accounts that we see for HPV, it's a much more competitive market. And I think that because it's incremental business for us, it is at a lower price than some of our earlier HPV wins, but it is business that we did not have in the past. So we're certainly not going to enjoy the days of $18 or $20 a test, and I think that the pricing is much, much lower than that. But as I said, we came from a relatively small installed base and market share to now grow into over 20% and those incremental customers had a lower AUP.

We're going to move next to David Lewis with Morgan Stanley.

Just 2 quick questions here. Rob, obviously, you've got a few questions here on the breast business. It sounds like the inflection for tomo may be happening sort of earlier, the enthusiasm is happening earlier which is sort of pressuring the 2D business. Now it gives you more confidence in your -- in the tomo business and the backlog, maybe in the back half of the year. But you maintained guidance for breast, so I think the real question I think investors are going to push you on is does this dynamic you're seeing play out here in the first and second quarter increase your visibility as it relates to kind of the breast outlook for the year? Do you feel sort of the same about it, better about it, or incrementally worse about it when you think about the balance of these 2 dynamics?

We feel better about it. I don't think we're prepared to raise our number other than with the words that I shared in terms of at least doubling versus nearly doubling our installed base. But we feel better about it, we felt much better after RSNA even though the order trend didn't result in revenue that was enough to cover the shortfall in 2D. The backlog activity and the quoting activity that we're seeing is very, very encouraging for the year.

Great, that is very clear. And just one more follow-up question. As it relates to operating expenses, I think the thought heading into this year was there's significant cushion on operating expenses. You had a release out before the quarter talking about ahead of your plan on operating expenses. So as you think about this reinvestment, how should we sort of think about that? Should we think about it, you're ahead of plans so you're choosing to reinvest, or were there expenses this year that you didn't think you're going to see that you are seeing? Or is this simply some of the product approvals are hitting earlier on the year and you expected them more in the back half of the year?

Yes, I think it's the latter. We really are very encouraged that we got the product approvals that we did. And then, in fact, they materialized earlier than expectations. So we believe that in order to successfully roll those products out, we are going to pull up some marketing spend as a result of it. So between that and just this hang over on some LIFECODES expenses in this quarter that were not anticipated led to we having to up our OpEx number. And we're talking about $10 million, of course, on a significant number. So we felt that it was probably well justified.

And Rob, is it safe to say that if you take the timing of the acquisition and now several months in the acquisition, you still feel better about the level of synergies you're going to be able to achieve?

Yes, absolutely. And I say that without question or without hesitation. It is not now -- we talk about these things happening over a 3-year period of time and we thought that the first tranche was conservative and we still believe that, and we clearly believe that over the 3-year period of time, the $75 million is not at all a challenge.

Our next question comes from Jayson Bedford with Raymond James. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: I apologize if I missed this, but if I just look at the implied first half guidance versus the second half guidance, it implies that a pretty big step-up from first half to second half. Kind of what drives the better growth in the second half?

Yes, there's a lot of things, Jayson, that we've been talking about that we need to be more specific with you, so it's a very fair question. And that is that all of the things that had to do with both our HPV business and our CT/GC business on PANTHER, particularly, are things that are now being focused on new account closures versus equipment replacements. We believe that generates incremental revenue for us in the mid-tier lab market. In addition, on the Breast Health side, the news about increased backlog, the news about broader adoption of tomo, are certainly outpacing now what -- where we originally thought with respect the customer interest. All of those things were in our plan and are in our plan. So yes, they were -- they are second half loaded, but they are within the expectations that we had when we originally put our budgets together. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: Okay. And then just second one for me, the thought of potential distribution synergies, meaning marrying the Gen-Probe portfolio with the larger Hologic sales force always appealed to me. When can you start seeing the benefit or the potential benefit of that marriage?

I think we're really starting to see it. I mean, you know how lab sales is. It's very time-consuming, it's not transactional, there's a lot of time that goes into education, there's a lot of time that goes into equipment validation assuming that you've won the account. So I mean, it could be anywhere from 60 to 90 days, from an order win or placement before you even start to see dollar one of revenue. So there's a lot of activity that's going on with the combined teams today and driven by both the physician sales team as well as our laboratory sales team. And I think that, again, when we think about the second half, that's when we start seeing -- believing that we start seeing the fruits of a lot of these efforts. And even early on, last quarter, when we suggested to you that we thought we would see a pickup in the CT/G business but it would happen in the second half of the year because of our physician sales team, because of new PANTHER placements and so on and so forth.

Glenn Novarro with RBC Capital Markets has the next question.

This is Brandon on for Glenn. First question, can you just discuss what you're seeing with tomo ASPs on a year-over-year basis? Is it pretty stable or is it declining?

Brandon, it's Peter. Yes, they're fairly stable I would say. We did introduce another platform last year. It's called the Dimensions 5000. So that provides a different slightly lower price point with some defeatured components on it. But ASPs are holding very steady.

Okay. And then second question, I might have missed this, but can you discuss your breast biopsy performance in the quarter and the outlook for the rest of the year?

The breast biopsy business did extremely well. We continue to maintain very strong, and in fact grow our market share, we're very, very pleased with that business and we do certainly expect that business to continue to grow for the rest of the year.

[Operator Instructions] We'll move onto Brian Weinstein with William Blair. Brian Weinstein - William Blair & Company L.L.C., Research Division: Just want to go over gross margin real quickly. Can you just confirm, I think I heard you guys say that Diagnostics was down about 550 basis points. Was that -- did I say that correctly? And can you guys just address kind of what's going on there? I think you said an increasing OUS sales. But can we dig into that a little bit?

Right, Brian, it's Glenn. That was in the diagnostics area itself. So if we look year-over-year, back to a point in time where it was Hologic-only with Gen-Probe, we're looking at a slightly different product lineup than we had a year ago. With the ThinPrep and the Hologic products, we were already at a slightly higher gross margin than some of the Gen-Probe products. They were in the mid-to-high '60s, we were in the 60%, almost 70% range. So there's a little bit of an effective of combining the historical Gen-Probe into our mix. But I think even more so, it really is an increase on the international side, especially for the things like ThinPrep where we are getting lower pricing. Brian Weinstein - William Blair & Company L.L.C., Research Division: How much more pricing do you guys get outside the U.S. versus inside the U.S.?

Yes, I think we're looking at pretty substantial differences, I mean, it's a -- depending on whether it's dealer or direct, would add a different layer. But let's assume it's direct to direct, we're probably 25% lower with respect to OUS pricing. If you layer on dealer sales, there's probably another 10% below that. So and a lot of that depends on the market, right? We're particularly aggressive and succeeding quite well in China, but the pricing in China is much different than the pricing in a market like the U.K., for instance.

Moving on to Doug Schenkel with Cowen & Company.

Do you -- I apologize if I missed this, but was there any update provided on timelines for HPV genotyping and any other menu expansion on PANTHER? And then related to that, and I guess probably just qualitatively, how do you think the -- I know PANTHER is going well but you have a somewhat limited test menu at this point, recognizing how well PANTHER's going, do you actually think you could be doing a lot better now if the menu were expanded? I guess I'd say that because some of the recent checks we've done suggest that while there's a lot of interest in PANTHER, there are at least a handful of folks that are holding back, anticipating an HPV launch later this calendar year.

Yes, I think, to the first question, the HPV and HPV genotyping were due out at the end of the calendar year, this calendar year. I think it's a fair statement. Obviously, there's a lot of enthusiasm over PANTHER but what PANTHER really brings to bear is a very diverse menu and the capabilities for random sampling. So now, with Trich on it, I think we answered part of that requirement. But clearly, our goal is to get a socket locked in with now a CT/GC and Trich and growing to HPV and to genotyping. What that will probably do this is, on an interim basis, cause us to use our Cervista and HTA. It's kind of a bridging technology until we're ready to convert over to PANTHER. But it is a -- it certainly is both a demand and a requirement from our customers that we are growing menu on that product, and that is our full intention. And by the end of this year, I think we'll fulfill the initial requirement.

Okay. And one follow-up, I believe you indicated that your guidance assumes no additional divestitures. It still seems like there's still some non-core assets related to some recent M&A that exist within the broader portfolio? Could you talk about the criteria by which you're using in considering future divestitures, and how likely is it that you might pursue additional spinoffs this year?

And look, we are currently studying the product portfolios of both Gen-Probe and our own legacy Diagnostic business and really looking at what do we think the future holds for many of those businesses. Clearly, we talked about being in virology so we know that we are investing heavily, and we being in viral load testing. But as we look beyond the next 3 to 5 years, what do we want to be? And is there an oncology play that we should be investing in today, and is PCA3 one opportunity to do so? So to be very specific about it, it's products like that will take a little bit longer for us to really get comfortable with and to research the broader implications of we investing in not just that particular application but in that field in general. So why I said what I did during the call is I don't think we're going to get a point where we're going to be comfortable enough to do anything like that this year. I think what we're doing this year is really studying what we think the opportunities are around each of those businesses.

Vijay Kumar with ISI Group has the next question.

My first one was just a quick housekeeping. So what was the Gen-Probe contribution in the quarter and what's the sort pull-through run rate on the PANTHER?

Yes, I think what we did on Gen-Probe was give you -- each of the product lines and what their growth was in the quarter. But I don't know if we gave a...

We don't really carve out Gen-Probe because their product lines have all been simulated into the Diagnostics group. So I don't have a real single number. We tried to back into Gen-Probe's clinical diagnostic products as an example of some of the traction. So I did say that the clinical Diagnostics, so 2/3 of their old business, was up 9% and the other 1/3 is the blood screening.

I think I can back in the numbers on that. So just maybe on the pull-through for PANTHER, I know that you have the Trichomonas assay approved. Can you provide some color?

We're not giving units other than to reconfirm that the 1,000-unit target that we had by 2015 is certainly well underway. I mean, I can say with a level of certainty that we are ahead of expectations relative to PF replacements. I think what we're focused on today is now that we think we've fulfilled our DTS replacements, or at least are getting to a point where we're fulfilling the DTS replacement, we're now pointing those sales efforts at new account wins, and we believe that will be a much stronger opportunity for incremental revenues. So I think that from a unit perspective, we seem to be on or ahead of placement plans. I think the difference over the next half of the year will be a much stronger emphasis on new account closures which would result in incremental revenue.

And just a quick follow-up on Breast Health, you did mention backlog was up 10%. And can you just comment on maybe the pacing in the quarter? What happened before and after RSNA, maybe after the publication of Oslo?

Vijay, this is Peter. Yes, I mean, basically what happened is that -- a couple of things. One is that the quote activity increased significantly and many folks who were sort of on the fence waiting for the clinical data to sort of validate the clinical marriage of the technology, they kind of moved off the fence, so we see just an overall pickup and interest in the quote activity and presentations and so forth.

Rich Newitter with Leerink Swann has the next question.

I just was wondering, just going back to a prior question earlier on Breast Health, as we think about the remainder of the year and the dynamics playing out between kind of the declining 2D and what sounds like a better outlook for your 3D adoption, is it right to assume, basically, that you see the 3D accelerating to a level that should more than offset whatever declines play out in 2D? Or is there still the potential for lumpiness to possibly outweigh the 3D adoption in the back half?

I think that there is lumpiness in any new capital rollout. What we believe, however, is that 3D placements start to outpace 2D erosion and just by the sheer fact that their ASPs are higher. But what I mean by lumpiness is that I think until we get to a point where there is a broader and thicker backlog on tomosynthesis, I think you're going to see some lumpiness because of the fact that it's a piece of capital equipment and there's a lot of things that go into an account closure. But having said that, the optimism is there relative to we showing an ongoing trajectory and acceleration of a product over the next -- the second half of the year.

Okay, that's helpful. And on your -- your reiteration of your cost synergies in Gen-Probe integration, I'm just curious, is that something -- I think last quarter, you said that your guidance was not fully reflecting the achievement of even those conservative synergy assumptions. Is it correct to assume that current guidance is still not necessarily maybe leaving a little cushion in there and that the incremental OpEx you're calling out is incremental, but again there could be incremental offsets to the extent that you're not fully forecasting the synergies in guidance?

Rich, it's Glenn. I think if we think about the cost synergies that we identify for Gen-Probe, nothing has changed. We still feel very confident of where we are on achieving well over that $40 million target that we kind of pegged in the first year in $75 million. So yes, we feel good about that, but those expenses and the actions that we took at the beginning of the fiscal year to enable those cost synergies to come through, those changes have been made. So we'll begin seeing those as the year plays out. The OpEx $10 million increase that we identified or upped our guidance for this quarter wasn't related to Gen-Probe or cost synergies. That was really related to other parts of the business other than, I guess, the little LIFECODE piece that we hadn't anticipated. In our thinking about fiscal year '13, we were expecting to close LIFECODES at the very end of the first quarter. So we've got a little bit of a spillover of expenses into Q2 because of that.

Okay. But just to -- am I right in thinking that your prior guidance was not necessarily fully baking in that full benefit of potential cost synergy?

Yes. No, no, that's correct. I meant to say yes to that. Very clearly, yes.

We'll now move onto Amit Bhalla with Citi.

This is Nick Nolan [ph] in for Amit. Quick question on the basis in 2D. How do we think of this going forward in the pacing of this? Do we see similar declines over the next few quarters, similar to what we're seeing this quarter? How do we think about that going forward?

Yes, I mean, it's -- I mean, if you think about things globally from a 2D demand standpoint, I mean, there are certainly parts of the world that are just not ready for 3D and the demand for 2D will continue to stay fairly stable. But I would certainly say that in the mature markets such as North America and Europe, there's certainly going to be downward decreases in 2D. Anybody needing to get 2D, it would certainly be, frankly, an obsolete product. So you kind of have to add the 2 together to get a sense of where things are going to go. But I would certainly say that we're probably see, again, decreases in 2D adoption in the U.S.

Moving on to Bill Quirk with Piper Jaffray.

First, I have a couple of questions. In terms of additional assets on PANTHER, obviously this subject has come up a couple of times today. But I guess I'm curious, because you gave us timing for Trich and HPV, how do we think about alternative sample specimens, things like urine, that sort of thing, for chlamydia, gonorrhea as well as Trich?

Yes, so I think relative to our sample types for PANTHER, and particularly for CT/GC, I think any of the voids that we have, particularly in male urine, I think that will be completed by the end of the year. We're also completing female urine, but we don't feel that's critical, and that will probably be in the middle of the following year. So we think by the end of the year, we will fulfill the critical sample typing for CT/GC and Panther as well as menu fulfillment of HPV as well.

Ladies and gentlemen, that is all the time that we have today for questions. I'll turn the conference back to our speakers for closing or additional remarks.

I think that's really all that we have. We really appreciate the questions and the time, and we look forward to reporting to you in the future. Good night, everyone.

And again, ladies and gentlemen, that does conclude our conference for today. We thank you all for your participation.