Karleen Oberton
Chief Financial Officer at Hologic
Thank you, Essex, and good afternoon everyone.
In my comments today, we will begin with an overview of our solid fourth quarter and full year financial results, providing more color on margin and capital deployment. In closing, we will finish with our fiscal 2025 guidance for Q1 and the full year.
We are pleased to close fiscal 2024 by continuing to meet or exceed our commitments on both the top and bottom line. In our fourth quarter, total revenue was $987.9 million growing 4.2% over the prior year period and 5% organically excluding COVID. In addition, our Q4 non-GAAP earnings per share were $1.01 growing 13.5%. For the full fiscal 2024, total revenue was $4.030 billion declining 0.2%, while growing 5.3% organically excluding COVID. And non-GAAP earnings per share were $4.08 growing 3%. Given the revenue headwind of the skeletal stop ship in Q4, we view these results as solid. More notably, for the second quarter in a row, we returned to top line growth for our total business as we continue to bend the revenue curve in a positive direction.
Before moving on to the income statement, we'd like to highlight the continued strength of our balance sheet as well as our commitment to our capital allocation strategy. In fiscal 2024, we pulled both levers of our capital allocation strategy by completing a revenue accretive tuck in M&A deal in Endomagnetics, while also repurchasing 11.2 million shares for $808 million which includes a $500 million ASR completed in the second quarter. Over the course of fiscal 2024, we reduced our diluted share count by over 10 million shares, demonstrating our commitment to leveraging our strong balance sheet and cash flow to manage our share count and deliver EPS growth.
Starting off 2025, as Steve mentioned, we remain confident in our business. We continue to leverage our ability to repurchase shares with the announcement of our intention to enter into a new $250 million ASR. With our strong operating cash flow, we are in excellent position to continue funding our priority organic investments as well as our capital allocation strategy. We exited the year with over $2.4 million in cash and investments on the balance sheet and we'll continue to pursue growth opportunities in fiscal 2025. As mentioned earlier on this call, we are off to a great start by signing a definitive agreement in October to acquire Gynesonics. We anticipate closing this deal in the first half of calendar 2025.
Now on to the non-GAAP P&L for the fourth quarter, starting at gross margin. In Q4, gross margin increased to 61.5%, and up 110 basis points year-over-year, driven by broad based domestic revenue growth. We are pleased with this performance, having achieved steady expansion throughout the year while overcoming several headwinds, including the amortization of higher cost inventory of semiconductor chips and the headwind from the skeletal stop ship.
Moving down the P&L. Fourth quarter operating expenses of $311 million increased approximately 2.4%. This increase was primarily driven by the inclusion of Endomagnetics in our fourth quarter results as well as stronger local currencies in our international business. Excluding the impact of Endomagnetics and FX, our operating expenses were approximately flat compared to the prior year. Altogether, fourth quarter operating margins finished at 30% and net margin was 24%, both representing a modest increase over the prior year. Below operating income, other income net represented a loss in our fiscal fourth quarter of slightly less than $1 million, better than previously anticipated due to lower net interest expense. Finally, our tax rate in Q4 was 19.75% as expected.
Now let's move on to our non-GAAP financial guidance for the first quarter in full fiscal year of 2025. In the first quarter of fiscal 2025, we are expecting total revenue in the range of $1.025 billion to $1.035 billion and EPS of $1 to $1.03. For the full year 2025, our guidance assumes revenue of $4.15 billion to $4.20 billion and EPS of $4.25 to $4.35. Help with constant currency modeling, we are assuming a foreign exchange tailwind of slightly less than $10 million for Q1 and $30 million for the full year. Our guidance assumes the recent trend of strengthening local currencies in our international markets continues in fiscal '25.
Overall, for the full fiscal year, our guidance assumes organic ex-COVID growth of approximately 4% at the midpoint. We expect revenue growth to build throughout the year. In Q1, we will be impacted by several transitory headwinds, such as the stop ship in our skeletal business as well as strong prior year comparisons in Breast Health and Surgical. We are also planning conservatively around the respiratory season and the residual impact from recent hurricanes, including the saline IV fluid shortage that we anticipate will be a headwind to our more elective breast and surgical procedures.
Now moving on to assumptions underlying our revenue guidance at the division level. For core diagnostics, we expect mid-single-digit growth for the full year, driven by our BV/CV/TV assay and the ongoing adoption of our Biotheranostics BCI test. Further, as Essex mentioned, we successfully launched genius digital cytology in the US during the fourth quarter. We are excited to continue this rollout and the growth opportunity it represents. Regarding COVID and respiratory assay assumptions, given the inherent variability of the respiratory season, we continue to plan conservatively for both, while maintaining capacity to aggressively meet any surges in demand.
In addition, fiscal 2024 saw COVID revenue transitioning to our 4-Plex respiratory assay in our base molecular business. In 2025, we anticipate lapping the benefit of this conversion. In terms of COVID revenue, we expect COVID assay sales to about $10 million in the first quarter and approximately $25 million for the full year. COVID-related items are expected to be about $24 million in the first quarter and approximately $95 million for the full year. Closing out our diagnostics business, we expect blood screening revenue of about $5 million in Q1 and about $20 million for the full year.
Turning to Breast Health. Over the past two fiscal years, we experienced elevated growth rates as we gradually recovered from the global chip shortage. Moving past this dynamic in fiscal 2025, we expect the gantry business within Breast Health to return to more normal growth ahead of our anticipated next-generation gantry launch. In our Interventional Breast segment, we expect continued strong performance from our portfolio of disposable needles and markers, though partially offset by recent withdrawal BioZorb products from the market. Lastly, in surgical, we expect broad-based progress across our portfolio to offset anticipated domestic NovaSure declines. We also foresee strong international surgical growth in fiscal '25 and driven by deeper market access and market penetration opportunities.
Moving next to margins. Our fiscal '25 guidance assumes both gross margin and operating margin expansion, highlighting our strong operational discipline and commitment to shareholder value. Thus, we expect Q1 gross margins around 60% and expect improvement of roughly 50 basis points over the course of the year. Additionally, we expect Q1 operating margins around 30%, with an expected increase of 50 basis points to 100 basis points throughout the year. We are in outstanding position given the current macro environment.
Working down the P&L. We expect Q1 to represent our highest quarter of operating expense in fiscal '25. This is due to normal seasonal expenses, including larger marketing campaigns as well as sales and trade meetings. For the balance of the year, we anticipate quarterly operating expense to represent a modest increase over fiscal '24 as we include the addition of Endomagnetics business into our fiscal '25 guidance. Below operating income, we estimate fiscal '25 other income net to be an expense of approximately $10 million to $15 million in Q1 and an expense between $50 million and $60 million for the full year. Our guidance is based on an annual effective tax rate of approximately 19.5%, and diluted shares outstanding are expected to be approximately $235 million for the full year.
To conclude, our solid fourth quarter completes another successful year for Hologic. As always, our focus remains on advancing women's health globally and delivering durable long-term results. Entering fiscal '25, we are excited about the opportunities ahead.
With that we ask the operator to open the call for questions.
