Source: Hologic

What: Shares in Hologic (NASDAQ:HOLX) soared higher by 10% earlier today after the company reported better than expected fiscal third quarter financial results after the bell yesterday.

So what: Sales of Hologic's diagnostic, medical imaging, and surgical products increased 9.7% year-over-year to $693.9 in the company's fiscal third quarter.

Importantly, a greater percentage of sales dropped to the bottom line during the quarter because Hologic's operating margin improved 4.7% to 16.7% in the three month period. As a result, Hologic reports that its non-GAAP EPS jumped 16.2% to $0.43 during the quarter, which outpaced analysts estimates for EPS of $0.39.

The company saw the biggest sales increase year-over-year in its breast health products, such as its Genius 3D mammography systems. In constant currency, sales of breast imaging products grew 20% to $279.5 million, gynecological product sales improved 11% to $85.5 million, diagnostics sales were up 7% to $306.9 million, and skeletal health product sales slipped 1.4% to $22 million during the quarter.

Now what: Hologic benefits from the sale of disposables, so a larger installed base of its products benefits its top and bottom line. Last quarter, 61% of the company's sales came from disposables, 23% from capital equipment, and 16% from services, or other sources.

The company should also benefit from a restructuring of its debt, including benefits from its plans to replace its outstanding 6.25% senior notes due in 2020 with proceeds from its recent 5.25% senior notes due in 2022.

Overall, Hologic's solid quarter has the company expecting that it will grow its sales by between 9.1% and 9.5% this fiscal year, up from prior estimates for between 7% and 7.4%, and non-GAAP EPS growth of between 17.1% and 17.8%, up from prior guidance for between 13% and 13.7% growth.

Since Hologic has beat profit expectations in each of the past four quarters, there's a chance that this increased guidance may still prove to be light. If so, then a forward P/E of 23.5 times to own Hologic may not be unreasonable and for that reason this could be one worth considering for portfolios. 

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