Analyst: Victor Sula, Ph.D.

Initial Report
February 6th, 2009

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MARKET DATA

Share Statistics NASDAQ FY2007 FY2008 %Chg Q1Fy Q1FY %Chg

(02/04/09) 2008 2009

Symbol HOLX Revenues, $ Mn. 738 1,674 126.7% 371 429 126.7%
Current Price $13.13 Gross margin 46.8% 53.3% 6.5% 45.1% 53.7% 8.6%
Low/ High 52 weeks $10.34 - 33.37 Operating margin 20.0% -11.8% -31.8% -87.0% 21.8% 108.8%
Average Volume (3m) 127,916 Net margin 12.8% -23.0% -35.8% -96.7% 11.2% 107.8%
Market Capitalization $3,024 Mn
Shares Outstanding 4,184 Mn EPS, $ 0.86 -1.57 n/m -1.65 0.19 n/m

Source: Reuters.com, SEC Filings, Fiscal year-ending September 30

Background
Hologic Inc. (HOLX) is a diversified diagnostic and medical product and de-
vice company, working with its subsidiaries to develop, manufacture and dis-
tribute medical imaging systems and surgical products dedicated to serving
the healthcare needs of women. The Company’s core business units are fo-
cused on breast health, diagnostics, GYN surgical and skeletal health.

The Breast Health segment offers a broad portfolio of breast imaging and
related products, including digital and film-based mammography systems,
computer-aided detection (CAD), breast biopsy guidance systems, minimally
invasive breast biopsy and tissue extraction devices, MammoPad breast cush-
ion, and photoconductor coatings. The Diagnostic Products segment provides
ThinPrep System, cervical cancer screening and Fetal Fibronectin Test for pre-
term birth risk assessment. The GYN Surgical segment includes NovaSure
Impedance Controlled RF Ablation system, a minimally-invasive procedure
that allows physicians to treat women suffering from excessive menstrual

Hologic Inc. (NASDAQ: HOLX) 1

 Analyst: Victor Sula, Ph.D.
Initial Report
February 6th, 2009

bleeding. The Skeletal Health Segment includes dual-energy X-ray bone densitometers and ultrasound bone
analyzers that address a growing market for osteoporosis prevention and treatment.

In October 2007, HOLX acquired Cytyc Corporation for approximately $6.2 billion, creating one of the largest
companies in the world focused on advanced technology in women’s health. With its merger with Cytyc, the
Company gained several other product lines, including tests to screen for cervical cancer, prenatal diagnostics
and radiation treatment of early-stage breast cancer. Cytyc’s strengths in the fields of gynecology, obstetrics,
minimally invasive surgery and radiation oncology added to HOLX’s 2008 revenue of more than $700 million,
representing approximately 50% of the Company’s total revenue.

The Company has offices throughout Europe, in the UK, Germany, France, Belgium, Italy and Spain, as well as
in Australia, China and Canada, which handle sales, service, training and distribution to hospitals and clinical
laboratories. HOLX markets its products through a combination of direct sales and service force, and a network
of independent distributors and sales representatives primarily in the United States, Europe and Asia. Founded
in 1985, the Company is headquartered in Bedford, Mass., and employs more than 4,000 employees worldwide.
HOLX is included in the S&P 400 MidCap Index, the S&P 1,500 Super Comp Index and the Nasdaq 100 Index.

Highlights
Solid revenue stream with a favorable outlook for 2009/2010 despite the economic downturn

The Company’s total revenues increased at a CAGR of 25% from $190 million to $738 million during the his-
torical period 2002-2007. The increase was primarily due to increased mammography sales including Selenia,
R2 CAD, breast biopsy, Mammopad and Mammosite, as well as osteoporosis assessment product sales includ-
ing bone densitometers systems. In 2008, HOLX’s revenues boosted by 127% to $1.674 billion as compared to
revenues of $738.4 million in 2007. These results were achieved after the integration of two recent acquisitions
- Cytyc and Third Wave – which added two significant new operating segments, as well as enhanced previous
operating segments.

Revenue ($Mn)

Source: SEC Filings; Yahoo Finance, Fiscal year-ending September 30.

Hologic Inc. (NASDAQ: HOLX) 2

 Analyst: Victor Sula, Ph.D.
Initial Report
February 6th, 2009

Despite the fact that the breast health, diagnostic and surgical segments will continue to face pressure in 2009 due
to cutbacks in hospital spending, analysts surveyed by Thomson Financial Network expect $1.65 billion in rev-
enue and a profit of $1.13 per share in 2009 for HOLX.

Rapid growth through an aggressive acquisition strategy to broaden presence in women’s health market

Since the inception in 1985, the Company has been following an active acquisition strategy to enhance its position
within its core markets. HOLX’s last years’ economic developments in this field involve the acquisition of a num-
ber of solid companies including: Fischer Imaging Corporation (September 2005), AEG Elektrofotografie (May
2006), R2 Technology (July 2006), Suros Surgical Systems (July 2006), BioLucent, (September 2006) and Cytyc
Corporation (October 2007), which broadened HOLX’s product portfolio and streamlined production process, as
well as strengthened the Company with vertical integration.

The latest significant acquisition (July 2008) made by the Company was Third Wave Technologies Inc., a com-
pany that develops and markets molecular diagnostic reagents for a variety of deoxyribonucleic acid (DNA) and
ribonucleic acid (RNA) analysis applications based on its own Invader chemistry. Third Wave’s current clinical
diagnostic offerings consist of products for conditions such as Cystic Fibrosis, Hepatitis C, cardiovascular risk and
other diseases. Third Wave recently submitted to the U.S. FDA pre-market approval applications for two human
papillomavirus (HPV) tests. The global market for HPV testing is expected to increase to $800 million in the next
few years.

Stable gross margins due to the cost control measures implemented last fiscal year

Gross Margins, %

Source: SEC filings;

The Company continues to benefit from a high and relatively flat gross margin despite the weakening economic
environment. The gross margin solidness is due primarily to a significant increase in higher margin sales like the
Diagnostic and GYN segment’s products. In addition, due to the cost control measures implemented last fiscal
year, the Company was not sensitive to Selenia shortfall sales in the U.S. Over the long term, the Company’s gross
margin is likely to be relatively flat to slightly up due to lower manufacturing product and service related costs.
HOLX’s goal is to drive the gross margin closer to the 75%.

Hologic Inc. (NASDAQ: HOLX) 3

 Analyst: Victor Sula, Ph.D.
Initial Report
February 6th, 2009

Strong balance sheet

HOLX has strong cash reserves valued at $171.5 million as of December 27, 2008, in cash, cash equivalents and
short-term investments. The Company also reported significant cash flows from operations that neared $364.6
million in 2008, which included a net loss of $385.6 million for the year mostly relating to non-cash charges of
$565.2 million of acquired in-process research and development.

Selected consolidated balance sheet data, $ Mn

27-Sep-07 27-Sep-08 27-Dec-08

Total Assets, including 1,066 8,134 8,139

Cash and cash equivalents 100.4 95.7 171.5
Liabilities, including 260.6 3,492 3,443
Debt 11.2 2,200 2,171
Equity 805.7 4,642 4,697

Source: SEC Filings; year-ending September, 30.

In order to finance the cash portion of the merger with Cytyc Corp. and other expenses incurred in connection
with the merger, the Company incurred more than $2.35 billion of new indebtedness under a credit facility with
Goldman Sachs Credit Partners L.P. and certain other lenders.

Three products awaiting FDA PMA approval to add significantly to FY 2009 revenue

On July 30, 2008, HOLX received a letter from the FDA requesting additional information in connection with
PMA application for the new 3-D full field digital mammography system - Selenia Dimensions Tomosynthesis
system. The Company compiled the information and responded to the FDA. In addition, HOLX has two other
products, the Adiana transcervical sterilization system and two Third Wave HPV filings (CerVista HR and Cer-
Vista Genotyping), which are also being reviewed by the FDA. While it is difficult to estimate the timing of
approval, there is a high probability that these products will be ap-
proved and start generating revenue already in the fiscal year 2009.

Digital mammography market leadership

The Company’s breast health segment offers a broad line of breast

imaging products, including HOLX’s flagship Selenia full field dig-
ital mammography system, which represents the main driver for
HOLX’s revenue. The Company’s efforts led to the adoption of digi-
tal mammography as a standard of care for breast cancer screen-
ing. In fiscal 2007, HOLX became the digital mammography mar-
ket leader in the U.S. with approximately 60% market share. The
Company’s sales of more than 1,300 digital mammography systems
in 2008 included the largest multi-order system sale in Selenia’s his-
tory. Overall, HOLX has nine products with No. 1 market share.

Hologic Inc. (NASDAQ: HOLX) 4

 Analyst: Victor Sula, Ph.D.
Initial Report
February 6th, 2009

Meanwhile, breast cancer affects the lives of one in eight women. Worldwide, breast cancer is the fifth most com-
mon cause of cancer death. Breast cancer causes more than 500,000 deaths worldwide or almost 1% of all deaths
each year. In the United States, breast cancer is the third most common cause of cancer death and causes 41,000
deaths annually. Around 180,000 new cases of breast cancer are diagnosed in U.S. each year.

Fast track for medical devices market

The market for healthcare products and services, including the medical device and diagnostics segment, has
exhibited attractive growth recently, driven by increasing demand for healthcare worldwide. The growth in the
medical device and diagnostics sector has averaged between 8% and 9% over the past four years, and is projected
at 7.2% per year over the next four years, with the global market exceeding $330 billion in 2008. The medical
device market is dominated by U.S. companies with 72% of the revenue. The global medical device market is
expected to continue its growth, reflecting aging populations and the greater physician need for better and more
precise diagnostics and imaging to guide them on patient disease status and accurate disease management.

Investment sentiment
HOLX is a leading developer, manufacturer and supplier of premium diagnostics products, medical imaging sys-
tems and surgical products dedicated to serving the healthcare needs of women. The Company has one the largest
sales and service organizations in the U.S. focused exclusively on women’s health, direct operations in more than
20 countries and 150 distribution partners in more than 125 countries.

The Company is currently traded close to its 52-week low of $10.3 mainly due to downward revision of FY 2009
outlook by management and the difficult environment in hospital spending. Moreover the Company is traded
with significant discount to peer group P/E multiples, which is not warranted, given its leading position in the
digital mammography market.
Comparative analysis

Company Name Ticker Price per Mrkt. Cap. P/E P/S

04.02.2009 Symbol Share, $ $ Mn
2008 2009 2008 2009

Johnson & Johnson JNJ 58.32 160,064 12.96 12.05 2.58 2.49
Siemens AG SI 59.10 483,49 8.22 8.13 0.51 n/m
Medtronic Inc. MDT 34.2 37,449 26.93 22.21 2.55 2.42
Baxter International Inc. BAX 60.42 36,373 16.16 14.25 2.93 2.73
Beckman Coulter Inc. BEC 50.77 3,115 14.22 12.98 1.00 0.97
C.R. Bard Inc. BCR 87.00 8,848 19.64 17.13 3.60 3.28
American Medical Systems Holdings Inc. AMMD 11.57 784.2 17.27 15.22 1.57 1.51
Celera Corp. CRA 9.46 679.2 946.00 72.77 3.86 3.21
Boston Scientific Corp. BSX 9.17 13,318 19.51 15.28 1.65 1.61
Median 17.27 15.22 2.55 2.45

Hologic Inc HOLX 13.07 3,024 11.08 9.40 1.71 1.56

Source: Yahoo Finance

Despite shortfall of Selenia Systems sales in the U.S. as a consequence of the faltering economy on the hospital
market, the Company’s 2009 revenues are expected to remain strong and near $1.65 billion. Going forward, the
analyst consensus expects HOLX’s revenue to reach 1.8 billion in 2010, as new products will enter the market and
the economy will likely start recovering. We rate HOLX as a Buy, grading the current weaknesses as temporary.

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 Analyst: Victor Sula, Ph.D.
Initial Report
February 6th, 2009

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I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding
the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation
been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares
or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr.
Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and
TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquida-
tion. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001
and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the
CFA program.

Hologic Inc. (NASDAQ: HOLX) 6