Good afternoon, and welcome to Hologic's Second Quarter Fiscal 2020 Earnings Conference Call. My name is Bryce and I'll be your operator for today's call, which is being recorded. I would now like to introduce Mike Watts, Vice President of Investor Relations and Corporate Communications, to begin the call. Please go ahead.

Thank you, Bryce. Good afternoon and thanks for joining us for Hologic's Second Quarter Fiscal 2020 Earnings Call. With me today are Steve MacMillan, the company's Chairman, President and Chief Executive Officer; and Karleen Oberton, our Chief Financial Officer. Steve and Karleen both have some prepared remarks, then we'll have a question-and-answer session. Our second quarter press release is available now on the Investors section of our website. We also will post our prepared remarks to our website shortly after we deliver them. Finally, a replay of this call will be archived through May 22. Before we begin, I'd like to inform you that certain statements we make during this call will be forward-looking. These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. Such factors include those referenced in our safe harbor statement that's included in our earnings release and in our filings with the SEC. Also during this call, we will be discussing certain non-GAAP financial measures; a reconciliation to GAAP can be found in our earnings release. One of these non-GAAP measures is organic revenue. As a reminder, we're defining organic revenue as constant currency revenue less the divested Blood Screening and Cynosure businesses as well as the acquired SuperSonic Imagine business. Finally, any percentage changes that we discuss will be on a year-over-year basis, and revenue growth rates will be expressed in constant currency unless otherwise noted. Now I'd like to turn the call over to Steve MacMillan, Hologic's CEO.

Thank you, Mike, and good afternoon, everyone. This is an unprecedented time for the company, our shareholders, and the entire world. Today, we'll structure our remarks differently. First, I will address three strategic topics related to the COVID-19 pandemic, then hand it over to Karleen to cover our results and outlook. Here are my key points upfront. First, Hologic was performing exceptionally well until late March, maintaining the strong momentum built over the last few years. Second, as COVID-19 spread and threatened economies globally, we quickly took steps to mitigate risk by focusing on cash, ensuring our healthy fundamentals would remain intact after the pandemic. Third, as a leading molecular diagnostics firm, this is a unique moment for us to fulfill our purpose by providing solutions for today's pressing global issue. While we are scaling back in some areas short-term, we are simultaneously increasing investments in our diagnostics business to meet the world's needs, strengthening our position for the future. Our employees have made this possible, and I want to take a moment to express our gratitude to them. I am extremely proud of the engagement and commitment we've witnessed within Hologic during these challenging times. Many employees from all divisions have volunteered to help with our COVID efforts, offering everything from new business ideas that prioritize customer safety to assisting on the packaging line in our San Diego plant. A special thanks to our diagnostics team under Kevin Thornal's leadership. The contributions of both current and former employees over the years have positioned us to make a significant impact when the world needs us most. I would like to especially acknowledge the work of Marcos Borrell's project managers, Maurice Exner's development team, Matt Friedenberg's instrument group, Kathy Chester's regulatory team, Dave Tyler's manufacturing organization, and Keith Gantner's commercial team. Someday, you will look back on this as a highlight of your careers, as the world has never needed you more. We will catch up on sleep once we get through this, and we will prevail. Now, let me get to those three key points. First, we were performing exceptionally well until late March, continuing to build on a strong momentum from previous years. This is crucial because women's health needs will not diminish because of COVID-19, and we will remain a market leader after the pandemic. Our growth strategies will continue to bear fruit. We will leverage our strong U.S. commercial positions in breast health, diagnostics, and surgical. We will expand internationally across all our franchises. We will invest in innovative research and development to drive new product growth, and we will boost our growth rate through strategic acquisitions. As mentioned in our earnings release, organic revenue growth was 5.2% through the end of February, and we were on track for another strong quarter. Three areas drove our growth in the second quarter. First, global molecular revenue increased 14.2%, the highest growth rate since 2012. This included only about $3.4 million from our COVID test. Even excluding this, the business grew more than 12% as we continue to add additional tests, including our COVID assays, to our Panther installed base. Our Molecular Diagnostics business is thriving globally. Second, sales in our European region grew by an impressive 20.8% in the second quarter, excluding the divested Cynosure business. This is a remarkable achievement by Jan Verstreken's team, with diagnostics leading the way, particularly through cervical cancer co-testing in Germany and viral load testing in Africa. Breast Health and Surgical also experienced low double-digit growth. Third, U.S. Surgical performed exceptionally well for most of the quarter, up 14.7% in the first two months, with enough momentum to qualify as an outstanding quarter. Even with a significant decline in March, U.S. Surgical managed to grow 3.1% for the full quarter. Next, let me address our second key point. As COVID-19 spread and threatened global economies in March, we swiftly took actions to mitigate risk, focusing on cash to ensure our strong fundamentals remained intact post-pandemic. I want to highlight several actions in this regard. First, our efforts to strengthen our balance sheet over the years prepared us well for the COVID crisis. We established a $1.5 billion revolving credit line with favorable interest rates and covenants typically seen only with investment-grade companies. As the pandemic escalated, we quickly borrowed $750 million from this line of credit to prepare for decreased cash flows and to pay off our $250 million accounts receivable securitization program, ensuring we were proactive with our bank partners. We also paused our share buyback activities in March. However, we managed to complete our previously announced ASR and repurchase 5.9 million shares for $267.6 million, which we believe will prove a wise long-term investment. Second, we took swift and decisive action to reduce operating expenses through temporary measures specific to each division, function, and geography within the company. Depending on individual business needs, we eliminated temporary positions and contractors, furloughed employees, and temporarily shut down or shortened workweeks at several manufacturing plants. Additionally, we implemented broad pay reductions across the company. Salaries were cut by 50% for myself and the Board, by 25% for our global leadership team, and by roughly 10% for other salaried employees. At the same time, we made efforts to preserve 401(k) matches and supplemented the compensation of sales personnel who normally receive 100% of their pay through commissions. Our goals were to retain key employees, minimize outright layoffs, and position ourselves to rebound quickly after the pandemic. These and other actions are expected to reduce operating expenses by almost $40 million in the third quarter compared to the second quarter run rate. Moving forward, we will continue to manage discretionary spending closely while supporting our employees and funding future growth initiatives, like increasing capital expenditures to enhance our COVID manufacturing capacity. Now, onto our third major topic. As one of the world's leading molecular diagnostics firms, this presents a unique opportunity for us to fulfill our corporate purpose and emerge as a stronger company. Building on the success we've achieved over the last several years with the Panther instruments globally, we are uniquely positioned to contribute to the fight against the coronavirus by providing essential molecular testing needed to protect public health and support the reopening of economies. Our efforts could significantly mitigate pressures across our business. Once the genetic sequence of the SARS-CoV-2 virus was published in January, our scientists responded immediately, similar to our past responses to H1N1 influenza and the Zika virus. Our focus was speed, aiming to deliver a test to market as quickly as possible. With support from BARDA, we secured emergency use authorization for our assay in about two months. We developed a PCR-based test for various reasons: it was faster as we utilized previously established Open Access software, we already had PCR-based tests for influenza and other respiratory viruses that could run on the Fusion side of our instrument, and there was a clear regulatory pathway for PCR assays, which serve as the foundation for most existing respiratory tests and early COVID assays. As we've come to understand, delivering fast and highly accurate test results on an unprecedented scale is essential to controlling this disease and allowing people to return to work. Many investors have wondered why U.S. testing volumes remain limited, even with increased production of diagnostics tests. One reason is that many tests are conducted on manual or semi-automated systems, creating strain on lab technicians who are already in short supply. Some of these systems require reagents from multiple vendors, which have been constrained. Additionally, while point-of-care tests play an important role in combating the pandemic, they aren't suitable for high-volume testing. In fact, high-volume testing is mainly concentrated in a small number of labs, potentially leading to longer turnaround times and backlogs. To address these challenges, we quickly allocated significant resources to develop a second COVID test for the base Panther system, utilizing our proprietary Aptima technologies, which employ transcription-mediated amplification, an alternative to PCR. Our lab customers rely on these Aptima technologies for tens of millions of molecular tests annually for sexually transmitted infections, cervical cancer screenings, and virology. This approach, also supported by BARDA with approximately $13 million, offers two significant advantages. First, our supply chain is already scaled to produce a high volume of Aptima tests for other infectious diseases, allowing us to redirect manufacturing capabilities to produce large quantities of coronavirus assays. Specifically, we anticipate providing our lab customers with about 3 million Aptima tests next week and plan to produce at least 1 million tests weekly starting in late May. Customers using our Aptima assays won’t need to perform additional sample preparation or purchase other commercial reagents for nucleic acid extraction, helping reduce competition for raw materials and expand global testing capability. To alleviate shortages of commonly used sample collection swabs and transport media, we have validated our Aptima multitest swab specimen collection kit, currently used for STD testing, for both Aptima and Panther Fusion SARS-CoV-2 assays. Moreover, our Aptima tests operate on the world's largest installed base of high-throughput systems. More than 1,800 Panthers are in use globally, compared to only about 200 of the newer Panther Fusion platform. This suggests a nearly tenfold increase in our ability to leverage our industry-leading installed base. Consequently, more hospitals, public health sectors, and reference labs can utilize automated systems for coronavirus testing. Automation reduces manual handling time and the potential for errors, easing the labor bottlenecks that have arisen due to the unprecedented demand for COVID tests. Our lab customers will be better positioned to deliver results when and where they are needed. Adding a COVID assay to the Panther menu offers a unique opportunity to enhance the strategy we've pursued in molecular diagnostics for years. COVID testing will aid in placing more Panthers in both the U.S. and internationally while also driving higher assay utilization on existing systems. Furthermore, it will expedite the positive transformation in diagnostics we've previously discussed, shifting our focus from being primarily a leader in STDs to a more robust position as a comprehensive molecular diagnostics leader with strong customer partnerships. Before turning it over to Karleen, I want to emphasize that during these unprecedented times, our purpose, passion, and promise remain unwavering. Our purpose is to enable healthier lives everywhere, every day, which has never been more relevant as we confront a global pandemic. Our passion is to advocate for women's health globally. Women are impacted by COVID-19, but once the pandemic is under control, the demand for our leading products and services will rebound. Early detection of diseases like breast and cervical cancer will always be critical. Our promise is anchored in what we term The Science of Sure, delivering highly accurate, differentiated products that are essential in addressing a public health crisis. As challenging as the current environment is, I have never been more motivated about our opportunity to play a pivotal role in tackling this pressing global issue while strengthening our future position. Now, I'll turn the call over to Karleen.

Thank you, Steve, and good afternoon, everyone. In my remarks today, I'm going to provide an overview of our divisional sales results, walk through the rest of our income statement, briefly touch on our overall financial condition and discuss some expectations for the future. Unless otherwise noted, my remarks will focus on non-GAAP results, and percentage changes will be on a year-over-year basis and constant currency. Let me start by summarizing our second quarter results. Revenue of $756.1 million declined 7.1% due to the divestiture of Cynosure. Organically, we grew 1.1% despite the impact of the COVID-19 pandemic late in the quarter. EPS of $0.57 was below our expectations, commensurate with the decrease in revenue but basically flat compared to a year ago. Now I will provide some more detail on our divisional revenue results. Diagnostics became our largest division in the second quarter by growing a strong 8.3%, despite a substantial decrease in demand in late March. Cytology had a good quarter internationally, driven by Germany's decision to adopt co-testing for cervical cancer screening. But the primary growth driver was Molecular, as it has been for many quarters. International sales were exceptionally strong, based in part on the continued uptake of viral load assays in Africa. The U.S. business performed very well, even when you exclude sales of our COVID assay on Panther Fusion, which were only $3.4 million in the quarter. In Breast Health, underlying trends were solid, and the division performed well through most of the quarter. However, gantries, accessories and 3D upgrade volumes were substantially impacted as a result of COVID-19 disruptions late in March, as our customers focus on responding to the pandemic and our field service engineers weren't allowed to install new products. Given these factors, global Breast Health sales of $307.8 million decreased 3.7%. Excluding $5.8 million of sales from SuperSonic Imagine, global sales decreased 5.5%. In Surgical, Steve already pointed out that the team was crushing it through most of March, especially in the United States. However, like most companies, we saw a significant impact to demand in late March as elective procedures were postponed. Despite this, the business still grew 3.6% for the full quarter based on the excellent momentum we had in January and February. Overall, in terms of geography, domestic sales of $574.9 million were down 1% on an organic basis and down 6.6% on a reported basis due to the Cynosure divestiture. Outside the United States, reported sales of $181.2 million decreased 8.6% but revenue increased 8.4% organically, reflecting the strong foundations we have built for sustainable growth. As Steve noted, this growth was primarily driven by our European and Canadian franchises. Not surprisingly, sales in Asia Pacific were negatively affected by COVID, especially in China. Moving on to our P&L for the second quarter. Gross margin of 61% was actually flat compared to the prior year period, as benefits from the Cynosure divestiture were offset by lower sales due to the COVID-19 pandemic, unfavorable product sales mix, and to a lesser extent, the strong U.S. dollar. Total operating expenses of $222.5 million decreased 18.4% in the second quarter, which was primarily driven by the divestiture of Cynosure. In addition, the decline in equity markets reduced expenses associated with our deferred compensation plan as the liability is marked to market. Finally, as Steve said, we did begin to reduce discretionary costs in late March as the negative effects of COVID-19 became more clear. As a result, operating margin of 31.5% increased 380 basis points. Overall, our profitability remains very healthy. Net margin of 20% increased 100 basis points compared to the prior year period, with the benefits I just discussed, partially offset by a higher effective tax rate. This resulted from an unfavorable divisional and geographic mix of income, primarily as a result of the COVID-19 pandemic. All this led to non-GAAP net income of $150.9 million and non-GAAP earnings per share of $0.57, commensurate with our lower-than-expected revenue. Finally, ROIC was 12.5% on a trailing 12-month basis, an increase of 20 basis points over the prior year. Adjusted EBITDA was $248.3 million, which decreased 2.3% compared to the prior year. Moving on, I'd like to briefly discuss our overall financial condition as we navigate through these uncertain times. The COVID-19 pandemic is a vivid reminder of how and how fast unforeseen events can change our economic environment. But even in this context, Hologic's financial position is strong because we have put a heavy emphasis on debt reduction and cash flow generation over the last several years. Maintaining a conservative liquidity posture is even more important during these challenging times as we focus on taking care of our employees, ensuring our products remain available to our customers and patients, and investing in critical COVID-19 diagnostics testing. At the end of the second quarter, our leverage ratio stood at 2.6x and we had approximately $800 million of cash and equivalents. The actions we have taken to reduce expenses, which Steve discussed, have put us in a strong position to weather a wide range of potential outcomes that may emerge over the coming months related to COVID-19. Before we open the call for questions, I would like to discuss our expectations for the second half of fiscal 2020. As a reminder, we withdrew our formal financial guidance when we preannounced quarterly revenue earlier this month. To state the obvious, the market environment is very fluid and unpredictable today. Our future results will be highly dependent on what the virus does and how successful global containment efforts are. But I want to clearly emphasize that we believe we are well prepared for either extreme scenario, a strong recovery or a prolonged downturn. That said, to give you a sense of the magnitude of the effect that COVID-19 has had on our business, we expect organic sales in our fiscal April to be down 45% to 50% from the prior year period, excluding sales of our COVID test on Panther Fusion, which we'll come back to in a second. We are planning for our base business to be down by a similar percentage for the full quarter. Again, excluding our own COVID assay sales since April sales probably benefited a little from our strength through most of March. By planning for a significant downturn and being ready for it, we believe we prepare appropriately for an uncertain time. By division, we believe that Surgical will be the hardest hit by COVID in the short term. In April, for example, global Surgical sales are expected to be down about 85% compared to the prior year period. We believe this business will begin to improve soon based on both the clinical need and the desire of our hospital customers to shore up their finances by addressing pent-up demand. In Breast and Skeletal Health, April sales will be down more than 30% compared to the prior year period. Recurring revenues such as service should compensate somewhat for a steeper decline in capital sales, reflecting the diversification strategy that we have been pursuing for several years. We have recently seen access restrictions loosening somewhat, so we are optimistic that conditions will improve gradually going forward. The pace of this recovery, however, is uncertain as it's hard to predict how long a general economic downturn will affect capital investments by customers. While recovery could take a while, it's worth emphasizing that our Breast business has become far less capital-dependent in recent years as we increase service and other recurring revenue across the full continuum of breast health care. In Diagnostics, sales of our core women's health tests have fallen significantly as routine screening has been put on hold. April sales, as a result, are expected to be down about 45%, excluding sales of our Panther Fusion COVID assay. It's worth noting that the strength we've seen internationally in the areas like viral load testing should slightly offset the negative impact of COVID on our women's health assays. Our own COVID test, especially the new TMA assay on Panther, could represent a significant positive offset to the pressures we are experiencing in our other parts of our business. We know that in the near term, demand for our COVID assays is very high as testing is essential to get people back to work and reopen economies. As we said in our press release, the combination of our large TMA manufacturing capacity with our Panther installed base can help labs deliver test results when and where they are needed. We could generate $150 million or more of COVID sales in our third fiscal quarter. In the future, we believe that significant levels of testing will continue to be needed worldwide. But it's impossible to predict the exact quantity and duration at this stage. So from a revenue perspective going forward, we will continue to watch the interplay between recovery in our base businesses and COVID test volumes. We are hopeful that most of our businesses will get back to normal in the first half of our fiscal 2021. But if not, we believe we have significant offsets in terms of our own testing volumes. But if our base franchises gradually improve over the next several quarters and COVID revenues remain high, there's at least the potential that our results could be exceptionally strong. We are making plans to significantly increase our manufacturing capacity to prepare for this possibility. Before we open the call for questions, let me conclude by saying that even in these uncertain times, the fundamentals of our business are strong as is our financial condition. Although COVID-19 will continue to negatively affect most of our business, our efforts to develop and manufacture molecular diagnostics tests to fight the pandemic could represent a significant offset that will help us emerge a stronger company in the long run.

I will now open the call for questions.

Steve, congrats on getting the new COVID test out. You highlighted the large installed base. I'm just curious about how you think about COVID driving incremental Panther placements, particularly on the hospital side, given the push toward more on-site testing? And then for the follow-up, I assume serology is not a focus given the divestiture of the Blood Screening business, but I'm curious if that's something you would consider?

Yes. Thanks, Tycho. By the way, Tony and the team at the warehouse are working hard right now. Part of this involves the Panthers. We have seen a significant increase in interest in Panthers globally, and everyone is starting to recognize what an incredible platform it is. As a reminder, we've been placing about 200 to 250 Panthers each year, which averages to around 20 a month. We are also currently scaling our capacity for Panthers; while they have longer lead times, we are receiving significant additional requests, especially from health departments and various hospital labs, including some of the largest reference labs. So, there's a widespread demand for increased access to capacity. Regarding the serology segment, we don't anticipate making any moves there. We are uncertain about how we could contribute in that area and are focusing all our resources on the molecular field where we have established expertise.

Steve, maybe a follow-up there, talking about the significant increase in interest in Panthers. I guess there's a bit of a debate out there. Does this pandemic fundamentally change kind of the diagnostics market on the other side of this, you might see a broad increase in testing? I guess what's your guys view on the diagnostics side that you feel like you're getting out in front of customers you didn't have the opportunity to before and you could get integrated with some new systems and all of a sudden, on the other side of this, Hologic was great during COVID. Now why don't we use them for a bunch of other testing? What's your view for the Diagnostics business as we get to the other side of this one?

I'll try to answer this real simply because it's an incredibly insightful question, Patrick. We've never had more calls from people wanting our products. And I mean this on a very global basis, right to various regions within European countries, particularly, frankly, all across Europe but also wildly in the U.S. We've literally been in touch with virtually every governor's office. It seems like half of Congress, obviously, with the White House Task Force on a daily basis, the Department of Defense, it's been mind-blowing in terms of the interest, really just since we launched the PCR assay. And Kevin Thornal, our commercial teams and our European teams, even the Asia Pac teams, right down to the Prime Minister in New Zealand, I mean we've got everybody reaching out to us and it is elevating our profile to a very different level than anything we've ever experienced. And there is zero doubt in my mind that that's absolutely creating a tremendous runway for us coming out of this.

Okay. And then maybe just a quick follow-up on the Breast Health side. I know you talked about, obviously, volumes are very hard to predict there and the recurring revenue is a bigger piece of the business for you guys now. I guess how quickly do you think this could come back again on the other side of COVID? I mean do you expect women to be a bit reluctant to come back into the doctor's office? Or do you think things could ramp pretty quickly?

Yes, I think it's still an evolving situation, Patrick. Our orders were positive in the quarter, especially with strong Breast Health orders. Having experienced the downturn in '08-'09, I'm concerned that hospitals and radiology suites will be seeking new capital. In the next month or two, as things stabilize, hospital CFOs will likely review their capital expenditures closely, which may lead to some projects being postponed. If I had to guess, I would say the recovery for Breast Health might be slower due to this. The good news for us is that we don't rely solely on patient visits for revenue; we also benefit from capital sales and recurring revenue from services, which may help cushion the impact. However, the recovery is likely to be a longer journey.

Yes. I would just add to kind of remind folks that the U.S. gantries, the U.S. capital is only about 21% of the total divisional revenue at this point in time.

Congrats on the progress that you guys made with this new assay. Should we be thinking about an ASP similar to what you saw in Fusion on a worldwide basis here? And then I think Karleen was kind of talking about this a little bit, the ability to manufacture. Should we be thinking about this level of manufacturing even when core Aptima kind of comes back? Or will there need to be some sort of a trade off there?

Great question, Brian. As we look ahead, some of this will depend on volume, but we are increasing our capacity to meet demands even as the core business returns. We are assessing our overall capacity to deliver on this.

Yes. And I would just say, we have, as Steve made meaningful investments in capital to do that, so that we don't have to make those trade-offs.

And then on that ASP, around 25%, is that how we should be thinking about it?

Yes. I'd probably go just a little below that, probably when you think about a global weighted ASP.

Okay. And then a final question here. I know you mentioned not being involved in serology and that makes sense. But is there an opportunity here for you to participate in viral load? We're seeing much more literature about viral load being used to determine kind of where somebody is in the course of the COVID-19 infection or maybe using viral load to trying to determine how severe that infection might be. Is the team working on anything there? Is that an opportunity for you guys, given your presence there?

It's not a focus at this point. We've been so locked and loaded on trying to realize this major testing opportunity, which we think is going to be the single biggest need to really get people back to work and everything else. But like everything else, as we get this out the door and as the science continues to evolve, our team will be looking at the areas that do make some sense for us. And that one clearly would be closer in, but nothing under progress at this point or nothing under development at this point, to be honest.

Steve, I want to echo the appreciation for you and your team for swiftly implementing more solutions during the pandemic. The first point I'd like to address is about the clinical labs we've discussed that have mentioned difficulties in obtaining molecular systems, often due to back orders. We understand you've been placing around 200 Panthers annually, independent of the pandemic. My question is, what is the capacity for Panthers and, similarly, for Fusions to be added to existing Panthers? Additionally, is it possible to run Panther and Fusion assays simultaneously? I'll pause there for your thoughts on those questions.

Sure. Yes, you can run Panther and Fusion at the same time. Regarding supply, part of the reason Dr. Birx and the government are pleased is that we already have the systems in place across the country. We are the only ones with high throughput systems in all 50 states. While many tests have been approved and people are rushing to find equipment, we are confident in our large installed base that has developed over the last six or seven years, rather than scrambling now. Can we add to it? Are we receiving more requests? Yes. However, we are capable of shipping 3 million tests next week, and the production capacity is already in place to support that.

Congrats on the new test. The first question is about the estimates we've seen regarding the broad testing market, which suggest a need for anywhere between 50,000 to 500,000 molecular tests a day, and possibly up to 1 million a day based on recent news. I would like to know your thoughts on the capacity and demand expectations you are planning for, especially since there are intentions to invest in increasing that capacity by the fall. Specifically, what do you think the ultimate testing need will be, and how long do you anticipate that demand to last? Additionally, where do you see your ultimate market share?

Sure, Ivy. I'll start backwards. In terms of market share, we're not really focused on that the way we typically are because I think we're all rooting for a unique time in the world where we are less about competing against each other and more focused on creating enough capacity to help not just this country but the world get back to work. There are so many unknowns. Come the fall, will we be running 500,000 tests a day, 200,000 tests a day, or 3 million tests a day in the U.S.? It's just hard to know at this point. We plan to continue investing in capacity. One of the biggest limiting factors for us is our unique cap system, which makes our system highly automated. We are building more cap machines, which typically take 18 months to build. We've got people working around the clock to try to shorten that to about 6 months. We want to be prepared to bring on even more capacity later in the fall, ahead of the next flu season in the Northern Hemisphere. We believe that next year, whenever there is an outbreak of flu or as soon as someone coughs, we will want to test for both regular flu and COVID. Therefore, we want to have even more capacity available by the fall, but I don’t want to give specific numbers.

Great. Appreciate sharing the color. I know there's a lot of unknowns around this. So just a follow-up on serology. There's clearly a lot of serology testing capacity in the U.S., maybe more than that is in molecular. So I'm just curious how you see the market demand evolving going forward in terms of the split between molecular and serologic testing, especially when we're thinking more about getting people back to work?

Yes. Ultimately, we recognize there will be a significant demand for diagnostic testing. Even in the serology field, there are many unknowns. Just because someone has antibodies does not necessarily mean they are immune. There are numerous uncertainties, and serology testing will only cover a portion of the population. What is vital for restoring confidence in returning to the workplace, enabling everyone to go back to school, and allowing people to travel by airplane again is having a strong real-time testing capability. This aligns with our strengths and focus. We are uncertain about the size of the serology market, but we believe there is enough opportunity in the areas where we have significant expertise.

This is Anthony for Raj, and I want to echo the congratulations. The work you all have done is truly impressive. Scott and Steve, I have a question regarding your prepared remarks about the availability of viral transport medium swabs as you scale the SARS-CoV-2 test on Panther compared to Fusion. How significant of a limitation is this? Is there a chance for Hologic to consider bundling in this area? Additionally, do you have any thoughts on Boston Scientific's announcement today regarding the sale of their intrauterine portfolio to Minerva? What could that mean for NovaSure?

Anthony, please say hi to Raj for us. Regarding the swab, the key point is that we have qualified our Aptima swab for use with our system. This means we can ship the swab and the vials together, making it easy for testing. We are essentially providing a complete package to our customers, which should greatly streamline the process. It's difficult for those not involved to fully grasp the significant workflow efficiencies that come from utilizing the Aptima system throughout. This should give us a considerable advantage. Concerning the Boston news with Minerva, we remain very optimistic about our Surgical business. As we noted, it grew by 14.7% in the first two months of the last quarter. Our Surgical business has seen remarkable improvement and strength over the past few years. Boston is a highly successful company and faces challenges in that area with those products, but our team is pleased to compete against anyone. We believe we have superior products and a more effective sales team.

Two testing questions for me, one for Karleen and one for Steve. So clearly, I just wanted to net out some math here for the third quarter. So if I just assume capacity for a second here, we have roughly $45 million of Fusion sales, maybe $75 million in that bolus Panther order. You get to 1 million tests per week at the end of May, so it's kind of 1 million tests a week in June, that's another, obviously, kind of $100 million. And then if I just adjust that ASP below 25% and assume kind of a 20%, 30% cannibalization rate on the core platform, does that kind of get me close to $150 million? Anything materially off in that math?

Yes, I would say that the 1 million per week is an average. This product is built in lots, so we may not actually ship 1 million each week. But yes, that probably gets you pretty close.

Okay. And then, Steve, I think getting Panther out there can be underestimated from sort of public health perspective. I want you to just sort of share your thoughts. There's been significant barriers to testing, reagents, nasal swabs and then general protocols and infrastructure, I would sort of call it, and yet 5 days ago, we have 300,000 tests a day and then yesterday, we had 200,000 tests. So reagents are coming on but the test numbers haven't gone in the right direction. As you think about the infrastructure and these barriers that have been addressed, just wondering if you could share your thoughts with us about do you think all the barriers have been addressed out there? And what are some of the outstanding barriers that are sort of creating this disconnect between capacity and then usable test? And great work on this.

Sure, David. One significant barrier has been people feeling they should get tested but facing restrictions in actually obtaining tests. States, hospitals, and doctors have limited access, making it challenging to get tested due to constrained supply. However, as people become more comfortable with the increasing availability of tests, I believe we will see a relaxation of the challenges in accessing testing. Opening up this process will likely result in more tests being conducted. Our advantage is that we will have the necessary swabs, eliminating the need for separate transport media or additional steps in the lab. This creates remarkable efficiency. In the coming week, we expect to see improvements. Dr. Birx and her team are actively communicating with public health labs about our progress, which is generating excitement. I believe these developments will contribute significantly to breaking down remaining barriers, allowing for substantial progress.

Operator, I think we have time for maybe two more questions, if we can be quick.

So I'll just ask one. Steve, you've talked a lot about the Aptima test for COVID. As we think about 12 months down the road, your Fusion is about 10% of your Panther total installed base. Does that ratio meaningfully change, post this pandemic? Do you see yourself having a much higher proportion of Fusions? Or is all the excitement around just the traditional Panther, not to minimize it, but just I'm curious your thoughts on that equation.

Sure, Dan. I think it will ramp up over time. If anything, it will probably take a short-term pause because we're going to be running the machines probably at a fairly hefty pace. Nobody's going to even want to shut one down to accommodate adding a Fusion onto the side. And now with the TMA assay out there, they frankly can manage without it for a while. So I think we'll continue to build it over time. Mike, did you want to add something?

Yes. Dan, the only thing I would say is once we get into the fall and the winter with the flu season, and you get kind of intermingled virus in order to be able to test for both, you do need a Fusion. So we think that will be helpful in the medium term as well.

I guess I'll ask a question on Breast Health then. So the numbers that you gave for April and for the quarter, maybe could you parse out a little bit between, Steve, in terms of the U.S. gantry being 20%, but how do we think about the math on that in terms of what gantries are doing, kind of service and then interventional? And then as we look out, is there any predicate for '08 and '09 that you suggested about how we might look further out beyond the next quarter or two and how hospital CFOs might react?

Sure. Internally, we are describing the recovery as a checkmark pattern, with a sharp decline followed by a recovery that may be somewhat jagged. Overall, we feel very optimistic about the Breast Health business, which has become much more diversified. However, we anticipate that capital spending will lag a bit during the recovery. On the positive side, our capital purchases are relatively modest for any hospital system. While we are not entirely certain, we are confident that we will collaborate with our customers to facilitate the recovery. I think we’ll be back on track by this time next year, but I wouldn't expect a full recovery in the next couple of quarters. Karleen?

Yes. And I would just add, the biggest component of revenue for that business is the service business. So this stability within foundationally for that division was that recurring revenue.

Great. Thank you, everybody.

Thank you. And that is all the time we have for questions today. This now concludes Hologic's Second Quarter Fiscal 2020 Earnings Conference Call. Have a good evening.