Cigna Okays 3D Mammogram: Is Hologic Poised to Gain?

Following the National Comprehensive Cancer Network's (NCCN) new guidelines that recommended breast tomosynthesis exam as a viable option for breast cancer screening at the onset of this month, Cigna has recently decided to offer insurance coverage for this diagnostic test. Interestingly, this news comes as a boon for molecular diagnostic providers like Hologic Inc. HOLX that offer Genius 3D mammography – one of the leading tests in the digital mammography space.

Notably, breast cancer is a treatable yet malicious medical condition that is very common among women globally. In the U.S., breast cancer is the second most common type of cancer in women and affects almost 2,300 new women every year.

As it is for most types of cancer, accurate detection of the disease at an early stage can increase the chances of survival in breast cancer patients and so far 2D mammogram has been the traditional diagnostic test advised for breast cancer screening.

However, in recent clinical trials concerning 3D mammography exam, otherwise known as breast tomosynthesis, has demonstrated its superiority in detecting more invasive breast cancer at a much earlier stage and resulted in reduced recalls, when compared to traditional 2D exams. In this context, we note that Hologic's Genius 3D mammogram is the only clinically proven test to detect cancer 15 months earlier than traditional 2D screenings.

Unfortunately, despite rapid adoption of the 3D technology among physicians, a lack of interest among insurance providers to offer coverage for this exam has been observed in the U.S. Though the country's national payers Medicare and Medicaid already cover this test for insured women aged 40 and above.

Hologic has been fighting for a long time to win the private payors' contract for its Genius 3D mammogram, which benefitted an estimated 10 million U.S. women in 2015 and has the potential to help even more, if it wins the coverage. The company even launched a billboard advertising campaign to pressure insurance companies to cover the full cost of routine screening with 3Dtechnology(according to Hartford).

The recently released NCCN guidelines recommending breast tomosynthesis, seems to reflect that Hologic's efforts have not gone in vain. Per management, since mostinsurers reference NCCN guidelines in their coverage policies, Hologic's 3D technology is now expected to get the attention of most insurers. 

A classic example of that is the aforementioned coverage initiated by the nation's renowned insurance provider Cigna, following which all women over 40 years and high-risk women starting at age 25 will get a reimbursement. We may expect other payers like Aetna, UnitedHealthcare and Anthem to follow suit; which in turn will benefit 3D mammogram providers like Hologic.

Management expects this to encourage more number of women to opt for Hologic's 3D mammogram as they no longer would have to incur an out-of-pocket expense; which in turn will fetch higher profits for the company.

Nevertheless it is crucial to mention that in a fiercely competitive medical device space, where everyday a new device comes to the market; the NCCN guidelines and the subsequent coverage initiated by Cigna, will also benefit other peer companies of Hologic, like Siemens and Fujifilm which also manufactures similar kind of 3D mammograms.

Currently, Hologic carries a Zacks Rank #3 (Hold). Some of the better-ranked stocks in the medical instrument space are IDEXX Laboratories, Inc. IDXX, Masimo Corporation MASI and Natus Medical Inc. BABY. All these stocks sport a Zacks Rank #1 (Strong Buy).

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