HOLOGIC INC, 424B4, 1996-01-26

HOLOGIC INC
424B4, 1996-01-26
X-RAY APPARATUS & TUBES & RELATED IRRADIATION APPARATUS

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<PAGE>

PROSPECTUS

1,200,000 Shares

[Logo]

Common Stock

----------------

All of the 1,200,000 shares of Common Stock offered hereby are being sold by
Hologic, Inc. ("Hologic" or the "Company"). The Company's Common Stock is
quoted on the Nasdaq National Market under the symbol "HOLX." On January 25,
1996, the last reported sale price for the Company's Common Stock on the
Nasdaq National Market was $43.75 per share. See "Price Range of Common
Stock."

----------------

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.

----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS (1) COMPANY (2)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $42.00 $2.21 $39.79
- -------------------------------------------------------------------------------------------
Total (3)........................ $50,400,000 $2,646,000 $47,754,000
- -------------------------------------------------------------------------------------------
</TABLE>
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(1) The Company and, in the event that the Underwriters' over-allotment option
is exercised, the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $350,000.
(3) The Company and the Selling Stockholders have granted to the Underwriters
a 30-day option to purchase up to an additional 180,000 shares of Common
Stock solely to cover over-allotments, if any. If the Underwriters
exercise this option in full, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Stockholders will be $57,960,000, $3,042,900, $49,584,570 and $5,332,530,
respectively. See "Underwriting."

----------------

The shares of Common Stock offered by this Prospectus are offered by the
several Underwriters, subject to prior sale, when, as and if delivered to and
accepted by them, and subject to the right of the Underwriters to reject
orders in whole or in part. It is expected that delivery of the shares of
Common Stock will be made in New York, New York, on or about January 31, 1996.

----------------

Needham & Company, Inc.
Tucker Anthony
Incorporated
Adams, Harkness & Hill, Inc.

The date of this Prospectus is January 25, 1996.
<PAGE>

[LOGO OF HOLOGIC, INC.]

QDR 4500A ACCLAIM

[DESCRIPTION OF GRAPHIC MATERIAL]

A picture of the Company's QDR 4500A ACCLAIM bone densitometer, including a
patient lying on her back on the table top of the system, and a technician
sitting in front of a computer console mounted on a separate table operating the
equipment.

Hologic introduced its fourth generation, clinically-oriented QDR 4500A
ACCLAIM DXA bone densitometer in fiscal 1995. Pioneered by the Company, DXA
systems have become the predominant means of evaluating low bone density
before fractures occur and monitoring changes in a patient's bone density in
response to therapy. The ACCLAIM series of bone densitometers offers rapid
scanning and high resolution imaging using the latest available fan beam and
high density, solid-state, multi-detector array technology.

- -------------------------------------------------------------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
included or incorporated by reference in this Prospectus. Except as otherwise
indicated, all information contained in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised. References to "Common
Stock" include "Rights" issuable pursuant to that certain Rights Agreement
entered into in 1992 providing for the delivery of a Right along with each
share of Common Stock issued by the Company.

THE COMPANY

Hologic, Inc. ("Hologic" or the "Company") is a leading international
developer, manufacturer and marketer of X-ray bone densitometers which
precisely measure bone density for use in the diagnosis and monitoring of
metabolic bone diseases such as osteoporosis. The Company pioneered the use of
dual-energy X-ray absorptiometry ("DXA") to measure bone density, introducing
the first DXA bone densitometer in 1987. Since this introduction, DXA systems
have become the standard for measuring bone density. In 1995, the Company
introduced its fourth generation of DXA bone densitometers, the clinically
oriented QDRt 4500 ACCLAIMe product line.

Osteoporosis is a condition characterized by reduced bone density that leads
to an increased risk of fracture, which occurs primarily in post-menopausal
women. It is estimated to afflict more than 25 million people in the United
States, at an annual cost of over $10 billion, and approximately 200 million
people worldwide. Because bone loss occurs without symptoms, osteoporosis often
goes unrecognized until after a patient suffers one or more fractures,
frequently of the spine or hip. The measurement of bone density can be used to
assess early post-menopausal bone loss as an indication for initiating
preventive therapies, and to monitor bone density during treatment for
osteoporosis.

The Company believes that the clinical market for osteoporosis diagnostic and
monitoring products is expanding due to the recent development and introduction
of new drug therapies to treat osteoporosis, the more widespread and increased
reimbursement for bone density examinations, the aging of the population, and
an increased focus on women's health issues and preventive medical practices.
All of these factors have led to an increased awareness by women and primary
care providers, such as gynecologists and family physicians, that osteoporosis
is a treatable disease and that measurement of bone density is an integral
component of diagnosis and monitoring of this disease.

In September 1995, the United States Food and Drug Administration (the "FDA")
approved the drug Fosamaxt, developed by Merck & Co., Inc. ("Merck"), for the
treatment of established osteoporosis in post-menopausal women. Fosamax is also
approved in at least 18 countries in addition to the United States. In clinical
trials, Fosamax was shown to increase bone density at the potential
osteoporotic fracture sites of the spine and hip, and to reduce the incidence
of fractures, as compared to patients receiving placebo, without any
significant adverse side effects. Following the approval of Fosamax, Merck has
launched an extensive educational campaign regarding the treatment of
osteoporosis and the use of DXA and other techniques to diagnose and monitor
bone loss and the effects of drug therapies.

To further address the growing clinical market for the early diagnosis and
monitoring of bone loss, the Company is developing products that it believes
will complement its DXA product line. In December 1994, the Company acquired
the ultrasound bone analyzer business of Walker Sonix, Inc. ("Walker Sonix").
The Company is developing an enhanced ultrasound bone analyzer, the Saharae,
which it intends to introduce in clinical test sites in the United States and
certain international markets during fiscal 1996. The Company believes that
ultrasound systems could represent a relatively low cost, compact, easy-to-use,
non-X-ray based, screening technique to assist in the initial diagnosis of
osteoporosis. In September 1994, the Company began a joint development effort
with Serex, Inc. ("Serex") to develop a diagnostic strip test to detect
biochemical markers that indicate the rate of a patient's bone loss. The strip
test is being designed to provide a physician with a real-time means of
measuring a patient's biochemical response to osteoporosis therapies and
compliance with those therapies, as a complement to periodic bone density
measurements. The Company and Serex have also recently entered into an
agreement with a leading pharmaceutical company to develop and market an over-
the-counter version of the strip test. In addition, the Company is expanding
its United States and international distribution capabilities.

Hologic, Inc. was incorporated as a Massachusetts corporation in October 1985
and was reincorporated in Delaware in March 1990. The Company's principal
offices are located at 590 Lincoln Street, Waltham, Massachusetts 02154, and
its telephone number is (617) 890-2300. As used in this Prospectus, the term
"Company" refers to Hologic, Inc. and its subsidiaries.

3
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the Company........... 1,200,000 shares
Common Stock to be outstanding after the Of-
fering....................................... 5,410,783 shares(1)(2)
Use of Proceeds............................... For general corporate
purposes, including working
capital, new product
development, sales and
marketing expansion, and
potential acquisitions. See
"Use of Proceeds."
Nasdaq National Market Symbol................. HOLX
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEARS ENDED (3)
---------------------------------------------------------
SEPTEMBER 30,
--------------- SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF
OPERATIONS DATA:
Revenues................ $17,057 $26,270 $24,848 $38,484 $43,400
Income (loss) before in-
come
taxes(4)(5)(6)......... 1,015 2,102 (2,075) 4,330 2,520
Net income
(loss)(4)(5)(6)........ 701 1,479 (1,775) 2,995 1,870
Net income (loss) per
common and common
equivalent share:
Primary(4)(5)(6)...... $ 0.17 $ 0.37 $ (0.45) $ 0.71 $ 0.43
Fully diluted(6)...... $ 0.69 $ 0.41
Weighted average number
of common and common
equivalent shares
outstanding:
Primary............... 4,049 4,050 3,930 4,195 4,376
Fully diluted......... 4,342 4,575
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
----------------------
ACTUAL AS ADJUSTED (7)
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<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital......................................... $19,370 $66,774
Total liabilities....................................... 11,190 11,190
Total assets............................................ 33,862 81,266
Stockholders' equity.................................... 22,672 70,076
</TABLE>
- --------
(1) Based on the number of shares of Common Stock outstanding as of January 24,
1996. Excludes (i) 844,953 shares of Common Stock issuable upon exercise of
options outstanding under the Company's stock plans at January 24, 1996 and
(ii) certain other contingent obligations for the Company to issue
additional shares of Common Stock. See "Capitalization" and Notes 5 and 8
of Notes to Consolidated Financial Statements.
(2) The Board of Directors of the Company has declared a two-for-one stock
split in the form of a stock dividend to be paid in March 1996, subject to
stockholder approval of an increase in the number of authorized shares of
Common Stock at the Company's Annual Meeting of Stockholders scheduled for
February 27, 1996. See "Description of Capital Stock."
(3) The Company changed its fiscal year end from September 30 to the last
Saturday in September effective with the fiscal year ended September 25,
1993.
(4) Fiscal 1991 expenses include litigation expenses of $1.2 million before
income taxes ($800,000 after income taxes or $0.20 per share) primarily
relating to certain patent litigation involving technology which the
Company no longer owns.
(5) Fiscal 1993 expenses include a restructuring charge of $900,000 (before and
after income taxes or $0.23 per share) relating to the reorganization of
the Company's European operations.
(6) Fiscal 1995 expenses include litigation expenses of $2.5 million before
income taxes ($1.8 million after income taxes or $0.41 per share) primarily
relating to certain patent litigation. A definitive agreement was reached
by the Company and the other party to this litigation in November 1995
settling all outstanding disputes. See "Business--Patents and Proprietary
Rights."
(7) Adjusted to reflect the sale by the Company of 1,200,000 shares of Common
Stock offered hereby, at the offering price of $42.00 per share, and the
application of the estimated net proceeds therefrom. See "Use of Proceeds"
and "Capitalization."

The Hologic logo is a service mark of the Company. QDR and QDR 1000 are
registered trademarks of the Company. QDR 1000W, QDR 1000plus, QDR 2000, QDR
2000plus, QDR 4500, QDR 4500A, QDR 4500SL, QDR 4500W, QDR 4500C, ACCLAIM, UBA
575+ and Sahara are trademarks of the Company. The trademarks Scanora and
Walker Sonix are licensed by the Company. This Prospectus also contains
trademarks of other companies.

4
<PAGE>

RISK FACTORS

In addition to the other information in this Prospectus or incorporated
herein by reference, the following risk factors should be considered carefully
in evaluating the Company and its business before purchasing the shares
offered in this Prospectus.

DEPENDENCE OF PRODUCT SALES ON AVAILABILITY AND ACCEPTANCE OF NEW DRUG
THERAPIES FOR OSTEOPOROSIS

The Company believes that it is important for the continued growth of its
sales that the efficacy of new drug therapies to treat osteoporosis and other
bone disorders be demonstrated, that broadened regulatory approval of those
therapies be granted in the United States and elsewhere, and once approved,
that these new drug therapies gain acceptance. There can be no assurance that
any drug therapies under development or in clinical trials will prove to be
effective, obtain FDA approval or, once approved, gain acceptance. Fosamax and
certain other drug therapies were approved in 1995 by the FDA for the
treatment of osteoporosis and other bone disorders. The failure of one or more
of these therapies to gain wide acceptance, or the failure of new therapies to
be approved and gain acceptance, could have a material adverse effect on the
Company's business. See "Business--Background."

UNCERTAINTY OF HEALTH CARE REFORM

Health care reform and medical cost containment have received significant
attention in the United States and many foreign countries. Certain reform
proposals and cost containment measures could limit the use of the Company's
products, reduce reimbursement available for such use, or adversely affect the
use of new drug therapies to treat osteoporosis and other bone disorders. As a
result, such reforms or cost containment measures could materially and
adversely affect sales of the Company's products. Uncertainty in the medical
community regarding the nature and effect of proposed health care reforms and
cost containment measures may also have a material adverse effect on the
Company's business.

THIRD PARTY REIMBURSEMENT FOR BONE DENSITY EXAMINATIONS

Reimbursement for the use of DXA bone densitometers has been approved by
health care insurance systems in the United States and many foreign countries,
including Belgium, Brazil, Canada, Germany, Greece, Japan, South Korea, Spain
and Switzerland. In the United States, DXA examinations are paid for by many
private third party insurers. In addition, the Health Care Finance
Administration ("HCFA"), which establishes guidelines for the reimbursement of
health care providers treating Medicare and Medicaid patients, has recommended
reimbursement for DXA examinations. The actual reimbursement amounts provided
for DXA examinations is determined by the individual state Medicare carriers.
As of December 1995, several of the more populous states, including
California, Connecticut, New York, New Jersey and Pennsylvania, had no or only
partial reimbursement of DXA examinations. The Company believes that it is
important for the continued growth of sales of the Company's DXA bone
densitometers in the United States and internationally that reimbursement for
bone density examinations be retained and broadened. A reduction in
reimbursement levels could have a material adverse effect on the Company's
business. See "Business--Third Party Reimbursement."

DEVELOPING MARKETS; NEED TO BROADEN ACCEPTANCE OF THE COMPANY'S PRODUCTS

The Company's continued success will depend upon the acceptance and adoption
of newly introduced and emerging drug therapies to treat osteoporosis by the
broad market of primary care providers, such as gynecologists and family
physicians, and the Company's ability to broaden sales of its products to
these physician groups. In order to penetrate this market more effectively,
the Company has expanded its sales and marketing activities, including
increasing its sales force, advertising and participation in trade shows. In
addition, the Company has implemented various leasing programs, including a
program with a third party leasing company, to make its QDR 4500C ACCLAIM
system available to physicians on a fee-per-scan basis, which expires in June
1996. There can be no assurance that the Company will be successful in
obtaining broader market acceptance for its products as a result of these
activities and programs or otherwise. Failure of the Company to do so could
have a material adverse effect on its business.

5
<PAGE>

COMPETITION; NEW PRODUCTS AND TECHNOLOGICAL CHANGE

The markets for the Company's products are highly competitive and subject to
rapid technological change and evolving industry requirements and standards.
The Company believes that these trends will continue into the foreseeable
future. Many of the Company's current and potential competitors have
substantially greater resources than the Company. Several companies have
developed or are expected to develop DXA bone densitometry systems or other
products that measure or assess bone density or bone mineral status, which
compete or will compete with the Company's products. These other systems
include single photon absorptiometry, radiographic absorptiometry,
quantitative computed tomography, ultrasound and biochemical markers. Although
the Company believes that DXA technology is more precise than competing
technologies and is capable of scanning a broader range of sites, certain
competing technologies have cost or other advantages which may limit the
Company's DXA market. The Company's products may also compete with sales of
used and refurbished systems. Furthermore, no assurance can be given that
continuing improvements in current or new technologies will not make them
technically equivalent or superior to DXA technology in addition to providing
cost or other advantages. The Company's success will depend upon its ability
to enhance its existing products, and to develop new products to meet
regulatory and customer requirements and to achieve market acceptance. There
can be no assurance that the Company will be successful in introducing
products or product enhancements on a timely basis, if at all, that the
Company will be able to market these products and product enhancements once
developed, or that the Company otherwise will be able to compete effectively.
See "Business-- Competition."

QUARTERLY FLUCTUATIONS IN OPERATING RESULTS

The Company's results of operations have and may continue to be subject to
significant quarterly variation. The results for a particular quarter may vary
due to a number of factors, including the overall state of health care and
cost containment efforts, the development status and demand for drug therapies
to treat osteoporosis, economic conditions in the Company's markets, the
timing of orders, the timing of expenditures in anticipation of future sales,
the mix of products sold by the Company, the introduction of new products and
product enhancements by the Company or its competitors, and pricing and other
competitive conditions. The Company also believes that its sales in Europe may
be seasonal, with reduced orders in the summer months reflecting summer
vacation schedules. Customers may also cancel or reschedule shipments and
production difficulties could delay shipments. Any of these factors also could
materially adversely affect the Company's annual results of operations.

NO ASSURANCE THAT NEW PRODUCTS WILL RECEIVE FDA OR FOREIGN REGULATORY
CLEARANCES

Medical devices cannot be marketed in the United States without clearance or
approval by the FDA. Medical devices sold in the United States must also be
manufactured in compliance with FDA Good Manufacturing Practices, which
regulate the design, manufacture, packaging, storage and installation of
medical devices. Moreover, medical devices are required to comply with FDA
regulations relating to investigational research, labeling and post-market
reporting. States may also regulate the manufacture, sale and use of medical
devices, particularly those that employ X-ray technology. The Company's
products are also subject to approval and regulation by certain foreign
regulatory and safety agencies. The process of obtaining clearances and
approvals can be costly and time-consuming. Moreover, any approvals or
clearances, once obtained, can be withdrawn or modified. The Company has
obtained all necessary FDA marketing clearances for its DXA bone densitometers
under the less stringent 510(k) marketing clearance procedure and is presently
awaiting regulatory clearance of its QDR 4500 ACCLAIM product line in Japan.
The Company believes that its ultrasound products and over-the-counter
biochemical marker strip test may require the more stringent and time
consuming FDA premarket approval to be marketed in the United States. Delay or
inability to obtain any necessary United States or foreign clearances or
approvals could have a material adverse effect on the Company's business. See
"Business--Regulation."

RELIANCE ON SEREX FOR THE DEVELOPMENT OF BIOCHEMICAL MARKER STRIP TEST

The Company has entered into a research and development agreement with Serex
to develop biochemical marker strip tests to monitor bone resorption. Serex is
a relatively small company with limited resources and

6
<PAGE>

limited operating history. There can be no assurance that Serex will be able
to meet its obligations under this agreement or otherwise be successful in
developing the strip test on a timely basis or within budget, if at all. Any
such failure on the part of Serex could have a material adverse effect on the
Company's future prospects.

RELIANCE ON FOREIGN SALES

In fiscal 1995, foreign sales accounted for approximately 75% of the
Company's product sales. The Company maintains sales and service offices in
Belgium, France and Spain. The expenses and sales of these offices are
denominated in local currencies. The Company anticipates that foreign sales
and foreign denominated sales will continue to account for a significant
portion of the Company's total sales, which will result in a significant
portion of the Company's revenues being subject to risks associated with
foreign sales, including risks of exchange rate fluctuations, United States
and foreign regulatory requirements and policy changes, political and economic
instability, difficulties in accounts receivable collection, difficulties in
managing distributors or representatives and seasonality of sales. The Company
has hedged its foreign currency exposure by borrowing funds in local European
currencies to pay the expenses of its foreign offices. There can be no
assurance that these hedging activities will be successful, or that exchange
rate fluctuations or other risks associated with international sales and
operations will not have a material adverse effect on the Company's business.
See "Business--Marketing and Sales" and Note 11 of Notes to Consolidated
Financial Statements.

DEPENDENCE ON THIRD PARTY DISTRIBUTORS; SIGNIFICANT CUSTOMER

For its sales and service activities outside of the United States, Canada
and certain European countries, the Company is primarily dependent upon third
party distributors. In fiscal 1995, the Company's sales to its exclusive
Japanese distributor, Toyo Medic Co., Ltd. ("Toyo Medic"), accounted for 20%
of product sales. There can be no assurance that Toyo Medic or any of the
Company's other distributors will continue to provide sales and services for
the Company at acceptable levels, if at all, or that the Company would be able
to replace any distributors on terms as advantageous to the Company should any
of its existing arrangements terminate. Further, there can be no assurance
that the Company will be able to make arrangements with additional
distributors to access new markets. Material adverse changes in the
relationship between the Company and its distributors, including the loss of
Toyo Medic as a distributor or an adverse change in the relationship between
the Company and Toyo Medic, or the failure of the Company to enter into
advantageous arrangements with distributors in new markets, could have a
material adverse effect on the Company's business. See "Business--Marketing
and Sales."

UNCERTAINTY OF PATENT AND PROPRIETARY RIGHTS PROTECTION

The Company relies upon trade secrets and patents to protect its technology.
The Company has obtained ten patents, licensed three patents and has pending
17 patent applications in the United States relating to its DXA technology,
and has obtained three patents, licensed four patents and has pending two
patent applications in the United States relating to its ultrasound
technology. The Company has obtained or applied for corresponding patents and
patent applications for certain of these patents and patent applications in
certain foreign countries. There can be no assurance that any of the Company's
patent applications will be granted or that any patent or patent application
will provide significant protection for the Company's products and technology.
Moreover, there can be no assurance that foreign intellectual property laws
will protect the Company's intellectual property rights. In the absence of
significant patent protection, the Company may be vulnerable to competitors
who attempt to copy the Company's products, processes or technology.

The Company has been involved in extensive patent litigation with Lunar
Corporation ("Lunar"), with each party claiming that the other is infringing
certain patents held by the other. This litigation was settled by agreement
dated November 22, 1995. The agreement provides for certain royalties to be
paid by each party to the other for future sales of products using certain
defined technologies. The Company does not believe that amounts to be paid by
either party under this arrangement will be material. The agreement also
provides that

7
<PAGE>

neither party will engage the other party in patent litigation relating to
these technologies for a period of ten years following the date of the
agreement, regardless of the infringement claimed and regardless of whether
the technology in question currently exists or is developed or acquired by the
other party in the future. There can be no assurance that Lunar will not use
the Company's technology during this ten-year period in a manner that would
materially and adversely affect the Company's business. See "Business--Patents
and Proprietary Rights."

ATTRACTION AND RETENTION OF KEY PERSONNEL

The future success of the Company will depend in large part on the continued
services of its executive officers, as well as the Company's ability to
attract and retain other highly qualified and well-trained managerial and
technical personnel. There may be only a limited number of persons with the
requisite skills to serve in these positions and it may become increasingly
difficult for the Company to hire such personnel. Competition for such
personnel is intense, and there can be no assurance that the Company will be
able to attract and retain personnel necessary for the development of its
business. Mr. Ellenbogen and Dr. Stein, the Chief Executive Officer and Senior
Vice President, respectively, of the Company, also serve in similar positions
at Vivid Technologies, Inc. ("Vivid"). Under a management agreement between
the Company and Vivid, the Company has agreed to provide management services
to Vivid, including the part-time assistance of Mr. Ellenbogen and Dr. Stein.
During fiscal 1995, Mr. Ellenbogen and Dr. Stein have typically devoted up to
approximately 16 and eight hours per week, respectively, to Vivid. See
"Management--Vivid Technologies, Inc."

PRODUCT LIABILITY

The Company's business involves the risk of product liability claims
inherent to the medical device business. The Company currently maintains
product liability insurance with an aggregate coverage limit of $6.0 million
per year, subject to certain deductibles and exclusions. There can be no
assurance that this insurance will be sufficient to protect the Company from
product liability claims, or that product liability insurance will be
available to the Company at a reasonable cost, if at all, in the future.

ANTI-TAKEOVER PROVISIONS; MANAGEMENT CONTROL

The Company's Certificate of Incorporation and By-laws include certain
provisions that may have the effect of discouraging or preventing a change in
control of the Company. In addition, the Company made a rights distribution in
December 1992 that could also have the effect of discouraging or preventing a
change in control of the Company. These provisions could limit the price that
stockholders of the Company might receive in the future for shares of the
Common Stock. See "Description of Capital Stock."

POSSIBLE VOLATILITY OF STOCK PRICE

The market price of the Common Stock may be highly volatile. Such factors as
quarterly fluctuations in the Company's results of operations, the
announcement of technological innovations or new products by the Company or
its competitors, and general conditions in the industry in which the Company
competes may have a significant impact on the market price of the Common
Stock.

8
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,200,000 shares of
Common Stock offered by the Company hereby will be approximately $47,404,000,
after deduction of the underwriting discounts and commissions and estimated
offering expenses payable by the Company.

The Company expects to use the net proceeds for working capital and general
corporate purposes, including new product development, and sales and marketing
expansion. The Company is undertaking the offering in part because it believes
that the availability of adequate financial resources is a substantial
competitive factor. The Company may use a portion of the net proceeds for
strategic acquisitions of businesses, products or technologies complementary
to the Company's business. The Company does not have any commitments to make
any such material acquisition. Pending such uses, the Company plans to invest
the net proceeds of this offering in short-term, interest-bearing investment-
grade securities.

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "HOLX." The following table sets forth, for the periods indicated, the
high and low sales prices per share of Common Stock, as reported by the Nasdaq
National Market.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR ENDED SEPTEMBER 24, 1994
First Quarter................................................ $ 5 $ 3 1/2
Second Quarter............................................... 7 3/8 3 3/8
Third Quarter................................................ 14 6 3/8
Fourth Quarter............................................... 18 9 3/4
FISCAL YEAR ENDED SEPTEMBER 30, 1995
First Quarter................................................ 18 1/8 12 1/4
Second Quarter............................................... 18 3/4 13 1/4
Third Quarter................................................ 17 3/8 9
Fourth Quarter............................................... 25 1/8 15 3/8
FISCAL YEAR ENDING SEPTEMBER 28, 1996
First Quarter ............................................... 45 1/2 20 3/4
Second Quarter (through January 25).......................... 48 1/4 34 1/2
</TABLE>

The last reported sale price of the Common Stock on the Nasdaq National
Market on January 25, 1996 was $43.75 per share. As of January 24, 1996, there
were approximately 232 holders of record of the Company's Common Stock.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its capital stock
and does not plan to pay any cash dividends in the foreseeable future. The
Company's current policy is to retain all of its earnings to finance future
growth.

<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company at
September 30, 1995 and as adjusted to reflect the sale of 1,200,000 shares of
Common Stock offered hereby by the Company and the application of the
estimated net proceeds therefrom, after deducting the underwriting discounts
and commissions and estimated offering expenses payable by the Company. This
table should be read in conjunction with the Consolidated Financial Statements
and Notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Stockholders' equity(1)(2):
Preferred Stock, $.01 par value, 1,622,685 shares autho-
rized; no shares issued................................ $ -- $ --
Common Stock, $.01 par value, 10,000,000 shares autho-
rized; 4,122,100 shares issued and outstanding;
5,322,100 shares issued and outstanding, as adjusted... 41 53
Capital in excess of par value.......................... 15,355 62,747
Retained earnings....................................... 7,421 7,421
Cumulative translation adjustment....................... (145) (145)
------- -------
Total stockholders' equity............................ $22,672 $70,076
======= =======
</TABLE>
- --------
(1) Excludes (i) 884,683 shares of Common Stock issuable upon exercise of
options outstanding under the Company's stock plans at September 30, 1995
and (ii) certain other contingent obligations for the Company to issue
additional shares of Common Stock. See Notes 5 and 8 of Notes to
Consolidated Financial Statements.
(2) The Board of Directors of the Company has declared a two-for-one stock
split in the form of a stock dividend to be paid in March 1996, subject to
stockholder approval of an increase in the number of authorized shares of
Common Stock at the Company's Annual Meeting of Stockholders scheduled for
February 27, 1996. See "Description of Capital Stock."

10
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following table contains certain selected consolidated financial data of
the Company and is qualified by the more detailed Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus. The
consolidated statement of operations data for the fiscal years ended September
25, 1993, September 24, 1994 and September 30, 1995 and the consolidated
balance sheet data as of September 24, 1994 and September 30, 1995 have been
derived from Consolidated Financial Statements, which statements have been
audited by Arthur Andersen LLP, independent public accountants, and are
included elsewhere in this Prospectus. The consolidated statement of
operations data for the fiscal years ended September 30, 1991 and 1992 and the
consolidated balance sheet data as of September 30, 1991 and 1992 and
September 25, 1993 have been derived from the Company's consolidated financial
statements, which statements have been audited by Arthur Andersen LLP and are
not included in this Prospectus. This data should be read in conjunction with
the Consolidated Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere herein.

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------------------------
SEPTEMBER 30,
--------------- SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
CONSOLIDATED STATEMENT OF 1991 1992 1993 1994 1995
OPERATIONS DATA: ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales........... $15,258 $26,197 $24,140 $37,056 $41,130
Other revenue........... 1,799 73 708 1,428 2,270
------- ------- ------- ------- -------
17,057 26,270 24,848 38,484 43,400
Costs and expenses:
Cost of product sales... 8,464 13,469 13,729 20,865 22,091
Research and develop-
ment................... 3,559 3,608 3,182 3,442 4,301
Selling and marketing... 2,373 4,692 5,472 5,893 7,835
General and administra-
tive................... 1,249 3,132 3,501 4,189 4,461
Litigation ex-
penses(1)(2)........... 1,190 -- -- -- 2,534
Restructuring costs(3).. -- -- 900 -- --
------- ------- ------- ------- -------
16,835 24,901 26,784 34,389 41,222
------- ------- ------- ------- -------
Income (loss) from opera-
tions.................... 222 1,369 (1,936) 4,095 2,178
Interest income........... 793 502 300 316 610
Other income (expense).... -- 231 (439) (81) (268)
------- ------- ------- ------- -------
Income (loss) before in-
come taxes............... 1,015 2,102 (2,075) 4,330 2,520
Provision (benefit) for
income taxes............. 314 623 (300) 1,335 650
------- ------- ------- ------- -------
Net income (loss)......... $ 701 $ 1,479 $(1,775) $ 2,995 $ 1,870
======= ======= ======= ======= =======
Net income (loss) per com-
mon and common equivalent
share:
Primary............... $ 0.17 $ 0.37 $ (0.45) $ 0.71 $ 0.43
======= ======= ======= ======= =======
Fully diluted......... $ 0.69 $ 0.41
======= =======
Weighted average number of
common and common equiva-
lent shares outstanding:
Primary............... 4,049 4,050 3,930 4,195 4,376
======= ======= ======= ======= =======
Fully diluted......... 4,342 4,575
======= =======
<CAPTION>
SEPTEMBER 30,
--------------- SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
CONSOLIDATED BALANCE SHEET 1991 1992 1993 1994 1995
DATA: ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Working capital........... $15,503 $16,427 $14,540 $17,688 $19,370
Total liabilities......... 3,135 4,578 5,854 8,625 11,190
Total assets.............. 19,809 22,695 22,166 28,497 33,862
Stockholders' equity...... $16,674 $18,117 $16,312 $19,872 $22,672
</TABLE>
- --------
(1) The fiscal 1991 litigation expenses of $1.2 million, or $0.20 per share,
relate primarily to certain patent litigation involving technology which
the Company no longer owns.
(2) The fiscal 1995 litigation expenses of $2.5 million, or $0.41 per share,
relate primarily to certain patent litigation. A definitive agreement was
reached by the Company and the other party to this litigation in November
1995 settling all outstanding disputes. See "Business--Patents and
Proprietary Rights."
(3) The fiscal 1993 restructuring charge of $900,000, or $0.23 per share,
relates to the reorganization of the Company's European operations.

11
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

Since inception, the Company has experienced generally increasing annual
sales as interest in bone diseases, such as osteoporosis, has grown, as new
drug therapies have become available in the United States and other countries
to treat these diseases and as the use of DXA systems to measure bone density
has become more widespread. The Company's revenues increased 75% to $43.4
million in 1995 from $24.8 million in 1993. During 1995, the Company's net
income was adversely impacted by litigation costs of $2.5 million, or $0.41
per share, incurred in connection with the Company's dispute with Lunar, which
was settled in November 1995, and, to a lesser extent, its dispute with B.V.
Optische Industrie de Oude Delft ("Oldelft") which was dismissed in December
1995. In January 1996, Oldelft filed a motion for reconsideration of the
dismissal, which is currently pending before the court. In fiscal 1993, the
Company's sales dropped slightly from fiscal 1992 as a result of certain
recessionary economic trends in Europe and a significant reduction of United
States sales due to uncertainty over the direction of proposed healthcare
reforms. In fiscal 1994 and 1995, the economic climate in Europe steadily
improved and the uncertainty over United States government reform of the
healthcare system abated. In addition, the Company was successful in its
efforts to develop new international markets in Latin America and the Pacific
Rim.

The Company commenced operations in April 1986 and was primarily engaged in
product development through the end of fiscal 1987. The Company shipped the
first QDR 1000 for clinical testing in June 1987 and began commercial
shipments of the system in October 1987 upon receipt of FDA marketing
clearance. The Company introduced a bone densitometer capable of assessing the
bone density of the entire body in 1989, introduced the first bone
densitometer capable of taking supine lateral measurements of the spine in
1991, and introduced its fourth generation clinically-oriented QDR 4500
ACCLAIM series of bone densitometers at the annual meeting of the Radiological
Society of North America in November 1994. The Company's shipments of its
high-end QDR 4500A ACCLAIM began in January 1995 and of its entire ACCLAIM
product line began in the third quarter of fiscal 1995. In the fourth quarter
of fiscal 1995, ACCLAIM sales represented approximately 70% of the Company's
total DXA sales. The Company achieved a slightly higher gross margin on this
product line because of higher selling prices and lower overall manufacturing
costs than the older DXA line.

The Company believes that the two major drivers of the growth in demand for
its bone densitometers are (i) the availability of new and effective drug
therapies to treat and prevent bone diseases, including osteoporosis, and (ii)
the availability of reimbursement to healthcare providers for bone density
measurements of patients. On September 29, 1995, the FDA cleared for marketing
Merck's new bisphosphonate, Fosamax, for treatment of established osteoporosis
in post-menopausal women. The Health Care Finance Administration, the agency
which administers Medicare, increased the recommended reimbursement rate for
DXA tests to a national average of $124, effective January 1, 1995, from $68,
the original recommended reimbursement rate which went into effect in April
1994.

12
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage of
revenues represented by items as shown in the Company's consolidated
statements of operations.

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------------------
SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Product sales........... 97.1% 96.3% 94.8%
Other revenue........... 2.9 3.7 5.2
----- ----- -----
100.0 100.0 100.0
----- ----- -----
Costs and expenses:
Cost of product sales... 55.3 54.2 50.9
Research and develop-
ment................... 12.8 8.9 9.9
Selling and marketing... 22.0 15.3 18.1
General and administra-
tive................... 14.1 10.9 10.3
Litigation expenses..... -- -- 5.8
Restructuring costs..... 3.6 -- --
----- ----- -----
107.8 89.3 95.0
----- ----- -----
Income (loss) from oper-
ations................. (7.8) 10.7 5.0
Interest income......... 1.2 0.7 1.4
Other expense........... (1.7) (0.2) (0.6)
----- ----- -----
Income (loss) before in-
come taxes............... (8.3) 11.2 5.8
Provision (benefit) for
income taxes............. (1.2) 3.4 1.5
----- ----- -----
Net income (loss)......... (7.1%) 7.8% 4.3%
===== ===== =====
</TABLE>

FISCAL YEARS ENDED SEPTEMBER 30, 1995, SEPTEMBER 24, 1994 AND SEPTEMBER 25,
1993

REVENUES. Total revenues were $43.4 million in fiscal 1995, $38.5 million in
fiscal 1994 and $24.8 million in fiscal 1993. The increase in total revenues
of 13% in fiscal 1995 compared to fiscal 1994 was primarily due to the
increase in the total number of DXA product shipments in both the Company's
domestic and international markets, particularly to Europe where product sales
increased 30% over the prior year. During fiscal 1995, there was also a shift
in product sales mix to the Company's new line of bone densitometers, the
ACCLAIM series, which the Company began shipping in January 1995. The new
ACCLAIM products have higher average selling prices than the comparable DXA
bone densitometers which they replace. For the current year, sales of the
ACCLAIM product accounted for over 42% of product sales. The increase in total
revenues in fiscal 1994 compared to 1993 was primarily due to the increase in
the total number of DXA product shipments in both the Company's domestic and
international markets, particularly Japan where the Company's distributor
accounted for 28% of product sales in fiscal 1994. During fiscal 1994, there
was also a shift in product sales mix from fiscal 1993, with an increased
percentage of sales being derived from the higher-priced QDR 2000plus and QDR
2000 systems, and an increase in sales of two X-ray products which the Company
began to sell as a distributor, primarily in Europe.

Other revenues consist of royalty revenues from the Company's licensing of
its technology to a related party and revenue relating to medical data
management services provided to pharmaceutical companies to assist in the
collection and monitoring of clinical trial data. In fiscal 1995, other
revenue increased 59% to $2.3 million from $1.4 million in fiscal 1994,
primarily due to an increase in revenue for medical data management services.
In fiscal 1994, other revenue increased 101% from $710,000 in fiscal 1993
primarily due to an increase in royalty revenues and, to a lesser extent, an
increase in revenue relating to medical data management services. See
"Business--Customers" and "Business--Patents and Proprietary Rights."

13
<PAGE>

In fiscal 1995, approximately 37% of product sales were generated in Europe,
29% in Asia, 25% in the United States and 9% in other international markets.
In fiscal 1994, approximately 38% of product sales were generated in Asia, 31%
in Europe, 26% in the United States and 5% in other international markets. In
fiscal 1993, approximately 51% of product sales were generated in Europe, 26%
in the United States, 17% in Asia and 6% in other international markets. The
Company expects that foreign sales in the current fiscal year will continue to
account for a substantial portion of product sales. See "Risk Factors --
Reliance on Foreign Sales."

COSTS AND EXPENSES. The cost of product sales decreased as a percentage of
product sales to 54% in fiscal 1995 from 56% in fiscal 1994 and from 57% in
fiscal 1993. In fiscal 1995, these costs decreased as a percentage of product
sales primarily due to the Company initiating shipments of its new family of
DXA bone densitometers, the ACCLAIM series, and a volume increase in the
number of DXA systems sold resulting in certain manufacturing efficiencies.
The Company began selling the ACCLAIM product in the second quarter of fiscal
1995 and has recognized higher gross margins than on the older DXA product
line from higher average selling prices and lower labor and overhead-related
manufacturing costs. In fiscal 1994, the cost of product sales decreased as a
percentage of product sales primarily due to the volume increase in the number
of DXA systems sold and the associated manufacturing efficiencies. These gross
margin improvements were offset somewhat by increased sales of X-ray systems,
which are distributed but not manufactured by the Company in Europe, resulting
in an overall gross margin percentage that is less than what is earned on the
DXA product line.

Research and development expenses increased 25% to $4.3 million (10% of
total revenues) in fiscal 1995 from $3.4 million (9% of total revenues) in
fiscal 1994 primarily due to the addition of engineering personnel and outside
consultants working on the development of new products and the funding of
Serex to develop a biochemical marker strip test. In fiscal 1994, research and
development expenses increased from $3.2 million (13% of total revenues) in
fiscal 1993 primarily due to the addition of engineering personnel working on
the development of new products and due to higher prototype material costs
associated with the Company's new fourth-generation QDR 4500 ACCLAIM bone
densitometers.

Selling and marketing expenses increased 33% to $7.8 million (19% of product
sales) in fiscal 1995 from $5.9 million (16% of product sales) in fiscal 1994.
The increase in fiscal 1995 expenses was primarily due to an increase in sales
personnel and related expenses, marketing and promotional costs incurred in
connection with the introduction of the QDR 4500 ACCLAIM product and increased
sales commissions based on the higher sales volume. In fiscal 1994, selling
and marketing expenses increased 8% from $5.5 million (23% of product sales)
in fiscal 1993. The increase in fiscal 1994 from 1993 was primarily due to
increased sales commissions based on the higher sales volume, especially in
North America and Latin America where the Company sells directly to end-user
customers. In addition, the Company incurred additional costs in connection
with its initiation of a formal new business development effort, which has
resulted in the Company's recent product acquisitions and strategic alliances.
The decrease in expenses as a percentage of product sales in fiscal 1994 was
due to the significant increase in sales volume to distributors which
generally do not receive commissions.

General and administrative expenses increased to $4.5 million (10% of total
revenues) in fiscal 1995 from $4.2 million (11% of total revenues) in fiscal
1994 and $3.5 million (14% of total revenues) in fiscal 1993. The increase in
fiscal 1995 was primarily due to increased head count and other compensation-
related expenditures. The increase in fiscal 1994 when compared to fiscal 1993
was primarily due to increases in accounts receivable reserves, which reflects
the increase in accounts receivable, and an increase in employee incentive
programs. These increases were offset in part by a decrease of general and
administrative expenses in Europe as part of the reorganization begun in the
fourth quarter of fiscal 1993.

Litigation expenses incurred in fiscal 1995 were in connection with the
Company's disputes with Lunar and Oldelft. Legal expenses in connection with
the patent litigation with Lunar began in October 1994 and represent a
substantial portion of the total litigation expenses. In November 1995, a
definitive agreement that provides for the cross-licensing of certain patent
rights and a non-assertion agreement for all patents involving DXA and
ultrasound technologies for a period of ten years was reached by the Company
and Lunar. The complaint brought by Oldelft against the Company was dismissed
in December 1995. In January 1996, Oldelft filed a motion for reconsideration
of the dismissal, which is currently pending before the court. See "Business
- -- Patents and Proprietary Rights" and "Business -- Legal Proceedings."

14
<PAGE>

In the fourth quarter of fiscal 1993, the Company recorded a restructuring
charge of $900,000. This nonrecurring charge covered the reorganization of its
European operations, including consolidation of the distribution and
administrative infrastructure, asset write-offs including receivables and
inventory, and a reduction of its European workforce. The charges from this
restructuring were a result of the weak European economy and the Company's
desire to reallocate its resources to expanding territories with greater
growth potential. At the end of fiscal 1994, the Company's reorganization was
complete and all restructuring charges had been incurred.

INTEREST INCOME. Interest income increased to $610,000 in fiscal 1995 from
$320,000 in fiscal 1994 as the Company earned a higher rate of return on a
slightly higher investment base than in the prior year and increased the
number of long-term receivables to Latin American customers. In fiscal 1994,
interest income increased from $300,000 in fiscal 1993 as the Company earned a
slightly higher rate of return on a slightly lower investment base than in the
preceding year.

OTHER EXPENSE. In fiscal 1995 and 1994, the Company incurred other expenses
of $270,000 and $80,000, respectively. These expenses were primarily
attributable to the interest costs on a line of credit established by the
Company in the third quarter of fiscal 1994 for use by the Company's European
subsidiaries to borrow funds in their local currencies to pay for all
intercompany sales, thereby reducing the foreign currency exposure on those
transactions.

In fiscal 1993, the Company recognized other expenses of $440,000 which
primarily represented foreign currency exchange losses, net of hedge
transactions, arising from the Company's United States dollar-denominated
sales to its three European subsidiaries. Approximately one-half of the losses
for the year were incurred in the first quarter, prior to the implementation
of the Company's program to purchase foreign currency forward contracts to
hedge its foreign currency exposure. In 1993, the United States dollar
strengthened significantly against the three foreign currencies (the French
franc, the Belgian franc and the Spanish peseta) in which the subsidiaries
conducted business causing the Company to recognize a transaction loss.

To the extent that foreign currency exchange rates fluctuate in the future,
the Company may be exposed to continued financial risk. Although the Company
has established a borrowing line denominated in the two foreign currencies
(the French franc and the Belgian franc) in which the subsidiaries currently
conduct business to minimize this risk, there can be no assurance that the
Company will be successful or can fully hedge its outstanding exposure. See
"Risk Factors -- Reliance on Foreign Sales."

PROVISION FOR INCOME TAXES. The Company's effective tax rate was 25.8% in
fiscal 1995 and 30.8% in fiscal 1994. In fiscal 1993, the Company had a
benefit for income taxes as a result of that year's loss. The Company's
effective tax rate is lower than the statutory tax rates due primarily to the
utilization of tax credits, the utilization of net operating losses in foreign
jurisdictions and tax benefits associated with the Company's foreign sales
corporation.

15
<PAGE>

QUARTERLY RESULTS OF OPERATIONS

The following table presents certain unaudited consolidated quarterly
financial information for the eight quarters ended September 30, 1995. In the
opinion of the Company's management, this information has been prepared on the
same basis as the Consolidated Financial Statements appearing elsewhere in the
Prospectus and includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial results set forth
herein. Results of operations for any previous quarter are not necessarily
indicative of results for any future period.

<TABLE>
<CAPTION>
FISCAL 1994 QUARTER ENDED FISCAL 1995 QUARTER ENDED
--------------------------------------------- ---------------------------------------------
CONSOLIDATED STATEMENTS
OF DECEMBER 25, MARCH 26, JUNE 25, SEPTEMBER 24, DECEMBER 24, MARCH 25, JUNE 24, SEPTEMBER 30,
OPERATIONS DATA: 1993 1994 1994 1994 1994 1995 1995 1995
---- ---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product sales.......... $7,483 $9,476 $10,573 $9,524 $ 9,783 $8,521 $10,804 $12,022
Other revenues......... 164 432 375 457 416 510 497 847
------ ------ ------- ------ ------- ------ ------- -------
7,647 9,908 10,948 9,981 10,199 9,031 11,301 12,869
Costs and Expenses:
Cost of product sales.. 4,109 5,343 5,855 5,558 5,343 4,893 5,670 6,185
Research and develop-
ment.................. 783 845 928 886 968 1,109 1,015 1,209
Selling and marketing.. 1,427 1,341 1,356 1,769 1,822 1,712 2,112 2,189
General and administra-
tive.................. 790 1,120 1,194 1,085 1,140 900 1,159 1,262
Litigation expenses.... -- -- -- -- 54 298 801 1,381
------ ------ ------- ------ ------- ------ ------- -------
7,109 8,649 9,333 9,298 9,327 8,912 10,757 12,226
------ ------ ------- ------ ------- ------ ------- -------
Income from operations.. 538 1,259 1,615 683 872 119 544 643
Other income (expense).. 64 16 126 29 32 95 73 142
------ ------ ------- ------ ------- ------ ------- -------
Income before income
taxes.................. 602 1,275 1,741 712 904 214 617 785
Provision for income
taxes.................. 190 400 545 200 260 60 130 200
------ ------ ------- ------ ------- ------ ------- -------
Net income.............. $ 412 $ 875 $ 1,196 $ 512 $ 644 $ 154 $ 487 $ 585
====== ====== ======= ====== ======= ====== ======= =======
</TABLE>

<TABLE>
<CAPTION>
FISCAL 1994 QUARTER ENDED FISCAL 1995 QUARTER ENDED
--------------------------------------------- ---------------------------------------------
AS A PERCENTAGE OF TOTAL DECEMBER 25, MARCH 26, JUNE 25, SEPTEMBER 24, DECEMBER 24, MARCH 25, JUNE 24, SEPTEMBER 30,
REVENUES: 1993 1994 1994 1994 1994 1995 1995 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product sales.......... 97.9% 95.6% 96.6% 95.4% 95.9% 94.4% 95.6% 93.4%
Other revenues......... 2.1 4.4 3.4 4.6 4.1 5.6 4.4 6.6
----- ----- ----- ----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Costs and Expenses:
Cost of product sales.. 53.7 54.0 53.5 55.7 52.4 54.1 50.1 48.1
Research and develop-
ment.................. 10.2 8.5 8.5 8.9 9.5 12.3 9.0 9.4
Selling and marketing.. 18.7 13.5 12.4 17.7 17.9 19.0 18.7 17.0
General and administra-
tive.................. 10.3 11.3 10.9 10.9 11.2 10.0 10.3 9.8
Litigation expenses.... -- -- -- -- 0.5 3.3 7.1 10.7
----- ----- ----- ----- ----- ----- ----- -----
92.9 87.3 85.3 93.2 91.5 98.7 95.2 95.0
----- ----- ----- ----- ----- ----- ----- -----
Income from operations.. 7.1 12.7 14.7 6.8 8.5 1.3 4.8 5.0
Other income (expense).. 0.8 0.2 1.1 0.3 0.3 1.0 0.6 1.1
----- ----- ----- ----- ----- ----- ----- -----
Income before income
taxes.................. 7.9 12.9 15.8 7.1 8.8 2.3 5.4 6.1
Provision for income
taxes.................. 2.5 4.1 4.9 2.0 2.5 0.6 1.1 1.6
----- ----- ----- ----- ----- ----- ----- -----
Net income.............. 5.4% 8.8% 10.9% 5.1% 6.3% 1.7% 4.3% 4.5%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

16
<PAGE>

The Company's results of operations have and may continue to be subject to
significant quarterly variation. The results for a particular quarter may vary
due to a number of factors, including the overall state of health care and
cost containment efforts, the development status and demand for drug therapies
to treat osteoporosis, economic conditions in the Company's markets, the
timing of orders, the timing of expenditures in anticipation of future sales,
the mix of products sold by the Company, the introduction of new products and
product enhancements by the Company or its competitors, and pricing and other
competitive conditions. The Company also believes that its sales in Europe may
be seasonal, with reduced orders in the summer months reflecting summer
vacation schedules. See "Risk Factors--Quarterly Fluctuations in Operating
Results."

REVENUES. The Company's revenues have increased generally in the quarters
presented above, reflecting increased market acceptance of the DXA systems and
a global strengthening of the bone densitometry market. The decrease in
revenues in the quarter ended September 24, 1994, generally reflected the
seasonal variation the Company has experienced in the summer months. In the
quarter ended September 30, 1995, the Company did not experience a slowdown in
revenues from seasonality due to the increased market activity from the
interest in a new drug therapy to treat osteoporosis and an increase in demand
for ACCLAIM, the Company's new product series. Also in the fourth quarter of
fiscal 1995, sales in the United States benefited from the anticipated FDA
approval of Fosamax. The decrease in revenues in the quarter ended March 25,
1995 was primarily due to the introduction of three models of the new ACCLAIM
product line, including the QDR 4500C clinical densitometer, in April 1995
which caused a delay in sales in the earlier quarter. The ACCLAIM product line
was introduced in December 1994 and shipments of the QDR 4500A, the high-end
system, began in January 1995. In the fourth quarter of fiscal 1995, the
ACCLAIM product line accounted for approximately 70% of the Company's DXA
product sales.

EXPENSES. The quarterly fluctuations in cost of product sales as a
percentage of net revenues were attributable to changing product mix,
variances in selling prices between countries and different distribution
channels, improved manufacturing efficiencies associated with increased
product volumes and, in the last two quarters of fiscal 1995, increased
selling prices and improved manufacturing efficiencies associated with
ACCLAIM, the Company's new product family.

Research and development expenses have generally increased through the
quarter ended September 30, 1995, reflecting the increased development efforts
for the ACCLAIM product line and, in fiscal 1995, development projects for a
dry ultrasound system and a strip-test utilizing a biochemical marker.

Selling, general and administrative expenses have generally increased over
the last eight quarters primarily due to increases in sales commissions,
marketing expenditures and personnel to support the Company's sales growth and
introduction of new products.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations primarily through cash flows from
operations and the issuance of Common Stock.

At September 30, 1995, the Company's working capital was $19.4 million. At
such date, the Company had $9.9 million in cash, cash equivalents and short-
term investments. The current cash, cash equivalents and investments balance
increased approximately $540,000 from September 24, 1994 primarily due to an
increase in the Company's current liabilities, which were partially offset by
an increase in inventories and accounts receivable. The increase in current
liabilities, inventories and accounts receivable reflects the Company's
introduction of its new ACCLAIM family of bone densitometers and the increase
in sales activity. At September 30, 1995, one customer had accounts receivable
outstanding of approximately $2.2 million, which were current within their
payment terms. The Company finances certain sales to Latin America over a two
to three year time frame. At September 30, 1995, the Company had long-term
accounts receivable outstanding of approximately $800,000 relating to these
sales, which were included in other assets. Working capital increased by
approximately $1.7 million in fiscal 1995, primarily from the addition of net
income. In fiscal 1995, the Company purchased $800,000 of property and
equipment, primarily computers and other equipment associated with the hiring
of additional personnel.

The Company does not currently have any significant capital commitments and
believes that existing sources of liquidity, including the anticipated net
proceeds of the offering, funds expected to be generated from operations and a
$3.0 million credit line for use by its European subsidiaries, will provide
adequate cash to fund the Company's anticipated working capital and other cash
needs for the foreseeable future.

17
<PAGE>

BUSINESS

The Company is a leading international developer, manufacturer and marketer
of X-ray bone densitometers which precisely measure bone density for use in
the diagnosis and monitoring of metabolic bone diseases such as osteoporosis.
The Company pioneered the use of dual-energy X-ray absorptiometry ("DXA") to
measure bone density, introducing the first DXA bone densitometer in 1987.
Since this introduction, DXA systems have become the standard for measuring
bone density. In 1995, the Company introduced its fourth generation of DXA
bone densitometers, its clinically oriented QDR 4500 ACCLAIM product line.

To address the growing clinical market for the early diagnosis and
monitoring of osteoporosis, the Company is developing products that it
believes will complement its DXA product line. In December 1994, the Company
acquired the ultrasound bone analyzer business of Walker Sonix, Inc. The
Company is developing an enhanced ultrasound bone analyzer, the SaharaE, which
it intends to introduce in clinical test sites in the United States and
certain international markets during fiscal 1996. The Company believes that
ultrasound systems could represent a relatively low cost, compact, easy-to-
use, non-X-ray based, screening technique to assist in the initial diagnosis
of osteoporosis. In September 1994, the Company began a joint development
effort with Serex, Inc. to develop a diagnostic strip test to detect
biochemical markers that indicate the rate of a patient's bone loss. The strip
test is being designed to provide a physician with a real-time means of
measuring a patient's biochemical response to osteoporosis therapies and
compliance with those therapies, as a complement to periodic bone density
measurements. The Company and Serex have also recently entered into an
agreement in principle with a leading pharmaceutical company to develop and
market an over-the-counter version of the strip test.

BACKGROUND

OSTEOPOROSIS. Osteoporosis is a condition characterized by reduced bone
density that leads to an increased risk of fractures. Bone is a dynamic organ
that is maintained through a process referred to as remodeling in which old
bone is removed (resorption) and new bone is formed. In early adulthood, the
levels of bone resorption and bone formation are generally balanced, with the
quantity and distribution of bone throughout the body varying over time
depending on muscle mass, strength and use. When remodeling does not function
properly, and resorption exceeds formation, the result is a net loss of bone
mass and density, often causing diminished structural integrity of the
skeleton (particularly of the trabecular "spongy" bone) and an increased risk
of fracture.

According to the National Osteoporosis Foundation (the "NOF"), 25 million
Americans, 80% of whom are women, and approximately 200 million people
worldwide, suffer from osteoporosis. Osteoporosis typically develops silently
over a period of years, eventually progressing to a point where a fracture can
easily occur, causing pain and disability. The post-menopausal female
population has the highest incidence of osteoporosis and the highest rate of
morbidity (loss of quality of life) and mortality due to osteoporosis. The NOF
estimates that in the United States osteoporosis contributes to more than 1.3
million fractures annually, a majority of which were of the spine and hip, and
that related direct health care and indirect productivity costs in 1987 were
approximately $10 billion. Hip fractures lead to the most serious
consequences. According to the NOF, as many as one in every five hip fracture
patients dies from complications within a year after fracture, one in every
four requires long-term care and an even higher percentage of hip fracture
patients never return to an active and independent lifestyle.

Until recently, osteoporosis was thought to be an untreatable consequence of
aging. The Company believes that the recent development and introduction of
new drug therapies, the aging of the population, and an increased focus on
women's health issues and preventive medical practices has created a growing
awareness among patients and physicians that osteoporosis is treatable.

<PAGE>

THERAPIES. The Company believes that over 70 clinical studies are currently
in progress to assess the safety and effectiveness of new therapies to treat
osteoporosis. However, prior to 1995, there were only two approved drug
treatments for osteoporosis in the United States, hormone replacement therapy,
using estrogen and related hormones ("HRT"), and calcitonin, with the most
widely prescribed treatment being HRT. Patient concerns regarding
complications related to prolonged use of HRT have contributed to a low
compliance rate. Until recently, calcitonin was available only in an
injectable form, a delivery method that has contributed to low patient
compliance. Although HRT and calcitonin have generally been shown in clinical
trials to slow or stop the loss of bone mass, these therapies have not been
proven to restore bone mass.

On September 29, 1995, the FDA approved Merck's drug Fosamax for the
treatment of established osteoporosis in post-menopausal women. Fosamax is a
bisphosphonate that acts by coating the bone surface and inhibiting bone
resorption. Merck reports that in clinical studies of Fosamax conducted in
over 16 countries, post-menopausal female patients with established
osteoporosis who were treated with Fosamax gained an average of 7-10% bone
mass in the spine and 7-8% bone mass in the hip over a three-year period
compared to patients treated with placebo, and that Fosamax reduced the number
of new vertebral fractures (fractures of the spine) by approximately 48%
compared with placebo. Merck is conducting ongoing clinical trials to
determine the effectiveness of Fosamax in preventing osteoporosis. Fosamax is
also approved in at least 18 countries in addition to the United States.

Other therapies cleared by the FDA to treat osteoporosis in 1995 are a one-
tablet hormone replacement therapy, which combines estrogen and progestin,
developed by Wyeth-Ayerst Laboratories, and an intra-nasal formulation of
calcitonin developed by Sandoz. In addition, in November 1995, an FDA advisory
committee recommended that the FDA approve slow-release sodium fluoride for
the treatment of post-menopausal osteoporosis. Additional therapies undergoing
clinical trials for the prevention or treatment of osteoporosis include
bisphosphonates being developed by Proctor & Gamble (Rasidronate), Boehringer-
Mannheim (Ibandronate) and Sanofi (Tiludronate), and estrogen analogues or
anti-estrogens being developed by Eli Lilly (Raloxifene) and Pfizer
(Draloxifene).

In several European countries, Japan and other international markets, there
has been an earlier availability and greater acceptance of osteoporosis
therapies. Some of these therapies include estrogens, bisphosphonates,
calcitonins, vitamin D compounds and ipriflavone.

The timing of when and where new drugs will become commercially available,
if ever, is uncertain. However, the Company believes that there will be
broadened and new approvals of osteoporosis therapies for both treatment and
prevention which should positively impact the bone assessment market
worldwide. See "Risk Factors--Dependence of Product Sales on Availability and
Acceptance of New Drug Therapies for Osteoporosis."

DIAGNOSIS AND MONITORING OF OSTEOPOROSIS. There are a number of different
technologies that are available that can be used to assess bone mineral
status. The following table sets forth selected information regarding the
range of these technologies.

19
<PAGE>

COMPARISON OF BONE ASSESSMENT TECHNOLOGIES
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
RADIATION
TECHNOLOGY SCAN SITE(S) PRECISION* DOSE FDA STATUS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dual Energy X-ray spine, hip, forearm less than 2-4 mR cleared
Absorptiometry and whole body 1-3%
(DXA)
- ---------------------------------------------------------------------------------------
Single Photon Absorptiometry forearm or heel 1-3% 5-10 mR cleared
(SPA)
- ---------------------------------------------------------------------------------------
Quantitative Computed spine or forearm 2-6% 200-1000 mR cleared
Tomography
(QCT)
- ---------------------------------------------------------------------------------------
Radiographic Absorptiometry hand 1-2% 5 mR cleared
(RA)
- ---------------------------------------------------------------------------------------
Ultrasound finger or heel 1-4% None not cleared

- ---------------------------------------------------------------------------------------

Biochemical Marker NA NA None cleared
(laboratory format)
</TABLE>

- --------
* Consistency of bone density measurements from test to test
(repeatability)

Since the introduction of the first DXA bone densitometer by the Company in
1987, dual energy X-ray absorptiometry has become the primary means of
measuring bone density. Prior to that introduction, the most widely used bone
density measuring technique for the hip and spine was dual photon
absorptiometry (DPA). DPA systems were not very precise and required
relatively long scanning times and the use of an expensive radioactive source
that required periodic replacement. In contrast, DXA systems have much higher
precision, require significantly shorter scanning times and do not require a
radioactive source. DXA systems require a low patient radiation exposure (less
than 1/10th of a conventional chest X-ray). The most advanced DXA systems can
be used to measure the bone density of the whole body, or any site, including
the most important fracture sites of the hip or spine. As a result of their
precision and versatility, DXA systems have become the predominant means of
evaluating low bone density before fractures occur and monitoring changes in a
patient's bone density in response to therapies.

Other bone assessment technologies include single photon absorptiometry
(SPA), radiographic absorptiometry (RA), quantitative computed tomography
(QCT), quantitative ultrasound and biochemical markers.

Single photon absorptiometry was introduced in the 1960s and represents an
effective method of measuring bone density at a peripheral site of the
skeleton (forearm or heel), although it cannot be used to measure the most
important fracture sites of the spine or hip. SPA systems also have the added
inconvenience of requiring the patient to place the site being scanned in
water or other tissue-equivalent media to achieve precision. SPA, however,
does represent a relatively inexpensive and valuable tool in the diagnosis of
osteoporosis with reasonable precision and low radiation exposure.

Quantitative computed tomography was introduced in the mid 1970s and can
measure bone density by using a CT scanner to determine both the patient's
bone density and bone distribution in three dimensions. QCT, however, has
remained limited in clinical use because of its relatively high radiation dose
and the high cost of CT scanner equipment.

Radiographic absorptiometry, also introduced in the 1970s, measures bone
density from two X-ray images (radiographs) of the hand placed alongside a
calibration device using a conventional X-ray machine. The

20
<PAGE>

radiographs are sent to a central processing laboratory where a computer
measures the density of the bone. The precision of this technique is
comparable to SPA measurements. An advantage of this system is that it does
not require any additional capital investment, as traditional X-ray equipment
can be used to obtain the radiographs. The technique, however, cannot be used
to measure and monitor the hip or spine. Also, because the radiograph must be
sent to a laboratory for testing, it does not provide a real-time assessment
of bone density, and, if the test is positive, a follow-up consultation is
required. The Company believes that RA will be useful in rural areas where
there may not be a sufficient concentration of patients to justify a capital
investment in DXA bone density measuring equipment.

Ultrasound has long been used in medical testing. However, the use of
ultrasound for the detection of osteoporosis was not commercially introduced
until recently, and then only in certain foreign countries. Ultrasound
measurement has concentrated mainly on the heel, which is comprised primarily
of trabecular bone, as a measuring site. Initial clinical trials of ultrasound
systems have indicated a significant association of low ultrasonic bone
measurements of the heel and the risk of fracture. The latest developments in
hardware and software, resulting in enhanced precision and ease of use, are
currently making ultrasound techniques an option for the diagnosis of
osteoporosis. Major advantages of ultrasound examination are the complete
absence of radiation and the small size and low cost of the equipment.
Ultrasound devices do not use X-rays in making their measurements and
therefore do not require X-ray licensing or registered operators. However,
because ultrasound bone measurements currently are not as precise as DXA and
other measurements, they are less reliable for continued monitoring of small
changes in bone density or for assessing the response to therapies. In
addition, they are generally limited to measurements at peripheral sites, not
the more important spine or hip fracture sites. Accordingly, the Company
believes that the most likely use for ultrasound techniques currently employed
and under development by the Company and others will be for initial screening
for osteoporosis and not for continued monitoring of changes in bone density
or the response to therapies.

Biochemical markers are substances that are produced within the body that
correlate directly or indirectly to disease or bodily function. A number of
biochemical markers have been discovered that can be used to measure the rate
of bone resorption or formation. These measurements, while not measuring bone
density, can provide a means to assess quickly (within approximately three
months) the effectiveness of treatment and patient compliance with therapies
for osteoporosis. A baseline and subsequent bone density tests (as frequently
as annually) must be used in conjunction with biochemical marker measurements
to assess fully the bone density of the patient. Because biochemical markers
cannot be used independently to diagnose osteoporosis or risk of fracture, or
to monitor a patient's changes in bone density as a result of therapy or
otherwise, the Company believes that biochemical marker tests, including those
being developed by the Company, will complement and not replace densitometry.

MARKET. The Company believes that the clinical market for osteoporosis
diagnostic and monitoring products is expanding due to the recent development
and introduction of new drug therapies to treat osteoporosis, the more
widespread and increased reimbursement for bone density examinations, the
aging of the population, and an increased focus on women's health issues and
preventive medical practices. All of these factors have led to an increased
awareness by women and primary care providers, such as gynecologists and
family physicians, that osteoporosis is a treatable disease and that
measurement of bone density is an integral component of diagnosis and
monitoring of this disease.

Upon obtaining FDA approval for Fosamax in September 1995, Merck launched an
extensive educational campaign to increase patient and physician awareness
that osteoporosis is a treatable disease. In connection with this effort,
Merck is promoting the use of DXA and other techniques to diagnose and monitor
osteoporosis and the effects of drug therapies. The Company believes that this
comprehensive Merck program will further accelerate the growth of the bone
densitometer and related markets. Currently, Fosamax is only approved for use
by patients with established osteoporosis. However, Merck and other drug
companies are conducting ongoing clinical trials to establish the efficacy of
drug therapies to prevent osteoporosis in high risk patients. Such approval
would increase the need for patient testing and monitoring at an earlier age,
before a patient is afflicted with osteoporosis.

21
<PAGE>

In the United States, the Health Care Finance Administration, which
establishes guidelines for the reimbursement of health care providers treating
Medicare and Medicaid patients, provided validation for DXA bone densitometry
examinations as a clinically useful procedure by recommending the
reimbursement for DXA bone evaluations at the rate of $68 per scan effective
April 1994. Effective January 1995, HCFA furthered the clinical use of DXA
evaluations by increasing the recommended reimbursement rate to $124. In part
as a result of the reimbursement policy recommendations implemented by HCFA,
bone density examinations are paid for by many private third party insurers in
the United States. See "Risk Factors--Third Party Reimbursement for Bone
Density Examinations" and "Business--Third Party Reimbursement."

With the recent increase in reimbursement levels in the United States, and
the FDA approval of Fosamax and other drug therapies, the Company believes
that the United States market for bone densitometers and other methods of bone
mineral assessment will expand from hospitals, large clinics, research
institutions and imaging and women's centers, to the larger potential market
of primary care providers, including gynecologists and family physicians.

In several European countries, Japan and other international markets, there
has been a greater availability or acceptance of osteoporosis therapies and an
earlier adoption of reimbursement for bone densitometry exams. Countries in
which reimbursement for the use of X-ray bone densitometers has been approved
include Belgium, Brazil, Canada, Germany, Greece, Japan, South Korea, Spain
and Switzerland. In addition, the Japanese government has been actively
supporting an educational program to promote public awareness of osteoporosis
as a treatable disease. In Latin American countries such as Argentina, Brazil
and Chile, and in Pacific Rim countries, such as Australia, The Peoples
Republic of China, South Korea and Taiwan, there is a growing use of
osteoporosis therapies and an expanding market for osteoporosis diagnostic and
monitoring equipment.

HOLOGIC'S STRATEGY

The Company's goal is (i) to become the leading fully-integrated supplier of
technologically advanced, innovative and clinically valuable diagnostic
systems and tests that address the growing market for osteoporosis prevention
and treatment, and (ii) to diversify into other medical device markets which
it believes will be complementary to its current business. Key elements of
this strategy are as follows:

MAINTAIN AND ENHANCE DXA TECHNOLOGICAL LEADERSHIP. The Company has been a
pioneer in the development of DXA bone densitometers. Since commercially
introducing the first DXA bone densitometer in 1987, the Company introduced a
bone densitometer capable of assessing the bone density of the entire body in
1989, introduced the first bone densitometer capable of taking supine lateral
measurements of the spine in 1991 and introduced its fourth generation
clinically-oriented QDR 4500 ACCLAIM series of bone densitometers in 1995. The
ACCLAIM series integrates the Company's most advanced X-ray technology into a
compact package that facilitates installation in a standard examination room.
The Company believes that because of their technological features, its DXA
systems have been and continue to be the most widely used bone densitometers
for clinical studies involving the emerging drug therapies for osteoporosis.
The Company intends to continue to enhance and expand upon its core technical
expertise to develop increasingly efficient and cost-effective DXA bone
densitometer solutions.

EXPAND RANGE OF COMPLEMENTARY BONE DIAGNOSTIC AND MONITORING PRODUCTS. The
Company believes that a significant market exists for relatively low-cost
products that assess bone density, employ technologies that do not use X-rays
or other ionizing radiation, and may be used in a doctor's office. In order to
address this market, the Company is pursuing the development and acquisition
of products that use ultrasound and biochemical markers to assess bone mineral
status. Recent milestones achieved by the Company in connection with this
pursuit include the following:

. In December 1994, the Company acquired the Walker Sonix ultrasound bone
analyzer business.

. In September 1995, the Company introduced a prototype of the Sahara, an
internally developed advanced ultrasound bone analyzer that does not
require the use of water, at the American Society of Bone Mineral
Research.

22
<PAGE>

. In September 1994, the Company began a joint development effort with
Serex to develop a low-cost biochemical marker strip test.

. In December 1995, the Company and Serex further entered into an agreement
with a major pharmaceutical company to develop an over-the-counter
version of the biochemical marker strip test.

The Company believes that if it is able to develop these products successfully
it will be in a position to offer a full range of diagnostic and monitoring
products for the growing osteoporosis market. The Company also plans to pursue
other product development and market opportunities in the area of bone
assessment that the Company identifies as promising.

EXPAND UNITED STATES DISTRIBUTION. The Company believes that the continued
development of its distribution network in the United States will be an
important factor in its continued success. The Company has developed an
experienced 11 person direct sales force covering the United States and plans
to enhance further its distribution capabilities in the United States through
a combination of an expansion of its sales force and strategic alliances with
companies with established distribution channels in the various market
segments for the Company's products.

CONTINUED INTERNATIONAL EXPANSION. International sales have accounted for
approximately 75% of the Company's sales in fiscal 1995, with such sales being
made predominantly to countries in Western Europe and Japan. In fiscal 1995,
the Company increased its efforts to expand its market penetration into new
markets in Latin America, including Argentina, Brazil and Chile, and along the
Pacific Rim, including Australia, The Peoples Republic of China, South Korea
and Taiwan. The Company intends to continue to seek to expand sales in these
and other less-developed territories.

DIVERSIFICATION INTO COMPLEMENTARY MARKETS. The Company is seeking to
leverage its medical device development, manufacturing and distribution
expertise to expand, through acquisition or strategic alliances, into
complementary markets. Such markets could include other diagnostic or imaging
markets, or other women's health care markets.

There can be no assurance that the Company will be able to implement
successfully any of its strategies on a timely basis, if at all, or if
successfully implemented, that any of these strategies will enable the Company
to maintain or enhance its growth. See "Risk Factors."

BONE ASSESSMENT PRODUCTS

The Company's products include a family of DXA bone densitometers which are
used for the precise measurement of bone density to assist physicians in the
diagnosis and monitoring of metabolic bone diseases such as osteoporosis.
Since commercially introducing the first DXA bone densitometer in 1987, the
Company introduced its first bone densitometer capable of assessing the bone
density of the entire body in 1989, introduced the first bone densitometer
capable of taking lateral measurements of the spine in 1991, and, in 1995,
introduced its new QDR 4500 ACCLAIM fourth generation series of bone
densitometers, which integrates the Company's most advanced X-ray technology
into a compact package that facilitates installation in a standard examination
room. The United States list prices for the Company's DXA bone densitometers
range from approximately $55,000 to $165,000 per system.

23
<PAGE>

The Company believes that a significant market may exist for relatively low-
cost products that assess bone mineral status, employ technologies that do not
use ionizing radiation and may be used in a doctor's office. In order to
address this market, the Company has acquired or is developing products that
use ultrasound or measure biochemical markers to assist in the assessment of
bone mineral status.

The following table sets forth certain information regarding the range of
the Company's bone assessment products, including certain products under
development.

PRODUCT EXAMINATION SITE FEATURES
- -------------------------------------------------------------------------------
DXA BONE
DENSITOMETERS
- -------------------------------------------------------------------------------
. Lumbar spine . Fan beam
(back-to-front . High resolution images
(PA)) . Automatic Internal Reference
System

QDR 4500A ACCLAIM . Lumbar spine
(side-to-side . Automated analysis software with
(supine/lateral)) compare capability to a
. Hip patient's prior examinations
. Forearm . Advanced lateral analysis
(optional) software
. Whole body . Software for integration of
patient data into clinical and
research protocols
. Precision: less than 1%
. Scan Time: 10 seconds to 3
minutes
- -------------------------------------------------------------------------------
. Lumbar spine (PA) . Fan beam
. Lumbar spine . High resolution images
(supine/lateral) . Automatic Internal Reference
System
. Hip
QDR 4500SL ACCLAIM . Forearm . Automated analysis software with
(optional) compare capability to a
patient's prior examinations
. Advanced lateral analysis
software
. Software for integration of
patient data into clinical and
research protocols
. Precision: less than 1%
. Scan Time: 10 seconds to 2
minutes
- -------------------------------------------------------------------------------
. Lumbar spine (PA) . Fan beam
. Hip . High resolution images
. Forearm . Automatic Internal Reference
(optional) System
. Whole Body . Automated analysis software with
compare capability to a
QDR 4500W ACCLAIM patient's prior examinations
. Software for integration of
patient data into clinical and
research protocols
. Precision: less than 1%
. Scan Time: 15 seconds to 6
minutes
- -------------------------------------------------------------------------------
. Lumbar spine (PA) . Fan beam
. Hip . High resolution images
. Forearm . Automatic Internal Reference
(optional) System
QDR 4500C ACCLAIM . Automated analysis software with
compare capability to a
patient's prior examinations
. Software for integration of
patient data into clinical and
research protocols
. Precision: less than 1%
. Scan Time: 15 to 30 seconds
- -------------------------------------------------------------------------------
. Lumbar spine (PA) . Pencil beam
. Hip . High resolution images
. Forearm . Automatic Internal Reference
(optional) System
. Automated analysis software with
QDR 1000PLUS compare capability to a
patient's prior examinations
. Software for integration of
patient data into clinical and
research protocols
. Precision: less than 1%
. Scan Time: 2 to 7.2 minutes

24
<PAGE>

- --------------------------------------------------------------------------------
PRODUCT EXAMINATION SITE FEATURES
- -------------------------------------------------------------------------------
QUANTITATIVE
ULTRASOUND
- -------------------------------------------------------------------------------
. Heel . Water immersion of the heel
. Weight (25 lbs.)

WALKER SONIX UBA . Scan time of 5 to 6 minutes
575+ . Multi-point scanning
. Bi-directional measurements
. High resolution electronics
. External personal computer
required
- -------------------------------------------------------------------------------
. Heel . Dry operation

SAHARA . Compact and portable (14 lbs.)
(under development) . Single button operation
. Scan time of less than one
minute
. Bi-directional measurements
. Integrated high resolution
electronics (no external
personal computer required)

BIOCHEMICAL MARKERS
- -------------------------------------------------------------------------------

. Urine sample . Measurement of bone resorption
SEREX STRIP TEST biochemical markers
(under development) . Easy to use strip test
. Real time results during patient
visit
. Over-the-counter version also
under development

QDR X-RAY BONE DENSITOMETERS. Since the Company's first commercial shipment
of a DXA system in October 1987, the Company has sold more than 2,000 DXA
systems. The Company believes that its systems' performance advantages and
their early adoption by leading clinical investigators have led to their
market acceptance. The Company's DXA systems have been purchased for multiple-
site studies sponsored by the pharmaceutical companies and by the United
States government for evaluation of the incidence and treatment of
osteoporosis. In addition, pharmaceutical companies have promoted the purchase
of the systems for use by physicians to assist in the diagnosis and treatment
of osteoporosis.

Advantages of the Company's DXA systems include high precision (consistency
from test to test), low patient radiation exposure equivalent to 1/10th of a
conventional chest X-ray, a relatively fast scanning time, low operating cost,
no radioactive source and the ability to measure bone density of the most
important fracture sites, the spine and hip. Studies conducted by the Company
and independent investigators have demonstrated that the systems can detect a
change in spine bone density with a precision error of less than 1%.

All the Company's DXA systems employ the Company's patented Automatic
Internal Reference System, which continuously calibrates each patient's bone
density measurement to a known standard. This system virtually eliminates
errors that might result from manual calibration and saves operators the time-
consuming task of calibrating several times a day. The system automatically
compensates for drift in the X-ray system, detectors or other electronic
components which ensures long-term measurement stability.

Each of the Company's DXA systems contains an X-ray source mounted beneath
the patient, who is positioned lying on her back. The X-ray source generates
alternating high and low energy pulses in a thin beam that passes through the
Company's patented Automatic Internal Reference System and then through the
patient to an X-ray detector mounted above the patient. Controlled by a
computer, the X-ray source and detector are moved in tandem across the
patient. When the X-ray beam is detected, it contains information about the X-
ray absorbing characteristics of both the patient and the calibration
materials in the Automatic Internal Reference System at each of the two levels
of radiation. The system converts this information into a digital format which
is processed and analyzed by a computer and displayed on a high-resolution
color monitor, both of which are incorporated into the system.

25
<PAGE>

The Company has invested substantial resources in developing operating and
applications software for its systems. The software includes calibration
software, automated scan and analysis programs for each scan site, a patient
data base manager that archives all raw data for later retrieval and analysis
and allows the operator to review the current image with an earlier image of
the same patient.

Initial DXA systems developed by the Company employed a single narrow pencil
beam detected by one receptor. In 1991, the Company introduced the first bone
densitometer employing a high density fan shaped X-ray beam that is detected
by an array of receptors. This configuration enables the system to obtain
better quality images with improved spatial resolution, significantly faster
scanning time and higher patient throughput compared to single-beam systems.
Moreover, for standard spine and hip scans, fan beam technology can reduce
scan time by a factor of more than 25 compared to older single-beam scanning
systems.

The Company developed this fan beam technology to perform lateral (side-to-
side) scans of the lower spine, in addition to the posterior-anterior (back-
to-front) measurements performed by the Company's pencil beam systems. The
earliest and most dramatic loss of bone density in the spine occurs primarily
in the spine's soft (trabecular) bone, which is positioned directly behind the
hard (cortical) bone when taking back-to-front measurements. This results in
bone density measurements that average the density of the soft and hard bone
and tends to mask changes in the soft bone. A lateral scan permits the imaging
and measurement of the spine's soft bone with only limited interference from
hard bone. In addition, a lateral scan reduces the interference caused by
abnormal accumulation of bone and calcium deposits in and around the spine.

Numerous scientific articles have established lateral bone densitometry,
using supine patient positioning, as a highly precise and more diagnostically
sensitive way to measure the spine than conventional posterior-anterior
examinations. Lateral densitometry also eliminates scan artifacts such as
aortic calcification or degenerative disease of the spinal processes that can
distort conventional posterior-anterior measurements.

In November 1994, the Company introduced the QDR 4500A ACCLAIM at the annual
meeting of the Radiological Society of North America and in January 1995
obtained FDA clearance to sell the system in the United States. As of December
11, 1995, regulatory approval to sell the system in Japan was pending. See
"Business--Regulation."

The Company's QDR 4500 ACCLAIM series of bone densitometers offers rapid
scanning and high resolution imaging using the latest available fan beam and
high density, solid-state multi-detector array technology. In addition, the
QDR 4500 ACCLAIM series is built in modular configurations that allow
customers to add new features and capabilities, while protecting their
investment in the equipment and patient data.

An important feature of the QDR 4500A and QDR 4500SL is their ability to
perform lateral (side-to-side) scans of the lower spine, without turning the
patient on her side, in addition to the posterior-anterior (back-to-front)
measurements. The QDR 4500A and QDR 4500SL ACCLAIM are capable of producing
high quality images of the spine, lateral spine, hip and other skeletal sites.
The ACCLAIM's scan arm allows for multiple scan views without patient
repositioning. Using the QDR 4500A or the QDR 4500SL, high-quality lateral
images of the entire spine can now be obtained in as little as ten seconds.

The ACCLAIM systems are designed to require less floor space than any other
bone densitometer capable of taking hip and spine measurements. The special
tabletop design and motorized scanner C-arm allow the QDR 4500C and QDR 4500SL
to be installed in a standard 8ft x 8ft examination room (the QDR 4500W and
QDR 4500A require an 8ft x 10ft room). Installation requirements for any of
the ACCLAIM bone densitometers are minimal and normally do not require special
electrical, structural or lead-shielding preparation. In addition to their
small size, the QDR 4500 series offers virtually silent operation.

The ACCLAIM series has replaced the Company's QDR 1500, QDR 2000 and QDR
2000plus products. The Company has retained its QDR 1000plus system as a low-
price offering. The QDR 1000plus employs the Company's older pencil beam
technology. In the fourth quarter of fiscal 1995, the ACCLAIM series accounted
for approximately 70% of DXA sales.

26
<PAGE>

ULTRASOUND. In December 1994, the Company acquired the ultrasound bone
analyzer business of Walker Sonix. Walker Sonix had developed an ultrasound
product line to assess bone mineral status of the heel. The location of the
heel facilitates easy coupling of the ultrasound transducers at a site with a
relatively low amount of overlying soft tissue. The heel is also made up of
predominantly trabecular bone which tends to be more metabolically active. The
Walker Sonix ultrasound devices measure two parameters, Broadbased Ultrasound
Attention (BUA) and Speed of Sound (SOS) through a water medium to
characterize bone mineral status. The use of water as a medium, which is a
characteristic of other ultrasound bone analyzers, requires the patient to
place her foot in water. The use of water requires cumbersome plumbing and
cleaning mechanisms to be incorporated in the system.

The Company is developing internally an enhanced dry ultrasound bone
analyzer, called "Sahara" that will not require the use of water. The Company
believes that this "dry" technology will offer further operator convenience by
the elimination of the water handling required between each patient. The
elimination of the use of water has also enabled the Company to reduce the
size and weight of the device. In September 1995, the Company introduced a
prototype of the Sahara at the American Society of Bone Mineral Research and
plans to begin clinical trials of the Sahara in the United States and selected
foreign countries, and to commence international sales of the system in fiscal
1996. Commercial introduction of the system in the United States is dependent
upon FDA approval. The Company believes that this approval process may take as
long as two to three years. There can be no assurance that the Company will be
able to obtain FDA approval for the Sahara on a timely basis, if at all. See
"Risk Factors--No Assurance that New Products Will Receive FDA or Foreign
Regulatory Clearance," "--New Products and Technological Change" and
"Business--Regulation."

Recent studies have suggested that ultrasound provides good separation of
fracture populations from reference groups and suggests that this method is a
promising screening tool for evaluating a patient's fracture risk. However,
ultrasound does not allow for direct assessment of important hip and spine
fracture sites, has undocumented ability to follow the effects of therapy and
has less precision (reproducibility of results) compared to DXA measurements.
Accordingly, the Company believes that ultrasound systems will be used
predominantly as a low cost initial screening or diagnostic tool and not as a
patient monitoring tool.

BIOCHEMICAL MARKERS. In September 1994, the Company entered into a joint
development agreement with Serex to develop a simple strip test for use by
physicians to monitor the levels of a patient's biochemical markers that
indicate the rate of bone resorption. In December 1995, the Company and Serex
expanded the scope of this development effort by entering into an agreement
with a major pharmaceutical company to develop an over-the-counter version of
this strip test. Although biochemical markers cannot measure bone density, the
Company believes that biochemical markers may be useful as a tool to determine
if therapy is effective. This is accomplished by comparing the baseline level
of the marker with the value obtained from a serial measurement performed only
two or three months following the start of therapy. This same technique may be
useful to evaluate patient compliance with a prescribed therapy.

Traditionally, biochemical markers of bone were performed using high
pressure liquid chromatography ("HPLC") methods conducted in a research
laboratory. HPLC procedures are complex, labor intensive requiring a highly
trained technician, relatively slow, subject to high variability and
expensive. For these reasons, biochemical markers of bone using HPLC methods
have not been used for routine clinical testing. Recently, several
immunodiagnostic tests that are antibody-based have been developed as
biochemical markers of bone remodeling. Immunodiagnostic tests may be
performed in a variety of technical formats. The format that has been
introduced by several companies is the microtitre plate system, which is used
for many different types of in-vitro diagnostic tests and is normally
performed in a reference laboratory.

Serex has developed a proprietary and patented technology that enables
complex immuno-chemistry assays to be performed in a strip test format that
the Company believes is well-suited for testing directly in the physician's
office or the home to provide a real-time assessment of bone resorption. In
September 1994, the Company purchased a minority interest in Serex and entered
into a license and supply agreement with Serex to

27
<PAGE>

develop a urine-based bone resorption test deliverable in a diagnostic strip
test format. The Company believes that other applications for biochemical
markers of bone as well as new markers are likely to be developed in the
future, and under its agreement with Serex, the Company retains the first
right of negotiation to develop and license such tests. There can be no
assurance that Serex will be able to develop effective strip tests, either for
physician or over-the-counter use, on a timely basis, if at all, that once
developed, any strip test will be approved or cleared for sale in the United
States or other jurisdictions, or that once cleared or approved for sale any
strip test will be commercially successful. See "Risk Factors--No Assurance
that New Products Will Receive FDA or Foreign Regulatory Clearance," "--
Competition; New Products and Technological Change--Reliance on Serex for the
Development of Biochemical Marker Strip Test" and "Business--Regulation."

OTHER PRODUCTS; SCANORA

In order to take advantage of its European sales force and associated
distribution capability, in May 1993, the Company entered into distribution
agreement with Soredex, S.A. ("Soredex"), a division of Orion Corporation of
Helsinki, Finland, to distribute Scanora, a specialized system for taking X-
ray images of the maxillo-facial anatomy (teeth, jaw and other facial
structures).

The Scanora system supports more than 1,000 different image modes, including
pre-surgical planning of dental implants, reconstructive surgery and temporal
mandibular joint repair. This system provides significantly improved images of
the maxillo-facial anatomy compared to other techniques available in the
market, such as panoramic X-rays or computed tomography. Dental implant
procedures have experienced significant growth in Europe over the past five
years.

Under the agreement, the Company is the exclusive distributor of Scanora
systems in Western Europe, the Middle East and Africa, excluding South Africa
and Namibia. In addition, the Company has non-exclusive distribution rights in
several Eastern European countries. The agreement with Soredex provides for
the Company to purchase a minimum number of systems in each contract year. In
the event that the Company does not achieve the minimum levels set forth under
this agreement, Soredex has the option to terminate the distribution
agreement. The Company has met its minimum purchase requirements in each year
of the contract. The agreement expires in May 1996, subject to the rights of
each party to pursue an extension under conditions to be agreed upon at such
time. There can be no assurance that the Company and Soredex will agree to an
extension of the distribution agreement on favorable terms, if at all.

CUSTOMERS

The Company's DXA customers include many pharmaceutical companies active in
the field of bone mineral metabolism, such as Ciba-Geigy, Eli Lilly, Merck,
Pfizer, Proctor & Gamble, Rhone-Poulenc/Rorer, Sandoz, Sanofi Research and
SmithKline. The Company believes that because of their technological features,
its DXA systems have been and continue to be the most widely used bone
densitometers for clinical studies involving the emerging drug therapies for
osteoporosis. The Company has a group of eight employees who provide data
collection and quality assurance services to such customers. Initial clinical
evaluation sites for the Company's DXA systems included leading medical and
research institutions, such as the Mayo Clinic, the Massachusetts General
Hospital and the University of California at San Francisco in the United
States; the University of Lyon and Guy's Hospital in Europe; and Kobe
University in Japan. These institutions, along with many other leading medical
institutions, continue to be users of the Company's DXA systems.

The clinical demand for the Company's DXA bone densitometers is growing as a
result of the increased worldwide focus on women's health problems and the
availability of new osteoporosis therapies entering the market. More than 50%
of the Company's new sales of DXA systems have shifted to the clinical segment
of the market which includes radiologists, endocrinologists and
rheumatologists. The Company expects a further shift in the market for bone
densitometers to primary care physicians, including gynecologists and family
physicians, in response to the development of new drug therapies for
osteoporosis and the growing awareness of osteoporosis as a treatable disease.

28
<PAGE>

In fiscal 1995, the Company's sales to its Japanese distributor, Toyo Medic,
accounted for 20% of product sales. The loss of Toyo Medic as a customer of
the Company or an adverse change in the relationship between the Company and
Toyo Medic could have a material adverse affect on the Company's business. See
"Risk Factors--Reliance on Third Party Distributors; Significant Customer."

MARKETING AND SALES

In the United States, the Company sells its DXA systems primarily through
its direct sales force. As of November 30, 1995, the Company had 11 employees
engaged in sales in the United States. In order to penetrate this market more
effectively, the Company has expanded its direct marketing activities,
including additions to its sales force, and has implemented various leasing
programs, including a program with a third party leasing company to make its
QDR 4500C ACCLAIM system available to physicians on a fee-per-scan basis. The
Company believes that the continued development of its distribution network in
the United States will be as important to its continuing success as its
product offerings. To meet the growing demand for its products, the Company
plans to enhance further its distribution capabilities in the United States
through a combination of an expansion of its sales force and strategic
alliances with companies with established distribution channels in the various
market segments for the Company's products.

The Company sells its DXA and Scanora systems in international markets
through independent distributors, as well as a direct sales force in France,
the Benelux countries, Spain and Portugal. As of November 30, 1995, the
Company had six employees engaged in sales in Europe.

The Company distributes its products in Japan through Toyo Medic, which has
been the Company's exclusive distributor in Japan since April 1988. The
agreement requires Toyo Medic to purchase certain minimum quantities and to
provide technical and warranty support to its customers.

In certain other territories outside the United States, the Company sells
its DXA systems through independent distributors, all of whom offer technical
support. Employees of these distributors and sales representatives have
undergone product and technical training related to the Company's products.
The Company has increased its efforts to expand its market penetration into
Latin America, including Argentina, Brazil and Chile, and into Pacific Rim
countries other than Japan, including Australia, the Peoples Republic of
China, South Korea and Taiwan, by working with local sales representatives and
distributors or entering into strategic marketing alliances in those
territories. The Company believes that with time, Eastern Europe may present a
significant opportunity for growth and also is seeking to expand its presence
in the area.

In fiscal 1995, foreign sales accounted for approximately 75% of the
Company's product sales. The Company believes that the relatively high level
of foreign sales reflects, in part, a more advanced regulatory status for drug
therapies for osteoporosis in certain foreign countries than in the United
States. Additionally, the large percentage of foreign sales in Japan in fiscal
1994 reflect a government initiative in Japan to provide wide-spread screening
for women's health problems such as osteoporosis and the Company's efforts to
develop new foreign markets. The Company's foreign sales are subject to risks
generally associated with foreign sales, including United States and foreign
regulatory approval requirements and policy changes. The relative strength of
the United States dollar in relation to foreign currencies may also adversely
affect the Company's sales to foreign countries. The Company also believes
that its sales to Europe may be seasonal, with reduced orders in the summer
months reflecting summer vacation schedules. International sales will also be
affected by government approval of new drug therapies, changes in local health
care policies regarding reimbursement and the strength of promotional efforts
by its distributors. See "Risk Factors--Reliance on Foreign Sales,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 11 of Notes to Consolidated Financial Statements.

COMPETITION

The bone assessment market is highly competitive and characterized by
continual change and improvement in technology, and multiple technologies that
have been or are under development. Some of the companies in this industry
have significantly greater manufacturing, marketing and financial resources
than the Company. See "Risk Factors--Competition; New Products and
Technological Change" and "Business--Background."

29
<PAGE>

Four companies, Lunar, Norland Medical Systems, Aloka and Hitachi have
developed DXA systems to measure bone density which compete with the Company's
systems. The Company believes that competition in the field of DXA bone
densitometry is based upon their price, precision, speed of measurement,
patient radiation dose, cost and ease of operation, product versatility,
product reliability and quality of service. The Company believes that it
competes effectively with respect to these criteria. The Company believes that
its DXA systems will also compete with other X-ray based modalities, including
a radiographic absorptiometry product developed by CompuMed which has been
licensed to Merck. The Company's DXA systems also compete with specially-
equipped CT scanners and may compete with used and refurbished DXA systems.
See "Business--Background" for a discussion of the technical advantages and
disadvantages of these other systems.

Several companies, including Igea, McCue Ultrasonics, Lunar, Myriad
Ultrasound, Osteometer and Osteo-Sciences have developed ultrasound systems to
assess bone mineral status. Some of these companies have had substantially
more experience than the Company in developing and marketing their systems.
The Company believes that competition in the field of ultrasound systems is
based on price, precision, speed of measurement, cost and ease of operation,
product versatility, product reliability and quality of service. The Company
believes that advantages of its Sahara ultrasound bone analyzer system under
development will include the system's dry operation, simple single-button
operation, and a compact and self-contained design that does not require the
use of a separate computer. No ultrasound bone analyzer has been approved for
commercial sale in the United States. The timing of FDA clearance or approval
for ultrasound bone analyzers in the United States, developed by the Company
and others, could have a significant impact on their respective market shares.
The Company believes that ultrasound systems will compete with DXA systems in
the diagnostic market for initial screening of patients. However, the Company
believes that because ultrasound systems can only measure peripheral skeletal
sites and do not have the precision of DXA systems, DXA systems will continue
to be the predominant means of monitoring bone density for patients being
treated for or at high risk of osteoporosis.

Three companies have obtained FDA clearance to market biochemical marker
tests that evaluate bone turnover in a microtitre format. Ostex International
and Metra Biosystems have been cleared to market biochemical markers that
assess bone resorption. Hybritech and Metra Biosystems have been cleared to
market biochemical markers that assess bone formation. One or more of these
companies may develop point-of-care, over-the-counter or other biochemical
marker tests that would compete with the biochemical marker strip tests being
developed by the Company and Serex. Competition in this market will be based
upon price, product reliability, diagnostic sensitivity, precision and ease of
use. There can be no assurance that the Company and Serex will be able to
compete effectively in this market. See "Risk Factors--Competition; New
Products and Technological Change" and "--Reliance on Serex for the
Development of Biochemical Marker Strip Test."

MANUFACTURING

The Company's manufacturing operations for its DXA and ultrasound systems
consist primarily of assembly, test, burn-in and quality control. The Company
purchases a major portion of the parts and peripheral components for its
products, and manufactures certain subsystems, such as the high-voltage X-ray
power supply, from raw materials. Parts and materials are readily available
from several supply sources.

The Company is required to purchase all of its requirements for Scanora from
Soredex. Failure of Soredex to manufacture those systems on time and in
accordance with specifications would have an adverse impact on the Company's
sales of those systems.

BACKLOG

Backlog for the Company's systems as of November 30, 1995 and 1994 totaled
approximately $4.6 million and $4.9 million, respectively. Backlog consists of
purchase orders for which a delivery schedule within the next twelve months
has been specified by the customer. Orders included in backlog may be canceled
or rescheduled by customers without significant penalty. Backlog as of any
particular date should not be relied upon as indicative of the Company's net
revenues for any future period.

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<PAGE>

RESEARCH AND DEVELOPMENT

The Company's research and development efforts are focused on enhancing its
existing products and developing new products for the bone assessment market.
The Company's research and development personnel also are involved in
establishing protocols, monitoring and interpreting and submitting test data
to the FDA and other regulatory agencies to obtain the requisite clearances
and approvals for its products. At November 30, 1995, the Company had 32
persons engaged in research and development, of whom 23 persons were engaged
in the enhancement of the DXA product line and nine persons were engaged in
the development and enhancement of the Company's ultrasound systems. Of these
persons, ten persons were engaged in software development. The research and
development group was responsible for the introduction of the Company's fourth
generation QDR ACCLAIM series of DXA bone densitometers during 1995 and the
ongoing development of the Company's Sahara bone analyzer. During fiscal 1995,
1994 and 1993, the Company's research and product development expenses were
approximately $4.3 million, $3.4 million and $3.2 million, respectively.

PATENTS AND PROPRIETARY RIGHTS

The Company relies upon trade secrets and patents to protect its technology.
Due to the rapid technological change that characterizes the medical
instrumentation industry, the Company believes that the improvement of
existing products, reliance upon trade secrets and unpatented proprietary
know-how and the development of new products are generally as important as
patent protection in establishing and maintaining a competitive advantage.
Nevertheless, the Company has obtained patents and will continue to make
efforts to obtain patents, when available, in connection with its product
development program. The Company has obtained ten patents, licensed three
patents and has pending 17 patent applications in the United States relating
to its DXA technology, and has obtained three patents, licensed four patents
and has pending two patent applications in the United States relating to its
ultrasound technology. The Company has obtained or applied for corresponding
patents and patent applications for certain of these patents and patent
applications in certain foreign countries. There can be no assurance that any
of the Company's patent applications will be granted or that any patent or
patent application will provide significant protection for the Company's
products and technology. Moreover, there can be no assurance that foreign
intellectual property laws will protect the Company's intellectual property
rights. In the absence of significant patent protection, the Company may be
vulnerable to competitors who attempt to copy the Company's products,
processes or technology. See "Risk Factors--Uncertainty of Patent and
Proprietary Rights Protection."

In September 1994, Serex granted the Company an exclusive license to use
Serex's technology to manufacture, market, sell and distribute the biochemical
marker strip test being developed under a joint development agreement between
Serex and the Company. Serex further granted the Company a right of first
negotiation with respect to the development and distribution of new products
conceived of by Serex for applications in bone metabolism. In order to
maintain its exclusive rights, the Company is required to purchase a certain
minimum number of tests or pay Serex amounts that would have been paid had the
Company purchased the minimum number of tests. If the Company does not meet
these minimum requirements, its rights become nonexclusive.

In June 1989, the Company granted an exclusive worldwide license of certain
of its DXA technology to Vivid Technologies, Inc. for the sole purpose of
developing a baggage inspection and security system. See "Management--Vivid
Technologies, Inc."

Until recently, the Company had been involved in extensive patent litigation
with Lunar, with each party claiming that the other was infringing certain
patents held by the other. This litigation was settled by agreement dated
November 22, 1995. The agreement provides for certain royalties to be paid by
each party to the other for future sales of products using certain defined
technologies. The Company does not believe that amounts to be paid by either
party under this arrangement will be material. The agreement also provides
that neither party will engage the other party in patent litigation for a
period of ten years following the date of the agreement, regardless of the
infringement claimed and regardless of whether the technology in question
currently exists or is developed or acquired by the other party in the future.
Neither party is required to disclose to the other any of its technology

31
<PAGE>

during this ten year period or otherwise. However, there can be no assurance
that Lunar will not use the Company's technology in a manner that would
materially and adversely affect the Company's business and results of
operations. See "Risk Factors--Uncertainty of Patent and Proprietary Rights
Protection."

THIRD PARTY REIMBURSEMENT

In the United States, the Health Care Finance Administration, which
establishes guidelines for the reimbursement of health care providers treating
Medicare and Medicaid patients, provided validation for DXA bone densitometry
examinations as a clinically useful procedure by recommending the
reimbursement for DXA bone evaluations at an initial rate of $68 per scan
effective April 1994, which was increased to $124 effective January 1995. The
actual reimbursement amounts provided for DXA examinations is determined by
the individual state Medicare carriers. As of December 1995, several of the
more populous states, including California, Connecticut, New York, New Jersey
and Pennsylvania, had no or only partial reimbursement of DXA examinations. In
part as a result of HCFA's recommendations, bone density examinations are paid
for by many private third party insurers in the United States.

In several European countries, Japan and other international markets, there
has generally been an earlier adoption of reimbursement for bone densitometry
exams. Countries in which reimbursement for the use of X-ray bone
densitometers has been approved include Belgium, Brazil, Canada, Germany,
Greece, Japan, South Korea, Spain and Switzerland. See "Risk Factors--
Uncertainty of Health Care Reform" and "--Third Party Reimbursement for Bone
Density Examinations."

REGULATION

The medical devices manufactured and marketed by the Company are subject to
regulation by the FDA and, in many instances, by foreign governments. Under
the Federal Food, Drug and Cosmetic Act (the "FDA Act"), manufacturers of
medical devices must comply with certain regulations governing the testing,
manufacturing, packaging and marketing of medical devices. The Company's
products are also subject to the Radiation Control for Health and Safety Act,
administered by the FDA, which imposes performance standards and record
keeping, reporting, product testing and product labeling requirements for
devices using radiation, such as X-rays.

The FDA generally must approve the commercial sale of new medical devices.
Commercial sales of the Company's medical devices within the United States
must be preceded by either a premarket notification filing pursuant to Section
510(k) of the FDA Act or the granting of a premarket approval. The 510(k)
notification filing must contain information that establishes that the device
is substantially equivalent to an existing device that has been continuously
marketed since May 28, 1976. The Company received FDA market clearance under
510(k) for its DXA bone densitometers and expects to be eligible to seek
510(k) clearance for its biochemical marker strip test for use by physicians,
once developed.

The premarket approval procedure involves a more complex and lengthy testing
and review process by the FDA than the 510(k) premarket notification procedure
and often requires at least several years to obtain. The Company must first
obtain an investigational device exemption ("IDE") for the product to conduct
extensive clinical testing of the device to obtain the necessary clinical data
for submission to the FDA. The FDA will thereafter only grant premarket
approval if, after evaluating this clinical data, it finds that the safety and
efficacy of the product has been sufficiently demonstrated. This approval may
restrict the number of devices distributed or require additional patient
follow-up for an indefinite period of time. The Company believes that the
approval to market its ultrasound products and its over-the-counter
biochemical marker strip test, once developed, in the United States may be
subject to this more stringent FDA review process.

The Company's systems are also subject to approval by certain foreign
regulatory and safety agencies. The Company is awaiting regulatory approval of
the Company's QDR 4500 ACCLAIM systems in Japan and certain

32
<PAGE>

other foreign countries, and has obtained the requisite regulatory approvals
for the systems in certain other countries.

No assurance can be given that the FDA or foreign regulatory agencies will
give the requisite approvals or clearances for any of the Company's medical
devices under development on a timely basis, if at all. Moreover, after
clearance is given, these agencies can later withdraw the clearance or require
the Company to change the device or its manufacturing process or labeling, to
supply additional proof of its safety and effectiveness, or to recall, repair,
replace or refund the cost of the medical device, if it is shown to be
hazardous or defective. The process of obtaining clearance to market products
is costly and time-consuming and can delay the marketing and sale of the
Company's products.

As a manufacturer of medical devices, the Company is subject to certain
other FDA regulations and the Company's manufacturing processes and facilities
are subject to continuing review by the FDA. Most states and certain other
foreign countries monitor and require licensing of X-ray devices. Federal,
state and foreign regulations regarding the manufacture and sale of medical
devices are subject to future change. The Company cannot predict what impact,
if any, such changes might have on its business.

EMPLOYEES

As of November 30, 1995, the Company had 191 full-time employees, including
53 in manufacturing operations, 32 in research and development, 71 in
marketing, sales and support services, 27 in finance and administration and
eight in medical data management. None of the Company's employees are
represented by a union. The Company considers its employee relations to be
good.

PROPERTIES

The Company leases a 83,500 square foot building located in Waltham,
Massachusetts. The lease expires in February 2002. The Company has subleased
approximately 26,500 square feet of this space to Vivid, an affiliate of Mr.
Ellenbogen and Dr. Stein. During fiscal 1995, Vivid paid the Company
approximately $320,000 for this space. The Company and Vivid have agreed that
Vivid will vacate this space by the end of the second quarter of fiscal 1996,
which the Company will then occupy. The Company also leases an additional
3,100 square feet of nearby office space under a tenancy at will. The Company
believes that its facilities will be adequate for its needs for the
foreseeable future. The Company also maintains sales and service offices in
France, Belgium and Spain. The Company believes that it has adequate space for
its anticipated needs and that suitable additional space will be available at
commercially reasonable prices as needed. See "Management--Vivid Technologies,
Inc."

LEGAL PROCEEDINGS

Except as set forth below, the Company is not a party to any material legal
proceedings.

On November 22, 1995, the Company and Lunar entered into a settlement
agreement relating to litigation involving allegations of each party against
the other of patent infringement. See "Business--Patents and Proprietary
Rights."

Until recently, the Company had been involved in litigation brought in
January 1995 by Oldelft claiming damages relating to a prior patent dispute.
On December 14, 1995, the United States District Court for the Southern
District of New York granted the Company's Motion to Dismiss and dismissed all
claims against the Company. In connection with the dismissal, the court
granted Oldelft leave to replead its complaint. In January 1996, Oldelft filed
a motion for reconsideration of the dismissal, which is currently pending
before the court.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
S. David Ellenbogen................. 57 Chairman of the Board and
Chief Executive Officer
Steve L. Nakashige.................. 46 President and Chief Operating Officer
Jay A. Stein........................ 53 Senior Vice President, Technical
Director and Director
Jean Chaintreuil.................... 40 Vice President of European Operations
Mark A. Duerst...................... 39 Vice President of Sales & Marketing
Glenn P. Muir....................... 36 Vice President of Finance and Treasurer
Theodore H. Vrountas................ 61 Vice President of Operations
Joel B. Weinstein................... 45 Vice President of New Business
Development
Irwin Jacobs(1)(2).................. 58 Director
William A. Peck(1).................. 62 Director
Gerald Segel(1)(2).................. 74 Director
</TABLE>
- --------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee

S. David Ellenbogen, a co-founder of the Company, has served as its Chief
Executive Officer and a director since its organization in October 1985, as
its Chairman of the Board of Directors since May 1994, as its President from
October 1985 until May 1994 and as its Treasurer from October 1985 until
February 1992. Prior to founding the Company, Mr. Ellenbogen served as
President, Treasurer and a director of Diagnostic Technology, Inc. ("DTI"),
which he co-founded with Dr. Stein in 1981. DTI, which developed an X-ray
product for digital angiography, was acquired in 1982 by Advanced Technology
Laboratories, Inc. ("ATL"), a wholly-owned subsidiary of Squibb Corporation.
Mr. Ellenbogen was involved in the management of the digital angiography group
of ATL from 1982 to 1985. Since July 1989, Mr. Ellenbogen has also been the
President, Treasurer and a director of Vivid and has been devoting
approximately sixteen hours per week to Vivid pursuant to a management
agreement between the Company and Vivid. See "Management--Vivid Technologies,
Inc."

Steve L. Nakashige has served as President and Chief Operating Officer of
the Company since May 1994. From 1988 to 1994, Mr. Nakashige was with General
Electric Medical Systems where he held the position of Senior Manager,
Ultrasound Business, from 1990 to 1994, and Manager, Ultrasound Marketing
Operations, from 1988 to 1990. From 1986 to 1988, Mr. Nakashige was Vice
President of Operations of Biosound Inc., a medical equipment manufacturer.

Jay A. Stein, a co-founder of the Company, has served as its Senior Vice
President, Technical Director and a director since its organization. Dr. Stein
co-founded DTI with Mr. Ellenbogen in 1981, served as Vice President and
Technical Director of DTI and was Technical Director of the digital
angiography group of its successor, ATL, from 1982 to 1985. Dr. Stein received
a Ph.D. in Physics from The Massachusetts Institute of Technology. He is the
principal author of fifteen patents involving X-ray technology. Since July
1989, Dr. Stein has also been the Senior Vice President, Technical Director
and a director of Vivid and has been devoting approximately eight hours per
week to Vivid pursuant to a management agreement between the Company and
Vivid. See "Management--Vivid Technologies, Inc."

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<PAGE>

Jean Chaintreuil has served as Vice President of European Operations of the
Company since February 1993. Mr. Chaintreuil has held the position of
President, Hologic Europe since joining the Company in October 1991. From 1986
to 1991, Mr. Chaintreuil held a variety of positions with General
Electric/C.G.R., including International Marketing Manager for mammography and
stand-alone products and Regional Sales and Service Manager for the Paris and
west France territory.

Mark A. Duerst has served as Vice President of Sales & Marketing since
September 1994. Prior to that, Mr. Duerst held the position of Director of
North American Sales since 1990 and the position of Central Regional Sales
Manager since joining the Company in 1989. From 1988 to 1989, Mr. Duerst was
an independent marketing and sales consultant, and from 1983 to 1987 he was
Director of Sales & Marketing of Lunar Corporation.

Glenn P. Muir, a Certified Public Accountant, has served as Vice President
of Finance and Treasurer of the Company since February 1992. Prior to that,
Mr. Muir held the position of Controller since joining the Company in October
1988. From 1986 to 1988, Mr. Muir was Vice President of Finance and
Administration and Chief Financial Officer of Metallon Engineered Materials
Corp., a manufacturer of composite materials. Mr. Muir received an MBA from
the Harvard Graduate School of Business Administration in 1986.

Theodore H. Vrountas has served as Vice President of Operations since March
1994 and as an executive officer of the Company since December 1994. Prior to
joining the Company, Mr. Vrountas was employed with GTE Government Systems for
twenty-five years. His most recent position with GTE was Director of
Operations for the Communications Systems Division from 1987 to 1993.

Joel B. Weinstein has served as Vice President of New Business Development
since August 1993. Prior to that, Mr. Weinstein held the position of Vice
President of Marketing since joining the Company in 1987. From 1980 to 1987,
Mr. Weinstein held a variety of positions with Advanced Technology
Laboratories, Inc., including Marketing Director from 1982 to 1984 and Vice
President, Business Development from 1984 to 1987.

Irwin Jacobs has been a director of the Company since January 1990. Mr.
Jacobs has been the President of Datives, Inc., a company which manufactures
and distributes software products, since January 1992. Since December 1990,
Mr. Jacobs has also been the Chairman of the Board of Personal Protection
Consultants, Inc., a company which provides specialized training to hospitals
and law enforcement agencies. From May 1990 to December 1990, Mr. Jacobs was a
Vice President of Ask Computers, Inc., a computer system developer. From 1987
to May 1990, Mr. Jacobs was the President and Chairman of the Board of
Directors of Perception Technology Corp., a manufacturer of voice response
systems.

William A. Peck has been a director of the Company since January 1990. In
1989, Dr. Peck became the Vice Chancellor for Medical Affairs at Washington
University (Executive Vice Chancellor since 1993) and Dean of the Washington
University School of Medicine in St. Louis, Missouri. From 1976 until his
appointment as Vice Chancellor, Dr. Peck was a Professor of Medicine and the
Co-Chairman of the Department of Medicine at Washington University, and the
Physician-in-Chief at the Jewish Hospital of St. Louis. Dr. Peck is a member
of the Board of Trustees of the National Osteoporosis Foundation and served as
its President from 1985 to 1990. Dr. Peck also serves as a director of Allied
Healthcare Products, Inc., Reinsurance Group of America, Inc. and Boatman's
Trust Company.

Gerald Segel has been a director of the Company since March 1990. Mr. Segel,
currently retired, was Chairman of the Board of Tucker Anthony Incorporated
from January 1987 to May 1990. From 1983 through January 1987 he served as
President of Tucker Anthony Incorporated. Mr. Segel also serves as a director
of Litchfield Financial, Inc.

35
<PAGE>

VIVID TECHNOLOGIES, INC.

In June 1989, the Company granted an exclusive worldwide license of certain
of its QDR technology to Vivid Technologies, Inc. for the sole purpose of
developing a baggage inspection and security system. Mr. Ellenbogen and Dr.
Stein are directors of Vivid and hold similar offices in Vivid as they do in
the Company. Mr. Ellenbogen and Dr. Stein collectively own approximately 23%
of the outstanding voting stock of Vivid.

In return for its license of the QDR technology, Vivid is required to pay
the Company royalties of 5% of the first $50 million of net sales of products
using the Company's technology, and 3% of net sales in excess of $50 million,
up to a maximum of $200 million of net sales. The maximum aggregate royalties
payable by Vivid to the Company under this arrangement are $7 million. In
fiscal 1995, Vivid paid the Company royalties of approximately $719,000 under
the License Agreement.

Under a management agreement, the Company has agreed to provide Vivid with
management, engineering and administrative support, and space at the Company's
facilities. The Company and Vivid have agreed that Vivid will vacate this
space by the end of the second quarter of fiscal 1996. The support services
provided by the Company under this arrangement include the part-time
management services of Mr. Ellenbogen and Dr. Stein and other managerial
personnel, and secretarial, telephone and similar services. Vivid is required
to pay the Company its proportionate share of the Company's overhead,
including rent and the salary of the Company's employees rendering services to
Vivid. Under this arrangement, no compensation is paid by Vivid to any of the
Company's employees. The management agreement may be terminated by either
party on six months written notice. For the fiscal year ended September 30,
1995, Vivid was charged approximately $740,000 by the Company for services
rendered under the agreement, manufactured sub-assemblies, spare parts and
space at the Company's facilities. In December 1995, Vivid paid the Company a
$40,000 bonus for the management services provided in fiscal 1995. The Company
estimates that Mr. Ellenbogen and Dr. Stein have been spending approximately
16 and eight hours per week, respectively, on matters involving Vivid.

36
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information as of December 11, 1995
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person who owns beneficially more than 5% of the outstanding shares of
Common Stock, and (ii) the stockholders of the Company who have granted an
over-allotment option to the Underwriters (the "Selling Stockholders"). This
information is based upon information received from or on behalf of the named
individuals. All the Selling Stockholders are either executive officers or
directors of the Company. See "Management."

<TABLE>
<CAPTION>
SHARES SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
BENEFICIALLY OWNED AFTER OFFERING IF AFTER OFFERING IF
PRIOR TO OVER-ALLOTMENT OPTION NOT OVER-ALLOTMENT OPTION
OFFERING(1) EXERCISED NUMBER OF EXERCISED(1)
------------------ ----------------------------- SHARES -----------------------------
NAME OF BENEFICIAL BEING
OWNER* NUMBER PERCENTAGE NUMBER PERCENTAGE OFFERED(1) NUMBER PERCENTAGE
------------------ ------- ---------- -------------- -------------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
S. David Ellenbogen(2).. 313,130 7.4% 313,130 5.8% 60,000 253,130 4.6%
Jay A. Stein(3)......... 274,190 6.5 274,190 5.1 60,000 214,190 3.9
Steve L. Nakashige(4)... 52,960 1.3 52,960 * 5,000 47,960 *
Irwin Jacobs(4)......... 11,000 * 11,000 * 3,000 8,000 *
William A. Peck(4)...... 3,000 * 3,000 * 1,000 2,000 *
Gerald Segel(4)......... 11,000 * 11,000 * 5,000 6,000 *
</TABLE>
- --------
*Less than one percent.
(1) Unless otherwise noted, each person identified possesses sole voting and
investment power with respect to the shares listed.
(2) Includes (i) 27,150 shares held by, or in trust for, Mr. Ellenbogen's
children and grandchildren and (ii) 7,190 shares held by Mr. Ellenbogen as
trustee, all of which shares Mr. Ellenbogen disclaims beneficial
ownership. Also includes options to purchase 28,440 shares of Common Stock
which are exercisable within 60 days after the date of this Prospectus.
Certain of these options are subject to stockholder approval.
(3) Includes (i) 7,190 shares held by, or in trust for, Dr. Stein's children
and (ii) 18,250 shares held by Dr. Stein as trustee or custodian, all of
which shares Dr. Stein disclaims beneficial ownership. Also includes
options to purchase 28,440 shares of Common Stock which are exercisable
within 60 days after the date of this Prospectus. Certain of these options
are subject to stockholder approval.
(4) Includes the following shares subject to options exercisable within 60
days after the date of this Prospectus: Mr. Nakashige -- 52,960; Mr.
Jacobs -- 11,000; Dr. Peck -- 3,000; and Mr. Segel -- 11,000. Certain of
these options are subject to stockholder approval.

37
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, $.01 par value, and 1,622,685 shares of Preferred Stock, $.01
par value. The Board of Directors of the Company has approved an increase in
the number of authorized shares of Common Stock to 30,000,000 shares, subject
to stockholder approval at the Company's Annual Meeting of Stockholders to be
held on February 27, 1996.

COMMON STOCK

The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor. Upon liquidation or
dissolution of the Company, the holders of Common Stock are entitled to
receive all assets available for distribution to the stockholders, subject to
any preferential or other rights of the holders of Preferred Stock. The Common
Stock has no preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to
such shares. The holders of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of stockholders. The
holders of Common Stock do not have cumulative voting rights in the election
of directors. All of the shares of Common Stock are, and the shares to be sold
in this offering will be, fully paid and nonassessable.

As of January 24, 1996, there were 4,210,783 shares of Common Stock
outstanding, held of record by approximately 232 stockholders. The Board of
Directors of the Company has declared a two-for-one stock split in the form of
a stock dividend to be paid in March 1996, subject to stockholder approval of
the proposed increase in the number of authorized shares of Common Stock at
the Company's upcoming Annual Meeting of Stockholders. The Board of Directors
reserves the right to revoke or alter the terms of the stock split.

PREFERRED STOCK

The Company is authorized to issue up to 1,622,685 shares of Preferred
Stock, none of which are outstanding. The Board of Directors may, without
future action of the stockholders of the Company, issue the Preferred Stock in
one or more classes or series and fix the rights and preferences thereof,
including the dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption (including sinking fund provisions), redemption
price or prices. liquidation preferences and the number of shares constituting
any class or series, or the designations of such class or series.

The voting and other rights of the holders of Common Stock will be subject
to, and may be adversely affected by, the rights of holders of any Preferred
Stock that may be issued in the future. Issuances of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring,
a majority of the outstanding voting stock of the Company. The Company has no
present plans to reissue any shares of Preferred Stock.

CERTAIN PROVISIONS AFFECTING STOCKHOLDERS

In addition to the Preferred Stock, the Certificate of Incorporation
includes several additional provisions which may render more difficult an
unfriendly tender offer, proxy contest, merger or other change in control of
the Company. These provisions may discourage bids for the Company and
therefore may limit the price that certain investors might be willing to pay
in the future for shares of the Company's Common Stock.

The Certificate of Incorporation contains a so-called "anti-greenmail"
provision. The provision is intended to discourage speculators who accumulate
beneficial ownership of a significant block of stock and then, under the
threat of making a tender offer or proxy contest or instigating some other
corporate disruption, succeed in extracting from the corporation a premium
price to repurchase the shares acquired by the speculator. This tactic

38
<PAGE>

has become known as greenmail. The anti-greenmail provision prohibits the
Company from purchasing any shares of Common Stock from a Related Person at a
per share price in excess of the fair market value at the time of such
purchase, unless the purchase is approved by two-thirds of the holders of the
outstanding shares of Common Stock, excluding any votes cast by the Related
Person. The term Related Person is defined in general to mean any person,
other than a founder of the Company (Mr. Ellenbogen and Dr. Stein), who
acquires more than 5% of the Company's voting stock. Stockholder approval is
not required for such purchases when the offer is made available on the same
terms to all holders of shares of Common Stock or when the purchases are
effected on the open market.

The Certificate of Incorporation also contains a provision that will require
the affirmative vote of the holders of 80% of the outstanding Common Stock to
approve amendments to the Certificate of Incorporation or to approve
extraordinary transactions that are required to be approved by stockholders
under the Delaware General Corporation Law, including mergers, sales of
substantially all of the Company's assets and dissolution, which actions are
not approved by a majority of the Continuing Directors (as defined below) of
the Company. The Certificate of Incorporation provides that the affirmative
vote of the holders of only a majority of the outstanding Common Stock is
required to approve such matters if they have been approved by the Continuing
Directors. The term Continuing Director is defined to mean (i) any member of
the Board of Directors who is unaffiliated with a Related Person and was a
member of the Board of Directors prior to the time any person became a Related
Person and (ii) any successor to such a Continuing Director who is not
affiliated with any Related Person and is recommended to succeed a Continuing
Director by a majority of the Continuing Directors then on the Board of
Directors. A majority of the Continuing Directors can designate a new director
to be a Continuing Director, even though such person is affiliated with a
Related Person.

The Continuing Directors are currently closely affiliated with management
and are anticipated to continue to be so into the foreseeable future.
Accordingly, the effect of the provision of the Company's Certificate of
Incorporation described in the preceding paragraph would be to make it
unlikely that any transaction requiring a stockholder vote would receive the
requisite approval unless supported by management. The 80% voting requirement
would apply to recapitalizations, management-led buy-outs and other
management-led transactions requiring the vote of stockholders under the
Delaware General Corporation Law, if such transactions were not approved by
the Continuing Directors. However, because of the likelihood of the close
association of the Continuing Directors to management, it would be more likely
that such transactions would obtain the approval of the Continuing Directors
and require only majority stockholder approval.

Another provision included in the Certificate of Incorporation requires the
Board of Directors to consider social, economic and other factors in
evaluating whether certain types of corporate transactions proposed by another
party are in the best interests of the Company and its stockholders. These
transactions include (i) the purchase or acquisition through exchange or
otherwise of any of the Company's outstanding equity securities, (ii) the
merger or consolidation of the Company with another corporation and (iii) the
purchase or other acquisition of all or substantially all of the Company's
properties and assets.

Section 203 of the Delaware General Corporation Law prohibits a Delaware
corporation from engaging in a wide range of specified transactions with any
interested stockholder, defined to include, among others, any person or entity
who in the last three years obtained 15% or more of any class or series of
stock entitled to vote in the election of directors, unless, among other
exceptions, the transaction is approved by (i) the Board of Directors prior to
the date the interested stockholder obtained such status or (ii) the holders
of two-thirds of the outstanding shares of each class or series of stock
entitled to vote generally in the election of directors, not including those
shares owned by the interested stockholder. By virtue of the Company's
decision not to elect out of the statute's provisions, the statute applies to
the Company.

39
<PAGE>

RIGHTS DISTRIBUTION

In 1992, the Board of Directors declared a dividend distribution of one
right (a "Right") for each outstanding share of Common Stock held of record on
December 22, 1992 or issued thereafter prior to the "Separation Time," as
defined below. After December 22, 1992 and for so long as the Rights are not
transferable separately from the Common Stock, one Right is deemed to be
delivered with each share of Common Stock issued or transferred by the
Company.

The "Separation Time" is the close of business on the earlier of (i) the
tenth business day (or such earlier or later date not beyond the thirtieth day
as the Board of Directors may decide) (a "Flip-in Date"), after the
announcement that a person has acquired 15% or more of the outstanding Common
Stock of the Company (or that a person already owning 15% has acquired any
more Common Stock) (an "Acquiring Person") or (ii) the tenth business day (or
such later date as the Board of Directors may decide) after any person
commences a tender or exchange offer to acquire beneficial ownership of 15% or
more of the outstanding shares of Common Stock. Until the Separation Time, the
Rights will be evidenced solely by the Common Stock certificates and may be
transferred only with the Common Stock.

After the Separation Time, the Rights become exercisable and may be
transferred independently of shares of Common Stock, and separate certificate
evidencing the Rights will be mailed to stockholders. The Rights will expire
on the earlier of (i) December 22, 2002, or (ii) the date on which the Rights
are redeemed.

Commencing after the Flip-in Date has occurred, the holders of Rights,
except the Acquiring Person, are entitled to purchase that number of shares of
the Company's Common Stock having a market value equal to twice the exercise
price of $30 per share (the "Exercise Price"). However, in lieu of the rights
to purchase shares of the Company's Common Stock at an effective 50% discount,
the Board of Directors of the Company may elect to issue one share of Common
Stock for each Right held by each holder other than the Acquiring Person.

After an Acquiring Person has become such, and prior to the expiration of
the Rights, the Company may not (i) consolidate or merge with any other
person, (ii) sell or otherwise transfer to any other person more than 50% of
the Company's assets, or assets generating more than 50% of the Company's
operating income or cash flow, (iii) engage in certain self-dealing
transactions with Acquiring Persons, or (iv) permit certain events to occur
when there is an Acquiring Person, if at the time of such merger, sale or
self-dealing transaction the Acquiring Person controls the board of directors
and, in the case of merger, will receive different treatment than other
stockholders, unless in any such case provision is made so that each holder of
a Right will thereafter have the right to receive, at the then current
Exercise Price, a number of shares of common stock of the Acquiring Person
engaging in the transaction having a market value equal to two times the
Exercise Price of the Right.

The Rights may be terminated by the Company at any time prior to the close
of business on a Flip-in Date.

The provisions in the Certificate of Incorporation and By-Laws referred to
above, and the authority of the Board of Directors to issue additional shares
of Common Stock and accelerate the exercisability of the Rights could be used
by the Board of Directors in a manner calculated to prevent the removal of
management and make more difficult or discourage a change in control of the
Company. The distribution of Rights and certain aspects of the foregoing
provisions in the Company's Certificate of Incorporation and By-Laws were
designed to afford the Board of Directors the opportunity to evaluate the
terms of a takeover attempt without haste or undue pressure, advise
stockholders of its findings, and to negotiate to protect the interests of all
stockholders. See "Risk Factors--Anti-takeover Provisions; Management
Control."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is the American Stock
Transfer & Trust Company.

40
<PAGE>

UNDERWRITING

Under the terms and subject to the conditions of the Underwriting Agreement,
the Underwriters named below, for whom Needham & Company, Inc., Tucker Anthony
Incorporated and Adams, Harkness & Hill, Inc. are acting as representatives
(the "Representatives"), have severally agreed to purchase from the Company,
and the Company has agreed to sell to each Underwriter, the aggregate number
of shares of Common Stock set forth opposite their respective names in the
table below. The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to certain conditions precedent, and that the Underwriters are
committed to purchase and pay for all shares if any are purchased.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Needham & Company, Inc......................................... 241,667
Tucker Anthony Incorporated.................................... 241,667
Adams, Harkness & Hill, Inc.................................... 241,666
Donaldson, Lufkin & Jenrette Securities Corporation............ 50,000
Hambrecht & Quist LLC.......................................... 50,000
Lehman Brothers Inc............................................ 50,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated............. 50,000
Morgan Stanley & Co. Incorporated.............................. 50,000
UBS Securities Inc............................................. 50,000
Robert W. Baird & Co. Incorporated............................. 25,000
Cowen & Company................................................ 25,000
Equitable Securities Corporation............................... 25,000
First Albany Corporation....................................... 25,000
Furman Selz LLC................................................ 25,000
Nutmeg Securities, Ltd......................................... 25,000
Vector Securities International, Inc........................... 25,000
---------
Total........................................................ 1,200,000
=========
</TABLE>

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers (who may include the Underwriters) at such price less a concession not
in excess of $1.15 per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $.10 per share to certain other dealers
(who may include the Underwriters). After the offering to the public, the
public offering price and other selling terms may be changed by the
Representatives.

The Company and the Selling Stockholders have granted the Underwriters an
option, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to 180,000 additional shares of Common Stock at the
public offering price, less the underwriting discounts and commissions, set
forth on the cover page of this Prospectus. The Underwriters may exercise such
option only to cover over-allotments made in connection with the sale of the
Common Stock offered hereby. To the extent the Underwriters exercise such
option, each of the Underwriters will have a firm commitment, subject to
certain exceptions, to purchase approximately the same percentage of such
additional shares that the number of shares of Common Stock to be purchased by
it shown in the above table bears to the total shown.

The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Selling Stockholders and the Company against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").

The Company has agreed not to offer, sell or otherwise dispose of any shares
of Common Stock for a period of 180 days after the date of this Prospectus
without the prior written consent of Needham & Company, Inc., except for the
shares of Common Stock offered hereby and except that the Company may issue
securities pursuant to the Company's stock option plans. S. David Ellenbogen
and Jay A. Stein, who hold in the aggregate 496,060 shares of

41
<PAGE>

Common Stock and currently exercisable options to purchase 56,880 shares of
Common Stock, have agreed that if the Underwriters' over-allotment option is
exercised with respect to the shares of Common Stock to be sold by them, they
will not, directly or indirectly, offer to sell, sell, or otherwise dispose of
shares of Common Stock or any securities convertible or exchangeable therefor,
for a period of 180 days after the date of this Prospectus, without the prior
written consent of Needham & Company, Inc., subject to certain limited
exceptions.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the
right to reject any order for the purchase of shares in whole or in part.

In connection with this offering, certain Underwriters and selling group
members (if any) who are qualifying registered market makers on the Nasdaq
National Market may engage in passive market making transactions in the Common
Stock of the Company on the Nasdaq National Market in accordance with Rule
10b-6A under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") during the two business day period before commencement of the offers or
sales of the Common Stock. The passive market making transactions must comply
with applicable volume and price limits and be identified as such. In general,
a passive market maker may display its bid at a price not in excess of the
highest independent bid for the security; if all independent bids are lowered
below the passive market maker's bid, however, such bid must then be lowered
when certain purchase limits are exceeded.

LEGAL MATTERS

The validity of the Common Stock offered hereby has been passed upon for the
Company and the Selling Stockholders by Brown, Rudnick, Freed & Gesmer,
Boston, Massachusetts. Certain legal matters in connection with the Common
Stock offered hereby will be passed upon for the Underwriters by Testa,
Hurwitz & Thibeault, Boston, Massachusetts. A member of Brown, Rudnick, Freed
& Gesmer is the Secretary of the Company and owns 1,000 shares of Common Stock
and options to purchase 5,000 shares of Common Stock.

EXPERTS

The financial statements and schedules included or incorporated by reference
in this Prospectus and elsewhere in the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto, and are included or incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said reports.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information filed by the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, NW, Room 1024, Judiciary Plaza, Washington,
D.C. 20549, and at the Commission's Regional Offices at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, Suite 1300, New York, New York 10048, at prescribed rates.

The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-3 under the Securities Act with respect to
the Common Stock being offered hereby. This Prospectus does not contain all of
the information set forth in such Registration Statement and the exhibits and
schedules thereto to which reference is hereby made. The statements in this
Prospectus as to the contents of such Registration Statement are qualified in
their entirety by such reference. The Registration Statement, together with
its exhibits and schedules, may be inspected without charge at the Public
Reference Section of the Commission in Washington, D.C. at the address noted
above, and copies of all or any part thereof may be obtained from the
Commission upon payment of the prescribed fees.

42
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission pursuant to the Exchange
Act are incorporated herein by reference: (1) the Company's Annual Report on
Form 10-K for the fiscal year ended September 24, 1994; (2) the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended December 24,
1994, March 25, 1995 and June 24, 1995; and (3) the description of the
Company's Common Stock contained in the Company's registration statement on
Form 8-A.

All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of the offering of the Common
Stock hereunder shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents referred to
above, excluding exhibits thereto. Requests should be made to: Investor
Relations, Hologic, Inc., 590 Lincoln Street, Waltham, Massachusetts 02154,
telephone number (617) 890-2300.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document that also is (or is deemed
to be) incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.

43
<PAGE>

HOLOGIC, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of September 24, 1994 and September 30,
1995..................................................................... F-3
Consolidated Statements of Operations for the years ended September 25,
1993, September 24, 1994 and September 30, 1995.......................... F-4
Consolidated Statements of Stockholders' Equity for the years ended
September 25, 1993, September 24, 1994 and September 30, 1995............ F-5
Consolidated Statements of Cash Flows for the years ended September 25,
1993, September 24, 1994 and September 30, 1995.......................... F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hologic, Inc.:

We have audited the accompanying consolidated balance sheets of Hologic,
Inc. (a Delaware corporation) and subsidiaries as of September 24, 1994 and
September 30, 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended September 30, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hologic, Inc. and
subsidiaries as of September 24, 1994 and September 30, 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended September 30, 1995, in conformity with generally accepted
accounting principles.

Arthur Andersen LLP

Boston, Massachusetts
November 22, 1995 (except with respect
to the matter discussed in
Note 13, as to which the date is
December 14, 1995)

F-2
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
24, 1994 30, 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......................... $ 5,880,010 $ 7,447,813
Short-term investments............................. 3,519,515 2,492,671
Accounts receivable, less reserves of $850,000..... 10,893,649 11,643,883
Inventories........................................ 4,435,033 6,917,000
Prepaid expenses and other current assets.......... 1,584,132 2,058,707
----------- -----------
Total current assets............................. 26,312,339 30,560,074
----------- -----------
Property and Equipment, at cost:
Equipment.......................................... 1,922,473 2,600,381
Furniture and fixtures............................. 553,393 652,446
Leasehold improvements............................. 448,529 506,495
----------- -----------
2,924,395 3,759,322
Less--Accumulated depreciation and amortization.... 1,796,826 2,298,168
----------- -----------
1,127,569 1,461,154
----------- -----------
Other Assets, net.................................... 1,057,254 1,840,785
----------- -----------
$28,497,162 $33,862,013
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit..................................... $ 2,417,034 $ 2,058,898
Accounts payable................................... 1,865,413 3,773,000
Accrued expenses................................... 3,474,482 3,965,750
Deferred revenue................................... 867,861 1,392,667
----------- -----------
Total current liabilities........................ 8,624,790 11,190,315
----------- -----------
Commitments and Contingencies (Notes 8 and 13)
Stockholders' Equity:
Preferred stock, $.01 par value--
Authorized--1,622,685 shares
Issued and outstanding--none..................... -- --
Common stock, $.01 par value--
Authorized--10,000,000 shares
Issued and outstanding--4,024,581 shares and
4,122,100 shares in 1994 and 1995, respectively. 40,246 41,221
Capital in excess of par value....................... 14,450,085 15,354,893
Retained earnings.................................... 5,551,074 7,420,593
Cumulative translation adjustment.................... (169,033) (145,009)
----------- -----------
Total stockholders' equity....................... 19,872,372 22,671,698
----------- -----------
$28,497,162 $33,862,013
=========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED
-------------------------------------
SEPTEMBER SEPTEMBER SEPTEMBER
25, 1993 24, 1994 30, 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Product sales........................ $24,139,565 $37,056,109 $41,129,782
Other revenue........................ 708,831 1,427,634 2,270,068
----------- ----------- -----------
24,848,396 38,483,743 43,399,850
----------- ----------- -----------
Costs and Expenses:
Cost of product sales................ 13,729,012 20,865,075 22,090,963
Research and development............. 3,182,412 3,441,871 4,300,474
Selling and marketing................ 5,472,413 5,892,377 7,835,418
General and administrative........... 3,500,998 4,189,377 4,461,335
Litigation expenses.................. -- -- 2,533,493
Restructuring costs.................. 900,000 -- --
----------- ----------- -----------
26,784,835 34,388,700 41,221,683
----------- ----------- -----------
Income (loss) from operations...... (1,936,439) 4,095,043 2,178,167
Interest Income........................ 300,468 315,886 609,678
Other Expense.......................... (438,869) (80,752) (268,326)
----------- ----------- -----------
Income (loss) before income taxes.. (2,074,840) 4,330,177 2,519,519
Provision (Benefit) for Income Taxes... (300,000) 1,335,000 650,000
----------- ----------- -----------
Net income (loss).................. $(1,774,840) $ 2,995,177 $ 1,869,519
=========== =========== ===========
Net Income (Loss) Per Common and Common
Equivalent Share:
Primary.............................. $ (.45) $ .71 $ .43
=========== =========== ===========
Fully diluted........................ $ .69 $ .41
=========== ===========
Weighted Average Number of Common and
Common Equivalent Shares Outstanding:
Primary.............................. 3,930,068 4,194,914 4,375,880
=========== =========== ===========
Fully diluted........................ 4,341,810 4,575,426
=========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
-----------------
$.01 CAPITAL IN CUMULATIVE TOTAL
NUMBER OF PAR EXCESS OF RETAINED TRANSLATION STOCKHOLDERS'
SHARES VALUE PAR VALUE EARNINGS ADJUSTMENT EQUITY
--------- ------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30,
1992................... 3,906,100 $39,061 $13,824,437 $4,330,737 $ (77,475) $18,116,760
Exercise of stock op-
tions and stock pur-
chase warrants....... 29,650 296 10,107 -- -- 10,403
Issuance of common
stock for patent ac-
quisition............ 10,667 107 49,893 -- -- 50,000
Net loss.............. -- -- -- (1,774,840) -- (1,774,840)
Translation adjust-
ments................ -- -- -- -- (90,104) (90,104)
--------- ------- ----------- ---------- --------- -----------
Balance, September 25,
1993................... 3,946,417 39,464 13,884,437 2,555,897 (167,579) 16,312,219
Exercise of stock op-
tions................ 78,164 782 365,648 -- -- 366,430
Tax benefit from stock
options exercised.... -- -- 200,000 -- -- 200,000
Net income............ -- -- -- 2,995,177 -- 2,995,177
Translation adjust-
ments................ -- -- -- -- (1,454) (1,454)
--------- ------- ----------- ---------- --------- -----------
Balance, September 24,
1994................... 4,024,581 40,246 14,450,085 5,551,074 (169,033) 19,872,372
Exercise of stock op-
tions................ 64,718 647 241,895 -- -- 242,542
Issuance of common
stock under employee
stock purchase plan.. 4,780 48 59,105 -- -- 59,153
Stock issuance in con-
junction with collab-
oration agreement.... 28,021 280 323,808 -- -- 324,088
Tax benefit from stock
options exercised.... -- -- 280,000 -- -- 280,000
Net income............ -- -- -- 1,869,519 -- 1,869,519
Translation adjust-
ments................ -- -- -- -- 24,024 24,024
--------- ------- ----------- ---------- --------- -----------
Balance, September 30,
1995................... 4,122,100 $41,221 $15,354,893 $7,420,593 $(145,009) $22,671,698
========= ======= =========== ========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss).................. $(1,774,840) $2,995,177 $1,869,519
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities--
Depreciation and amortization.... 424,787 593,519 565,806
Changes in assets and liabili-
ties--
Accounts receivable............ (680,391) (5,738,374) (883,961)
Inventories.................... 238,727 (387,204) (2,445,327)
Prepaid expenses and other cur-
rent assets................... (21,539) (580,031) (411,442)
Accounts payable............... 518,306 (131,964) 1,781,387
Accrued expenses............... 884,779 241,960 525,350
Deferred revenue............... 121,604 27,344 505,765
----------- ---------- ----------
Net cash provided by (used
in) operating activities.... (288,567) (2,979,573) 1,507,097
----------- ---------- ----------
Cash Flows from Investing Activities:
Net (purchases) sales of short-term
investments....................... 4,736,921 (79,340) 1,026,844
Purchase of property and equipment,
net............................... (213,426) (495,159) (802,822)
Increase in other assets........... (286,448) (37,579) (193,729)
----------- ---------- ----------
Net cash provided by (used
in) investing activities.... 4,237,047 (612,078) 30,293
----------- ---------- ----------
Cash Flows from Financing Activities:
Borrowings (settlement) under line
of credit......................... -- 2,311,352 (536,200)
Net proceeds from sale of common
stock............................. 10,403 366,430 301,695
Tax benefit from stock options ex-
ercised........................... -- 200,000 280,000
----------- ---------- ----------
Net cash provided by financ-
ing activities.............. 10,403 2,877,782 45,495
----------- ---------- ----------
Effect of Exchange Rate Changes on
Cash................................ 359,645 (94,627) (15,082)
----------- ---------- ----------
Net Increase (Decrease) in Cash and
Cash Equivalents.................... 4,318,528 (808,496) 1,567,803
Cash and Cash Equivalents, beginning
of year............................. 2,369,978 6,688,506 5,880,010
----------- ---------- ----------
Cash and Cash Equivalents, end of
year................................ $ 6,688,506 $5,880,010 $7,447,813
=========== ========== ==========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for in-
come taxes........................ $ 214,072 $1,259,940 $ 182,809
=========== ========== ==========
Supplemental Schedule of Noncash
Transactions:
Common stock issued for patent ac-
quisition......................... $ 50,000 $ -- $ --
=========== ========== ==========
Preferred stock investment acquired
in exchange for common stock...... $ -- $ -- $ 324,088
=========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) OPERATIONS

Hologic, Inc. (the Company) is engaged in the development, manufacture and
distribution of proprietary x-ray and other medical systems.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements reflect the application
of certain accounting policies as described in this note and elsewhere in the
accompanying consolidated financial statements.

(a) Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and all of its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in consolidation.

(b) Change in Fiscal Year

During fiscal 1993, the Company elected to change its fiscal year-end from
September 30 to the last Saturday in September. Fiscal 1993, 1994 and 1995
ended on September 25, 1993, September 24, 1994 and September 30, 1995.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(d) Cash and Cash Equivalents and Short-term Investments

The Company considers all highly liquid investments with maturities of three
months or less at the time of acquisition to be cash equivalents. Included in
cash equivalents at September 24, 1994 is approximately $4,804,000 of
securities purchased under agreements to resell. Included in cash equivalents
at September 30, 1995 is approximately $4,217,000 of securities purchased
under agreements to resell. The securities purchased under agreements to
resell are collateralized by U.S. Government securities. Short-term
investments have maturities of greater than three months and consist of
securities issued by the U.S. Government and its agencies.

The Company accounts for investments in accordance with the Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Under SFAS No. 115, investments
that the Company has the positive intent and ability to hold to maturity are
reported at amortized cost, which approximates fair market value, and are
classified as held-to-maturity. These investments include cash, cash
equivalents and securities issued by U.S. Government agencies, which total
$6,522,000 at September 30, 1995. Investments purchased to be held for
indefinite periods of time and not intended at the time of purchase to be held
until maturity are classified as available-for-sale, which total $1,803,000 at
September 30, 1995. These investments consist of securities issued by the U.S.
Government and are carried at cost which approximates fair market value.

F-7
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(e) Concentration of Credit Risk

SFAS No. 105, Disclosure of Information about Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentration of Credit
Risk, requires disclosure of any significant off-balance-sheet and credit risk
concentrations. Financial instruments that subject the Company to credit risk
consist primarily of trade accounts receivable. The Company utilizes
distributors in certain countries with various credit terms, depending on the
individual circumstances. One distributor had amounts due to the Company of
approximately $4,817,000 and $2,231,000 as of September 24, 1994 and September
30, 1995, respectively. This distributor accounted for 14%, 28% and 20% of
product sales for fiscal 1993, 1994 and 1995, respectively.

(f) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 24, SEPTEMBER 30,
1994 1995
------------- -------------
<S> <C> <C>
Raw materials and work-in-process............. $3,258,076 $4,030,275
Finished goods................................ 1,176,957 2,886,725
---------- ----------
$4,435,033 $6,917,000
========== ==========
</TABLE>

Work-in-process and finished goods inventories consist of materials, labor
and manufacturing overhead.

(g) Depreciation and Amortization

The Company provides for depreciation and amortization by charges to
operations, using the straight-line and declining-balance methods, which
allocate the cost of property and equipment over the following estimated
useful lives:

<TABLE>
<CAPTION>
ESTIMATED
ASSET CLASSIFICATION USEFUL LIFE
-------------------- -------------
<S> <C>
Equipment.................. 5 Years
Furniture and fixtures..... 5-7 Years
Leasehold improvements..... Life of lease
</TABLE>

(h) Intangible Assets

The Company assesses the realizability of intangible assets in accordance
with SFAS No. 121, Accounting for Impairment of Long-lived Assets and for
Long-lived Assets To Be Disposed Of.

(i) Foreign Currency Translation

The Company translates certain of its accounts and the financial statements
of its foreign subsidiaries in accordance with SFAS No. 52, Foreign Currency
Translation. In translating the accounts of the foreign subsidiaries into U.S.
dollars, assets and liabilities are translated at the rate of exchange in
effect at year-end, while stockholders' equity is translated at historical
rates. Revenue and expense accounts are translated using the weighted average
exchange rate in effect during the year. Gains and losses from foreign
currency translation are credited or charged to cumulative translation
adjustment, included in stockholders' equity in the accompanying consolidated
balance sheets.

Transaction losses of approximately $430,000 in fiscal 1993 are included in
other expense in the accompanying consolidated statements of operations.
Transaction gains in fiscal 1994 and 1995 were not significant.

F-8
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(j) Revenue Recognition

The Company recognizes product revenue upon shipment. A provision is made at
that time for estimated warranty costs to be incurred. Other revenues are
recorded at the time the product is shipped or the service rendered.

Maintenance revenues are recognized over the term of the contract. Cash
received in excess of revenues recognized is included in deferred revenue in
the accompanying consolidated balance sheets.

(k) Research and Development and Software Development Costs

Research and development costs, other than software development costs, have
been charged to operations as incurred. SFAS No. 86, Accounting for the Costs
of Computer Software To Be Sold, Leased or Otherwise Marketed, requires the
capitalization of certain computer software development costs incurred after
technological feasibility is established. The Company believes that once
technological feasibility of a software product has been established, the
additional development costs incurred to bring the product to a commercially
acceptable level are not significant.

(l) Net Income (Loss) per Common and Common Equivalent Share

Net income (loss) per share data are computed using the weighted average
number of shares of common stock outstanding during each period. Common
equivalent shares from stock options have been included in the computation
using the treasury stock method only when their effect would be dilutive.
Fully dilutive net income per share has been separately presented only when
the difference from primary net income per share is significant.

(m) Restructuring Charge

In fiscal 1993, the Company recorded a nonrecurring restructuring charge of
$900,000, representing the costs associated with reorganizing its European
operations. These costs included a reduction in work force, consolidation of
distribution and administrative functions, and asset write-offs and write-
downs. The restructuring was completed during the fourth quarter of fiscal
1994.

(n) Derivative Financial Instruments

During October 1994, the Financial Accounting Standards Board issued SFAS
No. 119, Disclosure About Derivative Financial Instruments and Fair Value of
Financial Instruments, which requires disclosures about derivative financial
instruments. SFAS No. 119 will be effective for fiscal 1996. The Company does
not expect the adoption of this standard to have a material effect on its
consolidated financial position or results of operations. At September 30,
1995, the Company had no instruments requiring disclosure under SFAS No. 119.

(3) LINE OF CREDIT

The Company maintains a line of credit with a bank for the equivalent of
$3,000,000, which bears interest at the Paris Interbank Offered Rate (6.375%
at September 30, 1995) plus 2.25%. The borrowings under this line are
primarily used by the Company's European subsidiaries to settle intercompany
sales and are denominated in the respective local currencies of its European
subsidiaries. The line of credit may be canceled by the bank with a 30-day
notice. Interest expense on this line of credit of approximately $79,000 and
$204,000 has been included in other expenses in the accompanying consolidated
statements of operations for 1994 and 1995, respectively.

F-9
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(4) INCOME TAXES

The Company provides for income taxes under the liability method in
accordance with SFAS No. 109, Accounting for Income Taxes.

The provision (benefit) for income taxes in the accompanying consolidated
statements of operations consists of the following:

<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Federal--
Current....................... $(295,000) $1,395,000 $415,000
Deferred...................... (15,000) (105,000) 135,000
--------- ---------- --------
(310,000) 1,290,000 550,000
--------- ---------- --------
State--
Current....................... 10,000 45,000 90,000
--------- ---------- --------
Foreign--
Current....................... -- -- 10,000
--------- ---------- --------
$(300,000) $1,335,000 $650,000
========= ========== ========
</TABLE>

A reconciliation of the federal statutory rate to the Company's effective
tax rate is as follows:

<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Income tax provision (benefit) at
federal statutory rate.............. (34.0)% 34.0% 34.0%
Increase (decrease) in tax resulting
from--
Net effect of (income) losses of
foreign subsidiaries not
(provided) benefited.............. 20.5 (0.9) (6.7)
State tax provision, net of federal
benefit........................... 0.3 0.7 2.4
Research and development tax cred-
it................................ (1.3) (0.5) (1.9)
Effect of not providing U.S. taxes
on exempt FSC income.............. (3.5) (4.5) (5.3)
Other.............................. 3.5 2.0 3.3
----- ---- ----
Effective tax rate................... (14.5)% 30.8% 25.8%
===== ==== ====
</TABLE>

The components of domestic and foreign income (loss) before the provision
for income taxes are as follows:

<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Domestic........................ $ (823,792) $4,211,439 $1,988,346
Foreign......................... (1,251,048) 118,738 531,173
----------- ---------- ----------
$(2,074,840) $4,330,177 $2,519,519
=========== ========== ==========
</TABLE>

During fiscal 1994 and 1995, the Company realized tax benefits of
approximately $200,000 and $280,000, respectively, relating to the exercise of
certain stock options. These benefits are reflected as a component of capital
in excess of par value.

F-10
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The components of the net deferred tax amount recognized in the accompanying
consolidated balance sheets are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 24, SEPTEMBER 30,
1994 1995
------------- -------------
<S> <C> <C>
Deferred tax assets........................... $1,450,000 $1,175,000
Valuation allowance........................... (696,000) (488,000)
---------- ----------
$ 754,000 $ 687,000
========== ==========
</TABLE>

The approximate income tax effect of each type of temporary difference and
carryforward before allocation of the valuation allowance is approximately as
follows:

<TABLE>
<CAPTION>
SEPTEMBER 24, SEPTEMBER 30,
1994 1995
------------- -------------
<S> <C> <C>
Foreign net operating loss carryforwards..... $ 561,000 $ 353,000
Nondeductible accruals....................... 389,000 290,000
Nondeductible reserves....................... 496,000 511,000
Other temporary differences.................. 4,000 21,000
---------- ----------
$1,450,000 $1,175,000
========== ==========
</TABLE>

The valuation allowance relates primarily to certain deferred tax assets in
foreign jurisdictions, for which realization is uncertain. The reduction in
the valuation allowance in 1995 is directly attributable to the reduction of
foreign net operating losses.

(5) COMMON STOCK

(a) Stock Option Plans

The Company's 1986 Combination Stock Option Plan (the 1986 Plan) is
administered by the Board of Directors and authorizes the Company to issue
options to purchase up to 950,000 shares that have been reserved by the
Company. Under the terms of the 1986 Plan, the Company may grant employees
either incentive stock options or nonqualified stock options to purchase
shares of the Company's common stock at a price not less than fair market
value at the date of grant. In addition, the Company may grant nonqualified
options to other participants. As of September 30, 1995, the Company had
granted options to purchase 927,502 shares, of which options to purchase
345,819 shares had been exercised. These options vest over a five-year period
and are exercisable at varying dates.

The Company's 1990 Nonemployee Director Stock Option Plan (the Directors'
Plan) allows for eligible directors to receive options to purchase 5,000
shares of common stock upon election as a director. The options vest ratably
over a five-year period. In addition, eligible directors are entitled to
annual option grants to purchase 2,000 shares of common stock, which vest
after six months. Option grants under the Directors' Plan are at not less than
fair market value on the date of grant. The Company has reserved 75,000 shares
of common stock for issuance under the Directors' Plan. As of September 30,
1995, the Company had granted options to purchase 35,000 shares, of which
options to purchase 7,000 shares had been exercised.

In June 1995, the Board of Directors adopted, subject to stockholders'
approval, the 1995 Combination Stock Option Plan, pursuant to which the
Company is authorized to issue 550,000 options to purchase shares. Pending
stockholder approval, the Company had granted 275,000 options under this plan.

F-11
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following table summarizes all stock option activity under the 1986 and
1995 Plans and the Directors' Plan for the three years ended September 30,
1995.

<TABLE>
<CAPTION>
NUMBER EXERCISE PRICE
OF SHARES PER SHARE
--------- --------------
<S> <C> <C>
Outstanding, September 30, 1992................. 297,413 $ .10-$22.75
Granted....................................... 252,450 4.38- 5.63
Terminated.................................... (164,363) .10- 22.75
Exercised..................................... (13,850) .10- 1.00
-------- -------------
Outstanding, September 25, 1993................. 371,650 .10- 17.75
Granted....................................... 303,400 3.63- 10.50
Terminated.................................... (13,185) 1.00- 7.38
Exercised..................................... (78,164) .10- 8.50
-------- -------------
Outstanding, September 24, 1994................. 583,701 .10- 17.75
Granted....................................... 373,300 12.38- 18.88
Terminated.................................... (7,600) 3.88- 14.13
Exercised..................................... (64,718) .10- 14.13
-------- -------------
Outstanding, September 30, 1995................. 884,683 $ .10-$18.88
======== =============
Exercisable, September 30, 1995................. 234,733 $ .10-$14.13
======== =============
</TABLE>

(b) Employee Stock Purchase Plan

In December 1994, the Company adopted the 1995 Employee Stock Purchase Plan
(the ESP Plan) in compliance with Section 423 of the Internal Revenue Code.
Employees who have completed 12 consecutive months or two years, whether or
not consecutive, of employment with the Company are eligible to participate in
the ESP Plan. The ESP Plan allows participants to purchase common stock of the
Company at 85% of the fair market value, as defined. The Company may issue up
to 100,000 shares under the ESP Plan. During fiscal 1995, the Company issued
4,780 shares under the ESP Plan. At September 30, 1995, the Company has 95,220
shares available for purchase under the ESP Plan.

In December 1992, the Company adopted a shareholder rights plan. The plan is
intended to protect shareholders from unfair or coercive takeover practices.
In accordance with the plan, the Board of Directors declared a dividend
distribution of one common stock purchase right for each share of common stock
outstanding until the rights become detachable. Each right entitles the
registered holder to purchase from the Company one share of common stock for
$30, adjusted for certain events. In the event that the Company is acquired in
a merger or other business combination transaction or more than 50% of its
assets or earning power are sold, each holder shall thereafter have the right
to receive, upon exercise of each right, that number of shares of Common Stock
of the acquiring Company which at the time of such transaction would have a
market value of two times the $30 per share exercise price. The rights will
not be detachable or exercisable until certain events occur. The Board of
Directors may elect to terminate the rights under certain circumstances.

(6) PROFIT-SHARING 401(K) PLAN

The Company has a qualified profit-sharing plan covering substantially all
of its employees. Contributions to the plan are at the discretion of the
Company's Board of Directors. The Company has recorded approximately $98,000,
$120,000 and $135,000 as a provision for the profit-sharing contribution for
fiscal 1993, 1994 and 1995, respectively.

F-12
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(7) RELATED-PARTY TRANSACTIONS

(a) Management Services Agreement

The Company has an agreement with Vivid Technologies, Inc. (Vivid), an
affiliated company, whereby the Company provides management, administrative
and support services. In addition, the Company leases a portion of its
facilities to Vivid through June 1996 for approximately $15,000 per month.
Vivid pays the Company for all direct costs incurred, as well as a portion of
the Company's overhead costs, as defined, representing the pro rata portion of
costs attributable to Vivid. The Company has charged Vivid approximately
$304,000, $544,000 and $530,000 under the agreement during fiscal 1993, 1994
and 1995, respectively, which has been offset against operating expenses of
the Company. Vivid also purchased approximately $154,000, $229,000 and
$210,000 of inventory and spare parts from the Company in fiscal 1993, 1994
and 1995, respectively. Of these amounts, approximately $291,000 and $463,000
was unpaid as of September 24, 1994 and September 30, 1995, respectively.

(b) License and Technology Agreement

The Company has an agreement with Vivid whereby Vivid obtained a perpetual,
exclusive worldwide license to utilize certain of the Company's technology and
patents for the sole purpose of developing baggage and inspection security
systems. Royalty payments to the Company under the agreement are 5% of product
revenue on Vivid's first $50 million in sales; thereafter, payments are 3% of
Vivid's sales up to $200 million. No royalty payments will be made on
aggregate revenues in excess of $200 million. The agreement terminates by
mutual agreement of the two parties or under certain other circumstances, as
defined. The Company recognized approximately $138,000, $688,000 and $719,000
of royalty revenue under the agreement for fiscal 1993, 1994 and 1995,
respectively. Approximately $189,000 and $351,000 was outstanding at September
24, 1994 and September 30, 1995, respectively.

(8) COMMITMENTS

(a) Operating Leases

The Company and its subsidiaries lease certain equipment and conduct their
operations in leased facilities under operating lease agreements that expire
through fiscal 2002. In addition, the facility lease requires the Company to
pay a percentage of real estate taxes and certain operating costs of the
property. Future minimum lease payments under the operating leases are
approximately as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDING AMOUNT
------------------ ----------
<S> <C>
September 28, 1996............ $ 890,000
September 27, 1997............ 811,000
September 26, 1998............ 775,000
September 25, 1999............ 760,000
September 24, 2000............ 760,000
Thereafter.................... 931,000
----------
$4,927,000
==========
</TABLE>

Rental expense, net of subrentals from Vivid, was approximately $784,000,
$647,000 and $632,000 for fiscal 1993, 1994 and 1995, respectively.

The lease agreement for the Company's headquarters included a free rent and
reduced rent period. The Company is recognizing the rent expense evenly over
the term of the lease agreement.

F-13
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(b) Patent Acquisition

In fiscal 1992, the Company acquired certain patents pertaining to
technology incorporated into certain of the Company's products. The Company
paid approximately $245,000 for these patents and related expenses upon
entering into the agreement. In May 1993, this agreement was amended such that
the Company paid approximately $344,000 for additional patent rights and
related expenses, of which $50,000 was paid through the issuance of 10,667
shares of common stock. The Company may be required to make additional
payments of common stock (up to a maximum of 32,000 shares) for certain
additional patent rights, if and when available. The cost of these patents are
being amortized over their expected life of 10 years.

(9) COLLABORATION AGREEMENT

In June 1995, the Company acquired a 5% minority interest in a collaborating
company. To acquire this minority interest, the Company issued 28,021 shares
of common stock and paid $75,912 in cash in return for all of the outstanding
convertible preferred stock of the collaborating company. The Company also
entered into a development agreement with the collaborating company related to
a certain product. As part of the development agreement, the Company will
reimburse the collaborating company for expenses incurred in the development
of this product. In order to maintain its exclusive rights in the
collaborating company's technology, the Company must meet required sales
volumes, as defined, in the five years commencing 90 days after approval of
the product by the Food and Drug Administration. The Company is also required
to pay royalties to the collaborating company based on net sales of the
product, as defined.

(10) FEE PER SCAN PROGRAM

The Company has entered into a strategic fee per scan program with a leasing
company whereby the Company sells its systems to the leasing company, which in
turn, leases the systems to third parties. Under the terms of the agreement,
the Company is contingently liable for a certain amount per system, up to a
maximum of $500,000. At September 30, 1995, the Company was liable for
approximately $89,000. A portion of the program is guaranteed by a third
party.

(11) GEOGRAPHIC INFORMATION

Revenues, net income (loss) and identifiable assets for the Company's U.S.
and European operations are summarized as follows:

<TABLE>
<CAPTION>
1993
-----------------------------------------------------
UNITED EUROPEAN
STATES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated
customers................. $15,997,129 $ 8,851,267 $ -- $24,848,396
Transfers between geo-
graphic areas............. 4,398,089 588,631 (4,986,720) --
----------- ----------- ----------- -----------
Total revenues......... $20,395,218 $ 9,439,898 $(4,986,720) $24,848,396
=========== =========== =========== ===========
Net loss................... $ (404,526) $(1,251,048) $ (119,266) $(1,774,840)
=========== =========== =========== ===========
Identifiable assets........ $19,264,066 $ 4,001,885 $(1,099,827) $22,166,124
=========== =========== =========== ===========
</TABLE>

F-14

<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
1994
---------------------------------------------------
UNITED EUROPEAN
STATES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated
customers.................. $29,646,443 $ 8,837,300 $ -- $38,483,743
Transfers between geographic
areas...................... 2,833,417 1,452,712 (4,286,129) --
----------- ----------- ----------- -----------
Total revenues.......... $32,479,860 $10,290,012 $(4,286,129) $38,483,743
=========== =========== =========== ===========
Net income.................. $ 2,869,578 $ 118,738 $ 6,861 $ 2,995,177
=========== =========== =========== ===========
Identifiable assets......... $24,698,626 $ 5,091,193 $(1,292,657) $28,497,162
=========== =========== =========== ===========
<CAPTION>
1995
---------------------------------------------------
UNITED EUROPEAN
STATES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated
customers.................. $31,249,364 $12,150,486 $ -- $43,399,850
Transfers between geographic
areas...................... 4,105,914 2,085,185 (6,191,099) --
----------- ----------- ----------- -----------
Total revenues.......... $35,355,278 $14,235,671 $(6,191,099) $43,399,850
=========== =========== =========== ===========
Net income (loss)........... $ 1,364,676 $ 519,941 $ (15,098) $ 1,869,519
=========== =========== =========== ===========
Identifiable assets......... $28,993,088 $ 6,353,095 $(1,484,170) $33,862,013
=========== =========== =========== ===========
</TABLE>

Export sales from the United States to unaffiliated customers primarily in
Europe and Asia during fiscal 1993, 1994 and 1995 totaled approximately
$8,944,000, $16,166,000 and $15,601,000, respectively.

Transfers between the Company and its European subsidiaries are generally
recorded at amounts similar to the prices paid by unaffiliated foreign dealers.
All intercompany profit is eliminated in consolidation.

Export product sales as a percentage of total product sales are as follows:

<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 30,
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Europe.......................... 51% 31% 37%
Asia............................ 17 38 29
All others...................... 6 5 9
--- --- ---
74% 74% 75%
=== === ===
</TABLE>

(12) ACCRUED EXPENSES

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 24, SEPTEMBER 30,
1994 1995
------------- -------------
<S> <C> <C>
Accrued payroll and employee benefits......... $1,007,867 $ 869,752
Accrued income taxes.......................... 578,073 581,222
Accrued commissions........................... 511,330 914,259
Accrued legal................................. 250,000 586,738
Other accrued expenses........................ 1,127,212 1,013,779
---------- ----------
$3,474,482 $3,965,750
========== ==========
</TABLE>

F-15
<PAGE>

HOLOGIC, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(13) LITIGATION

On September 7, 1994, Lunar Corporation (Lunar) filed a complaint in United
States District Court against the Company, alleging, among other things, that
two of the Company's patents are not valid and infringe on three of Lunar's
patents. The Company filed a counterclaim against Lunar with respect to the
infringement of two of the Company's patents and a declaration that certain of
Lunar's patents are invalid and unenforceable.

On November 22, 1995, the Company and Lunar executed a definitive agreement
settling all disputes between the parties. The agreement provides for the
cross-licensing of certain patent rights and continuing payments between the
parties related to future sales. The Company and Lunar have agreed not to
engage each other in patent litigation in the area of x-ray densitometry and
ultrasound for a ten-year period. Management believes that the financial terms
of this agreement will not have a material adverse effect on the Company's
financial position or results of operations.

On January 24, 1995, B.V. Optische Industrie de Oude Delft (Oldelft) filed
suit in the United States District Court against the Company seeking
unspecified treble damages, attorneys' fees and costs relating to a prior
patent dispute between the Company and Oldelft relating to equalization
radiography. On December 14, 1995, the litigation was dismissed by the United
States District Court. Management believes that the outcome of this dispute
will not have a material adverse effect on the Company's financial position or
results of operations.

(14) QUARTERLY INCOME STATEMENT INFORMATION (UNAUDITED)

The following table presents a summary of quarterly results of operations
for 1994 and 1995:

<TABLE>
<CAPTION>
1994
----------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue................... $ 7,647,423 $9,907,203 $10,948,026 $ 9,981,091
Net income...................... 413,415 873,989 1,195,525 512,248
Primary net income per common
and common
equivalent share............... .10 .21 .28 .12
<CAPTION>
1995
----------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue................... $10,198,855 $9,031,119 $11,301,320 $12,868,556
Net income...................... 643,720 153,610 487,668 584,521
Primary net income per common
and common
equivalent share............... .15 .03 .11 .13
</TABLE>

F-16
<PAGE>

[DESCRIPTION OF GRAPHIC MATERIAL] QDR 4500 LATERAL IMAGE OF THE SPINE

A screen image of a lateral spine of The Company's QDR bone
a post-menopausal woman taken by the densitometers produce high-
Company's QDR 4500 ACCLAIM bone resolution dual-energy X-ray
densitometer, including data read-out. scans. A common examination site
is the fracture-prone spine.
Numerous scientific articles have
established lateral bone
densitometry (using supine
QDR 4500 IMAGE OF THE HIP positioning) as a highly precise
and more diagnostically sensitive
The risk of hip fracture in women way to measure the spine than
increases significantly after age conventional back-to-front
50. Up to one in every five hip examinations.
fracture patients may die within
one year of fracture; one in every [DESCRIPTION OF GRAPHIC MATERIAL]
four will require long-term care;
and an even greater percentage A screen image of a hip of a post-
will never return to an menopausal woman taken by the
independent lifestyle. Early Company's QDR 4500 ACCLAIM bone
diagnosis and intervention are key densitometer, including data read-
to reducing the risk of fracture. out.

SAHARA CLINICAL BONE SONOMETER
[DESCRIPTION OF GRAPHIC MATERIAL]
Sahara is a compact and portable
A picture of the Company's Sahara "dry" ultrasound system under
ultrasound bone sonometer. development. Sahara is being
designed as a low cost and easy-
to-use system for preliminary
assessment of bone mineral status
in a physician's office.

<PAGE>

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- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK TO WHICH
THIS PROSPECTUS RELATES, OR AN OFFER IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 9
Price Range of Common Stock............................................... 9
Dividend Policy........................................................... 9
Capitalization............................................................ 10
Selected Consolidated Financial Data...................................... 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 12
Business.................................................................. 18
Management................................................................ 34
Principal and Selling Stockholders........................................ 37
Description of Capital Stock.............................................. 38
Underwriting.............................................................. 41
Legal Matters............................................................. 42
Experts................................................................... 42
Available Information..................................................... 42
Incorporation of Certain Documents by Reference........................... 43
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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1,200,000 Shares
(LOGO)

Common Stock

----------------
PROSPECTUS
----------------

Needham & Company, Inc.

Tucker Anthony
Incorporated

Adams, Harkness & Hill, Inc.

----------------

January 25, 1996

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