Myriad Genetics Reports Fiscal First-Quarter 2017 Financial Results
November 01 2016 - 4:05PM
Myriad Genetics, Inc. (NASDAQ:MYGN) today announced financial
results for its fiscal first-quarter 2017, provided an update on
recent business highlights, maintained its fiscal year 2017
financial guidance and issued fiscal second-quarter 2017 financial
guidance.
"We were pleased with the first quarter as our
hereditary cancer business returned to more normal volume trends,
and we secured important endorsements from physician networks
representing 70 percent of community oncologists in the United
States,” said Mark C. Capone, president and CEO of Myriad. “In
addition, our newest tests, Genesight®, EndoPredict®, and Prolaris®
all exceeded 50 percent growth rates, and we successfully completed
PARP inhibitor studies with the first prospective validation of
myChoice® HRD and an additional validation for BRACAnalysis
CDx™. We remain committed to transforming Myriad into a
larger and more diversified personalized medicine company and
delivering upon our five-year strategic goals.”
Financial Highlights
- Below are tables summarizing the financial results and revenue
by product class for our fiscal first-quarter 2017:
Revenue |
|
|
|
|
|
|
|
|
|
Fiscal
First-Quarter |
|
|
($
in millions) |
2017 |
|
2016 |
|
% Change |
Molecular
diagnostic testing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary cancer
testing revenue |
$ |
|
139.3 |
|
|
$ |
|
156.7 |
|
|
|
(11 |
%) |
|
|
|
|
|
|
|
|
|
|
GeneSight testing
revenue |
|
|
7.2* |
|
|
|
|
0.0 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
Vectra DA testing
revenue |
|
|
11.6 |
|
|
|
|
11.4 |
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
Prolaris testing
revenue |
|
|
2.9 |
|
|
|
|
0.7 |
|
|
|
314 |
% |
|
|
|
|
|
|
|
|
|
|
EndoPredict testing
revenue |
|
|
1.7 |
|
|
|
|
0.8 |
|
|
|
113 |
% |
|
|
|
|
|
|
|
|
|
|
Other testing
revenue |
|
|
2.4 |
|
|
|
|
2.3 |
|
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
Total
molecular diagnostic testing revenue |
|
|
165.1 |
|
|
|
|
171.9 |
|
|
|
(4 |
%) |
|
|
|
|
|
|
|
|
|
Pharmaceutical and clinical service revenue |
|
|
12.4 |
|
|
|
|
11.6 |
|
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
Total
Revenue |
$ |
|
177.5 |
|
|
$ |
|
183.5 |
|
|
|
(3 |
%) |
|
|
|
|
|
|
|
|
|
Income Statement |
|
|
|
|
|
|
|
|
|
Fiscal
First-Quarter |
|
|
($
in millions) |
2017 |
|
2016 |
|
% Change |
Total
Revenue |
$ |
|
177.5 |
|
|
$ |
|
183.5 |
|
|
|
(3 |
%) |
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
|
137.5 |
|
|
|
|
147.0 |
|
|
|
(7 |
%) |
|
Gross Margin |
|
|
77.5 |
% |
|
|
|
80.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
131.3 |
|
|
|
|
103.7 |
|
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
6.2 |
|
|
|
|
43.3 |
|
|
|
(86 |
%) |
|
Operating Margin |
|
|
3.5 |
% |
|
|
|
23.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Income |
|
|
21.6 |
|
|
|
|
46.5 |
|
|
|
(54 |
%) |
|
Adjusted Operating
Margin |
|
|
12.2 |
% |
|
|
|
25.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
|
(1.2 |
) |
|
|
|
30.3 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
|
(0.02 |
) |
|
|
|
0.42 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
Adjusted
EPS |
$ |
|
0.23 |
|
|
$ |
|
0.41 |
|
|
|
(44 |
%) |
*
represents revenue for the month of September only |
|
|
|
|
|
|
|
|
|
|
|
Business Highlights
- myRisk® Hereditary Cancer
- Signed preferred provider agreements with major physician
networks in oncology representing approximately 70 percent of
community oncologists in the country, or approximately 4,000
physicians.
- Launched a customizable myRisk panel for genetics experts who
are interested in tailoring their gene selections.
- Ended the quarter with 65 percent of revenue under long-term
contract and 95 percent of insurance plans in network.
- GeneSight®
- Volumes were up 70 percent year-over-year to approximately
51,000 tests performed in the full fiscal first-quarter 2017.
- Reached 90 percent enrollment in a landmark 1,200 patient
clinical utility study evaluating GeneSight in patients with
depression or anxiety treated by preventive care physicians or
psychiatrists.
- Vectra® DA
- Volumes were up four percent year-over-year in the fiscal
first-quarter with approximately 39,000 tests performed.
- Announced the presentation of four abstracts at the American
College of Rheumatology conference in November, showing the ability
of Vectra DA to predict which patients will experience flare or
sustained remission, and the ability of the Vectra DA score to
provide added predictive value to traditional measures of disease
activity.
- Prolaris®
- Volumes increased 56 percent year-over-year with approximately
4,400 tests ordered.
- Companion Diagnostics
- Announced data from the first prospective validation of
myChoice HRD from the NOVA study, evaluating the PARP inhibitor,
niraparib. In the study, which evaluated platinum-sensitive
ovarian cancer patients, myChoice HRD positive patients
demonstrated a 9.1 month median progression free survival benefit
versus a 3.1 progression free survival benefit in myChoice HRD
negative patients. Myriad has submitted the first module of
its premarket approval application for myChoice HRD to the
FDA.
- Announced data from the AstraZeneca SOLO2 study, which compared
maintenance olaparib against placebo in patients with
platinum-sensitive relapsed ovarian cancer met its primary
endpoint. These results further validate that BRCA status as
determined by BRACAnalysis CDx can identify patients likely to
benefit from PARP inhibition therapy.
- Myriad signed an agreement with AstraZeneca to use its newest
companion diagnostic, myChoice HRD Plus, to help prospectively
identify patients for enrollment in an upcoming exploratory study
involving olaparib. myChoice HRD Plus combines Myriad’s proprietary
myChoice HRD assay with 102 additional genes involved in DNA
repair.
- International
- Revenues were up 43 percent year-over-year in the first quarter
and accounted for approximately five percent of total product
revenue.
- EndoPredict revenues grew 113 percent year-over-year to $1.7
million in the first quarter of fiscal year 2017.
- Completed enrollment in an EndoPredict study evaluating the
ability of the test to predict response to neoadjuvant
chemotherapy. Results of the study are expected to be presented in
calendar year 2017.
- In August, the German public reimbursement system (GBA) issued
new ambulatory specialty care (ASV) reimbursement covering gene
expression testing for breast cancer when conducted in authorized
major centers throughout Germany.
- Share Repurchase
- During the quarter, the Company repurchased approximately 1.0
million shares, or $21 million, of common stock under our share
repurchase program and ended the quarter with approximately $171
million remaining on our current share repurchase
authorization.
Fiscal Year 2017 and Fiscal Second-Quarter 2017
Financial GuidanceBelow is a table summarizing Myriad’s
fiscal year 2017 and fiscal second-quarter 2017 financial
guidance:
|
|
Revenue |
|
Adjusted Earnings Per Share |
|
GAAP Diluted Earnings Per Share |
Fiscal Year 2017 |
|
$740-$760 million |
|
$1.00-$1.10 |
|
$0.34-$0.44 |
|
|
|
|
|
|
|
Fiscal Second-Quarter
2017 |
|
$188-$190 million |
|
$0.23-$0.25 |
|
$0.06-$0.08 |
|
|
|
|
|
|
|
These projections are forward-looking statements and are subject
to the risks summarized in the safe harbor statement at the end of
this press release. The Company will provide further details
on its business outlook during its conference call today to discuss
the fiscal first-quarter financial results and fiscal year 2017 and
fiscal second-quarter 2017 financial guidance.
Conference Call and WebcastA conference call
will be held today, Tuesday, Nov. 1, 2016, at 4:30 p.m. EDT to
discuss Myriad’s financial results for the fiscal first-quarter,
business developments and financial guidance. The dial-in
number for domestic callers is (800) 735-5968. International
callers may dial (312) 281-1210. All callers will be asked to
reference reservation number 21819980. An archived replay of
the call will be available for seven days by dialing (800) 633-8284
and entering the reservation number above. The conference
call along with a slide presentation will also will be available
through a live webcast at www.myriad.com.
About Myriad GeneticsMyriad Genetics Inc., is a
leading personalized medicine company dedicated to being a trusted
advisor transforming patient lives worldwide with pioneering
molecular diagnostics. Myriad discovers and commercializes
molecular diagnostic tests that: determine the risk of developing
disease, accurately diagnose disease, assess the risk of disease
progression, and guide treatment decisions across six major medical
specialties where molecular diagnostics can significantly improve
patient care and lower healthcare costs. Myriad is focused on
three strategic imperatives: maintaining leadership in an
expanding hereditary cancer market, diversifying its product
portfolio through the introduction of new products and increasing
the revenue contribution from international markets. For more
information on how Myriad is making a difference, please visit the
Company's website: www.myriad.com.
Myriad, the Myriad logo, BART, BRACAnalysis, Colaris, Colaris
AP, EndoPredict, myPath, myRisk, Myriad myRisk, myRisk Hereditary
Cancer, myChoice, myPlan, BRACAnalysis CDx, Tumor BRACAnalysis CDx,
myChoice HRD, Vectra and Prolaris are trademarks or registered
trademarks of Myriad Genetics, Inc. or its wholly owned
subsidiaries in the United States and foreign countries. MYGN-F,
MYGN-G
MYRIAD GENETICS, INC. AND
SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS
(Unaudited) |
|
|
|
|
|
|
|
|
|
(in
millions, except per share amounts) |
|
|
Three Months Ended |
|
|
|
|
|
|
Sep 30, 2016 |
|
Sep 30, 2015 |
|
|
|
|
|
|
|
|
|
|
Molecular
diagnostic testing |
|
$ |
|
165.1 |
|
|
171.9 |
|
Pharmaceutical and clinical services |
|
|
|
12.4 |
|
|
11.6 |
|
|
|
Total revenue |
|
|
|
177.5 |
|
|
183.5 |
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of
molecular diagnostic testing |
|
|
|
34.3 |
|
|
30.9 |
|
|
Cost of
pharmaceutical and clinical services |
|
|
|
5.7 |
|
|
5.6 |
|
|
Research
and development expense |
|
|
|
19.4 |
|
|
17.2 |
|
|
Selling,
general, and administrative expense |
|
|
|
111.9 |
|
|
86.5 |
|
|
|
Total costs and
expenses |
|
|
|
171.3 |
|
|
140.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
|
6.2 |
|
|
43.3 |
|
|
|
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
Interest
income |
|
|
|
0.3 |
|
|
0.1 |
|
|
Other |
|
|
|
(2.5 |
) |
|
0.1 |
|
|
|
Total other income
(expense) |
|
|
|
(2.2 |
) |
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
|
4.0 |
|
|
43.5 |
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
|
|
5.2 |
|
|
13.2 |
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
|
(1.2 |
) |
$ |
30.3 |
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to non-controlling interest |
|
|
— |
|
— |
|
Net income
(loss) attributable to Myriad Genetics, Inc. shareholders |
|
$ |
|
(1.2 |
) |
$ |
30.3 |
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share: |
|
|
|
|
|
|
|
Basic |
|
$ |
|
(0.02 |
) |
$ |
0.44 |
|
|
Diluted |
|
$ |
|
(0.02 |
) |
$ |
0.42 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding |
|
|
|
|
|
|
|
Basic |
|
|
|
68.8 |
|
|
68.7 |
|
|
Diluted |
|
|
|
68.8 |
|
|
72.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions) |
|
Sep 30, 2016 |
|
Jun. 30, 2016 |
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
|
86.9 |
|
$ |
|
68.5 |
|
|
|
|
|
|
Marketable
investment securities |
|
|
61.5 |
|
|
|
90.5 |
|
|
|
|
|
|
Prepaid
expenses |
|
|
12.2 |
|
|
|
18.4 |
|
|
|
|
|
|
Inventory |
|
|
53.9 |
|
|
|
38.3 |
|
|
|
|
|
|
Trade
accounts receivable, less allowance for doubtful |
|
|
|
|
|
|
|
|
|
|
accounts of
$6.8 in 2017 and $6.8 in 2016 |
|
|
98.2 |
|
|
|
91.7 |
|
|
|
|
|
|
Prepaid
taxes |
|
|
5.6 |
|
|
|
3.8 |
|
|
|
|
|
|
Other
receivables |
|
|
4.6 |
|
|
|
3.3 |
|
|
|
|
|
|
|
Total
current assets |
|
|
322.9 |
|
|
|
314.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net |
|
|
56.8 |
|
|
|
58.3 |
|
|
|
|
|
Long-term
marketable investment securities |
|
|
52.2 |
|
|
|
79.9 |
|
|
|
|
|
Intangibles, net |
|
|
521.2 |
|
|
|
227.5 |
|
|
|
|
|
Goodwill |
|
|
312.8 |
|
|
|
195.3 |
|
|
|
|
|
Other
assets |
|
|
5.0 |
|
|
|
5.0 |
|
|
|
|
|
|
|
Total
assets |
$ |
|
1,270.9 |
|
$ |
|
880.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
Accounts
payable |
$ |
|
19.9 |
|
$ |
|
21.1 |
|
|
|
|
|
|
Accrued
liabilities |
|
|
54.8 |
|
|
|
49.5 |
|
|
|
|
|
|
Short-term
debt |
|
|
199.2 |
|
|
|
— |
|
|
|
|
|
|
Deferred
revenue |
|
|
1.0 |
|
|
|
1.7 |
|
|
|
|
|
|
|
Total
current liabilities |
|
|
274.9 |
|
|
|
72.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized tax benefits |
|
|
24.4 |
|
|
|
24.0 |
|
|
|
|
|
Other
long-term liabilities |
|
|
148.7 |
|
|
|
18.2 |
|
|
|
|
|
Long-term
deferred taxes |
|
|
87.6 |
|
|
|
17.9 |
|
|
|
|
|
|
|
Total
liabilities |
|
|
535.6 |
|
|
|
132.4 |
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
Common
stock, 68.4 and 69.1 shares outstanding at |
|
|
|
|
|
|
|
|
|
|
September
30, 2016 and June 30, 2016 respectively |
|
|
0.7 |
|
|
|
0.7 |
|
|
|
|
|
|
Additional
paid-in capital |
|
|
826.9 |
|
|
|
830.1 |
|
|
|
|
|
|
Accumulated
other comprehensive loss |
|
|
(5.6 |
) |
|
|
(9.5 |
) |
|
|
|
|
|
Accumulated
deficit |
|
|
(86.5 |
) |
|
|
(73.2 |
) |
|
|
|
|
|
|
Total
Myriad Genetics, Inc. stockholders' equity |
|
|
735.5 |
|
|
|
748.1 |
|
|
|
|
|
|
Non-Controlling interest |
|
|
(0.2 |
) |
|
|
— |
|
|
|
|
|
|
|
Total
stockholders' equity |
|
|
735.3 |
|
|
|
748.1 |
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
$ |
|
1,270.9 |
|
$ |
|
880.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
(in
millions) |
|
Sep 30, 2016 |
|
Sep 30, 2015 |
|
|
Cash flows
from operating activities: |
|
|
|
|
|
|
Net income
(loss) |
$ |
|
(1.2 |
) |
$ |
|
30.3 |
|
|
|
|
Adjustments
to reconcile net income to net cash provided by |
|
|
|
|
|
|
|
operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
9.2 |
|
|
|
6.8 |
|
|
|
|
|
Non-cash
interest expense |
|
|
0.1 |
|
|
|
- |
|
|
|
|
|
Loss (gain)
on disposition of assets |
|
|
(0.2 |
) |
|
|
(0.4 |
) |
|
|
|
|
Share-based
compensation expense |
|
|
7.8 |
|
|
|
8.7 |
|
|
|
|
|
Bad debt
expense |
|
|
7.2 |
|
|
|
6.0 |
|
|
|
|
|
Deferred
income taxes |
|
|
3.2 |
|
|
|
11.4 |
|
|
|
|
|
Unrecognized tax benefits |
|
|
0.4 |
|
|
|
0.9 |
|
|
|
|
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
7.8 |
|
|
|
7.0 |
|
|
|
|
|
|
Trade accounts
receivable |
|
|
(5.9 |
) |
|
|
(3.6 |
) |
|
|
|
|
|
Other receivables |
|
|
(1.8 |
) |
|
|
0.2 |
|
|
|
|
|
|
Inventory |
|
|
(13.0 |
) |
|
|
(9.2 |
) |
|
|
|
|
|
Prepaid taxes |
|
|
(1.0 |
) |
|
|
(17.2 |
) |
|
|
|
|
|
Accounts payable |
|
|
(5.0 |
) |
|
|
(5.3 |
) |
|
|
|
|
|
Accrued
liabilities |
|
|
(9.5 |
) |
|
|
(5.7 |
) |
|
|
|
|
|
Deferred revenue |
|
|
(1.0 |
) |
|
|
(0.1 |
) |
|
|
Net cash
provided by (used in) operating activities |
|
|
(2.9 |
) |
|
|
29.8 |
|
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
|
Capital
expenditures for equipment and leasehold improvements |
|
|
(1.5 |
) |
|
|
(1.0 |
) |
|
|
|
Acquisitions, net of cash acquired |
|
|
(213.0 |
) |
|
|
- |
|
|
|
|
Purchases
of marketable investment securities |
|
|
(32.2 |
) |
|
|
(21.8 |
) |
|
|
|
Proceeds
from maturities and sales marketable investment securities |
|
|
88.7 |
|
|
|
31.8 |
|
|
|
Net cash
provided by (used in) investing activities |
|
|
(158.0 |
) |
|
|
9.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities: |
|
|
|
|
|
|
|
Net
proceeds (payments) from common stock issued under |
|
|
|
|
|
|
|
|
share-based
compensation plans |
|
|
(1.9 |
) |
|
|
22.8 |
|
|
|
|
Net
proceeds from issuance of debt |
|
|
199.0 |
|
|
|
- |
|
|
|
|
Repurchase
and retirement of common stock |
|
|
(21.3 |
) |
|
|
(38.0 |
) |
|
|
Net cash
provided by (used in) financing activities |
|
|
175.8 |
|
|
|
(15.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
Foreign exchange rates on cash and cash equivalents |
|
|
3.5 |
|
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents |
|
|
18.4 |
|
|
|
23.3 |
|
|
|
Cash and
cash equivalents at beginning of year |
|
|
68.5 |
|
|
|
64.1 |
|
|
|
Cash and
cash equivalents at end of period |
$ |
|
86.9 |
|
$ |
|
87.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Safe Harbor Statement This press release
contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, including
statements relating to the Company’s hereditary cancer business
returning to more normal volume trends; transforming the Company
into a larger and more diversified personalized medicine company
and delivering upon the Company’s five-year strategic goals; the
percent of revenue under long-term contract and the percent of
insurance plans in network; the Company’s submission of its first
module to the FDA for myChoice HRD; the Company’s expectation that
results of an EndoPredict study evaluating the ability of the test
to predict response to neoadjuvant chemotherapy will be presented
in calendar year 2017; the Company's second-quarter revenue
guidance of $188 to $190 million, adjusted earnings per share of
$0.23 to $0.25, and diluted earnings per share guidance of $0.06 to
$0.08, and the Company’s reiterated fiscal full year revenue
guidance of total revenue of $740 to $760 million, adjusted
earnings per share guidance of $1.00 to $1.10, and diluted earnings
per share guidance of $0.34 to $0.44, as further discussed under
the caption “Fiscal Year 2017 and Fiscal Second-Quarter 2017
Financial Guidance”; and the Company’s strategic directives under
the caption “About Myriad Genetics.” These “forward-looking
statements” are based on management’s current expectations of
future events and are subject to a number of risks and
uncertainties that could cause actual results to differ materially
and adversely from those described or implied in the
forward-looking statements. These risks include, but are not
limited to: the risk that sales and profit margins of our existing
molecular diagnostic tests and pharmaceutical and clinical services
may decline or will not continue to increase at historical rates;
risks related to our ability to transition from our existing
product portfolio to our new tests; risks related to changes in the
governmental or private insurers’ reimbursement levels for our
tests or our ability to obtain reimbursement for our new tests at
comparable levels to our existing tests; risks related to increased
competition and the development of new competing tests and
services; the risk that we may be unable to develop or achieve
commercial success for additional molecular diagnostic tests and
pharmaceutical and clinical services in a timely manner, or at all;
the risk that we may not successfully develop new markets for our
molecular diagnostic tests and pharmaceutical and clinical
services, including our ability to successfully generate revenue
outside the United States; the risk that licenses to the technology
underlying our molecular diagnostic tests and pharmaceutical and
clinical services tests and any future tests are terminated or
cannot be maintained on satisfactory terms; risks related to delays
or other problems with operating our laboratory testing facilities;
risks related to public concern over our genetic testing in general
or our tests in particular; risks related to regulatory
requirements or enforcement in the United States and foreign
countries and changes in the structure of the healthcare system or
healthcare payment systems; risks related to our ability to obtain
new corporate collaborations or licenses and acquire new
technologies or businesses on satisfactory terms, if at all; risks
related to our ability to successfully integrate and derive
benefits from any technologies or businesses that we license or
acquire, including but not limited to our acquisition of Assurex,
Sividon and the Clinic; risks related to our projections about the
potential market opportunity for our products; the risk that we or
our licensors may be unable to protect or that third parties will
infringe the proprietary technologies underlying our tests; the
risk of patent-infringement claims or challenges to the validity of
our patents; risks related to changes in intellectual property laws
covering our molecular diagnostic tests and pharmaceutical and
clinical services and patents or enforcement in the United States
and foreign countries, such as the Supreme Court decision in the
lawsuit brought against us by the Association for Molecular
Pathology et al; risks of new, changing and competitive
technologies and regulations in the United States and
internationally; the risk that we may be unable to comply with
financial operating covenants under our credit or lending
agreements; the risk that we will be unable to pay, when due,
amounts due under our credit or lending agreements; and other
factors discussed under the heading “Risk Factors” contained in
Item 1A of our Annual report on Form 10-K for the fiscal year ended
June 30, 2016, which has been filed with the Securities and
Exchange Commission, as well as any updates to those risk factors
filed from time to time in our Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K.
Statement regarding use of non-GAAP financial
measuresIn this press release, the Company’s financial
results and financial guidance are provided in accordance with
accounting principles generally accepted in the United States
(GAAP) and using certain non-GAAP financial measures. Management
believes that presentation of operating results using non-GAAP
financial measures provides useful supplemental information to
investors and facilitates the analysis of the Company’s core
operating results and comparison of operating results across
reporting periods. Management also uses non-GAAP financial measures
to establish budgets and to manage the Company’s business. A
reconciliation of the GAAP financial results to non-GAAP financial
results is included in the attached schedules.
Following is a description of the adjustments made to GAAP
financial measures:
- Acquisition - amortization of intangible assets: Represents
recurring amortization charges resulting from the acquisition of
intangible assets, including developed technology and database
rights.
- Acquisition – transaction related costs: Costs related to
closing and integration of acquired companies
- Tax impact related to equity compensation – Changes in
effective tax rate based upon ASU 2016-09
- One-time non-deductible tax penalties – One-time tax penalty
associated with payroll audit
- Earn-out true up – Non-cash expenses related to valuation
adjustments of earn out payments tied to recent acquisitions
The Company encourages investors to carefully consider its
results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Non-GAAP financial results are
reported in addition to, and not as a substitute for, or superior
to, financial measures calculated in accordance with GAAP.
Reconciliation of GAAP to Non-GAAP Financial
Measures |
|
|
|
|
|
|
for
the Three Months ended September 30, 2016 and 2015 |
|
|
|
|
|
|
(Unaudited
data in thousands, except per share amount) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Sept. 30, 2016 |
|
Sept. 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
177.5 |
|
|
|
183.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Cost of
molecular diagnostic testing |
|
$ |
34.3 |
|
|
$ |
30.9 |
|
|
|
|
|
GAAP Cost of
pharmaceutical and clinical services |
|
|
5.7 |
|
|
|
5.6 |
|
|
|
|
|
Acquisition - Integration related
costs |
|
|
- |
|
|
|
- |
|
|
|
|
|
Acquisition - amortization of
intangible assets |
|
|
- |
|
|
|
- |
|
|
|
|
|
Non-GAAP
COGS |
|
$ |
40.0 |
|
|
$ |
36.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin |
|
|
77 |
% |
|
|
80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Research
and Development |
|
$ |
19.4 |
|
|
$ |
17.2 |
|
|
|
|
|
Acquisition - Integration related
costs |
|
|
(0.1 |
) |
|
|
- |
|
|
|
|
|
Acquisition - amortization of
intangible assets |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
|
|
Non-GAAP
R&D |
|
$ |
19.2 |
|
|
$ |
17.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Selling,
General and Administrative |
|
$ |
111.9 |
|
|
$ |
86.5 |
|
|
|
|
|
Acquisition - Integration related
costs |
|
|
(9.9 |
) |
|
|
- |
|
|
|
|
|
Acquisition - amortization of
intangible assets |
|
|
(5.3 |
) |
|
|
(3.1 |
) |
|
|
|
|
Non-GAAP
SG&A |
|
$ |
96.7 |
|
|
$ |
83.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income |
|
$ |
6.2 |
|
|
$ |
43.3 |
|
|
|
|
|
Acquisition - Integration related
costs |
|
|
10.0 |
|
|
|
- |
|
|
|
|
|
Acquisition - amortization of
intangible assets |
|
|
5.4 |
|
|
|
3.2 |
|
|
|
|
|
Non-GAAP
Operating Income |
|
$ |
21.6 |
|
|
$ |
46.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Margin |
|
|
12 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income |
|
$ |
(1.2 |
) |
|
$ |
30.3 |
|
|
|
|
|
Acquisition - Integration related
costs |
|
|
10.0 |
|
|
|
- |
|
|
|
|
|
Acquisition - amortization of
intangible assets |
|
|
5.4 |
|
|
|
3.2 |
|
|
|
|
|
Tax impact related to equity
compensation |
|
|
2.4 |
|
|
|
(3.7 |
) |
|
|
|
|
Earn out true-up |
|
|
0.5 |
|
|
|
- |
|
|
|
|
|
One-time non-deductible tax
penalties |
|
|
2.8 |
|
|
|
- |
|
|
|
|
|
Tax effect associated with non-GAAP
adjustments |
|
|
(3.9 |
) |
|
|
- |
|
|
|
|
|
Non-GAAP Net
Income |
|
$ |
16.0 |
|
|
$ |
29.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS |
|
$ |
(0.02 |
) |
|
$ |
0.42 |
|
|
|
|
|
Non-GAAP
Diluted EPS |
|
$ |
0.23 |
|
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
|
69.5 |
|
|
|
72.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
|
(Unaudited data in
thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
Sept. 30, 2016 |
|
Sept. 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cash flow
from operations |
|
$ |
(2.9 |
) |
|
$ |
29.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(1.5 |
) |
|
|
(1.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash
flow |
|
$ |
(4.4 |
) |
|
$ |
23.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition -
Integration related costs |
|
|
7.9 |
|
|
|
- |
|
|
|
|
|
Cash paid at closing to
Assurex vendors |
|
|
6.8 |
|
|
|
|
|
|
|
Tax effect associated
with non-GAAP adjustments |
|
|
(5.7 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Free
cash flow |
|
$ |
4.6 |
|
|
$ |
23.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for
Fiscal Year 2017 and Fiscal First-Quarter 2017 Financial
Guidance
The Company’s future performance and financial results are
subject to risks and uncertainties, and actual results could differ
materially from guidance set forth below. Some of the factors that
could affect the Company’s financial results are stated in the safe
harbor statement of this press release. More information on
potential factors that could affect the Company’s financial results
are included under the heading "Risk Factors" contained in Item 1A
in the Company’s most recent Annual Report on Form 10-K filed with
the Securities and Exchange Commission, as well as any updates to
those risk factors filed from time to time in the Company’s
Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
|
|
|
Fiscal Year 2017 |
Diluted net
income per share |
|
|
|
GAAP diluted net income
per share |
|
|
$0.34 -
$0.44 |
Acquisition -
amortization of intangible assets |
|
|
0.48 |
Acquisition costs |
|
|
0.18 |
Non-GAAP
diluted net income per share |
|
|
$1.00 - $1.10 |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Second-Quarter 2017 |
Diluted net
income per share |
|
|
|
GAAP diluted net income
per share |
|
|
$0.06 -
$0.08 |
Acquisition -
amortization of intangible assets |
|
|
0.13 |
Acquisition costs |
|
|
0.04 |
Non-GAAP
diluted net income per share |
|
|
$0.23 - $0.25 |
|
|
Media Contact: Ron Rogers
(801) 584-3065
rrogers@myriad.com
Investor Contact: Scott Gleason
(801) 584-1143
sgleason@myriad.com
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