Myriad Genetics Reports Fiscal Fourth-Quarter 2016 Financial Results
August 09 2016 - 4:05PM
Myriad Genetics, Inc. (NASDAQ:MYGN) today announced financial
results for its fiscal fourth-quarter 2016, provided an update on
recent business highlights and provided fiscal first-quarter 2017
and fiscal year 2017 financial guidance.
"Fourth-quarter performance met our expectations, and we
continue to make substantial progress on advancing our product
portfolio and growing Myriad into a larger, more diversified
personalized medicine company,” said Mark C. Capone, president
and CEO of Myriad. “Myriad is on track to deliver on its five
year strategic goals. We continue to be the worldwide leader
in hereditary cancer testing, and our portfolio diversification
efforts are accelerating with substantive volume growth and
reimbursement for new commercial products, pivotal validations for
our pipeline products, the acquisitions of Assurex Health and
Sividon, and significant international expansion. Given the
multibillion dollar market opportunity for our portfolio, we remain
confident that we can deliver better health outcomes for patients
and significant long-term value for shareholders.”
Financial Highlights
- Below are tables summarizing the financial results and revenue
by product class for our fiscal fourth-quarter 2016 and full
fiscal-year 2016:
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Revenue |
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Fiscal Fourth-Quarter |
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Fiscal Year |
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($
in millions) |
|
2016 |
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|
2015 |
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% Change |
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2016 |
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2015 |
|
% Change |
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|
Molecular
diagnostic testing revenue |
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Hereditary cancer
testing revenue |
$ |
|
152.8 |
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$ |
|
163.8 |
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(7 |
%) |
|
$ |
|
632.3 |
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$ |
|
638.3 |
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(1 |
%) |
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Vectra DA testing
revenue |
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12.7 |
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11.8 |
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8 |
% |
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47.8 |
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43.7 |
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9 |
% |
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Prolaris testing
revenue |
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3.5 |
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0.7 |
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|
400 |
% |
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11.3 |
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2.1 |
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|
438 |
% |
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Other testing
revenue |
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4.8 |
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2.5 |
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|
92 |
% |
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14.3 |
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11.4 |
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25 |
% |
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Total
molecular diagnostic testing revenue |
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173.8 |
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|
|
178.8 |
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(3 |
%) |
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705.7 |
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695.5 |
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2 |
% |
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Pharmaceutical and clinical service revenue |
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12.7 |
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11.1 |
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14 |
% |
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48.1 |
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27.6 |
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|
74 |
% |
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Total
Revenue |
$ |
|
186.5 |
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$ |
|
189.9 |
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(2 |
%) |
|
$ |
|
753.8 |
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$ |
|
723.1 |
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4 |
% |
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Income Statement |
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Fiscal Fourth-Quarter |
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|
Fiscal Year |
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|
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($
in millions) |
|
2016 |
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|
2015 |
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% Change |
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2016 |
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2015 |
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% Change |
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|
Total
Revenue |
$ |
|
186.5 |
|
|
$ |
|
189.9 |
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(2 |
%) |
|
$ |
|
753.8 |
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|
$ |
|
723.1 |
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4 |
% |
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Gross
Profit |
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146.5 |
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152.4 |
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(4 |
%) |
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596.5 |
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575.7 |
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4 |
% |
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Gross Margin |
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78.6 |
% |
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80.3 |
% |
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79.1 |
% |
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79.6 |
% |
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Operating
Expenses |
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110.8 |
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|
116.2 |
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(5 |
%) |
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429.7 |
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|
441.5 |
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(3 |
%) |
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Operating
Income |
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35.7 |
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36.2 |
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(1 |
%) |
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166.8 |
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|
134.2 |
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24 |
% |
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Operating Margin |
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19.1 |
% |
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19.1 |
% |
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22.1 |
% |
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18.6 |
% |
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Adjusted
Operating Income |
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39.0 |
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|
48.2 |
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(19 |
%) |
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|
179.5 |
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|
167.3 |
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7 |
% |
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Adjusted Operating
Margin |
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20.9 |
% |
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25.4 |
% |
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23.8 |
% |
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23.1 |
% |
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Net
Income |
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23.4 |
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18.7 |
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25 |
% |
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|
125.3 |
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|
80.2 |
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|
56 |
% |
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Diluted
EPS |
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0.32 |
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|
0.26 |
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23 |
% |
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|
1.71 |
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|
1.08 |
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|
58 |
% |
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Adjusted
EPS |
$ |
|
0.36 |
|
|
$ |
|
0.41 |
|
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(12 |
%) |
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$ |
|
1.63 |
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$ |
|
1.45 |
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|
12 |
% |
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Business Highlights
- myRisk® Hereditary Cancer
- Myriad signed a new agreement with Blue Shield of California,
retaining Myriad’s previous network status. Myriad ended the
quarter with 65 percent of revenue under long-term contracts for
its hereditary cancer business.
- A new study in the New England Journal of Medicine demonstrated
that in patients with advanced prostate cancer, the rate of
deleterious mutations in myRisk genes was approximately 12 percent.
This is consistent with other cancers that have genetic
testing guidelines. Every year in the United States approximately
25,000 patients are diagnosed with advanced prostate cancer.
- Myriad made the first content additions to myRisk adding three
additional genes including GREMM1, POLE and POLD-1. These
genes were recently added to the NCCN guidelines on genetic testing
based upon their role in hereditary colon cancer.
- Myriad announced the ability to customize the myRisk panel for
genetics experts who are interested in ordering a subset of the
myRisk genes on the full panel.
- Vectra® DA
- Vectra DA volumes were up five percent year-over-year in the
fiscal fourth-quarter with approximately 41,300 tests
performed.
- Myriad signed three additional private payer contracts for
Vectra DA that collectively cover approximately one million lives
in the United States.
- At the European League Against Rheumatism (EULAR) annual
meeting, Myriad presented new data showing the ability of Vectra DA
to predict sustained clinical remission after discontinuation of
Humira®. In patients with a low Vectra DA score, 57 percent
had sustained clinical remission following discontinuation of
Humira. In patients with a high Vectra DA score, 60 percent
experienced flare within one year of discontinuation of
Humira.
- In a second study presented at EULAR of 180 treatment naïve
patients, the Vectra DA score was a statistically significant
predictor of clinical remission with 12-month remission rates
meaningfully higher in patients with a greater reduction in Vectra
DA score versus those with a smaller reduction.
- Prolaris®
- Prolaris volume increased 91 percent year-over-year and 11
percent sequentially with approximately 4,750 tests ordered.
- At the American Urological Association annual meeting, Myriad
presented the first study validating Prolaris exclusively in a
low-risk only patient population. In 440 patients with a
Gleason score of six or less, patients with a high Prolaris score
had three times the rate of prostate specific mortality and eight
times the rate of biochemical recurrence relative to patients with
a low Prolaris score.
- Myriad signed three additional private payer contracts for
Prolaris that collectively cover approximately one million lives in
the United States.
- Companion Diagnostics
- Myriad presented data from the first prospective validation of
myChoice HRD in concert with TESARO’s NOVA study. In the
study, which evaluated platinum-sensitive ovarian cancer patients,
myChoice HRD positive patients receiving niraparib demonstrated a
9.1 month increase in progression free survival relative to
patients receiving placebo.
- Sividon Diagnostics Acquisition
- Myriad completed the acquisition of Sividon Diagnostics during
the fiscal fourth quarter and gained United States and Chinese
distribution rights to EndoPredict®, a best-in-class breast cancer
prognostic test. Myriad announced plans to launch EndoPredict
in the United States in the second half of fiscal year 2017.
- A large head-to-head study comparing EndoPredict with Oncotype
Dx was recently published in the Journal of the National Cancer
Institute. The study, which evaluated 928 women from the TransATAC
study, showed that EndoPredict “markedly outperformed” Oncotype Dx
with a prognostic power that was more than four times
greater. Also, EndoPredict low-risk patients had a 10-year
rate of distant metastases of 5.8 percent versus low risk Oncotype
Dx patients at 10.1 percent.
- Assurex Health Acquisition
- In August, Myriad signed a definitive agreement to acquire
Assurex Health, a personalized medicine company providing treatment
decision support to healthcare providers for their patients with
mental health disorders. Assurex’s lead product, GeneSight®
Psychotropic, evaluates 12 genes known to play a significant role
in psychotropic drug response and is used in patient treatment
selection. Assurex performed over 150,000 GeneSight tests in
Myriad’s fiscal year 2016 and generated more than $60 million in
total revenue. The acquisition is subject to the satisfaction of
customary closing conditions.
- International
- International revenues were up 93 percent year-over-year in the
fourth quarter and accounted for approximately six percent of total
product revenue in the quarter.
- Myriad recently signed an agreement with BMI Healthcare in the
United Kingdom covering Myriad’s complete testing portfolio
including EndoPredict, Prolaris, Tumor BRACAnalysis CDx and
hereditary cancer testing. BMI Healthcare is the largest
private hospital group comprised of 59 hospitals and clinics across
the UK, servicing 1,500,000 outpatient visits per year.
- Share Repurchase
- During the quarter, the Company repurchased approximately 1.6
million shares, or $55 million, of common stock under our share
repurchase program and ended the quarter with approximately $195
million remaining on our current share repurchase
authorization.
Fiscal Year 2017 and Fiscal First-Quarter 2017 Financial
GuidanceBelow is a table summarizing Myriad’s fiscal year
2017 and fiscal first-quarter 2017 financial guidance:
|
|
Revenue |
|
Adjusted Earnings Per Share |
|
GAAP Diluted Earnings Per Share |
Fiscal Year 2017 |
|
$740-$760 million |
|
$1.00-$1.10 |
|
$0.47
- $0.57 |
|
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|
|
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|
Fiscal
First-Quarter 2017 |
|
$168-$170 million |
|
$0.25-$0.27 |
|
$0.14 - $0.16 |
|
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|
|
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|
Myriad’s fiscal year 2017 financial guidance includes the impact
of the Assurex Health acquisition which Myriad expects to close at
the end of the fiscal first-quarter 2017.
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 fourth-quarter financial results and fiscal year 2017
and fiscal first-quarter 2017 financial guidance.
Conference Call and WebcastA conference call
will be held today, Tuesday, August 9, 2016, at 4:30 p.m. EDT to
discuss Myriad’s financial results for the fiscal fourth-quarter,
business developments and financial guidance. The dial-in
number for domestic callers is (800) 698-1231. International
callers may dial (303) 223-4380. All callers will be asked to
reference reservation number 21814778. 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: transitioning and expanding its hereditary
cancer testing markets, 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
Humira is a registered trademark of AbbVie Inc.
Lynparza is a trademark of AstraZeneca.
MYRIAD GENETICS, INC. AND
SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS
(Unaudited) |
|
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|
|
(in
millions, except per share amounts) |
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
|
|
Jun 30, 2016 |
|
|
Jun 30, 2015 |
|
|
Jun 30, 2016 |
|
|
Jun 30, 2015 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Molecular
diagnostic testing |
|
$ |
173.8 |
|
|
|
178.8 |
|
|
|
705.7 |
|
$ |
695.5 |
Pharmaceutical and clinical services |
|
|
12.7 |
|
|
|
11.1 |
|
|
|
48.1 |
|
|
27.6 |
|
|
Total revenue |
|
|
186.5 |
|
|
|
189.9 |
|
|
|
753.8 |
|
|
723.1 |
|
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|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
molecular diagnostic testing |
|
|
34.2 |
|
|
|
32.0 |
|
|
|
132.8 |
|
|
132.8 |
|
Cost of
pharmaceutical and clinical services |
|
|
5.8 |
|
|
|
5.5 |
|
|
|
24.5 |
|
|
14.6 |
|
Research
and development expense |
|
|
19.5 |
|
|
|
18.7 |
|
|
|
70.6 |
|
|
75.5 |
|
Selling,
general, and administrative expense |
|
|
91.3 |
|
|
|
97.5 |
|
|
|
359.1 |
|
|
366.0 |
|
|
Total costs and
expenses |
|
|
150.8 |
|
|
|
153.7 |
|
|
|
587.0 |
|
|
588.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
35.7 |
|
|
|
36.2 |
|
|
|
166.8 |
|
|
134.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
0.4 |
|
|
|
0.1 |
|
|
|
0.9 |
|
|
0.4 |
|
Other |
|
|
1.2 |
|
|
|
(0.8 |
) |
|
|
1.2 |
|
|
0.3 |
|
|
Total other income
(expense) |
|
|
1.6 |
|
|
|
(0.7 |
) |
|
|
2.1 |
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
37.3 |
|
|
|
35.5 |
|
|
|
168.9 |
|
|
134.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
|
13.9 |
|
|
|
16.8 |
|
|
|
43.6 |
|
|
54.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
23.4 |
|
$ |
|
18.7 |
|
|
$ |
125.3 |
|
$ |
80.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.33 |
|
$ |
|
0.27 |
|
|
$ |
1.79 |
|
$ |
1.12 |
|
Diluted |
|
$ |
0.32 |
|
$ |
|
0.26 |
|
|
$ |
1.71 |
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
70.0 |
|
|
|
69.4 |
|
|
|
70.0 |
|
|
71.3 |
|
Diluted |
|
|
72.4 |
|
|
|
72.4 |
|
|
|
73.4 |
|
|
74.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
(in
millions) |
|
Jun 30, 2016 |
|
|
Jun 30, 2015 |
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
|
68.5 |
|
|
$ |
|
64.1 |
|
|
|
|
Marketable
investment securities |
|
|
90.5 |
|
|
|
|
80.7 |
|
|
|
|
Prepaid
expenses |
|
|
18.4 |
|
|
|
|
12.5 |
|
|
|
|
Inventory |
|
|
38.3 |
|
|
|
|
25.1 |
|
|
|
|
Trade
accounts receivable, less allowance for doubtful |
|
|
|
|
|
|
|
|
|
accounts of
$6.8 in 2016 and $7.6 in 2015 |
|
|
91.7 |
|
|
|
|
85.8 |
|
|
|
|
Deferred
taxes |
|
|
— |
|
|
|
|
13.5 |
|
|
|
|
Prepaid
taxes |
|
|
3.8 |
|
|
|
|
— |
|
|
|
|
Other
receivables |
|
|
3.3 |
|
|
|
|
1.9 |
|
|
|
|
|
Total
current assets |
|
|
314.5 |
|
|
|
|
283.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net |
|
|
58.3 |
|
|
|
|
67.2 |
|
|
|
Long-term
marketable investment securities |
|
|
79.9 |
|
|
|
|
40.6 |
|
|
|
Intangibles, net |
|
|
227.5 |
|
|
|
|
192.6 |
|
|
|
Goodwill |
|
|
195.3 |
|
|
|
|
177.2 |
|
|
|
Other
assets |
|
|
5.0 |
|
|
|
|
5.0 |
|
|
|
|
|
Total
assets |
$ |
|
880.5 |
|
|
$ |
|
766.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
$ |
|
21.1 |
|
|
$ |
|
21.1 |
|
|
|
|
Accrued
liabilities |
|
|
49.5 |
|
|
|
|
46.1 |
|
|
|
|
Deferred
revenue |
|
|
1.7 |
|
|
|
|
1.5 |
|
|
|
|
|
Total
current liabilities |
|
|
72.3 |
|
|
|
|
68.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized tax benefits |
|
|
24.0 |
|
|
|
|
26.4 |
|
|
|
Other
long-term liabilities |
|
|
18.2 |
|
|
|
|
8.8 |
|
|
|
Long-term
deferred taxes |
|
|
17.9 |
|
|
|
|
0.2 |
|
|
|
|
|
Total
liabilities |
|
|
132.4 |
|
|
|
|
104.1 |
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Common
stock, 69.1 and 68.9 shares outstanding at |
|
|
|
|
|
|
|
|
|
June 30,
2016 and 2015 respectively |
|
|
0.7 |
|
|
|
|
0.7 |
|
|
|
|
Additional
paid-in capital |
|
|
830.1 |
|
|
|
|
745.4 |
|
|
|
|
Accumulated
other comprehensive loss |
|
|
(9.5 |
) |
|
|
|
(7.0 |
) |
|
|
|
Accumulated
deficit |
|
|
(73.2 |
) |
|
|
|
(77.0 |
) |
|
|
|
|
Total
stockholders' equity |
|
|
748.1 |
|
|
|
|
662.1 |
|
|
|
|
|
Total
liabilities and stockholders' equity |
$ |
|
880.5 |
|
|
$ |
|
766.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions) |
|
Jun 30, 2016 |
|
|
Jun 30, 2015 |
|
|
Cash flows
from operating activities: |
|
|
|
|
|
|
|
Net
income |
$ |
|
125.3 |
|
|
$ |
|
80.2 |
|
|
|
|
Adjustments
to reconcile net income to net cash provided by |
|
|
|
|
|
|
|
|
operating
activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
26.7 |
|
|
|
|
25.0 |
|
|
|
|
|
Loss (gain)
on disposition of assets |
|
|
(0.9 |
) |
|
|
|
0.5 |
|
|
|
|
|
Share-based
compensation expense |
|
|
31.6 |
|
|
|
|
45.7 |
|
|
|
|
|
Bad debt
expense |
|
|
33.3 |
|
|
|
|
31.5 |
|
|
|
|
|
Deferred
income taxes |
|
|
18.1 |
|
|
|
|
(0.4 |
) |
|
|
|
|
Unrecognized tax benefits |
|
|
(2.4 |
) |
|
|
|
2.1 |
|
|
|
|
|
Excess tax
benefit from share-based compensation |
|
|
- |
|
|
|
|
(3.4 |
) |
|
|
|
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
(7.2 |
) |
|
|
|
(5.5 |
) |
|
|
|
|
|
Trade accounts
receivable |
|
|
(39.2 |
) |
|
|
|
(34.4 |
) |
|
|
|
|
|
Other receivables |
|
|
(0.9 |
) |
|
|
|
2.5 |
|
|
|
|
|
|
Inventory |
|
|
(14.6 |
) |
|
|
|
(0.8 |
) |
|
|
|
|
|
Prepaid taxes |
|
|
(3.8 |
) |
|
|
|
13.6 |
|
|
|
|
|
|
Accounts payable |
|
|
- |
|
|
|
|
(3.1 |
) |
|
|
|
|
|
Accrued
liabilities |
|
|
0.5 |
|
|
|
|
(13.4 |
) |
|
|
|
|
|
Deferred revenue |
|
|
(0.2 |
) |
|
|
|
0.4 |
|
|
|
Net cash
provided by operating activities |
|
|
166.3 |
|
|
|
|
140.5 |
|
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
|
|
Capital
expenditures for equipment and leasehold improvements |
|
|
(5.0 |
) |
|
|
|
(23.9 |
) |
|
|
|
Acquisitions, net of cash acquired |
|
|
(37.0 |
) |
|
|
|
(20.1 |
) |
|
|
|
Purchases
of marketable investment securities |
|
|
(164.5 |
) |
|
|
|
(80.7 |
) |
|
|
|
Proceeds
from maturities and sales marketable investment securities |
|
|
115.1 |
|
|
|
|
165.6 |
|
|
|
Net cash
provided by (used in) investing activities |
|
|
(91.4 |
) |
|
|
|
40.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities: |
|
|
|
|
|
|
|
|
Net
proceeds from common stock issued under |
|
|
|
|
|
|
|
|
|
share-based
compensation plans |
|
|
94.3 |
|
|
|
|
30.0 |
|
|
|
|
Excess tax
benefit from share-based compensation |
|
|
- |
|
|
|
|
3.4 |
|
|
|
|
Repurchase
and retirement of common stock |
|
|
(162.6 |
) |
|
|
|
(210.7 |
) |
|
|
Net cash
used in financing activities |
|
|
(68.3 |
) |
|
|
|
(177.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
Foreign exchange rates on cash and cash equivalents |
|
|
(2.2 |
) |
|
|
|
(4.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents |
|
|
4.4 |
|
|
|
|
(0.7 |
) |
|
|
Cash and
cash equivalents at beginning of year |
|
|
64.1 |
|
|
|
|
64.8 |
|
|
|
Cash and
cash equivalents at end of period |
$ |
|
68.5 |
|
|
$ |
|
64.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safe Harbor StatementThis 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 continued substantial progress
on advancing our product portfolio and growing the Company into a
larger, more diversified personalized medicine company; the Company
being on track to deliver on its five year strategic goals;
the Company’s continued status as the worldwide leader in
hereditary cancer testing; the Company’s portfolio diversification
efforts being accelerated with substantive volume growth and
reimbursement for new commercial products; pivotal validations for
the Company’s pipeline products; the Company’s significant
international expansion; the Company’s confidence that the Company
can deliver better health outcomes for patients and significant
long-term value for shareholders; the Company’s anticipated launch
of EndoPredict in the United States in the second half of fiscal
year 2017; the anticipated acquisition of Assurex Health; the
Company’s fiscal first quarter 2017 and fiscal full year 2017
financial guidance under the caption “Fiscal Year 2017 and Fiscal
First-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 and uncertainties 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, including
unexpected costs and delays; 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 a
healthcare clinic in Germany and Sividon Diagnostic and our planned
acquisition of Assurex Health; risks related to our projections
about our business, results of operations and financial condition;
risks related to 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; 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, 2015, 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
measures
In 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 financial statements.
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.
- Severance – executive severance: Represents one-time severance
expenses associated with the departure of executive officers of
Myriad Genetics, Inc.
- Discontinued operations – One-time charges associated with
the closing of business units.
- Acquisition costs – Closing and restructuring costs associated
with acquired companies
- Tax expense associated with R&D tax credit reserves – One
time net benefits associated with the release of R&D tax credit
reserves.
- Tax impact related to equity compensation – Changes in
effective tax rate based upon ASU 2016-09
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 and Twelve Months ended June 30, 2016 and
2015 |
|
|
|
|
|
|
|
(Unaudited data in
millions, except per share amount) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
Jun 30, 2016 |
|
Jun 30, 2015 |
|
Jun 30, 2016 |
|
Jun 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
186.5 |
|
|
|
189.9 |
|
|
|
753.8 |
|
|
|
723.1 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Cost of
molecular diagnostic testing |
|
$ |
34.2 |
|
|
$ |
32.0 |
|
|
$ |
132.8 |
|
|
$ |
132.8 |
|
|
GAAP Cost of
pharmaceutical and clinical services |
|
|
5.8 |
|
|
|
5.5 |
|
|
|
24.5 |
|
|
|
14.6 |
|
|
Acquisition - amortization of
intangible assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Non-GAAP
COGS |
|
$ |
40.0 |
|
|
$ |
37.5 |
|
|
$ |
157.3 |
|
|
$ |
147.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin |
|
|
79 |
% |
|
|
80 |
% |
|
|
79 |
% |
|
|
80 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP Research
and Development |
|
$ |
19.5 |
|
|
$ |
18.7 |
|
|
$ |
70.6 |
|
|
$ |
75.5 |
|
|
Severance - executive
severance |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.4 |
) |
|
Discontinued operations |
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
|
|
(0.3 |
) |
|
Acquisition - amortization of
intangible assets |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.4 |
) |
|
|
(0.3 |
) |
|
Non-GAAP
R&D |
|
$ |
19.4 |
|
|
$ |
18.5 |
|
|
$ |
70.2 |
|
|
$ |
74.5 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Selling,
General and Administrative |
|
$ |
91.3 |
|
|
$ |
97.5 |
|
|
$ |
359.1 |
|
|
$ |
366.0 |
|
|
Severance - executive
severance |
|
|
|
|
(8.3 |
) |
|
|
|
|
(19.5 |
) |
|
Discontinued operations |
|
|
- |
|
|
|
(0.4 |
) |
|
|
- |
|
|
|
(0.4 |
) |
|
Acquisition costs |
|
|
(0.1 |
) |
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
|
Acquisition - amortization of
intangible assets |
|
|
(3.1 |
) |
|
|
(3.1 |
) |
|
|
(12.2 |
) |
|
|
(12.2 |
) |
|
Non-GAAP
SG&A |
|
$ |
88.1 |
|
|
$ |
85.7 |
|
|
$ |
346.8 |
|
|
$ |
333.9 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income |
|
$ |
35.7 |
|
|
$ |
36.2 |
|
|
$ |
166.8 |
|
|
$ |
134.2 |
|
|
Discontinued operations |
|
|
- |
|
|
|
0.5 |
|
|
|
- |
|
|
|
0.7 |
|
|
Severance - executive
severance |
|
|
- |
|
|
|
8.3 |
|
|
|
- |
|
|
|
19.9 |
|
|
Acquisition costs |
|
|
0.1 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
- |
|
|
Acquisition - amortization of
intangible assets |
|
|
3.2 |
|
|
|
3.2 |
|
|
|
12.6 |
|
|
|
12.5 |
|
|
Non-GAAP
Operating Income |
|
$ |
39.0 |
|
|
$ |
48.2 |
|
|
$ |
179.5 |
|
|
$ |
167.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Margin |
|
|
21 |
% |
|
|
25 |
% |
|
|
24 |
% |
|
|
23 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income |
|
$ |
23.4 |
|
|
$ |
18.7 |
|
|
$ |
125.3 |
|
|
$ |
80.2 |
|
|
Severance - executive
severance |
|
|
- |
|
|
|
8.3 |
|
|
|
- |
|
|
|
19.9 |
|
|
Discontinued operations |
|
|
- |
|
|
|
0.8 |
|
|
|
- |
|
|
|
1.0 |
|
|
Acquisition costs |
|
|
0.1 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
- |
|
|
Acquisition - amortization of
intangible assets |
|
|
3.2 |
|
|
|
3.2 |
|
|
|
12.6 |
|
|
|
12.5 |
|
|
Tax expense associated with R&D
tax credit reserves |
|
|
- |
|
|
|
- |
|
|
|
(6.0 |
) |
|
|
- |
|
|
Tax impact related to equity
compensation |
|
|
(0.3 |
) |
|
|
- |
|
|
|
(12.7 |
) |
|
|
- |
|
|
Other tax expense |
|
|
- |
|
|
|
2.1 |
|
|
|
- |
|
|
|
2.1 |
|
|
Tax expense associated with
Non-GAAP adjustments |
|
|
- |
|
|
|
(3.7 |
) |
|
|
- |
|
|
|
(7.7 |
) |
|
Non-GAAP Net
Income |
|
$ |
26.4 |
|
|
$ |
29.4 |
|
|
$ |
119.3 |
|
|
$ |
108.0 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS |
|
$ |
0.32 |
|
|
$ |
0.26 |
|
|
$ |
1.71 |
|
|
$ |
1.08 |
|
|
Non-GAAP
Diluted EPS |
|
$ |
0.36 |
|
|
$ |
0.41 |
|
|
$ |
1.63 |
|
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
|
72.4 |
|
|
|
72.4 |
|
|
|
73.4 |
|
|
|
74.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
|
|
(Unaudited data in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
Jun 30, 2016 |
|
Jun 30, 2015 |
|
Jun 30, 2016 |
|
Jun 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
GAAP cash flow
from operations |
|
$ |
56.4 |
|
|
$ |
51.0 |
|
|
$ |
166.3 |
|
|
$ |
140.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(2.2 |
) |
|
|
(2.0 |
) |
|
|
(5.0 |
) |
|
|
(23.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
Free cash
flow |
|
$ |
54.2 |
|
|
$ |
49.0 |
|
|
$ |
161.3 |
|
|
$ |
116.6 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
$0.47 -
$0.57 |
Acquisition
- amortization of intangible assets |
0.36 |
Acquisition costs |
|
0.17 |
Non-GAAP diluted net income per share |
$1.00 - $1.10 |
|
|
|
|
|
|
|
|
Fiscal First-Quarter 2017 |
Diluted net income per share |
|
GAAP
diluted net income per share |
$0.14 -
$0.16 |
Acquisition
- amortization of intangible assets |
0.04 |
Acquisition costs |
|
0.07 |
Non-GAAP diluted net income per share |
$0.25 - $0.27 |
|
|
Media Contact: Ron Rogers
(801) 584-3065
rrogers@myriad.com
Investor Contact: Scott Gleason
(801) 584-1143
sgleason@myriad.com
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