Myriad Genetics, Inc. (NASDAQ:MYGN), a global leader in
molecular diagnostics and personalized medicine, today announced
financial results for its fiscal fourth-quarter 2017 and fiscal
full-year 2017, provided an update on recent business highlights
and issued its fiscal year 2018 and fiscal first-quarter 2018
financial guidance.
"This quarter we saw record demand for hereditary cancer tests
and now have 86 percent of our hereditary cancer revenue under
long-term contract, providing future stability upon which to build
our growing portfolio of new products,” said Mark C. Capone,
president and CEO, Myriad Genetics. “Our diversification
efforts showed continued success with new products representing
greater than two-thirds of test volume and 28 percent of revenue in
the fourth-quarter. Our strong progress on transforming the
company leaves us well positioned to achieve our long-term
strategic goals.”
Financial Highlights
The following table summarizes the financial results and product
revenue for our fiscal fourth-quarter 2017:
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Fourth-Quarter |
|
|
|
|
Fiscal Year |
|
|
($
in millions) |
|
2017 |
|
|
2016 |
|
% Change |
|
|
2017 |
|
|
2016 |
|
% Change |
Molecular
diagnostic testing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary cancer testing revenue |
$ |
144.6 |
|
|
$ |
152.8 |
|
|
(5%) |
|
$ |
568.7 |
|
|
$ |
632.3 |
|
|
(10%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GeneSight
testing revenue |
|
25.5 |
|
|
|
NA |
|
|
NM |
|
|
78.4 |
|
|
|
NA |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vectra DA
testing revenue |
|
10.3 |
|
* |
|
12.7 |
|
|
(19%) |
|
|
43.7 |
|
|
|
47.8 |
|
|
(9%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prolaris
testing revenue |
|
2.9 |
|
|
|
3.5 |
|
|
(17%) |
|
|
12.1 |
|
|
|
11.3 |
|
|
7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EndoPredict testing revenue |
|
2.0 |
|
|
|
1.7 |
|
|
18% |
|
|
7.6 |
|
|
|
4.5 |
|
|
69% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
testing revenue |
|
2.6 |
|
|
|
3.1 |
|
|
(13%) |
|
|
11.6 |
|
|
|
9.8 |
|
|
18% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
molecular diagnostic testing revenue |
|
187.9 |
|
|
|
173.7 |
|
|
8% |
|
|
722.1 |
|
|
|
705.7 |
|
|
2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical and clinical service revenue |
|
12.6 |
|
|
|
12.7 |
|
|
(1%) |
|
|
49.3 |
|
|
|
48.1 |
|
|
3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue |
$ |
200.5 |
|
|
$ |
186.5 |
|
|
8% |
|
$ |
771.4 |
|
|
$ |
753.8 |
|
|
2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Fourth-Quarter |
|
|
|
|
Fiscal Year |
|
|
($
in millions) |
|
2017 |
|
|
2016 |
|
% Change |
|
|
2017 |
|
|
2016 |
|
% Change |
Total
Revenue |
$ |
200.5 |
|
|
$ |
186.5 |
|
|
8% |
|
$ |
771.4 |
|
|
$ |
753.8 |
|
|
2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
158.0 |
|
|
|
146.5 |
|
|
8% |
|
|
600.3 |
|
|
|
596.5 |
|
|
1% |
|
Gross
Margin |
|
78.8 |
% |
|
|
78.6 |
% |
|
|
|
|
77.8 |
% |
|
|
79.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
140.9 |
|
|
|
110.8 |
|
|
27% |
|
|
550.8 |
|
|
|
429.7 |
|
|
28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
17.1 |
|
|
|
35.7 |
|
|
(52%) |
|
|
49.4 |
|
|
|
166.8 |
|
|
(70%) |
|
Operating
Margin |
|
8.5 |
% |
|
|
19.1 |
% |
|
|
|
|
6.4 |
% |
|
|
22.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Income |
|
28.0 |
|
|
|
39.0 |
|
|
(28%) |
|
|
97.2 |
|
|
|
179.5 |
|
|
(46%) |
|
Adjusted
Operating Margin |
|
14.0 |
% |
|
|
20.9 |
% |
|
|
|
|
12.6 |
% |
|
|
23.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
12.9 |
|
|
|
23.4 |
|
|
(45%) |
|
|
21.8 |
|
|
|
125.3 |
|
|
(83%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
0.19 |
|
|
|
0.32 |
|
|
(41%) |
|
|
0.32 |
|
|
|
1.71 |
|
|
(81%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EPS |
$ |
0.30 |
|
|
$ |
0.36 |
|
|
(17%) |
|
$ |
1.05 |
|
|
$ |
1.63 |
|
|
(36%) |
*
Negatively impacted by delayed submission of $2 million in Medicare
claims |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Highlights
• Hereditary Cancer
- Record hereditary cancer demand in the fourth quarter with 6
percent year-over-year volume growth.
- Signed multiple payer contracts, increasing revenue under
long-term contract to 86 percent.
- Presented the results of a 2,000 patient study with myRisk®
Hereditary Cancer at ASCO demonstrating that 50 percent of patients
with mutations would be missed with current testing criteria and
that 34 percent of mutations were in genes not indicated by family
history.
• New Products
- GeneSight® in fiscal 2017 grew revenue by 34 percent.
Additionally, over 17,000 physicians ordered the test representing
a 55 percent increase.
- Prolaris® received a final local coverage determination (LCD)
from Palmetto GBA for favorable intermediate patients which will
expand coverage to approximately 30,000 additional Medicare
patients.
- Prolaris clinical validity study with 767 patients presented at
the American Urological Association annual meeting demonstrated the
ability of the test to predict metastatic disease. The study found
that patients with a low Prolaris score had a 10-year risk of
metastases of less than 1 percent, while patients with a high
Prolaris score had a 10-year risk of metastases of 25 percent.
- Vectra® DA clinical utility study presented at the European
League Against Rheumatism (EULAR) demonstrated the ability of the
test to predict radiographic progression in a meta-analysis of six
cohorts incorporating over 800 patients. Vectra DA predicted
radiographic progression in all six patient cohorts, and had
greater than three times the predictive power of current standard
of care disease activity measures such as DAS28-CRP and CRP.
- Vectra DA clinical utility study presented at EULAR
demonstrated the ability of the test to predict which patients
could be considered for biologic tapering. In a study of 146
patients, relapse rates for patients who had undergone full or
partial tapering on biologic therapy were 24 percent in patients
with a low Vectra DA score and negative ACPA compared to 79 percent
in patients with high Vectra DA scores and positive ACPA. The study
found that patients with low Vectra DA scores and/or negative ACPA
were at a low risk for relapse when tapered, and average biologic
usage was reduced for the entire cohort by 20 percent.
- Companion diagnostics advanced with planned submission of a
premarket approval (PMA) supplement in the second half of calendar
year 2017 to the U.S. Food and Drug Administration for
BRACAnalysis® CDx to identify HER2-negative, metastatic breast
cancer patients for olaparib therapy.
- EndoPredict® received a draft LCD from Medicare for node
negative and node positive, ER+ patients with breast cancer
representing a U.S. market of approximately 140,000 patients per
year. If approved, Myriad would have coverage for approximately 75
percent of breast cancer patients when combined with the contracted
private lives in the United States.
• International
- EndoPredict revenues increased 18 percent compared on a
year-over-year basis.
- Received provincial reimbursement in Quebec for EndoPredict.
Expect additional Canadian provincial decisions in fiscal year
2018.
• Elevate 2020
- Announced the launch of the Elevate 2020 program with a goal of
delivering $50 million of incremental operating income by fiscal
year 2020. Projects already have been identified that will generate
$17 million in operating income in fiscal 2018 and an additional
$24 million in operating income in fiscal 2019.
Fiscal Year 2018 and Fiscal First-Quarter 2018 Financial
GuidanceBelow is a table summarizing Myriad’s fiscal year
2018 and fiscal first-quarter 2018 financial guidance:
|
|
Revenue |
|
GAAP
Diluted Earnings Per Share |
|
Adjusted Earnings Per Share |
Fiscal Year 2018 |
|
$750-$770 million |
|
$0.37-$0.42 |
|
$1.00-$1.05 |
|
|
|
|
|
|
|
Fiscal
First-Quarter 2018 |
|
$181-$183 million |
|
$0.05-$0.07 |
|
$0.19-$0.21 |
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 the conference call today to discuss
the fiscal fourth-quarter financial results, fiscal 2017 financial
results, fiscal year 2018 financial guidance, and fiscal
first-quarter 2018 financial guidance.
Conference Call and WebcastA conference call
will be held today, Tuesday, August 8, 2017, 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) 707-9445. International
callers may dial (303) 223-2686. All callers will be asked to
reference reservation number 21855166. 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 DA, GeneSight, EndoPredict 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 |
|
Twelve months ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Molecular diagnostic
testing |
|
$ |
187.9 |
|
|
$ |
173.8 |
|
|
$ |
722.1 |
|
|
$ |
705.7 |
|
Pharmaceutical and
clinical services |
|
|
12.6 |
|
|
|
12.7 |
|
|
|
49.3 |
|
|
|
48.1 |
|
Total Revenue |
|
|
200.5 |
|
|
|
186.5 |
|
|
|
771.4 |
|
|
|
753.8 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of
molecular diagnostic testing |
|
|
35.6 |
|
|
|
34.2 |
|
|
|
145.2 |
|
|
|
132.8 |
|
Cost of
pharmaceutical and clinical services |
|
|
6.9 |
|
|
|
5.8 |
|
|
|
26.0 |
|
|
|
24.5 |
|
Research
and development expense |
|
|
18.8 |
|
|
|
19.5 |
|
|
|
74.4 |
|
|
|
70.6 |
|
Selling,
general and administrative expense |
|
|
122.1 |
|
|
|
91.3 |
|
|
|
476.4 |
|
|
|
359.1 |
|
Total
costs and expenses |
|
|
183.4 |
|
|
|
150.8 |
|
|
|
722.0 |
|
|
|
587.0 |
|
Operating
income |
|
|
17.1 |
|
|
|
35.7 |
|
|
|
49.4 |
|
|
|
166.8 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
|
0.3 |
|
|
|
0.4 |
|
|
|
1.2 |
|
|
|
0.9 |
|
Interest
expense |
|
|
(1.2 |
) |
|
|
(0.1 |
) |
|
|
(6.0 |
) |
|
|
(0.3 |
) |
Change in
the fair value of contingent consideration |
|
|
2.7 |
|
|
|
- |
|
|
|
0.8 |
|
|
|
- |
|
Other |
|
|
(0.1 |
) |
|
|
1.3 |
|
|
|
(2.5 |
) |
|
|
1.5 |
|
Total
other income (expense) |
|
|
1.7 |
|
|
|
1.6 |
|
|
|
(6.5 |
) |
|
|
2.1 |
|
Income before income
taxes |
|
|
18.8 |
|
|
|
37.3 |
|
|
|
42.9 |
|
|
|
168.9 |
|
Income
tax provision |
|
|
6.1 |
|
|
|
13.9 |
|
|
|
21.3 |
|
|
|
43.6 |
|
Net
income |
|
|
12.7 |
|
|
|
23.4 |
|
|
|
21.6 |
|
|
|
125.3 |
|
Net loss
attributable to non-controlling interest |
|
|
(0.2 |
) |
|
|
- |
|
|
|
(0.2 |
) |
|
|
- |
|
Net income attributable
to Myriad Genetics, Inc. stockholders |
|
$ |
12.9 |
|
|
$ |
23.4 |
|
|
$ |
21.8 |
|
|
$ |
125.3 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.19 |
|
|
$ |
0.33 |
|
|
$ |
0.32 |
|
|
$ |
1.79 |
|
Diluted |
|
$ |
0.19 |
|
|
$ |
0.32 |
|
|
$ |
0.32 |
|
|
$ |
1.71 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
68.2 |
|
|
|
70.0 |
|
|
|
68.3 |
|
|
|
70.0 |
|
Diluted |
|
|
68.9 |
|
|
|
72.4 |
|
|
|
68.8 |
|
|
|
73.4 |
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) |
(in millions) |
|
|
|
|
|
|
Years Ended June 30, |
|
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
102.4 |
|
|
$ |
68.5 |
|
Marketable investment securities |
|
|
48.3 |
|
|
|
90.5 |
|
Prepaid
expenses |
|
|
12.7 |
|
|
|
18.4 |
|
Inventory |
|
|
42.2 |
|
|
|
38.3 |
|
Trade
accounts receivable, less allowance for doubtful accounts of
$8.2 in 2017 and $6.8 in 2016 |
|
|
105.6 |
|
|
|
91.7 |
|
Prepaid
taxes |
|
|
0.2 |
|
|
|
3.8 |
|
Other
receivables |
|
|
5.7 |
|
|
|
3.3 |
|
Total
current assets |
|
|
317.1 |
|
|
|
314.5 |
|
Property, plant and
equipment, net |
|
|
51.1 |
|
|
|
58.3 |
|
Long-term marketable
investment securities |
|
|
48.5 |
|
|
|
79.9 |
|
Intangibles, net |
|
|
491.6 |
|
|
|
227.5 |
|
Goodwill |
|
|
316.1 |
|
|
|
195.3 |
|
Other assets |
|
|
— |
|
|
|
5.0 |
|
Total
assets |
|
$ |
1,224.4 |
|
|
$ |
880.5 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
22.0 |
|
|
$ |
21.1 |
|
Accrued
liabilities |
|
|
65.6 |
|
|
|
49.5 |
|
Short-term contingent consideration |
|
|
127.3 |
|
|
|
— |
|
Deferred
revenue |
|
|
2.6 |
|
|
|
1.7 |
|
Total
current liabilities |
|
|
217.5 |
|
|
|
72.3 |
|
Unrecognized tax
benefits |
|
|
25.2 |
|
|
|
24.0 |
|
Other long-term
liabilities |
|
|
7.2 |
|
|
|
7.8 |
|
Contingent
consideration |
|
|
13.2 |
|
|
|
10.4 |
|
Long-term debt |
|
|
99.1 |
|
|
|
— |
|
Long-term deferred
taxes |
|
|
84.4 |
|
|
|
17.9 |
|
Total
liabilities |
|
|
446.6 |
|
|
|
132.4 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Common
stock, 68.4 and 69.1 shares outstanding at June 30, 2017 and
2016 respectively |
|
|
0.7 |
|
|
|
0.7 |
|
Additional paid-in capital |
|
|
851.4 |
|
|
|
830.1 |
|
Accumulated other comprehensive loss |
|
|
(5.5 |
) |
|
|
(9.5 |
) |
Accumulated deficit |
|
|
(68.4 |
) |
|
|
(73.2 |
) |
Total
Myriad Genetics, Inc. stockholders' equity |
|
|
778.2 |
|
|
|
748.1 |
|
Non-controlling interest |
|
|
(0.4 |
) |
|
|
— |
|
Total
stockholders' equity |
|
|
777.8 |
|
|
|
748.1 |
|
Total
liabilities and stockholders’ equity |
|
$ |
1,224.4 |
|
|
$ |
880.5 |
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
(in millions) |
|
|
|
|
|
|
|
|
|
Years Ended |
|
|
2017 |
|
2016 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net income |
|
$ |
21.8 |
|
|
$ |
125.3 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
48.3 |
|
|
|
26.7 |
|
Non-cash
interest expense |
|
|
0.4 |
|
|
|
— |
|
Gain on
disposition of assets |
|
|
(0.3 |
) |
|
|
(0.9 |
) |
Share-based compensation expense |
|
|
29.9 |
|
|
|
31.6 |
|
Impairment of cost basis investment |
|
|
2.4 |
|
|
|
— |
|
Bad debt
expense |
|
|
37.3 |
|
|
|
33.3 |
|
Loss on
extinguishment of debt |
|
|
1.3 |
|
|
|
- |
|
Deferred
income taxes |
|
|
1.3 |
|
|
|
18.1 |
|
Unrecognized tax benefits |
|
|
1.2 |
|
|
|
(2.4 |
) |
Change in
fair value of contingent consideration |
|
|
(0.8 |
) |
|
|
— |
|
Changes
in assets and liabilities: |
|
|
|
|
Prepaid
expenses |
|
|
7.8 |
|
|
|
(7.2 |
) |
Trade
accounts receivable |
|
|
(41.4 |
) |
|
|
(39.2 |
) |
Other
receivables |
|
|
(4.0 |
) |
|
|
(0.9 |
) |
Inventory |
|
|
(1.2 |
) |
|
|
(14.6 |
) |
Prepaid
taxes |
|
|
3.6 |
|
|
|
(3.8 |
) |
Accounts
payable |
|
|
(3.0 |
) |
|
|
— |
|
Accrued
liabilities |
|
|
0.7 |
|
|
|
0.5 |
|
Deferred
revenue |
|
|
0.9 |
|
|
|
(0.2 |
) |
Net cash provided by
operating activities |
|
|
106.2 |
|
|
|
166.3 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
Capital
expenditures |
|
|
(6.1 |
) |
|
|
(5.0 |
) |
Acquisitions, net of
cash acquired |
|
|
(216.1 |
) |
|
|
(37.0 |
) |
Sale of cost basis
investment |
|
|
2.6 |
|
|
|
- |
|
Purchases of marketable
investment securities |
|
|
(87.5 |
) |
|
|
(164.5 |
) |
Proceeds from
maturities and sales of marketable investment securities |
|
|
160.8 |
|
|
|
115.1 |
|
Net cash provided by
(used in) investing activities |
|
|
(146.3 |
) |
|
|
(91.4 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Net
proceeds from common stock issued under share-based
compensation plans |
|
|
6.0 |
|
|
|
94.3 |
|
Net
proceeds from revolving credit facility |
|
|
204.0 |
|
|
|
— |
|
Net
proceeds from term loan |
|
|
199.0 |
|
|
|
— |
|
Repayment of term loan |
|
|
(200.0 |
) |
|
|
— |
|
Repayment of revolving credit facility |
|
|
(105.0 |
) |
|
|
— |
|
Fees
paid for extinguishment of debt |
|
|
(0.6 |
) |
|
|
— |
|
Repurchase and
retirement of common stock |
|
|
(31.6 |
) |
|
|
(162.6 |
) |
Net cash used in
financing activities |
|
|
71.8 |
|
|
|
(68.3 |
) |
Effect of foreign
exchange rates on cash and cash equivalents |
|
|
2.2 |
|
|
|
(2.2 |
) |
Net increase in cash
and cash equivalents |
|
|
33.9 |
|
|
|
4.4 |
|
Cash and cash
equivalents at beginning of year |
|
|
68.5 |
|
|
|
64.1 |
|
Cash and cash
equivalents at end of year |
|
$ |
102.4 |
|
|
$ |
68.5 |
|
|
|
|
|
|
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 anticipated revenue and
profitability from new products; the Company’s goal of delivering
$50 million of incremental operating income by fiscal year 2020;
the Company’s planned submission of a PMA supplement in the second
half of calendar year 2017 to the U.S. Food and Drug Administration
for BRACAnalysis CDx to identify HER2 negative, metastatic breast
cancer patients for olaparib therapy; the potential market
expansion of approximately 30,000 patients per year for Prolaris
based on Medicare coverage determination; the potential market
expansion of approximately 140,000 patients per year for
EndoPredict based on Medicare draft coverage determination; the
expectation of additional Canadian provincial reimbursement
decisions for EndoPredict in fiscal year 2018; the Company’s fiscal
first-quarter 2018 guidance of total revenue of $181 to $183
million, diluted earnings per share of $0.05 to $0.07, and adjusted
earnings per share of $0.19 to $0.21, and the Company’s fiscal 2018
full year guidance of total revenue of $750 to $770 million,
diluted earnings per share of $0.37 to $0.42, and adjusted earnings
per share of $1.00 to $1.05, as further discussed under the caption
“Fiscal Year 2018 and Fiscal First-Quarter 2018 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 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 most recent Annual Report on Form 10-K, 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 – integration 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
- Tax expense associated with R&D tax credit reserves – One
time net benefits associated with the release of R&D tax credit
reserves.
- Potential future consideration related to acquisitions –
Non-cash expenses related to valuation adjustments of earn-out and
milestone payments tied to recent acquisitions
- One-time debt restructuring charges – Charges related to the
restructuring of the company’s debt from a one-year term loan to a
revolving credit facility
- One-time non-deductible costs – One-time non-deductible tax
items
- Impairment of Raindance Investment – One-time impairment charge
associated with Myriad’s investment in Raindance Technologies
- Elevate 2020 costs –Expenses tied to Elevate 2020 program
- Accrual for legal expenses – Accrual associated with
anticipated future legal expenses
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, 2017 and 2016 |
|
|
|
|
|
|
|
|
(Unaudited data in
millions, except per share amount) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
Jun 30, 2017 |
|
Jun 30, 2016 |
|
Jun 30, 2017 |
|
Jun 30, 2016 |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
200.5 |
|
|
$ |
186.5 |
|
|
$ |
771.4 |
|
|
$ |
753.8 |
|
|
|
|
|
|
|
|
|
|
GAAP Cost of
molecular diagnostic testing |
|
$ |
35.6 |
|
|
$ |
34.2 |
|
|
$ |
145.2 |
|
|
$ |
132.8 |
|
GAAP Cost of
pharmaceutical and clinical
services |
|
|
6.9 |
|
|
|
5.8 |
|
|
|
26.0 |
|
|
|
24.5 |
|
Acquisition - Integration related costs |
|
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
Non-GAAP
COGS |
|
$ |
42.5 |
|
|
$ |
40.0 |
|
|
$ |
171.1 |
|
|
$ |
157.3 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin |
|
|
79 |
% |
|
|
79 |
% |
|
|
78 |
% |
|
|
79 |
% |
|
|
|
|
|
|
|
|
|
GAAP Research
and Development |
|
$ |
18.8 |
|
|
$ |
19.5 |
|
|
$ |
74.4 |
|
|
$ |
70.6 |
|
Acquisition - Integration related costs |
|
|
(0.1 |
) |
|
|
- |
|
|
|
(0.2 |
) |
|
|
- |
|
Acquisition - amortization of intangible assets |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
(0.4 |
) |
Non-GAAP
R&D |
|
$ |
18.6 |
|
|
$ |
19.4 |
|
|
$ |
73.9 |
|
|
$ |
70.2 |
|
|
|
|
|
|
|
|
|
|
GAAP Selling,
General and Administrative |
|
$ |
122.1 |
|
|
$ |
91.3 |
|
|
$ |
476.4 |
|
|
$ |
359.1 |
|
Acquisition - Integration related costs |
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
(13.6 |
) |
|
|
(0.1 |
) |
Acquisition - amortization of intangible assets |
|
|
(9.1 |
) |
|
|
(3.1 |
) |
|
|
(32.7 |
) |
|
|
(12.2 |
) |
Elevate
2020 costs |
|
|
(0.3 |
) |
|
|
- |
|
|
|
(0.3 |
) |
|
|
- |
|
Accrual
for legal expenses |
|
|
(0.6 |
) |
|
|
- |
|
|
|
(0.6 |
) |
|
|
- |
|
Non-GAAP
SG&A |
|
$ |
111.4 |
|
|
$ |
88.1 |
|
|
$ |
429.2 |
|
|
$ |
346.8 |
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income |
|
$ |
17.1 |
|
|
$ |
35.7 |
|
|
$ |
49.4 |
|
|
$ |
166.8 |
|
Acquisition - Integration related costs |
|
|
0.8 |
|
|
|
0.1 |
|
|
|
13.9 |
|
|
|
0.1 |
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
3.2 |
|
|
|
33.0 |
|
|
|
12.6 |
|
Elevate
2020 costs |
|
|
0.3 |
|
|
|
- |
|
|
|
0.3 |
|
|
|
- |
|
Accrual
for legal expenses |
|
|
0.6 |
|
|
|
- |
|
|
|
0.6 |
|
|
|
- |
|
Non-GAAP
Operating Income |
|
$ |
28.0 |
|
|
$ |
39.0 |
|
|
$ |
97.2 |
|
|
$ |
179.5 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Margin |
|
|
14 |
% |
|
|
21 |
% |
|
|
13 |
% |
|
|
24 |
% |
|
|
|
|
|
|
|
|
|
GAAP Net Income
Attributable to Myriad Genetics, Inc. Stockholders |
|
$ |
12.9 |
|
|
$ |
23.4 |
|
|
$ |
21.8 |
|
|
$ |
125.3 |
|
Acquisition - Integration related costs |
|
|
0.8 |
|
|
|
0.1 |
|
|
|
13.9 |
|
|
|
0.1 |
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
3.2 |
|
|
|
33.0 |
|
|
|
12.6 |
|
Elevate
2020 costs |
|
|
0.3 |
|
|
|
- |
|
|
|
0.3 |
|
|
|
- |
|
Accrual
for legal expenses |
|
|
0.6 |
|
|
|
- |
|
|
|
0.6 |
|
|
|
- |
|
Tax
impact related to equity compensation |
|
|
0.1 |
|
|
|
(0.3 |
) |
|
|
3.0 |
|
|
|
(12.7 |
) |
Tax
expense associated with R&D tax credit reserves |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6.0 |
) |
Potential
future consideration related to acquisitions |
|
|
(2.7 |
) |
|
|
- |
|
|
|
(0.8 |
) |
|
|
- |
|
One-time
debt restructuring charges |
|
|
- |
|
|
|
- |
|
|
|
1.3 |
|
|
|
- |
|
One-time
non-deductible costs |
|
|
- |
|
|
|
- |
|
|
|
2.7 |
|
|
|
- |
|
Impairment of Raindance Investment |
|
|
- |
|
|
|
- |
|
|
|
2.4 |
|
|
|
- |
|
Tax
effect associated with non-GAAP adjustments |
|
|
(0.4 |
) |
|
|
- |
|
|
|
(5.8 |
) |
|
|
- |
|
Non-GAAP Net
Income |
|
$ |
20.8 |
|
|
$ |
26.4 |
|
|
$ |
72.4 |
|
|
$ |
119.3 |
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS |
|
$ |
0.19 |
|
|
$ |
0.32 |
|
|
$ |
0.32 |
|
|
$ |
1.71 |
|
Non-GAAP
Diluted EPS |
|
$ |
0.30 |
|
|
$ |
0.36 |
|
|
$ |
1.05 |
|
|
$ |
1.63 |
|
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
|
68.9 |
|
|
|
72.4 |
|
|
|
68.8 |
|
|
|
73.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
|
(Unaudited data in
millions) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
Jun 30, 2017 |
|
Jun 30, 2016 |
|
Jun 30, 2017 |
|
Jun 30, 2016 |
|
|
|
|
|
|
|
|
|
GAAP cash flow
from operations |
|
$ |
36.6 |
|
|
$ |
38.5 |
|
|
$ |
106.2 |
|
|
$ |
166.3 |
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(0.7 |
) |
|
|
(2.2 |
) |
|
|
(6.1 |
) |
|
|
(5.0 |
) |
|
|
|
|
|
|
|
|
|
Free cash
flow |
|
$ |
35.9 |
|
|
$ |
36.3 |
|
|
$ |
100.1 |
|
|
$ |
161.3 |
|
|
|
|
|
|
|
|
|
|
Acquisition -
Integration related costs |
|
|
0.8 |
|
|
|
0.1 |
|
|
|
8.7 |
|
|
|
- |
|
Cash paid at closing to
Assurex vendors |
|
|
- |
|
|
|
- |
|
|
|
6.8 |
|
|
|
- |
|
Elevate 2020 costs |
|
|
0.3 |
|
|
|
- |
|
|
|
0.3 |
|
|
|
- |
|
Accrual for legal
expenses |
|
|
0.6 |
|
|
|
- |
|
|
|
0.6 |
|
|
|
- |
|
Tax effect associated
with non-GAAP adjustments |
|
|
(0.6 |
) |
|
|
- |
|
|
|
(5.7 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Free
cash flow |
|
$ |
37.0 |
|
|
$ |
36.4 |
|
|
$ |
110.8 |
|
|
$ |
161.3 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2018
and Fiscal First-Quarter 2018 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 2018 |
Diluted net
income per share |
|
|
GAAP diluted net income
per share |
|
$0.37 -
$0.42 |
Acquisition -
amortization of intangible assets |
|
0.53 |
One-time expenses |
|
0.10 |
Non-GAAP
diluted net income per share |
|
$1.00 - $1.05 |
|
|
|
|
|
|
|
|
Fiscal First-Quarter 2018 |
Diluted net
income per share |
|
|
GAAP diluted net income
per share |
|
$0.05 -
$0.07 |
Acquisition -
amortization of intangible assets |
|
0.12 |
One-time expenses |
|
0.02 |
Non-GAAP
diluted net income per share |
|
$0.19 - $0.21 |
|
|
|
Media Contact:
Ron Rogers
(801) 584-3065
rrogers@myriad.com
Investor Contact:
Scott Gleason
(801) 584-1143
sgleason@myriad.com
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