Myriad Genetics Reports Fiscal Second-Quarter 2015 Financial Results
February 03 2015 - 4:05PM
- Revenues of $184.4 Million
- Adjusted Diluted EPS of $0.40, and Diluted EPS of
$0.32
- myRisk™ Hereditary Cancer Revenues of $85.1
Million
- BRACAnalysis CDx™ Approved by the FDA
- Tumor BRACAnalysis CDx™ Granted European CE Marking
Approval
- Company Revises Fiscal Year 2015 Financial Guidance;
Provides Fiscal 3Q15 Financial Guidance
Myriad Genetics, Inc. (Nasdaq:MYGN) today announced financial
results for its fiscal second-quarter and six months ended December
31, 2014, provided an update on recent business highlights,
provided fiscal Q3 financial guidance and revised its financial
guidance for the fiscal year ending June 30, 2015.
"Myriad delivered strong financial results in its second fiscal
quarter with revenues increasing nine percent over its first fiscal
quarter. In particular, the transition from single cancer testing
to the myRisk cancer panel has proceeded exceptionally well with
myRisk revenue up 60 percent sequentially," said Peter D. Meldrum,
president and chief executive officer of Myriad. "While delays for
some of our new products reimbursement have caused us to revise
guidance for this year, we remain very encouraged by our progress
and believe we will exit this year on an excellent trajectory for
long-term future growth."
Fiscal Second-Quarter 2015 Financial
Highlights
- Total revenues for the fiscal second quarter were $184.4
million compared to $204.1 million in the same period of the prior
year, a decrease of 10 percent. The year-over-year decline in
revenues was primarily attributable to the one-time revenue benefit
from celebrity publicity in the second quarter of the prior year.
The following tables display Myriad's product revenues by segment
and product:
|
Three months
ended December 31, |
($ in millions) |
2014 |
2013 |
Molecular diagnostic testing revenue: |
|
|
Oncology |
$ 83.7 |
$ 101.6 |
Preventive Care |
84.6 |
94.6 |
Rheumatology |
10.8 |
-- |
Total molecular diagnostic testing
revenue |
$ 179.1 |
$ 196.2 |
|
|
|
|
|
|
|
Three months
ended December 31, |
($ in millions) |
2014 |
2013 |
Hereditary Cancer Testing |
$ 165.0 |
$ 193.0 |
|
|
|
Vectra® DA |
10.8 |
-- |
|
|
|
Other Tests |
3.4 |
3.2 |
|
|
|
Total molecular diagnostic testing
revenue |
179.1 |
196.2 |
|
|
|
Pharmaceutical and clinical service
revenue |
5.2 |
7.9 |
|
|
|
Total Revenue |
$184.4 |
$204.1 |
- myRisk Hereditary Cancer revenue increased 640 percent to $85.1
million in the second quarter of fiscal 2015 from $11.5 million in
the second quarter of the prior year. In the second quarter of
this year, a large percentage of Integrated BRACAnalysis tests were
transitioned to myRisk, resulting in Integrated BRACAnalysis
revenue of $72.5 million in this quarter compared to $165.9 million
in the same quarter of the prior year. The Company also
transitioned approximately one half of its COLARIS and COLARIS AP
tests to myRisk, resulting in COLARIS and COLARIS AP revenue of
$7.4 million compared to $15.6 million in the same period of the
previous year.
- Operating income was $36.3 million in the second quarter and
excluding certain non-cash amortization charges, adjusted operating
income was $43.8 million. Adjusted operating income declined
47 percent year-over-year primarily due to the positive impact of
celebrity publicity on operating income in the second quarter of
the prior year, dilution from the Crescendo acquisition, lower
gross margins associated with the transition to myRisk, and product
launch expenses.
- Excluding certain non-cash amortization charges and one-time
severance expenses, second-quarter adjusted net income was $29.9
million compared to $50.6 million in the same period of the
previous year and adjusted earnings per share was $0.40 compared to
$0.66 in the same period of the prior year. Net income was
$24.0 million and diluted earnings per share were $0.32.
- During the quarter, the Company repurchased 1.7 million shares,
or $58 million, of common stock under its share repurchase program.
As of December 31, 2014, $62 million of share repurchase
authorization remained under the board authorized share repurchase
program. Fiscal second-quarter diluted weighted average
shares outstanding were 75.4 million compared to 76.8 million in
the same period last year.
Business Highlights
- Myriad received FDA approval for its BRACAnalysis CDx test to
identify ovarian cancer patients who may benefit from the PARP
inhibitor Lynparza™ (olaparib). The approval of BRACAnalysis CDx
represents the first and only complex sequencing based laboratory
developed test approved by the FDA.
- The Company was granted European CE Marking approval for its
Tumor BRACAnalysis CDx test. Tumor BRACAnalysis CDx is the only
tumor-based BRCA test with CE Marking, and in clinical studies has
shown that it identifies up to 44 percent more potential responders
to PARP inhibitors such as Lynparza when compared to germline
testing.
- Myriad and TESARO announced an expanded companion diagnostic
agreement during the second quarter to use Myriad's myChoice HRD™
test in clinical studies in support of niraparib, TESARO's novel
PARP inhibitor.
- At the San Antonio Breast Cancer Symposium (SABCS), Myriad
presented data from a study of 17,142 patients demonstrating that
the myRisk Hereditary Cancer test detected 105 percent more
patients with mutations when compared to standard single cancer
syndrome tests.
- The Company also presented data at the SABCS demonstrating that
its myChoice HRD test successfully predicted neoadjuvant response
to platinum-based therapies in triple negative breast cancer
patients. In the study, 52 percent of patients with a high HRD
score responded to platinum compared to only 10 percent of patients
with a low HRD score.
- At the American Society for Dermatopathology annual meeting,
Myriad presented data from its first clinical utility study on
myPath™ Melanoma. The study demonstrated that myPath Melanoma led
to a 49 percent change in physicians' treatment recommendations for
patients.
- At the American College of Rheumatology meeting, Crescendo
Bioscience presented data highlighting Vectra® DA as a better
predictor of radiographic progression (joint damage) when compared
to other tests such as C-reactive protein and DAS28.
- At the Society of Urological Oncology annual meeting, Myriad
presented a health economic study on its Prolaris® test. The study
demonstrated that Prolaris could save the healthcare system $6
billion over 10 years.
Fiscal Year 2015 Financial Guidance
The Company is revising its fiscal year 2015 financial guidance
and now expects total revenues of $730 to $740 million and adjusted
diluted earnings per share of $1.50 to $1.55 (diluted EPS of $1.16
to $1.21). The primary reasons for this guidance change are a
lag in obtaining private reimbursement coverage for Vectra DA, a
delay in Medicare reimbursement for Prolaris, an increase in
work-in-process, and the timing of certain contracts in the
pharmaceutical and clinical services segment. The Company is
projecting total revenues for the fiscal third quarter of 2015 of
$180 to $185 million and adjusted diluted earnings per share of
$0.38 to $0.40 (diluted EPS of $0.28 to $0.30). 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 it is holding today to discuss
its fiscal second quarter 2015 financial results.
Conference Call and Webcast
A conference call will be held today, Tuesday, February 3, 2015,
at 4:30 p.m. Eastern Time to discuss Myriad's financial results for
the fiscal second quarter of 2015, business developments and
financial guidance. The dial-in number for domestic callers is
(800) 408-6335. International callers may dial (303)
223-2680. All callers will be asked to reference reservation
number 21759233. 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 also will be
available through a live Webcast at www.myriad.com.
About Myriad Genetics
Myriad Genetics is a leading molecular diagnostic company
dedicated to making a difference in patients' lives through the
discovery and commercialization of transformative tests to assess a
person's risk of developing disease, guide treatment decisions and
assess risk of disease progression and recurrence. Myriad is
focused on strategic directives to grow existing markets, diversify
through the introduction of new products, including companion
diagnostics, as well as to expand internationally. 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, myPath, myRisk, myRisk Hereditary Cancer, myChoice, myPlan Lung
Cancer, BRACAnalysis CDx, Tumor BRACAnalysis CDx, 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
Lynparza is a trademark of AstraZeneca PLC.
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 our strong financial results
in our second fiscal quarter with revenues increasing nine percent
over our first fiscal quarter; the transition of our testing to our
myRisk cancer panel proceeding exceptional well; reimbursement
delays for some of our newer products; our encouragement on our
progress and our belief that we will exit this year on an excellent
trajectory for long-term future growth; the Company's revised
fiscal year 2015 financial guidance, including the primary reasons
stated for the guidance change, and the fiscal Q3 2015 financial
guidance under the caption "Fiscal Year 2015 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 set forth in
or implied by forward-looking statements. These risks and
uncertainties include, but are not limited to: the risk that sales
and profit margins of our 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 single cancer tests to our
new cancer panel test, including unexpected costs and delays; risks
related to decisions or 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 and any future tests and services 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; risks
related to our projections about our business, results of
operations and financial condition; risks related to the potential
market opportunity for our products and services; 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 or other intellectual property; 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; 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 in our 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 our Quarterly Reports
on Form 10-Q or Current Reports on Form 8-K. All information in
this press release is as of the date of the release, and Myriad
undertakes no duty to update this information unless required by
law.
MYRIAD GENETICS, INC.
AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
INCOME STATEMENTS (Unaudited) |
|
|
|
|
|
(in thousands, except per share amounts) |
Three Months
Ended |
Six Months
Ended |
|
Dec. 31, 2014 |
Dec. 31, 2013 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
|
|
|
|
Molecular diagnostic testing |
$ 179,149 |
$ 196,158 |
$ 343,656 |
$ 389,144 |
Pharmaceutical and clinical
services |
5,244 |
7,902 |
9,574 |
17,383 |
Total revenue |
184,393 |
204,060 |
353,230 |
406,527 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of molecular diagnostic testing |
35,050 |
22,755 |
67,847 |
44,194 |
Cost of pharmaceutical and clinical
services |
2,802 |
3,376 |
4,870 |
7,418 |
Research and development expense |
17,504 |
17,090 |
40,116 |
33,893 |
Selling, general, and administrative
expense |
92,695 |
77,840 |
178,135 |
155,119 |
Total costs and expenses |
148,051 |
121,061 |
290,968 |
240,624 |
|
|
|
|
|
Operating income |
36,342 |
82,999 |
62,262 |
165,903 |
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest income |
85 |
1,330 |
140 |
2,691 |
Other |
1,513 |
(185) |
1,416 |
(623) |
Total other income |
1,598 |
1,145 |
1,556 |
2,068 |
|
|
|
|
|
Income before income taxes |
37,940 |
84,144 |
63,818 |
167,971 |
|
|
|
|
|
Income tax provision |
13,909 |
33,784 |
23,805 |
62,146 |
|
|
|
|
|
Net income |
$ 24,031 |
$ 50,360 |
$ 40,013 |
$ 105,825 |
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ 0.33 |
$ 0.67 |
$ 0.55 |
$ 1.37 |
Diluted |
$ 0.32 |
$ 0.66 |
$ 0.53 |
$ 1.33 |
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
Basic |
72,467 |
75,070 |
72,615 |
77,323 |
Diluted |
75,401 |
76,825 |
75,755 |
79,312 |
|
|
|
|
|
Condensed Consolidated
Balance Sheets (Unaudited) |
|
|
|
|
|
|
Dec. 31, 2014 |
Jun. 30, 2014 |
|
|
(In thousands) |
|
|
|
|
Cash, cash equivalents, and marketable
investment securities |
$ 207,415 |
$ 270,586 |
|
|
Restricted cash |
22,138 |
— |
|
|
Trade receivables, net |
81,222 |
81,297 |
|
|
Other receivables |
5,331 |
3,770 |
|
|
Prepaid expenses |
7,694 |
6,921 |
|
|
Inventory |
20,173 |
23,919 |
|
|
Prepaid taxes |
5,602 |
13,609 |
|
|
Equipment and leasehold improvements,
net |
46,458 |
34,594 |
|
|
Other assets |
5,000 |
5,000 |
|
|
Intangibles, net |
198,827 |
205,312 |
|
|
Goodwill |
169,181 |
169,181 |
|
|
Deferred tax assets |
12,813 |
9,625 |
|
|
Total assets |
$ 781,854 |
$ 823,814 |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
$ 58,013 |
$ 79,488 |
|
|
Deferred revenue |
1,824 |
1,090 |
|
|
Deferred tax liabilities |
2,450 |
— |
|
|
Uncertain tax benefits |
25,326 |
24,238 |
|
|
Stockholders' equity |
694,241 |
718,998 |
|
|
Total liabilities and stockholders'
equity |
$ 781,854 |
$ 823,814 |
|
|
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
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.
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 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 Six
Months ended December 31, 2014 and 2013 |
(Unaudited data in thousands,
except per share amount) |
|
Three Months
Ended |
Six Months
Ended |
|
Dec. 31, 2014 |
Dec. 31, 2013 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
|
|
|
|
GAAP Cost of molecular diagnostic
testing |
$ 35,050 |
$ 22,755 |
$ 67,847 |
$ 44,194 |
GAAP Cost of pharmaceutical and
clinical services |
2,802 |
3,376 |
4,870 |
7,418 |
Acquisition - amortization of intangible
assets |
-- |
-- |
-- |
-- |
Non-GAAP COGS |
$ 37,852 |
$ 26,131 |
$ 72,717 |
$ 51,612 |
|
|
|
|
|
Non-GAAP Gross Margin |
79% |
87% |
79% |
87% |
|
|
|
|
|
GAAP Research and
Development |
$ 17,504 |
$ 17,090 |
$ 40,116 |
$ 33,893 |
Acquisition - amortization of intangible
assets |
(78) |
(78) |
(156) |
(156) |
Non-GAAP R&D |
$ 17,426 |
$ 17,012 |
$ 39,960 |
$ 33,737 |
|
|
|
|
|
GAAP Selling, General and
Administrative |
$ 92,695 |
$ 77,840 |
$ 178,135 |
$ 155,119 |
Severance - executive severance |
(4,312) |
-- |
(4,312) |
-- |
Acquisition - amortization of intangible
assets |
(3,057) |
(167) |
(6,114) |
(334) |
Non-GAAP SG&A |
$ 85,326 |
$ 77,673 |
$ 167,709 |
$ 154,785 |
|
|
|
|
|
GAAP Operating Income |
$ 36,342 |
$ 82,999 |
$ 62,262 |
$ 165,903 |
Severance - executive severance |
4,312 |
-- |
4,312 |
-- |
Acquisition - amortization of intangible
assets |
3,135 |
245 |
6,270 |
490 |
Non-GAAP Operating
Income |
$ 43,789 |
$ 83,244 |
$ 72,844 |
$ 166,393 |
|
|
|
|
|
Non-GAAP Operating
Margin |
24% |
41% |
21% |
41% |
|
|
|
|
|
GAAP Net Income |
$ 24,031 |
$ 50,360 |
$ 40,013 |
$ 105,825 |
Severance - executive severance |
4,312 |
-- |
4,312 |
-- |
Acquisition - amortization of intangible
assets |
3,135 |
245 |
6,270 |
490 |
Tax expense associated with non-GAAP
adjustments |
(1,581) |
-- |
(1,581) |
-- |
Non-GAAP Net Income |
$ 29,897 |
$ 50,605 |
$ 49,014 |
$ 106,315 |
|
|
|
|
|
GAAP Diluted EPS |
$ 0.32 |
$ 0.66 |
$ 0.53 |
$ 1.33 |
Non-GAAP Diluted EPS |
$ 0.40 |
$ 0.66 |
$ 0.65 |
$ 1.34 |
|
|
|
|
|
Diluted shares outstanding |
75,401 |
76,825 |
75,755 |
79,312 |
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
(Unaudited data in
thousands) |
|
Three Months
Ended |
Six Months
Ended |
|
Dec. 31, 2014 |
Dec. 31, 2013 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
|
|
|
|
GAAP cash flow from
operations |
$ 52,597 |
$ 47,549 |
$ 59,578 |
$ 138,031 |
|
|
|
|
|
Capital expenditures |
(5,946) |
(2,833) |
(17,448) |
(8,098) |
|
|
|
|
|
Free cash flow |
$ 46,651 |
$ 44,716 |
$ 42,130 |
$ 129,933 |
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2015
and Third Quarter Fiscal Year 2015 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
2015 |
Diluted net income per
share |
|
GAAP diluted net income per share |
$1.16 - $1.21 |
Acquisition - amortization of intangible
assets |
0.16 |
Severance - executive severance |
0.18 |
Non-GAAP diluted net income per
share |
$1.50 - $1.55 |
|
|
|
|
|
Fiscal Third Quarter
2015 |
Diluted net income per
share |
|
GAAP diluted net income per share |
$0.28 - $0.30 |
Acquisition - amortization of intangible
assets |
0.04 |
Severance - executive severance |
0.06 |
Non-GAAP diluted net income per
share |
$0.38 - $0.40 |
CONTACT: Media Contact:
Ron Rogers
(801) 584-3065
rrogers@myriad.com
Investor Contact:
Scott Gleason
(801) 584-1143
sgleason@myriad.com
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