Myriad Genetics Reports Fiscal Second-Quarter 2017 Financial Results
February 07 2017 - 4:05PM
Myriad Genetics, Inc. (NASDAQ:MYGN), a global leader in molecular
diagnostics and personalized medicine, today announced financial
results for its fiscal second-quarter 2017, provided an update on
recent business highlights, updated its fiscal year 2017 financial
guidance and issued fiscal third-quarter 2017 financial guidance.
"Revenues this quarter reached their highest level in the last
three years, driven by a return to sequential growth in hereditary
cancer revenue and strong results from GeneSight®,” said Mark C.
Capone, president and CEO, Myriad Genetics. “Importantly, our
diversification strategy is working with new products now
contributing more than two thirds of testing volume. We also
made steady progress on increasing reimbursement that will
ultimately unlock significant operating leverage and long-term
shareholder value.”
Financial Highlights
- The following table summarizes the financial results and
product revenue for our fiscal second-quarter 2017:
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Fiscal Second-Quarter |
|
|
($ in
millions) |
|
2017 |
|
|
2016 |
|
% Change |
Molecular diagnostic
testing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary cancer testing revenue |
$ |
143.9 |
|
|
$ |
165.6 |
|
|
(13%) |
|
|
|
|
|
|
|
|
|
GeneSight
testing revenue |
|
21.7 |
|
|
|
NA |
|
|
NM |
|
|
|
|
|
|
|
|
|
Vectra DA
testing revenue |
|
10.7 |
|
|
|
11.3 |
|
|
(5%) |
|
|
|
|
|
|
|
|
|
Prolaris
testing revenue |
|
3.1 |
|
|
|
1.9 |
|
|
63% |
|
|
|
|
|
|
|
|
|
EndoPredict testing revenue |
|
1.6 |
|
|
|
0.9 |
|
|
78% |
|
|
|
|
|
|
|
|
|
Other
testing revenue |
|
2.9 |
|
|
|
2.9 |
|
|
0% |
|
|
|
|
|
|
|
|
|
Total molecular
diagnostic testing revenue |
|
183.9 |
|
|
|
182.6 |
|
|
1% |
|
|
|
|
|
|
|
|
|
Pharmaceutical and
clinical service revenue |
|
12.6 |
|
|
|
10.7 |
|
|
18% |
|
|
|
|
|
|
|
|
|
Total Revenue |
$ |
196.5 |
|
|
$ |
193.3 |
|
|
2% |
|
|
|
|
|
|
|
|
|
Income
Statement |
|
|
|
|
|
|
|
|
|
Fiscal Second-Quarter |
|
|
($ in
millions) |
|
2017 |
|
|
2016 |
|
% Change |
Total Revenue |
$ |
196.5 |
|
|
$ |
193.3 |
|
|
2% |
|
|
|
|
|
|
|
|
|
Gross Profit |
|
152.1 |
|
|
|
152.7 |
|
|
(0%) |
|
Gross
Margin |
|
77.4% |
|
|
|
79.0% |
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
138.9 |
|
|
|
107.5 |
|
|
29% |
|
|
|
|
|
|
|
|
|
Operating Income |
|
13.2 |
|
|
|
45.2 |
|
|
(71%) |
|
Operating
Margin |
|
6.7% |
|
|
|
23.4% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income |
|
23.6 |
|
|
|
48.4 |
|
|
(51%) |
|
Adjusted
Operating Margin |
|
12.0% |
|
|
|
25.0% |
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
5.9 |
|
|
|
37.1 |
|
|
(84%) |
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
0.09 |
|
|
|
0.50 |
|
|
(82%) |
|
|
|
|
|
|
|
|
|
Adjusted EPS |
$ |
0.26 |
|
|
$ |
0.45 |
|
|
(42%) |
|
Business Highlights
- myRisk® Hereditary Cancer- Delivered
sequential hereditary cancer growth of three percent in the fiscal
second-quarter with hereditary cancer revenue of $144 million.-
Oncology volumes grew on a sequential basis fueled by preferred
provider agreements, the customizable myRisk panel launch and
improved sales force productivity. - Signed a contract with
Highmark Blue Shield to remain an in-network provider for
hereditary cancer testing; ended the quarter with 65 percent of
revenue under long-term contracts and greater than 95 percent of
insurance plans in network.
- GeneSight®- Volume grew 61 percent
year-over-year to approximately 57,000 tests performed in the
fiscal second-quarter.- Anticipate completing enrollment this month
and ahead of schedule in a 1,200 patient clinical utility study
evaluating GeneSight in patients with treatment resistant
depression. - Presented a health economic analysis at the
Neuroscience Education Institute Conference comparing the total
costs for patients with anxiety whose medications were congruent
versus incongruent with their GeneSight test report. The results
showed that medication cost savings were $6,747 higher per member
per year for patients that followed the GeneSight test
recommendations.- Completed a payer demonstration project using the
Optum healthcare informatics platform from United Health that
demonstrated substantial cost savings associated with the use of
GeneSight. Initiated similar demonstration projects with Humana and
Anthem Blue Cross Blue Shield.
- Vectra® DA- Volumes declined three percent in
the second-quarter year-over-year with approximately 37,000 tests
performed.- Demonstrated that the AMPLE study when analyzed in a
conventional way corroborates prior studies showing Vectra DA can
predict radiographic progression with high statistical
significance. This analysis along with data from 25 published
clinical studies will be presented to refute a draft local
non-coverage determination (LCD) issued by Medicare. - Published an
important clinical utility study for Vectra DA in Arthritis and
Rheumatology. The study evaluated the ability of Vectra DA to
predict response to biologic or non-biologic therapy in
methotrexate incomplete responders. In the study, patients with a
low Vectra DA score were statistically significantly more likely to
respond to triple therapy relative to a biologic, and patients with
high Vectra DA scores were statistically significantly more likely
to respond to a biologic than triple therapy.- Vectra DA was
included in the United Rheumatology professional guidelines that
represent approximately 10 percent of rheumatologists in the United
States.- Initiated our first payer demonstration project with an
independent practice association in Southern California. This
project will evaluate the impact of Vectra DA on patient outcomes
and healthcare costs in a real world setting and will be used to
support potential coverage of the test.
- Prolaris®- Volumes grew 33 percent
year-over-year with approximately 4,700 tests ordered.- Received a
draft LCD from Palmetto GBA for favorable intermediate patients
that would represent a market expansion of approximately 30,000
patients per year in the United States. Prolaris is the only
test to receive proposed Medicare coverage in this patient
population.
- EndoPredict®- Revenues grew 78 percent
year-over-year to $1.6 million in the fiscal second-quarter.-
Received a favorable technical assessment for EndoPredict from the
Blue Cross Blue Shield association tech assessment organization
Evidence Street. In total, we have received positive coverage
decisions from payers that represent 70 million lives.- The
Integrated Oncology Network (ION) recently made EndoPredict its
preferred test for their physicians. ION is the largest physician
service organization in oncology representing 50 percent of
community oncologists in the United States.- Confirmed that
EndoPredict will be launched in the United States in fiscal year
2017.
- myPath® Melanoma- The third clinical
validation study and second clinical utility study were accepted
for publication. Myriad intends to submit its reimbursement dossier
to Medicare and private payers by the end of fiscal year 2017.
- Companion Diagnostics- Completed the
submission of the myChoice HRD pre-market approval (PMA)
application to the FDA for review in conjunction with niraparib. -
Data from the AstraZeneca SOLO2 study, which compared maintenance
therapy with olaparib versus placebo in patients with
platinum-sensitive relapsed ovarian cancer met its primary
endpoint. These results further validate that BRCA status as
determined by BRACAnalysis CDx® test can identify patients who are
likely to benefit from therapy with olaparib.
- International- International revenue grew to
five percent of total product revenue.- Signed an agreement with
AstraZeneca in Japan to submit BRACAnalysis CDx for approval by
Japan's Pharmaceuticals and Medical Devices Agency (PMDA) in
parallel with the PMDA review of AstraZeneca's novel PARP
inhibitor, olaparib.- Signed an agreement with AstraZeneca to
perform Tumor BRACAnalysis testing in six Latin American
countries.
- Share Repurchase- During the quarter, the
Company repurchased approximately 600,000 shares, or $10 million,
of common stock under our share repurchase program and ended the
quarter with approximately $161 million remaining on our current
share repurchase authorization.
Fiscal Year 2017 and Fiscal Third-Quarter 2017 Financial
GuidanceBelow is a table summarizing Myriad’s updated
fiscal year 2017 and fiscal third-quarter 2017 financial
guidance:
|
|
|
|
|
|
|
Revenue |
|
GAAP Diluted Earnings Per Share |
|
Adjusted Earnings Per Share |
Fiscal Year 2017 |
$745-$755 million |
|
$0.31-$0.36 |
|
$1.00-$1.05 |
|
|
|
|
|
|
Fiscal
Third-Quarter 2017 |
$188-$190 million |
|
$0.08-$0.10 |
|
$0.23-$0.25 |
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 second-quarter financial results and fiscal year 2017
and fiscal third-quarter 2017 financial guidance.
Conference Call and WebcastA conference call
will be held today, Tuesday, February 7, 2017, at 4:30 p.m. EST to
discuss Myriad’s financial results for the fiscal second-quarter,
business developments and financial guidance. The dial-in
number for domestic callers is (800) 630-4153. International
callers may dial (303) 223-12698. All callers will be asked
to reference reservation number 21842407. 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 GeneSight, 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 |
|
Six Months Ended |
|
|
Dec 31, 2016 |
|
Dec 31, 2015 |
|
Dec 31, 2016 |
|
Dec 31, 2015 |
|
|
|
|
|
|
|
|
|
Molecular diagnostic
testing |
$ |
183.9 |
|
$ |
182.6 |
|
$ |
348.9 |
|
$ |
354.5 |
|
Pharmaceutical and
clinical services |
|
12.6 |
|
|
10.7 |
|
|
25.0 |
|
|
22.3 |
|
Total
revenue |
|
196.5 |
|
|
193.3 |
|
|
373.9 |
|
|
376.8 |
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of
molecular diagnostic testing |
|
37.4 |
|
|
34.1 |
|
|
71.6 |
|
|
65.0 |
|
Cost of
pharmaceutical and clinical services |
|
7.0 |
|
|
6.5 |
|
|
12.7 |
|
|
12.1 |
|
Research
and development expense |
|
18.6 |
|
|
16.7 |
|
|
38.0 |
|
|
33.9 |
|
Selling,
general, and administrative expense |
|
120.3 |
|
|
90.8 |
|
|
232.2 |
|
|
177.3 |
|
Total
costs and expenses |
|
183.3 |
|
|
148.1 |
|
|
354.5 |
|
|
288.3 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
13.2 |
|
|
45.2 |
|
|
19.4 |
|
|
88.5 |
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
0.3 |
|
|
0.1 |
|
|
0.6 |
|
|
0.2 |
|
Interest
expense |
|
(2.6 |
) |
|
(0.1 |
) |
|
(3.3 |
) |
|
(0.1 |
) |
Other |
|
1.2 |
|
|
(0.2 |
) |
|
(0.6 |
) |
|
— |
|
Total
other income (expense) |
|
(1.1 |
) |
|
(0.2 |
) |
|
(3.3 |
) |
|
0.1 |
|
|
|
|
|
|
|
|
|
|
Income
before income taxes |
|
12.1 |
|
|
45.0 |
|
|
16.1 |
|
|
88.6 |
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
6.2 |
|
|
7.9 |
|
|
11.4 |
|
|
21.1 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
5.9 |
|
$ |
37.1 |
|
|
4.7 |
|
$ |
67.5 |
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to non-controlling interest |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net income (loss)
attributable to Myriad Genetics, Inc. stockholders |
$ |
5.9 |
|
$ |
37.1 |
|
|
4.7 |
|
$ |
67.5 |
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.09 |
|
$ |
0.53 |
|
$ |
0.07 |
|
$ |
0.97 |
|
Diluted |
$ |
0.09 |
|
$ |
0.50 |
|
$ |
0.07 |
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
68.2 |
|
|
70.5 |
|
|
68.5 |
|
|
69.6 |
|
Diluted |
|
68.3 |
|
|
73.8 |
|
|
68.9 |
|
|
73.1 |
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
(Unaudited) |
|
|
|
|
|
|
|
(in
millions) |
|
Dec 31, 2016 |
|
Jun. 30, 2016 |
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
108.1 |
|
$ |
68.5 |
|
|
Marketable investment securities |
|
54.4 |
|
|
90.5 |
|
|
Prepaid expenses |
|
12.1 |
|
|
18.4 |
|
|
Inventory |
|
51.3 |
|
|
38.3 |
|
|
Trade accounts receivable, less allowance for doubtful |
|
|
|
|
|
accounts of $7.8 in 2017 and $6.8 in 2016 |
|
107.6 |
|
|
91.7 |
|
|
Prepaid taxes |
|
4.2 |
|
|
3.8 |
|
|
Other receivables |
|
3.9 |
|
|
3.3 |
|
|
Total current assets |
|
341.6 |
|
|
314.5 |
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net |
|
54.7 |
|
|
58.3 |
|
|
Long-term
marketable investment securities |
|
55.5 |
|
|
79.9 |
|
|
Intangibles, net |
|
506.4 |
|
|
227.5 |
|
|
Goodwill |
|
315.4 |
|
|
195.3 |
|
|
Other
assets |
|
2.5 |
|
|
5.0 |
|
|
Total assets |
$ |
1,276.1 |
|
$ |
880.5 |
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
22.9 |
|
$ |
21.1 |
|
|
Accrued liabilities |
|
57.4 |
|
|
49.5 |
|
|
Deferred revenue |
|
2.2 |
|
|
1.7 |
|
|
Total current liabilities |
|
82.5 |
|
|
72.3 |
|
|
|
|
|
|
|
|
|
Unrecognized tax benefits |
|
24.6 |
|
|
24.0 |
|
|
Other
long-term liabilities |
|
8.8 |
|
|
7.8 |
|
|
Contingent
consideration |
|
137.1 |
|
|
10.4 |
|
|
Long-term
debt |
|
204.0 |
|
|
— |
|
|
Long-term
deferred taxes |
|
86.1 |
|
|
17.9 |
|
|
Total liabilities |
|
543.1 |
|
|
132.4 |
|
|
Stockholders' equity: |
|
|
|
|
|
Common stock, 68.1 and 69.1 shares outstanding at |
|
|
|
|
|
December 31, 2016 and June 30, 2016 respectively |
|
0.7 |
|
|
0.7 |
|
|
Additional paid-in capital |
|
831.8 |
|
|
830.1 |
|
|
Accumulated other comprehensive loss |
|
(13.9 |
) |
|
(9.5 |
) |
|
Accumulated deficit |
|
(85.7 |
) |
|
(73.2 |
) |
|
Total Myriad Genetics, Inc. stockholders' equity |
|
732.9 |
|
|
748.1 |
|
|
Non-Controlling interest |
|
(0.2 |
) |
|
— |
|
|
Total stockholders' equity |
|
732.7 |
|
|
748.1 |
|
|
Total liabilities and stockholders' equity |
$ |
1,275.8 |
|
$ |
880.5 |
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
|
|
|
|
|
(in millions) |
|
Dec 31, 2016 |
|
Dec 31, 2015 |
Cash flows from
operating activities: |
|
|
|
|
Net income |
$ |
4.7 |
|
$ |
67.5 |
|
Adjustments to reconcile net income to net cash provided by |
|
|
|
|
operating
activities: |
|
|
|
|
Depreciation and amortization |
|
22.1 |
|
|
13.5 |
|
Non-cash
interest expense |
|
0.3 |
|
|
- |
|
Gain on
disposition of assets |
|
(0.2 |
) |
|
(0.4 |
) |
Share-based compensation expense |
|
15.2 |
|
|
16.3 |
|
Impairment of cost basis investment |
|
2.5 |
|
|
- |
|
Bad debt
expense |
|
18.1 |
|
|
14.5 |
|
Loss on
extinguishment of debt |
|
1.3 |
|
|
- |
|
Deferred
income taxes |
|
2.9 |
|
|
29.8 |
|
Unrecognized tax benefits |
|
0.6 |
|
|
1.5 |
|
Change in
fair value of contingent consideration |
|
(3.2 |
) |
|
- |
|
Changes
in assets and liabilities: |
|
|
|
|
|
Prepaid
expenses |
|
8.3 |
|
|
2.8 |
|
Trade
accounts receivable |
|
(24.4 |
) |
|
(11.1 |
) |
Other
receivables |
|
(2.4 |
) |
|
(5.3 |
) |
Inventory |
|
(10.4 |
) |
|
(4.1 |
) |
Prepaid
taxes |
|
(0.4 |
) |
|
(38.5 |
) |
Accounts
payable |
|
(2.0 |
) |
|
(4.1 |
) |
Accrued
liabilities |
|
(5.0 |
) |
|
(0.5 |
) |
Deferred
revenue |
|
0.5 |
|
|
- |
|
Net cash provided by
(used in) operating activities |
|
28.5 |
|
|
81.9 |
|
Cash flows from
investing activities: |
|
|
|
|
Capital
expenditures for equipment and leasehold improvements |
|
(3.9 |
) |
|
(2.1 |
) |
Acquisitions, net of cash acquired |
|
(216.1 |
) |
|
- |
|
Purchases
of marketable investment securities |
|
(49.0 |
) |
|
(100.7 |
) |
Proceeds
from maturities and sales marketable investment securities |
|
108.9 |
|
|
71.3 |
|
Net cash provided by
(used in) investing activities |
|
(160.1 |
) |
|
(31.5 |
) |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
Net
proceeds (payments) from common stock issued under |
|
|
|
|
share-based compensation plans |
|
1.0 |
|
|
84.9 |
|
Net
proceeds from revolving credit facility |
|
204.0 |
|
|
- |
|
Net
proceeds from term loan |
|
199.0 |
|
|
- |
|
Repayment
of term loan |
|
(200.0 |
) |
|
- |
|
Fees paid
for extinguishment of debt |
|
(0.6 |
) |
|
- |
|
Repurchase and retirement of common stock |
|
(31.6 |
) |
|
(62.9 |
) |
Net cash provided by
(used in) financing activities |
|
171.8 |
|
|
22.0 |
|
|
|
|
|
|
Effect of Foreign
exchange rates on cash and cash equivalents |
|
(0.7 |
) |
|
(1.8 |
) |
|
|
|
|
|
Net increase in cash
and cash equivalents |
|
39.5 |
|
|
70.6 |
|
Cash and cash
equivalents at beginning of year |
|
68.5 |
|
|
64.1 |
|
Cash and cash
equivalents at end of period |
$ |
108.0 |
|
$ |
134.7 |
|
|
|
|
|
|
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 hereditary cancer business
returning to more normal volume trends; transforming the Company
into a larger and more diversified personalized medicine company
and delivering upon the Company's five-year strategic goals; the
percent of revenue under long-term contract and the percent of
insurance plans in network; the Company's submission of its first
module to the FDA for myChoice HRD; the Company's expectation that
enrollment will be completed ahead of schedule in a 1,200 patient
clinical utility study evaluating GeneSight in patients with
treatment resistant depression in February 2017; the Company’s
expectation that EndoPredict will be launched in the U.S. in fiscal
year 2017; the Company’s expectation that it will submit its
reimbursement dossier for myPath Melanoma to Medicare and private
payers by the end of fiscal year 2017; the Company's third-quarter
revenue guidance of $188 to $190 million, adjusted earnings per
share of $0.23 to $0.25, and diluted earnings per share guidance of
$0.08 to $0.10, and the Company's updated fiscal full year revenue
guidance of total revenue of $745 to $755 million, adjusted
earnings per share guidance of $1.00 to $1.05, and diluted earnings
per share guidance of $0.31 to $0.36, as further discussed under
the caption "Fiscal Year 2017 and Fiscal Third-Quarter 2017
Financial Guidance"; and the Company's strategic directives under
the caption "About Myriad Genetics." These "forward-looking
statements" are based on management's current expectations of
future events and are subject to a number of risks and
uncertainties that could cause actual results to differ materially
and adversely from those described or implied in the
forward-looking statements. These risks include, but are not
limited to: the risk that sales and profit margins of our existing
molecular diagnostic tests and pharmaceutical and clinical services
may decline or will not continue to increase at historical rates;
risks related to our ability to transition from our existing
product portfolio to our new tests; risks related to changes in the
governmental or private insurers' reimbursement levels for our
tests or our ability to obtain reimbursement for our new tests at
comparable levels to our existing tests; risks related to increased
competition and the development of new competing tests and
services; the risk that we may be unable to develop or achieve
commercial success for additional molecular diagnostic tests and
pharmaceutical and clinical services in a timely manner, or at all;
the risk that we may not successfully develop new markets for our
molecular diagnostic tests and pharmaceutical and clinical
services, including our ability to successfully generate revenue
outside the United States; the risk that licenses to the technology
underlying our molecular diagnostic tests and pharmaceutical and
clinical services tests and any future tests are terminated or
cannot be maintained on satisfactory terms; risks related to delays
or other problems with operating our laboratory testing facilities;
risks related to public concern over our genetic testing in general
or our tests in particular; risks related to regulatory
requirements or enforcement in the United States and foreign
countries and changes in the structure of the healthcare system or
healthcare payment systems; risks related to our ability to obtain
new corporate collaborations or licenses and acquire new
technologies or businesses on satisfactory terms, if at all; risks
related to our ability to successfully integrate and derive
benefits from any technologies or businesses that we license or
acquire, including but not limited to our acquisition of Assurex,
Sividon and the Clinic; risks related to our projections about the
potential market opportunity for our products; the risk that we or
our licensors may be unable to protect or that third parties will
infringe the proprietary technologies underlying our tests; the
risk of patent-infringement claims or challenges to the validity of
our patents; risks related to changes in intellectual property laws
covering our molecular diagnostic tests and pharmaceutical and
clinical services and patents or enforcement in the United States
and foreign countries, such as the Supreme Court decision in the
lawsuit brought against us by the Association for Molecular
Pathology et al; risks of new, changing and competitive
technologies and regulations in the United States and
internationally; the risk that we may be unable to comply with
financial operating covenants under our credit or lending
agreements; the risk that we will be unable to pay, when due,
amounts due under our credit or lending agreements; and other
factors discussed under the heading "Risk Factors" contained in
Item 1A of our Annual report on Form 10-K for the fiscal year ended
June 30, 2016, which has been filed with the Securities and
Exchange Commission, as well as any updates to those risk factors
filed from time to time in our Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K.
Statement regarding use of non-GAAP financial
measuresIn this press release, the Company’s financial
results and financial guidance are provided in accordance with
accounting principles generally accepted in the United States
(GAAP) and using certain non-GAAP financial measures. Management
believes that presentation of operating results using non-GAAP
financial measures provides useful supplemental information to
investors and facilitates the analysis of the Company’s core
operating results and comparison of operating results across
reporting periods. Management also uses non-GAAP financial measures
to establish budgets and to manage the Company’s business. A
reconciliation of the GAAP financial results to non-GAAP financial
results is included in the attached schedules.
Following is a description of the adjustments made to GAAP
financial measures:
- Acquisition – amortization of intangible assets:
Represents recurring amortization charges resulting from the
acquisition of intangible assets, including developed technology
and database rights.
- Acquisition – transaction related costs: Costs related to
closing and integration of acquired companies
- Tax impact related to equity compensation – Changes in
effective tax rate based upon ASU 2016-09
- Earn-out true up – Non-cash expenses related to valuation
adjustments of earn out 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 tax penalties – One-time tax penalty
associated with payroll audit
- Impairment of Raindance Investment – One-time impairment charge
associated with Myriad’s investment in Raindance Technologies
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 Six Months ended December 31, 2016 and
2015 |
|
|
|
|
|
|
(Unaudited
data in millions, except per share amount) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
Dec 31, 2016 |
|
Dec 31, 2015 |
|
Dec 31, 2016 |
|
Dec 31, 2015 |
|
|
|
|
|
|
|
|
Revenue |
|
196.5 |
|
|
|
193.3 |
|
|
|
373.9 |
|
|
|
376.8 |
|
|
|
|
|
|
|
|
|
GAAP Cost of
molecular diagnostic testing |
$ |
37.4 |
|
|
$ |
34.1 |
|
|
$ |
71.6 |
|
|
$ |
65.0 |
|
GAAP Cost of
pharmaceutical and clinical
services |
|
7.0 |
|
|
|
6.5 |
|
|
|
12.7 |
|
|
|
12.1 |
|
Acquisition - Integration related costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acquisition - amortization of intangible assets |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Non-GAAP
COGS |
$ |
44.4 |
|
|
$ |
40.6 |
|
|
$ |
84.3 |
|
|
$ |
77.1 |
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin |
|
77% |
|
|
|
79% |
|
|
|
77% |
|
|
|
80% |
|
|
|
|
|
|
|
|
|
GAAP Research
and Development |
$ |
18.6 |
|
|
$ |
16.7 |
|
|
$ |
38.0 |
|
|
$ |
33.9 |
|
Acquisition - Integration related costs |
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
Acquisition - amortization of intangible assets |
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Non-GAAP
R&D |
$ |
18.5 |
|
|
$ |
16.6 |
|
|
$ |
37.7 |
|
|
$ |
33.7 |
|
|
|
|
|
|
|
|
|
GAAP Selling,
General and Administrative |
$ |
120.3 |
|
|
$ |
90.8 |
|
|
$ |
232.2 |
|
|
$ |
177.3 |
|
Acquisition - Integration related costs |
|
(1.1 |
) |
|
|
- |
|
|
|
(11.0 |
) |
|
|
- |
|
Acquisition - amortization of intangible assets |
|
(9.2 |
) |
|
|
(3.1 |
) |
|
|
(14.5 |
) |
|
|
(6.2 |
) |
Non-GAAP
SG&A |
$ |
110.0 |
|
|
$ |
87.7 |
|
|
$ |
206.7 |
|
|
$ |
171.1 |
|
|
|
|
|
|
|
|
|
GAAP Operating
Income |
$ |
13.2 |
|
|
$ |
45.2 |
|
|
$ |
19.4 |
|
|
$ |
88.5 |
|
Acquisition - Integration related costs |
|
1.1 |
|
|
|
- |
|
|
|
11.1 |
|
|
|
- |
|
Acquisition - amortization of intangible assets |
|
9.3 |
|
|
|
3.2 |
|
|
|
14.7 |
|
|
|
6.4 |
|
Non-GAAP
Operating Income |
$ |
23.6 |
|
|
$ |
48.4 |
|
|
$ |
45.2 |
|
|
$ |
94.9 |
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Margin |
|
12% |
|
|
|
25% |
|
|
|
12% |
|
|
|
25% |
|
|
|
|
|
|
|
|
|
GAAP Net
Income |
$ |
5.9 |
|
|
$ |
37.1 |
|
|
$ |
4.7 |
|
|
$ |
67.5 |
|
Acquisition - Integration related costs |
|
1.1 |
|
|
|
- |
|
|
|
11.2 |
|
|
|
- |
|
Acquisition - amortization of intangible assets |
|
9.3 |
|
|
|
3.2 |
|
|
|
14.6 |
|
|
|
6.4 |
|
Tax
impact related to equity compensation |
|
0.6 |
|
|
|
(6.8 |
) |
|
|
3.0 |
|
|
|
(10.5 |
) |
Earn out
true-up |
|
(5.1 |
) |
|
|
- |
|
|
|
(4.6 |
) |
|
|
- |
|
One-time
debt restructuring charges |
|
1.3 |
|
|
|
- |
|
|
|
1.3 |
|
|
|
- |
|
One-time
non-deductible costs |
|
1.4 |
|
|
|
- |
|
|
|
4.2 |
|
|
|
- |
|
Impairment of Raindance Investment |
|
3.4 |
|
|
|
- |
|
|
|
3.4 |
|
|
|
- |
|
Tax
effect associated with non-GAAP adjustments |
|
(0.4 |
) |
|
|
- |
|
|
|
(4.3 |
) |
|
|
- |
|
Non-GAAP Net
Income |
$ |
17.5 |
|
|
$ |
33.5 |
|
|
$ |
33.5 |
|
|
$ |
63.4 |
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS |
$ |
0.09 |
|
|
$ |
0.50 |
|
|
$ |
0.07 |
|
|
$ |
0.92 |
|
Non-GAAP
Diluted EPS |
$ |
0.26 |
|
|
$ |
0.45 |
|
|
$ |
0.49 |
|
|
$ |
0.87 |
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
68.3 |
|
|
|
73.8 |
|
|
|
68.9 |
|
|
|
73.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
(Unaudited data in
millions) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
Dec 31, 2016 |
|
Dec 31, 2015 |
|
Dec 31, 2016 |
|
Dec 31, 2015 |
|
|
|
|
|
|
|
|
GAAP cash flow
from operations |
$ |
31.4 |
|
|
$ |
40.9 |
|
|
$ |
28.5 |
|
|
$ |
81.9 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
(2.4 |
) |
|
|
(1.1 |
) |
|
|
(3.9 |
) |
|
|
(2.1 |
) |
|
|
|
|
|
|
|
|
Free cash
flow |
$ |
29.0 |
|
|
$ |
39.8 |
|
|
$ |
24.6 |
|
|
$ |
79.8 |
|
|
|
|
|
|
|
|
|
Acquisition -
Integration related costs |
|
1.1 |
|
|
|
- |
|
|
|
9.0 |
|
|
|
- |
|
Cash paid at closing to
Assurex vendors |
|
- |
|
|
|
- |
|
|
|
6.8 |
|
|
|
- |
|
Tax effect associated
with non-GAAP adjustments |
|
(0.4 |
) |
|
|
- |
|
|
|
(6.1 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
Non-GAAP Free
cash flow |
$ |
29.7 |
|
|
$ |
39.8 |
|
|
$ |
34.3 |
|
|
$ |
79.8 |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2017
and Fiscal Third-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 |
$0.31 -
$0.36 |
Acquisition
- amortization of intangible assets |
0.48 |
Acquisition
costs & one-time expenses |
0.21 |
Non-GAAP diluted net income per share |
$1.00 - $1.05 |
|
|
|
|
|
|
|
|
Fiscal Third-Quarter 2017 |
Diluted net income per share |
|
GAAP
diluted net income per share |
$0.08 -
$0.10 |
Acquisition
- amortization of intangible assets |
0.13 |
Acquisition
costs & one-time expenses |
0.02 |
Non-GAAP diluted net income per share |
$0.23 - $0.25 |
|
|
Media Contact:
Ron Rogers
(801) 584-3065
rrogers@myriad.com
Investor Contact:
Scott Gleason
(801) 584-1143
sgleason@myriad.com
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