Myriad Genetics Reports Fiscal Third-Quarter 2015 Financial Results
May 05 2015 - 4:05PM
- Total Revenue of $180.0 Million
- Adjusted Diluted EPS of $0.40 and Diluted EPS of
$0.29
- myRisk™ Hereditary Cancer Panel Ended Third Quarter at
58 Percent Conversion
- Myriad Acquires MVZ Clinic to Facilitate Reimbursement
in Germany
- Company Provides Fiscal Fourth-Quarter 2015 Financial
Guidance
Myriad Genetics, Inc. (Nasdaq:MYGN) today announced financial
results for its fiscal third-quarter and nine months ended March
31, 2015, provided an update on recent business highlights and
provided fiscal fourth-quarter and revised fiscal year 2015
financial guidance.
"I am pleased with our financial results for the third quarter
particularly in light of the severe weather conditions across the
northeast during January and February," said Peter D. Meldrum,
president and chief executive officer of Myriad. "More importantly,
we believe we are positioned to see sequential growth in both
revenues and earnings in the fourth quarter and are making
excellent progress toward diversifying our portfolio and growing
revenues."
Fiscal Third-Quarter 2015 Financial
Highlights
- Total revenue for the fiscal third quarter was $180.0 million
compared to $182.9 million in the same period of the prior year, a
decrease of 1.6 percent. Fiscal third-quarter 2015 revenue was
detrimentally impacted by approximately $4 million due to severe
weather conditions in the northeast throughout the months of
January and February. The following tables display Myriad's product
revenue by market segment and product:
|
|
|
|
|
Fiscal Third
Quarter |
|
($ in millions) |
2015 |
2014 |
Percentage
Change |
Molecular diagnostic testing revenue: |
|
|
|
Hereditary cancer testing
revenue |
$ 159.0 |
$ 169.6 |
(6.2%) |
|
|
|
|
Vectra® DA revenue |
10.5 |
3.1 |
238.7% |
|
|
|
|
Other testing revenue |
3.5 |
3.5 |
0.0% |
|
|
|
|
Total molecular diagnostic testing
revenue |
173.0 |
176.2 |
(1.8%) |
|
|
|
|
Pharmaceutical and clinical service
revenue |
7.0 |
6.7 |
4.5% |
|
|
|
|
Total Revenue |
$ 180.0 |
$ 182.9 |
(1.6%) |
|
|
|
|
|
|
|
|
|
Fiscal Third
Quarter |
|
($ in millions) |
2015 |
2014 |
Percentage
Change |
Molecular diagnostic segment revenue: |
|
|
|
Oncology |
$ 86.1 |
$ 92.4 |
(6.8%) |
Preventive Care |
76.4 |
80.7 |
(5.3%) |
Rheumatology |
10.5 |
3.1 |
238.7% |
Total molecular diagnostic testing
revenue |
$ 173.0 |
$ 176.2 |
(1.8%) |
|
|
|
|
- myRisk Hereditary Cancer revenue increased to $81.6 million in
the third quarter of fiscal 2015 from $14.5 million in the third
quarter of the prior year, and the Company exited the quarter with
58 percent of incoming hereditary cancer samples ordered as myRisk
testing.
- Adjusted operating income was $46.2 million in the third
quarter which excludes certain non-cash amortization charges,
one-time executive transition costs and one-time expenses tied to
discontinued operations. Adjusted operating income declined 33
percent year-over-year primarily due to dilution associated with
the Crescendo acquisition, lower gross margins associated with the
transition costs of myRisk testing and product launch expenses for
Prolaris®, myPath® Melanoma and myPlan® Lung Cancer tests. GAAP
operating income was $35.7 million, compared to $55.3 million in
the same period of the previous year.
- Third-quarter adjusted net income was $29.3 million compared to
$46.2 million in the same period of the previous year and adjusted
diluted earnings per share were $0.40 compared to $0.60 in the same
period of the prior year. GAAP net income was $21.5 million
compared to $36.8 million in the same period of the previous year,
and GAAP diluted earnings per share were $0.29, compared to $0.48
in the same period of the prior year.
- During the quarter, the Company repurchased approximately 1.8
million shares, or $62 million, of common stock under its share
repurchase program. In February 2015 the Company's board authorized
the company to repurchase an additional $200 million of its common
stock, almost all of which was remaining as of the end of the third
quarter. Fiscal third-quarter diluted weighted average shares
outstanding were 73.9 million compared to 76.4 million in the same
period last year.
Business Highlights
- Myriad acquired a licensed German MVZ (Medizinisches
Versorgungszentrum) clinic near Munich, Germany during the fiscal
third quarter which the Company believes will facilitate
penetration into the German molecular diagnostic market. The MVZ
will allow Myriad to directly negotiate reimbursement with
government and private insurance providers in the German market and
collaborate with hospitals and physician groups. Myriad believes
the acquisition will be slightly accretive to earnings per share
for the foreseeable future.
- Myriad received a final local coverage determination (LCD) from
Palmetto and a draft local coverage determination from Noridian
covering its Prolaris test for low and very low risk patients with
prostate cancer. The formal comment period on the draft LCD expired
on April 30, 2015, and Myriad is awaiting a final Medicare
reimbursement decision on Prolaris.
- During the third quarter, Myriad signed an expanded agreement
with BioMarin Pharmaceutical. Under the expanded collaboration,
BioMarin has agreed to use Myriad's myChoice™ HRD companion
diagnostic test to prospectively identify patients with metastatic
breast, ovarian and potentially other tumor types that may be
sensitive to BioMarin's PARP inhibitor, talazoparib.
- The Company announced the expansion of its companion diagnostic
collaboration with AstraZeneca. Under the terms of the expanded
agreement, Myriad's BRACAnalysis CDx™ test will be used to
prospectively identify patients with metastatic pancreatic cancer
that may respond to treatment with AstraZeneca's PARP inhibitor,
Lynparza™ (olaparib).
- Data from Myriad's first pivotal clinical validation on myPath
Melanoma testing was published in the Journal of Cutaneous
Pathology, which demonstrated that the myPath™ Melanoma test is
highly effective at differentiating benign skin moles from
malignant melanoma with greater than 90 percent accuracy.
- Myriad presented its third clinical utility study on myPath
Melanoma testing at the American Academy of Dermatology annual
meeting. The study followed patients for 6 to12 months after their
diagnosis and in 214 patients who received a benign myPath Melanoma
score there was no evidence of recurrent disease.
Fiscal Fourth Quarter and Fiscal Year 2015 Financial
Guidance
The Company is projecting total revenues for the fiscal fourth
quarter ending June 30, 2015 of $187 to $189 million and adjusted
diluted earnings per share of $0.40 to $0.42 (GAAP diluted EPS of
$0.28 to $0.30). Based on this financial guidance and third quarter
financial results, the Company is revising its fiscal year 2015
financial guidance and now expects total revenues of $720 to $722
million and adjusted diluted earnings per share of $1.44 to $1.46
(GAAP diluted EPS of $1.09 to $1.11). The primary reasons for this
guidance revision are related to the impact of severe weather on
our fiscal third-quarter revenue, a delay in Medicare reimbursement
for Prolaris until the first quarter of fiscal year 2016, and a
delay in international reimbursement. 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 third
quarter 2015 financial results.
Conference Call and Webcast
A conference call will be held today, Tuesday, May 5, 2015, at
4:30 p.m. Eastern Time to discuss Myriad's financial results for
the fiscal third quarter of 2015, business developments and
financial guidance. The dial-in number for domestic callers is
(800) 732-8470. International callers may dial (212) 231-2910. All
callers will be asked to reference reservation number 21766620. 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,
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
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 the Company's belief that it
is positioned to see sequential growth in both revenues and
earnings in the fourth quarter and the Company making excellent
progress toward diversifying the Company's portfolio and growing
revenues; the Company's belief that the acquisition of the MVZ will
facilitate penetration into the German molecular diagnostic market
and allow the Company to directly negotiate reimbursement with
government and private insurance providers in the German market and
collaborate with hospitals and physician groups; the Company's
belief that the clinic acquisition will be slightly accretive to
earnings per share for the foreseeable future; the timing and
extent of a final Medicare reimbursement decision on Prolaris
testing; the success and outcome of the Company's expanded
collaborations with BioMarin and Astrazeneca; the continued
transition of the Company's testing to its myRisk cancer panel; the
Company's fiscal fourth quarter 2015 guidance and revised fiscal
year 2015 financial guidance, including the primary reasons stated
for the guidance and guidance revision, under the caption "Fiscal
Fourth Quarter and 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 to new testing services,
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 |
Nine Months
Ended |
|
Mar. 31, 2015 |
Mar. 31, 2014 |
Mar. 31, 2015 |
Mar. 31, 2014 |
|
|
|
|
|
Molecular diagnostic testing |
$ 172,978 |
$ 176,191 |
$ 516,634 |
$ 565,335 |
Pharmaceutical and clinical services |
7,007 |
6,733 |
16,582 |
24,115 |
Total revenue |
179,985 |
182,924 |
533,216 |
589,450 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Cost of molecular diagnostic
testing |
33,011 |
23,648 |
100,859 |
67,842 |
Cost of pharmaceutical and
clinical services |
3,282 |
2,961 |
8,152 |
10,379 |
Research and development
expense |
16,673 |
13,397 |
56,788 |
47,289 |
Selling, general, and
administrative expense |
91,279 |
87,631 |
269,415 |
242,752 |
Total costs and expenses |
144,245 |
127,637 |
435,214 |
368,262 |
|
|
|
|
|
Operating income |
35,740 |
55,287 |
98,002 |
221,188 |
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest income |
124 |
2,498 |
265 |
5,190 |
Other |
(298) |
(442) |
1,117 |
(1,066) |
Total other income |
(174) |
2,056 |
1,382 |
4,124 |
|
|
|
|
|
Income before income taxes |
35,566 |
57,343 |
99,384 |
225,312 |
|
|
|
|
|
Income tax provision |
14,091 |
20,573 |
37,896 |
82,719 |
|
|
|
|
|
Net income |
$ 21,475 |
$ 36,770 |
$ 61,488 |
$ 142,593 |
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ 0.30 |
$ 0.50 |
$ 0.85 |
$ 1.87 |
Diluted |
$ 0.29 |
$ 0.48 |
$ 0.82 |
$ 1.82 |
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
Basic |
70,696 |
73,821 |
71,985 |
76,173 |
Diluted |
73,870 |
76,374 |
75,122 |
78,332 |
|
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited) |
|
Mar. 31, 2015 |
Jun. 30, 2014 |
|
|
(In thousands) |
|
|
|
|
Cash, cash equivalents, and marketable
investment securities |
$ 175,633 |
$ 270,586 |
|
|
Trade receivables, net |
92,195 |
81,869 |
|
|
Other receivables |
2,992 |
3,198 |
|
|
Prepaid expenses |
9,985 |
6,921 |
|
|
Inventory |
29,359 |
23,919 |
|
|
Prepaid taxes |
— |
13,609 |
|
|
Property, plant and equipment, net |
69,099 |
34,594 |
|
|
Other assets |
5,000 |
5,000 |
|
|
Intangibles, net |
195,691 |
205,312 |
|
|
Goodwill |
185,228 |
169,181 |
|
|
Deferred tax assets |
13,867 |
9,625 |
|
|
Total assets |
$ 779,049 |
$ 823,814 |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
$ 65,834 |
$ 79,488 |
|
|
Deferred revenue |
1,339 |
1,090 |
|
|
Long term liabilities |
16,867 |
— |
|
|
Uncertain tax benefits |
26,111 |
24,238 |
|
|
Stockholders' equity |
668,898 |
718,998 |
|
|
Total liabilities and
stockholders' equity |
$ 779,049 |
$ 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.
- Executive transition cost: Represents one-time expenses tied to
the transition of key executive officers at the Company.
- Discontinued operations: One-time charges associated with the
closing of business units.
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 Nine
Months ended March 31, 2015 and 2014 |
(Unaudited data in thousands,
except per share amount) |
|
Three Months
Ended |
Nine Months
Ended |
|
Mar. 31, 2015 |
Mar. 31, 2014 |
Mar. 31, 2015 |
Mar. 31, 2014 |
|
|
|
|
|
Revenue |
$ 179,985 |
$ 182,924 |
$ 533,216 |
$ 589,450 |
|
|
|
|
|
GAAP Cost of molecular diagnostic
testing |
$ 33,011 |
$ 23,648 |
$ 100,859 |
$ 67,842 |
GAAP Cost of pharmaceutical and
clinical services |
3,282 |
2,961 |
8,152 |
10,379 |
Acquisition - change of control
payments |
-- |
(238) |
-- |
(238) |
Acquisition - accelerated
share-based compensation |
-- |
(185) |
-- |
(185) |
Acquisition - amortization of
intangible assets |
-- |
-- |
-- |
-- |
Non-GAAP COGS |
$ 36,293 |
$ 26,186 |
$ 109,011 |
$ 77,798 |
|
|
|
|
|
Non-GAAP Gross Margin |
80% |
86% |
80% |
87% |
|
|
|
|
|
GAAP Research and
Development |
$ 16,673 |
$ 13,397 |
$ 56,788 |
$ 47,289 |
Acquisition - change of control
payments |
-- |
(1,710) |
-- |
(1,710) |
Acquisition - accelerated
share-based compensation |
-- |
(2,075) |
-- |
(2,075) |
Acquisition - amortization of
intangible assets |
(78) |
(78) |
(234) |
(234) |
Executive transition costs |
(398) |
-- |
(398) |
-- |
Discontinued operations |
(178) |
-- |
(178) |
-- |
Non-GAAP R&D |
$ 16,019 |
$ 9,534 |
$ 55,978 |
$ 43,270 |
|
|
|
|
|
GAAP Selling, General and
Administrative |
$ 91,279 |
$ 87,631 |
$ 269,415 |
$ 242,752 |
Acquisition - change of control
payments |
-- |
(3,747) |
-- |
(3,747) |
Acquisition - accelerated
share-based compensation |
-- |
(4,669) |
-- |
(4,669) |
Acquisition - amortization of
intangible assets |
(3,057) |
(1,067) |
(9,172) |
(1,400) |
Executive transition costs |
(6,788) |
-- |
(11,100) |
-- |
Non-GAAP SG&A |
$ 81,434 |
$ 78,148 |
$ 249,143 |
$ 232,936 |
|
|
|
|
|
GAAP Operating Income |
$ 35,740 |
$ 55,287 |
$ 98,002 |
$ 221,188 |
Acquisition - change of control
payments |
-- |
5,695 |
-- |
5,695 |
Acquisition - accelerated
share-based compensation |
-- |
6,929 |
-- |
6,929 |
Acquisition - amortization of
intangible assets |
3,135 |
1,145 |
9,406 |
1,634 |
Executive transition costs |
7,186 |
-- |
11,498 |
-- |
Discontinued operations |
178 |
-- |
178 |
-- |
Non-GAAP Operating
Income |
$ 46,239 |
$ 69,056 |
$ 119,084 |
$ 235,446 |
|
|
|
|
|
Non-GAAP Operating
Margin |
26% |
38% |
22% |
40% |
|
|
|
|
|
GAAP Net Income |
$ 21,475 |
$ 36,770 |
$ 61,488 |
$ 142,593 |
Acquisition - change of control
payments |
-- |
5,695 |
-- |
5,695 |
Acquisition - accelerated
share-based compensation |
-- |
6,929 |
-- |
6,929 |
Acquisition - amortization of
intangible assets |
3,135 |
1,145 |
9,406 |
1,634 |
Executive transition costs |
7,186 |
-- |
11,498 |
-- |
Discontinued operations |
178 |
-- |
178 |
-- |
Tax expense associated with
non-GAAP adjustments |
(2,713) |
(4,337) |
(4,415) |
(4,337) |
Non-GAAP Net Income |
$ 29,261 |
$ 46,202 |
$ 78,155 |
$ 152,514 |
|
|
|
|
|
GAAP Diluted EPS |
$ 0.29 |
$ 0.48 |
$ 0.82 |
$ 1.82 |
Non-GAAP Diluted EPS |
$ 0.40 |
$ 0.60 |
$ 1.04 |
$ 1.95 |
|
|
|
|
|
Diluted shares outstanding |
73,870 |
76,374 |
75,122 |
78,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
(Unaudited data in
thousands) |
|
Three Months
Ended |
Nine Months
Ended |
|
Mar. 31, 2015 |
Mar. 31, 2014 |
Mar. 31, 2015 |
Mar. 31, 2014 |
|
|
|
|
|
GAAP cash flow from
operations |
$ 29,878 |
$ 11,249 |
$ 89,456 |
$ 149,280 |
|
|
|
|
|
Capital expenditures |
(4,457) |
(1,555) |
(21,905) |
(9,653) |
|
|
|
|
|
Free cash flow |
$ 25,421 |
$ 9,694 |
$ 67,551 |
$ 139,627 |
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2015
and Fourth 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 |
$1.09 - $1.11 |
Acquisition - amortization of intangible
assets |
0.16 |
Executive transition costs |
0.19 |
Non-GAAP diluted net income per
share |
$1.44 - $1.46 |
|
|
|
|
|
Fiscal Fourth Quarter
2015 |
Diluted net income per
share |
|
GAAP diluted net income per share |
$0.28 - $0.30 |
Acquisition - amortization of intangible
assets |
0.04 |
Executive transition costs |
0.08 |
Non-GAAP diluted net income per
share |
$0.40 - $0.42 |
|
|
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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