Myriad Genetics, Inc. (NASDAQ:MYGN), a global leader in molecular
diagnostics and personalized medicine, today announced financial
results for its fiscal third-quarter 2017, provided an update on
recent business highlights and updated its fiscal year 2017
financial guidance.
"We were very encouraged to see sequential growth in hereditary
cancer testing volumes for the second consecutive quarter,” said
Mark C. Capone, president and CEO, Myriad Genetics. “Coupled
with meaningful sequential volume growth in all of our major
pipeline tests including GeneSight, Vectra DA, Prolaris, and
EndoPredict, we believe we are rapidly approaching an important
inflection in our business where our new products will drive
accelerated revenue growth and profitability.”
Financial Highlights
- The following table summarizes the financial results and
product revenue for our fiscal third-quarter 2017:
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Third-Quarter |
|
|
($
in millions) |
|
|
2017 |
|
|
|
2016 |
|
|
%Change |
Molecular
diagnostic testing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary cancer
testing revenue |
|
|
$ |
140.8 |
|
|
$ |
156.3 |
|
|
(10 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
GeneSight testing
revenue |
|
|
|
23.9 |
|
|
|
NA |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
Vectra DA testing
revenue |
|
|
|
11.2 |
|
|
|
12.3 |
|
|
(9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Prolaris testing
revenue |
|
|
|
3.4 |
|
|
|
5.2* |
|
|
(35 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
EndoPredict testing
revenue |
|
|
|
2.3 |
|
|
|
1.1 |
|
|
109 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Other testing
revenue |
|
|
|
3.6 |
|
|
|
2.5 |
|
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total
molecular diagnostic testing revenue |
|
|
185.2 |
|
|
|
177.4 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical and clinical service revenue |
|
|
11.7 |
|
|
|
13.1 |
|
|
(11 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue |
|
$ |
196.9 |
|
|
$ |
190.5 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Third-Quarter |
|
|
($
in millions) |
|
|
2017 |
|
|
|
2016 |
|
|
%Change |
Total
Revenue |
|
$ |
196.9 |
|
|
$ |
190.5 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
|
152.6 |
|
|
|
150.3 |
|
|
2 |
% |
|
Gross Margin |
|
|
|
77.5 |
% |
|
|
78.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
139.7 |
|
|
|
107.7 |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
12.9 |
|
|
|
42.6 |
|
|
(70 |
%) |
|
Operating Margin |
|
|
|
6.6 |
% |
|
|
22.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Income |
|
|
24.0 |
|
|
|
45.8 |
|
|
(48 |
%) |
|
Adjusted Operating
Margin |
|
|
|
12.2 |
% |
|
|
24.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
|
4.2 |
|
|
|
34.5 |
|
|
(88 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
|
0.06 |
|
|
|
0.47 |
|
|
(87 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EPS |
|
$ |
0.27 |
|
|
$ |
0.41 |
|
|
(34 |
%) |
* Included
Medicare retrospective payments |
|
|
|
|
|
|
|
|
Business Highlights
• myRisk® Hereditary Cancer
- Hereditary cancer volumes grew on a sequential basis for the
second consecutive quarter.
- A publication in The Oncologist by researchers at Northwestern
University compared 4,250 variants from ClinVar to those from
Myriad Genetics. In the study, only 73 percent of the
classifications in ClinVar were consistent with Myriad
classifications with 27 percent discordant. In addition, it was
shown that Myriad could definitely classify up to 60 percent of the
variants of uncertain significance from other
laboratories.
• GeneSight®
- Volume grew 44 percent year-over-year to more than 60,000 tests
performed in the fiscal third-quarter.
- Completed enrollment ahead of schedule in a 1,200 patient
clinical utility study evaluating GeneSight in patients with
treatment resistant depression. The company anticipates top line
data by the end of calendar year 2017.
- Published data in Clinical Therapeutics which evaluated 2,168
patients whose treatment was either congruent or non-congruent with
the GeneSight test result which demonstrated health savings of
$3,998 for primary care physicians and $1,308 for patients treated
by psychiatrists after paying for the cost of the test.
- 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
HealthCore, a subsidiary of Anthem Blue Cross Blue Shield.
- Launched a highly successful pilot sales program for GeneSight
in the preventive care market with the average sales territory
already generating a 300 sample annual run rate.
• Vectra® DA
- Volumes increased five percent sequentially with approximately
38,500 tests performed.
- Creaky Joints, a leading advocacy group for arthritis patients
added Vectra DA to its professional guidelines. This builds upon
the recent addition of Vectra DA to the United Rheumatology
guidelines, a physician guideline body comprising approximately 10
percent of practicing rheumatologists.
• Prolaris®
- Volumes grew 17 percent year-over-year and nine percent
sequentially with approximately 5,100 tests ordered in the third
quarter.
- The comment period ended on a draft local coverage
determination from Palmetto GBA for favorable-intermediate
patients, a new indication 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.
- At the upcoming American Urology Association meeting, Myriad
will be presenting a 767 patient study that demonstrated the
ability of Prolaris to predict metastases from biopsy samples with
a high degree of statistical significance.
• EndoPredict®
- Revenues grew 109 percent year-over-year to $2.3 million in the
fiscal third-quarter.
- Launched EndoPredict in the United States at the end of the
fiscal third-quarter.
- In aggregate, Myriad has now received positive coverage
decisions from payers in the United States representing 83 million
lives.
• myPath® Melanoma
- Myriad’s third clinical validation study, which demonstrated
myPath Melanoma was able to differentiate melanoma from benign nevi
with 95 percent diagnostic accuracy, was published in Cancer
Epidemiology.
- Myriad has submitted its reimbursement dossier for myPath
Melanoma to Medicare and private payers.
• Companion Diagnostics
- AstraZeneca announced that olaparib met its primary endpoint in
BRCA positive, HER2- metastatic breast cancer in the OlympiAD
study, demonstrating a statistically significant benefit in
progression free survival. This represents a potential 60,000
patient per year market for BRACAnalysis CDx as a companion
diagnostic.
- Myriad signed a research collaboration with BeiGene which is a
global pharmaceutical company developing the PARP inhibitor BGB-290
in the United States.
- Signed a commercial collaboration with Clovis Oncology to
perform BRACAnalysis CDx testing. Myriad is now performing
companion diagnostic testing for every major company developing a
PARP inhibitor.
- Submitted our regulatory filing in Japan for BRACAnalysis CDx
as the companion diagnostic for Lynparza in conjunction with our
collaboration with AstraZeneca.
• International
- International revenue grew 41 percent year-over-year and
comprised five percent of total revenue in the fiscal
third-quarter.
- International EndoPredict revenue grew 109 percent
year-over-year, largely as a result of recent French and German
reimbursement.
Fiscal Year 2017 and Fiscal Fourth-Quarter 2017
Financial GuidanceBelow is a table summarizing Myriad’s
updated fiscal year 2017 and fiscal fourth-quarter 2017 financial
guidance:
|
|
Revenue |
|
GAAP DilutedEarnings PerShare |
|
AdjustedEarnings PerShare |
Fiscal Year 2017 |
|
$763-$765million |
|
$0.23-$0.25 |
|
$1.01-$1.03 |
|
|
|
|
|
|
|
Fiscal
Fourth-Quarter 2017 |
|
$192-$194million |
|
$0.11-$0.13 |
|
$0.26-$0.28 |
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 third-quarter financial results, fiscal year 2017, and
fiscal fourth-quarter 2017 financial guidance.
Conference Call and WebcastA conference call
will be held today, Tuesday, May 2, 2017, at 4:30 p.m. EDT to
discuss Myriad’s financial results for the fiscal third-quarter,
business developments and financial guidance. The dial-in
number for domestic callers is (888) 225-2744. International
callers may dial (303) 223-2690. All callers will be asked to
reference reservation number 21849837. 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 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 |
|
Nine months ended |
|
|
|
March 31, |
|
March 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
2017 |
|
|
|
2016 |
|
|
Molecular diagnostic
testing |
|
$ |
185.2 |
|
|
$ |
177.4 |
|
$ |
534.2 |
|
|
$ |
532.0 |
|
|
Pharmaceutical and
clinical services |
|
|
11.7 |
|
|
|
13.1 |
|
|
36.7 |
|
|
|
35.4 |
|
|
Total
revenue |
|
|
196.9 |
|
|
|
190.5 |
|
|
570.9 |
|
|
|
567.4 |
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
Cost of
molecular diagnostic testing |
|
|
37.9 |
|
|
|
33.6 |
|
|
109.5 |
|
|
|
98.6 |
|
|
Cost of
pharmaceutical and clinical services |
|
|
6.4 |
|
|
|
6.6 |
|
|
19.1 |
|
|
|
18.7 |
|
|
Research
and development expense |
|
|
17.6 |
|
|
|
17.2 |
|
|
55.6 |
|
|
|
51.1 |
|
|
Selling,
general, and administrative expense |
|
|
122.1 |
|
|
|
90.5 |
|
|
354.3 |
|
|
|
267.8 |
|
|
Total
costs and expenses |
|
|
184.0 |
|
|
|
147.9 |
|
|
538.5 |
|
|
|
436.2 |
|
|
Operating
income |
|
|
12.9 |
|
|
|
42.6 |
|
|
32.4 |
|
|
|
131.2 |
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
0.3 |
|
|
|
0.3 |
|
|
0.9 |
|
|
|
0.5 |
|
|
Interest
expense |
|
|
(1.5 |
) |
|
|
— |
|
|
(4.8 |
) |
|
|
(0.2 |
) |
|
Change in
the fair value of contingent consideration |
|
|
(5.2 |
) |
|
|
— |
|
|
(2.0 |
) |
|
|
— |
|
|
Other |
|
|
1.5 |
|
|
|
0.2 |
|
|
(2.4 |
) |
|
|
0.2 |
|
|
Total
other income (expense): |
|
|
(4.9 |
) |
|
|
0.5 |
|
|
(8.3 |
) |
|
|
0.5 |
|
|
Income before income tax |
|
|
8.0 |
|
|
|
43.1 |
|
|
24.1 |
|
|
|
131.7 |
|
|
Income tax
provision |
|
|
3.8 |
|
|
|
8.6 |
|
|
15.2 |
|
|
|
29.7 |
|
|
Net income |
|
$ |
4.2 |
|
|
$ |
34.5 |
|
$ |
8.9 |
|
|
$ |
102.0 |
|
|
Net loss attributable
to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
(0.1 |
) |
|
|
— |
|
|
Net income attributable
to Myriad Genetics, Inc. stockholders |
|
$ |
4.2 |
|
|
$ |
34.5 |
|
$ |
9.0 |
|
|
$ |
102.0 |
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.06 |
|
|
$ |
0.49 |
|
$ |
0.13 |
|
|
$ |
1.46 |
|
|
Diluted |
|
$ |
0.06 |
|
|
$ |
0.47 |
|
$ |
0.13 |
|
|
$ |
1.39 |
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
68.1 |
|
|
|
70.9 |
|
|
68.1 |
|
|
|
70.1 |
|
|
Diluted |
|
|
68.3 |
|
|
|
73.5 |
|
|
68.5 |
|
|
|
73.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
(Unaudited) |
|
(in millions) |
|
|
|
|
|
|
|
March 31, |
|
June 30, |
|
ASSETS |
|
|
2017 |
|
|
|
2016 |
|
|
Current
assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
123.8 |
|
|
$ |
68.5 |
|
|
Marketable investment securities |
|
|
48.3 |
|
|
|
90.5 |
|
|
Prepaid
expenses |
|
|
9.5 |
|
|
|
18.4 |
|
|
Inventory |
|
|
47.4 |
|
|
|
38.3 |
|
|
Trade
accounts receivable, less allowance for doubtful accounts of $8.1
March 31, 2017and $6.8 June 30, 2016 |
|
|
114.8 |
|
|
|
91.7 |
|
|
Prepaid
taxes |
|
|
0.1 |
|
|
|
3.8 |
|
|
Other
receivables |
|
|
4.4 |
|
|
|
3.3 |
|
|
Total
current assets |
|
|
348.3 |
|
|
|
314.5 |
|
|
Property, plant and equipment, net |
|
|
53.0 |
|
|
|
58.3 |
|
|
Long-term marketable investment securities |
|
|
53.4 |
|
|
|
79.9 |
|
|
Intangibles, net |
|
|
498.1 |
|
|
|
227.5 |
|
|
Goodwill |
|
|
315.0 |
|
|
|
195.3 |
|
|
Other
assets |
|
|
— |
|
|
|
5.0 |
|
|
Total
assets |
|
$ |
1,267.8 |
|
|
$ |
880.5 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
26.8 |
|
|
$ |
21.1 |
|
|
Accrued
liabilities |
|
|
64.0 |
|
|
|
49.5 |
|
|
Short-term contingent consideration |
|
|
128.2 |
|
|
|
— |
|
|
Deferred
revenue |
|
|
2.7 |
|
|
|
1.7 |
|
|
Total
current liabilities |
|
|
221.7 |
|
|
|
72.3 |
|
|
Unrecognized tax benefits |
|
|
24.9 |
|
|
|
24.0 |
|
|
Other
long-term liabilities |
|
|
7.2 |
|
|
|
7.8 |
|
|
Contingent consideration |
|
|
14.3 |
|
|
|
10.4 |
|
|
Long-term debt |
|
|
167.1 |
|
|
|
— |
|
|
Long-term deferred taxes |
|
|
84.7 |
|
|
|
17.9 |
|
|
Total
liabilities |
|
|
519.9 |
|
|
|
132.4 |
|
|
Commitments and contingencies |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
Common
stock, 68.1 and 69.1 shares outstanding at March 31, 2017 and
June 30, 2016 respectively |
|
|
0.7 |
|
|
|
0.7 |
|
|
Additional paid-in capital |
|
|
839.5 |
|
|
|
830.1 |
|
|
Accumulated other comprehensive loss |
|
|
(10.6 |
) |
|
|
(9.5 |
) |
|
Accumulated deficit |
|
|
(81.4 |
) |
|
|
(73.2 |
) |
|
Total
Myriad Genetics, Inc. stockholders’ equity |
|
|
748.2 |
|
|
|
748.1 |
|
|
Non-Controlling Interest |
|
|
(0.3 |
) |
|
|
— |
|
|
Total
stockholders' equity |
|
|
747.9 |
|
|
|
748.1 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,267.8 |
|
|
$ |
880.5 |
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
|
(in millions) |
|
|
|
|
|
|
|
Nine months ended |
|
|
|
March 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
Net income |
|
$ |
8.9 |
|
|
$ |
102.0 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
35.0 |
|
|
|
20.0 |
|
|
Non-cash
interest expense |
|
|
0.4 |
|
|
|
— |
|
|
Gain on
disposition of assets |
|
|
(0.2 |
) |
|
|
(0.4 |
) |
|
Share-based compensation expense |
|
|
22.7 |
|
|
|
23.9 |
|
|
Impairment of cost basis investment |
|
|
2.4 |
|
|
|
— |
|
|
Bad debt
expense |
|
|
27.3 |
|
|
|
23.5 |
|
|
Loss on
extinguishment of debt |
|
|
1.3 |
|
|
|
— |
|
|
Deferred
income taxes |
|
|
2.0 |
|
|
|
31.5 |
|
|
Unrecognized tax benefits |
|
|
0.9 |
|
|
|
(2.4 |
) |
|
Change in
fair value of contingent consideration |
|
|
2.0 |
|
|
|
— |
|
|
Changes
in assets and liabilities: |
|
|
|
|
|
Prepaid
expenses |
|
|
10.9 |
|
|
|
(8.7 |
) |
|
Trade
accounts receivable |
|
|
(40.3 |
) |
|
|
(28.7 |
) |
|
Other
receivables |
|
|
(3.2 |
) |
|
|
(1.0 |
) |
|
Inventory |
|
|
(6.5 |
) |
|
|
(0.2 |
) |
|
Prepaid
taxes |
|
|
3.6 |
|
|
|
(27.7 |
) |
|
Accounts
payable |
|
|
2.0 |
|
|
|
(6.9 |
) |
|
Accrued
liabilities |
|
|
(0.6 |
) |
|
|
2.9 |
|
|
Deferred
revenue |
|
|
1.0 |
|
|
|
— |
|
|
Net cash provided by
operating activities |
|
|
69.6 |
|
|
|
127.8 |
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
Capital
expenditures |
|
|
(5.4 |
) |
|
|
(2.8 |
) |
|
Acquisitions, net of
cash acquired |
|
|
(216.1 |
) |
|
|
— |
|
|
Sale of cost basis
investment |
|
|
2.6 |
|
|
|
— |
|
|
Purchases of marketable
investment securities |
|
|
(74.6 |
) |
|
|
(131.4 |
) |
|
Proceeds from
maturities and sales of marketable investment securities |
|
|
142.9 |
|
|
|
86.6 |
|
|
Net cash used in
investing activities |
|
|
(150.6 |
) |
|
|
(47.6 |
) |
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
Net proceeds for common
stock issued under share-based compensation plans |
|
|
1.3 |
|
|
|
85.9 |
|
|
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 |
|
|
(37.0 |
) |
|
|
|
Fees paid for
extinguishment of debt |
|
|
(0.6 |
) |
|
|
— |
|
|
Repurchase and
retirement of common stock |
|
|
(31.6 |
) |
|
|
(107.9 |
) |
|
Net cash provided by
(used in) financing activities |
|
|
135.1 |
|
|
|
(22.0 |
) |
|
Effect of foreign
exchange rates on cash and cash equivalents |
|
|
1.2 |
|
|
|
(1.8 |
) |
|
Net increase in cash
and cash equivalents |
|
|
55.3 |
|
|
|
56.4 |
|
|
Cash and cash
equivalents at beginning of the period |
|
|
68.5 |
|
|
|
64.1 |
|
|
Cash and
cash equivalents at end of the period |
|
$ |
123.8 |
|
|
$ |
120.5 |
|
|
|
|
|
|
|
|
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 volumes, revenue
and profitability from existing and new products; the Company’s
belief that it is rapidly approaching an important inflection in
its business where its new products will drive accelerated revenue
growth and profitability; the Company’s expectation of receiving
top line data from a 1,200 patient clinical utility study
evaluating GeneSight in patients with treatment resistant
depression by the end of calendar year 2017; the potential market
expansion of approximately 30,000 patients per year for Prolaris
based on Palmetto GBA’s draft coverage determination; the potential
60,000 patient per year market for BRACAnalysis CDx as a companion
diagnostic to olaparib; the Company’s anticipated study
presentation at the upcoming American Urology Association meeting;
the Company’s fiscal fourth-quarter guidance of total revenue of
$192 to $194 million, diluted earnings per share of $0.11 to $0.13,
and adjusted earnings per share of $0.26 to $0.28, and the
Company’s updated fiscal full year guidance of total revenue of
$763 to $765 million, diluted earnings per share of $0.23 to $0.25,
and adjusted earnings per share of $1.01 to $1.03, as further
discussed under the caption “Fiscal Year 2017 and Fiscal
Fourth-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 – 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
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 Nine Months ended March 31, 2017 and
2016 |
|
|
|
|
|
|
|
(Unaudited data in
millions, except per share amount) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
Mar 31, 2017 |
|
Mar 31, 2016 |
|
Mar 31, 2017 |
|
Mar 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
196.9 |
|
|
|
190.5 |
|
|
|
570.9 |
|
|
|
567.4 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Cost of
molecular diagnostic testing |
|
$ |
37.9 |
|
|
$ |
33.6 |
|
|
$ |
109.5 |
|
|
$ |
98.6 |
|
|
GAAP Cost of
pharmaceutical and clinical
services |
|
|
6.4 |
|
|
|
6.6 |
|
|
|
19.1 |
|
|
|
18.7 |
|
|
Acquisition - Integration related costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Acquisition - amortization of intangible assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Non-GAAP
COGS |
|
$ |
44.3 |
|
|
$ |
40.2 |
|
|
$ |
128.6 |
|
|
$ |
117.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin |
|
|
78 |
% |
|
|
79 |
% |
|
|
77 |
% |
|
|
79 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP Research
and Development |
|
$ |
17.6 |
|
|
$ |
17.2 |
|
|
$ |
55.6 |
|
|
$ |
51.1 |
|
|
Acquisition - Integration related costs |
|
|
(0.1 |
) |
|
|
- |
|
|
|
(0.2 |
) |
|
|
- |
|
|
Acquisition - amortization of intangible assets |
|
|
- |
|
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
|
Non-GAAP
R&D |
|
$ |
17.5 |
|
|
$ |
17.1 |
|
|
$ |
55.2 |
|
|
$ |
50.8 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Selling,
General and Administrative |
|
$ |
122.1 |
|
|
$ |
90.5 |
|
|
$ |
354.3 |
|
|
$ |
267.8 |
|
|
Acquisition - Integration related costs |
|
|
(1.8 |
) |
|
|
- |
|
|
|
(12.8 |
) |
|
|
- |
|
|
Acquisition - amortization of intangible assets |
|
|
(9.2 |
) |
|
|
(3.1 |
) |
|
|
(23.6 |
) |
|
|
(9.2 |
) |
|
Non-GAAP
SG&A |
|
$ |
111.1 |
|
|
$ |
87.4 |
|
|
$ |
317.9 |
|
|
$ |
258.6 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income |
|
$ |
12.9 |
|
|
$ |
42.6 |
|
|
$ |
32.4 |
|
|
$ |
131.2 |
|
|
Acquisition - Integration related costs |
|
|
1.9 |
|
|
|
- |
|
|
|
13.0 |
|
|
|
- |
|
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
3.2 |
|
|
|
23.8 |
|
|
|
9.5 |
|
|
Non-GAAP
Operating Income |
|
$ |
24.0 |
|
|
$ |
45.8 |
|
|
$ |
69.2 |
|
|
$ |
140.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Margin |
|
|
12 |
% |
|
|
24 |
% |
|
|
12 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
Attributable to Myriad Gentics, Inc.
Stockholders |
|
$ |
4.2 |
|
|
$ |
34.5 |
|
|
$ |
9.0 |
|
|
$ |
102.0 |
|
|
Acquisition - Integration related costs |
|
|
1.9 |
|
|
|
- |
|
|
|
13.0 |
|
|
|
- |
|
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
3.2 |
|
|
|
23.8 |
|
|
|
9.5 |
|
|
Tax
impact related to equity compensation |
|
|
(0.1 |
) |
|
|
(1.9 |
) |
|
|
2.9 |
|
|
|
(12.4 |
) |
|
Tax
expense associated with R&D tax credit reserves |
|
|
|
|
(6.0 |
) |
|
|
- |
|
|
|
(6.0 |
) |
|
Earn out
true-up |
|
|
5.2 |
|
|
|
- |
|
|
|
0.6 |
|
|
|
- |
|
|
One-time
debt restructuring charges |
|
|
- |
|
|
|
- |
|
|
|
1.3 |
|
|
|
- |
|
|
One-time
non-deductible costs |
|
|
(1.5 |
) |
|
|
- |
|
|
|
2.7 |
|
|
|
- |
|
|
Impairment of Raindance Investment |
|
|
(0.1 |
) |
|
|
- |
|
|
|
3.3 |
|
|
|
- |
|
|
Tax
effect associated with non-GAAP adjustments |
|
|
(0.7 |
) |
|
|
- |
|
|
|
(4.9 |
) |
|
|
- |
|
|
Non-GAAP Net
Income |
|
$ |
18.1 |
|
|
$ |
29.8 |
|
|
$ |
51.7 |
|
|
$ |
93.1 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS |
|
$ |
0.06 |
|
|
$ |
0.47 |
|
|
$ |
0.13 |
|
|
$ |
1.39 |
|
|
Non-GAAP
Diluted EPS |
|
$ |
0.27 |
|
|
$ |
0.41 |
|
|
$ |
0.75 |
|
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
|
68.3 |
|
|
|
73.5 |
|
|
|
68.5 |
|
|
|
73.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
|
|
(Unaudited data in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
Mar 31, 2017 |
|
Mar 31, 2016 |
|
Mar 31, 2017 |
|
Mar 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
GAAP cash flow
from operations |
|
$ |
41.1 |
|
|
$ |
45.9 |
|
|
$ |
69.6 |
|
|
$ |
127.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(1.5 |
) |
|
|
(0.7 |
) |
|
|
(5.4 |
) |
|
|
(2.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
Free cash
flow |
|
$ |
39.6 |
|
|
$ |
45.2 |
|
|
$ |
64.2 |
|
|
$ |
125.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition -
Integration related costs |
|
|
1.9 |
|
|
|
- |
|
|
|
9.8 |
|
|
|
- |
|
|
Cash paid at closing to
Assurex vendors |
|
|
- |
|
|
|
- |
|
|
|
6.8 |
|
|
|
- |
|
|
Tax effect associated
with non-GAAP adjustments |
|
|
(0.7 |
) |
|
|
- |
|
|
|
(6.4 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Free
cash flow |
|
$ |
40.8 |
|
|
$ |
45.2 |
|
|
$ |
74.4 |
|
|
$ |
125.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2017
and Fiscal Fourth-Quarter 2017 Financial GuidanceThe
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 |
|
$0.23 -
$0.25 |
Acquisition
- amortization of intangible assets |
|
0.48 |
Acquisition
costs & one-time expenses |
|
0.30 |
Non-GAAP diluted net income per share |
|
$1.01 - $1.03 |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Fourth-Quarter2017 |
Diluted net income per share |
|
|
GAAP
diluted net income per share |
|
$0.11 -
$0.13 |
Acquisition
- amortization of intangible assets |
|
0.13 |
Acquisition
costs & one-time expenses |
|
0.02 |
Non-GAAP diluted net income per share |
|
$0.26 - $0.28 |
Media Contact:
Ron Rogers
(801) 584-3065
rrogers@myriad.com
Investor Contact:
Scott Gleason
(801) 584-1143
sgleason@myriad.com
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