NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Tuesday that its second quarter revenues rose 4 percent year over year, falling slightly short of the consensus Wall Street estimate.
The company's total revenue for the three months ended June 30 was $85.5 million, compared with $82.0 million in the second quarter of 2016. Analysts on average had predicted revenues of $86.1 million.
Genomic Health adjusted slightly its guidance for the full year, but maintained that it expects to reach overall profitability. The firm now predicts total revenue of $345 to $355 million for full-year 2017, down from $355 to $370 million, with profit at either end of that range.
In a call discussing the firm's earnings, Genomic Health COO and CFO Brad Cole said that the adjustment reflects the unknown timing of results from the analysis of intermediate risk score patients from the TAILORx trial, an unexpected hold on payments for tests in France following the recent presidential election in that country, lighter-than-expected revenue from the firm's ductal carcinoma in situ testing, and delays in reimbursement.
Specifically, Genomic Health had been expecting an expansion of Medicaid coverage for its Oncotype DX Genomic Prostate Score for intermediate prostate cancer cases in the second quarter of this year, with increases in private payor coverage to follow.
This May, CMS contractor Palmetto GBA issued a draft local coverage determination that recommends coverage expansion for the to include intermediate-risk patients, but has not yet finalized that draft.
Genomic Health's competitor in the prostate cancer space, Myriad Genetics, received its own final LCD from Palmetto for intermediate-risk patients, effective July 10.
During the firm's earnings call, Cole said that since commentary on Genomic Health's draft LCD just closed, and comments were "strongly supportive" of the test, the company expects that the finalized LCD will come through by the end of this year.
"We believe we continue to be the market leader in low- and intermediate-risk prostate cancer based on test volume performance over the last several quarters, and based on recent market research," Cole added.
During Q2, Genomic Health's US product revenue was $72.4 million compared with $69.6 million in Q2 2016. The company's invasive breast cancer testing in the US grew slightly to $65.6 million from $64.4 million in the year-ago quarter.
Revenue for the company's prostate cancer test rose to $4.1 million from $2.3 million in the same period last year.
Genomic Health said that it delivered more than 31,550 Oncotype test results during the quarter compared to 29,060 in the same period last year. The company's Oncotype DX breast cancer tests grew 5 percent in the US, while prostate cancer tests grew 38 percent in the US compared to the prior year's quarter.
International product revenue increased 6 percent to $13.1 million from $12.3 million in Q2 2016. On a constant currency basis, it increased 10 percent, Genomic Health said.
The company delivered 12 percent more international tests than in Q2 2016, and international testing made up approximately 24 percent of the firm's overall test volume during the quarter.
In preparation for a broader commercial launch of the Oncotype DX AR-V7 Nucleus Detect test later this year, Genomic Health CSO Steve Shak said that the company recently initiated an early-access program with select centers around the country.
Genomic Health partnered with Epic Sciences last year to commercialize the test, which targets the V7 variant of the androgen receptor protein (AR-V7) in the nucleus of circulating tumor cells in order to guide treatment decisions for patients with metastatic castration-resistant prostate cancer.
Company officials did not provide an update on the firm's OncotypeSEQ liquid biopsy test.
Genomic Health's second quarter net loss was $2.7 million or $.08 per share, compared with a net loss of $6.1 million, or $.18 per share, a year ago. Analysts had expected a lower per-share loss of $.06.
"We expect our net income results in both the third and fourth quarter to exceed those of 2016. By delivering these strong results in the second half, we will have achieved 10 consecutive quarters of bottom line improvement by the end of 2017 and a full-year profit," Cole said during the firm's call.
"Looking ahead, we see significant upside in 2018 with the anticipated January implementation of both PAMA reimbursement rates and AJCC staging criteria, along with the TAILORx intermediate study results," added Genomic Health Chairman, CEO, and President Kim Popovits.
The company's R&D costs in Q2 rose to $15.8 million from $14.9 million the prior year, while SG&A costs rose to $59.1 million from $56.5 million.
Genomic Health ended the quarter with cash and cash equivalents totaling $42.2 million and short-term marketable securities of $67.6 million.