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Genomic Health Q3 Revenues Up 2 Percent, Miss Analyst Expectations

NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Tuesday that its third quarter revenues rose 2 percent year over year, falling short of Wall Street expectations.

The company's total revenue for the three months ended Sept. 30 was $83.8 million, compared with $82.3 million for the third quarter of 2016. Analysts on average had predicted revenues of $87 million.

Genomic Health said that hurricane disruption in certain regions of the US negatively impacted  total revenue by about $3 million.

In a statement, Genomic Health's President, CEO and chairman of the board Kim Popovits called the results "solid" despite these hurricane-related disruptions.

"We look forward to significant revenue drivers in 2018 including a new higher Medicare rate under PAMA and anticipated TAILORx results, while we expand our business model to increase worldwide access through the development of an in vitro diagnostic, or IVD, version of the Oncotype DX breast cancer test," she added. Genomic Health is developing the IVD version of the test in collaboration with Biocartis.

Genomic Health's US product revenue rose a little more than 1 percent to $70.9 million during Q3 from $70 million in the same quarter of 2016.

US invasive breast cancer testing revenue dropped to $63.1 million from $64.6 million, while sales of the company's prostate cancer test more than doubled to $5.5 million from $2.3 million in the same period last year.

Genomic Health said that it delivered 31,580 Oncotype test results during the quarter compared to about 29,990 in the same period last year, an increase of about 5 percent. Breast cancer volume was flat, while prostate cancer tests grew 39 percent compared to the prior year's quarter.

In a call discussing the firm's earnings, Genomic Health COO and CFO Brad Cole said that without the impact of the season's hurricanes, the company would have increased test volume by more than 7 percent.

Popovits added that the company believes it remains in a strong position with its breast cancer test, despite the drop in sales.

Although the firm still hasn't seen publication of intermediate results from the TAILORx trial, which it believes will drive further adoption in Europe, she highlighted the fact that the Oncotype Dx breast cancer test is now included in all major clinical guidelines for node-negative disease, and has been ordered "for more than 800,000 patients to date."

There had been a possibility that the TAILORx data would be presented at the upcoming San Antonio Breast Cancer Symposium, but the new anticipated date for release of results is at the American Society for Clinical Oncology in June 2018.

In prostate cancer, Popovits said that though Medicare coverage for intermediate-risk patients was delayed this year, Genomic Health is "beginning to close the gap between volume and revenue," since receiving its final coverage determination in October.

International product revenue increased about 7 percent to $12.9 million from $12.1 million in Q3 2016. International tests grew 14 percent year over year to make up approximately 26 percent of the firm's overall test volume during the quarter.

In a statement, Genomic Health said that it continues to expect to meet the low end of its full-year revenue guidance of $345 million. It also still expects to deliver full-year profit excluding $3.2 million paid as part of its development deal with Biocartis.

Genomic Health's third quarter net loss was $2.2 million or $.06 per share, compared with a net loss of $2.8 million, or $.08 per share in the prior year's quarter. Analysts had expected a significantly lower per-share loss of $.02.

The company's R&D costs in Q3 rose 17 percent to $17.2 million from $14.7 million in Q3 2016, while SG&A costs fell 2 percent to $55.8 million from $57.1 million.

Genomic Health ended the quarter with cash and cash equivalents totaling $43 million and short-term marketable securities of $75.9 million.