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Myriad Genetics Fiscal Q4 Revenues Up 1 Percent

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market on Tuesday that its fiscal fourth quarter revenues rose 1 percent year over year, thanks largely to a 6 percent increase in pharmaceutical and clinical service revenues, which offset flat molecular diagnostic testing revenues.

For the three months ended June 30, the firm reported total revenues of $200.9 million, up from $199.6 million in fiscal Q4 2017, and beating the consensus Wall Street estimate of $195.8 million.

Myriad's molecular diagnostic testing revenues were $187.6 million compared to $187.0 million a year ago. Within that category, hereditary cancer test sales fell 12 percent to $126.8 million from $ 143.5 million a year earlier. GeneSight testing revenues rose 33 percent to $33.9 million from $25.5 million, Vectra DA testing revenues rose 47 percent to $15.1 million from $10.3 million, Prolaris testing revenues rose 133 percent to $7.0 million from $3.0 million, and EndoPredict testing revenues rose 40 percent to $2.8 million from $2.0 million. Other testing revenues fell 26 percent to $2.0 million from $2.7 million.

Pharmaceutical and clinical service revenues rose to $13.3 million is fiscal Q4 from $12.6 million a year earlier.   

The company noted that during the financial close for fiscal year 2018, it determined that it had not fully reserved for its sales allowance for the financial periods from fiscal year 2015 through fiscal year 2018. These errors, which represented less than 1 percent of total revenue during that time frame, were determined to be immaterial, but the financial information for Q4 2017 and full-year 2017 was restated to reflect these adjustments.

Myriad noted that a record 15,000 physicians, including almost 3,000 new ordering doctors, ordered the GeneSight test in fiscal Q4. For Prolaris, the company received positive medical policy recommendations from eight commercial insurers, including a top-10 commercial insurer, during the quarter. Prolaris is now covered for approximately 55 percent of prostate cancer patients in the US, Myriad added. The firm also received positive medical policy recommendations for myPath Melanoma from eight commercial insurers during Q4. And it noted that metastatic breast cancer patients tested by Myriad increased 13 percent from Q3 based on the recent launch of BRACAnalysis CDx as a companion diagnostic for AstraZeneca's PARP inhibitor Lynparza (olaparib).

"Fiscal year 2018 was an excellent year for Myriad as record-setting growth in new products with increasing reimbursement added to a solid hereditary cancer business and a re-engineered cost structure," Myriad President and CEO Mark Capone said in a statement. "Based upon our operational momentum and the recent completion of the Counsyl acquisition, we are confident in our strategy to transform Myriad into the global leader in personalized medicine."

Myriad closed on its $375 million acquisition of reproductive genetic testing firm Counsyl at the end of July.

On a conference call with analysts following the release of the earnings, Capone also said new products now represent 70 percent of the company's total sample volume of approximately 750,000 tests, which is a significant change from fiscal 2013 when new products represented less than 1 percent of samples.

He further noted that Myriad made significant progress securing reimbursements for new products during fiscal 2018. "We measure reimbursement according to the percent of addressable market that has a coverage decision. Using this metric, we ended the year with EndoPredict at 90 percent, Prolaris at 55 percent, Vectra DA at 40 percent, GeneSight at 6 percent, and myPath Melanoma at 1 percent of targeted US reimbursement," he said. "In total, the reimbursed addressable market for new products exceeds $1.6 billion in potential revenue per year."

He specifically noted Myriad's new approach to securing coverage by working directly with self-funded employer groups, which make up about 50 percent of total commercial lives in the US. The firm's first such deal was with Kroger Prescription Plans for coverage of Vectra DA, and Capone also said Myriad recently signed a contract with a second large employer that has approximately 30,000 employees to cover GeneSight.

Also in Q4, Capone said, the firm received regulatory approval for BRACAnalysis CDx from the Japanese Ministry of Health Welfare and Labor, and started receiving samples in June, which are being processed by its lab in the US. This market represents approximately 15,000 potential patients per year.

Myriad's Q4 net income attributable to its shareholders rose to $13.1 million from $12.3 million in Q4 2017. Its earnings per share was flat at $.18, calculated with 72.9 million weighted average shares outstanding in fiscal Q4 compared to 68.9 million weighted average shares outstanding a year ago. On an adjusted basis, its Q4 EPS was $.38, beating the average Wall Street estimate of $.33.

The firm's fourth quarter R&D expenses fell 6 percent to $17.7 from $18.8 million, and its SG&A spending fell less than 1 percent to $121.4 from $122.1 million.

For full-year 2018, the firm's total revenues were relatively flat at $772.6 million compared to $769.9 million in fiscal 2017. Analysts were expecting full-year revenues of $771.1 million.

Myriad's molecular diagnostic testing revenues were flat for the year at $719.3 million compared to $720.6 million in 2017. Within that category, hereditary cancer test sales fell 12 percent to $498.2 from $567.2 million a year earlier. GeneSight testing revenues rose 59 percent to $124.9 million from $78.4 million, Vectra DA testing revenues rose 31 percent to $57.2 million from $43.7 million, Prolaris testing revenues rose 73 percent to $20.9 million from $12.1 million, and EndoPredict testing revenues rose 16 percent to $8.9 million from $7.7 million. Other testing revenues fell 20 percent to $9.2 million from $11.5 million.

Pharmaceutical and clinical service revenues rose 8 percent in fiscal 2018 to $53.3 million from $49.3 million in the prior-year period.

Myriad's fiscal 2018 net income attributable to its shareholders rose to $131.0 million, or $1.82 per share, from $20.5 million, or $.30, per share, in 2017. On an adjusted basis, its 2018 EPS was $1.20, missing the average Wall Street estimate of $1.21.

The firm's 2018 R&D expenses fell 5 percent to $70.8 from $74.4 million, and its SG&A spending fell 2 percent to $467.1 from $476.4 million.

Myriad ended the year with $110.9 million in cash and cash equivalents and $69.7 million in marketable investment securities.

For the fiscal first quarter, the firm expects revenues of $200 million to $202 million, a loss per share of $.06 to $.08, and an adjusted EPS of $.28 to $.30. And for fiscal 2019, Myriad is expecting revenues of $880 million to $890 million, EPS of $.40 to $.45, and adjusted EPS of $1.70 to $1.75. Analysts are expecting Q1 revenues of $191.6 million and EPS of $.31, and 2019 revenues of $781.5 million and EPS of $1.40.

On the call, Myriad CFO Bryan Riggsbee noted that the guidance assumes only known reimbursement parameters, and that the company could see potential upside drivers to its financial guidance for fiscal 2019.

"Our guidance assumes that we will not launch GeneSight into the primary care channel in fiscal 2019. However, with sufficient reimbursement, we will expand our sales targets into primary care. As a reminder, primary care represents more than half of the market for GeneSight," Riggsbee said. "Guidance also assumes no additional reimbursement for Prolaris, Vectra DA, EndoPredict, or myPath Melanoma. For Prolaris, we have seen a number of recent significant reimbursement decisions from commercial insurers and Medicaid. ... We believe it is likely we will see additional positive coverage decisions in fiscal year 2019."

He added that the guidance for 2019 assumes some level of revenue disruption associated with the Counsyl acquisition. If this disruption does not occur, it would represent another upside to the guidance.

The company's shares rose more than 9 percent to $46.85 in Wednesday morning trading on the Nasdaq.