NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market on Tuesday that its fiscal third quarter revenues decreased 24 percent year over year and fell short of the consensus Wall Street estimate.
For the three months ended March 31, the firm reported total revenues of $164 million compared to $216.6 million in its fiscal Q3 2019. The consensus Wall Street estimate for the quarter was $167.2 million.
The company had previously indicated that its business during the quarter would be impacted by the COVID-19 pandemic. In April, Myriad withdrew its fiscal year 2020 financial guidance citing the public health crisis as a reason.
Bryan Riggsbee, Myriad's interim CEO and CFO, said during a conference call following the release of the financial results that the company started seeing the pandemic's impact in mid-March, and subsequently, testing volumes were reduced by between 20 and 75 percent across the company's portfolio. Before the pandemic hit, however, Riggsbee said that the company's tests were selling well.
Riggsbee outlined a number of adjustments the company will make going forward, including launching its own PCR-based COVID-19 test, for which the firm will seek emergency use authorization from the US Food and Drug Administration. "As a CLIA lab in the US, we have an obligation to bring up this testing and make it available to support the broader effort," said Riggsbee, adding that the company is now focused on validating testing and figuring out the logistics of collecting and getting samples to its labs for analysis.
During the pandemic, the company has also converted sales representatives from selling in physicians' offices to selling remotely; implemented the US Centers for Disease Control and Prevention's recommended safety measures in the laboratory; and ensured that its testing will not be hampered by supply chain issues. The company will develop virtual educational programs, mail out direct-to-patient sample collection kits, and roll out mobile phlebotomy services.
The pandemic negatively impacted "tests that can be deferred" the most, but Riggsbee noted that the company also saw a negative effect on non-elective testing, such as tests for cancer risk assessment.
Myriad's molecular diagnostic testing revenue during the quarter decreased 25 percent to $150.5 million from $200.5 million in Q3 2019. Within that category, hereditary cancer test sales dropped to $85.2 million, a 28 percent reduction from $117.6 million a year earlier. Scott Gleason, senior VP of investor relations, said during the call that in the hereditary cancer segment, a "large national payor" has not yet reimbursed the company for a "significant number of claims due to internal system issues." These claims all have prior authorization from the insurer, and the company is working to collect these funds, which will likely be recognized in Q4.
The sales of a number of the company's other tests also were negatively impacted by the pandemic during the quarter. Sales for GeneSight, the psychiatric pharmacogenetic test, went down 31 percent to $20.4 million in Q3 compared to $29.6 million in the year ago quarter. Prenatal testing brought in $20.3 million compared to $30.6 million from the year prior, a 34 percent decrease. The Vectra DA rheumatoid arthritis test brought in $10.5 million during the quarter, a 7 percent decrease from $11.3 million in Q3 2019.
Sales of the breast cancer recurrence test EndoPredict fared well, recording a 25 percent increase in revenues to $3.5 million in Q3 this year compared to $2.8 million last year. The Prolaris prostate cancer test saw only a 1 percent dip in revenues, bringing in $6.8 million during the quarter compared to $6.9 million in 2019. Myriad's other testing revenues increased to $3.8 million from $1.7 million, a 124 percent increase.
Myriad's pharmaceutical and clinical service revenues decreased 16 percent to $13.5 million in Q3 from $16.1 million a year ago.
Myriad's Q3 net loss attributable to its shareholders was $115.2 million or $1.55 per share, compared to net income of $6.9 million, or $.09 per share, in Q3 2019. On an adjusted basis, its loss per share was $.08 compared to the average Wall Street estimate of $.02.
The firm's third quarter R&D expenses declined about 8 percent to $19.7 from $21.5 million, and its SG&A spending dropped 5 percent to $132.9 from $140.6 million.
Myriad ended the quarter with $121 million in cash and cash equivalents, and $60.5 million in marketable investment securities.
In light of the pandemic, the company is taking steps to lower its operating expenses by $50 million, which will include reducing commissions and marketing budgets, initiating temporary furloughs and reduced hours for employees in lab operations and customer service, and temporarily cutting pay for senior executives and the board of directors.
"All of these changes will mitigate our financial losses, but also allow the company to quickly recover when sample demand trends begin to normalize as the period of social distancing comes to an end," Riggsbee said. He added that the company is also considering changes that could result in longer-term efficiencies, such as direct-to-patient testing models, telemedicine, and virtual marketing models.
Gleason noted that it's not yet known how quickly pandemic restrictions will be lifted, allowing the company's financials to recover, and as such, cost-cutting measures may have to extend to 2021. In FY Q4, Myriad received $8 million from the Provider Relief Fund within the CARES Act, for healthcare-related expenses or lost revenue attributable to COVID-19. The firm also received $30 million in accelerated payments from the Centers for Medicare & Medicaid Services. "Combined, these will mitigate our anticipated cash burn in the fiscal fourth quarter," he said.
In early Wednesday morning trading on the Nasdaq, Myriad's stock price had decreased around 8 percent to $13.59.