This article has been updated with additional information from Myriad Genetics' earnings call.
NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market on Tuesday that its second quarter revenues in fiscal 2018 dipped 1 percent, largely due to a 12 percent decline in hereditary cancer testing revenues, which dragged down its total molecular diagnostic testing sales.
For the three months ended Dec. 31, the firm reported total revenues of $194.0 million, down from $196.5 million in Q2 2017, but beating the consensus Wall Street estimate of $188.8 million.
Myriad's total molecular diagnostic testing revenues declined 3 percent to $179.2 million from $183.9 million in Q2 2017. Hereditary cancer test sales fell to $126.9 million from $143.9 million a year earlier.
On a conference call with analysts following the release of the earnings, however, Myriad CFO Bryan Riggsbee said that hereditary cancer testing volumes grew by more than 3 percent year over year, which offset the price reductions in long-term payor contracts.
In a statement, Myriad CEO Mark Capone noted that the company's financial performance in the quarter had exceeded expectations, and as a result, the firm increased it financial guidance for the fiscal year. In addition to strong hereditary cancer volume trends during Q2, Capone highlighted the continued growth of the GeneSight pharmacogenetic test, revenues from which increased 46 percent year over year, to $31.7 million in Q2 2018 from $21.7 million in Q2 2017.
During the call, Riggsbee said there were an additional 2,000 new ordering physicians for GeneSight , and 12,500 doctors in total ordered the test during the quarter.
Meanwhile, the firm's Vectra DA rheumatoid arthritis test brought in $11.1 million in revenues, marking a 4 percent increase from $10.7 million a year earlier; its Prolaris prostate cancer test had revenues of $5.0 million, a 61 percent increase from $3.1 million in the year-ago period; and the EndoPredict breast cancer test netted $2.0 million in revenues, a 25 percent increase from $1.6 in Q2 2017. Other testing revenues fell 14 percent to $2.5 million from $2.9 million.
Vectra DA was priced favorably in the 2018 clinical lab fee schedule, Riggsbee noted, and Myriad is expecting higher test volumes in the second half of the fiscal year. "We expect a meaningful increase in Vectra DA revenue beginning in the fiscal third quarter," he said.
A Medicare local coverage decision that took effect last September for Prolaris in intermediate risk patients bolstered test volume and increased average selling price. Q2 revenues for the test included $900,000 of retrospective revenues from Medicare coverage of intermediate risk patients.
The revenue growth for EndoPredict in Q2 was largely due to a 70 percent sequential increase in US test volumes. International revenues for the test were flat year-over-year due to reimbursement delays in France, Riggsbee said, adding, "We are positioned for increased revenue in the US market for EndoPredict, beginning in the fiscal third quarter as our final LCD from [Medicare contractor] Noridian became effective on Jan. 30."
During the quarter, Myriad's pharmaceutical and clinical service revenues rose 18 percent to $14.8 million from $12.6 million in Q2 2017. "The higher than anticipated pharmaceutical and services revenue was tied to the timing of some large pharmaceutical contracts without Myriad RBM business," Riggsbee said.
Myriad's Q2 net income rose to $32.1 million, or $.45 per share, from $5.9 million, or $.09 per share, in Q2 2017. On an adjusted basis, its EPS was $.31, beating the average Wall Street estimate of $.24.
The firm's Q2 R&D expenses decreased 10 percent to $16.8 million from $18.6 million, while its SG&A spending was down 4 percent to $115.4 million from $120.3 million. The reduction in R&D expense was due to the completion of a large, randomized study for GeneSight, and "the consolidation of our research programs, to focus on broader reimbursement coverage," Riggsbee said.
Myriad ended the quarter with $88.7 million in cash and cash equivalents, and $54.8 million in marketable investment securities.
Myriad expects Q3 revenues of $186 million to $188 million, EPS of $.11 to $.13, and adjusted EPS of $.26 to $.28. The firm increased its full-year 2018 revenue expectations to between $760 million and $770 million, and now expects EPS of $1.82 to $1.87 and adjusted EPS of $1.11 to $1.16 for the year. Previously, Myriad had projected FY2018 revenues of between $750 million and $770 million, and adjusted EPS of $1.00 to $1.05.
Analysts are expecting revenues of $192.1 million and EPS of $.26 for Q3, and revenues of $770.2 million and EPS of $1.05 for the year.
The company also said that its expects the tax reform legislation to positively benefit its fiscal 2018 full-year adjusted earnings per share by approximately $.06, with $.02 recorded in Q2 and the remaining $.04 benefit anticipated across the second half of fiscal year 2018.
Myriad's shares dropped 3 percent to $34.62 in Wednesday morning trading on the Nasdaq.