NEW YORK (GenomeWeb) ─ Genomic Health reported after the close of the market Tuesday that its fourth quarter revenues were up a fraction of 1 percent year over year, falling short of the consensus Wall Street estimate.
For the three months ended Dec. 31, Genomic Health had revenues of $69.1 million compared to $68.8 million in the same period last year. On average, analysts had expected revenues of $72 million.
The firm's fourth quarter product revenue was up 3 percent from $67.1 million in Q4 2013. Last year's fourth quarter also included $1.8 million in revenue from contracts, which wasn't repeated in Q4 2014.
Genomic Health said that it delivered more than 24,770 Oncotype DX test results in the quarter, up 9 percent from the more than 22,720 test results delivered during the same period in 2013. International product revenue was $10.3 million and represented 15 percent of product revenue in the quarter.
Genomic Health reported a net loss of $6.3 million, or $0.20 per share, in Q4, compared with a loss of $9.4 million, or $.30 per share, in Q4 2013. Analysts, on average, had expected the company to post a net loss of $.23 per share.
The company's R&D costs in Q4 dropped 44 percent to $13.3 million from $24.1 million, while its SG&A spending rose 16 percent year over year to $49.2 million from $42.4 million.
For full-year 2014, Genomic Health posted $275.7 million in revenues compared to $261.6 million for the previous year and below the consensus Wall Street estimate of $278.6 million.
The company's total revenue for the year was made up entirely of product revenue, which increased 6 percent year over year from $259.2 million in 2013. The firm delivered more than 95,610 Oncotype DX test results in 2014, up 12 percent from more than 85,500 results in 2013, Genomic Health said.
International product revenue for full-year 2014 was $45 million, the company said, representing 16 percent of total product revenue, and up 19 percent compared to the prior year.
Genomic Health had a net loss of $24.6 million, or $.78 per share, in 2014, compared to a loss of $12.8 million, or $.42 per share, in 2013, beating the average analyst estimate for a loss of $.81 per share.
Genomic Health COO and CFO Brad Cole said during the firm's earnings call that the "increased loss in 2014 was a result of planned investments inUSprostate commercial expansion, international market access, and our liquid biopsy pipeline."
The company's R&D spending decreased to $56.1 million from $66.3 million, and SG&A costs rose to $194.5 million from $165 million the previous year.
Genomic Health ended the year with cash and cash equivalents of $29.7 million and short-term investments of $73.9 million.
"In 2015, we plan to narrow our full-year loss and deliver a profit in the fourth quarter," Cole said in a statement. "With anticipated reimbursement for our prostate cancer test in the US, our breast cancer test in the UK being available through NHS, and increasing DCIS adoption, we expect product revenue to grow," he added.
Genomic Health President and CEO Kim Popovits said during the call that the company's investments in these three main areas have driven its increased revenue over the last year and are expected to now help it deliver a profit by the end of 2015. Combined, international growth, DCIS testing, and prostate cancer testing represent "more than twice the market opportunity" of the company's current breast cancer business, she said.
Genomic Health announced last week that as of April 1, the UK's National Health Service will begin offering the Oncotype DX breast cancer recurrence test to patients who meet certain eligibility criteria.
Cole said that product revenue for the year came in just below the company's guidance "due primarily to approximately $1 million of cash revenue variability in the fourth quarter and lighter volume due to reimbursement delays in western Europe in the second half of the year.
"International revenues slowed while working with NHS and other large European markets to establish the appropriate reimbursement path for Oncotype DX," he explained.
Though Cole said that Genomic Health expects this sort of variability to continue on a country-by-country basis, the NHS decision is an important step for the company in increasing its test volumes and reimbursement outside theUS.
"With more than 3,500 women in the UK having already used the Oncotype DX test, we believe this agreement will help accelerate test adoption beginning in the second quarter and revenue generation primarily in the second half of the year," Cole said.
Meanwhile, Germany is currently the company's highest volume market outside theUS, with 25,000 patients tested to date, even absent a public reimbursement decision. This indicates that there is a "significant opportunity for increased adoption and revenue growth once reimbursement is established" inGermanyas well, Cole said.
In December, Genomic Health also published results of a study in a large cohort of patients with DCIS breast cancer, in which Oncotype DX accurately assessed the 10-year risk of local and invasive local recurrence for those treated with breast conservation surgery.
According to Popovits, while there is already some reimbursement for Oncotype DX in the DCIS setting in the US, the completion of this additional research will be important in helping to grow adoption among physicians.
Popovits said that Genomic Health also "quadrupled" its number of prostate tests in 2014 compared to 2013. She said the company believes it has "delivered the data required to obtain reimbursement [for the prostate test] with the publication of the company's second validation study and presentation of [its] first decision impact study last year."
According to Cole, prostate tests were more than 8 percent of total tests ordered in the fourth quarter of 2014. "Securing reimbursement to begin generating revenue for prostate tests delivered is a critical near-term focus and essential to delivering profit in the fourth quarter of 2015," he said.
Popovits also said that the firm has seen "positive results" in its ongoing studies evaluating a new liquid biopsy platform to detect breast and bladder cancer in blood in urine. She added that Genomic Health is advancing large-scale clinical studies to support launch of its first liquid biopsy test in 2016.
The company provided guidance of $292 to $305 million in total revenues for 2015 and a net loss of between $17 million and $24 million, or basic net loss of between $.53 and $.75 per share. The company expects to deliver between 102,000 and 109,000 Onctotype DX tests over the upcoming year.
In Wednesday morning trade on the Nasdaq, shares of Genomic Health were down around 4 percent at $30.13.