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Genomic Health Q2 Revenues Up 14 Percent, Beat Wall Street Expectations

NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market on Thursday that its second quarter reported revenues rose 14 percent year over year, beating the consensus Wall Street estimate.

For the three months ended March 31, the company's total revenues were $95.6 million, compared with $83.8 million in the second quarter of 2017, when adjusted to the new ASC 606 accounting standard the company adopted this January. On a constant currency, pre-606 basis, revenues rose 13 percent in Q2 2018 from $85.5 million in Q2 2017. Analysts had predicted revenues of $92.1 million on average.

During a conference call with analysts following the release of the earnings, Genomic Health Chairman, President, and CEO Kim Popovits said that the company believes its growth was driven by enhanced operational efficiency, strong reimbursement for the Oncotype DX breast cancer test, and increased private payor reimbursement for the firm's Genomic Prostate Score test.

"With increasing reimbursement in our US urology business and the global impact of the recently published landmark TAILORx results, we are on track to deliver double-digit revenue growth and full year profitability," she added.

Long-awaited results from the TAILORx study — which answered what had been an unresolved question regarding intermediate risk-scores — were presented at the annual meeting of the American Society for Clinical Oncology in June, and simultaneously published in the New England Journal of Medicine.

Genomic Health CSO and Chief Medical Officer Steve Shak said during the call that reception of the new data has been very warm, including across "key countries where there remains significant opportunity for increasing patient access."

Notably, the German Federal Joint Committee — an authority that decides which therapies and medical services are covered under Germany's public health insurance system — said in July that it had commissioned the Institute for Quality and Efficiency in Health Care to evaluate the new TAILORx results on the use of biomarker-based tests in primary breast cancer.

Popovits said that the UK's National Institute for Health and Care Excellence (NICE) made a similar pledge to consider the new data in its ongoing reevaluation of OncotypeDx and other similar assays.

During Q2, Genomic Health's US product revenues rose to $81.4 million from an ASC 606-adjusted $71.0 million in Q2 2017. The company's invasive breast cancer testing in the US rose 13 percent to $72.5 million from $64.2 million in the year-ago quarter. Revenues from the company's Genomic Prostate Score test rose 63 percent to $6.7 million from $4.1 million in the same period last year.

Genomic Health said that it delivered more than 33,590 Oncotype test results during the quarter compared to 31,550 in the same period last year. The company's Oncotype DX breast cancer testing volume grew 4 percent in the US, while prostate cancer test volume increased 32 percent compared to the prior year's quarter.

Popovits said that the company has now seen multiple private payor coverage decisions for its prostate cancer test, including a new positive decision by an unnamed "top five national payor," bringing the total number of covered lives for the GPS test in the US to "more than 92 million."

During a question and answer period, she added that the company believes it is likely that it will see at least one more positive coverage decision from another major payor before the end of the year.

Finally, although Popovits said the firm plans to continue to actively develop its urology pipeline, she also announced during the call that Genomic Health has discontinued its early-stage development of the IsoPSA assay, terminating its milestone-based licensing agreement with Cleveland Diagnostics.

Outside the US, Genomic Health's international product revenues increased 11 percent to $14.2 million from an adjusted $12.8 million in Q2 2017. The company said it delivered about the same number of international tests as it did in the same part of last year, with international testing making up approximately 23 percent of its overall test volume during the quarter.

Genomic Health's second quarter net income was $8.3 million, or $0.23 per share, compared with a net loss of $2.7 million or $.08 per share, a year ago. Analysts, on average, had expected income of $.06 per share.

The company's R&D costs in Q2 shrank slightly to $15.3 million from $15.8 million the prior year, while SG&A costs dropped to $58.8 million from $59.1 million.

The firm ended the quarter with cash and cash equivalents totaling $53.8 million and short-term marketable securities of $99.1 million.

For full-year 2018, Genomic Health expects revenues of $366 million to $382 million, EPS of $.00 to $.14, and adjusted EPS of $.39 to $.56. Analysts are expecting revenues of $377.1 million for the year and EPS of $.45.