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Genomic Health Q3 Revenues Rise 23 Percent Post-TAILORx

NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Tuesday that its third quarter revenues were up 23 percent year over year on an adjusted basis.

The company's total revenues for the three months ended Sept. 30 were $101.3 million, compared with Q3 2017 revenues of $82.2 million adjusted for the change to ASC 606 accounting standards that the company adopted this January, and reported revenues of $83.8 million. Wall Street analysts had expected revenues of $94.4 million for the third quarter.

During a call discussing the firm's third quarter results, Genomic Health Chairman, CEO, and President Kim Popovits attributed the positive growth to increasing global demand for the firm's Oncotype DX Breast Recurrence Score test, continued demand and growing reimbursement for the company's newer Genomic Prostate Score test, and success in driving "operational efficiencies." She added that Genomic Health is raising its full year 2018 guidance and now expects to deliver more than 17 percent revenue growth for the year, surpassing the top end of its previous predictions.

Genomic Health's US product revenue rose to $85.8 million in Q3 2018, compared with a pre-606-adjusted revenue of $69.5 million, and a reported revenue of $70.9 million in the same quarter of 2017. US invasive breast cancer testing revenue was up 24 percent in Q3, reaching $76.7 million in the third quarter of 2018, compared with a pre-606 adjusted $61.6 million. Sales of the company's prostate cancer test in the US rose 28 percent to $6.9 million in Q3 2018, compared with $5.4 million in Q3 2017.

Genomic Health said that it delivered more than 34,810 Oncotype test results during the quarter compared to about 31,580 in the same period last year, an increase of about 10 percent. Breast cancer volume was up 12 percent, while prostate cancer tests grew 15 percent compared to the prior year's quarter.

International product revenue was up 22 percent percent at $15.5 million from $12.9 million in Q3 2017 (adjusted to $12.7 million under the new 606 accounting standards). International testing volume grew 6 percent year over year, making up approximately 25 percent of the firm's overall test volume during the quarter.

According to Popovits, expected improvements in test adoption following the publication of the TAILORx intermediate risk score data have manifested according to the company's forecasts.

Milestones for the firm over recent months include an update by the National Comprehensive Cancer Network (NCCN) that elevated the Oncotype DX Breast Recurrence Score to its "preferred" category. Popovitz added during the call that the NCCN also elevated Oncotype DX into the chemotherapy treatment pathway for patients with micro-metastases and for patients with up to three positive lymph nodes.

The German Institute for Quality and Efficiency in Health Care (IQWiG)'s also recently issued a conclusion based on the TAILORx results that Oncotype DX is the only available test with sufficient evidence to guide breast cancer adjuvant chemotherapy decisions.

"We continue to expect decisions [in Germany], as well as from NICE in the UK in the coming months," she added.

Genomic Health CFO Brad Cole added that although a list price is yet to be determined for German reimbursement, this should get finalized "pretty quickly" after the expected endorsement in the next few months.

The company reported net income in Q3 of $12.2 million, or $0.32 per share, compared to a net loss of $2.2 million, or $.06 per share, in the prior year's quarter. Analysts had expected EPS of $.07.

The company's R&D costs in Q3 shrank 10 percent to $15.4 million from $17.2 million in Q3 2017, while SG&A costs rose 5 percent to $58.6 million from $55.8 million.

Popvits said that Genomic Health is making progress in its development of an IVD kit-version of the Oncotype DX Breast Recurrence Score test on Biocartis' Idylla platform with "the successful completion of technical feasibility and the selection of validation study sites."

Genomic Health ended the quarter with cash and cash equivalents of $69.2 million, and short-term marketable securities of $114.0 million.

In its updated guidance, Genomic Health projected full-year 2018 revenues of $389 million to $391 million, EPS of $.72 to $.78, and adjusted EPS of $1.03 to $1.08. The company had previously expected revenues of $366 million to $382 million, EPS of $.00 to $.14, and adjusted EPS of $.39 to $.56 for the year.

Analysts are expecting revenues of $380.9 million and EPS of $.53 for 2018.

Genomic Health's shares rose nearly 24 percent to $87.71 in Wednesday morning trading on the Nasdaq.