NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Tuesday that its fourth quarter revenues rose 10 percent year over year, buoyed by an increase in its prostate cancer testing business and international test revenues.
For the three months ended Dec. 31, 2016, Genomic Health's total revenues rose to $82.7 million from $75.1 million in the same period last year. Wall street analysts had expected, on average, revenue of $84.1 million.
The company reported a net income of $1.4 million, or $.04 per share, in Q4 2016, compared to a loss of $2.7 million, or $.8 per share, in Q4 2015. It beat the consensus Wall Street estimate of a loss per share of $.01.
In the US, Genomic Health's product revenues were $70.0 million overall, 9 percent more than the $64.5 million it saw in the same period last year. Prostate cancer test revenue, which totaled $3.6 million during the quarter, made up about 4 percent of the year-over-year growth, the company said.
International revenue rose 13 percent year over year to $12 million in the fourth quarter of 2016, from $10.6 million a year ago. This represents a 16 percent increase on a constant currency basis, the company added.
Overall, the firm said that it delivered 30,020 test results in the fourth quarter of 2016 compared to 27,730 results delivered in Q4 2015.
The company's R&D costs in Q4 rose 21 percent to $15.3 million from $12.6 million, while its SG&A spending climbed almost 3 percent to $52.7 million from $51.4 million.
Genomic Health Chairman, CEO, and President Kim Popvits said during a call discussing the firm's earnings that with market share for its noninvasive breast cancer testing holding steady in the US, focus in the upcoming year will be on international growth in breast cancer, and on the US invasive breast cancer and prostate cancer markets.
Brad Cole, the company's Chief Operating Officer and CFO said that based on Q4 performance in prostate cancer tests delivered, as well as reported revenue, Genomic Health believes that it is now the market leader in low- and intermediate-risk prostate cancer.
According to Chief Medical Officer Phil Febbo, data from 21 clinical studies and more than 3,600 patients in the prostate cancer setting is expected to support the company's efforts to gain Medicare coverage for patients with intermediate disease and help increase coverage by private payors across the board.
For full year 2016, Genomic Health posted $327.9 in revenue, a 14 percent increase over $287.5 million during the previous year, but short of the analysts' average estimate of $329.3 million.
The company posted a net loss of $13.9 million, or $0.42 per share, for full year 2016, compared to a loss of $33.3 million, or $1.03 per share, in 2015. Analysts had expected on average a loss of $.46 per share.
In the US, the company's product revenues rose 14 percent to $280.1 million in 2016 from about $246 million in 2015. International product revenue rose 13 percent to $46.8 million from $41.5 million the prior year. This translates to a 15 percent increase on a constant currency basis, the company said.
Revenue from the company's prostate cancer testing in the US totaled $10.8 million for the year, contributing to approximately 3 percent of total product revenue growth.
"In 2016, we delivered double-digit revenue and test growth for the year, and achieved profitability in the fourth quarter," Popovits said in a statement. "With substantial opportunity for growth in our global breast and US prostate business and leverage of our unique commercial channel with the planned launch this year of Oncotype DX AR-V7 Nucleus Detect, we expect to continue to deliver long-term revenue growth with improved profitability," she added.
Overall, the firm delivered more than 118,570 Oncotype DX test results in 2016, an 11 percent increase over the 107,030 results in 2015. Breast cancer test volume in the US grew 7 percent year over year. Prostate tests in the US rose 18 percent compared to the prior year, representing approximately 8 percent of total test volume in 2016, the company said.
International test volume grew 23 percent compared to 2015, representing approximately 24 percent of the company's total volume during the year, Genomic Health said.
The firm's R&D spending for the full year rose 3 percent to $61.7 million from $59.8 million in 2015, and its SG&A costs rose 8 percent to $224.3 million from $207.9 million.
Genomic Health ended the year with cash and cash equivalents of $40.4 million — excluding the fair value of the company's investment in a marketable security of $9.3 million — and short-term investments of $56.6 million.
The company provided guidance for full year 2017 of total product revenues between $355 million and $370 million, representing growth of between 9 and 13 percent compared to 2016.
"In 2017 at the mid-point of revenue guidance, we expect to deliver 11 percent revenue growth and positive net income for the full year, which requires operating leverage of more than 40 percent," Cole said in a statement. "We anticipate that expected reimbursement progress in the second half of the year will contribute to accelerated revenue growth."
"The value we created this past year … has generated momentum we expect will lead to full-year profitability in 2017," Popovits added.
The company's goals for the upcoming year include continuing to grow its invasive breast cancer testing business, to increase reimbursement for its genomic prostate cancer test in the US and its breast cancer tests abroad, and to launch the planned Oncotype DX AR-V7 Nucleus Detect test with Epic Sciences.
She also said that the company plans to expand its Oncotype IQ platform through "internal product development and strategic partnerships," but did not detail any other tests that company expects to announce.