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Genomic Health's Q1 Revenues Rise 2 Percent

NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Tuesday that its first quarter revenues were up two percent year over year, driven by increased sales for its Oncotype DX tests.

The Redwood City, California-based molecular diagnostics firm brought in total revenues of $68.2 million for the three months ended March 31, up from $67 million in the first quarter of 2014 but below the consensus Wall Street estimate of $69.9 million. All of its revenue in the quarter came from product sales.

Genomic Health said that it delivered 25,430 Oncotype DX test results in the quarter, an increase of 10 percent from 23,080 in Q1 2014. The company also said that test volume for international customers grew 7 percent year over year and now represents 20 percent of total test volume.

International product revenue was $10.4 million and represented 15 percent of the company's total revenue.

"We delivered record Oncotype DX test volume and double-digit growth in the first quarter, including nearly 50 percent year-over-year growth in DCIS tests delivered … a five percent increase in our US breast cancer business … increased international use in key international markets … and nearly triple the number of prostate cancer tests delivered compared to last year," Kim Popovits, chairman, CEO, and president of Genomic Health, said during a conference call following the release of the company's financial results.

"Importantly, we are well positioned to deliver key reimbursement milestones and clinical data presentations this year to drive further test utility and revenue growth — returning us to profitability in the fourth quarter," she added.

Additionally, Popovits noted that Genomic Health is continuing to make progress in its efforts to develop a liquid biopsy test and will share new data from a study in bladder cancer later this month at the annual meeting of the American Urological Association.

The firm posted a net loss of $9.5 million, or $.30 per share, for the quarter, up from a loss of $7.4 million, or $.24 per share, for Q1 2014. Analysts, on average, had expected a loss of $.26 per share.

Genomic Health also recognized a $5.5 million tax benefit in the first quarter as a result of the increase in the fair value of the company's interest in Invitae Corporation.

Genomic Health's R&D spending rose to $19.1 million from $14.0 million in the previous year's quarter, and its SG&A expenses rose to $51.9 million from $48.1 million.

Brad Cole, Genomic Health's COO, said that the company's revenues were affected by several factors, including delays in payments under the company's new CPT code in theUS, foreign exchange, and the effect of a strong dollar on international distributor revenues.

While a large majority of US payors have implemented Genomic Health's new CPT code as expected, Cole added, the firm did see some operational delays in billing that impacted breast testing cash revenue in the first quarter by approximately $800,000. The company expects to recover this revenue over the next two quarters, he said.

According to Cole, the company's international product revenues were also reduced by an estimated $1.2 million due to a strong dollar.

Among the recent business highlights cited by the firm was an expansion of the German Association of Gynecological Oncology's treatment guidelines to include the Oncotype DX breast cancer test for node-positive disease and late recurrence.

The guidelines also reconfirmed the Oncotype DX test as the only gene expression test that provides predictive information on the likelihood of chemotherapy benefit for patients with early-stage, hormone-receptor positive invasive breast cancer.

Genomic Health also highlighted its recent milestones in gaining a test-specific Current Procedural Terminology code for the Oncotype DX colon cancer test from the American Medical Association and securing its first purchase agreements with US government facilities for the Oncotype DX prostate cancer test.

Cole also noted that Genomic Health is in the midst of ongoing coverage discussions with leading private payors.

Meanwhile, the company saw nearly triple the number of postate cancer tests delivered compared to the first quarter of 2014.

According to Cole, repeat orders were up 22 percent and the number of physicians who have ordered 10 or more Oncotype DX prostate tests was up 37 percent. "To date more than 1,800 physicians have used the prostate test in their treatment planning," he said.

Cole said Genomic Health recognizes that establishing Medicare reimbursement for the prostate test is a "critical near-term" step, and will be "essential to delivering a profit in the fourth quarter of 2015."

The company finished the quarter with $22.9 million in cash and cash equivalents and $105 million in short-term marketable securities.