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Myriad Genetics Q2 Revenues Increase 15 Percent

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market on Tuesday that its fiscal second quarter revenues increased 15 percent year over year, driven by growth in the hereditary cancer segment and expanding prenatal testing business.

For the three months ended Dec. 31, 2018 the firm reported total revenues of $216.8 million, up from $187.9 million in Q2 2018 and just above the consensus Wall Street estimate of $216.7 million.

Myriad's total molecular diagnostic testing revenues increased 17 percent to $203.0 million from $173.1 million in Q2 2018. Hereditary cancer test sales jumped 4 percent to $126.7 million from $122.2 million a year earlier, marking the first time this segment increased in revenues since fiscal year 2014.

"Hereditary cancer returned to year-over-year revenue growth and the prenatal business saw an inflection in revenue even before the launch of an integrated sales force in January," said Myriad CEO Mark Capone in a conference call discussing the firm's quarterly financials. The company expects pricing for hereditary cancer testing to remain stable into 2020, and more opportunities to grow test volumes and revenues.

The prenatal testing segment, which Myriad recently garnered through its acquisition of Counsyl, recorded revenues of $31.2 million, increasing 12 percent sequentially. According to Myriad CFO Bryan Riggsbee, the company expects the prenatal seqment under Counsyl will be accretive by end of fiscal year 2019..

The GeneSight pharmacogenetic test, however, saw a 24 percent decline in revenues from the year-ago period to $24.0 million from $31.7 million. However, test volume increased by 22 percent year over year and more than 16,000 doctors ordered GeneSight. Although there is strong demand for the test, Riggsbee said revenues declined in Q2 because the company is still educating physicians about complying with Medicare documentation requirements.

Additionally, there was a $4.2 million revenue adjustment for GeneSight in the quarter. "For GeneSight we accrue revenue based on anticipated cash collections over an eight-month time frame," Riggsbee said. "Due to recently implemented, industry-wide laboratory benefit management programs, actual cash collections fell behind those anticipated levels."

The Vectra DA rheumatoid arthritis test brought in $11.8 million in the quarter, up 6 percent from $11.1 million in the prior year, while the Prolaris prostate cancer test had revenues of $6.1 million, a 45 percent year-over-year increase from $4.2 million in Q2 2018.The EndoPredict breast cancer recurrence test had revenues of $2.2 million compared to $2.0 million, a 10 percent increase, reflective of growth in the US and international markets.

During the quarter, Myriad's pharmaceutical and clinical service revenues decreased by 7 percent to $13.8 million from $14.8 million in Q2 2018. Riggsbee attributed the decline due to variability in pharmaceutical companies' orders.

The company had a net income of $2.6 million, or $.03 per share, compared to $30.9 million, or $.43 per share, in Q2 2018. On an adjusted basis, its EPS was $.38, below Wall Street's average estimate of $.41.

The firm's Q2 R&D expenses increased 33 percent to $22.4 million from $16.8 million, and its SG&A spending increased 26 percent to $135.2 million from $107.4 million.

Myriad ended the quarter with $90.6 million in cash and cash equivalents, and $74.8 million in marketable investment securities.

Myriad expects fiscal third quarter revenues of $216 million to $218 million, EPS of $.12 to $.14, and adjusted EPS of $.42 to $.44. For full-year fiscal 2019, the firm is maintaining its revenue guidance of $855 million to $865 million, EPS of $.40 to $.45 and adjusted EPS of $1.70 to $1.75.

"For GeneSight we are anticipating a meaningful rebound in revenue in the second half of fiscal year 2019 based on continued double-digit volume growth and increasing compliance with the new Medicare documentation requirements," Riggsbee said. He added that the revenue guidance for fiscal 2019 does not assume any incremental reimbursement for GeneSight but does assume modest growth in prenatal testing, Prolaris, Vectra DA, and EndoPredict.

On Wednesday morning trading following the earnings call, Myriad's stock price had increased around 5 percent on the Nasdaq.