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Myriad's Fiscal Q3 Revenues Fall 2 Percent but Beat Wall Street Expectations

NEW YORK (GenomeWeb) – Myriad Genetics reported this morning that its fiscal third quarter revenues dropped 2 percent year over year, but it still handily beat the predictions of Wall Street analysts.

For the three months ended March 31, the firm reported total revenues of $193.5 million compared to $196.9 million in its fiscal Q3 2017, beating the consensus Wall Street estimate of $188.2 million.

Myriad's molecular diagnostic testing revenue fell about 3 percent overall to $179.7 million from $185.2 million in Q3 2017. Within that category, hereditary cancer test sales were responsible for a large portion of the reduction, dropping 12 percent to $123.3 million from $140.8 million a year earlier.

Myriad CFO Bryan Riggsbee said during a call discussing the firm's earnings that this decline was largely offset by new product growth, and that the company estimates that without the impact of bad weather during the third quarter, its overall revenues would have been closer to flat year-over-year.

A top strategic goal for Myriad continues to be to grow adoption and reimbursement of its assays beyond the hereditary cancer testing that was its original hallmark.

In Q3 this year, the company's non-hereditary cancer tests and services accounted for 71 percent of overall volume and 36 percent of total revenue, both new records for the company, according to Myriad CEO Mark Capone.

GeneSight, which Myriad pulled in through its acquisition of Assurex in 2016, brought in revenues of $30.4 million in Q3 compared to $23.9 million in the same quarter of 2017.

"We once again set a record with an additional 2,300 new ordering physicians and over 11,000 total ordering doctors," Riggsbee said during the firm's call with investors and analysts.

Ordering physicians increased 37 percent year over year, he added, which Myriad believes reflects a positive response to top-line data released earlier this year from the company's randomized controlled trial of the PGx test, and a strong indication of future demand trends.

Researchers presented a new report on these trial results yesterday at at the American Psychiatric Association (APA) annual meeting in New York, reiterating a conclusion that the use of GeneSight to guide treatment decisions can improve outcomes in depressed patients when compared to standard drug prescribing.

Myriad has said previously that it expects full publication of this trial later this year to support additional reimbursement decisions by private insurers, but added today that it has already received a new coverage decision from an unnamed "top-20 payor" in the Mid-Atlantic region.

Myriad's Vectra DA rheumatoid arthritis test brought in $15 million during the quarter, a 34 percent increase from $11.2 million in the same period last year. Riggsbee said that much of that increase was attributable to a new Medicare payment rate under PAMA, but that the company also saw strong volume growth sequentially.

For Myriad's Prolaris prostate cancer test, revenues nearly doubled compared to the same quarter last year, driven by an expansion of Medicare coverage to intermediate-risk patients, the implementation of PAMA, and to double-digit volume growth, Riggsbee said. The test brought in $6.5 million in fiscal Q3, a 91 percent increase from $3.4 million in the year-ago period.

Quarterly revenue from the company's EndoPredict breast cancer test was flat year over year at $2.3 million. Importantly, after initially releasing a draft recommending against the adoption of genomic tests like EndoPredict this February, the UK's National Institute for Health and Care Excellence, or NICE, issued a revised document in April that includes the test as one of three endorsed prognostic assays.

Capone said that the company expects its inclusion in the final version of the NICE recommendation, which is expected later this year and would then allow adoption of EndoPredict by the UK's National Health Service.

Myriad's other testing revenues fell 39 percent to $2.2 million from $3.6 million, and its pharmaceutical and clinical service revenues increased 18 percent to $13.8 from $11.7 million in Q3 2017.

Capones said that based on the performance during the quarter, Myriad has again increased its full-year 2018 revenue expectations. The company now expects between $771 million and $773 million in revenue and adjusted EPS of $1.19 to $1.21 for the year. It had previously predicted FY2018 revenues of between $760 million and $770 million and adjusted EPS of $1.11 to $1.16.

Reflective of the company's shift to focusing its international testing to a disseminated, kit-based model, Capone also said that Myriad plans to close its lab in Munich, Germany by the end of this calendar year, and sell its associated Munich clinic ideally by the end of first quarter of FY 2019.

Myriad's Q3 net income was $11.4 or $.16 per share, compared to $4.2 million, or $.06 per share, in Q3 2017. On an adjusted basis, its EPS was $.31, beating the average Wall Street estimate of $.27.

The firm's third quarter R&D expenses rose about 5 percent to $18.5 from $17.6 million, and its SG&A spending dropped nearly 6 percent to $115.1 from $122.1 million.

Myriad ended the quarter with $97.4 million in cash and cash equivalents and $59.9 million in marketable investment securities.

The company's shares were up about nearly 10 percent at $31.74 in Tuesday morning trading on the Nasdaq.