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Genomic Health Reports 8 Percent Jump in Q1 Revenues

NEW YORK (GenomeWeb News) – Genomic Health's revenues for the first quarter increased 8 percent to $63.1 million from $58.5 million year over year, driven by increased use of its Oncotype DX products and significant growth in the use of its tests in markets outside of the US, the firm reported after the close of the market Thursday.

For the three months ended March 31, Genomic Health reported product revenues of $62.7 million, compared to $57.9 million in the year-ago first quarter. International product revenues grew 69 percent to $8.5 million, comprising 14 percent of the total product revenue. The firm edged past analysts' consensus estimate for total revenues of $62.9 million.

"In the first quarter, we delivered strong year-over-year increases in both product revenue and tests delivered, reflecting our continued success in expanding the US invasive breast cancer market and achieving significant growth in our international business," Kim Popovits, Genomic Health's CEO and president, said in a statement.

"As you may remember, in the first quarter of last year we had stronger than expected revenue performance due to the increase of approximately $1.2 million of cash revenues from payment by Medicare for colon tests performed prior to the establishment of coverage," Genomic Health CFO Dean Schorno said on a conference call following the release of the results. "We anticipate product revenue in the second quarter [of 2013] to be similar to the first quarter due to historical seasonal patterns along with anticipated impact from sequestration, which is expected to be approximately $1 million for the remainder of the year."

The company registered a net loss of $883,000, or $.03 per share, in the first quarter, compared to net income of $777,000, or $.02 per share, during the first quarter of 2012. It matched the consensus Wall Street estimate of a loss of $.03 per share.

Its R&D expenses in the quarter increased 14 percent to $13.7 million from $12 million, and its SG&A costs jumped 12 percent to $40.6 million from $36.3 million year over year.

Genomic Health currently markets Oncotype DX tests for breast cancer recurrence and colon cancer recurrence. In the first quarter, the company delivered 20,350 Oncotype DX test results, compared with more than 18,630 test results delivered in the first quarter of 2012, marking a 9 percent increase.

Genomic Health is planning to launch its third test in the Oncotype DX franchise for prostate cancer next week. The company said that it intends to launch this test immediately following a presentation of positive results from a clinical validation study at the American Urological Association annual meeting on May 8.

Separately, data from an Oncotype DX DCIS clinical validation trial is slated for publication in the Journal of the National Cancer Institute , the company said. "Publication of the DCIS validation study and next week's scheduled launch of our Oncotype DX prostate cancer test represent two significant milestones that we believe will lead to long-term growth beyond our existing core markets," Popovits said in a statement.

Furthermore, Genomic Health is planning to present 10 abstracts involving its Oncotype DX breast, colon, and prostate cancer tests at the American Society of Clinical Oncology annual meeting in Chicago at the end of May.

As of March 31, the company had cash and cash equivalents of $17.1 million and short-term marketable securities of $79 million.

"We continue to expect operating expense increases in the second quarter as we continue to prepare for and execute the launch of our prostate cancer test and further invest in international expansion of our product pipeline," Schorno added on the call. "As such, we currently expect a net loss of approximately $3 million in the second quarter as we seek to realize these opportunities."

In Friday morning trade on the Nasdaq, shares of Genomic Health climbed 5 percent to $31.99.