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Genomic Health Q2 Revenues Improve 13 Percent

NEW YORK (GenomeWeb News) – Genomic Health reported after the close of the market on Wednesday a 13 percent increase year over year in revenues for the second quarter.

For the three months ended June 30, revenues totaled $57.6 million, up from $50.8 million a year ago, but short of the consensus Wall Street estimate of $58.3 million.

Product revenues increased 13 percent to $57.2 million from $50.5 million a year ago, while contract revenues rose 26 percent to $446,000 from $353,000. During the quarter more than 19,020 Oncotype Dx test results were delivered, a 16 percent increase from 16,390 in Q2 2011, the Redwood City, Calif.-based company said.

Genomic Health recorded a profit of $1.8 million, or $.06 per share, down from a profit of $2.3 million, or $.08 per share, in the year-ago period. The company said that the net loss for the quarter related to its wholly owned clinical genetics subsidiary called InVitae was about $800,000. Excluding that business, net income was about $2.6 million.

On average, analysts estimated a loss of $.02 per share for the second quarter.

The firm's R&D costs were up 17 percent to $11.6 million from $9.9 million a year ago, and SG&A spending increased 16 percent to $35.2 million from $30.4 a year ago.

Genomic Health today announced that its founder Randal Scott has resigned from his position as the CEO of InVitae as well as from the Genomic Health board to become chairman and CEO of a new firm, also called InVitae, which combines InVitae — the Genomic Health wholly owned subsidiary — with Locus Development, a privately held genetics firm. Genomic Health has transferred substantially all of the assets of InVitae to Locus to create the new firm.

InVitae will no longer be a wholly owned subsidiary of Genomic Health and will operate as a separate independent company.

Genomic Health also said it has committed to make an additional investment of up to $5 million into InVitae in its current Series C financing round. As a result, Genomic Health will have an ownership stake of less than 20 percent and has the right to increase its ownership in a future financing round.

"By consolidating our investment through this single organization, Genomic Health remains focused on the $3.5 billion global cancer opportunity, across breast, colon, and prostate cancer, as well as developing clinical applications through next-generation sequencing and improving near-term profitability while maintaining a valuable position in the emerging field of genetics," Genomic Health Chairman, President, and CEO Kim Popovits said on a conference call following the release of the results.

The company exited the quarter with $57.0 million in cash and cash equivalents, and $55.6 million in short-term marketable securities.

"Looking ahead, we remain on track to report top line results from our prostate cancer clinical validation study later this year with the goal of launching an Oncotype Dx test for prostate cancer patients in 2013," Popovits added in a statement.

Genomic Health's shares jumped 13 percent to $35.46 in Thursday morning trade on the Nasdaq.

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