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Genomic Health Q1 Revenues Jump 19 Percent

NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Wednesday that its first quarter revenues were up 19 percent percent year over year, driven primarily by continued growth in test volume, mainly in breast cancer, but also in prostate cancer.

The Redwood City, California-based molecular diagnostics firm brought in total revenues of $80.9 million for the three months ended March 31, up from $68.2 million in the first quarter of 2015, and beating the consensus Wall Street estimate of $78.1 million.

Genomic Health said that it delivered 29,510 Oncotype DX test results in the quarter, an increase of 16 percent from 25,430 tests in Q1 2015.

International product revenue was $10.4 million, the same as in the year-ago quarter, or two percent higher if viewed on a constant currency basis.

US test revenue contributed $70.5 million of the firm's total revenues in first quarter of 2016, an increase of 22 percent over the same period in the prior year. Genomic Health also said that its newer prostate cancer test contributed $2.6 million in revenues during the quarter, and represented approximately 4 percent of the firm's total year-over-year revenue growth.

The company's prostate test volume grew 18 percent year over year, and represented approximately 8 percent of total test volume in the first quarter of 2016, similar to Q4 2015.

During a call discussing the firm's Q1 financial results, Genomic Health CFO and COO Bradley Cole said that of the company's $2.6 million in prostate test revenue during the quarter, approximately $1 million was from Centers for Medicare and Medicaid Services reimbursement. Since this represented only about half of the eligible Medicare revenue, Cole said, Genomic Health expects that ongoing efforts to more efficiently collect required Medicare billing data will result in a "higher conversion of tests to revenue in future quarters."

Analysts have questioned whether there may be other factors contributing to Genomic Health's relatively slower growth in the prostate market compared its competitor Myriad Genetics, which saw sales of its Prolaris prostate cancer test jump 940 percent year over year, bringing in $5.2 million in the recently ended quarter.

During the earnings call, Genomic Health Chairman, President, and CEO Kim Popovits said that she views "noise" in the prostate cancer space as a positive thing. "[There is] a lot of conversation around the need to be treating prostate cancer differentially," she said. "But one of the things that continues to resonate [is] … our specific focus on the very low- and low-risk group with the active surveillance endpoint … So we believe that that differentiator is going to continue to be a very positive factor for us."

Although Genomic Health expects usage of its test to grow in higher-risk populations as well, Popovits argued that the firm's main opportunity for immediate growth is in these low- and very low-risk groups.

Genomic Health posted a net loss of $6.4 million or $.19 per share, for the quarter, compared to $9.5 million, or $.30 per share, for Q1 2015. Analysts, on average, had expected a higher loss of $.24 per share.

The company's R&D spending dropped 16 percent to about $16 million from $19.1 million in the previous year's quarter, while its SG&A expenses rose 12 percent to $58 million from $51.9 million in the year-ago quarter.

Among recent business highlights cited by the firm are the establishment of multiple private coverage arrangements for the Oncotype DX prostate cancer test bringing the total number of covered lives in the US to approximately 60 million.

Genomic Health also said it has expanded coverage of the Oncotype DX breast cancer test for patients with one-to-three positive nodes to more than 175 million covered lives.

Outside the US the company saw positive movement in France, with an announcement by the French Ministry of Health of a new access program for genomic tests, including Oncotype DX.

Additionally during the quarter, Genomic Health published three-year clinical outcome results from the PlanB study led by the West German Study Group (WSG) in the Journal of Clinical Oncology.

Results of the study showed that women with Oncotype DX recurrence score results of 11 or less had excellent outcomes with 98 percent disease-free survival rates at three years, despite having high-risk disease by traditional parameters.

The WSG investigators also presented additional five-year PlanB outcome results in a presentation at the 10th European Breast Cancer Conference in Amsterdam.

The company finished the quarter with $30.7 million in cash and cash equivalents and $55.7 million in short-term marketable securities.

In Thursday morning trade on the Nasdaq, shares of Genomic Health were up around 10 percent at $27.20.