Current Report Filing (8-k)

MYRIAD GENETICS, INC.

Date: May 5, 2015

/s/ R. Bryan Riggsbee

R. Bryan Riggsbee

Executive Vice President, Chief Financial Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 5, 2015

MYRIAD GENETICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

0-26642

87-0494517

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

320 Wakara Way

Salt Lake City, Utah 84108

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (801) 584-3600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02

Results of Operations and Financial Condition.

On May 5, 2015, Myriad announced its financial results for the three months ended March 31, 2015. The earnings release is attached hereto as an exhibit to this Current Report on Form 8-K and incorporated herein by reference, and is being furnished pursuant to this Item 2.02 as Exhibit 99.1 to this Current Report on Form 8-K.

ITEM 9.01

Financial Statements and Exhibits.

(d)


Exhibit Number		Description

99.1		Earnings release dated May 5, 2015 for the three months ended March 31, 2015.

The press releases contain hypertext links to information on our website or other parties’ websites. The information on our website and other parties’ websites is not incorporated by reference into this Current Report on Form 8-K and does not constitute a part of this Form 8-K.

In accordance with General Instruction B-2 of Form 8-K, the information set forth in Item 2.02 and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Page 2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Page 3

EXHIBIT INDEX


Exhibit Number		Description

99.1		Earnings release dated May 5, 2015 for the three months ended March 31, 2015.

Page 4

Exhibit 99.1

LOGO

News Release


Media Contact:	Ron Rogers	Investor Contact:	Scott Gleason
	(801) 584-3065		(801) 584-1143
	rrogers@myriad.com		sgleason@myriad.com

Myriad Genetics Reports Fiscal Third-Quarter 2015 Financial Results

•

Total Revenue of $180.0 Million

•

Adjusted Diluted EPS of $0.40 and Diluted EPS of $0.29

•

myRisk™ Hereditary Cancer Panel Ended Third Quarter at 58 Percent Conversion

•

Myriad Acquires MVZ Clinic to Facilitate Reimbursement in Germany

•

Company Provides Fiscal Fourth-Quarter 2015 Financial Guidance

SALT LAKE CITY, UTAH, May 5, 2015 – Myriad Genetics, Inc. (NASDAQ: MYGN) today announced financial results for its fiscal third-quarter and nine months ended March 31, 2015, provided an update on recent business highlights and provided fiscal fourth-quarter and revised fiscal year 2015 financial guidance.

“I am pleased with our financial results for the third quarter particularly in light of the severe weather conditions across the northeast during January and February,” said Peter D. Meldrum, president and chief executive officer of Myriad. “More importantly, we believe we are positioned to see sequential growth in both revenues and earnings in the fourth quarter and are making excellent progress toward diversifying our portfolio and growing revenues.”

Fiscal Third-Quarter 2015 Financial Highlights

•

Total revenue for the fiscal third quarter was $180.0 million compared to $182.9 million in the same period of the prior year, a decrease of 1.6 percent. Fiscal third-quarter 2015 revenue was detrimentally impacted by approximately $4 million due to severe weather conditions in the northeast throughout the months of January and February. The following tables display Myriad’s product revenue by market segment and product:


	Fiscal Third Quarter
($ in millions)	2015		2014		Percentage Change
Molecular diagnostic testing revenue:

Hereditary cancer testing revenue	$	159.0	$	169.6		(6.2	%)

Vectra^® DA revenue		10.5		3.1		238.7	%

Other testing revenue		3.5		3.5		0.0	%


Total molecular diagnostic testing revenue		173.0		176.2		(1.8	%)


Pharmaceutical and clinical service revenue		7.0		6.7		4.5	%


Total Revenue	$	180.0	$	182.9		(1.6	%)


	Fiscal Third Quarter
($ in millions)	2015		2014		Percentage Change
Molecular diagnostic segment revenue:
Oncology	$	86.1	$	92.4		(6.8	%)
Preventive Care		76.4		80.7		(5.3	%)
Rheumatology		10.5		3.1		238.7	%

Total molecular diagnostic testing revenue	$	173.0	$	176.2		(1.8	%)

•

myRisk Hereditary Cancer revenue increased to $81.6 million in the third quarter of fiscal 2015 from $14.5 million in the third quarter of the prior year, and the Company exited the quarter with 58 percent of incoming hereditary cancer samples ordered as myRisk testing.

•

Adjusted operating income was $46.2 million in the third quarter which excludes certain non-cash amortization charges, one-time executive transition costs and one-time expenses tied to discontinued operations. Adjusted operating income declined 33 percent year-over-year primarily due to dilution associated with the Crescendo acquisition, lower gross margins associated with the transition costs of myRisk testing and product launch expenses for Prolaris^®, myPath^® Melanoma and myPlan^® Lung Cancer tests. GAAP operating income was $35.7 million, compared to $55.3 million in the same period of the previous year.

•

Third-quarter adjusted net income was $29.3 million compared to $46.2 million in the same period of the previous year and adjusted diluted earnings per share were $0.40 compared to $0.60 in the same period of the prior year. GAAP net income was $21.5 million compared to $36.8 million in the same period of the previous year, and GAAP diluted earnings per share were $0.29, compared to $0.48 in the same period of the prior year.

•

During the quarter, the Company repurchased approximately 1.8 million shares, or $62 million, of common stock under its share repurchase program. In February 2015 the Company’s board authorized the company to repurchase an additional $200 million of its common stock, almost all of which was remaining as of the end of the third quarter. Fiscal third-quarter diluted weighted average shares outstanding were 73.9 million compared to 76.4 million in the same period last year.

Business Highlights

•

Myriad acquired a licensed German MVZ (Medizinisches Versorgungszentrum) clinic near Munich, Germany during the fiscal third quarter which the Company believes will facilitate penetration into the German molecular diagnostic market. The MVZ will allow Myriad to directly negotiate reimbursement with government and private insurance providers in the German market and collaborate with hospitals and physician groups. Myriad believes the acquisition will be slightly accretive to earnings per share for the foreseeable future.

•

Myriad received a final local coverage determination (LCD) from Palmetto and a draft local coverage determination from Noridian covering its Prolaris test for low and very low risk patients with prostate cancer. The formal comment period on the draft LCD expired on April 30, 2015, and Myriad is awaiting a final Medicare reimbursement decision on Prolaris.

•

During the third quarter, Myriad signed an expanded agreement with BioMarin Pharmaceutical. Under the expanded collaboration, BioMarin has agreed to use Myriad’s myChoice™ HRD companion diagnostic test to prospectively identify patients with metastatic breast, ovarian and potentially other tumor types that may be sensitive to BioMarin’s PARP inhibitor, talazoparib.

•

The Company announced the expansion of its companion diagnostic collaboration with AstraZeneca. Under the terms of the expanded agreement, Myriad’s BRACAnalysis CDx™ test will be used to prospectively identify patients with metastatic pancreatic cancer that may respond to treatment with AstraZeneca’s PARP inhibitor, Lynparza™ (olaparib).

•

Data from Myriad’s first pivotal clinical validation on myPath Melanoma testing was published in the Journal of Cutaneous Pathology, which demonstrated that the myPath™ Melanoma test is highly effective at differentiating benign skin moles from malignant melanoma with greater than 90 percent accuracy.

•

Myriad presented its third clinical utility study on myPath Melanoma testing at the American Academy of Dermatology annual meeting. The study followed patients for 6 to12 months after their diagnosis and in 214 patients who received a benign myPath Melanoma score there was no evidence of recurrent disease.

Fiscal Fourth Quarter and Fiscal Year 2015 Financial Guidance

The Company is projecting total revenues for the fiscal fourth quarter ending June 30, 2015 of $187 to $189 million and adjusted diluted earnings per share of $0.40 to $0.42 (GAAP diluted EPS of $0.28 to $0.30). Based on this financial guidance and third quarter financial results, the Company is revising its fiscal year 2015 financial guidance and now expects total revenues of $720 to $722 million and adjusted diluted earnings per share of $1.44 to $1.46 (GAAP diluted EPS of $1.09 to $1.11). The primary reasons for this guidance revision are related to the impact of severe weather on our fiscal third-quarter revenue, a delay in Medicare reimbursement for Prolaris until the first quarter of fiscal year 2016, and a delay in international reimbursement. These projections are forward-looking statements and are subject to the risks summarized in the safe harbor statement at the end of this press release. The Company will provide further details on its business outlook during the conference call it is holding today to discuss its fiscal third quarter 2015 financial results.

Conference Call and Webcast

A conference call will be held today, Tuesday, May 5, 2015, at 4:30 p.m. Eastern Time to discuss Myriad’s financial results for the fiscal third quarter of 2015, business developments and financial guidance. The dial-in number for domestic callers is (800) 732-8470. International callers may dial (212) 231-2910. All callers will be asked to reference reservation number 21766620. An archived replay of the call will be available for seven days by dialing (800) 633-8284 and entering the reservation number above. The conference call also will be available through a live Webcast at www.myriad.com.

About Myriad Genetics

Myriad Genetics is a leading molecular diagnostic company dedicated to making a difference in patients’ lives through the discovery and commercialization of transformative tests to assess a person’s risk of developing disease, guide treatment decisions and assess risk of disease progression and recurrence. Myriad is focused on strategic directives to grow existing markets, diversify through the

introduction of new products, including companion diagnostics, as well as to expand internationally. For more information on how Myriad is making a difference, please visit the Company’s website: www.myriad.com.

Myriad, the Myriad logo, BART, BRACAnalysis, Colaris, Colaris AP, myPath, myRisk, myRisk Hereditary Cancer, myChoice, myPlan, BRACAnalysis CDx, Tumor BRACAnalysis CDx, myChoice HRD, Vectra and Prolaris are trademarks or registered trademarks of Myriad Genetics, Inc. or its wholly owned subsidiaries in the United States and foreign countries. MYGN-F, MYGN-G Lynparza is a trademark of AstraZeneca PLC.

Safe Harbor Statement

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the Company’s belief that it is positioned to see sequential growth in both revenues and earnings in the fourth quarter and the Company making excellent progress toward diversifying the Company’s portfolio and growing revenues; the Company’s belief that the acquisition of the MVZ will facilitate penetration into the German molecular diagnostic market and allow the Company to directly negotiate reimbursement with government and private insurance providers in the German market and collaborate with hospitals and physician groups; the Company’s belief that the clinic acquisition will be slightly accretive to earnings per share for the foreseeable future; the timing and extent of a final Medicare reimbursement decision on Prolaris testing; the success and outcome of the Company’s expanded collaborations with BioMarin and Astrazeneca; the continued transition of the Company’s testing to its myRisk cancer panel; the Company’s fiscal fourth quarter 2015 guidance and revised fiscal year 2015 financial guidance, including the primary reasons stated for the guidance and guidance revision, under the caption “Fiscal Fourth Quarter and Fiscal Year 2015 Financial Guidance”; and the Company’s strategic directives under the caption “About Myriad Genetics.” These “forward-looking statements” are based on management’s current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by forward-looking statements. These risks and uncertainties include, but are not limited to: the risk that sales and profit margins of our molecular diagnostic tests and pharmaceutical and clinical services may decline or will not continue to increase at historical rates; risks related to our ability to transition from our existing to new testing services, including unexpected costs and delays; risks related to decisions or changes in the governmental or private insurers’ reimbursement levels for our tests or our ability to obtain reimbursement for our new tests at comparable levels to our existing tests; risks related to increased

competition and the development of new competing tests and services; the risk that we may be unable to develop or achieve commercial success for additional molecular diagnostic tests and pharmaceutical and clinical services in a timely manner, or at all; the risk that we may not successfully develop new markets for our molecular diagnostic tests and pharmaceutical and clinical services, including our ability to successfully generate revenue outside the United States; the risk that licenses to the technology underlying our molecular diagnostic tests and pharmaceutical and clinical services and any future tests and services are terminated or cannot be maintained on satisfactory terms; risks related to delays or other problems with operating our laboratory testing facilities; risks related to public concern over genetic testing in general or our tests in particular; risks related to regulatory requirements or enforcement in the United States and foreign countries and changes in the structure of the healthcare system or healthcare payment systems; risks related to our ability to obtain new corporate collaborations or licenses and acquire new technologies or businesses on satisfactory terms, if at all; risks related to our ability to successfully integrate and derive benefits from any technologies or businesses that we license or acquire; risks related to our projections about our business, results of operations and financial condition; risks related to the potential market opportunity for our products and services; the risk that we or our licensors may be unable to protect or that third parties will infringe the proprietary technologies underlying our tests; the risk of patent-infringement claims or challenges to the validity of our patents or other intellectual property; risks related to changes in intellectual property laws covering our molecular diagnostic tests and pharmaceutical and clinical services and patents or enforcement in the United States and foreign countries; risks of new, changing and competitive technologies and regulations in the United States and internationally; and other factors discussed under the heading “Risk Factors” contained in Item 1A in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. All information in this press release is as of the date of the release, and Myriad undertakes no duty to update this information unless required by law.

MYRIAD GENETICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)


(in thousands, except per share amounts)	Three Months Ended						Nine Months Ended
	Mar. 31, 2015			Mar. 31, 2014			Mar. 31, 2015		Mar. 31, 2014

Molecular diagnostic testing	$	172,978		$	176,191		$	516,634	$	565,335
Pharmaceutical and clinical services		7,007			6,733			16,582		24,115

Total revenue		179,985			182,924			533,216		589,450

Costs and expenses:
Cost of molecular diagnostic testing		33,011			23,648			100,859		67,842
Cost of pharmaceutical and clinical services		3,282			2,961			8,152		10,379
Research and development expense		16,673			13,397			56,788		47,289
Selling, general, and administrative expense		91,279			87,631			269,415		242,752

Total costs and expenses		144,245			127,637			435,214		368,262

Operating income		35,740			55,287			98,002		221,188

Other income (expense):
Interest income		124			2,498			265		5,190
Other		(298	)		(442	)		1,117		(1,066	)

Total other income		(174	)		2,056			1,382		4,124

Income before income taxes		35,566			57,343			99,384		225,312

Income tax provision		14,091			20,573			37,896		82,719

Net income	$	21,475		$	36,770			61,488		142,593


Earnings per share:
Basic	$	0.30		$	0.50		$	0.85	$	1.87
Diluted	$	0.29		$	0.48		$	0.82	$	1.82

Weighted average shares outstanding
Basic		70,696			73,821			71,985		76,173
Diluted		73,870			76,374			75,122		78,332

Condensed Consolidated Balance Sheets (Unaudited)


	Mar. 31, 2015		Jun. 30, 2014
(In thousands)
Cash, cash equivalents, and marketable investment securities	$	175,633	$	270,586
Trade receivables, net		92,195		81,869
Other receivables		2,992		3,198
Prepaid expenses		9,985		6,921
Inventory		29,359		23,919
Prepaid taxes		—		13,609
Property, plant and equipment, net		69,099		34,594
Other assets		5,000		5,000
Intangibles, net		195,691		205,312
Goodwill		185,228		169,181
Deferred tax assets		13,867		9,625

Total assets	$	779,049	$	823,814

Accounts payable and accrued liabilities	$	65,834	$	79,488
Deferred revenue		1,339		1,090
Long term liabilities		16,867		—
Uncertain tax benefits		26,111		24,238
Stockholders’ equity		668,898		718,998

Total liabilities and stockholders’ equity	$	779,049	$	823,814

Statement regarding use of non-GAAP financial measures

In this press release, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and to manage the Company’s business. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial statements.

Following is a description of the adjustments made to GAAP measures:

•

Acquisition — amortization of intangible assets: Represents recurring amortization charges resulting from the acquisition of intangible assets including developed technology and database rights.

•

Executive transition cost: Represents one-time expenses tied to the transition of key executive officers at the Company.

•

Discontinued operations: One-time charges associated with the closing of business units.

The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Non-GAAP results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Reconciliation of GAAP to Non-GAAP Financial Measures

for the Three and Nine Months ended March 31, 2015 and 2014

(Unaudited data in thousands, except per share amount)


	Three Months Ended						Nine Months Ended
	Mar. 31, 2015			Mar. 31, 2014			Mar. 31, 2015			Mar. 31, 2014

Revenue	$	179,985		$	182,924		$	533,216		$	589,450

GAAP Cost of molecular diagnostic testing	$	33,011		$	23,648		$	100,859		$	67,842
GAAP Cost of pharmaceutical and clinical services		3,282			2,961			8,152			10,379
Acquisition - change of control payments		—			(238	)		—			(238	)
Acquisition - accelerated share-based compensation		—			(185	)		—			(185	)
Acquisition - amortization of intangible assets		—			—			—			—

Non-GAAP COGS	$	36,293		$	26,186		$	109,011		$	77,798

Non-GAAP Gross Margin		80	%		86	%		80	%		87	%

GAAP Research and Development	$	16,673		$	13,397		$	56,788		$	47,289
Acquisition - change of control payments		—			(1,710	)		—			(1,710	)
Acquisition - accelerated share-based compensation		—			(2,075	)		—			(2,075	)
Acquisition - amortization of intangible assets		(78	)		(78	)		(234	)		(234	)
Executive transition costs		(398	)		—			(398	)		—
Discontinued operations		(178	)		—			(178	)		—

Non-GAAP R&D	$	16,019		$	9,534		$	55,978		$	43,270

GAAP Selling, General and Administrative	$	91,279		$	87,631		$	269,415		$	242,752
Acquisition - change of control payments		—			(3,747	)		—			(3,747	)
Acquisition - accelerated share-based compensation		—			(4,669	)		—			(4,669	)
Acquisition - amortization of intangible assets		(3,057	)		(1,067	)		(9,172	)		(1,400	)
Executive transition costs		(6,788	)		—			(11,100	)		—

Non-GAAP SG&A	$	81,434		$	78,148		$	249,143		$	232,936

GAAP Operating Income	$	35,740		$	55,287		$	98,002		$	221,188
Acquisition - change of control payments		—			5,695			—			5,695
Acquisition - accelerated share-based compensation		—			6,929			—			6,929
Acquisition - amortization of intangible assets		3,135			1,145			9,406			1,634
Executive transition costs		7,186			—			11,498			—
Discontinued operations		178			—			178			—

Non-GAAP Operating Income	$	46,239		$	69,056		$	119,084		$	235,446

Non-GAAP Operating Margin		26	%		38	%		22	%		40	%

GAAP Net Income	$	21,475		$	36,770		$	61,488		$	142,593
Acquisition - change of control payments		—			5,695			—			5,695
Acquisition - accelerated share-based compensation		—			6,929			—			6,929
Acquisition - amortization of intangible assets		3,135			1,145			9,406			1,634
Executive transition costs		7,186			—			11,498			—
Discontinued operations		178			—			178			—
Tax expense associated with non-GAAP adjustments		(2,713	)		(4,337	)		(4,415	)		(4,337	)

Non-GAAP Net Income	$	29,261		$	46,202		$	78,155		$	152,514

GAAP Diluted EPS	$	0.29		$	0.48		$	0.82		$	1.82
Non-GAAP Diluted EPS	$	0.40		$	0.60		$	1.04		$	1.95

Diluted shares outstanding		73,870			76,374			75,122			78,332

Free Cash Flow Reconciliation

(Unaudited data in thousands)


	Three Months Ended						Nine Months Ended
	Mar. 31, 2015			Mar. 31, 2014			Mar. 31, 2015			Mar. 31, 2014

GAAP cash flow from operations	$	29,878		$	11,249		$	89,456		$	149,280

Capital expenditures		(4,457	)		(1,555	)		(21,905	)		(9,653	)


Free cash flow	$	25,421		$	9,694		$	67,551		$	139,627

Reconciliation of GAAP to Non-GAAP for Fiscal Year 2015 and Fourth Quarter Fiscal Year 2015 Financial Guidance

The Company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from guidance set forth below. Some of the factors that could affect the Company’s financial results are stated in the safe harbor statement of this press release. More information on potential factors that could affect the Company’s financial results are included under the heading “Risk Factors” contained in Item 1A in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.


		Fiscal Year 2015
Diluted net income per share
GAAP diluted net income per share		$1.09 - $1.11
Acquisition - amortization of intangible assets		0.16
Executive transition costs		0.19

Non-GAAP diluted net income per share		$1.44 - $1.46


		Fiscal Fourth Quarter 2015
Diluted net income per share
GAAP diluted net income per share		$0.28 - $0.30
Acquisition - amortization of intangible assets		0.04
Executive transition costs		0.08

Non-GAAP diluted net income per share		$0.40 - $0.42