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): November 3, 2015
MYRIAD GENETICS, INC.
(Exact name of registrant as specified in its charter)
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| Delaware |
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0-26642 |
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87-0494517 |
| (State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(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 November 3, 2015, Myriad
Genetics, Inc. (“Myriad”) announced its financial results for the three months ended September 30, 2015. The earnings release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
| ITEM 7.01 |
Regulation FD Disclosure. |
On its earnings conference call for the three months ended
September 30, 2015, Myriad also delivered a slide presentation, which is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference. [The slide presentation will also be available under the
“Investors –Events & Presentations” section of Myriad’s website at www.myriad.com.]
FORWARD-LOOKING
STATEMENTS
Exhibits 99.1 and 99.2 contain “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements relating to our business, goals, strategy and financial and operational outlook. 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 existing 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 product portfolio to our new tests; risks related to 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 tests and any future tests 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 our 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 the potential market opportunity for our products; 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; 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, such as the Supreme Court decision in the lawsuit brought against us
by the Association for Molecular Pathology et al; 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 of our most recent Annual Report on Form 10-K, which has been filed
Page 2
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 the exhibits is as of the date of the exhibits, and Myriad undertakes no duty to update this information unless required by law.
| ITEM 9.01 |
Financial Statements and Exhibits. |
(d)
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| Exhibit
Number |
|
Description |
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| 99.1 |
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Earnings release dated November 3, 2015 for the three months ended September 30, 2015. |
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| 99.2 |
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Earnings call slide presentation dated November 3, 2015 for the three months ended September 30, 2015. |
The exhibit(s) may 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 Item 7.01 and in Exhibits 99.1 and 99.2 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 3
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.
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MYRIAD GENETICS, INC. |
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| Date: November 3, 2015 |
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By: |
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/s/ R. Bryan Riggsbee |
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R. Bryan Riggsbee |
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Executive Vice President, Chief Financial Officer |
Page 4
EXHIBIT INDEX
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| Exhibit
Number |
|
Description |
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| 99.1 |
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Earnings release dated November 3, 2015 for the three months ended September 30, 2015. |
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| 99.2 |
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Earnings call slide presentation dated November 3, 2015 for the three months ended September 30, 2015. |
Page 5
Exhibit 99.1
News Release
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| Media Contact: |
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Ron Rogers |
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Investor Contact: |
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Scott Gleason |
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(801) 584-3065 |
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(801) 584-1143 |
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rrogers@myriad.com |
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sgleason@myriad.com |
Myriad Genetics Reports Fiscal First-Quarter 2016 Financial Results
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• |
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Total Revenues of $183.5 Million |
| |
• |
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Adjusted Diluted EPS of $0.41 and Diluted EPS of $0.37 |
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• |
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Myriad Completes Conversion of Targeted Physicians to myRisk™ Hereditary Cancer |
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• |
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Company Maintains Fiscal Year 2016 Financial Guidance and provides Fiscal Second-Quarter 2016 Financial Guidance |
SALT LAKE CITY, UTAH, November 3, 2015 – Myriad Genetics, Inc. (NASDAQ: MYGN) today announced financial results for its fiscal first-quarter
2016, provided an update on recent business highlights, maintained its fiscal year 2016 financial guidance and provided fiscal second-quarter 2016 financial guidance.
“We were very pleased with our results in the first quarter and reiterate our fiscal 2016 guidance,” said Mark C. Capone, president and chief
executive officer of Myriad. “More importantly, we continued the excellent progress on our five-year plan to transform Myriad into a diversified global pioneer in personalized medicine. We are now beginning to see the benefits of the
substantial investments the Company has made in our industry-leading pipeline and international expansion, which we believe will drive significant shareholder value over the next five years.”
Financial Highlights
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• |
|
Below are tables summarizing the financial results and revenue by product class for our fiscal first-quarter 2016: |
Revenue
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Fiscal First Quarter |
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| ($ in millions) |
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2016 |
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2015 |
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%
Change |
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| Molecular Diagnostic Testing Revenue |
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| Hereditary cancer testing revenue |
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$ |
156.7 |
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$ |
150.6 |
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4 |
% |
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| Vectra DA testing revenue |
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|
11.4 |
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10.6 |
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|
8 |
% |
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| Other testing revenue |
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3.8 |
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3.3 |
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15 |
% |
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| Total molecular diagnostic testing revenue |
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171.9 |
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164.5 |
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5 |
% |
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| Pharmaceutical and clinical service revenue |
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11.6 |
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4.3 |
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170 |
% |
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| Total Revenue |
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$ |
183.5 |
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$ |
168.8 |
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9 |
% |
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Income Statement
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Fiscal First Quarter |
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| ($ in millions) |
|
2016 |
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2015 |
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%
Change |
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| Total Revenue |
|
$ |
183.5 |
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$ |
168.8 |
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9 |
% |
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| Gross Profit |
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147.0 |
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133.9 |
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10 |
% |
| Gross Margin |
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80.1 |
% |
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79.3 |
% |
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| Operating Expenses |
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103.7 |
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108.0 |
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(4 |
%) |
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| Operating Income |
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43.3 |
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25.9 |
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|
67 |
% |
| Operating Margin |
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23.6 |
% |
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15.3 |
% |
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| Adjusted Operating Income |
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46.5 |
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29.3 |
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59 |
% |
| Adjusted Operating Margin |
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25.3 |
% |
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17.4 |
% |
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| Net Income |
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26.6 |
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16.0 |
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66 |
% |
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| Diluted EPS |
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0.37 |
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0.21 |
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|
76 |
% |
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| Adjusted EPS |
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$ |
0.41 |
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$ |
0.25 |
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64 |
% |
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| |
• |
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The Company exited the quarter with approximately 80 percent of incoming hereditary cancer tests being ordered as myRisk, representing 100 percent conversion of our targeted physician base. |
| |
• |
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The increase in adjusted operating income and net income on a year-over-year basis was driven by higher revenue, improved operational efficiencies in our myRisk Hereditary Cancer laboratory, lower research and
development expense and leverage in sales, general and administrative expenses. |
2
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• |
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During the quarter, the Company repurchased approximately 1.1 million shares, or $38 million, of common stock under its share repurchase program and ended the quarter with approximately $117 million remaining on
its current share repurchase authorization. Fiscal first-quarter diluted weighted average shares outstanding were 72.1 million compared to 76.1 million in the same period last year. |
Business Highlights
| |
• |
|
At the upcoming American College of Rheumatology annual meeting Myriad will present several studies showing the potential for Vectra DA to predict treatment response in patients with rheumatoid arthritis. The studies
demonstrated that the Vectra DA score was predictive of response to either triple therapy or anti-TNF therapy, predicted flare in patients discontinuing anti-TNF therapy and could predict relapse in patients undergoing tapering for disease modifying
anti-rheumatic drugs. |
| |
• |
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In August, Myriad received a favorable final local coverage determination for its Prolaris test from Noridian, the Medicare Administrative Contractor for the Company. The coverage determination, which became effective
October 15, 2015, covers Prolaris for patients defined as low or very-low risk by the National Comprehensive Cancer Network guidelines. |
| |
• |
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Tufts Health Plan and Myriad signed a three-year contract that will cover Prolaris for all members diagnosed with localized prostate cancer across all risk categories. |
| |
• |
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Myriad presented data at the recent American Society for Dermatopathology that demonstrated the ability of myPath Melanoma to accurately predict cancer outcomes by evaluating 127 patients with melanocytic lesions. Of
the 65 lesions that were classified as melanomas by pathologists, myPath Melanoma results agreed with 61 of these classifications representing a sensitivity of 97 percent. Importantly, myPath Melanoma identified 100 percent of the 14 lesions which
went on to become metastatic melanoma. |
| |
• |
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At the International Association for the Study of Lung Cancer, Myriad presented data that compared the myPlan Lung Cancer score to standard pathological risk factors. Of the 183 patients that were designated as
high-risk by the myPlan Lung Cancer test, less than 50 percent had three or more high-risk features and would have been designated as low-risk utilizing standard pathology. |
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• |
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At the European Society for Clinical Oncology Meeting, Myriad presented new data on its myChoice HRD test from the NOVA study currently being
conducted by TESARO, one of Myriad’s pharmaceutical collaborators. The data showed that 100 percent of patients with a |
3
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BRCA mutation and 55 percent of patients without a BRCA mutation were HRD positive and would have been missed with tumor sequencing alone. Additionally, the myChoice HRD algorithm which utilizes
three proprietary technologies (LOH, TAI, and LST) better defined the HRD positive population than LOH alone. |
Fiscal Second-Quarter
and Fiscal Full-Year 2016 Financial Guidance
Below is a table summarizing Myriad’s fiscal year 2016 and fiscal second-quarter
2016 financial guidance:
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Revenue |
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Adjusted
Earnings Per
Share |
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GAAP Diluted
Earnings Per
Share |
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| Fiscal Year 2016 |
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$ |
750-$770 million |
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$ |
1.60-$1.65 |
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$ |
1.45-$1.50 |
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| Fiscal Second Quarter 2016 |
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$ |
188-$190 million |
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$ |
0.40-$0.42 |
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$ |
0.36-$0.38 |
|
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 first-quarter financial results and fiscal second-quarter and full
fiscal year 2016 financial guidance.
Conference Call and Webcast
A conference call will be held today, Tuesday, November 3, 2015, at 4:30 p.m. Eastern Time to discuss Myriad’s financial results for
the fiscal first quarter, business developments and financial guidance. The dial-in number for domestic callers is (800) 706-9302. International callers may dial (303) 223-4366. All callers will be asked to reference reservation number
21779749. 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 along with a slide presentation will also will be available through a live
Webcast at www.myriad.com.
About Myriad Genetics
Myriad Genetics Inc., is a leading personalized medicine company dedicated to being a trusted advisor transforming patient lives worldwide with
pioneering molecular diagnostics. Myriad discovers and commercializes molecular diagnostic tests that: determine the risk of developing disease, accurately diagnose disease, assess the risk of disease progression, and guide treatment decisions
across six major medical specialties where molecular diagnostics can significantly improve patient care
4
and lower healthcare costs. Myriad is focused on three strategic imperatives: transitioning and expanding its hereditary cancer testing markets, diversifying its product portfolio through the
introduction of new products and increasing the revenue contribution from international markets. 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
5
MYRIAD GENETICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (Unaudited)
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| (in millions, except per share amounts) |
|
Three Months Ended |
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| |
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Sept. 30, 2015 |
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|
Sept. 30, 2014 |
|
| Molecular diagnostic testing |
|
$ |
171.9 |
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|
$ |
164.5 |
|
| Pharmaceutical and clinical services |
|
|
11.6 |
|
|
|
4.3 |
|
|
|
|
|
|
|
|
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| Total revenue |
|
|
183.5 |
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|
|
168.8 |
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| Costs and expenses: |
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|
|
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| Cost of molecular diagnostic testing |
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30.9 |
|
|
|
32.8 |
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| Cost of pharmaceutical and clinical services |
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|
5.6 |
|
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2.1 |
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| Research and development expense |
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|
17.2 |
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|
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22.6 |
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| Selling, general, and administrative expense |
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|
86.5 |
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85.4 |
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| Total costs and expenses |
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|
140.2 |
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|
|
142.9 |
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|
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|
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| Operating income |
|
|
43.3 |
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|
|
25.9 |
|
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| Other income (expense): |
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|
|
|
|
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|
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| Interest income |
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|
0.1 |
|
|
|
0.1 |
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| Other |
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|
0.1 |
|
|
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(0.1 |
) |
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|
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| Total other income |
|
|
0.2 |
|
|
|
— |
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| Income before income taxes |
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|
43.5 |
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|
|
25.9 |
|
|
|
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| Income tax provision |
|
|
16.9 |
|
|
|
9.9 |
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
26.6 |
|
|
$ |
16.0 |
|
|
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|
|
|
|
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| Earnings per share: |
|
|
|
|
|
|
|
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| Basic |
|
$ |
0.39 |
|
|
$ |
0.22 |
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| Diluted |
|
$ |
0.37 |
|
|
$ |
0.21 |
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| Basic |
|
|
68.7 |
|
|
|
72.8 |
|
| Diluted |
|
|
72.1 |
|
|
|
76.1 |
|
6
Consolidated Balance Sheets (Unaudited)
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| (in millions) |
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Sept. 30, 2015 |
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|
Jun. 30, 2015 |
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| Current assets: |
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|
|
|
|
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| Cash and cash equivalents |
|
$ |
87.4 |
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|
$ |
64.1 |
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| Marketable investment securities |
|
|
68.0 |
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|
80.7 |
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| Prepaid expenses |
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|
5.6 |
|
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|
12.5 |
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| Inventory |
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|
34.3 |
|
|
|
25.1 |
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| Trade accounts receivable, less allowance for doubtful accounts of $6.2 September 30, 2015 and $7.6 June 30, 2015 |
|
|
83.4 |
|
|
|
85.8 |
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| Deferred taxes |
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|
13.5 |
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|
|
13.5 |
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| Prepaid taxes |
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|
13.5 |
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|
— |
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| Other receivables |
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|
1.6 |
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1.9 |
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| Total current assets |
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|
307.3 |
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|
283.6 |
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| Equipment, leasehold improvements and property, net |
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|
64.9 |
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|
67.2 |
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| Long-term marketable investment securities |
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|
43.1 |
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|
40.6 |
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| Long-term deferred taxes |
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|
— |
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|
— |
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| Intangibles, net |
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|
189.4 |
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|
192.6 |
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| Goodwill |
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|
177.3 |
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|
177.2 |
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| Other assets |
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|
5.0 |
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|
5.0 |
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| Total assets |
|
$ |
787.0 |
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$ |
766.2 |
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| Current liabilities: |
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| Accounts payable |
|
$ |
15.8 |
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$ |
21.1 |
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| Accrued liabilities |
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|
41.8 |
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|
46.1 |
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| Deferred revenue |
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|
1.4 |
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1.5 |
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| Total current liabilities |
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59.0 |
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|
68.7 |
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| Unrecognized tax benefits |
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27.2 |
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|
26.4 |
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| Other long-term liabilities |
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|
7.1 |
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|
8.8 |
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| Long-term deferred taxes |
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|
6.6 |
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|
0.2 |
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|
|
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| Total liabilities |
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|
99.9 |
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|
104.1 |
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| Stockholders’ equity: |
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| Common stock, 73.5 and 73.5 shares outstanding at June 30, 2015 and 2014 respectively |
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|
0.7 |
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|
0.7 |
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| Additional paid-in capital |
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|
772.3 |
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|
745.4 |
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| Accumulated other comprehensive loss |
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|
(7.1 |
) |
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(7.0 |
) |
| Accumulated deficit |
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(78.8 |
) |
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(77.0 |
) |
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| Total stockholders’ equity |
|
|
687.1 |
|
|
|
662.1 |
|
|
|
|
|
|
|
|
|
|
| Total liabilities and stockholders’ equity |
|
$ |
787.0 |
|
|
$ |
766.2 |
|
7
Consolidated Statement of Cash Flows (Unaudited)
|
|
|
|
|
|
|
|
|
| (in millions) |
|
Sept. 30, 2015 |
|
|
Sept. 30, 2014 |
|
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
| Net income |
|
$ |
26.6 |
|
|
$ |
16.0 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
6.8 |
|
|
|
6.0 |
|
| Loss on disposition of assets |
|
|
(0.4 |
) |
|
|
0.1 |
|
| Share-based compensation expense |
|
|
8.7 |
|
|
|
6.9 |
|
| Bad debt expense |
|
|
6.0 |
|
|
|
7.1 |
|
| Deferred income taxes |
|
|
11.4 |
|
|
|
2.7 |
|
| Unrecognized tax benefits |
|
|
0.9 |
|
|
|
0.3 |
|
| Excess tax benefit from share-based compensation |
|
|
(4.9 |
) |
|
|
(1.7 |
) |
| Gain on sale of marketable investment securities |
|
|
— |
|
|
|
— |
|
| Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
| Prepaid expenses |
|
|
7.0 |
|
|
|
(2.5 |
) |
| Trade accounts receivable |
|
|
(3.6 |
) |
|
|
(1.5 |
) |
| Other receivables |
|
|
0.2 |
|
|
|
(7.5 |
) |
| Inventory |
|
|
(9.2 |
) |
|
|
(0.9 |
) |
| Prepaid taxes |
|
|
(13.5 |
) |
|
|
(5.1 |
) |
| Accounts payable |
|
|
(5.3 |
) |
|
|
2.6 |
|
| Accrued liabilities |
|
|
(5.7 |
) |
|
|
(15.8 |
) |
| Deferred revenue |
|
|
(0.1 |
) |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
|
24.9 |
|
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| Capital expenditures for equipment and leasehold improvements |
|
|
(1.0 |
) |
|
|
(11.5 |
) |
| Restricted cash |
|
|
— |
|
|
|
(22.7 |
) |
| Purchases of marketable investment securities |
|
|
(21.8 |
) |
|
|
(5.9 |
) |
| Proceeds from maturities and sales marketable investment securities |
|
|
31.8 |
|
|
|
67.6 |
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
|
|
9.0 |
|
|
|
27.5 |
|
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Net proceeds from common stock issued under share-based compensation plans |
|
|
22.8 |
|
|
|
15.1 |
|
| Excess tax benefit from share-based compensation |
|
|
4.9 |
|
|
|
1.7 |
|
| Repurchase and retirement of common stock |
|
|
(38.0 |
) |
|
|
(45.6 |
) |
|
|
|
|
|
|
|
|
|
| Net cash used in financing activities |
|
|
(10.3 |
) |
|
|
(28.8 |
) |
|
|
|
|
|
|
|
|
|
| Effect of Foreign exchange rates on cash and cash equivalents |
|
|
(0.3 |
) |
|
|
(0.7 |
) |
|
|
|
| Net increase in cash and cash equivalents |
|
|
23.3 |
|
|
|
5.0 |
|
| Cash and cash equivalents at beginning of year |
|
|
64.1 |
|
|
|
64.8 |
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at end of year |
|
$ |
87.4 |
|
|
$ |
69.8 |
|
|
|
|
|
|
|
|
|
|
8
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 continued progress on its five-year plan to transform the Company into a diversified global pioneer in personalized medicine; the benefits of the Company’s investments made in its pipeline and
international expansion; the Company’s belief that its substantial investments will drive significant shareholder value over the next five years; the Company’s fiscal second quarter 2016 and fiscal full year 2016 financial guidance under
the caption “Fiscal Second-Quarter and Fiscal Full Year 2016 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 described or implied in the forward-looking statements.
These risks include, but are not limited to: the risk that sales and profit margins of our existing 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 product portfolio to our new tests; risks related to 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 tests and any future tests 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 our 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, including but not limited to our acquisition of a
healthcare clinic in Germany; risks related to our projections about the potential market opportunity for our products; the risk that we or our licensors may be unable to protect or that third parties will infringe the proprietary technologies
underlying our
9
tests; the risk of patent-infringement claims or challenges to the validity of our patents; 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, such as the Supreme Court decision in the lawsuit brought against us by the Association for Molecular Pathology et al; 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 of our Annual report on
Form 10-K for the fiscal year ended June 30, 2015, which has been 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.
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 financial measures:
| |
• |
|
Acquisition - amortization of intangible assets: Represents recurring amortization charges resulting from the acquisition of intangible assets, including developed technology and database rights. |
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 financial results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
10
Reconciliation of GAAP to Non-GAAP Financial Measures
for the Three Months ended September 30, 2015 and 2014
(Unaudited data in thousands, except per share amount)
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
Sept. 30, 2015 |
|
|
Sept. 30, 2014 |
|
| GAAP Cost of molecular diagnostic testing |
|
$ |
30.9 |
|
|
$ |
32.8 |
|
| GAAP Cost of pharmaceutical and clinical services |
|
|
5.6 |
|
|
|
2.1 |
|
| Acquisition - amortization of intangible assets |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
| Non-GAAP COGS |
|
$ |
36.5 |
|
|
$ |
34.9 |
|
|
|
|
| Non-GAAP Gross Margin |
|
|
80 |
% |
|
|
79 |
% |
|
|
|
| GAAP Research and Development |
|
$ |
17.2 |
|
|
$ |
22.6 |
|
| Acquisition - amortization of intangible assets |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
| Non-GAAP R&D |
|
$ |
17.1 |
|
|
$ |
22.5 |
|
|
|
|
| GAAP Selling, General and Administrative |
|
$ |
86.5 |
|
|
$ |
85.4 |
|
| Acquisition - amortization of intangible assets |
|
|
(3.1 |
) |
|
|
(3.3 |
) |
|
|
|
|
|
|
|
|
|
| Non-GAAP SG&A |
|
$ |
83.4 |
|
|
$ |
82.1 |
|
|
|
|
| GAAP Operating Income |
|
$ |
43.3 |
|
|
$ |
25.9 |
|
| Acquisition - amortization of intangible assets |
|
|
3.2 |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
| Non-GAAP Operating Income |
|
$ |
46.5 |
|
|
$ |
29.3 |
|
|
|
|
| Non-GAAP Operating Margin |
|
|
25 |
% |
|
|
17 |
% |
|
|
|
| GAAP Net Income |
|
$ |
26.6 |
|
|
$ |
16.0 |
|
| Acquisition - amortization of intangible assets |
|
|
3.2 |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
| Non-GAAP Net Income |
|
$ |
29.8 |
|
|
$ |
19.4 |
|
|
|
|
| GAAP Diluted EPS |
|
$ |
0.37 |
|
|
$ |
0.21 |
|
| Non-GAAP Diluted EPS |
|
$ |
0.41 |
|
|
$ |
0.25 |
|
|
|
|
| Diluted shares outstanding |
|
|
72.1 |
|
|
|
76.1 |
|
11
Free Cash Flow Reconciliation
(Unaudited data in thousands)
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
Sept. 30, 2015 |
|
|
Sept. 30, 2014 |
|
| GAAP cash flow from operations |
|
$ |
24.9 |
|
|
$ |
7.0 |
|
|
|
|
| Capital expenditures |
|
|
(1.0 |
) |
|
|
(11.5 |
) |
|
|
|
|
|
|
|
|
|
| Free cash flow |
|
$ |
23.9 |
|
|
$ |
(4.5 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2016 and Fiscal Second Quarter 2016 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 2016 |
| Diluted net income per share |
|
|
| GAAP diluted net income per share |
|
$1.45 - $1.50 |
| Acquisition - amortization of intangible assets |
|
0.15 |
|
|
|
| Non-GAAP diluted net income per share |
|
$1.60 - $1.65 |
|
|
|
|
|
| |
|
Fiscal Second Quarter
2016 |
| Diluted net income per share |
|
|
| GAAP diluted net income per share |
|
$0.36 - $0.38 |
| Acquisition - amortization of intangible assets |
|
0.04 |
|
|
|
| Non-GAAP diluted net income per share |
|
$0.40 - $0.42 |
|
|
|
12
Myriad Genetics Fiscal First Quarter
2016 Earnings Call 11/03/2015 Exhibit 99.2 Copyright © 2015 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Forward Looking Statements Some of the
information presented here today contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. These statements are based on management’s current expectations and the actual
events or results may differ materially and adversely from these expectations. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission, specifically, the Company’s annual reports on Form
10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in the Company’s projections or
forward-looking statements. In this presentation, 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. The Company’s financial measures under GAAP include ongoing amortization expense related to acquired intangible assets that will be recognized over the useful lives of the assets. Management believes that presentation of operating
results that excludes these items 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 to non-GAAP financial guidance is provided below. Forward Looking Statements Non-GAAP Financial Measures Financial Guidance
Fiscal Year 2016 Fiscal Second Quarter 2016 GAAP diluted net income per share $1.45 - $1.50 $0.36 - $0.38 Acquisition – amortization of intangible assets $0.15 $0.04 Non-GAAP diluted net income per share $1.60 - $1.65 $0.40 - $0.42 For
additional information on GAAP to non-GAAP reconciliation see: https://www.myriad.com/investors/gaap-to-non-gaap-reconciliation/
Strong Start to Fiscal Year 2016 Q1FY16
Actual Results Q1FY16 Company Guidance Difference From Mid-Point Revenue $183.5M $176M to $178M +$6.5M Adjusted EPS $0.41 $0.34 to $0.36 +$0.06 GAAP EPS $0.37 $0.30 to $0.32 +$0.06
Hereditary Cancer Revenue Returns to
YoY Growth Hereditary Cancer Revenue Grew 4% YoY Hereditary Cancer Revenue Celebrity Publicity Impact Estimated Market Share Hereditary Cancer Revenue (in $ mil.) Estimated Market Share
Achieved Objective of Having 100% of
Targeted Accounts Converted By End of 1Q16 myRisk Hereditary Cancer Conversion Targeted Accounts Actual Conversion Estimated Future Conversion
Hereditary Cancer Market Expansion
Plans on Track Indication Added Market Potential Guidelines Contracting Colon @ 5% risk +$100M 45% All Endometrial +$150M 45% Breast <60 yrs +$150M FY16 FY17 All Pancreatic Cancer +$125M FY17 FY17 Potential Market Expansion >$500M
Myriad Continues to Extend Its Quality
Advantages in Variant Classification Two New Proprietary Methodologies Advanced artificial intelligence literature search algorithm: Found 36% more literature references Evaluates RNA transcription and functionality to aid in variant classification
LitVIEW™: inSITE™: Pheno™ MuCo™ 3D Structural Analysis
50% of Hereditary Cancer Revenue Now
Under Long-Term Arrangement % of HC Business Under LT Arrangement Change in ASP* FY13 to 1Q16 *Average selling price
Pipeline Total Addressable Market and
Current Reimbursement Current Reimbursement ($1.0 Billion) Total Addressable Market ($11.3 Billion) (in billions)
Vectra DA Volume Trends Vectra DA
Volumes New management and sales tactics 31% CAGR
Vectra DA Potential to Guide
Treatment Decisions in Three New Studies Study Methotrexate Incomplete Responders (Hambardzumyan et al.) Prediction of Flares in Patients Discontinuing TNFi Therapy (Lamers-Karnebeek et al.) Prediction of Relapse in Patients Tapering DMARDs (Rech et
al.) Conclusion “Patients with lower Vectra DA scores were more likely to respond to triple therapy, whereas patients with higher Vectra DA scores were more likely to respond to anti-TNF therapy.” “A high Vectra DA score was an
independent predictor of flare within 12 months after discontinuing TNFi therapy.” “Vectra DA scores were significantly higher in RA patients relapsing than those in stable remission, when analyzing the entire population.” Data 157
patients; p=0.001 439 patients; p=0.03 100 patients; p=0.0034
Working Towards Broader Private
Payer Coverage for Vectra DA Data Mining FY16 Retrospective Study FY17 Prospective Study FY18 % of private payer covered lives Distribution of private payers’ data requests
Continued Strong Prolaris Growth
Trends Prolaris Volumes 16% sequential growth 119% YoY Growth
New Report Format Drives Physician
Behavior Change Active Surveillance Threshold 3% Mortality 20% Mortality Urologists followed the treatment recommendations provided by the active surveillance threshold 85% of the time Pathology Recommends Active Surveillance Pathology Does Not
Recommend Active Surveillance
myPath Melanoma Finds 100% of Future
Metastatic Lesions in Outcomes Study MyPath Melanoma Score Histopathology Diagnosis Clinical Outcome Melanoma Metastases Malignant 61 14 Indeterminate 2 0 Benign 2 0 Total 65 14 Sensitivity 97% 100% *ASDP presentation 2015 – Correlation of
myPath Melanoma gene expression score with clinical outcomes in a series of melanocytic lesions
myChoice HRD Gives the Most Complete
Picture of Response to DNA-Damaging Agents LST odds ratio = 4.7 LOH odds ratio = 3.3 Odds ratio of predicting pCR for myChoice HRD is 5.5 All 3 Technologies Required TAI odds ratio = 2.8 Launching this month for platinum indication
4% of Global Revenue From
International Markets in 1Q16 International Product Revenue as a Percentage of Total Revenue Goal to have international product revenue comprise 10% of sales by FY20
Myriad Pursuing Kit Strategy Outside
the United States RNA Expression Protein Evaluating instrument platforms
Prolaris Reimbursement Status and
Plans Outside the United States Country Private Insurance Public Insurance Germany In progress Filing with IQWIG/GBA after CE Mark in 2Q16 UK Most plans cover Prolaris Filing with NICE after CE Mark in 2Q16 France NA Filing with HAS after CE Mark in
2Q16 Switzerland NA Largest payor Helsana covers Prolaris Spain NA Reimbursed in 2 out of 17 autonomous communities
Fiscal First Quarter 2016 Revenue By
Product Product 1Q16 1Q15 YoY Growth Hereditary Cancer $156.7 $150.6 4% Vectra DA $11.4 $10.6 8% Other $3.8 $3.3 15% Total Molecular Diagnostic Revenue $171.9 $164.5 5% Pharmaceutical & Clinical Services $11.6 $4.3 170% Total Revenue $183.5
$168.8 9% (in millions)
Fiscal First Quarter Financial
Results 1Q16 1Q15 YoY Growth Total Revenue $183.5 $168.8 9% Gross Profit $147.0 $133.9 10% Gross Margin 80.1% 79.3% NA Operating Income $43.3 $25.9 67% Adjusted Operating Income $46.5 $29.3 59% Adjusted Operating Margin 25.3% 17.4% NA Net Income
$26.6 $16.0 66% Diluted EPS $0.37 $0.21 76% Adjusted EPS $0.41 $0.25 64% (in millions except per share data)
Guidance Assumptions for FY16
DOWNSIDE RISKS BASE CASE FOR GUIDANCE UPSIDE POTENTIAL Hereditary cancer market losses > market growth Hereditary cancer revenue of $638 to $649 million Hereditary cancer market losses < market growth Impact from expanded payer coverage for
colon and endometrial cancer Coding/reimbursement change Vectra DA revenue of $50 to $55 million Expanded private payer coverage Medicare reimbursement starting later than October 1, 2015 Prolaris revenue of $10 to $12 million Private payer coverage
Medicare reimbursement prior to October 1, 2015 Expanded Medicare coverage Pharmaceutical and Clinical Services revenue of $40M Other revenue of $12 to $14 million Reimbursement for EndoPredict, Tumor BRACAnalysis CDx, myPath Melanoma or myPlan Lung
Cancer
2Q16 and FY16 Financial Guidance
Metric Fiscal Year 2016 Fiscal Second Quarter 2016 Revenue $750 to $770 million $188 to $190 million Diluted EPS $1.40 to $1.45 $0.36 to $0.38 Adjusted EPS $1.60 to $1.65 $0.40 to $0.42
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