Myriad Genetics Reports Fiscal Second-Quarter 2019 Financial Results
February 05 2019 - 4:05PM
Myriad Genetics, Inc. (NASDAQ: MYGN, “Myriad” or the “Company”), a
global leader in molecular diagnostics and personalized medicine,
today announced financial results for its fiscal second-quarter
2019, provided an update on recent business highlights, maintained
its fiscal year 2019 financial guidance and provided fiscal
third-quarter 2019 financial
guidance.
"This quarter we saw a return to revenue growth for our
hereditary cancer business, an acceleration in our prenatal testing
and continued profitability improvements driven by the Elevate 2020
program,” said Mark C. Capone, president and CEO, Myriad
Genetics. “Importantly, in the last month, we announced two
pivotal events with the publication of the GeneSight GUIDED study
and the launch of our expanded Women’s Health sales team, which
have the potential to drive transformational growth and long-term
shareholder value.”
Financial HighlightsThe following table
summarizes the financial results for the fiscal second-quarter
2019:
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Fiscal
Second-Quarter |
|
|
|
|
|
|
|
|
($
in millions) |
2019 |
|
2018 |
|
% Change |
Molecular
diagnostic testing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary Cancer |
$ |
126.7 |
|
|
$ |
122.2 |
|
|
4% |
|
|
|
|
|
|
|
|
|
|
|
|
GeneSight® |
|
24.0 |
|
|
|
31.7 |
|
|
(24%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Prenatal |
|
31.2 |
|
|
|
- |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
Vectra® |
|
11.8 |
|
|
|
11.1 |
|
|
6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Prolaris® |
|
6.1 |
|
|
|
4.2 |
|
|
45% |
|
|
|
|
|
|
|
|
|
|
|
|
|
EndoPredict® |
|
2.2 |
|
|
|
2.0 |
|
|
10% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
1.0 |
|
|
|
1.9 |
|
|
(47%) |
|
|
|
|
|
|
|
|
|
|
|
|
Total
molecular diagnostic testing revenue |
|
203.0 |
|
|
|
173.1 |
|
|
17% |
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical and clinical service revenue |
|
13.8 |
|
|
|
14.8 |
|
|
(7%) |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue |
$ |
216.8 |
|
|
$ |
187.9 |
|
|
15% |
|
|
|
|
|
|
|
|
|
|
Income Statement |
|
|
|
|
|
|
|
|
|
Fiscal
Second-Quarter |
|
|
|
|
|
|
|
|
($
in millions) |
2019 |
|
2018 |
|
% Change |
Total
Revenue |
$ |
216.8 |
|
|
$ |
187.9 |
|
|
15% |
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
164.7 |
|
|
|
143.5 |
|
|
15% |
|
Gross Margin |
|
76.0 |
% |
|
|
76.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
158.6 |
|
|
|
137.2 |
|
|
16% |
|
|
|
|
|
|
|
|
|
Operating
Income |
|
6.1 |
|
|
|
6.3 |
|
|
(3%) |
|
Operating Margin |
|
2.8 |
% |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Income |
|
37.4 |
|
|
|
37.0 |
|
|
1% |
|
Adjusted Operating
Margin |
|
17.3 |
% |
|
|
19.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
2.6 |
|
|
|
30.9 |
|
|
(92%) |
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
0.03 |
|
|
|
0.43 |
|
|
(93%) |
|
|
|
|
|
|
|
|
|
Adjusted
EPS |
$ |
0.38 |
|
|
$ |
0.36 |
|
|
6% |
|
|
|
|
|
|
|
|
|
Business Highlights
- Hereditary Cancer
- Revenue returned to growth for the first time since fiscal year
2014.
- Achieved eighth consecutive quarter of year-over-year
hereditary cancer testing volume growth and fifth consecutive
quarter with stable hereditary cancer pricing.
- Presented validation study on riskScore™ for women of Hispanic
descent at the 2018 San Antonio Breast Cancer Symposium, consisting
of almost 9,000 women analyzed with a proprietary test that was
highly predictive of breast cancer risk (p= 7.1 x 10-19).
- Submitted our application to the Japanese Ministry of Health,
Labour, and Welfare, for BRACAnalysis in hereditary cancer
patients. There are approximately 3 million women in Japan who will
be candidates for this test if approved.
- GeneSight®
- GeneSight test volume increased 22 percent year over year.
- GeneSight revenue was negatively impacted by changes in
Medicare documentation requirements and the impact on cash
collections from recently implemented industry-wide laboratory
benefit manager programs.
- A record 16,000 physicians ordered a GeneSight test in the
fiscal second quarter.
- Published the landmark GUIDED study in the Journal of
Psychiatric Research, which is the largest prospective
pharmacogenomics study ever conducted in depression. The key
finding of the study was that patients were 50 percent more likely
to achieve remission and 30 percent more likely to respond to
treatment when their medication selection was guided by the
GeneSight test.
- Prenatal Testing
- Prenatal testing volume increased at a double-digit rate
year-over-year with total revenue increasing 12 percent
sequentially.
- Completed sales force expansion in early January, tripling the
number of sales representatives selling prenatal tests.
- Launched Myriad Complete application which includes patient
education, cost estimators, test results, electronic reporting, and
counseling tools for physician and patient customers, covering all
Myriad Women’s Health products including myRisk® Hereditary
Cancer.
- Published a large clinical utility study for ForeSight™ in
Genetics in Medicine. The study found that the ForeSight test led
to significant changes in pregnancy management with 77 percent of
at-risk couples taking steps to avoid having an affected offspring
such as prenatal diagnostic testing and in-vitro
fertilization.
- Vectra®
- Fiscal second-quarter revenue increased six percent year over
year to $11.8 million.
- Published study in Rheumatology demonstrating that Vectra was
five times more predictive of radiographic progression compared to
historical measures of disease activity.
- Prolaris®
- Fiscal second-quarter revenue increased 45 percent
year-over-year to $6.1 million.
- EndoPredict®
- Fiscal second-quarter revenue increased 10 percent
year-over-year to $2.2 million.
- Received favorable National Comprehensive Cancer Network
Guidelines.
- Received a favorable recommendation from NICE in the United
Kingdom providing reimbursement coverage for the test.
- Presented data at the San Antonio Breast Cancer Symposium
(SABCS) from a retrospective study with 3,746 women that evaluated
the benefit of chemotherapy on 10-year distant recurrence in women
with estrogen receptor positive, HER2 negative breast cancer. The
study found that women with a high EndoPredict score who received
chemotherapy saw a statistically significant benefit with lower
rates of 10-year distant recurrence compared to high risk women who
did not receive chemotherapy.
- A second study presented at SABCS evaluated the distant
recurrence rates in 1,702 women who received five years of
endocrine therapy alone and were followed for 15 years. This study
showed a four-fold risk of recurrence in the 5 to 15 year timeframe
for women with a high EndoPredict score and demonstrates
EndoPredict can identify women who will benefit from extended
endocrine therapy.
- A third, 373 patient study was presented at SABCS that is
positioned to corroborate the ability of EndoPredict to predict
chemotherapy benefit. This is the first prospective study to ever
evaluate chemoprediction in a high-risk cohort for any breast
cancer recurrence test. In a 3-year interim evaluation of the
data, high-risk patients who received chemotherapy had a disease
free recurrence rate of 96.3 percent compared to 91.5 percent in
the high-risk patients who did not receive chemotherapy
(p=0.06).
- Companion Diagnostics
- Received U.S. Food and Drug Administration approval for
BRACAnalysis CDx for use in conjunction with olaparib for
maintenance in first-line ovarian cancer.
- Completed our submission in Japan for BRACAnalysis CDx as a
companion diagnostic in first line ovarian cancer with
olaparib.
Fiscal Year 2019 and Fiscal Third-Quarter 2019 Financial
GuidanceBelow is a table summarizing Myriad’s fiscal year
2019 and fiscal third-quarter 2019 financial guidance:
|
Revenue |
|
GAAP Diluted
Earnings Per Share |
|
Adjusted Earnings
Per Share |
Fiscal Year 2019 |
$855-$865 million |
|
$0.40-$0.45 |
|
$1.70-$1.75 |
Fiscal
Third-Quarter 2019 |
$216-$218 million |
|
$0.12-$0.14 |
|
$0.42-$0.44 |
|
|
|
|
|
|
Myriad’s fiscal year 2019 and third-quarter 2019 adjusted
earnings per share guidance excludes the impact of stock based
compensation expense, non-cash amortization associated with
acquisitions and certain non-recurring expenses. 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 today and discuss the
fiscal second-quarter financial results and fiscal year 2019
financial guidance.
Conference Call and WebcastA conference call
will be held today, Tuesday, February 5, 2019, at 4:30 p.m. EST to
discuss Myriad’s financial results for the fiscal second-quarter,
business developments and financial guidance. The dial-in
number for domestic callers is 1-888-222-6159. International
callers may dial 1-303-223-4369. All callers will be asked to
reference reservation number 21914704. 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 GeneticsMyriad 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 and lower healthcare costs. Myriad is focused on
five strategic imperatives: building upon a solid hereditary
cancer foundation, growing new product volume, expanding
reimbursement coverage for new products, increasing RNA kit revenue
internationally and improving profitability with Elevate
2020. 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, Myriad myRisk, myRisk Hereditary Cancer,
myChoice, myPlan, BRACAnalysis CDx, Tumor BRACAnalysis CDx,
myChoice HRD, EndoPredict, Vectra, GeneSight, riskScore Prolaris,
ForeSight and Prequel 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.
|
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|
|
|
|
|
|
|
|
|
|
|
MYRIAD GENETICS, INC. AND SUBSIDIARIES |
|
|
|
|
|
|
|
|
CONSOLIDATED INCOME STATEMENTS
(Unaudited) |
|
|
|
|
|
|
|
(in millions, except
per share amounts) |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
December 31, |
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Molecular diagnostic
testing |
|
$ |
203.0 |
|
|
$ |
173.1 |
|
|
$ |
392.0 |
|
|
$ |
340.5 |
|
Pharmaceutical and
clinical services |
|
|
13.8 |
|
|
|
14.8 |
|
|
|
27.1 |
|
|
|
26.2 |
|
Total
revenue |
|
|
216.8 |
|
|
|
187.9 |
|
|
|
419.1 |
|
|
|
366.7 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
molecular diagnostic testing |
|
|
44.0 |
|
|
|
37.7 |
|
|
|
86.3 |
|
|
|
73.9 |
|
Cost of
pharmaceutical and clinical services |
|
|
8.1 |
|
|
|
6.7 |
|
|
|
15.5 |
|
|
|
13.5 |
|
Research
and development expense |
|
|
22.4 |
|
|
|
16.8 |
|
|
|
43.5 |
|
|
|
34.6 |
|
Change in
the fair value of contingent consideration |
|
|
1.0 |
|
|
|
13.0 |
|
|
|
1.4 |
|
|
|
(60.2 |
) |
Selling,
general, and administrative expense |
|
|
135.2 |
|
|
|
107.4 |
|
|
|
265.1 |
|
|
|
214.6 |
|
Total
costs and expenses |
|
|
210.7 |
|
|
|
181.6 |
|
|
|
411.8 |
|
|
|
276.4 |
|
Operating
income |
|
|
6.1 |
|
|
|
6.3 |
|
|
|
7.3 |
|
|
|
90.3 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
0.9 |
|
|
|
0.4 |
|
|
|
1.6 |
|
|
|
0.8 |
|
Interest
expense |
|
|
(3.4 |
) |
|
|
(0.7 |
) |
|
|
(5.6 |
) |
|
|
(1.6 |
) |
Other |
|
|
— |
|
|
|
(0.4 |
) |
|
|
1.1 |
|
|
|
(0.7 |
) |
Total
other expense: |
|
|
(2.5 |
) |
|
|
(0.7 |
) |
|
|
(2.9 |
) |
|
|
(1.5 |
) |
Income
before income tax |
|
|
3.6 |
|
|
|
5.6 |
|
|
|
4.4 |
|
|
|
88.8 |
|
Income tax
provision |
|
|
1.0 |
|
|
|
(25.3 |
) |
|
|
2.6 |
|
|
|
(20.8 |
) |
Net income |
|
$ |
2.6 |
|
|
$ |
30.9 |
|
|
$ |
1.8 |
|
|
$ |
109.6 |
|
Net loss attributable
to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Net income attributable
to Myriad Genetics, Inc. stockholders |
|
$ |
2.6 |
|
|
$ |
30.9 |
|
|
$ |
1.9 |
|
|
$ |
109.7 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.04 |
|
|
$ |
0.45 |
|
|
$ |
0.03 |
|
|
$ |
1.59 |
|
Diluted |
|
$ |
0.03 |
|
|
$ |
0.43 |
|
|
$ |
0.02 |
|
|
$ |
1.54 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
74.2 |
|
|
|
69.3 |
|
|
|
73.6 |
|
|
|
68.9 |
|
Diluted |
|
|
76.5 |
|
|
|
71.9 |
|
|
|
76.9 |
|
|
|
71.2 |
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) |
(in millions) |
|
|
|
|
|
|
December 31, |
|
June 30, |
ASSETS |
|
|
2018 |
|
|
|
2018 |
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
90.6 |
|
|
$ |
110.9 |
|
Marketable investment securities |
|
|
74.8 |
|
|
|
69.7 |
|
Prepaid
expenses |
|
|
12.5 |
|
|
|
9.4 |
|
Inventory |
|
|
33.3 |
|
|
|
34.3 |
|
Trade
accounts receivable |
|
|
116.6 |
|
|
|
99.5 |
|
Prepaid
taxes |
|
|
3.1 |
|
|
|
— |
|
Other
receivables |
|
|
5.9 |
|
|
|
3.8 |
|
Total
current assets |
|
|
336.8 |
|
|
|
327.6 |
|
Property, plant and equipment, net |
|
|
59.1 |
|
|
|
43.2 |
|
Long-term marketable investment securities |
|
|
29.9 |
|
|
|
30.7 |
|
Intangibles, net |
|
|
717.6 |
|
|
|
455.2 |
|
Goodwill |
|
|
413.2 |
|
|
|
318.6 |
|
Total
assets |
|
$ |
1,556.6 |
|
|
$ |
1,175.3 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
31.9 |
|
|
$ |
26.0 |
|
Accrued
liabilities |
|
|
73.7 |
|
|
|
68.3 |
|
Short-term contingent consideration |
|
|
5.3 |
|
|
|
5.3 |
|
Deferred
revenue |
|
|
2.4 |
|
|
|
2.6 |
|
Total
current liabilities |
|
|
113.3 |
|
|
|
102.2 |
|
Unrecognized tax benefits |
|
|
24.9 |
|
|
|
24.9 |
|
Other
long-term liabilities |
|
|
6.6 |
|
|
|
6.3 |
|
Contingent consideration |
|
|
10.4 |
|
|
|
9.2 |
|
Long-term debt |
|
|
273.3 |
|
|
|
9.3 |
|
Long-term deferred taxes |
|
|
64.0 |
|
|
|
57.3 |
|
Total
liabilities |
|
|
492.5 |
|
|
|
209.2 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common
stock, 73.2 and 70.6 shares outstanding at December 31, 2018 and
June 30, 2018 respectively |
|
|
0.7 |
|
|
|
0.7 |
|
Additional paid-in capital |
|
|
1,045.6 |
|
|
|
915.4 |
|
Accumulated other comprehensive loss |
|
|
(5.0 |
) |
|
|
(4.1 |
) |
Retained
earnings |
|
|
22.9 |
|
|
|
54.1 |
|
Total
Myriad Genetics, Inc. stockholders’ equity |
|
|
1,064.2 |
|
|
|
966.1 |
|
Non-Controlling Interest |
|
|
(0.1 |
) |
|
|
— |
|
Total
stockholders' equity |
|
|
1,064.1 |
|
|
|
966.1 |
|
Total
liabilities and stockholders’ equity |
|
$ |
1,556.6 |
|
|
$ |
1,175.3 |
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
(in millions) |
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net Income attributable
to Myriad Genetics, Inc. stockholders |
|
$ |
1.9 |
|
|
|
109.7 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
36.3 |
|
|
|
26.3 |
|
Non-cash
interest expense |
|
|
(1.2 |
) |
|
|
0.1 |
|
Loss
(gain) on disposition of assets |
|
|
(0.9 |
) |
|
|
0.1 |
|
Share-based compensation expense |
|
|
15.2 |
|
|
|
13.3 |
|
Deferred
income taxes |
|
|
2.3 |
|
|
|
(25.9 |
) |
Unrecognized tax benefits |
|
|
(2.3 |
) |
|
|
8.2 |
|
Change in
fair value of contingent consideration |
|
|
(1.4 |
) |
|
|
(60.2 |
) |
Changes
in assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid
expenses |
|
|
0.8 |
|
|
|
2.9 |
|
Trade
accounts receivable |
|
|
(0.9 |
) |
|
|
(13.0 |
) |
Other
receivables |
|
|
(1.9 |
) |
|
|
1.4 |
|
Inventory |
|
|
6.1 |
|
|
|
4.1 |
|
Prepaid
taxes |
|
|
(3.1 |
) |
|
|
(8.4 |
) |
Accounts
payable |
|
|
(0.3 |
) |
|
|
3.0 |
|
Accrued
liabilities |
|
|
(4.7 |
) |
|
|
(5.8 |
) |
Deferred
revenue |
|
|
(0.3 |
) |
|
|
0.7 |
|
Net cash provided by
operating activities |
|
|
45.6 |
|
|
|
56.5 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(4.1 |
) |
|
|
(3.7 |
) |
Acquisitions, net of
cash acquired |
|
|
(278.5 |
) |
|
|
— |
|
Purchases of marketable
investment securities |
|
|
(36.6 |
) |
|
|
(61.3 |
) |
Proceeds from
maturities and sales of marketable investment securities |
|
|
32.1 |
|
|
|
45.2 |
|
Net cash used in
investing activities |
|
|
(287.1 |
) |
|
|
(19.8 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net proceeds from
common stock issued under share-based compensation plans |
|
|
4.5 |
|
|
|
6.3 |
|
Net proceeds from
revolving credit facility |
|
|
340.0 |
|
|
|
— |
|
Repayment of revolving
credit facility |
|
|
(75.0 |
) |
|
|
(56.0 |
) |
Repurchase and
retirement of common stock |
|
|
(50.0 |
) |
|
|
— |
|
Proceeds from
non-controlling interest |
|
|
— |
|
|
|
0.3 |
|
Net cash provided by
(used in) financing activities |
|
|
219.5 |
|
|
|
(49.4 |
) |
Effect of foreign
exchange rates on cash and cash equivalents |
|
|
1.7 |
|
|
|
(1.0 |
) |
Net increase (decrease)
in cash and cash equivalents |
|
|
(20.3 |
) |
|
|
(13.7 |
) |
Cash and cash
equivalents at beginning of the period |
|
|
110.9 |
|
|
|
102.4 |
|
Cash and
cash equivalents at end of the period |
|
$ |
90.6 |
|
|
$ |
88.7 |
|
|
|
|
|
|
Safe Harbor StatementThis 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 ability to become a trusted
advisor transforming patient lives worldwide with pioneering
diagnostics; the Company’s expectation that the publication of the
GeneSight GUIDED study and the launch of the expanded Women’s
Health sales team have the potential to drive transformational
growth and long-term shareholder value; the Company’s belief that
the study presented at SABCS demonstrates that EndoPredict can
identify women who will benefit from extended endocrine therapy;
the Company’s expectation that the study presented at SABCS is
positioned to corroborate the ability of EndoPredict to predict
chemotherapy benefit; the Company’s fiscal year 2019 and fiscal
third-quarter 2019 financial guidance for revenue, GAAP diluted
earnings per share, and adjusted earnings per share under the
caption “Fiscal Year 2019 and Fiscal Third-Quarter 2019 Financial
Guidance”; and the Company’s strategic imperatives under the
caption “About Myriad Genetics.” These “forward-looking statements”
are management’s present 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 the Company’s existing molecular diagnostic tests and
pharmaceutical and clinical services may decline or will not
continue to increase at historical rates; risks related to the
Company’s ability to successfully transition from its existing
product portfolio to its new tests; risks related to changes in the
governmental or private insurers’ reimbursement levels for the
Company’s tests or the Company’s ability to obtain reimbursement
for its new tests at comparable levels to its existing tests; risks
related to increased competition and the development of new
competing tests and services; the risk that the Company 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 the Company may not
successfully develop new markets for its molecular diagnostic tests
and pharmaceutical and clinical services, including the Company’s
ability to successfully generate revenue outside the United States;
the risk that licenses to the technology underlying the Company’s
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 the Company’s laboratory testing facilities; risks
related to public concern over the Company’s genetic testing in
general or the Company’s 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 the
Company’s ability to obtain new corporate collaborations or
licenses and acquire new technologies or businesses on satisfactory
terms, if at all; risks related to the Company’s ability to
successfully integrate and derive benefits from any technologies or
businesses that it licenses or acquires; risks related to the
Company’s projections about the potential market opportunity for
the Company’s products; the risk that the Company or its licensors
may be unable to protect or that third parties will infringe the
proprietary technologies underlying the Company’s tests; the risk
of patent-infringement claims or challenges to the validity of the
Company’s patents; risks related to changes in intellectual
property laws covering the Company’s 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; the risk that the Company may be unable to comply
with financial operating covenants under the Company’s credit or
lending agreements; the risk that the Company will be unable to
pay, when due, amounts due under the Company’s credit or lending
agreements; and other factors discussed under the heading “Risk
Factors” contained in Item 1A of 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.
Statement regarding use of non-GAAP financial
measuresIn 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 schedules.
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.
- Acquisition – integration related costs: Costs related to
closing and integration of acquired companies
- Equity compensation – non-cash equity based compensation
provided to Myriad employees
- Deferred Tax impact of non-GAAP adjustments: Changes in
effective tax rate based upon ASU 2016-09 and the deferred tax
impact of non-deductible acquisition costs
- Tax reform impact – The impact of tax reform legislation on
deferred tax assets
- Potential future consideration related to acquisitions:
Non-cash expenses related to valuation adjustments of earn-out and
milestone payments tied to recent acquisitions
- Elevate 2020 costs: Expenses tied to Elevate 2020 program
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.
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
for the Three
and Six months ended December 31, 2018 |
|
|
|
|
|
|
|
|
(Unaudited data in
millions, except per share amount) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
Dec 31, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
Revenue |
|
$ |
216.8 |
|
|
$ |
187.9 |
|
|
$ |
419.1 |
|
|
$ |
366.7 |
|
GAAP Cost of molecular diagnostic testing |
|
|
44.0 |
|
|
|
37.7 |
|
|
|
86.3 |
|
|
|
73.9 |
|
GAAP Cost of pharmaceutical and clinical
services |
|
|
8.1 |
|
|
|
6.7 |
|
|
|
15.5 |
|
|
|
13.5 |
|
Acquisition - Integration related costs |
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
Equity
Compensation |
|
|
— |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
(0.5 |
) |
Elevate
2020 costs |
|
|
(0.6 |
) |
|
|
— |
|
|
|
(3.6 |
) |
|
|
— |
|
Non-GAAP COGS |
|
$ |
51.4 |
|
|
$ |
44.2 |
|
|
$ |
97.9 |
|
|
$ |
86.9 |
|
Non-GAAP Gross Margin |
|
|
76 |
% |
|
|
76 |
% |
|
|
77 |
% |
|
|
76 |
% |
GAAP Research and Development |
|
$ |
22.4 |
|
|
$ |
16.8 |
|
|
$ |
43.5 |
|
|
$ |
34.6 |
|
Acquisition - amortization of intangible assets |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
Acquisition - Integration related costs |
|
|
(0.6 |
) |
|
|
— |
|
|
|
(0.7 |
) |
|
|
— |
|
Equity
compensation |
|
|
(1.3 |
) |
|
|
(1.2 |
) |
|
|
(2.5 |
) |
|
|
(2.0 |
) |
Elevate
2020 costs |
|
|
(1.5 |
) |
|
|
(0.1 |
) |
|
|
(2.2 |
) |
|
|
(0.2 |
) |
Non-GAAP R&D |
|
$ |
18.9 |
|
|
$ |
15.4 |
|
|
$ |
38.0 |
|
|
$ |
32.2 |
|
GAAP Contingent Consideration |
|
$ |
1.0 |
|
|
$ |
13.0 |
|
|
$ |
1.4 |
|
|
$ |
(60.2 |
) |
Potential
future consideration related to acquisitions |
|
|
(1.0 |
) |
|
|
(13.0 |
) |
|
|
(1.4 |
) |
|
|
60.2 |
|
Non-GAAP Contingent Consideration |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
GAAP Selling, General and Administrative |
|
$ |
135.2 |
|
|
$ |
107.4 |
|
|
$ |
265.1 |
|
|
$ |
214.6 |
|
Acquisition - amortization of intangible assets |
|
|
(15.2 |
) |
|
|
— |
|
|
|
(28.5 |
) |
|
|
— |
|
Acquisition - Integration related costs |
|
|
(3.3 |
) |
|
|
(9.1 |
) |
|
|
(12.8 |
) |
|
|
(18.2 |
) |
Equity
compensation |
|
|
(6.2 |
) |
|
|
(5.5 |
) |
|
|
(12.5 |
) |
|
|
(10.8 |
) |
Elevate
2020 costs |
|
|
(1.4 |
) |
|
|
(1.5 |
) |
|
|
(2.5 |
) |
|
|
(2.7 |
) |
Non-GAAP SG&A |
|
$ |
109.1 |
|
|
$ |
91.3 |
|
|
$ |
208.8 |
|
|
$ |
182.9 |
|
GAAP Operating Income |
|
$ |
6.1 |
|
|
$ |
6.3 |
|
|
$ |
7.3 |
|
|
$ |
90.3 |
|
Acquisition - Integration related costs |
|
|
4.0 |
|
|
|
9.1 |
|
|
|
13.6 |
|
|
|
18.2 |
|
Acquisition - amortization of intangible assets |
|
|
15.3 |
|
|
|
0.1 |
|
|
|
28.6 |
|
|
|
0.2 |
|
Equity
compensation |
|
|
7.5 |
|
|
|
6.9 |
|
|
|
15.2 |
|
|
|
13.3 |
|
Elevate
2020 costs |
|
|
3.5 |
|
|
|
1.6 |
|
|
|
8.3 |
|
|
|
2.9 |
|
Potential
future consideration related to acquisitions |
|
|
1.0 |
|
|
|
13.0 |
|
|
|
1.4 |
|
|
|
(60.2 |
) |
Non-GAAP Operating Income |
|
$ |
37.4 |
|
|
$ |
37.0 |
|
|
$ |
74.4 |
|
|
$ |
64.7 |
|
Non-GAAP Operating Margin |
|
|
17 |
% |
|
|
20 |
% |
|
|
18 |
% |
|
|
18 |
% |
GAAP Net Income Attributable to Myriad Genetics, Inc.
Stockholders |
|
$ |
2.6 |
|
|
$ |
30.9 |
|
|
$ |
1.9 |
|
|
$ |
109.7 |
|
Acquisition - Integration related costs |
|
|
4.0 |
|
|
|
9.1 |
|
|
|
13.6 |
|
|
|
18.2 |
|
Acquisition - amortization of intangible assets |
|
|
15.3 |
|
|
|
0.1 |
|
|
|
28.6 |
|
|
|
0.2 |
|
Equity
compensation |
|
|
7.5 |
|
|
|
6.9 |
|
|
|
15.2 |
|
|
|
13.3 |
|
Elevate
2020 costs |
|
|
3.5 |
|
|
|
1.6 |
|
|
|
8.3 |
|
|
|
2.9 |
|
Potential
future consideration related to acquisitions |
|
|
1.0 |
|
|
|
13.0 |
|
|
|
1.4 |
|
|
|
(60.2 |
) |
Tax
reform impact |
|
|
— |
|
|
|
(32.6 |
) |
|
|
— |
|
|
|
(32.6 |
) |
Deferred
tax impact of non-GAAP adjustments |
|
|
(0.1 |
) |
|
|
(0.6 |
) |
|
|
2.6 |
|
|
|
(0.3 |
) |
Tax
effect associated with non-GAAP adjustments |
|
|
(4.6 |
) |
|
|
(2.5 |
) |
|
|
(9.7 |
) |
|
|
(4.8 |
) |
Non-GAAP Net Income |
|
$ |
29.2 |
|
|
$ |
25.9 |
|
|
$ |
61.9 |
|
|
$ |
46.4 |
|
GAAP Diluted EPS |
|
$ |
0.03 |
|
|
$ |
0.43 |
|
|
$ |
0.02 |
|
|
$ |
1.54 |
|
Non-GAAP Diluted EPS |
|
$ |
0.38 |
|
|
$ |
0.36 |
|
|
$ |
0.80 |
|
|
$ |
0.65 |
|
Diluted
shares outstanding |
|
|
76.5 |
|
|
|
71.9 |
|
|
|
76.9 |
|
|
|
71.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
|
(Unaudited data in
millions) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
Dec 31, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
|
|
|
|
|
|
|
|
|
GAAP cash flow from operations |
|
$ |
37.8 |
|
|
$ |
33.0 |
|
|
$ |
45.6 |
|
|
$ |
56.5 |
|
Capital
expenditures |
|
|
(2.8 |
) |
|
|
(5.3 |
) |
|
|
(4.1 |
) |
|
|
(3.7 |
) |
Free cash flow |
|
$ |
35.0 |
|
|
$ |
27.7 |
|
|
$ |
41.5 |
|
|
$ |
52.8 |
|
Elevate
2020 costs |
|
|
3.4 |
|
|
|
1.6 |
|
|
|
8.1 |
|
|
|
2.8 |
|
Acquisition - Integration related costs |
|
|
0.3 |
|
|
|
— |
|
|
|
8.4 |
|
|
|
— |
|
Tax
effect associated with non-GAAP adjustments |
|
|
(1.1 |
) |
|
|
(0.6 |
) |
|
|
(4.0 |
) |
|
|
(1.1 |
) |
Non-GAAP Free cash
flow |
|
$ |
37.6 |
|
|
$ |
28.7 |
|
|
$ |
54.0 |
|
|
$ |
54.5 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year
2019 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 2019 |
Diluted net
income per share |
|
GAAP diluted net income
per share |
$0.40-
$0.45 |
Stock Based
Compensation Expense |
0.30 |
Acquisition -
amortization of intangible assets |
0.80 |
Adjustments to GAAP
financial measures |
0.20 |
Non-GAAP
diluted net income per share |
$1.70 -
$1.75 |
|
|
|
|
|
Fiscal Third-Quarter
2019 |
Diluted net
income per share |
|
GAAP diluted net income
per share |
$0.12 -
$0.14 |
Stock Based
Compensation Expense |
0.08 |
Acquisition -
amortization of intangible assets |
0.20 |
Adjustments to GAAP
financial measures |
- |
Non-GAAP
diluted net income per share |
$0.40 -
$0.42 |
|
|
Media Contact: Ron Rogers (801) 584-3065
rrogers@myriad.com
Investor Contact: Scott Gleason (801) 584-1143
sgleason@myriad.com
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