Myriad Genetics Reports Fiscal Third-Quarter 2019 Financial Results
May 07 2019 - 4:05PM
Myriad Genetics, Inc. (NASDAQ: MYGN, “Myriad” or the “Company”), a
global leader in personalized medicine, today announced financial
results for its fiscal third-quarter 2019, provided an update on
recent business highlights, updated its fiscal year 2019 financial
guidance, and provided fiscal fourth-quarter 2019 financial
guidance.
"During the fiscal third-quarter we once again saw meaningful
year-over-year growth in our hereditary cancer business, continued
strong volume trends with our prenatal and GeneSight® tests and
posted one of the most profitable quarters in the history of the
company,” said Mark C. Capone, president and CEO, Myriad Genetics.
“We continue to advance our diversification efforts with new
products representing more than 76 percent of overall volume.
With ongoing volume growth and expanding reimbursement, we remain
highly optimistic about our future growth prospects.”
Financial Highlights
The following table summarizes the financial results for the
fiscal third-quarter 2019:
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
Fiscal Third-Quarter |
|
|
($ in
millions) |
|
2019 |
|
|
|
2018 |
|
|
% Change |
Molecular
diagnostic testing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary Cancer |
$ |
117.6 |
|
|
$ |
113.1 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
GeneSight® |
|
29.6 |
|
|
|
30.4 |
|
|
(3 |
%) |
|
|
|
|
|
|
|
|
|
|
Prenatal |
|
30.6 |
|
|
|
- |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
Vectra® |
|
11.3 |
|
|
|
15.0 |
|
|
(25 |
%) |
|
|
|
|
|
|
|
|
|
|
Prolaris® |
|
6.9 |
|
|
|
6.4 |
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
EndoPredict® |
|
2.8 |
|
|
|
2.3 |
|
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
Other |
|
1.7 |
|
|
|
2.1 |
|
|
(19 |
%) |
|
|
|
|
|
|
|
|
|
Total molecular
diagnostic testing revenue |
|
200.5 |
|
|
|
169.3 |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
Pharmaceutical and
clinical service revenue |
|
16.1 |
|
|
|
13.8 |
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
Total Revenue |
$ |
216.6 |
|
|
$ |
183.1 |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
Income
Statement |
|
|
|
|
|
|
|
|
|
|
Fiscal Third-Quarter |
|
|
($ in
millions) |
|
2019 |
|
|
|
2018 |
|
|
% Change |
Total Revenue |
$ |
216.6 |
|
|
$ |
183.1 |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
Gross Profit |
|
168.0 |
|
|
|
139.0 |
|
|
21 |
% |
|
Gross Margin |
|
77.6 |
% |
|
|
75.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
162.1 |
|
|
|
125.2 |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
Operating
Income |
|
5.9 |
|
|
|
13.8 |
|
|
(57 |
%) |
|
Operating Margin |
|
2.7 |
% |
|
|
7.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income |
|
37.6 |
|
|
|
32.0 |
|
|
18 |
% |
|
Adjusted Operating Margin |
|
17.4 |
% |
|
|
17.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
6.9 |
|
|
|
9.1 |
|
|
(24 |
%) |
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
0.09 |
|
|
|
0.13 |
|
|
(31 |
%) |
|
|
|
|
|
|
|
|
|
Adjusted EPS |
$ |
0.46 |
|
|
$ |
0.34 |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
Business Highlights
- Hereditary Cancerο Year-over-year
revenue growth reached four percent, the highest in the last five
fiscal years.ο Achieved ninth consecutive quarter of
year-over-year hereditary cancer testing volume growth and sixth
consecutive quarter with stable hereditary cancer pricing.ο
The American Society of Breast Surgeons expanded hereditary cancer
testing guidelines to all breast cancer patients.ο Data
presented at the American College of Obstetrics and Gynecology
meeting from a large clinical study showed that 23 percent of women
met National Comprehensive Cancer Network Guidelines for hereditary
cancer screening, substantially higher than previously
estimated.
- GeneSightο Test volume increased 19
percent year over year.ο Signed agreement with Kroger
Prescription Plans to cover GeneSight as a medical benefit for
Kroger Prescription Plans employer group clients and to launch a
pharmacy medical management intervention in Kroger stores.
- Prenatal Testingο Test volume grew seven
percent sequentially following the integration of the Counsyl and
Myriad women’s health sales teams.ο Announced in-network
agreement with UnitedHealthcare effective April 1, 2019.ο
Launched expanded aneuploidy screening for Prequel™ non-invasive
prenatal screening test for all 23 chromosome pairs increasing
sensitivity by 30 percent.ο Presented data at the American
College of Medical Genetics meeting from a 58,000 patient study
demonstrating that the Prequel test was highly accurate below a
four percent fetal fraction cutoff and that the inclusion of a
cutoff did not improve test accuracy. ο Published an
expanded carrier screening study in Genetics in Medicine,
demonstrating that 38 genes in the Foresight® test met all panel
inclusion criteria commonly recommended in medical guidelines.
- Prolaris®ο Fiscal third-quarter revenue
increased eight percent year-over-year to $6.9 million.ο
Received positive medical policy decisions from Blue Cross Blue
Shield of Kansas, SmartHealth, Blue Cross Blue Shield of
Northeastern New York, and Blue Cross Blue Shield of Western New
York, thereby increasing coverage to 27 million commercial lives in
the United States.
- EndoPredictο Fiscal third-quarter
revenue increased 22 percent year-over-year to $2.8 million.ο
New publication in Breast Cancer Research and Treatment found that
the EndoPredict test accurately predicts the magnitude of
chemotherapy benefit in women with ER-positive, HER2-negative
breast cancer.
- Companion
Diagnosticsο Submitted the
first module of premarket approval application (PMA) for myChoice
HRD® CDx as a companion diagnostic for GlaxoSmithKline’s PARP
inhibitor, niraparib, in ovarian cancer patients.ο Announced
new data showing BRACAnalysis® CDx successfully identified patients
with pancreatic cancer who benefitted from olaparib in
AstraZeneca’s POLO study. Myriad intends to file a supplementary
PMA to the U.S. Food and Drug Administration for BRACAnalysis CDx
as a companion diagnostic for olaparib in patients with pancreatic
cancer.ο Expanded research collaboration with Merck and
AstraZeneca to provide BRACAnalysis CDx testing for patients with
metastatic castrate resistant prostate cancer.ο Received
approval from the Japanese Ministry of Health Labour and Welfare
for BRACAnalysis CDx as a companion diagnostic for olaparib in
first-line ovarian cancer patients.
- myPath®
Melanomaο Received
positive final local coverage decision from Noridian Healthcare
Solutions for myPath Melanoma.
Fiscal Year 2019 and Fiscal Fourth-Quarter 2019
Financial GuidanceBelow is a table summarizing Myriad’s
fiscal year 2019 and fiscal fourth-quarter 2019 financial
guidance:
|
|
|
|
|
|
|
Revenue |
|
GAAP Diluted Earnings Per Share |
|
Adjusted Earnings Per Share |
Fiscal Year 2019 |
$856
million |
|
$0.28 |
|
$1.74 |
Fiscal Fourth-Quarter 2019 |
$220 million |
|
$0.16 |
|
$0.48 |
|
|
|
|
|
|
Myriad’s fiscal year 2019 and fourth-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, May 7, 2019, at 4:30 p.m. EDT to
discuss Myriad’s financial results for the fiscal third-quarter,
business developments and financial guidance. The dial-in
number for domestic callers is 1-800-908-1487. International
callers may dial 1-303-223-0120. All callers will be asked to
reference reservation number 21920022. 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.
MYRIAD GENETICS, INC. AND SUBSIDIARIES |
|
|
|
|
|
|
|
CONSOLIDATED INCOME STATEMENTS (Unaudited) |
|
|
|
|
|
|
|
(in millions, except per share
amounts) |
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
March 31, |
|
March 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Molecular diagnostic testing |
$ |
200.5 |
|
|
$ |
169.3 |
|
|
$ |
592.5 |
|
|
$ |
509.7 |
|
Pharmaceutical and clinical
services |
|
16.1 |
|
|
|
13.8 |
|
|
|
43.2 |
|
|
|
40.1 |
|
Total revenue |
|
216.6 |
|
|
|
183.1 |
|
|
|
635.7 |
|
|
|
549.8 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of molecular diagnostic testing |
|
40.3 |
|
|
|
36.8 |
|
|
|
126.6 |
|
|
|
110.7 |
|
Cost of pharmaceutical and clinical services |
|
8.3 |
|
|
|
7.3 |
|
|
|
23.8 |
|
|
|
20.7 |
|
Research and development expense |
|
21.5 |
|
|
|
18.5 |
|
|
|
65.0 |
|
|
|
53.1 |
|
Change in the fair value of contingent consideration |
|
— |
|
|
|
(1.2 |
) |
|
|
1.4 |
|
|
|
(61.3 |
) |
Selling, general, and administrative expense |
|
140.6 |
|
|
|
107.9 |
|
|
|
405.7 |
|
|
|
322.3 |
|
Total costs and expenses |
|
210.7 |
|
|
|
169.3 |
|
|
|
622.5 |
|
|
|
445.5 |
|
Operating income |
|
5.9 |
|
|
|
13.8 |
|
|
|
13.2 |
|
|
|
104.3 |
|
Other income (expense): |
|
|
|
|
|
|
|
Interest income |
|
0.7 |
|
|
|
0.5 |
|
|
|
2.3 |
|
|
|
1.2 |
|
Interest expense |
|
(3.2 |
) |
|
|
(0.5 |
) |
|
|
(8.8 |
) |
|
|
(2.2 |
) |
Other |
|
(0.1 |
) |
|
|
(0.5 |
) |
|
|
1.0 |
|
|
|
(1.3 |
) |
Total other expense: |
|
(2.6 |
) |
|
|
(0.5 |
) |
|
|
(5.5 |
) |
|
|
(2.3 |
) |
Income before income tax |
|
3.3 |
|
|
|
13.3 |
|
|
|
7.7 |
|
|
|
102.0 |
|
Income tax provision |
|
(3.6 |
) |
|
|
4.3 |
|
|
|
(1.0 |
) |
|
|
(16.7 |
) |
Net income |
$ |
6.9 |
|
|
$ |
9.0 |
|
|
$ |
8.7 |
|
|
$ |
118.7 |
|
Net loss attributable to
non-controlling interest |
|
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
Net income attributable to
Myriad Genetics, Inc. stockholders |
$ |
6.9 |
|
|
$ |
9.1 |
|
|
$ |
8.8 |
|
|
$ |
118.9 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.09 |
|
|
$ |
0.13 |
|
|
$ |
0.12 |
|
|
$ |
1.72 |
|
Diluted |
$ |
0.09 |
|
|
$ |
0.13 |
|
|
$ |
0.12 |
|
|
$ |
1.66 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
73.3 |
|
|
|
69.8 |
|
|
|
73.5 |
|
|
|
69.2 |
|
Diluted |
|
74.9 |
|
|
|
72.4 |
|
|
|
76.4 |
|
|
|
71.7 |
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) |
(in millions) |
|
|
|
|
March 31, |
|
June 30, |
ASSETS |
2019 |
|
2018 |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
84.9 |
|
|
$ |
110.9 |
|
Marketable investment securities |
|
64.8 |
|
|
|
69.7 |
|
Prepaid expenses |
|
11.3 |
|
|
|
9.4 |
|
Inventory |
|
31.9 |
|
|
|
34.3 |
|
Trade accounts receivable |
|
142.6 |
|
|
|
99.5 |
|
Prepaid taxes |
|
3.0 |
|
|
|
— |
|
Other receivables |
|
4.4 |
|
|
|
3.8 |
|
Total current assets |
|
342.9 |
|
|
|
327.6 |
|
Property, plant and equipment, net |
|
58.7 |
|
|
|
43.2 |
|
Long-term marketable investment securities |
|
40.3 |
|
|
|
30.7 |
|
Intangibles, net |
|
699.5 |
|
|
|
455.2 |
|
Goodwill |
|
415.9 |
|
|
|
318.6 |
|
Total assets |
$ |
1,557.3 |
|
|
$ |
1,175.3 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
24.1 |
|
|
$ |
26.0 |
|
Accrued liabilities |
|
78.8 |
|
|
|
68.3 |
|
Short-term contingent consideration |
|
3.7 |
|
|
|
5.3 |
|
Deferred revenue |
|
2.3 |
|
|
|
2.6 |
|
Total current liabilities |
|
108.9 |
|
|
|
102.2 |
|
Unrecognized tax benefits |
|
19.9 |
|
|
|
24.9 |
|
Other long-term liabilities |
|
7.3 |
|
|
|
6.3 |
|
Contingent consideration |
|
10.3 |
|
|
|
9.2 |
|
Long-term debt |
|
263.4 |
|
|
|
9.3 |
|
Long-term deferred taxes |
|
65.8 |
|
|
|
57.3 |
|
Total liabilities |
|
475.6 |
|
|
|
209.2 |
|
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, 73.4 and 70.6 shares outstanding at March 31, 2019
and June 30, 2018 respectively |
|
0.7 |
|
|
|
0.7 |
|
Additional paid-in capital |
|
1,057.0 |
|
|
|
915.4 |
|
Accumulated other comprehensive loss |
|
(5.7 |
) |
|
|
(4.1 |
) |
Retained earnings |
|
29.8 |
|
|
|
54.1 |
|
Total Myriad Genetics, Inc. stockholders’ equity |
|
1,081.8 |
|
|
|
966.1 |
|
Non-Controlling Interest |
|
(0.1 |
) |
|
|
— |
|
Total stockholders' equity |
|
1,081.7 |
|
|
|
966.1 |
|
Total liabilities and stockholders’ equity |
$ |
1,557.3 |
|
|
$ |
1,175.3 |
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
(in millions) |
|
|
|
|
|
|
Nine months ended |
|
March 31, |
|
2019 |
|
2018 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net Income attributable to Myriad Genetics, Inc. stockholders |
$ |
8.8 |
|
|
|
118.9 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
54.6 |
|
|
|
39.3 |
|
Non-cash interest expense |
|
0.3 |
|
|
|
0.1 |
|
Loss (gain) on disposition of assets |
|
(0.9 |
) |
|
|
0.1 |
|
Share-based compensation expense |
|
24.7 |
|
|
|
20.0 |
|
Deferred income taxes |
|
3.0 |
|
|
|
(24.9 |
) |
Unrecognized tax benefits |
|
(7.3 |
) |
|
|
2.7 |
|
Change in fair value of contingent consideration |
|
(1.4 |
) |
|
|
(61.3 |
) |
Payment of contingent consideration |
|
(1.5 |
) |
|
|
(20.8 |
) |
Changes in assets and liabilities: |
|
|
|
Prepaid expenses |
|
2.0 |
|
|
|
2.7 |
|
Trade accounts receivable |
|
(27.0 |
) |
|
|
(14.4 |
) |
Other receivables |
|
(0.4 |
) |
|
|
4.1 |
|
Inventory |
|
7.4 |
|
|
|
8.9 |
|
Prepaid taxes |
|
(3.0 |
) |
|
|
(2.7 |
) |
Accounts payable |
|
(8.1 |
) |
|
|
(2.0 |
) |
Accrued liabilities |
|
1.4 |
|
|
|
(2.6 |
) |
Deferred revenue |
|
(0.4 |
) |
|
|
(0.1 |
) |
Net cash provided by operating
activities |
|
52.2 |
|
|
|
68.0 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Capital expenditures |
|
(7.2 |
) |
|
|
(6.6 |
) |
Acquisitions, net of cash
acquired |
|
(278.5 |
) |
|
|
— |
|
Purchases of marketable
investment securities |
|
(57.0 |
) |
|
|
(79.4 |
) |
Proceeds from maturities and
sales of marketable investment securities |
|
51.8 |
|
|
|
65.5 |
|
Net cash used in investing
activities |
|
(290.9 |
) |
|
|
(20.5 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Net proceeds from common stock
issued under share-based compensation plans |
|
6.5 |
|
|
|
18.2 |
|
Net proceeds from revolving
credit facility |
|
340.0 |
|
|
|
53.0 |
|
Repayment of revolving credit
facility |
|
(85.0 |
) |
|
|
(83.0 |
) |
Fees associated with
refinancing of revolving credit facility |
|
(1.4 |
) |
|
|
— |
|
Payment of contingent
consideration recorded in purchase accounting |
|
— |
|
|
|
(42.4 |
) |
Repurchase and retirement of
common stock |
|
(50.0 |
) |
|
|
— |
|
Proceeds from non-controlling
interest |
|
— |
|
|
|
0.5 |
|
Net cash provided by (used in)
financing activities |
|
210.1 |
|
|
|
(53.7 |
) |
Effect of foreign exchange
rates on cash and cash equivalents |
|
2.6 |
|
|
|
1.2 |
|
Net increase (decrease) in
cash and cash equivalents |
|
(26.0 |
) |
|
|
(5.0 |
) |
Cash and cash equivalents at
beginning of the period |
|
110.9 |
|
|
|
102.4 |
|
Cash and cash equivalents at end of the period |
$ |
84.9 |
|
|
$ |
97.4 |
|
|
|
|
|
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 continued growth in our
hereditary cancer business, strong volume trends with our prenatal
and GeneSight tests, and our profitability; the Company’s continued
advancement in product diversification; the Company’s optimism for
future growth prospects given ongoing volume growth and expanding
reimbursement; the implementation of the agreement with Kroger
Prescription Plans to cover GeneSight testing as a medical benefit
for Kroger Prescription Plans employer group clients, and the
launch of a pharmacy medical management intervention in Kroger
stores; the Company’s intent to file a supplementary PMA to the
U.S. Food and Drug Administration for BRACAnalysis CDx as a
companion diagnostic for olaparib in first-line ovarian cancer
patients; the Company’s achievements discussed under the caption
“Business Highlights”; the Company’s fiscal year 2019 and fiscal
fourth-quarter 2019 financial guidance for revenue, GAAP diluted
earnings per share, and adjusted earnings per share under the
caption “Fiscal Year 2019 and Fiscal Fourth-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 Nine
months ended March 31, 2019 |
|
|
|
|
|
|
|
(Unaudited data in millions,
except per share amount) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
Mar 31, 2019 |
|
Mar 31, 2018 |
|
Mar 31, 2019 |
|
Mar 31, 2018 |
Revenue |
$ |
216.6 |
|
|
$ |
183.1 |
|
|
$ |
635.7 |
|
|
$ |
549.8 |
|
GAAP Cost of molecular diagnostic testing |
|
40.3 |
|
|
|
36.8 |
|
|
|
126.6 |
|
|
|
110.7 |
|
GAAP Cost of pharmaceutical and clinical
services |
|
8.3 |
|
|
|
7.3 |
|
|
|
23.8 |
|
|
|
20.7 |
|
Acquisition - Integration related costs |
|
(0.1 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
Equity Compensation |
|
(0.3 |
) |
|
|
(0.3 |
) |
|
|
(0.5 |
) |
|
|
(0.8 |
) |
Elevate 2020 costs |
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
(3.7 |
) |
|
|
(0.2 |
) |
Non-GAAP COGS |
$ |
48.0 |
|
|
$ |
43.6 |
|
|
$ |
146.0 |
|
|
$ |
130.4 |
|
Non-GAAP Gross Margin |
|
77.8 |
% |
|
|
76.2 |
% |
|
|
77.0 |
% |
|
|
76.3 |
% |
GAAP Research and Development |
$ |
21.5 |
|
|
$ |
18.5 |
|
|
$ |
65.0 |
|
|
$ |
53.1 |
|
Acquisition - amortization of intangible assets |
|
(0.1 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Acquisition - Integration related costs |
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.7 |
) |
|
|
(0.1 |
) |
Equity compensation |
|
(1.7 |
) |
|
|
(1.0 |
) |
|
|
(4.2 |
) |
|
|
(3.0 |
) |
Elevate 2020 costs |
|
— |
|
|
|
(1.0 |
) |
|
|
(2.3 |
) |
|
|
(1.2 |
) |
Non-GAAP R&D |
$ |
19.6 |
|
|
$ |
16.4 |
|
|
$ |
57.6 |
|
|
$ |
48.6 |
|
GAAP Contingent Consideration |
$ |
— |
|
|
$ |
(1.2 |
) |
|
$ |
1.4 |
|
|
$ |
(61.3 |
) |
Potential future consideration related to acquisitions |
|
— |
|
|
|
1.2 |
|
|
|
(1.4 |
) |
|
|
61.3 |
|
Non-GAAP Contingent Consideration |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
GAAP Selling, General and Administrative |
$ |
140.6 |
|
|
$ |
107.9 |
|
|
$ |
405.7 |
|
|
$ |
322.3 |
|
Acquisition - amortization of intangible assets |
|
(15.1 |
) |
|
|
(9.2 |
) |
|
|
(43.5 |
) |
|
|
(27.4 |
) |
Acquisition - Integration related costs |
|
(5.1 |
) |
|
|
(0.3 |
) |
|
|
(18.0 |
) |
|
|
(0.3 |
) |
Equity compensation |
|
(7.6 |
) |
|
|
(5.3 |
) |
|
|
(20.1 |
) |
|
|
(16.1 |
) |
Elevate 2020 costs |
|
(1.4 |
) |
|
|
(2.0 |
) |
|
|
(3.9 |
) |
|
|
(4.7 |
) |
Non-GAAP SG&A |
$ |
111.4 |
|
|
$ |
91.1 |
|
|
$ |
320.2 |
|
|
$ |
273.8 |
|
GAAP Operating Income |
$ |
5.9 |
|
|
$ |
13.8 |
|
|
$ |
13.2 |
|
|
$ |
104.3 |
|
Acquisition - Integration related costs |
|
5.3 |
|
|
|
0.4 |
|
|
|
18.9 |
|
|
|
0.4 |
|
Acquisition - amortization of intangible assets |
|
15.2 |
|
|
|
9.2 |
|
|
|
43.7 |
|
|
|
27.6 |
|
Equity compensation |
|
9.6 |
|
|
|
6.6 |
|
|
|
24.8 |
|
|
|
19.9 |
|
Elevate 2020 costs |
|
1.6 |
|
|
|
3.2 |
|
|
|
9.9 |
|
|
|
6.1 |
|
Potential future consideration related to acquisitions |
|
— |
|
|
|
(1.2 |
) |
|
|
1.4 |
|
|
|
(61.3 |
) |
Non-GAAP Operating Income |
$ |
37.6 |
|
|
$ |
32.0 |
|
|
$ |
111.9 |
|
|
$ |
97.0 |
|
Non-GAAP Operating Margin |
|
17 |
% |
|
|
17 |
% |
|
|
18 |
% |
|
|
18 |
% |
GAAP Net Income Attributable to Myriad Genetics, Inc.
Stockholders |
$ |
6.9 |
|
|
$ |
9.1 |
|
|
$ |
8.8 |
|
|
$ |
118.9 |
|
Acquisition - Integration related costs |
|
5.3 |
|
|
|
0.4 |
|
|
|
18.9 |
|
|
|
0.4 |
|
Acquisition - amortization of intangible assets |
|
15.2 |
|
|
|
9.2 |
|
|
|
43.7 |
|
|
|
27.6 |
|
Equity compensation |
|
9.6 |
|
|
|
6.6 |
|
|
|
24.8 |
|
|
|
19.9 |
|
Elevate 2020 costs |
|
1.6 |
|
|
|
3.2 |
|
|
|
9.9 |
|
|
|
6.1 |
|
Potential future consideration related to acquisitions |
|
— |
|
|
|
(1.2 |
) |
|
|
1.4 |
|
|
|
(61.3 |
) |
Tax reform impact |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(32.6 |
) |
Deferred tax impact of non-GAAP adjustments |
|
0.2 |
|
|
|
0.1 |
|
|
|
2.8 |
|
|
|
(0.2 |
) |
Tax effect associated with non-GAAP adjustments |
|
(4.5 |
) |
|
|
(2.8 |
) |
|
|
(14.1 |
) |
|
|
(7.7 |
) |
Non-GAAP Net Income |
$ |
34.3 |
|
|
$ |
24.6 |
|
|
$ |
96.2 |
|
|
$ |
71.1 |
|
|
|
|
|
|
|
|
|
GAAP Diluted EPS |
$ |
0.09 |
|
|
$ |
0.13 |
|
|
$ |
0.12 |
|
|
$ |
1.66 |
|
Non-GAAP Diluted EPS |
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
1.26 |
|
|
$ |
0.99 |
|
|
|
|
|
|
|
|
|
Diluted shares outstanding |
|
74.9 |
|
|
|
72.4 |
|
|
|
76.4 |
|
|
|
71.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
(Unaudited data in
millions) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
Mar 31, 2019 |
|
Mar 31, 2018 |
|
Mar 31, 2019 |
|
Mar 31, 2018 |
|
|
|
|
|
|
|
|
GAAP cash flow from operations |
$ |
6.6 |
|
|
$ |
11.5 |
|
|
$ |
52.2 |
|
|
$ |
68.0 |
|
Capital expenditures |
|
(3.1 |
) |
|
|
(2.9 |
) |
|
|
(7.2 |
) |
|
|
(6.6 |
) |
Free cash flow |
$ |
3.5 |
|
|
$ |
8.6 |
|
|
$ |
45.0 |
|
|
$ |
61.4 |
|
Elevate 2020 costs |
|
0.6 |
|
|
|
3.2 |
|
|
|
8.7 |
|
|
|
6.0 |
|
Acquisition - Integration related costs |
|
3.5 |
|
|
|
0.4 |
|
|
|
11.9 |
|
|
|
0.4 |
|
Cash paid for contingent consideration in operating cash flows |
|
— |
|
|
|
20.8 |
|
|
|
— |
|
|
|
20.8 |
|
Tax effect associated with non-GAAP adjustments |
|
(1.1 |
) |
|
|
(0.8 |
) |
|
|
(5.8 |
) |
|
|
(1.8 |
) |
Non-GAAP Free cash
flow |
$ |
6.5 |
|
|
$ |
32.2 |
|
|
$ |
59.8 |
|
|
$ |
86.8 |
|
|
|
|
|
|
|
|
|
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 |
|
$0.28 |
Stock Based Compensation
Expense |
|
0.30 |
Acquisition - amortization of
intangible assets |
|
0.80 |
Adjustments to GAAP financial
measures |
|
0.36 |
Non-GAAP diluted net
income per share |
|
$1.74 |
|
|
|
|
|
Fiscal Fourth-Quarter
2019 |
Diluted net income per
share |
|
GAAP diluted net income per
share |
|
$0.16 |
Stock Based Compensation
Expense |
|
0.08 |
Acquisition - amortization of
intangible assets |
|
0.20 |
Adjustments to GAAP financial
measures |
|
0.04 |
Non-GAAP diluted net
income per share |
|
$0.48 |
Media
Contact: |
|
Ron
Rogers |
|
Investor
Contact: |
|
Scott
Gleason |
|
|
(801) 584-3065 |
|
|
|
(801)
584-1143 |
|
|
rrogers@myriad.com |
|
|
|
sgleason@myriad.com |
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