Myriad Genetics, Inc. (NASDAQ:MYGN), a global leader in molecular
diagnostics and personalized medicine, today announced financial
results for its fiscal second-quarter 2018, provided an update on
recent business highlights, raised its fiscal year 2018 financial
guidance, and issued fiscal third-quarter 2018 financial guidance.
"We exceeded our financial expectations in the first half of
fiscal year 2018 as a result of strong hereditary cancer volume
trends, solid GeneSight® revenue growth, and significant progress
on our Elevate 2020 profitability program,” said Mark C. Capone,
president and CEO, Myriad Genetics. “Based upon this strong
performance we are increasing our financial guidance for fiscal
2018. We remain highly encouraged that our strategy to build upon
the solid foundation of our hereditary cancer business with
diversified revenues from our industry-leading pipeline of new
products will deliver significant future revenue and earnings
growth.”
Financial HighlightsThe following table
summarizes the financial results for the fiscal second-quarter
2018:
Revenue |
|
|
|
|
|
|
|
|
|
|
Fiscal Second-Quarter |
|
|
($
in millions) |
|
2018 |
|
|
|
2017 |
|
|
% Change |
Molecular
diagnostic testing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary cancer
testing revenue |
$ |
126.9 |
|
|
$ |
143.9 |
|
|
(12 |
%) |
|
|
|
|
|
|
|
|
|
|
GeneSight testing
revenue |
|
31.7 |
|
|
|
21.7 |
|
|
46 |
% |
|
|
|
|
|
|
|
|
|
|
Vectra DA testing
revenue |
|
11.1 |
|
|
|
10.7 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
Prolaris testing
revenue |
|
5.0 |
|
|
|
3.1 |
|
|
61 |
% |
|
|
|
|
|
|
|
|
|
|
EndoPredict testing
revenue |
|
2.0 |
|
|
|
1.6 |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
Other testing
revenue |
|
2.5 |
|
|
|
2.9 |
|
|
(14 |
%) |
|
|
|
|
|
|
|
|
|
Total
molecular diagnostic testing revenue |
|
179.2 |
|
|
|
183.9 |
|
|
(3 |
%) |
|
|
|
|
|
|
|
|
|
Pharmaceutical and clinical service revenue |
|
14.8 |
|
|
|
12.6 |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
Total
Revenue |
$ |
194.0 |
|
|
$ |
196.5 |
|
|
(1 |
%) |
|
|
|
|
|
|
|
|
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
Fiscal Second-Quarter |
|
|
($
in millions) |
|
2018 |
|
|
|
2017 |
|
|
% Change |
Total
Revenue |
$ |
194.0 |
|
|
$ |
196.5 |
|
|
(1 |
%) |
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
149.6 |
|
|
|
152.1 |
|
|
(2 |
%) |
|
Gross Margin |
|
77.1 |
% |
|
|
77.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
145.2 |
|
|
|
135.1 |
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
Operating
Income |
|
4.4 |
|
|
|
17.0 |
|
|
(74 |
%) |
|
Operating Margin |
|
2.3 |
% |
|
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Income |
|
28.2 |
|
|
|
23.6 |
|
|
20 |
% |
|
Adjusted Operating
Margin |
|
14.5 |
% |
|
|
12.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
32.1 |
|
|
|
5.9 |
|
|
444 |
% |
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
0.45 |
|
|
|
0.09 |
|
|
400 |
% |
|
|
|
|
|
|
|
|
|
Adjusted
EPS |
$ |
0.31 |
|
|
$ |
0.26 |
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
Business Highlights
• Hereditary Cancer
- Achieved the fourth consecutive quarter of year-over-year
volume growth and again exceeded our three percent fiscal 2018
volume growth target.
- Presented pivotal validation data for riskScore® at the San
Antonio Breast Cancer Symposium (SABCS) with data from over 1,617
women. The results show that riskScore is a highly statistically
significant predictor of the 5-year and lifetime risk of breast
cancer (p=5.2x10-39 and p=4.1x10-35, respectively).
- Successful commercial launch of riskScore led to an
acceleration in preventive care hereditary cancer test
volumes.
• GeneSight®
- Announced data from 1,200 patient prospective randomized
controlled trial showing GeneSight led to a highly statistically
significant improvement in the gold-standard outcomes of response
and remission (p<0.01 and p=0.01 respectively).
- GeneSight revenue increased 46 percent year-over-year with
double-digit, sequential volume growth.
- Announced top-line data from 2,000 patient IMPACT study
demonstrating that with GeneSight primary care physicians saw even
better outcomes when compared to psychiatrists.
- Announced the PRIME Care study in conjunction with the
Department of Veterans Affairs, which will be a randomized
controlled trial enrolling over 2,000 patients with major
depressive disorder at 21 VA medical centers. The Department of
Veterans Affairs has committed over $12 million to fund the study,
which will evaluate how the GeneSight test influences the key
endpoints of remission, response, and symptom improvement relative
to patients receiving standard of care therapy.
• Vectra DA®
- Presented data at the American College of Rheumatology (ACR)
meeting demonstrating that Vectra DA® was more
than three times better at predicting radiographic progression
compared to conventional measures of disease activity.
- Presented new clinical utility data from 60,596 patients
demonstrating that physicians use Vectra DA scores to change
treatment decisions appropriately. The study found that in patients
who were naive to biologics, rheumatologists were 118 percent more
likely to recommend a biologic for patients with a high Vectra DA
score when compared to patients with a low Vectra DA score.
For patients already on a biologic, rheumatologists were 158
percent more likely to change therapy for those with high Vectra DA
scores compared to those with low Vectra DA scores.
- Submitted a new publication on Vectra DA showing the change in
Vectra DA scores required to recommend a modification in treatment.
This clinical utility data will be utilized to add a medical
management protocol to the Vectra DA test report.
- Published clinical utility study for a new indication in the
Annals of Rheumatic Diseases demonstrating that in over 70,000
Medicare patients there was a strong link between Vectra DA score
and cardiovascular disease.
• Prolaris®
- Finalized Medicare Local Coverage Decision (LCD) for favorable
intermediate prostate cancer patients.
- Prolaris volumes grew in the double-digits on a year-over-year
basis.
• EndoPredict®
- United States test volumes increased over 70 percent on a
sequential basis.
- Presented chemopredictive data at SABCS demonstrating the
ability of EndoPredict to predict response to neoadjuvant therapy
in 217 women with HR+ breast cancer. The study found that patients
with a low EndoPredict score were significantly more responsive to
endocrine therapy (p=0.015) and women with a high EndoPredict score
were significantly more responsive to neoadjuvant chemotherapy
(p=0.0001).
• Companion Diagnostics
- Received FDA approval for BRACAnalysis® CDx as
a companion diagnostic in conjunction with AstraZeneca’s Lynparza
(olaparib) for HER2- metastatic breast cancer.
- Pfizer presented positive data from the phase 3 EMBRACA trial
in metastatic breast cancer using talazoparib, Pfizer’s
investigational PARP inhibitor and Myriad’s BRACAnalysis CDx
test as a companion diagnostic. Myriad plans to submit a
supplementary premarket approval application to the U.S. Food and
Drug Administration under its existing PMA for BRACAnalysis CDx to
include talazoparib.
- Announced an expanded research agreement with AstraZeneca using
the company's myChoice® HRD Plus test in an exploratory analysis to
identify women with advanced ovarian cancer who may benefit from
maintenance treatment with Lynparza (olaparib) and Avastin
(bevacizumab).
• Impact of Tax Reform
- The company estimates that the tax reform legislation will
positively benefit our fiscal 2018 full year adjusted earnings per
share by approximately $0.06 with $0.02 recorded in the fiscal
second quarter, and the remaining $0.04 benefit anticipated across
the second half of fiscal year 2018.
Fiscal Year 2018 and Fiscal Third-Quarter 2018 Financial
GuidanceBelow is a table summarizing Myriad’s fiscal year
2018 and fiscal third-quarter 2018 financial guidance:
|
Revenue |
|
GAAP Diluted Earnings Per Share |
|
Adjusted Earnings Per Share |
Fiscal Year 2018 |
$760-$770million |
|
$1.82-$1.87 |
|
$1.11-$1.16 |
|
|
|
|
|
|
Fiscal
Third-Quarter 2018 |
$186-$188million |
|
$0.11-$0.13 |
|
$0.26-$0.28 |
|
|
|
|
|
|
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 to discuss
the fiscal second-quarter financial results, fiscal year 2018
financial guidance, and fiscal third-quarter 2018 financial
guidance.
Conference Call and WebcastA conference call
will be held today, Tuesday, February 6, 2018, at 4:30 p.m. ET to
discuss Myriad’s financial results for the fiscal second-quarter,
business developments and financial guidance. The dial-in
number for domestic callers is 1-800-699-0623. International
callers may dial 1-303-223-4362. All callers will be asked to
reference reservation number 21879835. 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: build 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 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.
|
|
|
|
|
|
|
|
|
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, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Molecular diagnostic
testing |
|
$ |
179.2 |
|
|
$ |
183.9 |
|
|
$ |
358.0 |
|
|
$ |
348.9 |
|
Pharmaceutical and
clinical services |
|
|
14.8 |
|
|
|
12.6 |
|
|
|
26.2 |
|
|
|
25.0 |
|
Total revenue |
|
|
194.0 |
|
|
|
196.5 |
|
|
|
384.2 |
|
|
|
373.9 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of
molecular diagnostic testing |
|
|
37.7 |
|
|
|
37.4 |
|
|
|
73.9 |
|
|
|
71.6 |
|
Cost of
pharmaceutical and clinical services |
|
|
6.7 |
|
|
|
7.0 |
|
|
|
13.5 |
|
|
|
12.7 |
|
Research
and development expense |
|
|
16.8 |
|
|
|
18.6 |
|
|
|
34.6 |
|
|
|
38.0 |
|
Change in
the fair value of contingent consideration |
|
|
13.0 |
|
|
|
(3.8 |
) |
|
|
(60.2 |
) |
|
|
(3.2 |
) |
Selling,
general, and administrative expense |
|
|
115.4 |
|
|
|
120.3 |
|
|
|
230.5 |
|
|
|
232.2 |
|
Total
costs and expenses |
|
|
189.6 |
|
|
|
179.5 |
|
|
|
292.3 |
|
|
|
351.3 |
|
Operating
income |
|
|
4.4 |
|
|
|
17.0 |
|
|
|
91.9 |
|
|
|
22.6 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
|
0.4 |
|
|
|
0.3 |
|
|
|
0.8 |
|
|
|
0.6 |
|
Interest
expense |
|
|
(0.7 |
) |
|
|
(2.6 |
) |
|
|
(1.7 |
) |
|
|
(3.3 |
) |
Other |
|
|
(0.4 |
) |
|
|
(2.6 |
) |
|
|
(0.7 |
) |
|
|
(3.8 |
) |
Total
other income (expense): |
|
|
(0.7 |
) |
|
|
(4.9 |
) |
|
|
(1.6 |
) |
|
|
(6.5 |
) |
Income
before income tax |
|
|
3.7 |
|
|
|
12.1 |
|
|
|
90.3 |
|
|
|
16.1 |
|
Income tax
provision |
|
|
(28.4 |
) |
|
|
6.2 |
|
|
|
(22.8 |
) |
|
|
11.4 |
|
Net income |
|
$ |
32.1 |
|
|
$ |
5.9 |
|
|
$ |
113.1 |
|
|
$ |
4.7 |
|
Net loss attributable
to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
Net income attributable
to Myriad Genetics, Inc. stockholders |
|
$ |
32.1 |
|
|
$ |
5.9 |
|
|
$ |
113.2 |
|
|
$ |
4.7 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.46 |
|
|
$ |
0.09 |
|
|
$ |
1.64 |
|
|
$ |
0.07 |
|
Diluted |
|
$ |
0.45 |
|
|
$ |
0.09 |
|
|
$ |
1.59 |
|
|
$ |
0.07 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
69.3 |
|
|
|
68.2 |
|
|
|
68.9 |
|
|
|
68.5 |
|
Diluted |
|
|
71.9 |
|
|
|
68.3 |
|
|
|
71.2 |
|
|
|
68.9 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) |
(in millions) |
|
|
|
|
|
|
December 31, |
|
June 30, |
ASSETS |
|
2017 |
|
2017 |
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
88.7 |
|
|
$ |
102.4 |
|
Marketable investment securities |
|
|
54.8 |
|
|
|
48.3 |
|
Prepaid
expenses |
|
|
9.8 |
|
|
|
12.7 |
|
Inventory |
|
|
38.2 |
|
|
|
42.2 |
|
Trade
accounts receivable, less allowance for doubtful accounts of $9.5
December 31, 2017 and $8.2 June 30, 2017 |
|
|
121.1 |
|
|
|
105.6 |
|
Prepaid
taxes |
|
|
8.4 |
|
|
|
0.2 |
|
Other
receivables |
|
|
6.0 |
|
|
|
5.7 |
|
Total
current assets |
|
|
327.0 |
|
|
|
317.1 |
|
Property, plant and equipment, net |
|
|
48.4 |
|
|
|
51.1 |
|
Long-term marketable investment securities |
|
|
58.5 |
|
|
|
48.5 |
|
Intangibles, net |
|
|
475.2 |
|
|
|
491.6 |
|
Goodwill |
|
|
319.4 |
|
|
|
316.1 |
|
Total
assets |
|
$ |
1,228.5 |
|
|
$ |
1,224.4 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
25.1 |
|
|
$ |
22.0 |
|
Accrued
liabilities |
|
|
60.8 |
|
|
|
65.6 |
|
Short-term contingent consideration |
|
|
70.0 |
|
|
|
127.3 |
|
Deferred
revenue |
|
|
3.4 |
|
|
|
2.6 |
|
Total
current liabilities |
|
|
159.3 |
|
|
|
217.5 |
|
Unrecognized tax benefits |
|
|
33.4 |
|
|
|
25.2 |
|
Other
long-term liabilities |
|
|
6.6 |
|
|
|
7.2 |
|
Contingent consideration |
|
|
11.0 |
|
|
|
13.2 |
|
Long-term debt |
|
|
43.2 |
|
|
|
99.1 |
|
Long-term deferred taxes |
|
|
60.8 |
|
|
|
84.4 |
|
Total
liabilities |
|
|
314.3 |
|
|
|
446.6 |
|
Commitments and contingencies |
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common
stock, 69.4 and 68.4 shares outstanding at December 31, 2017 and
June 30, 2017 respectively |
|
|
0.7 |
|
|
|
0.7 |
|
Additional paid-in capital |
|
|
871.1 |
|
|
|
851.4 |
|
Accumulated other comprehensive loss |
|
|
(2.4 |
) |
|
|
(5.5 |
) |
Retained
earnings (deficit) |
|
|
44.8 |
|
|
|
(68.4 |
) |
Total
Myriad Genetics, Inc. stockholders’ equity |
|
|
914.2 |
|
|
|
778.2 |
|
Non-Controlling Interest |
|
|
— |
|
|
|
(0.4 |
) |
Total
stockholders' equity |
|
|
914.2 |
|
|
|
777.8 |
|
Total
liabilities and stockholders’ equity |
|
$ |
1,228.5 |
|
|
$ |
1,224.4 |
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows
(Unaudited) |
(in millions) |
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
December 31, |
|
|
|
2017 |
|
|
|
2016 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net Income attributable
to Myriad Genetics, Inc. stockholders |
|
$ |
113.2 |
|
|
$ |
4.7 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
26.3 |
|
|
|
22.1 |
|
Non-cash
interest expense |
|
|
0.1 |
|
|
|
0.3 |
|
Gain
(loss) on disposition of assets |
|
|
0.1 |
|
|
|
(0.2 |
) |
Share-based compensation expense |
|
|
13.3 |
|
|
|
15.2 |
|
Impairment of cost basis investment |
|
|
— |
|
|
|
2.5 |
|
Bad debt
expense |
|
|
16.0 |
|
|
|
18.1 |
|
Loss on
extinguishment of debt |
|
|
— |
|
|
|
1.3 |
|
Deferred
income taxes |
|
|
(25.9 |
) |
|
|
2.9 |
|
Unrecognized tax benefits |
|
|
8.2 |
|
|
|
0.6 |
|
Change in
fair value of contingent consideration |
|
|
(60.2 |
) |
|
|
(3.2 |
) |
Changes
in assets and liabilities: |
|
|
|
|
Prepaid
expenses |
|
|
2.9 |
|
|
|
8.3 |
|
Trade
accounts receivable |
|
|
(32.5 |
) |
|
|
(24.4 |
) |
Other
receivables |
|
|
1.4 |
|
|
|
(2.4 |
) |
Inventory |
|
|
4.1 |
|
|
|
(10.4 |
) |
Prepaid
taxes |
|
|
(8.4 |
) |
|
|
(0.4 |
) |
Accounts
payable |
|
|
3.0 |
|
|
|
(2.0 |
) |
Accrued
liabilities |
|
|
(5.8 |
) |
|
|
(5.0 |
) |
Deferred
revenue |
|
|
0.7 |
|
|
|
0.5 |
|
Net cash provided by
operating activities |
|
|
56.5 |
|
|
|
28.5 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
Capital
expenditures |
|
|
(3.7 |
) |
|
|
(3.9 |
) |
Acquisitions, net of
cash acquired |
|
|
— |
|
|
|
(216.1 |
) |
Purchases of marketable
investment securities |
|
|
(61.3 |
) |
|
|
(49.0 |
) |
Proceeds from
maturities and sales of marketable investment securities |
|
|
45.2 |
|
|
|
108.9 |
|
Net cash used in
investing activities |
|
|
(19.8 |
) |
|
|
(160.1 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Net proceeds from
common stock issued under share-based compensation plans |
|
|
6.3 |
|
|
|
1.0 |
|
Net proceeds from
revolving credit facility |
|
|
— |
|
|
|
204.0 |
|
Repayment of revolving
credit facility |
|
|
(56.0 |
) |
|
|
— |
|
Net proceeds from term
loan |
|
|
— |
|
|
|
199.0 |
|
Repayment of term
loan |
|
|
— |
|
|
|
(200.0 |
) |
Fees paid for
extinguishment of debt |
|
|
— |
|
|
|
(0.6 |
) |
Repurchase and
retirement of common stock |
|
|
— |
|
|
|
(31.6 |
) |
Proceeds from
Non-Controlling Interest |
|
|
0.3 |
|
|
|
— |
|
Net cash provided by
(used in) financing activities |
|
|
(49.4 |
) |
|
|
171.8 |
|
Effect of foreign
exchange rates on cash and cash equivalents |
|
|
(1.0 |
) |
|
|
(0.7 |
) |
Net increase (decrease)
in cash and cash equivalents |
|
|
(13.7 |
) |
|
|
39.5 |
|
Cash and cash
equivalents at beginning of the period |
|
|
102.4 |
|
|
|
68.5 |
|
Cash and
cash equivalents at end of the period |
|
$ |
88.7 |
|
|
$ |
108.0 |
|
|
|
|
|
|
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 belief that its strategy to
build upon the solid foundation of its hereditary cancer business
with diversified revenues from its industry-leading pipeline of new
products will deliver significant future revenue and earnings
growth; the Company’s expectation that the PRIME Care study will
enroll over 2,000 patients with major depressive disorders at 21 VA
medical centers; the Company’s expectation that it will submit a
supplementary premarket approval application to the FDA under its
existing PMA for BRACAnalysis CDx to include talazoparib; the
Company’s third-quarter revenue guidance of $186 to $188 million,
GAAP diluted earnings per share of $0.11 to $0.13, and adjusted
earnings per share of $0.26 to $0.28, and the Company’s increased
fiscal full year revenue guidance of total revenue of $760 to $770
million, GAAP diluted earnings per share guidance of $1.82 to
$1.87, and adjusted earnings per share guidance of $1.11 to $1.16,
as further discussed under the captions “Fiscal Year 2018 and
Fiscal Third-Quarter 2018 Financial Guidance” and “Reconciliation
of GAAP and Non-GAAP for Fiscal Year 2018 and Fiscal Third-Quarter
2018 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 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 transition from
its existing product portfolio to the Company’s 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, including but not limited
to the Company’s acquisition of Assurex, Sividon and the Clinic;
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
- Tax impact related to equity compensation – Changes in
effective tax rate based upon ASU 2016-09
- Potential future consideration related to acquisitions –
Non-cash expenses related to valuation adjustments of earn-out and
milestone payments tied to recent acquisitions
- Impairment of Raindance Investment – One-time impairment charge
associated with Myriad’s investment in Raindance Technologies
- One-time debt restructuring costs – Charges related to the
restructuring of the company’s debt from a one-year term loan to a
revolving credit facility
- One-time non-deductible costs – One-time non-deductible tax
items
- 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, 2017 and 2016 |
|
|
|
|
|
|
|
(Unaudited data in
millions, except per share amount) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
Dec 31, 2017 |
|
Dec 31, 2016 |
|
Dec 31, 2017 |
|
Dec 31, 2016 |
|
|
|
|
|
|
|
|
Revenue |
$ |
194.0 |
|
|
$ |
196.5 |
|
|
$ |
384.2 |
|
|
$ |
373.9 |
|
|
|
|
|
|
|
|
|
GAAP Cost of
molecular diagnostic testing |
$ |
37.7 |
|
|
$ |
37.4 |
|
|
$ |
73.9 |
|
|
$ |
71.6 |
|
GAAP Cost of
pharmaceutical and clinical
services |
|
6.7 |
|
|
|
7.0 |
|
|
|
13.5 |
|
|
|
12.7 |
|
Acquisition - Integration related costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Non-GAAP
COGS |
$ |
44.4 |
|
|
$ |
44.4 |
|
|
$ |
87.4 |
|
|
$ |
84.3 |
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin |
|
77 |
% |
|
|
77 |
% |
|
|
77 |
% |
|
|
77 |
% |
|
|
|
|
|
|
|
|
GAAP Research
and Development |
$ |
16.8 |
|
|
$ |
18.6 |
|
|
$ |
34.6 |
|
|
$ |
38.0 |
|
Acquisition - Integration related costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
Acquisition - amortization of intangible assets |
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Elevate
2020 costs |
|
(0.1 |
) |
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
Non-GAAP
R&D |
$ |
16.6 |
|
|
$ |
18.5 |
|
|
$ |
34.3 |
|
|
$ |
37.7 |
|
|
|
|
|
|
|
|
|
GAAP Contingent
Consideration |
$ |
13.0 |
|
|
$ |
(3.8 |
) |
|
$ |
(60.2 |
) |
|
$ |
(3.2 |
) |
Potential
future consideration related to acquisitions |
|
(13.0 |
) |
|
|
3.8 |
|
|
|
60.2 |
|
|
|
3.2 |
|
Non-GAAP
Contingent Consideration |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
GAAP Selling,
General and Administrative |
$ |
115.4 |
|
|
$ |
120.3 |
|
|
$ |
230.5 |
|
|
$ |
232.2 |
|
Acquisition - Integration related costs |
|
- |
|
|
|
(1.1 |
) |
|
|
- |
|
|
|
(11.0 |
) |
Acquisition - amortization of intangible assets |
|
(9.1 |
) |
|
|
(9.2 |
) |
|
|
(18.3 |
) |
|
|
(14.5 |
) |
Elevate
2020 costs |
|
(1.5 |
) |
|
|
- |
|
|
|
(2.7 |
) |
|
|
- |
|
Non-GAAP
SG&A |
$ |
104.8 |
|
|
$ |
110.0 |
|
|
$ |
209.5 |
|
|
$ |
206.7 |
|
|
|
|
|
|
|
|
|
GAAP Operating
Income |
$ |
4.4 |
|
|
$ |
17.0 |
|
|
$ |
91.9 |
|
|
$ |
22.6 |
|
Acquisition - Integration related costs |
|
- |
|
|
|
1.1 |
|
|
|
- |
|
|
|
11.1 |
|
Acquisition - amortization of intangible assets |
|
9.2 |
|
|
|
9.3 |
|
|
|
18.5 |
|
|
|
14.7 |
|
Elevate
2020 costs |
|
1.6 |
|
|
|
- |
|
|
|
2.8 |
|
|
|
- |
|
Potential
future consideration related to acquisitions |
|
13.0 |
|
|
|
(3.8 |
) |
|
|
(60.2 |
) |
|
|
(3.2 |
) |
Non-GAAP
Operating Income |
$ |
28.2 |
|
|
$ |
23.6 |
|
|
$ |
53.0 |
|
|
$ |
45.2 |
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Margin |
|
15 |
% |
|
|
12 |
% |
|
|
14 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
GAAP Net Income
Attributable to Myriad Genetics, Inc. Stockholders |
$ |
32.1 |
|
|
$ |
5.9 |
|
|
$ |
113.2 |
|
|
$ |
4.7 |
|
Acquisition - Integration related costs |
|
- |
|
|
|
1.1 |
|
|
|
- |
|
|
|
11.1 |
|
Acquisition - amortization of intangible assets |
|
9.2 |
|
|
|
9.3 |
|
|
|
18.5 |
|
|
|
14.7 |
|
Elevate
2020 costs |
|
1.6 |
|
|
|
- |
|
|
|
2.8 |
|
|
|
- |
|
Potential
future consideration related to acquisitions |
|
13.0 |
|
|
|
(3.8 |
) |
|
|
(60.2 |
) |
|
|
(3.2 |
) |
Tax
impact related to equity compensation |
|
(0.6 |
) |
|
|
0.6 |
|
|
|
(0.3 |
) |
|
|
3.0 |
|
One-time
debt restructuring costs |
|
- |
|
|
|
1.3 |
|
|
|
- |
|
|
|
1.3 |
|
One-time
non-deductible costs |
|
- |
|
|
|
1.4 |
|
|
|
- |
|
|
|
4.2 |
|
Tax
reform affect on deferred taxes |
|
(32.6 |
) |
|
|
|
|
(32.6 |
) |
|
|
Impairment of Raindance Investment |
|
- |
|
|
|
3.4 |
|
|
|
- |
|
|
|
3.4 |
|
Tax
effect associated with non-GAAP adjustments |
|
(0.4 |
) |
|
|
(1.7 |
) |
|
|
(0.9 |
) |
|
|
(5.7 |
) |
Non-GAAP Net
Income |
$ |
22.3 |
|
|
$ |
17.5 |
|
|
$ |
40.5 |
|
|
$ |
33.5 |
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS |
$ |
0.45 |
|
|
$ |
0.09 |
|
|
$ |
1.59 |
|
|
$ |
0.07 |
|
Non-GAAP
Diluted EPS |
$ |
0.31 |
|
|
$ |
0.26 |
|
|
$ |
0.57 |
|
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
71.9 |
|
|
|
68.3 |
|
|
|
71.2 |
|
|
|
68.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Reconciliation |
|
|
|
|
|
|
|
(Unaudited data in
millions) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
Dec 31, 2017 |
|
Dec 31, 2016 |
|
Dec 31, 2017 |
|
Dec 31, 2016 |
|
|
|
|
|
|
|
|
GAAP cash flow
from operations |
$ |
33.0 |
|
|
$ |
31.4 |
|
|
$ |
56.5 |
|
|
$ |
28.5 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
(2.1 |
) |
|
|
(2.4 |
) |
|
|
(3.7 |
) |
|
|
(3.9 |
) |
|
|
|
|
|
|
|
|
Free cash
flow |
$ |
30.9 |
|
|
$ |
29.0 |
|
|
$ |
52.8 |
|
|
$ |
24.6 |
|
|
|
|
|
|
|
|
|
Elevate 2020 costs |
|
1.6 |
|
|
|
- |
|
|
|
2.8 |
|
|
|
- |
|
Acquisition -
Integration related costs |
|
- |
|
|
|
1.1 |
|
|
|
- |
|
|
|
9.0 |
|
Cash paid at closing to
Assurex vendors |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6.8 |
|
Tax effect associated
with non-GAAP adjustments |
|
(0.6 |
) |
|
|
(0.4 |
) |
|
|
(1.1 |
) |
|
|
(6.1 |
) |
|
|
|
|
|
|
|
|
Non-GAAP Free
cash flow |
$ |
31.9 |
|
|
$ |
29.7 |
|
|
$ |
54.5 |
|
|
$ |
34.3 |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2018
and Fiscal Third-Quarter 2018 Financial GuidanceThe
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 2018 |
Diluted net
income per share |
|
GAAP diluted net income
per share |
$1.82 - $1.87 |
|
Acquisition -
amortization of intangible assets |
0.52 |
|
Change in contingent
consideration |
(0.85 |
) |
Tax reform impact on
deferred taxes |
(0.46 |
) |
One-time expenses |
0.08 |
|
Non-GAAP
diluted net income per share |
$1.11 - $1.16 |
|
|
|
|
|
|
Fiscal Third-Quarter 2018 |
Diluted net
income per share |
|
GAAP diluted net income
per share |
$0.11 - $0.13 |
|
Acquisition -
amortization of intangible assets |
0.12 |
|
One-time expenses |
0.03 |
|
Non-GAAP
diluted net income per share |
$0.26- $0.28 |
|
|
|
|
Media Contact:
Ron Rogers(801) 584-3065rrogers@myriad.com
Investor Contact:
Scott Gleason(801) 584-1143sgleason@myriad.com
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