NEW YORK (AP) -- Shares of cancer test maker Genomic Health Inc. plunged Thursday after the company reported disappointing sales of its Oncotype DX cancer test.
THE SPARK: The Redwood City, Calif., company reported its results after the market closed on Wednesday. Genomic Health said it delivered about 18,000 test results during the third quarter. That represented growth of 7 percent from a year ago, but means the company ran fewer tests in the third quarter than it did in the first or second quarters of 2012: Genomic Health said it delivered about 18,600 test results in the first quarter and 19,000 in the second quarter.
The company said it now expects to deliver about 74,000 tests in 2012, down from its previous estimate of 75,000 to 77,000.
THE BIG PICTURE: Oncotype DX is designed to predict the risk that a patient's breast or colon cancer will recur. The company expects to start selling an Oncotype DX prostate cancer test in the first half of 2013.
Chief Financial Officer Dean Schorno said the company's third-quarter testing volume suffered because of a decline in doctor's visits by consumers, and because of increased competition.
The company said its third-quarter net income rose to $3.7 million, or 11 cents per share, from $3.2 million, or 10 cents per share, one year ago. A nearly 6 percent increase in the number of outstanding shares kept the per-share results from rising another penny.
Revenue increased 13 percent, to $58.6 million, or $52.1 million.
Analysts were expecting a smaller profit of 5 cents per share, according to estimates compiled by FactSet. However they expected greater revenue, with estimates averaging $59.9 million.
THE ANALYSIS: Jefferies & Co. analyst Jon Wood said the decline in testing volume was "surprising" and said it would hurt Genomic Health shares. However, he said the stock should bounce back, because investors will take a positive view of growing demand for Oncotype DX colon cancer and ductal carcinoma in situ testing, and the progress of the company's prostate cancer test and its international business.
Wood rates Genomic Health shares "Hold" and he raised his price target by $1, to $36 per share.
SHARE ACTION: Shares of Genomic Health dropped $5.46, or 17.1 percent, to end Thursday at $26.42. The decline meant the stock shed most of its gains for the year, but it remains up about 4 percent for 2012.