Myriad Genetics (MYGN) Lags Q3 Earnings Estimates, Cancels View
Myriad Genetics, Inc. MYGN reported adjusted loss per share of 8 cents in the third quarter of fiscal 2020, deteriorating from earnings of 46 cents reported in the year-ago quarter. Adjusted loss per share was also wider than the Zacks Consensus Estimate of a loss of a penny.
The quarter’s adjustments exclude one-time impairment charges on intangible assets and goodwill tied to company acquisitions, a penny-per-share impact related to COVID-19 expenses and Elevate 2020 program-related expenses, among others.
On a reported basis, loss per share was $1.55 against the prior-year quarter’s earnings of 9 cents.
Overall, a sharp year-over-year decline in revenues stemming from coronavirus impact since mid-March affected the bottom line.
Revenues
Total revenues plunged 24.3% year over year to $164 million in the quarter under review. The figure, however, edged past the Zacks Consensus Estimate by 0.2%.
Myriad Genetics, Inc. Price, Consensus and EPS Surprise
Myriad Genetics, Inc. price-consensus-eps-surprise-chart | Myriad Genetics, Inc. Quote
In the fiscal third quarter, the company reported lower-than-expected results due to effects of the pandemic. Revenues were hampered since mid-March when social distancing policies were imposed to combat the outbreak, leading to unprecedented delays in elective testing for the lab industry and negatively impacting all aspects of its business.
Quarter in Detail
Segment-wise, Molecular Diagnostic tests recorded total revenues of $150.5 million, down 24.9% year over year.
Within this segment, Hereditary Cancer testing revenues fell 28% year over year to $85.2 million. Vectra testing revenues were $10.5 million, down 7% year over year.
Further, GeneSight testing revenues fell 31% year over year to $20.4 million in the reported quarter. Prolaris tests raked in revenues of $6.8 million, down 1% year over year. Prenatal testing revenues came in at $20.3 million, down 34%.
However, EndoPredict testing revenues rose 25% year over year to $3.5 million. Other testing revenues surged 124% to $3.8 million year on year.
Pharmaceutical and clinical service revenues in the quarter under review totaled $13.5 million, down 16% on a year-over-year basis.
Margin Trends
Gross margin in the quarter under review contracted 811 basis points (bps) to 69.5%.
Research and development (R&D) expenses fell 8.4% year over year to $19.7 million along with 5.5% a contraction in selling, general and administrative (SG&A) expenses to $132.9 million in the reported quarter.
Adjusted operating loss was $38.7 million against adjusted operating profit of $5.9 million in the year-ago quarter.
Financial Position
Myriad Genetics exited third-quarter of fiscal 2020 with cash and cash equivalents of $121 million compared with $81.2 million at the end of the second quarter of fiscal 2020. Long-term debt at the end of the third quarter was $225.2 million compared with $225.1 million at the end of second quarter.
Cumulative cash flow from operating activities at the end of the third quarter was $30.7 million compared with $52.2 million at the end of the year-ago quarter.
2020 Guidance
Per a business update provided by Myriad Genetics on Apr 8, it is currently unable to ascertain the scope and duration of the pandemic as well as quantify the actual impact. The company has experienced adverse impacts on its test volume trends in late March, which is expected to continue in the fiscal fourth quarter. Given the difficulty in predicting the future business trend for the company, the company will provide an update on its business, including the impact of COVID-19, on its next quarterly earnings call.
At present, the company is withdrawing its existing fiscal year 2020 financial guidance and not issuing a new one.
Our View
Myriad Genetics exited third-quarter fiscal 2020 on a disappointing note. Although revenues exceeded the Zacks Consensus Estimate, the company saw a decline in both its operating segments resulting owing to the adverse impact of the pandemic since mid-March. Within its Molecular Diagnostic segment, all its testing segments witnessed declines, except EndoPredict and Other revenues. The company experienced gross margin contraction and incurred operating loss during the quarter. Further, withdrawal of its guidance is concerning.
We are upbeat about the launch of BRACAnalysis CDx for pancreatic cancer in conjunction with the FDA approval for the indication. The FDA approval for BRACAnalysis CDx in prostate cancer is also expected in fiscal 2020.
Zacks Rank and Stocks to Consider
Myriad Genetics currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Aphria Inc. APHA, Biogen Inc. BIIB and Eli Lilly and Company LLY.
Aphria reported third-quarter fiscal 2020 adjusted EPS of 2 cents, comparing favorably with the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million outpaced the consensus estimate by 14.6%. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.
Eli Lilly delivered first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.
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