Shares of Myriad Genetics Inc. sank Monday after the genetic test maker confirmed a new, lower government reimbursement rate for a key test.
The Salt Lake City company said the Centers for Medicare and Medicaid Services has set reimbursement for BRCA breast and ovarian cancer testing at $1,438.14 — about 50 percent below the previous rate, said Cowen and Co. analyst Doug Schenkel said in a research note.
The new rate, which will be effective for tests performed starting on Jan. 1, will put significant pressure on Myriad's earnings, Schenkel said. He noted that commercial health insurers also will seek rate cuts in light of this lower reimbursement, and that could hurt revenue.
Myriad's BRCAnalysis test can confirm the presence of mutations in two genes that are responsible for some hereditary breast and ovarian cancers.
CMS is providing a public comment period on the new rate through the end of January, and Myriad said it will participate to address concerns.
Schenkel said that could lead to revisions to the rate that would occur starting in April.
Shares of Myriad fell nearly 14 percent, or $3.31, to $20.83 in late afternoon trading Monday. The company's stock had dropped 11 percent in 2013 through Friday's close.