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Myriad (MYGN) Down 0.7% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Myriad Genetics (MYGN). Shares have lost about 0.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Myriad due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Myriad Genetics' Q4 Loss Narrower Than Estimated

Myriad Genetics reported adjusted loss per share of 31 cents for the fourth quarter of fiscal 2020 in contrast to earnings of 41 cents reported in the year-ago quarter. Adjusted loss per share was however narrower than the Zacks Consensus Estimate of a loss of 36 cents.

The quarter’s adjustments exclude one-time impairment charges on an intangible assets and goodwill tied to company acquisitions, certain impact related to COVID-19 expenses and the impact of Elevate 2020 program-related expenses, among others.

On a reported basis, earnings per share were 74 cents compared with the prior-year quarter’s earnings of 6 cents per share.

Overall, a sharp year-over-year decline in revenues stemming from the coronavirus impact through the second quarter affected the bottom line.

For the full-year, the company registered adjusted loss of 8 cents per share as against adjusted earnings of $1.67 per share in the year-ago period.

Revenues

Total revenues plunged 56.7% year over year to $93.2 million in the quarter under review. The figure also missed the Zacks Consensus Estimate by 2.3%. In the quarter, the company faced a significant challenge from the global pandemic and its impact on elective testing volume.

Fiscal 2020 total revenues were $638.6 million, marking a 25% decline from fiscal 2019.

Quarter in Detail

Segment-wise, Molecular Diagnostic tests recorded total revenues of $83.3 million, down 58% year over year.

Within this segment, Hereditary Cancer testing revenues fell 66% year over year to $39.9 million. Vectra testing revenues were $7.2 million, down 41% year over year.

Further, GeneSight testing revenues fell 71% year over year to $8.5 million in the reported quarter. Prolaris tests raked in revenues of $4.5 million, down 29% year over year. Prenatal testing revenues came in at $16.6 million, down 34%.

EndoPredict testing revenues were down 27% year over year to $2.2 million. Other testing revenues surged 175% to $4.4 million year on year.

Pharmaceutical and clinical service revenues in the quarter under review totaled $9.9 million, down 47% on a year-over-year basis.

Margin Trends

Gross margin in the quarter under review contracted 1589 basis points (bps) to 60.6%.

R&D expenses fell 16.7% year over year to $17.4 million. SG&A expenses declined 28.3% to $107.4 million in the reported quarter.

Adjusted operating loss was $68.3 million compared with adjusted operating loss of $5.9 million in the year-ago quarter.

Financial Position

Myriad Genetics exited fiscal 2020 with cash and cash equivalents of $163.7 million compared with $121 million at the end of the third quarter of fiscal 2020. Long-term debt at the end of the fiscal was $224.4 million compared with $225.2 million at the end of the third quarter.

Cumulative cash flow from operating activities at the end of the fourth quarter was $60.7 million compared with $83.7 million at the end of the year-ago period.

2021 Guidance

Given the difficulty in predicting the future business trend, the company has not provided fiscal year 2021 financial guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -3075% due to these changes.

VGM Scores

Currently, Myriad has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Myriad has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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