It has been about a month since the last earnings report for Myriad Genetics (MYGN). Shares have added about 8.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Myriad due for a pullback? 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 catalysts.
Myriad Genetics Lags Q3 Earnings Estimates, Cancels View
Myriad Genetics 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.
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%.
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.
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.
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.
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.
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 -170.37% due to these changes.
At this time, Myriad has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.
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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