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Why Is Myriad (MYGN) Down 11.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Myriad Genetics (MYGN). Shares have lost about 11.5% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

Myriad Genetics Beats on Q1 Earnings and Revenues

Myriad Genetics reported adjusted loss per share of 6 cents for the first quarter of 2021, narrower than the loss of 8 cents reported in the year-ago quarter. Adjusted loss per share was also narrower than the Zacks Consensus Estimate of a loss of 10 cents per share.

The quarter’s adjustments exclude certain acquisition-amortization of intangible asset expenses and equity compensation, among others.

GAAP loss per share was 52 cents, narrower than the prior-year quarter’s loss of $1.55 per share.

For investors’ note, Myriad Genetics’ management had approved a change in its fiscal year ending on the last day of June to a calendar year ending on the last day of December of each year, effective Jan 1, 2021.

Revenues

Total revenues surged 5.5% year over year to $173.1 million in the quarter under review. The figure exceeded the Zacks Consensus Estimate by 11.5%. The company, despite facing a significant challenge from the global pandemic and experiencing typical seasonality, witnessed strong sequential increases in its test volume and overall average selling prices during the quarter.

Notably, Myriad Genetics registered a 12% improvement in revenues on a sequential basis.

Total test volumes in the quarter were 236,000, reflecting a plunge of 1% year over year. However, volumes improved 5% on a sequential basis.

Quarter in Detail

Segment-wise, Molecular Diagnostic tests recorded total revenues of $159.6 million, up 6% year over year.

Within this segment, Hereditary Cancer testing revenues fell 10.7% year over year to $76.1 million. GeneSight testing revenues were $17.6 million, down 13.7% year over year.

Other testing revenues, however, remained unchanged at $0.5 million year on year.

EndoPredict testing revenues were up 17.1% year over year to $4.1 million. myChoice CDx testing revenues were up by a huge 154.5% year over year to $8.4 million. Prolaris tests raked in revenues of $18.5 million, up a stupendous 172.1% year over year. Prenatal testing revenues came in at $23.7 million, up 16.7%. Vectra testing revenues were $10.7 million, up 1.9% year over year.

Pharmaceutical and clinical service revenues in the quarter under review totaled $13.5 million, flat year-over-year.

Margin Trends

Gross margin in the quarter under review expanded 149 basis points (bps) to 70.9%.

R&D expenses rose 17.3% year over year to $23.1 million. SG&A expenses climbed 9.5% to $145.5 million in the reported quarter.

Adjusted operating loss was $45.8 million compared with adjusted operating loss of $38.7 million in the year-ago quarter.

Financial Position

Myriad Genetics exited the first quarter of 2021 with cash and cash equivalents of $148.9 million compared with $117 million at the end of the sequentially last-reported quarter. Long-term debt at the end of the first quarter of 2021 was $154 million, compared with $224.8 million at the end of the sequentially last-reported quarter.

Net cash provided by operating activities at the end of the first quarter of 2021 was $71.8 million compared with net cash provided by operating activities of $16.8 million in the year-ago period.

Guidance

Given the difficulty in predicting the future business trend, the company has not provided any financial guidance for either the second quarter ending June 30 or the full year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, Myriad has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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. Notably, Myriad has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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