It has been about a month since the last earnings report for Genomic Health, Inc. . Shares have added about 2.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it 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.
Recent Earnings
Genomic Health reported fourth-quarter 2016 earnings per share of $0.04, reflecting an improvement from the year-ago quarter’s loss figure of $0.08. The quarter’s number exceeded the Zacks Consensus Estimate of break-even earnings as well.
Net income in the reported quarter was $1.4 million as against net loss of $2.7 million in the year-ago quarter.
Full-year 2016 loss per share was $0.42, narrower than the loss of $1.03 per share in the year-ago period and the Zacks Consensus Estimate of a loss of $0.46.
Revenues in Detail
Total revenue in the quarter improved 10.1% year over year to $82.7 million but missed the Zacks Consensus Estimate of $84 million. Strong growth across both the U.S. and international markets drove the top line.
For full-year 2016, Genomic Health's total revenue rose 14% from the year-ago period to $327.9 million. This figure however missed the Zacks Consensus Estimate of $329.2 million.
Geographically, fourth-quarter revenues in the U.S. improved 9% to $70 million, while international revenues rose 13% (up 16% at constant exchange rate or CER) to $12 million. The U.S. revenue growth was fueled by invasive breast cancer revenue growth of 6% as well as 4% contribution from Prostate test revenues.
On the other hand, during the reported quarter international revenue growth of 15% at constant exchange rate came on the back of strong performance in the market of Western Europe. Also, international tests in this quarter increased 22% from the prior-year levels and represented approximately 24% of the total test volume in the fourth quarter 2016.
During the quarter, the company delivered more than 30,020 Oncotype DX test results, up 8% year over year.
Margin Trends
In the quarter under review, Genomic Health’s gross margin expanded 306 basis points (bps) year over year to 84.1%. Apart from significant top-line growth, the improvement in gross margin was fueled by the 7.6% fall in cost of product revenues of $13.2 million.
On the other hand, Genomic Health witnessed a 6.4% rise in operating expenses to $68.1 million owing to a 14.4% increase in general and administrative expenses to $18 million, 21.5% increase in research and development expenses to $15.3 million. However, selling and marketing expenses fell 34.7% to $38.8 million.
In the reported quarter, Genomic Health recorded an operating profit of $1.5 million, exhibiting a massive improvement of 148.3% from the year-ago equivalent, owing to higher revenue growth.
Financial Update
Genomic Health exited fiscal 2016 with cash and cash equivalents and short-term marketable securities (including a corporate equity investment) of $96.9 million, a slight improvement from $94.9 million recorded in the prior year.
2017 Guidance
Management projects 2017 revenues in the range of $355–$370 million, representing growth between 9% and 13% compared to 14% revenue growth in 2016. The Zacks Consensus Estimate for full-year 2017 revenues is $363.67 million, within the guided range.
The company expects positive net income at the midpoint of the revenue guidance and gross margin rate in the band of 83% to 84%.
For the first quarter 2017, the company anticipates revenue of approximately $86 million and an operating loss of up to $3 million compared to the approximate $9 million operating loss in the first quarter 2016.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. In the past month, the consensus estimate also shifted downward by 42.9% due to these changes.
VGM Scores
At this time, Genomic Health's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. 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.
The stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
Image: Bigstock
Genomic Health (GHDX) Up 2.1% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Genomic Health, Inc. . Shares have added about 2.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it 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.
Recent Earnings
Genomic Health reported fourth-quarter 2016 earnings per share of $0.04, reflecting an improvement from the year-ago quarter’s loss figure of $0.08. The quarter’s number exceeded the Zacks Consensus Estimate of break-even earnings as well.
Net income in the reported quarter was $1.4 million as against net loss of $2.7 million in the year-ago quarter.
Full-year 2016 loss per share was $0.42, narrower than the loss of $1.03 per share in the year-ago period and the Zacks Consensus Estimate of a loss of $0.46.
Revenues in Detail
Total revenue in the quarter improved 10.1% year over year to $82.7 million but missed the Zacks Consensus Estimate of $84 million. Strong growth across both the U.S. and international markets drove the top line.
For full-year 2016, Genomic Health's total revenue rose 14% from the year-ago period to $327.9 million. This figure however missed the Zacks Consensus Estimate of $329.2 million.
Geographically, fourth-quarter revenues in the U.S. improved 9% to $70 million, while international revenues rose 13% (up 16% at constant exchange rate or CER) to $12 million. The U.S. revenue growth was fueled by invasive breast cancer revenue growth of 6% as well as 4% contribution from Prostate test revenues.
On the other hand, during the reported quarter international revenue growth of 15% at constant exchange rate came on the back of strong performance in the market of Western Europe. Also, international tests in this quarter increased 22% from the prior-year levels and represented approximately 24% of the total test volume in the fourth quarter 2016.
During the quarter, the company delivered more than 30,020 Oncotype DX test results, up 8% year over year.
Margin Trends
In the quarter under review, Genomic Health’s gross margin expanded 306 basis points (bps) year over year to 84.1%. Apart from significant top-line growth, the improvement in gross margin was fueled by the 7.6% fall in cost of product revenues of $13.2 million.
On the other hand, Genomic Health witnessed a 6.4% rise in operating expenses to $68.1 million owing to a 14.4% increase in general and administrative expenses to $18 million, 21.5% increase in research and development expenses to $15.3 million. However, selling and marketing expenses fell 34.7% to $38.8 million.
In the reported quarter, Genomic Health recorded an operating profit of $1.5 million, exhibiting a massive improvement of 148.3% from the year-ago equivalent, owing to higher revenue growth.
Financial Update
Genomic Health exited fiscal 2016 with cash and cash equivalents and short-term marketable securities (including a corporate equity investment) of $96.9 million, a slight improvement from $94.9 million recorded in the prior year.
2017 Guidance
Management projects 2017 revenues in the range of $355–$370 million, representing growth between 9% and 13% compared to 14% revenue growth in 2016. The Zacks Consensus Estimate for full-year 2017 revenues is $363.67 million, within the guided range.
The company expects positive net income at the midpoint of the revenue guidance and gross margin rate in the band of 83% to 84%.
For the first quarter 2017, the company anticipates revenue of approximately $86 million and an operating loss of up to $3 million compared to the approximate $9 million operating loss in the first quarter 2016.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. In the past month, the consensus estimate also shifted downward by 42.9% due to these changes.
Genomic Health, Inc. Price and Consensus
Genomic Health, Inc. Price and Consensus | Genomic Health, Inc. Quote
VGM Scores
At this time, Genomic Health's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. 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.
The stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.