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Myriad Genetics Inc. (MYGN - Free Report) reported adjusted earnings per share (EPS) of 27 cents in the third quarter of fiscal 2017, down 34% year over year. However, adjusted EPS beat the Zacks Consensus Estimate by 12.5% and surpassed the company’s guided range of 23–25 cents.
Including one-time items, the company reported net income of $4.2 million or earnings of 6 cents per share in the quarter, exhibiting a decline of 88% and 87%, respectively.
Revenues
Total revenue rose 3% year over year to $196.9 million. The figure also outpaced the company’s guidance of $188–$190 million. The top line also exceeded the Zacks Consensus Estimate of $188.9 million. The year-over-year rise in the top line was primarily on account of sequential growth in hereditary cancer revenues and strong results from GeneSight.
Myriad Genetics, Inc. Price, Consensus and EPS Surprise
Segment-wise, Molecular diagnostic tests (94.1% of total revenue) recorded total revenue of $185.2 million, up 4% year over year, mainly on account of a 109% surge in EndoPredict testing revenues to $2.3 million. Prolaris testing revenues however fell 35% to $3.4 million. Also, Hereditary cancer testing revenues dropped 10% year over year to $140.8 million, Vectra DA testing revenues fell 9% to $11.2 million, while other testing revenues gained 44% to $3.6 million.
On the other hand, Pharmaceutical and clinical service revenues (accounting for the rest) in the quarter were $11.7 million, reflecting a year-over-year decline of 11%.
Margin Trend
Gross margin in the quarter under review contracted 140 basis points (bps) to 77.5%. According to management, the decline was led by unfavorable product mix with more revenues coming in from lower margin segments such as pharmaceutical and clinical services along with reduced fixed cost absorption on reduced hereditary cancer revenues. Additionally, the company witnessed an impact from the full implementation of long-term contracts in hereditary cancer.
Operating expenses rose 30% to $139.7 million owing to a 34.9% rise in selling, general and administrative (SG&A) expenses to $122.1 million. Research and development (R&D) expenses climbed 2.3% (to $17.6 million) in the reported quarter. Consequently, the operating margin contracted a stupendous 1580 bps, down 6.6%.
Financial Position
Myriad exited the third quarter of fiscal 2017 with cash, cash equivalents and marketable securities of $123.8 million, compared with $162.5 million at the end of second-quarter 2017. Year to date, cash used in operations totaled $69.6 million, down 45.5% year over year. Consequently, free cash flow was down to $39.6 million from $45.2 million a year ago.
Guidance
Myriad raised the revenue guidance for fiscal 2017 to the range of $745–$755 million from $745–$755 million. The Zacks Consensus Estimate of $752 million is within the range.
On the bottom-line front, the company slashed the high end and raised the low end of the adjusted EPS guidance to $1.01–$1.03 from $1.00–$1.05. The current Zacks Consensus Estimate of 99 cents lies below the present range.
Alongside, management provided its outlook for the fourth quarter of fiscal 2017. The company estimates adjusted earnings per share of 26–28 cents on total revenues of $192–$194 million. The Zacks Consensus Estimate for adjusted EPS is pegged at 28 cents and revenues at $188.0 million.
Our View
Myriad recorded impressive third-quarter fiscal 2017 results, with both earnings and revenues beating the Zacks Consensus Estimate. The company particularly observed strong growth in both Endopredict testing revenues and sequential growth in hereditary cancer volumes. In the reported quarter, Myriad’s companion diagnostic program received a major boost in a new cancer indication on positive results from its AstraZeneca test.
On the flip side, a weak gross margin scenario is dampening. Also, the company’s narrowed earnings guidance for fiscal 2017 indicates looming concerns.
Zacks Rank & Key Picks
Myriad currently has a Zacks Rank #3 (Hold). Better-ranked medical stocks include Hologic, Inc. (HOLX - Free Report) , Baxter International Inc. (BAX - Free Report) and Progenics Pharmaceuticals, Inc. . Hologic, Baxter International and Progenics Pharmaceuticals sport a Zacks Rank 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic gained 33.7% in the last one year, in comparison to the S&P 500’s 16.6%. The company has a stellar four-quarter average earnings surprise of over 4.16%.
Baxter International rose around 23.4% in the last one year, in comparison to the S&P 500. It has a four-quarter average earnings surprise of 17.14%.
Progenics Pharmaceuticals gained 52.7% in the past one year, better than the S&P 500 mark. It has a four-quarter average earnings surprise of 8.45%.
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Myriad Genetics (MYGN) Tops Q3 Earnings & Sales, Tweaks View
Myriad Genetics Inc. (MYGN - Free Report) reported adjusted earnings per share (EPS) of 27 cents in the third quarter of fiscal 2017, down 34% year over year. However, adjusted EPS beat the Zacks Consensus Estimate by 12.5% and surpassed the company’s guided range of 23–25 cents.
Including one-time items, the company reported net income of $4.2 million or earnings of 6 cents per share in the quarter, exhibiting a decline of 88% and 87%, respectively.
Revenues
Total revenue rose 3% year over year to $196.9 million. The figure also outpaced the company’s guidance of $188–$190 million. The top line also exceeded the Zacks Consensus Estimate of $188.9 million. The year-over-year rise in the top line was primarily on account of sequential growth in hereditary cancer revenues and strong results from GeneSight.
Myriad Genetics, Inc. Price, Consensus and EPS Surprise
Myriad Genetics, Inc. Price, Consensus and EPS Surprise | Myriad Genetics, Inc. Quote
Segment-wise, Molecular diagnostic tests (94.1% of total revenue) recorded total revenue of $185.2 million, up 4% year over year, mainly on account of a 109% surge in EndoPredict testing revenues to $2.3 million. Prolaris testing revenues however fell 35% to $3.4 million. Also, Hereditary cancer testing revenues dropped 10% year over year to $140.8 million, Vectra DA testing revenues fell 9% to $11.2 million, while other testing revenues gained 44% to $3.6 million.
On the other hand, Pharmaceutical and clinical service revenues (accounting for the rest) in the quarter were $11.7 million, reflecting a year-over-year decline of 11%.
Margin Trend
Gross margin in the quarter under review contracted 140 basis points (bps) to 77.5%. According to management, the decline was led by unfavorable product mix with more revenues coming in from lower margin segments such as pharmaceutical and clinical services along with reduced fixed cost absorption on reduced hereditary cancer revenues. Additionally, the company witnessed an impact from the full implementation of long-term contracts in hereditary cancer.
Operating expenses rose 30% to $139.7 million owing to a 34.9% rise in selling, general and administrative (SG&A) expenses to $122.1 million. Research and development (R&D) expenses climbed 2.3% (to $17.6 million) in the reported quarter. Consequently, the operating margin contracted a stupendous 1580 bps, down 6.6%.
Financial Position
Myriad exited the third quarter of fiscal 2017 with cash, cash equivalents and marketable securities of $123.8 million, compared with $162.5 million at the end of second-quarter 2017. Year to date, cash used in operations totaled $69.6 million, down 45.5% year over year. Consequently, free cash flow was down to $39.6 million from $45.2 million a year ago.
Guidance
Myriad raised the revenue guidance for fiscal 2017 to the range of $745–$755 million from $745–$755 million. The Zacks Consensus Estimate of $752 million is within the range.
On the bottom-line front, the company slashed the high end and raised the low end of the adjusted EPS guidance to $1.01–$1.03 from $1.00–$1.05. The current Zacks Consensus Estimate of 99 cents lies below the present range.
Alongside, management provided its outlook for the fourth quarter of fiscal 2017. The company estimates adjusted earnings per share of 26–28 cents on total revenues of $192–$194 million. The Zacks Consensus Estimate for adjusted EPS is pegged at 28 cents and revenues at $188.0 million.
Our View
Myriad recorded impressive third-quarter fiscal 2017 results, with both earnings and revenues beating the Zacks Consensus Estimate. The company particularly observed strong growth in both Endopredict testing revenues and sequential growth in hereditary cancer volumes. In the reported quarter, Myriad’s companion diagnostic program received a major boost in a new cancer indication on positive results from its AstraZeneca test.
On the flip side, a weak gross margin scenario is dampening. Also, the company’s narrowed earnings guidance for fiscal 2017 indicates looming concerns.
Zacks Rank & Key Picks
Myriad currently has a Zacks Rank #3 (Hold). Better-ranked medical stocks include Hologic, Inc. (HOLX - Free Report) , Baxter International Inc. (BAX - Free Report) and Progenics Pharmaceuticals, Inc. . Hologic, Baxter International and Progenics Pharmaceuticals sport a Zacks Rank 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic gained 33.7% in the last one year, in comparison to the S&P 500’s 16.6%. The company has a stellar four-quarter average earnings surprise of over 4.16%.
Baxter International rose around 23.4% in the last one year, in comparison to the S&P 500. It has a four-quarter average earnings surprise of 17.14%.
Progenics Pharmaceuticals gained 52.7% in the past one year, better than the S&P 500 mark. It has a four-quarter average earnings surprise of 8.45%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>