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Genomic Health (GHDX) Swings to Earnings in Q3, Revenues Lag
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Genomic Health, Inc. reported third-quarter 2017 adjusted earnings per share (EPS) of 3 cents, reflecting an improvement from the year-ago quarter’s loss of a cent. Earnings also compared favorably with the Zacks Consensus Estimate of a loss of a cent.
The reported net loss came in at 6 cents as compared to a loss of 8 cents in the year-ago quarter.
Revenues in Detail
Total revenues in the quarter rose 2.1% year over year to $83.8 million, missing the Zacks Consensus Estimate of $87 million. Growth in the United States and international markets drove the top line. However, revenues were adversely impacted by roughly $3 million due to hurricanes in certain regions of the United States.
Geographically, third-quarter product revenues in the United States improved 1.3% to $70.9 million. The U.S. product revenue growth was fueled by a 139% rise in Prostate test revenues, partially offset by a 2.3% fall in invasive breast cancer revenues to $63.1 million. International product revenues totaled $12.9 million in the reported quarter, up 6.6%.
During the quarter, the company delivered more than 31,580 Oncotype DX test results, up 5.3% year over year.
Genomic Health, Inc. Price, Consensus and EPS Surprise
In the quarter under review, Genomic Health’s gross margin expanded 20 basis points (bps) year over year to 83.9%.
Genomic Health also witnessed a 1.7% rise in operating expenses to $73 million owing to a 16.7% rise in research and development expenses to $17.2 million. However, general and administrative expenses declined 4.2% to $17.5 million and selling and marketing expenses contracted 1.4% to $38.3 million.
In the reported quarter, Genomic Health reported an operating loss of $2.6 million, showing a year-over-year improvement from an operating loss of $3 million a year ago.
Financial Update
Genomic Health exited third-quarter 2017 with cash and cash equivalents and short-term marketable securities (including a corporate equity investment) of $118.9 million, reflecting an improvement from $109.8 million recorded at the end of the second quarter.
2017 Guidance
The company reiterated the guidance for 2017. Genomic Health expects to meet the low end of its full-year revenue guidance of $345-$355 million. This excludes the estimated hurricane impact on revenues of around $3 million in the third quarter. The Zacks Consensus Estimate of $348.3 million is within the guided range.
The company also expects to meet the full-year profit expectations, excluding the $3.2-million cost related to the Biocartis transaction. Notably, the company expects full-year profits to meet either end of the revenue guidance.
Our Take
Genomic Health exited the third quarter of 2017 on a mixed note. We are concerned about the company’s rising operating expenses as well.
Nevertheless, we are encouraged by the year-over-year rise in revenues, driven by solid performances in United States and internationally.
Management noted that strong demand for Genomic Health’s Oncotype tests in the third quarter of 2017 was partly on account of growth in its U.S. and International prostate business. Specifically, in prostate cancer, the Oncotype DX Genomic Prostate Score test receivedpositive Local Coverage Determinationto expand Medicare coverage by Palmetto GBA. The company also made positive developments for its Oncotype DX Breast Recurrence Score tests. It established private coverage for the test in Germany. In this context, the company signed an exclusive agreement with Biocartis Group to develop an in-vitro diagnostic (IVD) version of the Oncotype DX Breast Recurrence Score test on Biocartis' proprietary Idylla platform. This can be performed locally by laboratory partners as well as hospitals globally. Biocartis is an innovative molecular diagnostics company providing next generation diagnostic solutions.
On the flip side, the company’s sole reliance on the Breast Oncotype DX test is a concern.
Zacks Rank & Key Picks
Genomic Health carries a Zacks Rank #3 (Hold).
A few better-ranked medical stocks are PetMed Express, Inc. (PETS - Free Report) , Luminex Corporation and Intuitive Surgical, Inc. (ISRG - Free Report) . Notably, PetMed and Luminex sport a Zacks Rank #1 (Strong Buy), while Intuitive Surgical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PetMed reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% from the year-ago quarter’s 24 cents. Also, gross margin expanded 548 bps year over year to 35.2%.
Luminex reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. Revenues increased almost 4.1% year over year to $74.1 million.
Intuitive Surgical posted adjusted earnings of $2.77 per share in the third quarter of 2017, up 34.5% on a year-over-year basis. Also, revenues increased 18% year over year to $806.1 million.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Genomic Health (GHDX) Swings to Earnings in Q3, Revenues Lag
Genomic Health, Inc. reported third-quarter 2017 adjusted earnings per share (EPS) of 3 cents, reflecting an improvement from the year-ago quarter’s loss of a cent. Earnings also compared favorably with the Zacks Consensus Estimate of a loss of a cent.
The reported net loss came in at 6 cents as compared to a loss of 8 cents in the year-ago quarter.
Revenues in Detail
Total revenues in the quarter rose 2.1% year over year to $83.8 million, missing the Zacks Consensus Estimate of $87 million. Growth in the United States and international markets drove the top line. However, revenues were adversely impacted by roughly $3 million due to hurricanes in certain regions of the United States.
Geographically, third-quarter product revenues in the United States improved 1.3% to $70.9 million. The U.S. product revenue growth was fueled by a 139% rise in Prostate test revenues, partially offset by a 2.3% fall in invasive breast cancer revenues to $63.1 million. International product revenues totaled $12.9 million in the reported quarter, up 6.6%.
During the quarter, the company delivered more than 31,580 Oncotype DX test results, up 5.3% year over year.
Genomic Health, Inc. Price, Consensus and EPS Surprise
Genomic Health, Inc. Price, Consensus and EPS Surprise | Genomic Health, Inc. Quote
Margin Trend
In the quarter under review, Genomic Health’s gross margin expanded 20 basis points (bps) year over year to 83.9%.
Genomic Health also witnessed a 1.7% rise in operating expenses to $73 million owing to a 16.7% rise in research and development expenses to $17.2 million. However, general and administrative expenses declined 4.2% to $17.5 million and selling and marketing expenses contracted 1.4% to $38.3 million.
In the reported quarter, Genomic Health reported an operating loss of $2.6 million, showing a year-over-year improvement from an operating loss of $3 million a year ago.
Financial Update
Genomic Health exited third-quarter 2017 with cash and cash equivalents and short-term marketable securities (including a corporate equity investment) of $118.9 million, reflecting an improvement from $109.8 million recorded at the end of the second quarter.
2017 Guidance
The company reiterated the guidance for 2017. Genomic Health expects to meet the low end of its full-year revenue guidance of $345-$355 million. This excludes the estimated hurricane impact on revenues of around $3 million in the third quarter. The Zacks Consensus Estimate of $348.3 million is within the guided range.
The company also expects to meet the full-year profit expectations, excluding the $3.2-million cost related to the Biocartis transaction. Notably, the company expects full-year profits to meet either end of the revenue guidance.
Our Take
Genomic Health exited the third quarter of 2017 on a mixed note. We are concerned about the company’s rising operating expenses as well.
Nevertheless, we are encouraged by the year-over-year rise in revenues, driven by solid performances in United States and internationally.
Management noted that strong demand for Genomic Health’s Oncotype tests in the third quarter of 2017 was partly on account of growth in its U.S. and International prostate business. Specifically, in prostate cancer, the Oncotype DX Genomic Prostate Score test receivedpositive Local Coverage Determinationto expand Medicare coverage by Palmetto GBA. The company also made positive developments for its Oncotype DX Breast Recurrence Score tests. It established private coverage for the test in Germany. In this context, the company signed an exclusive agreement with Biocartis Group to develop an in-vitro diagnostic (IVD) version of the Oncotype DX Breast Recurrence Score test on Biocartis' proprietary Idylla platform. This can be performed locally by laboratory partners as well as hospitals globally. Biocartis is an innovative molecular diagnostics company providing next generation diagnostic solutions.
On the flip side, the company’s sole reliance on the Breast Oncotype DX test is a concern.
Zacks Rank & Key Picks
Genomic Health carries a Zacks Rank #3 (Hold).
A few better-ranked medical stocks are PetMed Express, Inc. (PETS - Free Report) , Luminex Corporation and Intuitive Surgical, Inc. (ISRG - Free Report) . Notably, PetMed and Luminex sport a Zacks Rank #1 (Strong Buy), while Intuitive Surgical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PetMed reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% from the year-ago quarter’s 24 cents. Also, gross margin expanded 548 bps year over year to 35.2%.
Luminex reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. Revenues increased almost 4.1% year over year to $74.1 million.
Intuitive Surgical posted adjusted earnings of $2.77 per share in the third quarter of 2017, up 34.5% on a year-over-year basis. Also, revenues increased 18% year over year to $806.1 million.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>