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Myriad Genetics (MYGN) Q2 Earnings Beat, Gross Margin Rises

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Myriad Genetics, Inc. (MYGN - Free Report) reported adjusted earnings per share (EPS) of 12 cents for the second quarter of 2021 versus the Zacks Consensus Estimate of a loss of 7 cents. This compares to loss of 31 cents reported a year ago.

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

GAAP loss per share was 6 cents, narrower than the prior-year quarter’s loss of 74 cents per share.

Revenues

Total revenues surged 103.2% year over year to $189.4 million in the quarter under review. The figure exceeded the Zacks Consensus Estimate by 13.6%. The company, despite facing a significant challenge from the pandemic and experiencing typical seasonality, witnessed strong increases in its test volume and overall average selling prices during the quarter.

Notably, Myriad Genetics registered a 9% improvement in revenues on a sequential basis.

Total test volumes in the quarter were 273,000, reflecting a surge of 70% year over year. However, volumes improved 8% on a sequential basis.

Quarter in Detail

Segment-wise, Molecular Diagnostic tests recorded total revenues of $178.7 million, up 114.5% year over year.

Within this segment, Hereditary Cancer testing revenues rose 116% year over year to $86 million. Pharmacogenomics testing revenues were $22.6 million, up 166% year over year.

Myriad Genetics, Inc. Price, Consensus and EPS Surprise

 

Other testing revenues rose 160% to $1.3 million year over year.

Tumor Profiling testing revenues rose 178% year over year to $29.2 million. Prenatal testing revenues came in at $29.4 million, up 77%. Autoimmune testing revenues totaled $10.2 million, up 40% year over year.

Pharmaceutical and clinical service revenues in the quarter under review totaled $10.7 million, up 8% year over year.

Margin Trends

Gross margin in the quarter under review expanded 1103 basis points (bps) to 71.7%.

Research and development expenses rose 12.1% year over year to $19.5 million. Selling, general and administrative expenses climbed 25.5% to $134.8 million in the reported quarter.

Adjusted operating loss was $18.6 million compared with adjusted operating loss of $68.3 million in the year-ago quarter.

Financial Position

Myriad Genetics exited the second quarter of 2021 with cash and cash equivalents of $118.4 million compared with $148.9 million at the end of the last-reported quarter. Short-term debt at the end of the second quarter of 2021 was $104.1 million. However, the company has no long-term debt in its balance sheet at the end of the second quarter of 2021.

Cumulative net cash provided by operating activities at the end of the second quarter of 2021 was $67.4 million compared with the year-ago $46.8 million.

Guidance

Given the difficulty in predicting the business trend, the company has not provided any financial guidance for either the third quarter ending Sep 30 or the full year. However, the company expects the third quarter to get impacted by the recent surge in the spread of the COVID -19 delta variant.

Our View

Myriad Genetics exited second-quarter 2021 with better-than-expected results. The company registered revenue growth on both a year over year and sequential basis. The stupendous improvement in Hereditary Cancer testing revenues and Pharmacogenomics testing revenues along with growth in tumor profiling and GeneSight test volumes looks encouraging. Further, robust performance by the Myriad Women’s Health business bodes well for the company. Gross margin expansion looks impressive as well. However, the company incurred operating loss during the quarter. The company’s expectation that the recent surge in the spread of the delta variant will adversely impact third-quarter results is a significant concern.

Zacks Rank and Key Picks

The company currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader medical space that have announced their quarterly results are West Pharmaceutical Services, Inc. (WST - Free Report) , Encompass Health Corporation (EHC - Free Report) and Chemed Corporation (CHE - Free Report) .

West Pharmaceutical, carrying a Zacks Rank #1 (Strong Buy), reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encompass Health, carrying a Zacks Rank #2 (Buy), reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Revenues of $1.3 billion outpaced the consensus mark by 1.5%.

Chemed, carrying a Zacks Rank #2, reported second-quarter 2021 adjusted EPS of $4.60, surpassing the Zacks Consensus Estimate by 3.4%. Revenues of $532.3 million beat the Zacks Consensus Estimate by 0.8%.