Back to top

Image: Bigstock

Myriad Genetics (MYGN) Ailed by Mounting Costs, FX Headwind

Read MoreHide Full Article

Myriad Genetics’ (MYGN - Free Report) emerging competitors and rising expenses continue to plague the business. Additionally, the adverse impacts of new regulations and foreign exchange fluctuations remain a concern. The stock currently carries a Zacks Rank #4 (Sell)

Myriad Genetics exited the third quarter of 2022 with lower-than-expected earnings. In the face of external headwinds like a stronger U.S. dollar, significant cost pressure on wages, supply-chain and freight charges and problems to advance the commercial strategy as planned, MYGN’s third-quarter performance remained sluggish.

Significant gross margin contraction and an operating loss as a result of mounting cost pressure are concerning. The gross margin in the quarter under review contracted 365 basis points (bps) to 67.8%.

Meanwhile, research and development expenses rose 9% year over year. SG&A expenses fell 27.7% in the reported quarter. The adjusted operating loss was $45 million compared with an adjusted operating loss of $79.9 million in the year-ago quarter.

The slashed adjusted EPS outlook for 2022 raises apprehension. For 2022, the company reduced revenue expectations to the range of $668-$672 million (from the earlier guidance in the band of $670-$700 million).

The bottom line, on an adjusted basis, is expected between a loss of 30 cents and a loss of 35 cents (the previous guidance was a loss of 10 cents to breakeven).

Over the past year, Myriad Genetics has underperformed the industry it belongs to. The stock has declined 36.3% compared with the industry’s 16.6% fall.

On a positive note, Myriad Genetics exited the third quarter of 2022 with better-than-expected revenues. The Hereditary Cancer testing volume returned to growth in the third quarter.

Also, GeneSight, within Hereditary Cancer testing, witnessed a strong performance with volume improvement. GeneSight continues to produce strong results, with two years of consecutive quarterly volume growth. The company’s strategic partnerships with Intermountain Precision Genomics and Epic Systems Corporation have added to the upsides.

In the third quarter of 2022, Myriad Genetics’ Oncology business generated $69.2 million in revenues. Reported test volumes were approximately 45,000. myChoiceCDx achieved a huge milestone, recording its highest volume ever, up 40% year to date.

Precise tumor volumes continue to grow and are leading to additional orders of other Myriad oncology products like myChoice CDx and BRACAnalysis CDx. Myriad's Prolaris prostate cancer prognostic test grew in the mid-teens compared with the third quarter of 2021.

In terms of product update, during the third-quarter earnings call update, MYGN noted that it continues to enhance its core commercial organization with prudent investments in technologies and innovations and is optimistic about the First Gene Myriad Genetics next-generation prenatal offering.

First Gene is complementary to the company’s current prenatal portfolio and targets a market of more than one million patients in the United States. Myriad Genetics is planning for the commercial launch of First Gene in the second half of 2023.

Key Picks

Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .

AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has dropped 10.6% compared with the industry’s 30.3% decline in the past year.

Boston Scientific, which holds a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.

Boston Scientific has risen 6.8% against the industry’s 42.6% fall over the past year.

Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.

Merit Medical has rallied 13.7% against the industry’s 8.7% decline over the past year.

Published in