UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 21, 2018
MYRIAD GENETICS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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0-26642 |
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87-0494517 |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
320 Wakara Way
Salt Lake City, Utah 84108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 584-3600
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On August 21, 2018, Myriad Genetics, Inc. (“Myriad”) announced its financial results for the three and twelve months ended June 30, 2018. The earnings release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
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ITEM 7.01 |
Regulation FD Disclosure. |
On its earnings conference call for the three and twelve months ended June 30, 2018, Myriad also delivered a slide presentation, which is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference. [The slide presentation will also be available under the “Investors –Events & Presentations” section of Myriad’s website at www.myriad.com.]
FORWARD-LOOKING STATEMENTS
Exhibits 99.1 and 99.2 contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to our business, goals, strategy and financial and operational outlook. These “forward-looking statements” are based on management’s current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by forward-looking statements. These risks and uncertainties include, but are not limited to: the risk that sales and profit margins of our existing molecular diagnostic tests and pharmaceutical and clinical services may decline or will not continue to increase at historical rates; risks related to our ability to transition from our existing product portfolio to our new tests; risks related to changes in the governmental or private insurers reimbursement levels for our tests or our ability to obtain reimbursement for our new tests at comparable levels to our existing tests; risks related to increased competition and the development of new competing tests and services; the risk that we may be unable to develop or achieve commercial success for additional molecular diagnostic tests and pharmaceutical and clinical services in a timely manner, or at all; the risk that we may not successfully develop new markets for our molecular diagnostic tests and pharmaceutical and clinical services, including our ability to successfully generate revenue outside the United States; the risk that licenses to the technology underlying our molecular diagnostic tests and pharmaceutical and clinical services tests and any future tests are terminated or cannot be maintained on satisfactory terms; risks related to delays or other problems with operating our laboratory testing facilities; risks related to public concern over our genetic testing in general or our tests in particular; risks related to regulatory requirements or enforcement in the United States and foreign countries and changes in the structure of the healthcare system or healthcare payment systems; risks related to our ability to obtain new corporate collaborations or licenses and acquire new technologies or businesses on satisfactory terms, if at all; risks related to our ability to successfully integrate and derive benefits from any technologies or businesses that we license or acquire; risks related to our projections about the potential market opportunity for our products; the risk that we or our licensors may be unable to protect or that third parties will infringe the proprietary technologies underlying our tests; the risk of patent-infringement claims or challenges to the validity of our patents; risks related to changes in intellectual property laws covering our molecular diagnostic tests and pharmaceutical and clinical services and patents or enforcement in the United States and foreign countries, such as the Supreme Court decision in the lawsuit brought against us by the Association for Molecular Pathology et al; risks of new, changing and competitive technologies and regulations in the United States and internationally; and other factors discussed under the heading “Risk Factors” contained in Item 1A of our most recent Annual Report on Form 10-K, which has been filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. All information in the exhibits is as of the date of the exhibits, and Myriad undertakes no duty to update this information unless required by law.
Page 2
(d)
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Exhibit Number |
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Description |
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99.1 |
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Earnings release dated August 21, 2018 for the three and twelve months ended June 30, 2018. |
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99.2 |
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The exhibit(s) may contain hypertext links to information on our website or other parties’ websites. The information on our website and other parties’ websites is not incorporated by reference into this Current Report on Form 8-K and does not constitute a part of this Form 8-K.
In accordance with General Instruction B-2 of Form 8-K, the information set forth in Item 2.02 and Item 7.01 and in Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Page 3
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MYRIAD GENETICS, INC. |
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Date: August 21, 2018 |
By: |
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/s/ R. Bryan Riggsbee |
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R. Bryan Riggsbee |
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Executive Vice President, Chief Financial Officer |
Page 4
Exhibit 99.1
News Release
Media Contact:Ron RogersInvestor Contact:Scott Gleason
(801) 584-3065(801) 584-1143
rrogers@myriad.comsgleason@myriad.com
Myriad Genetics Reports Fiscal Fourth-Quarter and Full-Year 2018 Financial Results
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Total Fourth-Quarter Revenues of $200.9 Million |
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Fourth-Quarter Diluted EPS of $0.18 and Adjusted EPS of $0.38, Up 31 Percent |
SALT LAKE CITY, Aug. 21, 2018 – Myriad Genetics, Inc. (NASDAQ: MYGN, “Myriad” or the “Company”), a global leader in molecular diagnostics and personalized medicine, today announced financial results for its fiscal fourth-quarter and full-year 2018, provided an update on recent business highlights and issued its fiscal year and first-quarter 2019 financial guidance.
"Fiscal year 2018 was an excellent year for Myriad as record-setting growth in new products with increasing reimbursement added to a solid hereditary cancer business and a re-engineered cost structure,” said Mark C. Capone, president and CEO, Myriad Genetics. “Based upon our operational momentum and the recent completion of the Counsyl acquisition, we are confident in our strategy to transform Myriad into the global leader in personalized medicine.”
Financial Highlights
The following table summarizes the financial results for the fiscal fourth-quarter and
fiscal full-year 2018:
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Revenue |
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Fiscal Fourth-Quarter |
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Fiscal Year |
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($ in millions) |
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2018 |
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2017 (Restated) |
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% Change |
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2018 |
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2017 (Restated) |
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% Change |
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Molecular diagnostic testing revenue |
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Hereditary cancer testing revenue |
$ |
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126.8 |
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$ |
143.5 |
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(12%) |
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$ |
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498.2 |
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$ |
567.2 |
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(12%) |
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GeneSight testing revenue |
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33.9 |
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25.5 |
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33% |
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124.9 |
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78.4 |
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59% |
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Vectra DA testing revenue |
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15.1 |
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10.3 |
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47% |
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57.2 |
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43.7 |
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31% |
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Prolaris testing revenue |
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7.0 |
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3 |
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133% |
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20.9 |
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12.1 |
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73% |
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EndoPredict testing revenue |
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2.8 |
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2 |
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40% |
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8.9 |
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7.7 |
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16% |
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Other testing revenue |
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2.0 |
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2.7 |
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(26%) |
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9.2 |
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11.5 |
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(20%) |
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Total molecular diagnostic testing revenue |
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187.6 |
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187 |
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0% |
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719.3 |
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720.6 |
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0% |
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Pharmaceutical and clinical service revenue |
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13.3 |
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12.6 |
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6% |
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53.3 |
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49.3 |
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8% |
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Total Revenue |
$ |
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200.9 |
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$ |
199.6 |
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1% |
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$ |
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772.6 |
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$ |
769.9 |
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0% |
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Income Statement |
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Fiscal Fourth-Quarter |
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Fiscal Year |
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($ in millions) |
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2018 |
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2017 (Restated) |
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% Change |
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2018 |
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2017 (Restated) |
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% Change |
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Total Revenue |
$ |
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200.9 |
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$ |
199.6 |
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1% |
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$ |
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772.6 |
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$ |
769.9 |
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0% |
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Gross Profit |
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155.2 |
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157.1 |
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(1%) |
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595.4 |
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598.7 |
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(1%) |
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Gross Margin |
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77.3 |
% |
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78.7 |
% |
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77.1 |
% |
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77.8 |
% |
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Operating Expenses |
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139.3 |
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138.2 |
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1% |
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476.7 |
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550 |
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(13%) |
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Operating Income |
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15.9 |
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18.9 |
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(16%) |
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118.7 |
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48.7 |
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144% |
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Operating Margin |
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7.9 |
% |
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9.5 |
% |
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15.4 |
% |
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6.3 |
% |
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Adjusted Operating Income |
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34.9 |
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27.1 |
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29% |
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110.4 |
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95.7 |
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15% |
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Adjusted Operating Margin |
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17.4 |
% |
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13.6 |
% |
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14.3 |
% |
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12.4 |
% |
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Net Income |
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13.1 |
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12.3 |
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7% |
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131.0 |
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20.5 |
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539% |
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Diluted EPS |
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0.18 |
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0.18 |
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0% |
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1.82 |
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0.30 |
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507% |
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Adjusted EPS |
$ |
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0.4 |
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$ |
0.29 |
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31% |
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$ |
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1.2 |
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$ |
1.03 |
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17% |
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• |
Revisions of Previously-Issued Financial Statements: During the financial close for fiscal year 2018, the Company determined that it had not fully reserved for its sales allowance for the financial periods from fiscal year 2015 through fiscal year 2018. These errors which represented less than one percent of total revenue during that time frame were determined to be. The financial information for prior periods has been restated to reflect these adjustments. |
Business Highlights
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Hereditary Cancer |
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Achieved sixth consecutive quarter of year-over-year hereditary cancer testing volume growth. |
3
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statistically significantly superior to Tyrer-Cuzick alone for both 5-year and lifetime risk of breast cancer (1.9x10-8 and p=2.4x10-8, respectively), underscoring the independent contribution of the combined test score. |
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o |
Based upon recent changes to the National Comprehensive Cancer Network professional treatment guidelines for prostate, pancreatic and colon cancer, we estimate 121,000 additional cancer patients now qualify for hereditary cancer testing in the United States every year. |
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GeneSight® |
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o |
Fiscal fourth-quarter revenue increased 33 percent year-over-year to $33.9 million with record volumes in the quarter. |
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o |
A record 15,000 physicians, including almost 3,000 new ordering doctors, ordered a GeneSight test in the fiscal fourth-quarter. |
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o |
Presented the results from the GeneSight GUIDED randomized controlled trial at the American Psychiatric Association annual meeting. The landmark study showed that patients receiving GeneSight had significantly better outcomes with a 50 percent increase in remission rates and a 30 percent increase in response rates relative to standard-of-care therapy. |
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o |
Announced the results of the IMPACT study at the American Society of Clinical Psychopharmacology annual meeting. In the study, patients treated by primary care physicians had 33 percent greater symptom improvement, 34 percent increased response and 57 percent greater remission than those treated by psychiatrists. |
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o |
CareFirst®, the 15th largest commercial payer in the United States, announced a favorable coverage policy for GeneSight taking effect August 1, 2018 which included all physician specialties. |
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Announced a new coverage decision for GeneSight with a major U.S. company with 30,000 employees. |
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In late-stage negotiations with Kroger® Prescription Plans on a potential favorable coverage decision for GeneSight. |
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Vectra DA® |
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o |
Fiscal fourth-quarter revenue increased 47 percent year-over-year to $15.1 million. |
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o |
Announced a favorable coverage decision for Vectra DA from Kroger Prescription Plans, the pharmacy benefits manager for Kroger and other employers. Kroger is the fourth largest employer in the United States. |
4
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o |
Fiscal fourth-quarter revenue increased 133 percent year-over-year to $7.0 million with record volumes in the quarter. |
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Received positive medical policy recommendations on Prolaris from eight commercial insurers, including a top-10 commercial insurer, and seven others, totaling over 20 million covered lives or 12 percent of total commercial lives in the United States. Prolaris is now covered for approximately 55 percent of prostate cancer patients in the United States. |
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EndoPredict® |
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o |
Fiscal fourth-quarter revenue increased 40 percent year-over-year to $2.8 million. |
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o |
Received positive recommendation from the National Institute for Health and Care Excellence (NICE) in the United Kingdom to cover the EndoPredict test. |
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myPath® Melanoma |
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o |
Received positive medical policy recommendations on myPath Melanoma from eight commercial insurers. |
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Companion Diagnostics |
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Metastatic breast cancer patients tested by Myriad increased 13 percent sequentially based upon the recent launch of BRACAnalysis CDx as a companion diagnostic for Lynparza™. |
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Received pre-market approval from the Japanese Ministry of Health, Labor, and Welfare for our BRACAnalysis CDx test for HER2- metastatic breast cancer. |
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Announced positive results from Phase III, SOLO-1 study which evaluated patients with advanced ovarian cancer treated in the first-line setting who tested positive with Myriad’s BRACAnalysis CDx test. Myriad intends to submit a supplementary pre-market approval (sPMA) to the U.S. Food and Drug Administration (FDA) for this indication. |
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Announced that the FDA has accepted Myriad’s sPMA application for BRACAnalysis CDx® to be used as a companion diagnostic with Pfizer’s PARP inhibitor, talazoparib, in HER2- metastatic breast cancer. The New Drug Application for talazoparib has been granted priority review by the U.S. FDA and has a Prescription Drug User Fee Act goal date of December 2018. |
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Closing of Counsyl Acquisition |
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estimates that these markets will grow to approximately 3 million tests performed annually in the United States and $1.5 billion of revenue over the next five years. |
Fiscal Year 2019 and Fiscal First-Quarter 2019 Financial Guidance
Below is a table summarizing Myriad’s fiscal year 2019 and fiscal first-quarter 2019 financial guidance:
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Revenue |
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GAAP Diluted Earnings Per Share |
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Adjusted Earnings Per Share |
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Fiscal Year 2019 |
$880-$890 million |
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$0.40-$0.45 |
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$1.70-$1.75 |
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Fiscal First-Quarter 2019 |
$200-$202 million |
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($0.08)-($0.06) |
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$0.28-$0.30 |
Myriad’s fiscal year 2019 and fiscal first-quarter 2019 adjusted earnings per share guidance excludes the impact of stock based compensation expense, non-cash amortization associated with acquisitions and certain non-recurring expenses. These projections are forward-looking statements and are subject to the risks summarized in the safe harbor statement at the end of this press release. The Company will provide further details on its business outlook during the conference call today and discuss the fiscal fourth-quarter financial results and fiscal year 2019 financial guidance.
Conference Call and Webcast
A conference call will be held today, Tuesday, August 21, 2018, at 4:30 p.m. EDT to discuss Myriad’s financial results for the fiscal fourth-quarter, business developments and financial guidance. The dial-in number for domestic callers is 1-800-616-4021. International callers may dial 1-303-223-2682. All callers will be asked to reference reservation number 21892392. An archived replay of the call will be available for seven days by dialing (800) 633-8284 and entering the reservation number above. The conference call along with a slide presentation will also will be available through a live webcast at www.myriad.com.
About Myriad Genetics
Myriad Genetics Inc., is a leading personalized medicine company dedicated to being a trusted advisor transforming patient lives worldwide with pioneering molecular diagnostics. Myriad discovers and commercializes molecular diagnostic tests that: determine the risk of developing disease, accurately diagnose disease, assess the risk of disease progression, and guide treatment
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decisions across six major medical specialties where molecular diagnostics can significantly improve patient care and lower healthcare costs. Myriad is focused on five strategic imperatives: building upon a solid hereditary cancer foundation, growing new product volume, expanding reimbursement coverage for new products, increasing RNA kit revenue internationally and improving profitability with Elevate 2020. For more information on how Myriad is making a difference, please visit the Company's website: www.myriad.com.
Myriad, the Myriad logo, BART, BRACAnalysis, Colaris, Colaris AP, myPath, myRisk, Myriad myRisk, myRisk Hereditary Cancer, myChoice, myPlan, BRACAnalysis CDx, Tumor BRACAnalysis CDx, myChoice HRD, EndoPredict, Vectra, GeneSight, riskScore Prolaris, ForeSight and Prelude are trademarks or registered trademarks of Myriad Genetics, Inc. or its wholly owned subsidiaries in the United States and foreign countries. MYGN-F, MYGN-G.
Kroger is a trademark of The Kroger Company.
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MYRIAD GENETICS, INC. AND SUBSIDIARIES |
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CONSOLIDATED INCOME STATEMENTS (Unaudited) |
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(in millions, except per share amounts) |
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Three months ended |
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Twelve months ended |
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June 30 |
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June 30 |
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2018 |
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2017 |
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2018 |
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2017 |
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(Restated) |
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(Restated) |
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Molecular diagnostic testing |
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$ |
187.6 |
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$ |
187.0 |
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$ |
719.3 |
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$ |
720.6 |
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Pharmaceutical and clinical services |
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13.3 |
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12.6 |
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53.3 |
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49.3 |
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Total revenue |
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200.9 |
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199.6 |
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772.6 |
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769.9 |
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Costs and expenses: |
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Cost of molecular diagnostic testing |
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38.0 |
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35.6 |
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148.7 |
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145.2 |
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Cost of pharmaceutical and clinical services |
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7.7 |
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6.9 |
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28.5 |
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26.0 |
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Research and development expense |
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17.7 |
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18.8 |
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70.8 |
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74.4 |
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Change in the fair value of contingent consideration |
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0.2 |
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(2.7 |
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(61.2 |
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(0.8 |
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Selling, general, and administrative expense |
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121.4 |
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122.1 |
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467.1 |
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476.4 |
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Total costs and expenses |
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185.0 |
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180.7 |
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653.9 |
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721.2 |
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Operating income |
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15.9 |
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18.9 |
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118.7 |
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48.7 |
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Other income (expense): |
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|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
0.5 |
|
|
|
0.3 |
|
|
|
1.8 |
|
|
|
1.2 |
|
|
Interest expense |
|
|
(1.1 |
) |
|
|
(1.2 |
) |
|
|
(3.2 |
) |
|
|
(6.0 |
) |
|
Other |
|
|
0.8 |
|
|
|
(0.1 |
) |
|
|
(0.4 |
) |
|
|
(3.0 |
) |
|
Total other income (expense): |
|
|
0.2 |
|
|
|
(1.0 |
) |
|
|
(1.8 |
) |
|
|
(7.8 |
) |
|
Income before income tax |
|
|
16.1 |
|
|
|
17.9 |
|
|
|
116.9 |
|
|
|
40.9 |
|
|
Income tax provision |
|
|
3.0 |
|
|
|
5.8 |
|
|
|
(13.9 |
) |
|
|
20.6 |
|
|
Net income |
|
$ |
13.1 |
|
|
$ |
12.1 |
|
|
$ |
130.8 |
|
|
$ |
20.3 |
|
|
Net loss attributable to non-controlling interest |
|
|
— |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
Net income attributable to Myriad Genetics, Inc. stockholders |
|
$ |
13.1 |
|
|
$ |
12.3 |
|
|
$ |
131.0 |
|
|
$ |
20.5 |
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.19 |
|
|
$ |
0.18 |
|
|
$ |
1.89 |
|
|
$ |
0.30 |
|
|
Diluted |
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
1.82 |
|
|
$ |
0.30 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
70.1 |
|
|
|
68.2 |
|
|
|
69.4 |
|
|
|
68.3 |
|
|
Diluted |
|
|
72.9 |
|
|
|
68.9 |
|
|
|
72.0 |
|
|
|
68.8 |
|
8
|
Consolidated Balance Sheets (Unaudited) |
|
|||||||
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
June 30 |
|
|
June 30, |
|
||
|
|
|
2018 |
|
|
2017 |
|
||
|
ASSETS |
|
|
|
|
|
(Restated) |
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
110.9 |
|
|
$ |
102.4 |
|
|
Marketable investment securities |
|
|
69.7 |
|
|
|
48.3 |
|
|
Prepaid expenses |
|
|
9.4 |
|
|
|
12.7 |
|
|
Inventory |
|
|
34.3 |
|
|
|
42.2 |
|
|
Trade accounts receivable, less allowance for doubtful accounts of $12.1 in 2018 and $7.6 in 2017 |
|
|
98.3 |
|
|
|
90.2 |
|
|
Prepaid taxes |
|
|
— |
|
|
|
0.2 |
|
|
Other receivables |
|
|
3.8 |
|
|
|
5.7 |
|
|
Total current assets |
|
|
326.4 |
|
|
|
301.7 |
|
|
Property, plant and equipment, net |
|
|
43.2 |
|
|
|
51.1 |
|
|
Long-term marketable investment securities |
|
|
30.7 |
|
|
|
48.5 |
|
|
Intangibles, net |
|
|
455.2 |
|
|
|
491.5 |
|
|
Goodwill |
|
|
318.6 |
|
|
|
316.1 |
|
|
Total assets |
|
$ |
1,174.1 |
|
|
$ |
1,208.9 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
26.0 |
|
|
$ |
22.0 |
|
|
Accrued liabilities |
|
|
68.3 |
|
|
|
65.6 |
|
|
Short-term contingent consideration |
|
|
5.3 |
|
|
|
127.3 |
|
|
Deferred revenue |
|
|
2.6 |
|
|
|
2.6 |
|
|
Total current liabilities |
|
|
102.2 |
|
|
|
217.5 |
|
|
Unrecognized tax benefits |
|
|
24.9 |
|
|
|
25.2 |
|
|
Other long-term liabilities |
|
|
6.3 |
|
|
|
7.2 |
|
|
Contingent consideration |
|
|
9.2 |
|
|
|
13.2 |
|
|
Long-term debt |
|
|
9.3 |
|
|
|
99.1 |
|
|
Long-term deferred taxes |
|
|
57.3 |
|
|
|
78.7 |
|
|
Total liabilities |
|
|
209.2 |
|
|
|
440.9 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock, 70.6 and 68.4 shares outstanding at June 30, 2018 and June 30, 2017 respectively |
|
|
0.7 |
|
|
|
0.7 |
|
|
Additional paid-in capital |
|
|
915.4 |
|
|
|
851.4 |
|
|
Accumulated other comprehensive income (loss) |
|
|
(4.0 |
) |
|
|
(5.5 |
) |
|
Retained earnings (deficit) |
|
|
52.8 |
|
|
|
(78.2 |
) |
|
Total Myriad Genetics, Inc. stockholders’ equity |
|
|
964.9 |
|
|
|
768.4 |
|
|
Non-Controlling Interest |
|
|
— |
|
|
|
(0.4 |
) |
|
Total stockholders' equity |
|
|
964.9 |
|
|
|
768.0 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,174.1 |
|
|
$ |
1,208.9 |
|
9
|
Consolidated Statement of Cash Flows (Unaudited) |
|
|||||||
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Twelve months ended |
|
|||||
|
|
|
June 30, |
|
|||||
|
|
|
2018 |
|
|
2017 |
|
||
|
|
|
|
|
|
|
(Restated) |
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net Income attributable to Myriad Genetics, Inc. stockholders |
|
$ |
131.0 |
|
|
|
20.5 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
54.4 |
|
|
|
48.3 |
|
|
Non-cash interest expense |
|
|
0.2 |
|
|
|
0.4 |
|
|
Loss (gain) on disposition of assets |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
|
Share-based compensation expense |
|
|
27.1 |
|
|
|
29.9 |
|
|
Impairment of cost basis investment |
|
|
— |
|
|
|
2.4 |
|
|
Bad debt expense |
|
|
32.3 |
|
|
|
37.3 |
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
1.3 |
|
|
Deferred income taxes |
|
|
(23.4 |
) |
|
|
0.8 |
|
|
Unrecognized tax benefits |
|
|
(0.3 |
) |
|
|
1.2 |
|
|
Change in fair value of contingent consideration |
|
|
(60.9 |
) |
|
|
(0.8 |
) |
|
Payment of contingent consideration |
|
|
(22.7 |
) |
|
|
— |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
3.3 |
|
|
|
7.8 |
|
|
Trade accounts receivable |
|
|
(39.2 |
) |
|
|
(39.9 |
) |
|
Other receivables |
|
|
1.1 |
|
|
|
(4.0 |
) |
|
Inventory |
|
|
7.9 |
|
|
|
(1.2 |
) |
|
Prepaid taxes |
|
|
— |
|
|
|
3.4 |
|
|
Accounts payable |
|
|
4.0 |
|
|
|
(3.0 |
) |
|
Accrued liabilities |
|
|
1.4 |
|
|
|
1.2 |
|
|
Deferred revenue |
|
|
(0.1 |
) |
|
|
0.9 |
|
|
Net cash provided by operating activities |
|
|
115.9 |
|
|
|
106.2 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(8.4 |
) |
|
|
(6.1 |
) |
|
Acquisitions, net of cash acquired |
|
|
— |
|
|
|
(216.1 |
) |
|
Sale of cost basis investment |
|
|
— |
|
|
|
2.6 |
|
|
Purchases of marketable investment securities |
|
|
(80.9 |
) |
|
|
(87.5 |
) |
|
Proceeds from maturities and sales of marketable investment securities |
|
|
77.7 |
|
|
|
160.8 |
|
|
Net cash used in investing activities |
|
|
(11.6 |
) |
|
|
(146.3 |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net proceeds from common stock issued under share-based compensation plans |
|
|
36.9 |
|
|
|
6.0 |
|
|
Net proceeds from revolving credit facility |
|
|
53.0 |
|
|
|
204.0 |
|
|
Repayment of revolving credit facility |
|
|
(143.0 |
) |
|
|
(105.0 |
) |
|
Net proceeds from term loan |
|
|
— |
|
|
|
199.0 |
|
|
Payment of contingent consideration recorded in purchase accounting |
|
|
(42.4 |
) |
|
|
— |
|
|
Repayment of term loan |
|
|
— |
|
|
|
(200.0 |
) |
|
Fees paid for extinguishment of debt |
|
|
— |
|
|
|
(0.6 |
) |
|
Repurchase and retirement of common stock |
|
|
— |
|
|
|
(31.6 |
) |
|
Proceeds from non-controlling interest |
|
|
0.5 |
|
|
|
— |
|
|
Net cash provided by (used in) financing activities |
|
|
(95.0 |
) |
|
|
71.8 |
|
|
Effect of foreign exchange rates on cash and cash equivalents |
|
|
(0.8 |
) |
|
|
2.2 |
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
8.5 |
|
|
|
33.9 |
|
|
Cash and cash equivalents at beginning of the period |
|
|
102.4 |
|
|
|
68.5 |
|
|
Cash and cash equivalents at end of the period |
|
$ |
110.9 |
|
|
$ |
102.4 |
|
10
Safe Harbor Statement
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the Company’s ability to transform into the global leader in personalized medicine; the Company’s ability to continue to achieve record setting growth in new products and increasing reimbursement; the Company’s estimates of additional cancer patients who now qualify for hereditary cancer testing in the United States every year; the Company’s expectations regarding a potential favourable coverage decision by Kroger Prescription Plans for GeneSight; the Company’s intention to submit a supplementary premarket approval (sPMA) to the FDA for patients with advanced ovarian cancer treated in the first line setting who tested positive with the Company’s BRACAnalysis CDx test; the timing and outcome of the Company’s sPMA application for BRACAnalysis CDx to be used as a companion diagnostic with Pfizer’s PARP inhibitor, talazoparib; the Company’s estimates of the annual and next five year growth of the ForeSight and Prelude markets in the United States; the Company’s fiscal year 2019 and fiscal first-quarter 2019 financial guidance for revenue, GAAP diluted earnings per share, and adjusted earnings per share under the caption “Fiscal Year 2019 and Fiscal First-Quarter 2019 Financial Guidance”; and the Company’s strategic directives under the caption “About Myriad Genetics.” These “forward-looking statements” are based on management’s current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those described or implied in the forward-looking statements. These risks include, but are not limited to: the risk that sales and profit margins of the Company’s existing molecular diagnostic tests and pharmaceutical and clinical services may decline or will not continue to increase at historical rates; risks related to the Company’s ability to transition from its existing product portfolio to its new tests; risks related to changes in the governmental or private insurers’ reimbursement levels for the Company’s tests or the Company’s ability to obtain reimbursement for its new tests at comparable levels to its existing tests; risks related to increased competition and the development of new competing tests and services; the risk that the Company may be unable to develop or achieve commercial success for additional molecular diagnostic tests and pharmaceutical and clinical services in a timely manner, or at all; the risk that the Company may not successfully develop new markets for its molecular diagnostic tests and pharmaceutical and clinical services, including the Company’s ability to successfully generate revenue outside the United States; the risk that licenses to the technology underlying the Company’s molecular diagnostic tests
11
and pharmaceutical and clinical services tests and any future tests are terminated or cannot be maintained on satisfactory terms; risks related to delays or other problems with operating the Company’s laboratory testing facilities; risks related to public concern over the Company’s genetic testing in general or the Company’s tests in particular; risks related to regulatory requirements or enforcement in the United States and foreign countries and changes in the structure of the healthcare system or healthcare payment systems; risks related to the Company’s ability to obtain new corporate collaborations or licenses and acquire new technologies or businesses on satisfactory terms, if at all; risks related to the Company’s ability to successfully integrate and derive benefits from any technologies or businesses that it licenses or acquires, including but not limited to the Company’s acquisition of Counsyl, Assurex, Sividon and the Clinic; risks related to the Company’s projections about the potential market opportunity for the Company’s products; the risk that the Company or its licensors may be unable to protect or that third parties will infringe the proprietary technologies underlying the Company’s tests; the risk of patent-infringement claims or challenges to the validity of the Company’s patents; risks related to changes in intellectual property laws covering the Company’s molecular diagnostic tests and pharmaceutical and clinical services and patents or enforcement in the United States and foreign countries, such as the Supreme Court decision in the lawsuit brought against us by the Association for Molecular Pathology et al; risks of new, changing and competitive technologies and regulations in the United States and internationally; the risk that the Company may be unable to comply with financial operating covenants under the Company’s credit or lending agreements; the risk that the Company will be unable to pay, when due, amounts due under the Company’s credit or lending agreements; and other factors discussed under the heading “Risk Factors” contained in Item 1A of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
Statement regarding use of non-GAAP financial measures
In this press release, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets
12
and to manage the Company’s business. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached schedules.
Following is a description of the adjustments made to GAAP financial measures:
|
|
• |
Acquisition – amortization of intangible assets: Represents recurring amortization charges resulting from the acquisition of intangible assets, including developed technology and database rights. |
|
|
• |
Acquisition – integration related costs: Costs related to closing and integration of acquired companies |
|
|
• |
Non-recurring legal expenses: One-time non-recurring legal settlements |
|
|
• |
Tax impact related to equity compensation: Changes in effective tax rate based upon ASU 2016-09 |
|
|
• |
Potential future consideration related to acquisitions: Non-cash expenses related to valuation adjustments of earn-out and milestone payments tied to recent acquisitions |
|
|
• |
Impairment of Raindance Investment: One-time impairment charge associated with Myriad’s investment in Raindance Technologies |
|
|
• |
One-time debt restructuring costs: Charges related to the restructuring of the company’s debt from a one-year term loan to a revolving credit facility |
|
|
• |
One-time non-deductible costs: One-time non-deductible tax items |
|
|
• |
Tax reform impact on deferred taxes: One-time non-cash charges associated with change in value of our deferred tax assets due to tax reform |
|
|
• |
Elevate 2020 costs: Expenses tied to Elevate 2020 program |
|
|
• |
Non-recurring bad debt reserve: Changes in bad debt reserve tied to prior period adjustments |
The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Non-GAAP financial results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
13
|
Reconciliation of GAAP to Non-GAAP Financial Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the Three and Twelve Months ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited data in millions, except per share amount) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
||||||||||
|
|
|
Jun 30, 2018 |
|
|
Jun 30, 2017 |
|
|
Jun 30, 2018 |
|
|
Jun 30, 2017 |
|
||||
|
|
|
|
|
|
|
(Restated) |
|
|
|
|
|
|
(Restated) |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
200.9 |
|
|
$ |
199.6 |
|
|
$ |
772.6 |
|
|
$ |
769.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Cost of molecular diagnostic testing |
|
|
38.0 |
|
|
|
35.6 |
|
|
|
148.7 |
|
|
|
145.2 |
|
|
GAAP Cost of pharmaceutical and clinical services |
|
|
7.7 |
|
|
|
6.9 |
|
|
|
28.5 |
|
|
|
26.0 |
|
|
Acquisition - Integration related costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
Elevate 2020 costs |
|
|
(2.8 |
) |
|
|
— |
|
|
|
(3.0 |
) |
|
|
— |
|
|
Non-GAAP COGS |
|
$ |
42.9 |
|
|
$ |
42.5 |
|
|
$ |
174.2 |
|
|
$ |
171.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Margin |
|
|
79 |
% |
|
|
79 |
% |
|
|
77 |
% |
|
|
78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Research and Development |
|
$ |
17.7 |
|
|
$ |
18.8 |
|
|
$ |
70.8 |
|
|
$ |
74.4 |
|
|
Acquisition - Integration related costs |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
Acquisition - amortization of intangible assets |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
(0.3 |
) |
|
Elevate 2020 costs |
|
|
(0.7 |
) |
|
|
— |
|
|
|
(1.8 |
) |
|
|
— |
|
|
Non-GAAP R&D |
|
$ |
16.9 |
|
|
$ |
18.6 |
|
|
$ |
68.6 |
|
|
$ |
73.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Contingent Consideration |
|
$ |
0.2 |
|
|
$ |
(2.7 |
) |
|
$ |
(61.2 |
) |
|
$ |
(0.8 |
) |
|
Potential future consideration related to acquisitions |
|
|
(0.2 |
) |
|
|
2.7 |
|
|
|
61.2 |
|
|
|
0.8 |
|
|
Non-GAAP Contingent Consideration |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Selling, General and Administrative |
|
$ |
121.4 |
|
|
$ |
122.1 |
|
|
$ |
467.1 |
|
|
$ |
476.4 |
|
|
Acquisition - Integration related costs |
|
|
(0.6 |
) |
|
|
(0.7 |
) |
|
|
(0.9 |
) |
|
|
(13.6 |
) |
|
Acquisition - amortization of intangible assets |
|
|
(9.1 |
) |
|
|
(9.1 |
) |
|
|
(36.6 |
) |
|
|
(32.7 |
) |
|
Non-recurring bad debt reserve |
|
|
(2.5 |
) |
|
|
— |
|
|
|
(2.5 |
) |
|
|
— |
|
|
Non-recurring legal expenses |
|
|
(0.5 |
) |
|
|
(0.6 |
) |
|
|
(0.5 |
) |
|
|
(0.6 |
) |
|
Elevate 2020 costs |
|
|
(2.5 |
) |
|
|
(0.3 |
) |
|
|
(7.2 |
) |
|
|
(0.3 |
) |
|
Non-GAAP SG&A |
|
$ |
106.2 |
|
|
$ |
111.4 |
|
|
$ |
419.4 |
|
|
$ |
429.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Income |
|
$ |
15.9 |
|
|
$ |
18.9 |
|
|
$ |
118.7 |
|
|
$ |
48.7 |
|
|
Acquisition - Integration related costs |
|
|
0.6 |
|
|
|
0.8 |
|
|
|
1.0 |
|
|
|
13.9 |
|
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
9.2 |
|
|
|
36.9 |
|
|
|
33.0 |
|
|
Non-recurring bad debt reserve |
|
|
2.5 |
|
|
|
— |
|
|
|
2.5 |
|
|
|
— |
|
|
Non-recurring legal expenses |
|
|
0.5 |
|
|
|
0.6 |
|
|
|
0.5 |
|
|
|
0.6 |
|
|
Elevate 2020 costs |
|
|
6.0 |
|
|
|
0.3 |
|
|
|
12.0 |
|
|
|
0.3 |
|
|
Potential future consideration related to acquisitions |
|
|
0.2 |
|
|
|
(2.7 |
) |
|
|
(61.2 |
) |
|
|
(0.8 |
) |
|
Non-GAAP Operating Income |
|
$ |
34.9 |
|
|
$ |
27.1 |
|
|
$ |
110.4 |
|
|
$ |
95.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Margin |
|
|
17 |
% |
|
|
14 |
% |
|
|
14 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income Attributable to Myriad Genetics, Inc. Stockholders |
|
$ |
13.1 |
|
|
$ |
12.3 |
|
|
$ |
131.0 |
|
|
$ |
20.5 |
|
|
Acquisition - Integration related costs |
|
|
0.6 |
|
|
|
0.8 |
|
|
|
1.0 |
|
|
|
13.9 |
|
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
9.2 |
|
|
|
36.9 |
|
|
|
33.0 |
|
|
Non-recurring bad debt reserve |
|
|
2.5 |
|
|
|
— |
|
|
|
2.5 |
|
|
|
— |
|
14
|
|
|
0.5 |
|
|
|
0.6 |
|
|
|
0.5 |
|
|
|
0.6 |
|
|
|
Elevate 2020 costs |
|
|
6.0 |
|
|
|
0.3 |
|
|
|
12.0 |
|
|
|
0.3 |
|
|
Potential future consideration related to acquisitions |
|
|
0.2 |
|
|
|
(2.7 |
) |
|
|
(61.2 |
) |
|
|
(0.8 |
) |
|
Tax impact related to equity compensation |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
(0.4 |
) |
|
|
3.0 |
|
|
One-time debt restructuring costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.3 |
|
|
One-time non-deductible costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.7 |
|
|
Tax reform effect |
|
|
(1.8 |
) |
|
|
— |
|
|
|
(32.0 |
) |
|
|
— |
|
|
Impairment of Raindance Investment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.4 |
|
|
Tax effect associated with non-GAAP adjustments |
|
|
(2.6 |
) |
|
|
(0.4 |
) |
|
|
(4.2 |
) |
|
|
(5.8 |
) |
|
Non-GAAP Net Income |
|
$ |
27.6 |
|
|
$ |
20.2 |
|
|
$ |
86.1 |
|
|
$ |
71.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted EPS |
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
1.82 |
|
|
$ |
0.30 |
|
|
Non-GAAP Diluted EPS |
|
$ |
0.38 |
|
|
$ |
0.29 |
|
|
$ |
1.20 |
|
|
$ |
1.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding |
|
|
72.9 |
|
|
|
68.9 |
|
|
|
72.0 |
|
|
|
68.8 |
|
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited data in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
||||||||||
|
|
|
Jun 30, 2018 |
|
|
Jun 30, 2017 |
|
|
Jun 30, 2018 |
|
|
Jun 30, 2017 |
|
||||
|
|
|
|
|
|
|
(Restated) |
|
|
|
|
|
|
(Restated) |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cash flow from operations |
|
$ |
47.9 |
|
|
$ |
36.6 |
|
|
$ |
115.9 |
|
|
$ |
106.2 |
|
|
Capital expenditures |
|
|
(1.8 |
) |
|
|
(0.7 |
) |
|
|
(8.4 |
) |
|
|
(6.1 |
) |
|
Free cash flow |
|
$ |
46.1 |
|
|
$ |
35.9 |
|
|
$ |
107.5 |
|
|
$ |
100.1 |
|
|
Elevate 2020 costs |
|
|
3.7 |
|
|
|
0.3 |
|
|
|
9.7 |
|
|
|
0.3 |
|
|
Acquisition - Integration related costs |
|
|
0.6 |
|
|
|
0.8 |
|
|
|
— |
|
|
|
8.7 |
|
|
Cash paid for contingent consideration in operating cash flows |
|
|
1.9 |
|
|
|
— |
|
|
|
22.7 |
|
|
|
— |
|
|
Cash paid at closing to Assurex vendors |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.8 |
|
|
Accrual for legal expenses |
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
|
0.6 |
|
|
Tax effect associated with non-GAAP adjustments |
|
|
(1.7 |
) |
|
|
(0.6 |
) |
|
|
(9.1 |
) |
|
|
(5.7 |
) |
|
Non-GAAP Free cash flow |
|
$ |
50.6 |
|
|
$ |
37.0 |
|
|
$ |
130.8 |
|
|
$ |
110.8 |
|
15
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2019
The Company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from guidance set forth below. Some of the factors that could affect the Company’s financial results are stated in the safe harbor statement of this press release. More information on potential factors that could affect the Company’s financial results are included under the heading "Risk Factors" contained in Item 1A in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
|
|
Fiscal Year 2019 |
|
|
|
Diluted net income per share |
|
|
|
|
GAAP diluted net income per share |
$0.40- $0.45 |
|
|
|
Stock Based Compensation Expense |
|
0.30 |
|
|
Acquisition - amortization of intangible assets |
|
0.80 |
|
|
One-time expenses |
|
0.20 |
|
|
Non-GAAP diluted net income per share |
$1.70 - $1.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal First-Quarter 2019 |
|
|
|
Diluted net income per share |
|
|
|
|
GAAP diluted net income per share |
($0.08) - ($0.06) |
|
|
|
Stock Based Compensation Expense |
|
0.08 |
|
|
Acquisition - amortization of intangible assets |
|
0.18 |
|
|
One-time expenses |
|
0.10 |
|
|
Non-GAAP diluted net income per share |
$0.28 - $0.30 |
|
|
Myriad Genetics Fiscal Fourth-Quarter 2018 Earnings Call 08/21/2018 Exhibit 99.2
Forward Looking Statements Some of the information presented here today may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. These statements are based on management’s current expectations and the actual events or results may differ materially and adversely from these expectations. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission, specifically, the Company’s annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in the Company’s projections or forward-looking statements. In this presentation, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. The Company’s financial measures under GAAP include substantial one-time charges related to its acquisitions and ongoing amortization expense related to acquired intangible assets that will be recognized over the useful lives of the assets and charges related to executive severance. Management believes that presentation of operating results that excludes these items provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and to manage the Company’s business. A link to reconciliation of the GAAP to non-GAAP financial guidance is provided above. Forward Looking Statements Non-GAAP Financial Measures Financial Guidance Fiscal Year 2019 GAAP diluted earnings per share $0.40 - $0.45 Acquisition – amortization of intangible assets $0.80 Stock based compensation expense $0.30 One time expenses $0.20 Non-GAAP diluted earnings per share $1.70 - $1.75 For additional information on GAAP to non-GAAP reconciliation see: https://www.myriad.com/investors/gaap-to-non-gaap-reconciliation/ Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
FY 2018 Fourth-Quarter Financial Results Significantly Exceeded Expectations 4Q18 Actual Results 4Q17 Actual Results (restated) YoY Change FY18 Actual Results FY18 Initial Guidance Revenue (in mil.) $200.9 $199.6 1% $772.6 $750-$770 GAAP EPS $0.18 $0.18 0% $1.82 $0.37-$0.42 Adjusted EPS $0.38 $0.29 31% $1.20 $1.00-$1.05 Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Pioneering Science in Fiscal Year 2018 Multiple Significant Scientific Achievements Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Launch of riskScore: 4th epoch in hereditary cancer testing Genesight GUIDED study met Remission & Response endpoints BRACAnalysis CDx approved for metBC in U.S. and Japan Validated Vectra DA as 3X more predictive than any other DA test 70 presentations and 23 manuscripts
Review of Fiscal Year 2018 New Product Sample Volume and Revenue Set New Records Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. New Product FY18 Revenue = $212M Product YoY Growth GeneSight 59% Vectra DA 31% Prolaris 73% EndoPredict 16% New Products 1% New Products 70%
Critical Success Factors to Achieving Strategic Goals Grow new product volume STRATEGIC GOALS CRITICAL SUCCESS FACTORS >10% Revenue Growth >30% Operating Margin 7 Products >$50M >10% International Revenue Expand reimbursement coverage for new products Increase RNA kit revenue internationally Improve profitability with Elevate 2020 Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Build upon a solid hereditary cancer foundation
Solid Hereditary Cancer Foundation Six Straight Quarters of YoY Volume Growth With Stable Pricing Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Hereditary Cancer Revenue 6 sequential quarters with YoY volume growth 3 sequential quarters with stable pricing Launched riskScore in Sept. BRACAnalysis CDx approved for metBC in U.S. and Japan metBC volume up 13% sequentially in fourth quarter Revenue expected to increase nominally YoY in FY19 Expanded indications for >120,000 patients per year
Record GeneSight Ordering Physicians and Volume Ordering Physicians Have Nearly Doubled in Last Two Years Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Ordering Doctors Over 15,000 ordering doctors in 4Q18 Record new ordering physicians RCT Data
Advances in Reimbursement Coverage For New Products New Product Reimbursement 1.6B in Potential Revenue Current U.S. Coverage Signed eight payers for Prolaris representing 20M lives including a top 10 national payers Announced CareFirst® coverage for GeneSight Large employer with 30,000 employees to cover GeneSight Signed partnership with Kroger® to cover Vectra DA – in late stage discussions on GeneSight Coverage from 8 commercial payers on myPath Melanoma Received final LCD from Medicare for EndoPredict Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Reimbursed Addressable Market (RAM) Existing FY18 Additions RAM $240M $330M $720M $300M $4M
International Developments Kit-Based Strategy With Restructuring to Global LDT Laboratory Revised NICE draft guidance document on breast cancer prognostics recommends EndoPredict as one of three diagnostic tests Received pre market approval for BRACAnalysis CDx in Japan for HER2- metastatic breast cancer = 15,000 patients per year Selling German clinic and closing Munich laboratory Shift LDT testing to single U.S. based laboratory Continue with kit manufacturing and laboratory in Cologne Germany Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Improve Profitability With Elevate 2020 Adjusted Operating Margin Improves 380BP Year-Over-Year Total Expenses ($M) FY18 Targeted Savings = $17M Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Adjusted Operating Margin 13.6% 17.4%
FY 2018 Fourth-Quarter Revenue By Product Product 4Q18 4Q17 (Restated) YoY Growth Hereditary Cancer $126.8 $143.5 (12%) GeneSight $33.9 $25.5 33% Vectra DA $15.1 $10.3 47% Prolaris $7.0 $3.0 133% EndoPredict $2.8 $2.0 40% Other $2.0 $2.7 (26%) Total Molecular Diagnostic Revenue $187.7 $187.0 0% Pharmaceutical & Clinical Services $13.3 $12.6 6% Total Revenue $200.9 $199.6 1% (in millions) Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Fiscal Fourth-Quarter Financial Results Adjusted Earnings Per Share Increase 31% Over Q4 FY2017 GAAP Results Adjusted Results 4Q18 4Q17 (Restated) YoY Growth 4Q18 4Q17 (Restated) YoY Growth Total Revenue $200.9 $199.6 0% $200.9 $199.6 0% Gross Profit $155.2 $157.1 (1%) $158.0 $157.1 1% Gross Margin 77.3% 78.7% -140 bps 78.6% 78.7% -10 bps Operating Income $15.9 $18.9 (16%) $34.9 $27.1 29% Operating Margin 7.9% 9.5% -160 bps 17.4% 13.6% +380 bps Net Income $13.1 $12.3 7% $27.6 $20.2 37% EPS $0.18 $0.18 0% $0.38 $0.29 31% Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Comparison of Adjusted EPS and FCF/Share Adjusted EPS Significantly Understates Cash Earnings Power Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. TTM FCF/Share = $1.82
FY17 & FY18 Revenue and EPS After Adjustments Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Revenue (in mil.) FY18 FY17 (Restated) YoY Growth Q1 $187.9 $178.8 5% Q2 $192.7 $196.7 (2%) Q3 $191.1 $194.8 (2%) Q4 $200.9 $199.6 1% Total $772.5 $769.9 0% Adjusted EPS FY18 FY17 (Restated) YoY Growth Q1 $0.24 $0.24 0% Q2 $0.30 $0.24 25% Q3 $0.29 $0.25 16% Q4 $0.38 $0.29 31% Total $1.20 $1.03 17%
FY19 Financial Guidance Metric Fiscal Year 2019 Revenue $880 to $890 million GAAP Diluted EPS $0.40 to $0.45 Adjusted EPS $1.70 to $1.75 Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
FY19 Revenue Guidance Bridge Overall revenue growth >20% Assuming No Counsyl Synergies Fiscal Year 2018 ($M) As Reported $772.6 ASC-606 Impact ($28.9) Clinic (6 months) ($12.7) Fiscal Year 2019 Guidance YoY Growth Post ASC-606, Clinic $731.0 $750-$760 3% - 4% Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Counsyl (11 months) $0.0 $130 NA Overall $731.0 $880-$890 20% - 22%
FY19 Adjusted EPS Guidance Bridge Adjusted EPS growth > 16% Fiscal Year 2018 Adjusted EPS $1.20 Stock Based Compensation $0.26 ASC-606 Impact $0.01 Fiscal Year 2019 Guidance YoY Growth New Adjusted EPS $1.47 $1.70-$1.75 16% - 19% Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Potential Financial Catalysts in FY19 Multiple Opportunities for Material Upside Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Product Current Status Initiative Annualized Financial Impact GeneSight Coverage 6% coverage Commercial payers, Medicare and Medicaid coverage Coverage for current contracted payers = $67M in rev. and $0.67 in EPS GeneSight LCD Medicare limited to psychiatrists Revised LCD to include primary care physicians 7% increase in RAM = $350M potential Prolaris Coverage 55% coverage Commercial payers Medicaid +10% increase in RAM = $6M in rev. and $0.06 in EPS Vectra DA Coverage 40% coverage Commercial payers Medicaid +10% increase in RAM = $7M in rev. and $0.07 in EPS myPath Melanoma Coverage 1% coverage Medicare coverage, additional commercial coverage, sales expansion Medicare coverage = $3M in rev. and $0.03 in EPS Hereditary Cancer New indications for 120k patients per year Expanded indications, riskScore, Met BC 1% incremental YoY volume growth = $5M in rev. and $0.05 in EPS ForeSight Coverage Limited ECS coverage Commercial payer coverage for ECS Medicare price for CPT Code 81412 = $2,449 Prelude Coverage Average Risk 50% Medicaid 50% Commercial payer and Medicaid coverage for average risk 10% increase in Average Risk coverage = $3M in rev. and $0.03 in EPS Reproductive Health Tests 9,000 Myriad OBGYNs no calls Train Myriad sales force 1 sample/month/MD = $50M in rev. and $0.50 in EPS
1Q19 Financial Guidance Metric First Quarter Fiscal Year 2019 Revenue $200 to $202 million GAAP Diluted EPS ($0.08) to ($0.06) Adjusted EPS $0.28 to $0.30 Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Hereditary Cancer Upsides in Fiscal Year 2019 Several Significant Contributors to Growth Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Companion Diagnostics Expanded Guidelines riskScore Continued launch of BRACAnalysis CDx in metBC in U.S. and Japan BRACAnalysis CDx in first-line ovarian cancer based upon SOLO-1 olaparib data Submission of BRACAnalysis CDx in metBC with talazoparib Indication Mkt. Expansion Prostate Cancer +40,000 Pancreatic Cancer +40,000 Colon Cancer +41,000 Added validation studies New ethnic groups Additional clinical data
Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. IMPACT Study Published Primary Care Physicians Have Even Better Outcomes Than Psychiatrists Clinical Outcome Primary Care Physicians Psychiatrists % Difference p-value GUIDED Study Results (Genesight Arm) Symptom Improvement 31.7% 24.9% 27% <0.01 27.2% Response Rates 30.1% 22.3% 35% <0.01 26.0% Remission Rates 19.5% 12.0% 63% <0.01 15.3% Prospective unblinded study All 1,871 patients received GeneSight
Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Self-Insured Employers Another Avenue to Coverage Comprise 50 Percent of Commercial Lives in the United States 50% ≈30,000 employees ≈450,000 employees Other Self-Insured Employer
Tripling Number of Physician Targets Guidance Assumes No Contribution From 9,000 Myriad Physicians Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. 16,000 Women’s Health Call Points 37,000 OBGYNs in Clinical Practice 9,000 Unique Ordering Physicians 3,500 Unique Ordering Physicians 1,500 Overlap Physicians 23,000 OBGYNs Not Targeted
Significant Expansion in Prolaris Reimbursement 8 Commercial Payers Now Cover the Test Totaling 20 Million Lives 225 Sales Reps 80 Sales Reps Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Commercial Insurers 20 million commercial lives under coverage Medicare Low & Favorable Intermediate
Worldwide Leader in Personalized Medicine We are entering the golden age for personalized medicine Molecular diagnostics are the keystone for improving patient outcomes while eliminating waste in healthcare spending Myriad is the pioneer of “research-based” and “education-centric” business model for molecular diagnostics We are the best positioned company to lead this revolution in healthcare Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.