mygn-10q_20190331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission file number:  0-26642

 

MYRIAD GENETICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

87-0494517

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

320 Wakara Way, Salt Lake City, UT

84108

(Address of principal executive offices)

(Zip Code)

 

Registrant's telephone number, including area code: (801) 584-3600

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “accelerated filer,” “large accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  Check one:

Large accelerated filer

Accelerated filer                        

 

 

Non-accelerated filer

Smaller reporting company          

 

 

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. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Public Common Stock, $0.01 par value

 

MYGN

 

Nasdaq Global Select Market

As of May 1, 2019, the registrant had 73,373,443 shares of $0.01 par value common stock outstanding.

 

 


MYRIAD GENETICS, INC.

INDEX TO FORM 10-Q

 

 

 

Page

 

PART I - Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2019 and June 30, 2018

3

 

 

 

 

Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended March 31, 2019 and 2018

4

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended March 31, 2019 and 2018

5

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the nine months ended March 31, 2019 and 2018

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended March 31, 2019 and 2018

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

25

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

 

 

 

Item 4.

Controls and Procedures

32

 

 

 

 

PART II - Other Information

 

 

 

 

Item 1.

Legal Proceedings

33

 

 

 

Item 1A.

Risk Factors

34

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

 

 

 

Item 3.

Defaults Upon Senior Securities

34

 

 

 

Item 4.

Mine Safety Disclosures

34

 

 

 

Item 5.

Other Information

34

 

 

 

Item 6.

Exhibits

34

 

 

 

Signatures

35

 

2


MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(In millions)

 

 

 

March 31,

 

 

June 30,

 

ASSETS

 

2019

 

 

2018(a)

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

84.9

 

 

$

110.9

 

Marketable investment securities

 

 

64.8

 

 

 

69.7

 

Prepaid expenses

 

 

11.3

 

 

 

9.4

 

Inventory

 

 

31.9

 

 

 

34.3

 

Trade accounts receivable

 

 

142.6

 

 

 

99.5

 

Prepaid taxes

 

 

3.0

 

 

 

 

Other receivables

 

 

4.4

 

 

 

3.8

 

Total current assets

 

 

342.9

 

 

 

327.6

 

Property, plant and equipment, net

 

 

58.7

 

 

 

43.2

 

Long-term marketable investment securities

 

 

40.3

 

 

 

30.7

 

Intangibles, net

 

 

699.5

 

 

 

455.2

 

Goodwill

 

 

415.9

 

 

 

318.6

 

Total assets

 

$

1,557.3

 

 

$

1,175.3

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

24.1

 

 

$

26.0

 

Accrued liabilities

 

 

78.8

 

 

 

68.3

 

Short-term contingent consideration

 

 

3.7

 

 

 

5.3

 

Deferred revenue

 

 

2.3

 

 

 

2.6

 

Total current liabilities

 

 

108.9

 

 

 

102.2

 

Unrecognized tax benefits

 

 

19.9

 

 

 

24.9

 

Other long-term liabilities

 

 

7.3

 

 

 

6.3

 

Contingent consideration

 

 

10.3

 

 

 

9.2

 

Long-term debt

 

 

263.4

 

 

 

9.3

 

Long-term deferred taxes

 

 

65.8

 

 

 

57.3

 

Total liabilities

 

 

475.6

 

 

 

209.2

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, 73.4 and 70.6 shares outstanding at March 31, 2019 and

   June 30, 2018 respectively

 

 

0.7

 

 

 

0.7

 

Additional paid-in capital

 

 

1,057.0

 

 

 

915.4

 

Accumulated other comprehensive loss

 

 

(5.7

)

 

 

(4.1

)

Retained earnings

 

 

29.8

 

 

 

54.1

 

Total Myriad Genetics, Inc. stockholders’ equity

 

 

1,081.8

 

 

 

966.1

 

Non-Controlling Interest

 

 

(0.1

)

 

 

 

Total stockholders' equity

 

 

1,081.7

 

 

 

966.1

 

Total liabilities and stockholders’ equity

 

$

1,557.3

 

 

$

1,175.3

 

 

See accompanying notes to condensed consolidated financial statements.

(a)

Amounts adjusted due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

3


MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2019

 

 

2018(a)

 

 

2019

 

 

2018(a)

 

Molecular diagnostic testing

 

$

200.5

 

 

$

169.3

 

 

$

592.5

 

 

$

509.7

 

Pharmaceutical and clinical services

 

 

16.1

 

 

 

13.8

 

 

 

43.2

 

 

 

40.1

 

Total revenue

 

 

216.6

 

 

 

183.1

 

 

 

635.7

 

 

 

549.8

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of molecular diagnostic testing

 

 

40.3

 

 

 

36.8

 

 

 

126.6

 

 

 

110.7

 

Cost of pharmaceutical and clinical services

 

 

8.3

 

 

 

7.3

 

 

 

23.8

 

 

 

20.7

 

Research and development expense

 

 

21.5

 

 

 

18.5

 

 

 

65.0

 

 

 

53.1

 

Change in the fair value of contingent consideration

 

 

 

 

 

(1.2

)

 

 

1.4

 

 

 

(61.3

)

Selling, general, and administrative expense

 

 

140.6

 

 

 

107.9

 

 

 

405.7

 

 

 

322.3

 

Total costs and expenses

 

 

210.7

 

 

 

169.3

 

 

 

622.5

 

 

 

445.5

 

Operating income

 

 

5.9

 

 

 

13.8

 

 

 

13.2

 

 

 

104.3

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

0.7

 

 

 

0.5

 

 

 

2.3

 

 

 

1.2

 

Interest expense

 

 

(3.2

)

 

 

(0.5

)

 

 

(8.8

)

 

 

(2.2

)

Other

 

 

(0.1

)

 

 

(0.5

)

 

 

1.0

 

 

 

(1.3

)

Total other expense:

 

 

(2.6

)

 

 

(0.5

)

 

 

(5.5

)

 

 

(2.3

)

Income before income tax

 

 

3.3

 

 

 

13.3

 

 

 

7.7

 

 

 

102.0

 

Income tax provision

 

 

(3.6

)

 

 

4.3

 

 

 

(1.0

)

 

 

(16.7

)

Net income

 

$

6.9

 

 

$

9.0

 

 

$

8.7

 

 

$

118.7

 

Net loss attributable to non-controlling interest

 

 

 

 

 

(0.1

)

 

 

(0.1

)

 

 

(0.2

)

Net income attributable to Myriad Genetics, Inc. stockholders

 

$

6.9

 

 

$

9.1

 

 

$

8.8

 

 

$

118.9

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

 

$

0.13

 

 

$

0.12

 

 

$

1.72

 

Diluted

 

$

0.09

 

 

$

0.13

 

 

$

0.12

 

 

$

1.66

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

73.3

 

 

 

69.8

 

 

 

73.5

 

 

 

69.2

 

Diluted

 

 

74.9

 

 

 

72.4

 

 

 

76.4

 

 

 

71.7

 

 

See accompanying notes to condensed consolidated financial statements.

(a)

Amounts adjusted due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

 

4


MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2019

 

 

2018(a)

 

 

2019

 

 

2018(a)

 

Net income attributable to Myriad Genetics, Inc. stockholders

 

$

6.9

 

 

$

9.1

 

 

$

8.8

 

 

$

118.9

 

Unrealized gain (loss) on available-for-sale securities, net of tax

 

 

0.3

 

 

 

(0.2

)

 

$

0.7

 

 

$

(0.5

)

Change in foreign currency translation adjustment, net of tax

 

 

(1.0

)

 

 

4.4

 

 

$

(2.3

)

 

 

7.8

 

Comprehensive income

 

 

6.2

 

 

 

13.3

 

 

 

7.2

 

 

 

126.2

 

Comprehensive income attributable to non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to Myriad Genetics, Inc.

   shareholders

 

$

6.2

 

 

$

13.3

 

 

$

7.2

 

 

$

126.2

 

 

See accompanying notes to condensed consolidated financial statements.

(a)

Amounts adjusted due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

 

 

 

 

5


MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In millions)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Retained

 

 

Myriad

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

earnings

 

 

Genetics, Inc.

 

 

Non-

 

 

Total

 

 

 

 

Common

 

 

paid-in

 

 

comprehensive

 

 

(accumulated

 

 

Stockholders’

 

 

Controlling

 

 

Stockholders’

 

 

 

 

stock

 

 

capital

 

 

loss (a)

 

 

deficit) (a)

 

 

equity (a)

 

 

Interest

 

 

equity (a)

 

 

BALANCES AT JUNE 30, 2018

 

$

0.7

 

 

$

915.4

 

 

$

(4.1

)

 

$

54.1

 

 

$

966.1

 

 

$

 

 

$

966.1

 

 

Issuance of common stock under share-based compensation plans

 

 

 

 

 

1.9

 

 

 

 

 

 

 

 

 

1.9

 

 

 

 

 

 

1.9

 

 

Issuance of common stock for acquisition

 

 

 

 

 

127.4

 

 

 

 

 

 

 

 

 

127.4

 

 

 

 

 

 

127.4

 

 

Share-based payment expense

 

 

 

 

 

7.7

 

 

 

 

 

 

 

 

 

7.7

 

 

 

 

 

 

7.7

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(0.7

)

 

 

(0.7

)

 

 

 

 

 

(0.7

)

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

(0.2

)

 

 

 

 

 

(0.2

)

 

BALANCES AT SEPTEMBER 30, 2018

 

$

0.7

 

 

$

1,052.4

 

 

$

(4.3

)

 

$

53.4

 

 

$

1,102.2

 

 

$

-

 

 

$

1,102.2

 

 

Issuance of common stock under share-based compensation plans

 

 

 

 

 

2.6

 

 

 

 

 

 

 

 

 

2.6

 

 

 

 

 

 

2.6

 

 

Share-based payment expense

 

 

 

 

 

7.5

 

 

 

 

 

 

 

 

 

7.5

 

 

 

 

 

 

7.5

 

 

Repurchase and retirement of common stock

 

 

 

 

 

(16.9

)

 

 

 

 

 

(33.1

)

 

 

(50.0

)

 

 

 

 

 

(50.0

)

 

Non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

(0.1

)

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2.6

 

 

 

2.6

 

 

 

 

 

 

2.6

 

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

(0.7

)

 

 

 

 

 

(0.7

)

 

 

 

 

 

(0.7

)

 

BALANCES AT DECEMBER 31, 2018

 

$

0.7

 

 

$

1,045.6

 

 

$

(5.0

)

 

$

22.9

 

 

$

1,064.2

 

 

$

(0.1

)

 

$

1,064.1

 

 

Issuance of common stock under share-based compensation plans

 

 

 

 

 

1.9

 

 

 

 

 

 

 

 

 

1.9

 

 

 

 

 

 

1.9

 

 

Share-based payment expense

 

 

 

 

 

9.5

 

 

 

 

 

 

 

 

 

9.5

 

 

 

 

 

 

9.5

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

6.9

 

 

 

6.9

 

 

 

 

 

 

6.9

 

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

(0.7

)

 

 

 

 

 

(0.7

)

 

 

 

 

 

(0.7

)

 

BALANCES AT MARCH 31, 2019

 

$

0.7

 

 

$

1,057.0

 

 

$

(5.7

)

 

$

29.8

 

 

$

1,081.8

 

 

$

(0.1

)

 

$

1,081.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

(a)

Amounts adjusted due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6


MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - Continued

(In millions)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Retained

 

 

Myriad

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

earnings

 

 

Genetics, Inc.

 

 

Non-

 

 

Total

 

 

 

 

Common

 

 

paid-in

 

 

comprehensive

 

 

(accumulated

 

 

Stockholders’

 

 

Controlling

 

 

Stockholders’

 

 

 

 

stock

 

 

capital

 

 

loss (a)

 

 

deficit) (a)

 

 

equity (a)

 

 

Interest

 

 

equity (a)

 

 

BALANCES AT JUNE 30, 2017

 

$

0.7

 

 

$

851.4

 

 

$

(5.5

)

 

$

(78.2

)

 

$

768.4

 

 

$

(0.4

)

 

$

768.0

 

 

Issuance of common stock under share-based compensation plans

 

 

 

 

 

1.7

 

 

 

 

 

 

 

 

 

1.7

 

 

 

 

 

 

1.7

 

 

Non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

 

Share-based payment expense

 

 

 

 

 

6.4

 

 

 

 

 

 

 

 

 

6.4

 

 

 

 

 

 

6.4

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

78.9

 

 

 

78.9

 

 

 

 

 

 

78.9

 

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

3.3

 

 

 

 

 

 

3.3

 

 

 

 

 

 

3.3

 

 

BALANCES AT SEPTEMBER 30, 2017

 

$

0.7

 

 

$

859.5

 

 

$

(2.2

)

 

$

0.7

 

 

$

858.7

 

 

$

(0.3

)

 

$

858.4

 

 

Issuance of common stock under share-based compensation plans

 

 

 

 

 

4.6

 

 

 

 

 

 

 

 

 

4.6

 

 

 

 

 

 

4.6

 

 

Share-based payment expense

 

 

 

 

 

6.9

 

 

 

 

 

 

 

 

 

6.9

 

 

 

 

 

 

6.9

 

 

Non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.3

 

 

 

0.3

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

30.9

 

 

 

30.9

 

 

 

 

 

 

30.9

 

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

(0.2

)

 

 

 

 

 

(0.2

)

 

BALANCES AT DECEMBER 31, 2017

 

$

0.7

 

 

$

871.0

 

 

$

(2.4

)

 

$

31.6

 

 

$

900.9

 

 

$

 

 

$

900.9

 

 

Issuance of common stock under share-based compensation plans

 

 

 

 

 

11.9

 

 

 

 

 

 

 

 

 

11.9

 

 

 

 

 

 

11.9

 

 

Share-based payment expense

 

 

 

 

 

6.6

 

 

 

 

 

 

 

 

 

6.6

 

 

 

 

 

 

6.6

 

 

Non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

9.1

 

 

 

9.1

 

 

 

 

 

 

9.1

 

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

4.2

 

 

 

 

 

 

4.2

 

 

 

 

 

 

4.2

 

 

BALANCES AT MARCH 31, 2018

 

$

0.7

 

 

$

889.5

 

 

$

1.8

 

 

$

40.7

 

 

$

932.7

 

 

$

0.1

 

 

$

932.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

(a)

Amounts adjusted due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

 

 

7


MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

 

 

 

Nine months ended

 

 

 

March 31,

 

 

 

2019

 

 

2018(a)

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net Income attributable to Myriad Genetics, Inc. stockholders

 

$

8.8

 

 

 

118.9

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

54.6

 

 

 

39.3

 

Non-cash interest expense

 

 

0.3