mygn-8k_20190813.htm

 

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 13, 2019

 

MYRIAD GENETICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

0-26642

 

87-0494517

(State or other jurisdiction of

incorporation)

 

(Commission

File Number)

 

(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):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

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. 

 

Page 2


ITEM 2.02

Results of Operations and Financial Condition.

On August 13, 2019, Myriad Genetics, Inc. (“Myriad”) announced its financial results for the three and twelve months ended June 30, 2019.  The earnings release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

ITEM 7.01

Regulation FD Disclosure.

On its earnings conference call for the three and twelve months ended June 30, 2019, 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 3


ITEM 9.01

Financial Statements and Exhibits.

(d)

 

Exhibit

Number

 

Description

 

 

 

99.1

 

Earnings release dated August 13, 2019 for the three and twelve months ended June 30, 2019.

 

 

 

99.2

 

Earnings call slide presentation dated August 13, 2019 for the three and twelve months ended June 30, 2019.

 

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 4


SIGNATURES

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.

 

 

MYRIAD GENETICS, INC.

 

 

 

 

Date:  August 13, 2019

By:

 

/s/ R. Bryan Riggsbee

 

 

 

R. Bryan Riggsbee

 

 

 

Executive Vice President, Chief Financial Officer

 

Page 5

mygn-ex991_45.htm

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 2019 Financial Results

 

Total Fourth-Quarter Revenues of $215.4 Million

Fourth-Quarter Diluted EPS of ($0.06) and Adjusted EPS of $0.41

 

SALT LAKE CITY, Aug. 13, 2019 – Myriad Genetics, Inc. (NASDAQ: MYGN, “Myriad” or the “Company”), a global leader in molecular diagnostics and precision medicine, today announced financial results for its fiscal fourth-quarter and full-year 2019, provided an update on recent business highlights and provided fiscal year and first-quarter 2020 financial guidance.

"Fiscal year 2019 revenue increased 14 percent with earnings up 18 percent.  Unfortunately, revenue in the fourth quarter was two percent below expectations largely due to lower reimbursement for our expanded carrier screening test,” said Mark C. Capone, president and CEO, Myriad Genetics. “Looking ahead to fiscal year 2020, with stabilized pricing, growing new product volumes and recent reimbursement advances with GeneSight®, we are highly optimistic about our ability to deliver an inflection in revenue and earnings as we transition through the fiscal year.”  

 

 

 

 

 

 

 


2

 

Financial Highlights

The following table summarizes the financial results for the fiscal fourth-quarter and full year 2019:

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Fourth-Quarter

 

 

 

 

 

 

 

Fiscal Year

 

 

 

 

 

($ in millions)

 

2019

 

 

2018

 

 

% Change

 

 

 

2019

 

 

2018

 

 

% Change

 

Molecular diagnostic testing revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hereditary Cancer

$

 

119.0

 

 

 

119.1

 

 

(0%)

 

 

$

 

479.7

 

 

 

471.4

 

 

2%

 

GeneSight®

 

 

29.8

 

 

 

34.0

 

 

(12%)

 

 

 

 

112.6

 

 

 

124.9

 

 

(10%)

 

Prenatal

 

 

25.0

 

 

 

 

 

NM

 

 

 

 

104.9

 

 

 

 

 

NM

 

Vectra®

 

 

12.2

 

 

 

15.1

 

 

(19%)

 

 

 

 

48.3

 

 

 

55.2

 

 

(13%)

 

Prolaris®

 

 

6.3

 

 

 

7.0

 

 

(10%)

 

 

 

 

25.5

 

 

 

21.5

 

 

19%

 

EndoPredict®

 

 

3.0

 

 

 

2.7

 

 

11%

 

 

 

 

10.4

 

 

 

8.8

 

 

18%

 

Other testing revenue

 

 

1.6

 

 

 

2.7

 

 

(41%)

 

 

 

 

8.0

 

 

 

8.6

 

 

(7%)

 

Total molecular diagnostic testing revenue

 

 

196.9

 

 

 

180.6

 

 

9%

 

 

 

 

789.4

 

 

 

690.4

 

 

14%

 

Pharmaceutical and clinical service revenue

 

 

18.5

 

 

 

13.3

 

 

39%

 

 

 

 

61.7

 

 

53.3

 

 

16%

 

Total Revenue

$

 

215.4

 

$

 

193.9

 

 

11%

 

 

$

 

851.1

 

$

 

743.7

 

 

14%

 

 

Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Fourth-Quarter

 

 

 

 

 

 

 

Fiscal Year

 

 

 

 

 

($ in millions)

 

2019

 

 

2018

 

 

% Change

 

 

 

2019

 

 

2018

 

 

% Change

 

Total Revenue

$

 

215.4

 

 

 

193.9

 

 

11%

 

 

$

 

851.1

 

$

743.7

 

 

14%

 

Gross Profit

 

 

164.8

 

 

 

148.2

 

 

11%

 

 

 

 

650.1

 

 

 

566.5

 

 

15%

 

Gross Margin

 

 

76.5

%

 

 

76.4

%

 

 

 

 

 

 

 

76.4

%

 

 

76.2

%

 

 

 

 

Operating Expenses

 

 

170.4

 

 

 

130.4

 

 

31%

 

 

 

 

642.5

 

 

 

444.6

 

 

45%

 

Operating Income

 

 

(5.6

)

 

 

17.8

 

 

NM

 

 

 

 

7.6

 

 

121.9

 

 

(94%)

 

Operating Margin

 

 

(2.6

%)

 

 

9.2

%

 

 

 

 

 

 

 

0.9

%

 

 

16.4

%

 

 

 

 

Adjusted Operating Income

 

 

33.2

 

 

 

41.5

 

 

(20%)

 

 

 

 

145.2

 

 

 

138.2

 

 

5%

 

Adjusted Operating Margin

 

 

15.4

%

 

 

21.4

%

 

 

 

 

 

 

 

17.1

%

 

 

18.6

%

 

 

 

 

Net Income

 

 

(4.2

)

 

 

14.5

 

 

NM

 

 

 

 

4.6

 

 

 

133.3

 

 

(97%)

 

Diluted EPS

$

 

(0.06

)

$

 

0.20

 

 

NM

 

 

$

 

0.06

 

$

 

1.85

 

 

(97%)

 

Adjusted EPS

$

 

0.41

 

$

 

0.43

 

 

(5%)

 

 

$

 

1.67

 

$

 

1.42

 

 

18%

 

 

 

Recent Business Highlights

 

Hereditary Cancer

 

o

Hereditary cancer revenue returned to year-over-year growth in fiscal year 2019 representing the first time hereditary cancer revenue has grown in the last five fiscal years.

 

o

Presented data at the American Society of Clinical Oncology annual meeting from the Women’s Health Initiative study that evaluated mutation rates in 2,195 post-menopausal women with breast cancer. The study found that women with post-menopausal breast cancer had a high rate of inherited mutations in a range of cancer causing genes and this mutation rate did not diminish with age.  This along with other studies have shown that

 


3

 

 

current hereditary breast cancer testing guidelines miss approximately 50 percent of mutation carriers.

GeneSight®

 

o

Announced coverage decision from UnitedHealth, the largest commercial payer in the United States, covering GeneSight for patients that have a diagnosis of major depressive disorder or anxiety and have failed at least one prior medication.

 

o

Announced coverage decision for GeneSight by Kroger® Prescription Plans. As part of the agreement, Kroger initiated an early access program at 500 Kroger pharmacies where GeneSight testing will be facilitated by the Kroger Health pharmacist.

 

o

Presented data at the Clinical Pharmacogenomics Implementation Consortium annual meeting showing GeneSight had more than double the predictive power for drug blood levels compared to single gene pharmacogenomics tests.

 

o

Completed a Medicare Coverage Advisory Committee meeting reviewing potential expansion of the GeneSight LCD to primary care physicians. During the meeting, Medicare’s selected subject matter experts unanimously agreed that pharmacogenomics testing should be available to primary care physicians.

Prolaris®

 

o

Published data from a large study of 1,062 men with newly diagnosed localized prostate cancer to evaluate the ability of the Prolaris test to predict risk of metastases. The study found that Prolaris was the strongest independent predictor of progression to metastatic disease, and men were approximately three times more likely to develop metastatic disease with each unit increase in the Prolaris test score (HR: 2.93; p=1.8x10-11).

 

 

EndoPredict®

 

o

Published data in the journal Clinical Cancer Research demonstrating that the EndoPredict test identifies women with early-stage breast cancer who can safely forgo extended endocrine therapy five years after diagnosis. 

 

o

Published the results of the first comprehensive cost-effectiveness analysis of the EndoPredict test compared to other breast cancer assays. The study found that the EndoPredict test was more than twice as cost effective as Oncotype® DX.

Companion Diagnostics

 

o

Announced that the BRACAnalysis CDx® companion diagnostic test effectively identified patients with metastatic pancreatic cancer who benefitted from treatment with Lynparza®

 


4

 

 

(olaparib) in the Phase III POLO study. Patients in the study with a germline mutation had a clinically-meaningful and statistically-significant improvement in progression-free survival (PFS) of 7.4 months when treated with Lynparza compared to 3.8 months for placebo (HR 0.53; p=0.004).

 

o

Received approval from the Japanese Ministry of Health, Labour, and Welfare for Myriad’s BRACAnalysis® Diagnostic System as a companion for Lynparza in women with ovarian cancer.

 

o

Announced that BRACAnalysis CDx effectively identified patients with castrate resistant, metastatic prostate cancer who benefitted from treatment with Lynparza in the PROfound study. Results from the study showed a statistically-significant and clinically-meaningful improvement in radiographic progression-free survival in patients who received Lynparza vs. enzalutamide or abiraterone and had deleterious mutations in the BRCA1/2 genes.

myPath® Melanoma

 

o

Received a positive final local coverage decision from Noridian Healthcare Solutions for myPath Melanoma.

German Clinic Sale

 

o

Announced planned sale of the Privatklinik Dr. Robert Schindlbeck GmbH & Co. KG (the “Clinic”), which is expected to occur around the middle of fiscal year 2020.

 

 

Fiscal Year 2020 and Fiscal First-Quarter 2020 Financial Guidance

Below is a table summarizing Myriad’s fiscal year 2020 and fiscal first-quarter 2020 financial guidance:

 

Revenue

 

GAAP Diluted Earnings Per Share

 

Adjusted Earnings Per Share

Fiscal Year 2020

$865-875 million

 

$0.55-$0.65

 

$1.80-$1.90

Fiscal First-Quarter 2020

$200-$202 million

 

($0.02)-$0.00

 

$0.30-$0.32

 

Myriad’s fiscal year 2020 and first-quarter 2020 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 2020 financial guidance.

 


5

 

 

Conference Call and Webcast

A conference call will be held today, Tuesday, August 13, 2019, 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 1-800-763-5615.  International callers may dial 1-212-231-2936.  All callers will be asked to reference reservation number 21927089.  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 precision 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 decisions across six major medical specialties where molecular diagnostics can significantly improve patient care and lower healthcare costs.  Myriad is focused on five critical success factors:  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 Prequel 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.

 

 

 

 

 

 

 

 


6

 

MYRIAD GENETICS, INC. AND SUBSIDIARIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENTS (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Twelve months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Molecular diagnostic testing

 

$

196.9

 

 

$

180.6

 

 

$

789.4

 

 

$

690.4

 

Pharmaceutical and clinical services

 

 

18.5

 

 

 

13.3

 

 

 

61.7

 

 

 

53.3

 

Total revenue

 

 

215.4

 

 

 

193.9

 

 

 

851.1

 

 

 

743.7

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of molecular diagnostic testing

 

 

41.6

 

 

 

38.0

 

 

 

168.2

 

 

 

148.7

 

Cost of pharmaceutical and clinical services

 

 

9.0

 

 

 

7.7

 

 

 

32.8

 

 

 

28.5

 

Research and development expense

 

 

20.9

 

 

 

17.7

 

 

 

85.9

 

 

 

70.8

 

Change in the fair value of contingent consideration

 

 

(0.3

)

 

 

0.2

 

 

 

1.1

 

 

 

(61.2

)

Selling, general, and administrative expense

 

 

149.8

 

 

 

112.5

 

 

 

555.5

 

 

 

435.0

 

Total costs and expenses

 

 

221.0

 

 

 

176.1

 

 

 

843.5

 

 

 

621.8

 

Operating income

 

 

(5.6

)

 

 

17.8

 

 

 

7.6

 

 

 

121.9

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

0.9

 

 

 

0.5

 

 

 

3.2

 

 

 

1.8

 

Interest expense

 

 

(3.2

)

 

 

(1.1

)

 

 

(12.0

)

 

 

(3.2

)

Other

 

 

0.2

 

 

 

0.8

 

 

 

1.2

 

 

 

(0.4

)

Total other expense:

 

 

(2.1

)

 

 

0.2

 

 

 

(7.6

)

 

 

(1.8

)

Income before income tax

 

 

(7.7

)

 

 

18.0

 

 

 

 

 

 

120.1

 

Income tax provision

 

 

(3.4

)

 

 

3.5

 

 

 

(4.4

)

 

 

(13.0

)

Net income

 

$

(4.3

)

 

$

14.5

 

 

$

4.4

 

 

$

133.1

 

Net loss attributable to non-controlling interest

 

 

(0.1

)

 

 

 

 

 

(0.2

)

 

 

(0.2

)

Net income attributable to Myriad Genetics, Inc. stockholders

 

$

(4.2

)

 

$

14.5

 

 

$

4.6

 

 

$

133.3

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.06

)

 

$

0.21

 

 

$

0.06

 

 

$

1.92

 

Diluted

 

$

(0.06

)

 

$

0.20

 

 

$

0.06

 

 

$

1.85

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

73.4

 

 

 

70.1

 

 

 

73.5

 

 

 

69.4

 

Diluted

 

 

74.8

 

 

 

72.9

 

 

 

76.0

 

 

 

72.0

 

 

 

 

 

 

 

 

 

 

 

 

 


7

 

Consolidated Balance Sheets (Unaudited)

 

(in millions)

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

June 30,

 

ASSETS

 

2019

 

 

2018

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

93.2

 

 

$

110.9

 

Marketable investment securities

 

 

43.7

 

 

 

69.7

 

Prepaid expenses

 

 

16.6

 

 

 

9.4

 

Inventory

 

 

31.4

 

 

 

34.3

 

Trade accounts receivable

 

 

133.9

 

 

 

99.5

 

Prepaid taxes

 

 

25.1

 

 

 

 

Other receivables

 

 

4.7

 

 

 

3.8

 

Total current assets

 

 

348.6

 

 

 

327.6

 

Property, plant and equipment, net

 

 

57.3

 

 

 

43.2

 

Long-term marketable investment securities

 

 

54.9

 

 

 

30.7

 

Intangibles, net

 

 

684.7

 

 

 

455.2

 

Goodwill

 

 

417.2

 

 

 

318.6

 

Total assets

 

$

1,562.7

 

 

$

1,175.3

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

33.3

 

 

$

26.0

 

Accrued liabilities

 

 

78.9

 

 

 

68.3

 

Short-term contingent consideration

 

 

3.4

 

 

 

5.3

 

Deferred revenue

 

 

2.2

 

 

 

2.6

 

Total current liabilities

 

 

117.8

 

 

 

102.2

 

Unrecognized tax benefits

 

 

21.7

 

 

 

24.9

 

Other long-term liabilities

 

 

7.8

 

 

 

6.3

 

Contingent consideration

 

 

10.4

 

 

 

9.2

 

Long-term debt

 

 

233.5

 

 

 

9.3

 

Long-term deferred taxes

 

 

82.6

 

 

 

57.3

 

Total liabilities

 

 

473.8

 

 

 

209.2

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, 73.5 and 70.6 shares outstanding at

   June 30, 2019 and 2018 respectively

 

 

0.7

 

 

 

0.7

 

Additional paid-in capital

 

 

1,068.0

 

 

 

915.4

 

Accumulated other comprehensive loss

 

 

(5.4

)

 

 

(4.1

)

Retained earnings

 

 

25.6

 

 

 

54.1

 

Total Myriad Genetics, Inc. stockholders’ equity

 

 

1,088.9

 

 

 

966.1

 

Non-Controlling Interest

 

 

 

 

 

 

Total stockholders' equity

 

 

1,088.9

 

 

 

966.1

 

Total liabilities and stockholders’ equity

 

$

1,562.7

 

 

$

1,175.3

 

 

 

 

 

 

 

 


8

 

Consolidated Statement of Cash Flows (Unaudited)

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve months ended

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net Income attributable to Myriad Genetics, Inc. stockholders

 

$

4.6

 

 

 

133.3

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

73.0

 

 

 

54.4

 

Non-cash interest expense

 

 

0.4

 

 

 

0.2

 

Gain on disposition of assets

 

 

(0.9

)

 

 

(0.2

)

Share-based compensation expense

 

 

33.5

 

 

 

27.1

 

Deferred income taxes

 

 

18.6

 

 

 

(23.5

)

Unrecognized tax benefits

 

 

(5.5

)

 

 

(0.3

)

Change in fair value of contingent consideration

 

 

(1.4

)

 

 

(60.9

)

Payment of contingent consideration

 

 

(1.5

)

 

 

(22.7

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(3.2

)

 

 

3.3

 

Trade accounts receivable

 

 

(18.2

)

 

 

(9.1

)

Other receivables

 

 

(0.7

)

 

 

1.1

 

Inventory

 

 

8.0

 

 

 

7.9

 

Prepaid taxes

 

 

(25.1

)

 

 

 

Accounts payable

 

 

1.1

 

 

 

4.0

 

Accrued liabilities

 

 

1.5

 

 

 

1.4

 

Deferred revenue

 

 

(0.5

)

 

 

(0.1

)

Net cash provided by operating activities

 

 

83.7

 

 

 

115.9

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8.6

)

 

 

(8.4

)

Acquisitions, net of cash acquired

 

 

(278.5

)

 

 

 

Purchases of marketable investment securities

 

 

(78.5

)

 

 

(80.9

)

Proceeds from maturities and sales of marketable investment securities

 

 

79.2

 

 

 

77.7

 

Net cash used in investing activities

 

 

(286.4

)

 

 

(11.6

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Net proceeds from common stock issued under share-based compensation plans

 

 

8.7

 

 

 

36.9

 

Net proceeds from revolving credit facility

 

 

340.0

 

 

 

53.0

 

Repayment of revolving credit facility

 

 

(115.0

)

 

 

(143.0

)

Fees associated with refinancing of revolving credit facility

 

 

(1.4

)

 

 

 

Payment of contingent consideration recorded in purchase accounting

 

 

 

 

 

(42.4

)

Repurchase and retirement of common stock

 

 

(50.0

)

 

 

 

Proceeds from non-controlling interest

 

 

 

 

 

0.5

 

Net cash provided by (used in) financing activities

 

 

182.3

 

 

 

(95.0

)

Effect of foreign exchange rates on cash and cash equivalents

 

 

2.7

 

 

 

(0.8

)

Net increase (decrease) in cash and cash equivalents

 

 

(17.7

)

 

 

8.5

 

Cash and cash equivalents at beginning of the period

 

 

110.9

 

 

 

102.4

 

Cash and cash equivalents at end of the period

 

$

93.2

 

 

$

110.9

 

 

 

 

 

 


9

 

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 deliver an inflection in revenue and earnings as it transitions through fiscal year 2020; the potential expansion of the GeneSight LCD to primary care physicians; the planned sale of the German Clinic and the expectation that the sale will occur around the middle of fiscal year 2020; the Company’s fiscal year 2020 and fiscal first-quarter 2020 financial guidance for revenue, GAAP diluted earnings per share, and adjusted earnings per share under the caption “Fiscal Year 2020 and Fiscal First-Quarter 2020 Financial Guidance”; and the Company’s five critical success factors of 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 under the caption “About Myriad Genetics.” These “forward-looking statements” are management’s present 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 successfully 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 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

 


10

 

that it licenses or acquires; 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


11

 

 

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 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

 

Equity compensation – non-cash equity based compensation provided to Myriad employees

 

Deferred Tax impact of non-GAAP adjustments: Changes in effective tax rate based upon ASU 2016-09 and the deferred tax impact of non-deductible acquisition costs

 

Tax reform impact – The impact of tax reform legislation on deferred tax assets

 

Potential future consideration related to acquisitions: Non-cash expenses related to valuation adjustments of earn-out and milestone payments tied to recent acquisitions

 

Settlement of Hereditary Cancer Qui Tam Complaint – Expenses tied to the one-time settlement of the Qui Tam Complaint against Myriad around hereditary cancer billing

 

Non-recurring legal expenses: One-time non-recurring legal settlements

 

Elevate 2020 costs: Expenses tied to Elevate 2020 program

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.  

 

 


12

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for the Three and Twelve months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited data in millions, except per share amount)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

Jun 30, 2019

 

 

Jun 30, 2018

 

 

Jun 30, 2019

 

 

Jun 30, 2018

 

Revenue

 

$

215.4

 

 

$

193.9

 

 

$

851.1

 

 

$

743.7

 

GAAP Cost of molecular diagnostic testing

 

 

41.6

 

 

 

38.0

 

 

 

168.2

 

 

 

148.7

 

GAAP Cost of pharmaceutical and clinical services

 

 

9.0

 

 

 

7.7

 

 

 

32.8

 

 

 

28.5

 

Acquisition - Integration related costs

 

 

 

 

 

 

 

 

(0.2

)

 

 

 

Equity Compensation

 

 

(0.2

)

 

 

(0.1

)

 

 

(0.7

)

 

 

(0.9

)

Elevate 2020 costs

 

 

(0.4

)

 

 

(2.8

)

 

 

(4.2

)

 

 

(3.0

)

Non-GAAP COGS

 

$

50.0

 

 

$

42.8

 

 

$

195.9

 

 

$

173.3

 

Non-GAAP Gross Margin

 

 

76.8

%

 

 

77.9

%

 

 

77.0

%

 

 

76.7

%

GAAP Research and Development

 

$

20.9

 

 

$

17.7

 

 

$

85.9

 

 

$

70.8

 

Acquisition - amortization of intangible assets

 

 

(0.1

)

 

 

(0.1

)

 

 

(0.3

)

 

 

(0.3

)

Acquisition - Integration related costs

 

 

(0.1

)

 

 

 

 

 

(0.8

)

 

 

(0.1

)

Equity compensation

 

 

(1.4

)

 

 

(1.3

)

 

 

(5.6

)

 

 

(4.3

)

Elevate 2020 costs

 

 

 

 

 

(0.7

)

 

 

(2.2

)

 

 

(1.8

)

Non-GAAP R&D

 

$

19.3

 

 

$

15.6

 

 

$

77.0

 

 

$

64.3

 

GAAP Contingent Consideration

 

$

(0.3

)

 

$

0.2

 

 

$

1.1

 

 

$

(61.2

)

Potential future consideration related to acquisitions

 

 

0.3

 

 

 

(0.2

)

 

 

(1.1

)

 

 

61.2

 

Non-GAAP Contingent Consideration

 

$

 

 

$

 

 

$

 

 

$

 

GAAP Selling, General and Administrative

 

$

149.8

 

 

$

112.5

 

 

$

555.5

 

 

$

435.0

 

Acquisition - amortization of intangible assets

 

 

(15.1

)