UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
MYRIAD GENETICS, INC.
(Exact name of registrant as specified in its charter)
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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.) |
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (
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)) |
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered |
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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. ☐
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ITEM 2.02 |
Results of Operations and Financial Condition. |
On November 4, 2019, Myriad Genetics, Inc. (“Myriad”) announced its financial results for the three months ended November 4, 2019. 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 months ended November 4, 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 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 set forth in or implied by forward-looking statements. These risks 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 decisions in Mayo Collab. Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012), Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013), and Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014); risks of new, changing and competitive technologies and regulations in the United States and internationally; the risk that we may be unable to comply with financial operating covenants under our credit or lending agreements; the risk that we will be unable to pay, when due, amounts due under our credit or lending agreements; 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.
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ITEM 9.01 |
Financial Statements and Exhibits. |
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Exhibit Number |
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Description |
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99.1 |
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Earnings release dated November 4, 2019 for the three months ended September 30, 2019. |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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.
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.
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MYRIAD GENETICS, INC. |
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Date: November 4, 2019 |
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 |
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 First-Quarter 2020 Financial Results
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Total First-Quarter Revenues of $186.3 Million |
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Excluding Out-of-Period Adjustments Revenue Would Have Been $197.5 Million |
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First-Quarter Diluted EPS of ($0.28) and Adjusted EPS of $0.08 |
SALT LAKE CITY, Nov.4, 2019 – Myriad Genetics, Inc. (NASDAQ: MYGN, “Myriad” or the “Company”), a global leader in molecular diagnostics and precision medicine, today announced financial results for its fiscal first-quarter 2020, provided an update on recent business highlights and provided revised fiscal year and second-quarter 2020 financial guidance.
"We had a challenging start to fiscal year 2020 as hereditary cancer revenue accrual from small payers was impacted by the deletion of the historical hereditary cancer CPT codes. We had assumed this administrative change would have a minor impact to cash collections, but unfortunately, that has not proven to be the case. While the hereditary cancer business has returned to strong double-digit volume growth, the revenue accrual impact from these changes have led us to lower our financial outlook for the year,” said Mark C. Capone, president and CEO, Myriad Genetics. “Despite this setback, we expect earnings to be significantly higher in the second half of the fiscal year and believe that a number of important upsides will materialize during the fiscal year generating momentum as we transition into fiscal year 2021.”
2
Financial Highlights
The following table summarizes the financial results for the fiscal first-quarter of 2020:
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Revenue |
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Fiscal First-Quarter |
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($ in millions) |
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2020 |
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2019 |
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% Change |
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Molecular diagnostic testing revenue |
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Hereditary Cancer |
$ |
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104.5 |
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116.3 |
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(10%) |
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GeneSight® |
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22.7 |
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29.3 |
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(22%) |
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Prenatal |
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23.5 |
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18.1 |
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30% |
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Vectra® |
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11.0 |
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13.0 |
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(15%) |
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Prolaris® |
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6.5 |
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6.2 |
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5% |
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EndoPredict® |
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2.3 |
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2.4 |
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(4%) |
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Other testing revenue |
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1.5 |
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3.7 |
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(60%) |
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Total molecular diagnostic testing revenue |
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172.0 |
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189.0 |
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(9%) |
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Pharmaceutical and clinical service revenue |
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14.3 |
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13.3 |
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8% |
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Total Revenue |
$ |
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186.3 |
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$ |
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202.3 |
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(8%) |
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Income Statement |
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Fiscal First-Quarter |
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($ in millions) |
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2020 |
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2019 |
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% Change |
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Total Revenue |
$ |
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186.3 |
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202.3 |
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(8%) |
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Gross Profit |
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136.6 |
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152.6 |
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(10%) |
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Gross Margin |
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73.3 |
% |
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75.4 |
% |
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Operating Expenses |
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157.5 |
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151.4 |
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4% |
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Operating Income |
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(20.9 |
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1.2 |
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NM |
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Operating Margin |
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(11.2 |
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0.6 |
% |
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Adjusted Operating Income |
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7.6 |
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37.1 |
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(80%) |
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Adjusted Operating Margin |
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4.1 |
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18.3 |
% |
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Net Income |
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(20.6 |
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(0.7 |
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NM |
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Diluted EPS |
$ |
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(0.28 |
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$ |
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(0.01 |
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NM |
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Adjusted EPS |
$ |
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0.08 |
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$ |
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0.43 |
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(81%) |
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3
Recent Business Highlights
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Hereditary Cancer |
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o |
In the fiscal first-quarter, Myriad made approximately an $11 million reserve adjustment for hereditary cancer revenue due to lower cash collections from small payers as a result of the deletion of the current procedural terminology (CPT®) codes 81211 and 81213. As a result, the company has revised its revenue accrual rate, and is forecasting lower hereditary cancer rates for fiscal year 2020. Myriad will provide a detailed summary of the changes on its fiscal first-quarter 2020 earnings call. |
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Hereditary cancer volumes grew at a double-digit growth rate on a year-over-year basis for both the company’s oncology and women’s health business units. |
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GeneSight® |
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Announced coverage decision from UnitedHealthcare, 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. |
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Signed master service agreement with a large pharmacy benefit manager in the United States to offer GeneSight to its commercial payer and self-funded employer customers. A Fortune 50 company has already opted into the master service agreement. |
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Published the precision medicine analysis of the GUIDED study in the Journal of Clinical Psychiatry. The study evaluated 787 patients at baseline who were on medications with known gene drug interactions. The analysis showed that patients who had their treatment guided by GeneSight saw a 70 percent improvement in remission, 42 percent improvement in response, and a 23 percent improvement in symptoms, all of which were statistically significant. |
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Prenatal |
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Received acceptance for publication for new data in Prenatal Diagnosis demonstrating that Prequel® is the only non-invasive prenatal screening (NIPS) test that outperforms traditional measures of aneuploidy detection across all classes of obesity. Other NIPS testing methodologies can have failure rates up to 24 percent in obese patients leading the American College of Gynecology to recommend against using NIPS in patients with significant obesity. |
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Prolaris® |
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Companion Diagnostics |
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Filed a supplementary Premarket Approval Application with the U.S. Food and Drug Administration (FDA) to authorize BRACAnalysis® CDx as a companion diagnostic test for olaparib in metastatic, castrate-resistant, prostate cancer patients with germline BRCA mutations. |
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Received the first FDA approval for myChoice® CDx as a companion diagnostic to identify women with ovarian cancer who are candidates for Zejula® monotherapy in the late-line setting. |
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Submitted our myChoice CDx test for approval by Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) in ovarian cancer. |
Fiscal Year 2020 and Fiscal Second-Quarter 2020 Financial Guidance
Below is a table summarizing Myriad’s fiscal year 2020 and fiscal second-quarter 2020 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 2020 |
$800-810 million |
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($0.25)-($0.15) |
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$1.00-$1.10 |
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Fiscal Second-Quarter 2020 |
$210-$212 million |
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$(0.02)-$0.00 |
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$0.30-$0.32 |
Myriad’s fiscal year 2020 and second-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 first-quarter financial results and fiscal year 2020 financial guidance.
5
A conference call will be held today, Monday, November 4, 2019, at 4:30 p.m. EDT to discuss Myriad’s financial results for the fiscal first-quarter, business developments and financial guidance. The dial-in number for domestic callers is 1-800-945-0427. International callers may dial 1-212-231-2918. All callers will be asked to reference reservation number 21931991. 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
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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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September 30, |
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2019 |
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2018 |
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Molecular diagnostic testing |
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$ |
172.0 |
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$ |
189.0 |
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Pharmaceutical and clinical services |
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14.3 |
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13.3 |
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Total revenue |
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186.3 |
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202.3 |
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Costs and expenses: |
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Cost of molecular diagnostic testing |
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41.2 |
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42.3 |
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Cost of pharmaceutical and clinical services |
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8.5 |
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7.4 |
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Research and development expense |
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21.3 |
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21.1 |
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Change in the fair value of contingent consideration |
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0.7 |
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0.4 |
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Selling, general, and administrative expense |
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135.5 |
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129.9 |
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Total costs and expenses |
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207.2 |
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201.1 |
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Operating income |
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(20.9 |
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1.2 |
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Other income (expense): |
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Interest income |
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0.9 |
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0.7 |
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Interest expense |
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(2.9 |
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(2.2 |
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Other |
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0.6 |
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1.1 |
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Total other expense: |
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(1.4 |
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(0.4 |
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Income before income tax |
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(22.3 |
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0.8 |
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Income tax provision |
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(1.7 |
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1.6 |
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Net income |
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$ |
(20.6 |
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$ |
(0.8 |
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Net loss attributable to non-controlling interest |
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— |
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(0.1 |
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Net income attributable to Myriad Genetics, Inc. stockholders |
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$ |
(20.6 |
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$ |
(0.7 |
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Earnings per share: |
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Basic |
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$ |
(0.28 |
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$ |
(0.01 |
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Diluted |
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$ |
(0.28 |
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$ |
(0.01 |
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Weighted average shares outstanding: |
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Basic |
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73.7 |
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73.0 |
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Diluted |
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73.7 |
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73.0 |
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7
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Consolidated Balance Sheets (Unaudited) |
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(in millions) |
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September 30, |
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June 30, |
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ASSETS |
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2019 |
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2019 |
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Current assets: |
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Cash and cash equivalents |
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$ |
89.9 |
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$ |
93.2 |
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Marketable investment securities |
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52.7 |
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43.7 |
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Prepaid expenses |
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14.0 |
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16.6 |
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Inventory |
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28.1 |
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31.4 |
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Trade accounts receivable |
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117.0 |
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133.9 |
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Prepaid taxes |
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23.0 |
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25.1 |
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Other receivables |
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4.8 |
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4.7 |
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Total current assets |
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329.5 |
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348.6 |
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Property, plant and equipment, net |
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55.0 |
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57.3 |
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Operating lease right-of-use assets |
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71.3 |
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— |
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Long-term marketable investment securities |
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51.5 |
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54.9 |
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Intangibles, net |
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667.8 |
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684.7 |
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Goodwill |
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416.1 |
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417.2 |
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Total assets |
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$ |
1,591.2 |
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$ |
1,562.7 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
24.0 |
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$ |
33.3 |
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Accrued liabilities |
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73.0 |
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78.9 |
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Current maturities of operating lease liabilities |
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13.0 |
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— |
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Short-term contingent consideration |
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3.3 |
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3.4 |
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Deferred revenue |
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2.1 |
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2.2 |
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Total current liabilities |
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115.4 |
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117.8 |
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Unrecognized tax benefits |
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22.1 |
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21.7 |
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Noncurrent operating lease liabilities |
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62.6 |
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— |
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Other long-term liabilities |
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7.3 |
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7.8 |
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Contingent consideration |
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7.4 |
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10.4 |
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Long-term debt |
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225.0 |
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233.5 |
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Long-term deferred taxes |
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76.9 |
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82.6 |
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Total liabilities |
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516.7 |
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473.8 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock, 74.4 and 73.5 shares outstanding at September 30, 2019 and June 30, 2019 respectively |
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0.7 |
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0.7 |
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Additional paid-in capital |
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1,076.3 |
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|
|
1,068.0 |
|
|
Accumulated other comprehensive loss |
|
|
(7.5 |
) |
|
|
(5.4 |
) |
|
Retained earnings |
|
|
5.0 |
|
|
|
25.6 |
|
|
Total Myriad Genetics, Inc. stockholders’ equity |
|
|
1,074.5 |
|
|
|
1,088.9 |
|
|
Non-Controlling Interest |
|
|
— |
|
|
|
— |
|
|
Total stockholders' equity |
|
|
1,074.5 |
|
|
|
1,088.9 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,591.2 |
|
|
$ |
1,562.7 |
|
8
|
Consolidated Statement of Cash Flows (Unaudited) |
|
|||||||
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Three months ended |
|
|||||
|
|
|
September 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net Income attributable to Myriad Genetics, Inc. stockholders |
|
$ |
(20.6 |
) |
|
|
(0.7 |
) |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
18.2 |
|
|
|
18.3 |
|
|
Non-cash interest expense |
|
|
0.1 |
|
|
|
(1.3 |
) |
|
Gain on disposition of assets |
|
|
(0.1 |
) |
|
|
(1.0 |
) |
|
Share-based compensation expense |
|
|
8.8 |
|
|
|
7.7 |
|
|
Deferred income taxes |
|
|
(5.1 |
) |
|
|
2.7 |
|
|
Unrecognized tax benefits |
|
|
0.4 |
|
|
|
(2.6 |
) |
|
Change in fair value of contingent consideration |
|
|
0.7 |
|
|
|
(0.4 |
) |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
2.6 |
|
|
|
1.8 |
|
|
Trade accounts receivable |
|
|
16.7 |
|
|
|
(3.3 |
) |
|
Other receivables |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
Inventory |
|
|
3.1 |
|
|
|
3.5 |
|
|
Prepaid taxes |
|
|
2.1 |
|
|
|
(3.6 |
) |
|
Accounts payable |
|
|
(9.3 |
) |
|
|
(8.4 |
) |
|
Accrued liabilities |
|
|
(1.7 |
) |
|
|
(4.4 |
) |
|
Deferred revenue |
|
|
— |
|
|
|
(0.2 |
) |
|
Net cash provided by operating activities |
|
|
15.8 |
|
|
|
7.8 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(1.4 |
) |
|
|
(1.3 |
) |
|
Acquisitions, net of cash acquired |
|
|
— |
|
|
|
(279.6 |
) |
|
Purchases of marketable investment securities |
|
|
(23.1 |
) |
|
|
(14.4 |
) |
|
Proceeds from maturities and sales of marketable investment securities |
|
|
17.4 |
|
|
|
16.3 |
|
|
Net cash used in investing activities |
|
|
(7.1 |
) |
|
|
(279.0 |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net proceeds from common stock issued under share-based compensation plans |
|
|
(0.4 |
) |
|
|
2.1 |
|
|
Payment of contingent consideration recognized at acquisition |
|
|
(3.3 |
) |
|
|
— |
|
|
Net proceeds from revolving credit facility |
|
|
— |
|
|
|
290.0 |
|
|
Repayment of revolving credit facility |
|
|
(8.6 |
) |
|
|
(40.0 |
) |
|
Net cash provided by (used in) financing activities |
|
|
(12.3 |
) |
|
|
252.1 |
|
|
Effect of foreign exchange rates on cash and cash equivalents |
|
|
0.3 |
|
|
|
1.5 |
|
|
Net decrease in cash and cash equivalents |
|
|
(3.3 |
) |
|
|
(17.6 |
) |
|
Cash and cash equivalents at beginning of the period |
|
|
93.2 |
|
|
|
110.9 |
|
|
Cash and cash equivalents at end of the period |
|
$ |
89.9 |
|
|
$ |
93.3 |
|
Safe Harbor Statement
9
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to significantly higher earnings in the second half of the fiscal year; a number of important upsides materializing during the fiscal year generating momentum as the Company transitions into fiscal year 2021; the Company’s fiscal year 2020 and fiscal second-quarter 2020 financial guidance for revenue, GAAP diluted earnings per share, and adjusted earnings per share under the caption “Fiscal Year 2020 and Fiscal Second-Quarter 2020 Financial Guidance”; and the Company’s strategic imperatives 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 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.
10
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 |
|
|
• |
Potential future consideration related to acquisitions: Non-cash expenses related to valuation adjustments of earn-out and milestone payments tied to recent acquisitions |
|
|
• |
Elevate Initiatives: 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.
11
|
Reconciliation of GAAP to Non-GAAP Financial Measures |
|
|
|
|
|
|
|
|
|
for the Three months ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
(Unaudited data in millions, except per share amount) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
Sep 30, 2019 |
|
|
Sep 30, 2018 |
|
||
|
Revenue |
|
$ |
186.3 |
|
|
$ |
202.3 |
|
|
GAAP Cost of molecular diagnostic testing |
|
|
41.2 |
|
|
|
42.3 |
|
|
GAAP Cost of pharmaceutical and clinical services |
|
|
8.5 |
|
|
|
7.4 |
|
|
Equity Compensation |
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
Elevate initiatives |
|
|
(0.2 |
) |
|
|
(3.1 |
) |
|
Non-GAAP COGS |
|
$ |
49.2 |
|
|
$ |
46.4 |
|
|
Non-GAAP Gross Margin |
|
|
73.6 |
% |
|
|
77.1 |
% |
|
GAAP Research and Development |
|
$ |
21.3 |
|
|
$ |
21.1 |
|
|
Acquisition - amortization of intangible assets |
|
|
— |
|
|
|
(0.1 |
) |
|
Equity compensation |
|
|
(1.5 |
) |
|
|
(1.2 |
) |
|
Elevate initiatives |
|
|
(0.7 |
) |
|
|
(0.6 |
) |
|
Non-GAAP R&D |
|
$ |
19.1 |
|
|
$ |
19.2 |
|
|
GAAP Contingent Consideration |
|
$ |
0.7 |
|
|
$ |
0.4 |
|
|
Potential future consideration related to acquisitions |
|
|
(0.7 |
) |
|
|
(0.4 |
) |
|
Non-GAAP Contingent Consideration |
|
$ |
— |
|
|
$ |
— |
|
|
GAAP Selling, General and Administrative |
|
$ |
135.5 |
|
|
$ |
129.9 |
|
|
Acquisition - amortization of intangible assets |
|
|
(15.2 |
) |
|
|
(13.2 |
) |
|
Acquisition - Integration related costs |
|
|
(0.6 |
) |
|
|
(9.6 |
) |
|
Equity compensation |
|
|
(7.0 |
) |
|
|
(6.3 |
) |
|
Elevate initiatives |
|
|
(2.3 |
) |
|
|
(1.2 |
) |
|
Non-GAAP SG&A |
|
$ |
110.4 |
|
|
$ |
99.6 |
|
|
GAAP Operating Income |
|
$ |
(20.9 |
) |
|
$ |
1.2 |
|
|
Acquisition - Integration related costs |
|
|
0.6 |
|
|
|
9.6 |
|
|
Acquisition - amortization of intangible assets |
|
|
15.2 |
|
|
|
13.3 |
|
|
Equity compensation |
|
|
8.8 |
|
|
|
7.7 |
|
|
Elevate initiatives |
|
|
3.2 |
|
|
|
4.9 |
|
|
Potential future consideration related to acquisitions |
|
|
0.7 |
|
|
|
0.4 |
|
|
Non-GAAP Operating Income |
|
$ |
7.6 |
|
|
$ |
37.1 |
|
|
Non-GAAP Operating Margin |
|
|
4 |
% |
|
|
18 |
% |
|
GAAP Net Income Attributable to Myriad Genetics, Inc. Stockholders |
|
$ |
(20.6 |
) |
|
$ |
(0.7 |
) |
|
Acquisition - Integration related costs |
|
|
0.6 |
|
|
|
9.6 |
|
|
Acquisition - amortization of intangible assets |
|
|
15.2 |
|
|
|
13.3 |
|
|
Equity compensation |
|
|
8.8 |
|
|
|
7.7 |
|
|
Elevate initiatives |
|
|
3.2 |
|
|
|
4.9 |
|
|
Potential future consideration related to acquisitions |
|
|
0.7 |
|
|
|
0.4 |
|
|
Deferred tax impact of non-GAAP adjustments |
|
|
1.4 |
|
|
|
2.7 |
|
|
Tax effect associated with non-GAAP adjustments |
|
|
(3.5 |
) |
|
|
(5.1 |
) |
|
Non-GAAP Net Income |
|
$ |
5.8 |
|
|
$ |
32.8 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted EPS |
|
$ |
(0.28 |
) |
|
$ |
(0.01 |
) |
|
Non-GAAP Diluted EPS |
|
$ |
0.08 |
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding |
|
|
75.4 |
|
|
|
77.0 |
|
12
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
(Unaudited data in millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
Sep 30, 2019 |
|
|
Sep 30, 2018 |
|
||
|
|
|
|
|
|
|
|
|
|
|
GAAP cash flow from operations |
|
$ |
15.8 |
|
|
$ |
7.8 |
|
|
Capital expenditures |
|
|
(1.4 |
) |
|
|
(1.3 |
) |
|
Free cash flow |
|
$ |
14.4 |
|
|
$ |
6.5 |
|
|
Elevate initiative costs |
|
|
3.2 |
|
|
|
4.7 |
|
|
Acquisition - Integration related costs |
|
|
0.6 |
|
|
|
8.1 |
|
|
Tax effect associated with non-GAAP adjustments |
|
|
(1.1 |
) |
|
|
(2.9 |
) |
|
Non-GAAP Free cash flow |
|
$ |
17.1 |
|
|
$ |
16.4 |
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2020
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 2020 |
|
|
|
Diluted net income per share |
|
|
|
|
GAAP diluted net income per share |
($0.25) - ($0.15) |
|
|
|
Stock Based Compensation Expense |
|
0.30 |
|
|
Acquisition - amortization of intangible assets |
|
0.80 |
|
|
Adjustments to GAAP financial measures |
|
0.15 |
|
|
Non-GAAP diluted net income per share |
$1.00 - $1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Second-Quarter 2020 |
|
|
|
Diluted net income per share |
|
|
|
|
GAAP diluted net income per share |
($0.02) - $0.00 |
|
|
|
Stock Based Compensation Expense |
|
0.08 |
|
|
Acquisition - amortization of intangible assets |
|
0.20 |
|
|
Adjustments to GAAP financial measures |
|
0.04 |
|
|
Non-GAAP diluted net income per share |
$0.30 - $0.32 |
|
|
Myriad Genetics Fiscal First-Quarter 2020 Earnings Call November 4, 2019 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 For additional information on GAAP to non-GAAP reconciliation see: https://www.myriad.com/investors/gaap-to-non-gaap-reconciliation/ Fiscal Year 2020 GAAP diluted earnings per share ($0.25)-($0.15) Stock based compensation expense $0.30 Acquisition – amortization of intangible assets $0.80 Adjustments to GAAP financial measures $0.15 Non-GAAP diluted earnings per share $1.00-$1.10 Fiscal Second-Quarter 2020 GAAP diluted earnings per share ($0.02)-$0.00 Stock based compensation expense $0.08 Acquisition – amortization of intangible assets $0.20 Adjustments to GAAP financial measures $0.04 Non-GAAP diluted earnings per share $0.30-$0.32
Fiscal First-Quarter 2020 Financial Results 1Q20 Actual Results 1Q19 Actual Results Revenue (in mil.) $186.3 $202.3 GAAP EPS ($0.28) ($0.01) Adjusted EPS $0.08 $0.43
Financial Overview
Fiscal First-Quarter 2020 Revenue By Product Product 1Q20 1Q19 YoY Growth Hereditary Cancer $104.5 $116.3 (10%) GeneSight® $22.7 $29.3 (22%) Prenatal Testing $23.5 $18.1 30% Vectra® $11.0 $13.0 (15%) Prolaris® $6.5 $6.2 5% EndoPredict® $2.3 $2.4 (4%) Other $1.5 $3.7 (60%) Total Molecular Diagnostic Revenue $172.0 $189.0 (9%) Pharmaceutical & Clinical Services $14.3 $13.3 8% Total Revenue $186.3 $202.3 (8%) (in millions)
Fiscal First-Quarter 2020 Financial Results GAAP Results Adjusted Results 1Q20 1Q19 YoY Growth 1Q20 1Q19 YoY Growth Total Revenue $186.3 $202.3 (8%) $186.3 $202.3 (8%) Gross Profit $136.6 $152.6 (10%) $137.1 $155.9 (12%) Gross Margin 73.3% 75.4% -210 bps 73.6% 77.1% -350 bps Operating Income ($20.9) $1.2 NM $7.6 $37.1 (80%) Operating Margin (11.2%) 0.6% NM 4.1% 18.3% -1420 bps Net Income ($20.6) ($0.7) NM $5.8 $32.8 (82%) EPS ($0.28) ($0.01) NM $0.08 $0.43 (81%)
FY20 and 2Q FY20 Financial Guidance Metric Fiscal Year 2020 2Q FY20 Revenue $800-$810 million $210-$212 million GAAP Diluted EPS ($0.25)-($0.15) ($0.02)-$0.00 Adjusted EPS $1.00-$1.10 $0.30-$0.32
Publication of the Precision Medicine Analysis from GUIDED Outcomes at Week-8 1 Thase et al: Impact of pharmacogenomics on clinical outcomes for patients taking medications with gene-drug interactions in a randomized, controlled trial
New Medicare Draft LCDs for GeneSight from MolDx Broad Pharmacogenomic LCD Combinatorial LCD LCD LCD Covers primary care physicians Covers anxiety Similar to UnitedHealthcare Medical Policy Ordered by a psychiatrist for major depressive disorder Combinatorial LCD: https://www.cms.gov/medicare-coverage-database/details/lcd-details.aspx?LCDId=38295&ver=5&Cntrctr=All&UpdatePeriod=847&bc=AAAAEAAAAAAA& Broad Pharmacogenomic LCD: https://www.cms.gov/medicare-coverage-database/details/lcd-details.aspx?LCDId=38293&ver=7&Cntrctr=All&UpdatePeriod=847&bc=AAAAEAAAAAAA&
Opportunities for BRACAnalysis CDx With PARP Inhibitors Cancer Type Incident Population* Launch Timing Pancreatic Cancer (POLO study) 57,000 1H FY20 Castrate Resistant Metastatic Prostate Cancer (PROfound) 32,000 2H FY20 Adjuvant HER2- Breast Cancer (OlympiA Study) 198,000 FY21 * cancer.net, https://www.healthline.com/health/breast-cancer/her2-positive-survival-rates-statistics#prevalence
myChoice CDx FDA Approved – October 23rd
Opportunities with myChoice CDx Indication/Drug Incident Population* Launch Timing Ovarian Cancer U.S. 15,000 patients Approved Ovarian Cancer Japan 9,000 patients FY21 1st Line Ovarian Cancer (olaparib, niraparib, veliparib) U.S & Europe 50,000 patients Seeking clarity from regulators and commercial partners Metastatic Breast Cancer U.S. 80,000 patients FY21 Sources: www.cancer.net, https://www.medscape.com/viewarticle/849644, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5323288/, https://eurohealth.ie/policy-brief-women-and-ovarian-cancer-in-the-eu-2018/
Prequel® is the Most Accurate NIPS Test in Women With High BMI Source: Muzzey et al: Noninvasive prenatal screening for patients with high body mass index: Evaluating the impact of a customized whole genome sequencing workflow on sensitivity and residual risk No call rate of up to 24% in high BMI women using SNP arrays with 4% fetal fraction cutoff Prequel has demonstrated high diagnostic accuracy in women below a 4% fetal fraction Prequel maintained high analytical sensitivity in women with high BMIs No call rate for Prequel is 1 in 1,000
Vectra Additive to All Other Cardiovascular Risk Predictive Measures 1 Source – ACR Abstract: Derivation and Validation of a Biomarker-Based Cardiovascular Risk Prediction Score in Rheumatoid Arthritis Highly validated in 30,751 patients 28% of patients determined to be high risk by American Heart Association guidelines Significantly outperformed other methods of cardiovascular risk assessment in RA patients High Risk Threshold for AHA Guidelines
New Prolaris Clinical Utility Data % of Patients Remaining on Active Surveillance 82% of patients selected active surveillance as initial therapy Only 0.4% of patients selecting active surveillance experienced disease progression Source: Kaul et al: Clinical outcomes in men with prostate cancer who selected active surveillance using a clinical cell-cycle risk score
Potential Upside Drivers to Financial Guidance Product Catalysts NCCN breast cancer guidelines Regional payer collections progress U.S. CDx for pancreatic cancer Japan CDx for ovarian cancer U.S. CDx for prostate cancer Japan hereditary cancer Commercial payer coverage Large PBM master service agreement Reconsideration request by a large tech assessor Medicare LCD expansion to primary care and anxiety Primary care sales force expansion ACOG guidelines for average risk Updated ECS guidelines Medicare revenue U.S. CDx launch in ovarian cancer Launch of RP risk prediction ACR guidelines Launch of CVD risk prediction Utility data leading to increased commercial coverage Expanded Medicare LCD