On November 2, 2021 Myriad Genetics, Inc. (NASDAQ: MYGN), a leader in genetic testing and precision medicine, reported financial results for its third quarter ended September 30, 2021 and provided an update on recent business performance and strategic transformation plans (Press release, Myriad Genetics, NOV 2, 2021, View Source [SID1234594202]).
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"We are encouraged by our third quarter performance, and the execution of our teammates on our strategic growth and transformation plans that resulted in year-over-year growth in test volumes, margins and revenue," said Paul J. Diaz, President and Chief Executive Officer. "The quality and accuracy of our products and improving customer service levels continue to position our business for sustainable growth and profitability. I want to thank all of our 2,400 Myriad Genetics teammates for their commitment to advancing the health and well-being of all of our patients. We are encouraged by the growing market opportunities in our core businesses and see significant potential to expand access to quality genetic testing and precision medicines that improve health outcomes and access to needed healthcare services."
Financial and Operational Highlights:
Diagnostic test volumes of 252,000 increased 15% year-over-year. Sequential volume was impacted by constraints in access to healthcare providers due to the COVID-19 pandemic, the impact of the Delta variant strain, and typical summer seasonality.
Hereditary cancer volumes for the quarter were flat year-over-year and decreased 7% sequentially.
Prenatal test volumes in Women’s Health increased 7% year-over-year and decreased 10% sequentially.
Tumor profiling test volumes in Oncology increased 33% year-over-year and decreased 15% sequentially.
Pharmacogenomics test volumes in Mental Health increased 71% year-over-year and 6% sequentially.
Overall, average selling price (ASP) was stable year-over-year and sequentially after excluding positive revenue adjustments related to better-than-expected cash collections on tests ordered in prior periods.
Total revenue in the quarter was $167.3 million, an increase of 15% year-over-year.
Excluding the divested business revenue, RBM, Autoimmune and myPath, quarterly revenue increased 27% year-over-year.
The following table summarizes year-over-year revenue changes by product category:
GAAP gross margin in the quarter was 71.4%; adjusted gross margin was 71.7%, which improved 190 basis points year-over-year.
GAAP total operating expenses in the quarter were $199.4 million; adjusted total operating expenses decreased $1.6 million sequentially to $121.5 million.
GAAP operating loss in the quarter was $(79.9) million, declining $40.3 million year-over-year; adjusted operating loss was $(1.4) million, improving $10.7 million year-over year.
Diluted GAAP EPS in the quarter were $0.30, improving $0.50 year-over-year; adjusted EPS were $(0.02), improving $0.13 year-over-year.
Closed the sale of Myriad Autoimmune’s Vectra testing business on September 13, 2021.
Ended the quarter with $413.6 million in cash, cash equivalents and investments.
"While we still have a lot of hard work ahead of us, we are now better positioned for growth across all of our business segments as we look to 2022 and beyond," said Diaz. "Our balance sheet is strong. As a result, we can now focus on investing further in the opportunities we see in the emerging technologies, R&D and commercial strategies that elevate our products to their full potential including, acquisitions, new partnerships, and new business development efforts. We look forward to expanding access to vital genetic testing, and precision medicine, making it easier for patients and partners to engage with us, and delivering sustainable and profitable results for all of our shareholders."
Business Performance and Highlights:
Women’s Health
In the Myriad Women’s Health business, Myriad serves women assessing their risk of cancer, and those who are pregnant or planning a family. Women’s Health delivered revenue of $59.1 million in the quarter, an increase of 6% year-over-year and a decrease of 12% sequentially.
Hereditary Cancer
With the launch of the first polygenic breast cancer risk assessment score validated for women of all ancestries, Myriad further strengthened its industry-leading MyRisk Hereditary Cancer test and significantly expanded access to genetic testing. Now enhanced with RiskScore for all ancestries, MyRisk provides 5-year and lifetime breast cancer risk assessment for all women not previously diagnosed with breast cancer.
RiskScore results are informed by a combination of genetic markers, clinical and biological variables, personal and family history, and ancestry-specific data. RiskScore is available at no additional cost to women who take the MyRisk test.
Prenatal
The company continues to see increasing momentum from its Prequel noninvasive prenatal screening (NIPS) test including proprietary AMPLIFY technology, which dramatically enhances the test’s performance and works to reduce test failure rates so that patients may avoid unnecessary invasive procedures.
In late 2022, the company plans to launch a novel prenatal test that will deliver the clinical value of both Prequel and Foresight to more expectant parents. The novel offering will simplify the NIPS and carrier screening workflows, which currently involve several samples and different tests, and deliver key clinical content of Prequel and the Foresight carrier screen test from a single maternal sample. The combined offering will provide a single prenatal test that is simple, accurate and will allow more patients to get answers faster.
Oncology
Myriad’s Oncology business provides hereditary cancer testing, including MyRisk, for patients who have cancer. It also provides tumor profiling products such as the EndoPredict breast cancer prognostic test, the Prolaris prostate cancer test, and the myChoiceCDx companion diagnostic test for predicting response to PARP inhibitors. The Oncology business delivered revenue of $76.8 million in the quarter, an increase of 32% year-over-year and a decrease of 2% sequentially.
The company made progress towards launching its combined offering of somatic, germline and CDx for ovarian cancer patients.
The new offering, planned for launch in early 2022, combines Myriad’s leading germline hereditary cancer test (MyRisk), Myriad’s FDA approved companion diagnostic test (myChoiceCDx), together with a Myriad branded tumor profiling test powered by Illumina’s TSO500 and run by Intermountain’s Precision Genomics.
With Myriad’s new combined offering, patients and their healthcare providers will receive one comprehensive solution from one laboratory with one team of scientists interpreting the results thereby significantly improving the quality and ease of use of the results.
The combined product offering will be sold through the Myriad Oncology sales force throughout the entire U.S.
Mental Health
Myriad’s Mental Health business consists of the GeneSight psychotropic test that covers 61 medications commonly prescribed for depression, anxiety, ADHD, and other psychiatric conditions. In the pharmacogenomic category, GeneSight delivered revenue of $24.1 million in the quarter, an increase of 103% year-over-year and 7% sequentially.
GeneSight saw a strong increase in new ordering providers with nearly 2,700 physicians ordering GeneSight for the first time in the quarter. The total number of ordering physicians increased 6% sequentially.
The Mental Health business has successfully implemented its ongoing commercial transformation with the rightsizing of its field sales force, growing its inside sales force, and executing a robust digital marketing plan to meet patients and clinicians where they are searching for mental health treatments online.
Business Divestitures
On July 1, 2021, the company completed the sale of its wholly-owned subsidiary, Myriad RBM, Inc. to Q2 Solutions.
Gross proceeds of $197.0 million in cash.
Recognized gain on sale of assets of $121.0 million.
On September 13, 2021, the company completed the sale of select operating assets and intellectual property, including the Vectra test, to Laboratory Corporation of America Holdings.
Gross proceeds of $150.0 million in cash.
Recognized loss on sale of assets of $0.6 million.
Recognized loss on inventory of $11.7 million.
The company recorded $48.0 million for the potential qui tam settlement against Crescendo Bioscience, Inc.
The company intends to use a portion of the total divestiture gross proceeds of approximately $380.0 million to fund investments in technology and commercial efforts and fund the potential qui tam settlement relating to Crescendo Bioscience, Inc. The proceeds were also used to paid down its revolving credit facility.
Financial Guidance
Given the continued unpredictability surrounding the COVID-19 pandemic (and its variant strains) as well as the impact it continues to have on the healthcare environment, customer behavior and the ability to market tests to physicians, the company will not provide financial guidance for the fourth quarter ending December 31, 2021 or fiscal year 2021. We expect to resume providing financial guidance in early 2022.
Conference Call and Webcast
A conference call will be held today, Tuesday, November 2, 2021, at 4:30 p.m. EDT to discuss Myriad’s financial results and business developments for the third quarter 2021. The dial-in number for domestic callers is 1-800-920-2776. International callers may dial 1-212-271-4651. All callers will be asked to reference reservation number 21998401. An archived replay of the call will be available for seven days by dialing 1-800-633-8284 and entering the reservation number above. The conference call and slide presentation will be available through a live webcast at www.myriad.com.