Myriad Genetics, Inc. (NASDAQ: MYGN), a leader in genetic testing
and precision medicine, today announced financial results for its
second quarter ended June 30, 2023. The Company also provided an
update on its business performance and 2023 financial guidance.
“Strong double-digit test volume growth in the second quarter of
2023 continues to reflect greater adoption by providers as we
continue to emerge from the pandemic restrictions on access and
Myriad’s improved commercial execution across our businesses. We're
pleased with ongoing share gains in our hereditary cancer testing
franchise, particularly the 21% year-over-year volume growth in
Women's Health," said Paul J. Diaz, president and CEO, Myriad
Genetics. "Excluding changes in estimated revenue, Myriad generated
10% year-over-year revenue growth in the second quarter of 2023,
even as the company, and the diagnostics lab industry, continue to
work through challenging payor dynamics that negatively impacted
our second quarter revenue by approximately $4 million. We believe
these dynamics are largely transitory and we remain focused on
working collaboratively with payers to support reimbursement for
the services we provide to healthcare providers and their
patients." Mr. Diaz concluded, “In the second quarter of 2023, we
generated strong gross margins, managed operating expenses and
improved our financial flexibility by executing on a new credit
facility. We remain confident in our ability to achieve our goal of
adjusted profitability by the fourth quarter and sustainable 10%+
annual revenue growth."
Financial and Operational Highlights:
- Test volumes of 358,325 in the second quarter of 2023 increased
38% year-over-year, or 17% excluding contributions from the
SneakPeek Early Gender DNA Test.
- The following table summarizes sequential and year-over-year
quarterly testing volume changes in the company's core product
categories:
|
|
Three months ended June 30,
2023 |
|
Three months ended March 31,
2023 |
|
Three months endedJune 30,
2023 |
|
|
Year-over-Year |
|
Year-over-Year |
|
Sequential |
Product volumes: |
|
|
|
|
|
|
Hereditary cancer |
|
20 |
% |
|
24 |
% |
|
8 |
% |
Tumor profiling |
|
8 |
% |
|
5 |
% |
|
(2)% |
Prenatal |
|
71 |
% |
|
77 |
% |
|
(2)% |
Pharmacogenomics |
|
23 |
% |
|
31 |
% |
|
7 |
% |
Total |
|
38 |
% |
|
45 |
% |
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
- Excluding contributions from the SneakPeek Early Gender DNA
Test:
- Prenatal testing volumes in the second quarter 2023 increased
12% year-over-year and 1% sequentially. In the first quarter 2023
prenatal testing volumes increased 12% year-over-year and 16%
sequentially.
- The following table summarizes year-over-year quarterly revenue
changes in the company's core businesses by product category:
|
Three months ended |
|
Six months ended |
(in millions) |
June 30, 2023 |
|
June 30, 2022 |
|
% Change |
|
June 30, 2023 |
|
June 30, 2022 |
|
% Change |
Product revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hereditary cancer |
$ |
76.7 |
|
$ |
79.4 |
|
(3)% |
|
$ |
152.4 |
|
$ |
150.3 |
|
1 |
% |
Tumor profiling |
|
36.0 |
|
|
33.5 |
|
7 |
% |
|
|
73.3 |
|
|
66.0 |
|
11 |
% |
Prenatal |
|
35.6 |
|
|
33.3 |
|
7 |
% |
|
|
71.8 |
|
|
65.2 |
|
10 |
% |
Pharmacogenomics |
|
35.2 |
|
|
33.1 |
|
6 |
% |
|
|
67.2 |
|
|
62.4 |
|
8 |
% |
Total |
$ |
183.5 |
|
$ |
179.3 |
|
2 |
% |
|
$ |
364.7 |
|
$ |
343.9 |
|
6 |
% |
|
|
|
|
|
|
|
|
|
- Year-over-year revenue growth in the second quarter of 2023
reflects an $11.7 million addition to revenue in the second quarter
of 2022 from change of estimates1 compared to an immaterial change
in estimated revenue in the second quarter of 2023.
- GAAP gross margins of 68.5% in the second quarter of 2023;
adjusted gross margins for the second quarter of 2023 was 69.0%, an
increase of 130 basis points from the first quarter of 2023,
reflecting disciplined execution from the laboratory operations
team.
- GAAP total operating expenses in the second quarter of 2023
were $239.4 million. Adjusted operating expenses in the quarter
were $133.4 million. On a sequential basis, adjusted operating
expenses in the second quarter decreased $11.1 million, reflecting
seasonality and general cost management activities.
- GAAP operating loss in the second quarter of 2023 was $113.7
million, which factors in settlement costs for the securities class
action lawsuit, which is subject to court approval, of $77.5
million; adjusted operating loss in the quarter was $6.8
million.
- Ended the second quarter of 2023 with $127.8 million in cash,
cash equivalents and marketable investment securities, which
includes $40.0 million of borrowings under the new asset-based
credit facility.
Business Performance and Highlights:
OncologyThe Myriad Genetics Oncology business
provides hereditary cancer testing, including the MyRisk®
hereditary cancer test for patients who have cancer. It also
provides tumor profiling products such as the myChoice® CDx
companion diagnostic test, the Prolaris® prostate cancer test,
Precise™ Tumor molecular profile test and the EndoPredict® breast
cancer prognostic test. The Oncology business delivered revenue of
$80.7 million in the second quarter of 2023.
- Second quarter hereditary cancer testing volumes in Oncology
grew 18% year-over-year. In addition, Prolaris continued to see
strong demand as second quarter testing volumes grew 13%
year-over-year.
- Named leading medical oncologist and University of Pittsburgh
School of Medicine professor of medicine, Adam Brufsky, MD, PhD,
FACP, as Scientific Advisor to the Oncology business unit. Dr.
Brufsky is responsible for guiding clinical development and medical
affairs to further elevate the Precise™ Oncology Solutions
portfolio.
- In June 2023, we entered into a research collaboration with the
University of Texas MD Anderson Cancer Center to use our minimal
residual disease testing platform, a tumor-informed high-definition
assay that detects circulating tumor DNA (ctDNA), to support
research focused on metastatic renal cell carcinoma treatment
selection and response.
- Added the Folate Receptor Alpha test as an enhancement to the
Precise Oncology Solutions portfolio to help guide treatment
decisions for women living with ovarian cancer.
Women’s HealthThe Myriad Genetics Women’s
Health business serves women of all ancestries by assessing their
risk of cancer and offers prenatal testing solutions for those who
are pregnant or planning a family. The Women’s Health business
delivered revenue of $67.6 million in the second quarter of
2023.
- Second quarter hereditary cancer testing volumes in Women's
Health grew 21% year-over-year, driven by competitive account wins
and increased adoption by providers of MyRisk for patients whose
family history puts them at a higher risk for cancer.
- Excluding the contributions from the SneakPeek Early Gender DNA
Test, prenatal testing volumes in the second quarter of 2023 grew
12% versus the second quarter of 2022.
- In collaboration with SimonMed® Imaging, one of the largest
independent outpatient medical imaging providers and physician
radiology practices in the U.S., we launched a new Breast Cancer
Risk Assessment Program in the second quarter of 2023. This program
combines diagnostic imaging and genetic risk assessment utilizing
MyRisk with RiskScore® and patient education. The program is
expected to enable affordable access to genetic testing and deliver
personalized insights to better inform clinical decisions for
millions of potential patients.
- During the second quarter of 2023, Myriad surpassed one million
Prequel® tests provided to-date.
Mental HealthThe Myriad Genetics Mental Health
business consists of the GeneSight test that covers 64 medications
commonly prescribed for depression, anxiety, attention deficit
hyperactivity disorder, and other psychiatric conditions. GeneSight
helps physicians understand how genetic alterations impact patient
response to antidepressants and other drugs. In the
pharmacogenomics category, the GeneSight test recorded revenue of
$35.2 million in the second quarter of 2023.
- In the second quarter, Myriad Genetics added approximately
4,000 clinicians who ordered GeneSight for the first time.
- Second quarter GeneSight revenue began to factor in
reimbursement from a number of Medicaid programs and managed
Medicaid plans now pricing and paying for GeneSight under the PLA
code (O345U).
- Myriad continues to work on building GeneSight's clinical data,
including collaborating with Optum Genomics to create a multi-phase
study designed to better understand GeneSight's ability to improve
clinical outcomes and reduce healthcare costs.
- Building on a 2020 meta-analysis of the clinical utility of the
GeneSight test, which included four prospective, controlled trials
and 1,556 unique patients, Myriad is incorporating additional
published studies to further measure the utility of combinatorial
pharmacogenomics testing for the treatment of Major Depressive
Disorder (MDD).
Securities Class Action
SettlementMyriad Genetics reached an agreement to
settle the securities class-action lawsuit, In re Myriad Genetics,
Inc. Securities Litigation, 2:19-cv-00707-JNP-DBP (D. Utah). The
settlement, if approved by the United States District Court for the
District of Utah, will resolve all claims brought by the plaintiff
Los Angeles Fire and Police Pensions Fund, without Myriad Genetics
making an admission or the finding of fault, liability, or
wrongdoing by Myriad Genetics or any current and former Myriad
Genetics employees. Pursuant to the terms of the settlement, Myriad
Genetics has agreed to pay a settlement amount of $77.5 million,
consisting of at least $20 million in cash to be paid in the third
quarter of 2023, and, at Myriad Genetics’ sole election, the
remaining $57.5 million in either shares of Myriad Genetics common
stock or cash, or a combination thereof, upon the final court
approval of the settlement, which is expected to occur in the first
quarter of 2024. The company intends to pay the majority of the
settlement amount in cash from its cash on hand, operating cash
flow and asset based credit facility. Additional details can be
found on the Current Report on Form 8-K filed with the Securities
and Exchange Commission on August 3, 2023.
Liquidity and Cash FlowIn the second quarter,
Myriad established a new $90 million asset-based credit facility
(the “ABL Facility”) with JPMorgan Chase Bank, N.A., Wells Fargo
Bank, N.A. and Bank of America, N.A. The ABL Facility includes an
option to increase the maximum principal amount by up to $25
million for a total of $115 million. The ABL Facility replaces the
Company’s previous credit facility and matures on June 30,
2026.
(in millions) |
|
|
Total cash and cash equivalents at end of second quarter of
2023 |
|
$ |
127.8 |
|
Amount available to draw currently under the
asset-based credit facility* |
|
|
23.5 |
|
Expected initial cash payment in the securities class action
settlement (third quarter of 2023)** |
|
|
(20.0 |
) |
Estimated capex and cash flow from operations in second half of
2023 |
|
|
(30.0 |
) |
Estimated total available cash and cash equivalents and
availability under credit facility at year end 2023 |
|
$ |
101.3 |
|
|
|
|
* The Company
plans to increase the size of the ABL facility by $25 million to
$115 million by the end of 2023. |
** The remaining
$57.5 million is to be paid upon the final court approval of the
settlement, which is expected to occur in the first quarter of
2024. The company intends to pay the majority of the settlement
amount in cash from its cash on hand, operating cash flow and asset
based credit facility. |
2023 Investor Event Myriad
Genetics will host its 2023 Investor Event at the Dr. Walter
Gilbert Innovation Center in South San Francisco on September 19,
2023. The event will commence with a facility tour beginning at
12:00 p.m. EDT followed by a management presentation and Q&A
from 1:00 p.m. to 3:00 p.m. EDT. For those unable to attend in
person, a webcast will be available at the investor site on
www.myriad.com.
Background on Walter Gilbert,
Ph.D.Walter Gilbert, Ph.D, a molecular biology pioneer and
co-founder of Myriad Genetics served on the Board of Directors for
28 years and was the company’s first Chairman of the Board. An
early proponent of sequencing the human genome, Dr. Gilbert joined
Myriad as a founding scientist in 1992 and served in numerous
leadership roles which positively impacted the strategic direction
and growth of the company. Leading up to his work at Myriad
Genetics, Dr. Gilbert won the Nobel Prize in Chemistry in 1980 for
his contributions to the development of DNA sequencing technology.
He also was a founder of Biogen, Inc. and its Chairman of the Board
and Chief Executive Officer from 1981 to 1985, as well as the Carl
M. Loeb University Professor at Harvard University.
Financial GuidanceMyriad Genetics reaffirms its
2023 revenue and non-GAAP financial guidance and updates its other
GAAP financial guidance to account for the pending settlement of
the securities class action lawsuit, as stated in the table
below.*
(in millions, except
per share amounts) |
FY 2023 |
|
FY 2023 Comments |
|
|
|
|
|
Revenue |
$730 - $750 |
|
2023 annual growth between 8%
- 11% over 2022 |
Gross margin % |
68% - 70% |
|
GM expected to fluctuate in
any quarter given seasonality |
GAAP OPEX |
$722 - $742 |
|
Increase in the GAAP operating
expense range to include expected costs of approximately $80
million associated with the settlement of the securities class
action lawsuit |
Adjusted OPEX |
$535 - $555 |
|
|
GAAP EPS |
$(2.75) - $(2.60) |
|
Increase in the GAAP EPS range
to include expected costs of approximately $80 million associated
with the settlement of the securities class action lawsuit |
Adjusted EPS |
$(0.36) - $(0.24) |
|
Adjusted EPS is expected to
improve through 2023, reaching positive adjusted profitability and
adjusted operating cash flow in Q4 '23 |
*Assumes currency rates as of August 3, 2023 |
Myriad Genetics' fiscal year 2023 non-GAAP guidance begins with
the comparable GAAP financial measure and excludes the estimated
impact of stock-based compensation expense of approximately
$40.0 million, non-cash amortization associated with
acquisitions of approximately $43.0 million and special items
such as costs related to transformation initiatives of
approximately $24.0 million, legal settlement costs of
approximately $80 million, and tax adjustments of approximately
$8.0 million.
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.
Conference Call and WebcastA conference call
will be held today, Thursday, August 3, 2023, at 4:30 p.m. EDT to
discuss Myriad Genetics’ financial results and business
developments for the second quarter 2023. The dial-in number for
domestic callers is 1-800-954-0653. International callers may dial
1-212-231-2921. All callers will be asked to reference reservation
number 22027563. 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.
About Myriad GeneticsMyriad Genetics is a
leading genetic testing and precision medicine company dedicated to
advancing health and well-being for all. Myriad Genetics provides
insights that help people take control of their health and enable
healthcare providers to better detect, treat, and prevent disease.
Myriad Genetics develops and offers genetic tests that help assess
the risk of developing disease or disease progression and guide
treatment decisions across medical specialties where critical
genetic insights can significantly improve patient care and lower
healthcare costs. For more information, visit
www.myriad.com.
Myriad, the Myriad logo, BRACAnalysis, BRACAnalysis CDx,
Colaris, ColarisAP, MyRisk, Myriad myRisk, MyRisk Hereditary
Cancer, myChoice, Tumor BRACAnalysis CDx, MyChoice CDx, Prequel,
Prequel with Amplify, Amplify, Foresight, Precise, FirstGene,
SneakPeek, SneakPeek Early Gender DNA Test, Health.Illuminated.,
RiskScore, Prolaris, GeneSight, and EndoPredict are registered
trademarks or trademarks of Myriad Genetics, Inc.. All third-party
marks—® and ™—are the property of their respective owners. © 2023
Myriad Genetics, Inc. All rights reserved.
Media Contact: |
Megan Manzari |
Investor Contact: |
Matt Scalo |
|
(385) 318-3718 |
|
(801) 584-3532 |
|
megan.manzari@myriad.com |
|
matt.scalo@myriad.com |
Revenue by Product (Unaudited):
|
Three months ended June 30, |
(in millions) |
|
2023 |
|
|
2022 |
|
|
|
WH |
ONC |
MH |
Other |
Total |
|
WH |
ONC |
MH |
Other |
Total |
|
% Change |
Hereditary Cancer |
$ |
32.1 |
$ |
44.6 |
$ |
— |
$ |
— |
$ |
76.7 |
|
$ |
36.8 |
$ |
42.6 |
$ |
— |
$ |
— |
$ |
79.4 |
|
(3)% |
Tumor Profiling |
|
— |
|
36.0 |
|
— |
|
— |
|
36.0 |
|
|
— |
|
33.5 |
|
— |
|
— |
|
33.5 |
|
7 |
% |
Prenatal |
|
35.6 |
|
— |
|
— |
|
— |
|
35.6 |
|
|
33.3 |
|
— |
|
— |
|
— |
|
33.3 |
|
7 |
% |
Pharmacogenomics |
|
— |
|
— |
|
35.2 |
|
— |
|
35.2 |
|
|
— |
|
— |
|
33.1 |
|
— |
|
33.1 |
|
6 |
% |
Total Revenue |
$ |
67.6 |
$ |
80.7 |
$ |
35.2 |
$ |
— |
$ |
183.5 |
|
$ |
70.1 |
$ |
76.1 |
$ |
33.1 |
$ |
— |
$ |
179.3 |
|
2 |
% |
|
Six months ended June 30, |
(in millions) |
|
2023 |
|
|
2022 |
|
|
|
WH |
ONC |
MH |
Other |
Total |
|
WH |
ONC |
MH |
Other |
Total |
|
% Change |
Hereditary Cancer |
$ |
67.4 |
$ |
85.0 |
$ |
— |
$ |
— |
$ |
152.4 |
|
$ |
70.3 |
$ |
80.0 |
$ |
— |
$ |
— |
$ |
150.3 |
|
1 |
% |
Tumor Profiling |
|
— |
|
73.3 |
|
— |
|
— |
|
73.3 |
|
|
— |
|
66.0 |
|
— |
|
— |
|
66.0 |
|
11 |
% |
Prenatal |
|
71.8 |
|
— |
|
— |
|
— |
|
71.8 |
|
|
65.2 |
|
— |
|
— |
|
— |
|
65.2 |
|
10 |
% |
Pharmacogenomics |
|
— |
|
— |
|
67.2 |
|
— |
|
67.2 |
|
|
— |
|
— |
|
62.4 |
|
— |
|
62.4 |
|
8 |
% |
Other |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
0.3 |
|
0.3 |
|
(100)% |
Total Revenue |
$ |
139.1 |
$ |
158.3 |
$ |
67.2 |
$ |
— |
$ |
364.7 |
|
$ |
135.5 |
$ |
146.0 |
$ |
62.4 |
$ |
0.3 |
$ |
344.2 |
|
6 |
% |
Business Units:WH = Women’s HealthONC = OncologyMH = Mental
Health
Product Categories:Hereditary Cancer – MyRisk, BRACAnalysis,
BRACAnalysis CDxTumor Profiling – myChoice CDx, Prolaris,
EndoPredictPrenatal – Foresight, Prequel, SneakPeekPharmacogenomics
– GeneSight
MYRIAD GENETICS, INC.AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations(in millions, except per share amounts)
|
Three months endedJune 30, |
|
Six months endedJune 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
Testing revenue |
$ |
183.5 |
|
|
$ |
179.3 |
|
|
$ |
364.7 |
|
|
$ |
344.2 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of testing revenue |
|
57.8 |
|
|
|
49.7 |
|
|
|
117.0 |
|
|
|
97.7 |
|
Research and development expense |
|
21.2 |
|
|
|
20.3 |
|
|
|
43.7 |
|
|
|
41.5 |
|
Selling, general, and administrative expense |
|
140.7 |
|
|
|
127.1 |
|
|
|
292.4 |
|
|
|
237.7 |
|
Legal charges pending settlement |
|
77.5 |
|
|
|
— |
|
|
|
77.5 |
|
|
|
— |
|
Goodwill and long-lived asset impairment charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10.7 |
|
Total costs and expenses |
|
297.2 |
|
|
|
197.1 |
|
|
|
530.6 |
|
|
|
387.6 |
|
Operating loss |
|
(113.7 |
) |
|
|
(17.8 |
) |
|
|
(165.9 |
) |
|
|
(43.4 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Interest income |
|
0.5 |
|
|
|
0.4 |
|
|
|
1.2 |
|
|
|
0.5 |
|
Interest expense |
|
(0.5 |
) |
|
|
(0.6 |
) |
|
|
(1.0 |
) |
|
|
(1.5 |
) |
Other |
|
(2.4 |
) |
|
|
0.1 |
|
|
|
(3.0 |
) |
|
|
0.1 |
|
Total other expense, net |
|
(2.4 |
) |
|
|
(0.1 |
) |
|
|
(2.8 |
) |
|
|
(0.9 |
) |
Loss before income tax |
|
(116.1 |
) |
|
|
(17.9 |
) |
|
|
(168.7 |
) |
|
|
(44.3 |
) |
Income tax expense
(benefit) |
|
— |
|
|
|
(3.8 |
) |
|
|
2.1 |
|
|
|
(9.7 |
) |
Net loss |
$ |
(116.1 |
) |
|
$ |
(14.1 |
) |
|
$ |
(170.8 |
) |
|
$ |
(34.6 |
) |
Net loss per share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(1.42 |
) |
|
$ |
(0.18 |
) |
|
$ |
(2.10 |
) |
|
$ |
(0.43 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
|
81.7 |
|
|
|
80.4 |
|
|
|
81.5 |
|
|
|
80.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MYRIAD GENETICS, INC.AND
SUBSIDIARIESCondensed Consolidated Balance Sheets(in
millions, except share information)
|
June 30, 2023 |
|
December 31,2022 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
102.8 |
|
|
$ |
56.9 |
|
Marketable investment securities |
|
18.8 |
|
|
|
58.0 |
|
Trade accounts receivable |
|
111.7 |
|
|
|
101.6 |
|
Inventory |
|
22.5 |
|
|
|
20.1 |
|
Prepaid taxes |
|
17.7 |
|
|
|
17.6 |
|
Prepaid expenses and other current assets |
|
20.8 |
|
|
|
20.4 |
|
Total current assets |
|
294.3 |
|
|
|
274.6 |
|
Operating lease right-of-use
assets |
|
106.6 |
|
|
|
103.9 |
|
Long-term marketable
investment securities |
|
6.2 |
|
|
|
54.8 |
|
Property, plant and equipment,
net |
|
112.0 |
|
|
|
83.4 |
|
Intangibles, net |
|
358.8 |
|
|
|
379.7 |
|
Goodwill |
|
287.2 |
|
|
|
286.8 |
|
Other assets |
|
22.1 |
|
|
|
15.5 |
|
Total assets |
$ |
1,187.2 |
|
|
$ |
1,198.7 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
|
39.8 |
|
|
|
28.8 |
|
Accrued liabilities |
|
164.3 |
|
|
|
94.3 |
|
Current maturities of operating lease liabilities |
|
17.0 |
|
|
|
14.1 |
|
Total current liabilities |
|
221.1 |
|
|
|
137.2 |
|
Unrecognized tax benefits |
|
29.0 |
|
|
|
26.8 |
|
Long-term deferred taxes |
|
3.7 |
|
|
|
3.5 |
|
Long-term debt |
|
38.4 |
|
|
|
— |
|
Noncurrent operating lease
liabilities |
|
148.4 |
|
|
|
130.9 |
|
Other long-term
liabilities |
|
11.4 |
|
|
|
14.5 |
|
Total liabilities |
|
452.0 |
|
|
|
312.9 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, 81.9 million and 81.2 million shares outstanding at
June 30, 2023 and December 31, 2022, respectively |
|
0.8 |
|
|
|
0.8 |
|
Additional paid-in capital |
|
1,276.8 |
|
|
|
1,260.1 |
|
Accumulated other comprehensive loss |
|
(5.4 |
) |
|
|
(8.9 |
) |
Accumulated deficit |
|
(537.0 |
) |
|
|
(366.2 |
) |
Total stockholders' equity |
|
735.2 |
|
|
|
885.8 |
|
Total liabilities and stockholders’ equity |
$ |
1,187.2 |
|
|
$ |
1,198.7 |
|
|
|
|
|
|
|
|
|
MYRIAD GENETICS, INC.AND
SUBSIDIARIESCondensed Consolidated Statements of Cash
Flows(in millions)
|
Six months ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net loss |
$ |
(170.8 |
) |
|
$ |
(34.6 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
32.7 |
|
|
|
25.9 |
|
Non-cash lease expense |
|
5.8 |
|
|
|
5.7 |
|
Stock-based compensation expense |
|
18.7 |
|
|
|
20.5 |
|
Deferred income taxes |
|
(0.7 |
) |
|
|
(10.6 |
) |
Unrecognized tax benefits |
|
2.3 |
|
|
|
(0.2 |
) |
Net realized losses on marketable investment securities |
|
1.4 |
|
|
|
— |
|
Impairment of goodwill and long-lived assets |
|
— |
|
|
|
10.7 |
|
Other non-cash adjustments |
|
1.7 |
|
|
|
0.4 |
|
Changes in assets and liabilities: |
|
|
|
Prepaid expenses and other current assets |
|
— |
|
|
|
2.3 |
|
Trade accounts receivable |
|
(10.1 |
) |
|
|
(18.9 |
) |
Inventory |
|
(2.3 |
) |
|
|
(0.1 |
) |
Prepaid taxes |
|
(0.1 |
) |
|
|
(0.9 |
) |
Other assets |
|
(5.1 |
) |
|
|
(0.4 |
) |
Tenant improvement allowance received |
|
16.3 |
|
|
|
— |
|
Accounts payable |
|
10.7 |
|
|
|
(8.2 |
) |
Accrued expenses and other liabilities |
|
65.3 |
|
|
|
(82.9 |
) |
Deferred revenue |
|
0.1 |
|
|
|
(4.9 |
) |
Net cash used in operating
activities |
|
(34.1 |
) |
|
|
(96.2 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Capital expenditures |
|
(42.3 |
) |
|
|
(13.0 |
) |
Purchases of marketable
investment securities |
|
— |
|
|
|
(85.5 |
) |
Proceeds from maturities and
sales of marketable investment securities |
|
88.7 |
|
|
|
45.2 |
|
Net cash provided by (used in)
investing activities |
|
46.4 |
|
|
|
(53.3 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Proceeds from common stock
issued under stock-based compensation plans |
|
— |
|
|
|
3.0 |
|
Fees associated with issuance
of revolving credit facility |
|
(5.1 |
) |
|
|
(5.3 |
) |
Proceeds from revolving credit
facility |
|
40.0 |
|
|
|
— |
|
Fees associated with issuance
of revolving credit facility |
|
(1.4 |
) |
|
|
— |
|
Net cash provided by (used in)
financing activities |
|
33.5 |
|
|
|
(2.3 |
) |
Effect of foreign exchange
rates on cash, cash equivalents, and restricted cash |
|
0.5 |
|
|
|
(0.8 |
) |
Net increase (decrease) in
cash, cash equivalents, and restricted cash |
|
46.3 |
|
|
|
(152.6 |
) |
Cash, cash equivalents, and
restricted cash at beginning of the period |
|
66.4 |
|
|
|
258.8 |
|
Cash, cash equivalents, and
restricted cash at end of the period |
$ |
112.7 |
|
|
$ |
106.2 |
|
Safe Harbor StatementThis press release
contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, including the
company's updated fiscal year 2023 financial guidance, the
company's goal of adjusted profitability by the fourth quarter of
2023 and sustainable 10%+ annual revenue growth, statements
relating to the securities class action settlement subject to court
approval, including the expected timing of the initial $20 million
cash payment in the third quarter of 2023 and the payment of the
remaining $57.5 million in the first quarter of 2024, and the
company's intention to pay the majority of the settlement amount in
cash from its cash on hand, operating cash flow and asset based
credit facility, the company's expected capital expenditures and
cash flow from operations for the second half of 2023, and the
company's estimated total available cash and credit at year end
2023. These “forward-looking statements” are management’s present
expectations of future events as of the date hereof and are subject
to a number of known and unknown risks and uncertainties that could
cause actual results, conditions, and events to differ materially
and adversely from those anticipated. These risks include, but are
not limited to: the risk that sales and profit margins of the
company’s existing tests may decline or that the company may not be
able to operate its business on a profitable basis; risks related
to the company’s ability to achieve certain revenue growth targets
and generate sufficient revenue from its existing product portfolio
or in launching and commercializing new tests to be profitable;
risks related to changes in governmental or private insurers’
coverage and 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; continued
uncertainties associated with COVID-19, including its possible
effects on the company's operations and the demand for its
products; the risk that the company may be unable to develop or
achieve commercial success for additional tests in a timely manner,
or at all; the risk that the company may not successfully develop
new markets or channels for its tests, including the company’s
ability to successfully generate substantial revenue outside the
United States; the risk that licenses to the technology underlying
the company’s tests and any future tests are terminated or cannot
be maintained on satisfactory terms; risks related to delays or
other problems with constructing and operating the company’s
laboratory testing facilities; risks related to public concern over
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 or develop 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, acquires or develops;
the risk that the company is not able to secure additional
financing to fund its business, if needed, in a timely manner or on
favorable terms, if it all; risks related to the company’s
projections about the potential market opportunity for the
company’s current and future 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 tests, or patents
or enforcement, in the United States and foreign countries; risks
related to security breaches, loss of data and other disruptions,
including from cyberattacks; risks of new, changing and competitive
technologies in the United States and internationally and that the
company may not be able to keep pace with the rapid technology
changes in its industry, or properly leverage new technologies to
achieve or sustain competitive advantages in its products; the risk
that the company may be unable to comply with financial operating
covenants under the company’s credit or lending agreements; risks
related to the company’s inability to achieve and maintain
effective disclosure controls and procedures and internal control
over financial reporting; risks related to current and future
investigations, claims or lawsuits, including derivative claims,
product or professional liability claims, including the risk that
the court does not approve the settlement of the class action
lawsuit, and risks related to the amount of the company's insurance
coverage limits and scope of insurance coverage with respect
thereto; and other factors discussed under the heading “Risk
Factors” contained in Item 1A of the company’s Annual Report on
Form 10-K filed with the U.S. Securities and Exchange Commission
(SEC) on March 1, 2023 as updated in the company's Quarterly Report
on Form 10-Q filed with the SEC on May 4, 2023, as well as any
further 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. Myriad is not under any obligation, and it expressly
disclaims any obligation, to update or alter any forward-looking
statements, whether as a result of new information, future events
or otherwise except as required by law.
Statement regarding use of non-GAAP
financial measuresIn 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 schedules below and a description of the
adjustments made to the GAAP financial measures is included at the
end of the schedules.
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.
Reconciliation of GAAP to Non-GAAP Financial
Measuresfor the Three and Six Months ended June
30, 2023 and 2022(unaudited data in millions, except per
share amounts)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted Gross
Margin |
|
|
|
|
|
|
|
GAAP Gross Profit (1) |
$ |
125.7 |
|
|
$ |
129.6 |
|
|
$ |
247.7 |
|
|
$ |
246.5 |
|
Equity compensation |
|
0.4 |
|
|
|
0.2 |
|
|
|
0.7 |
|
|
|
0.5 |
|
Acquisition - amortization of
intangible assets |
|
0.3 |
|
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
Transformation
initiatives |
|
0.2 |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
Adjusted Gross Profit |
$ |
126.6 |
|
|
$ |
129.8 |
|
|
$ |
249.2 |
|
|
$ |
247.0 |
|
Adjusted Gross Margin |
|
69.0 |
% |
|
|
72.4 |
% |
|
|
68.3 |
% |
|
|
71.8 |
% |
(1) Consists of
total revenues less cost of testing from the Condensed Consolidated
Statements of Operations. |
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted Operating
Expenses |
|
|
|
|
|
|
|
GAAP Operating Expenses
(1) |
$ |
239.4 |
|
|
$ |
147.4 |
|
|
$ |
413.6 |
|
|
$ |
289.9 |
|
Acquisition - amortization of intangible assets |
|
(10.3 |
) |
|
|
(10.1 |
) |
|
|
(20.6 |
) |
|
|
(20.3 |
) |
Goodwill and long-lived asset impairment charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10.7 |
) |
Equity compensation |
|
(10.8 |
) |
|
|
(9.9 |
) |
|
|
(17.9 |
) |
|
|
(19.7 |
) |
Transformation initiatives |
|
(6.2 |
) |
|
|
(3.7 |
) |
|
|
(17.8 |
) |
|
|
(7.7 |
) |
Legal charges, net of insurance reimbursement |
|
(77.9 |
) |
|
|
1.6 |
|
|
|
(78.2 |
) |
|
|
12.9 |
|
Other adjustments |
|
(0.8 |
) |
|
|
— |
|
|
|
(1.2 |
) |
|
|
0.9 |
|
Adjusted Operating
Expenses |
$ |
133.4 |
|
|
$ |
125.3 |
|
|
$ |
277.9 |
|
|
$ |
245.3 |
|
(1) Consists of
research and development expense, selling, general, and
administrative expense, and goodwill and long-lived asset
impairment charges from the Condensed Consolidated Statements of
Operations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted Operating
Income (Loss) |
|
|
|
|
|
|
|
GAAP Operating Loss |
$ |
(113.7 |
) |
|
$ |
(17.8 |
) |
|
$ |
(165.9 |
) |
|
$ |
(43.4 |
) |
Acquisition - amortization of intangible assets |
|
10.7 |
|
|
|
10.1 |
|
|
|
21.3 |
|
|
|
20.3 |
|
Goodwill and long-lived asset impairment charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10.7 |
|
Equity compensation |
|
11.1 |
|
|
|
10.1 |
|
|
|
18.5 |
|
|
|
20.2 |
|
Transformation initiatives |
|
6.4 |
|
|
|
3.7 |
|
|
|
18.0 |
|
|
|
7.7 |
|
Legal charges, net of insurance reimbursement |
|
77.9 |
|
|
|
(1.6 |
) |
|
|
78.2 |
|
|
|
(12.9 |
) |
Other adjustments |
|
0.8 |
|
|
|
— |
|
|
|
1.2 |
|
|
|
(0.9 |
) |
Adjusted Operating Income
(Loss) |
$ |
(6.8 |
) |
|
$ |
4.5 |
|
|
$ |
(28.7 |
) |
|
$ |
1.7 |
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted Net
Loss (1) |
|
|
|
|
|
|
|
GAAP Net Loss |
$ |
(116.1 |
) |
|
$ |
(14.1 |
) |
|
$ |
(170.8 |
) |
|
$ |
(34.6 |
) |
Acquisition - amortization of intangible assets |
|
10.7 |
|
|
|
10.1 |
|
|
|
21.3 |
|
|
|
20.3 |
|
Goodwill and long-lived asset impairment charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10.7 |
|
Equity compensation |
|
11.1 |
|
|
|
10.1 |
|
|
|
18.5 |
|
|
|
20.2 |
|
Transformation initiatives |
|
6.4 |
|
|
|
3.7 |
|
|
|
18.0 |
|
|
|
7.7 |
|
Legal charges, net of insurance reimbursement |
|
77.9 |
|
|
|
(1.6 |
) |
|
|
78.2 |
|
|
|
(12.9 |
) |
Other adjustments |
|
0.8 |
|
|
|
— |
|
|
|
1.2 |
|
|
|
(0.9 |
) |
Tax adjustments |
|
2.8 |
|
|
|
(4.7 |
) |
|
|
9.8 |
|
|
|
(9.8 |
) |
Adjusted Net Income
(Loss) |
$ |
(6.4 |
) |
|
$ |
3.5 |
|
|
$ |
(23.8 |
) |
|
$ |
0.7 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
81.7 |
|
|
|
80.4 |
|
|
|
81.5 |
|
|
|
80.3 |
|
Diluted |
|
81.7 |
|
|
|
81.0 |
|
|
|
81.5 |
|
|
|
81.0 |
|
Adjusted Earnings Per
Share |
|
|
|
|
|
|
|
Basic |
$ |
(0.08 |
) |
|
$ |
0.04 |
|
|
$ |
(0.29 |
) |
|
$ |
0.01 |
|
Diluted |
$ |
(0.08 |
) |
|
$ |
0.04 |
|
|
$ |
(0.29 |
) |
|
$ |
0.01 |
|
(1) To determine
Adjusted Earnings Per Share, or adjusted EPS. |
|
Adjusted Free Cash Flow
Reconciliationfor the Three and Six Months Ended
June 30, 2023 and 2022(unaudited data in millions)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flow from
operations |
$ |
(0.9 |
) |
|
$ |
(49.7 |
) |
|
$ |
(34.1 |
) |
|
$ |
(96.2 |
) |
Transformation initiatives |
|
6.4 |
|
|
|
3.7 |
|
|
|
12.3 |
|
|
|
7.7 |
|
Legal charges, net of insurance reimbursement |
|
0.4 |
|
|
|
47.0 |
|
|
|
2.2 |
|
|
|
49.9 |
|
Other adjustments |
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
Adjusted operating cash
flow |
$ |
5.9 |
|
|
$ |
1.0 |
|
|
$ |
(19.2 |
) |
|
$ |
(38.6 |
) |
Capital expenditures |
|
(18.8 |
) |
|
|
(6.7 |
) |
|
|
(42.3 |
) |
|
|
(13.0 |
) |
Adjusted free cash
flow(1) |
$ |
(12.9 |
) |
|
$ |
(5.7 |
) |
|
$ |
(61.5 |
) |
|
$ |
(51.6 |
) |
(1) The company
has revised its Adjusted Free Cash Flow metric in the quarter ended
June 30, 2022 to exclude the tax impact, if any, associated with
non-GAAP adjustments. |
|
|
|
|
|
|
|
|
|
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.
- Goodwill and long-lived asset impairment charges – impairment
charges on long-lived assets and goodwill.
- Equity compensation – non-cash equity-based compensation
provided to Myriad Genetics employees and directors.
- Transformation initiatives – transitory costs such as
consulting and professional fees related to transformation
initiatives, additional rent as a result of the build-out of the
company's new laboratories in Salt Lake City, Utah and in South San
Francisco, California, while maintaining its current laboratories
in those locations, re-location costs of equipment to new
laboratories, severance costs, and accelerated depreciation in
connection with the company's decision to cease the use of its
former corporate headquarters in Salt Lake City, Utah. With respect
to the adjusted free cash flow reconciliation, the cash flow effect
of transformation initiatives excludes non-cash items such as
accelerated depreciation.
- Legal charges, net of insurance reimbursement – one-time legal
expenses, net of insurance reimbursement. With respect to the
adjusted free cash flow reconciliation, the cash flow effect
includes cash paid for settlements in the related period.
- Other adjustments – other one-time non-recurring expenses
including consulting and professional fees related to prior year
acquisitions, changes in the fair value of contingent consideration
related to acquisitions from prior years and reclassifications of
cumulative translation adjustments to income upon liquidation of an
investment in a foreign entity.
- Tax adjustments – tax expense/(benefit) due to non-GAAP
adjustments, differences between stock compensation recorded for
book purposes as compared to the allowable tax deductions, and
valuation allowance recognized against federal and state deferred
tax assets in the United States. A valuation allowance of $37.2
million was not recognized for non-GAAP purposes given the
company's historical and forecasted positive earnings
performance.
1 Change of estimates may include both positive and negative
adjustments primarily driven by changes in the estimated
transaction price due to contractual adjustments, actual cash
collections, and obtaining updated information from payors and
patients that was unknown at the time revenue was recognized.
Myriad Genetics (NASDAQ:MYGN)
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