Myriad Genetics Drops despite Earnings, Revs Beat; Ups View – Analyst Blog

Myriad Genetics ( MYGN ) reported earnings per share (EPS) of 60 cents in the third quarter of fiscal 2014, registering a remarkable 30.4% beat over the Zacks Consensus Estimate as well as the year-over-year adjusted number. EPS growth was boosted by a strong top line and a reduced share count. Without these adjustments, reported EPS came in at 48 cents, up 4.3% year over year.

However, despite outperforming all estimates, shares of Myriad slashed 9.8% to close at $36.87 following the earnings release.

Quarter in Detail

Revenues increased 17% year over year to $182.9 million, sailing past the Zacks Consensus Estimate of $174 million. Growth was mainly driven by strong performance in the core markets, complemented by international expansion. According to the company, it is perfectly in sync with the strategic initiatives of expanding core hereditary cancer market, growing international business and launching new life-saving products. The company noted that, this quarter is more reflective of a true year-over-year performance sans the impact from additional publicity involving celebrities, which had otherwise acted as a major factorboosting revenues for the past few quarters.

Segments in Detail

Myriad operates through two major segments. Molecular diagnostic tests contributed 96% to total revenue in the quarter while Companion diagnostic tests accounted for the remaining 4% of sales.

Molecular diagnostic tests recorded revenues of $176.2 million, up 19% year over year. Molecular diagnostic testing revenues were, in turn, derived from the Oncology (down 3.5% to $92.4 million) and Women's Health (up 53% to $80.7 million) segments. Myriad noted that, the year-over-year decline in Oncology sales resulted from aMedicare reimbursement reduction of $6 million for BRAC Analysis , effective from Jan 1, 2014. However, the company is looking forward to the 37% increase in reimbursement rate that is now in effect since Apr 1, 2014.

The Hereditary Cancer test generated revenues of $169.6 million in the third quarter, up 16% year over year. Under this segment, BRAC Analysis revenues grossed $119.7 million, BART revenues were $21.1 million, myRisk(TM) Hereditary Cancer revenues totaled $14.5 million, and Colarisand Colaris APrevenues came in at $14.4 million.

Other molecular diagnostic tests generated revenues of $3.5 million, up 25% from the comparable quarter in fiscal 2013.

Companion diagnostic service revenues declined 17% from the year-ago quarter to $6.7 million. According to the company, this segment may reflect fluctuation in sales performance going forward due to the timing of research projects with Myriad's pharmaceutical partners.

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Myriad Genetics Drops despite Earnings, Revs Beat; Ups View - Analyst Blog