) reported fourth-quarter 2012 net income of $2.0 million, down
from $2.6 million in the year-ago period. The company's reported
earnings per share (EPS) of 6 cents surpassed the Zacks Consensus
Estimate of 3 cents, but were 2 cents lower than the year-ago
quarter results. Fiscal 2012 EPS came in at 26 cents, ahead of
the Zacks Consensus Estimate of 21 cents and flat compared with
the year-ago result.
Total revenue in the reported quarter climbed 13.2% year over
year to $60.4 million, beating the Zacks Consensus Estimate of
$59 million. Product revenues climbed $12.9 million to $59.9
million in the quarter, while Contract revenues accounted for the
balance. The improvement in product sales was mainly on the back
of significant international growth with diversification of
business and successful utilization of an important global
In the reported quarter, Genomic provided more than 18,820
Oncotype DX test results, up 10% year over year. For the full
year 2012, total revenue increased 14% to $235.2 million compared
with the prior-year result and surpassed the Zacks Consensus
Estimate of $234 million.
Gross profit increased 10.3% year over year to $50.8 million.
However, there was a 219 basis points (bps) improvement in gross
margin to 84.0%. On the other hand, a 12.6% rise in operating
expenses to $48.8 million led to a 178 bps contraction in
operating margin to 3.3%. The rise in operating expenses was
based on higher research and development (29.6% to $13.3
million), selling and marketing (6.7% to $23.9 million), and
general and administrative (8.5% to $11.5 million) expenses.
Genomic Health provided its guidance for fiscal 2013. The
company expects net earnings/loss per share in the range of a
loss of 12 cents to EPS of 8 cents on revenues of $258-$266
million. Also, the company expects to deliver 82,000-84,000
Oncotype DX tests.
Genomic reported another quarter of healthy growth. The number
of Oncotype DX tests delivered by the company during the reported
quarter along with deeper penetration in new markets is quite
encouraging. Further, Genomic is conducting several studies to
expand its portfolio or increase the acceptance of the tests,
thus driving operating expenses. While we are concerned about the
company's dependence on the breast cancer test, we look forward
to the launch of the Oncotype DX prostate cancer test, which is
expected in the second quarter of 2013. Another significant
player in this business, which increases competition in the
While we prefer to remain on the sidelines for Genomic Health,
other medical device stocks worth a look are
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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