) reported second-quarter 2013 net loss of $3.0 million, down
from net income of $1.8 million in the year-ago period. The
company's reported loss of 10 cents per share was narrower than
the Zacks Consensus Estimate of a loss of 28 cents a share.
Moreover, it was significantly down from the year-ago period's
earnings of 6 cents per share. The dismal performance was
primarily attributable to a huge contraction in bottom line.
However, total revenue (comprising solely of product revenues
in this quarter) climbed 10.5% year over year to $63.7 million,
almost in line with the Zacks Consensus Estimate. The upside was
driven by an 11% increase in product revenues and 9% growth in
Despite the completion of the collaboration with
) in the sequentially last quarter, the company failed to
generate contract revenues in the reported quarter.
The improvement in product sales was mainly on the back of a
significant increase in invasive breast cancer penetration in the
U.S. Continued international expansion was another major upside..
During the reported quarter, international product revenues grew
58% year over year to $9.2 million and international test volume
increased 43%. Genomic provided 20,640 Oncotype DX test
results, up 9% year over year.
Gross profit increased 8.9% year over year to $52.9 million.
However, the recent prostate cancer test launch and impact of
sequestration led to a 125 basis points (bps) contraction in
gross margin, which stood at to 83.1% in the quarter. On the
other hand, with a 19.4% rise in operating expenses to $55.8
million, the company incurred operating loss of $2.9 million
compared to operating profit of $1.8 million in the year-ago
quarter. The rise in operating expenses was based on higher
research and development (up 19.2% to $13.8 million), selling and
marketing (up 18.4% to $28.1 million), and general and
administrative (21.6% to $13.9 million) expenses.
Genomic Health exited the second quarter with cash and cash
equivalents, and short-term marketable securities of $107.3
million, up from $99.1 million at the end of fiscal 2012.
Genomic Health reaffirmed its guidance for fiscal 2013. The
company still expects loss of 12 cents to EPS of 8 cents on
revenues of $258-$266 million. Further, the company expects to
deliver 82,000-84,000 Oncotype DX tests.
Genomic reported a disappointing quarter with respect to its
earnings numbers, which was mainly the impact of sequestration
and the Oncotype DX prostate cancer test launch in the last
quarter leading to huge pressure on margin.
However, we are looking forward to the company's successful
business diversification with this much awaited test launch in
May. We believe that this new test for prostate cancer will
reduce the company's dependence on the breast cancer tests over
the long haul. Moreover, the recent Medicare reimbursement for
DCIS Score is another plus.
Genomic Health currently retains a Zacks Rank #5 (Strong
Sell). While we prefer to remain on the sidelines for Genomic
Health, other medical device stocks worth a look are
Align Technology Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
GENOMIC HEALTH (GHDX): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
THORATEC CORP (THOR): Free Stock Analysis
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