) reported first-quarter 2013 net loss of $0.9 million, down from
a net income of $0.8 million in the year-ago period. The
company's reported loss of 3 cents per share was significantly
down from the year-ago period's earnings of 2 cents per share as
well as the Zacks Consensus Estimate of break-even earnings. A
huge contraction in the bottom line drove this dismal
However, total revenue in the reported quarter climbed 7.9%
year over year to $63.1 million, beating the Zacks Consensus
Estimate of $62 million. Product revenues climbed $4.8 million to
$57.9 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 (up 69% year over year to $8.5%)
with diversification of business and successful utilization of an
important global opportunity. In the reported quarter, Genomic
provided 20,350 Oncotype DX test results, up 9% year over year.
This would have been 11% without considering one additional day
in the year-ago quarter due to a leap year.
Gross profit increased 8.6% year over year to $53.3 million.
However, there was a 50.4 basis points (bps) improvement in gross
margin to 84.6%. On the other hand, with a 12.4% rise in
operating expenses to $48.8 million, the company incurred
operating loss of $889 million compared to operating profit of
$871 million in the year-ago quarter. The rise in operating
expenses was based on higher research and development (up 14.5%
to $13.7 million), selling and marketing (up 12.6% to $27.4
million), and general and administrative (9.7% to $13.1 million)
Genomic Health exited the first quarter with cash and cash
equivalents and short-term marketable securities of 96.1 million,
down from $99.1 million at the end of fiscal 2012.
While reporting the fourth quarter and fiscal 2012 results,
Genomic Health had provided its guidance for fiscal 2013. The
company still 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. Further, the company expects to deliver 82,000-84,000
Oncotype DX tests.
Genomic reported a dismal quarter with respect to its earnings
numbers, which was mainly due to a huge operating loss during the
quarter. To add to our worries, this scenario will barely change
in the second quarter as the company expects operating expenses
to increase further with its preparation for the execution of
prostate cancer test. Genomic Healthcurrently expects a net loss
of $3 million in the second quarter.
While we are concerned about the company's dependence on the
breast cancer tests, we look forward to the recent launch of the
Oncotype DX prostate cancer test following the presentation by
the University of California, San Francisco (UCSF) of a positive
clinical validation study at the 2013 American Urological
Association (AUA) Annual Meeting in San Diego.
Genomic Health currently retains a Zacks Rank #3 (Hold).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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