) reported EPS of 34 cents for the fourth quarter of fiscal 2012,
up 14% year over year and at par with the Zacks Consensus Estimate.
For fiscal 2012, EPS increased 18% to $1.30, also in line with the
Zacks Consensus Estimate.
Revenues for the quarter came in at $133 million, up 24% year
over year and marginally higher than the Zacks Consensus Estimate
of $132 million. For fiscal 2012, revenues increased 23% to $496
million, nominally ahead of the Zacks Consensus Estimate of $495
During the quarter, Myriad's two businesses - Molecular
diagnostic testing and Companion diagnostic services - recorded
revenues of $127.5 million (up 21% year over year) and $5.5 million
(up 4.1%), respectively.
The company has been offering Companion diagnostic services
following its acquisition of Rules-Based Medicine in May 2011 which
now accounts for 4% of total revenues. Molecular diagnostic testing
revenue is derived from both Oncology (up 16% to $87 million) and
Women's Health (up 32% to $40.5 million).
While Myriad markets several molecular diagnostic products, the
company's flagship product is Bracanalysis (representing 81.7% of
total revenues during the quarter), which studies BRCA1 and BRCA2
genes for assessing a woman's risk of developing hereditary breast
and ovarian cancers.
This test recorded a 17% jump in revenues to $108.7 million
during the quarter. Moreover, revenues derived from Colaris and
Colaris AP, which assess a patient's risk of developing hereditary
colorectal and uterine cancers, increased 51% to $11.5 million.
Gross profit increased 22.3% year over year to $116 million.
Gross margin, however, declined 110 basis points (bps) to 87.3%.
Operating expenses increased 29.4% during the quarter to $68.7
million due to a 28.9% rise in selling, general and administrative
expenses ($56.6 million) and a 31.6% increase in research and
development (R&D) expenses ($12.1 million).
Higher operating expenses were primarily to support portfolio
expansion, Myriad RBM and deeper penetration in the international
market. Consequently, operating margin declined 330 bps to
Myriad exited the fiscal with cash, cash equivalents and
marketable securities of $454.2 million, an improvement from $417.3
million at the end of fiscal 2011. The company repurchased 2.6
million shares for $61 million during the quarter. The
consistent share buyback program had a favorable impact on the
company's bottom line as shares outstanding declined 1.9% year over
Myriad initiated its guidance for fiscal 2013. The company
expects to report revenues of $550−$565 million (representing
11−14% growth) with Molecular and Companion Diagnostics revenues of
$525-$537 million and $25-$28 million, respectively. The EPS for
the fiscal year is likely to be in a range of $1.44−$1.48.
While revenue guidance is in line with the Zacks Consensus
Estimate of $554 million, EPS guidance nominally fell short of the
consensus estimate of $1.49. Cash flow from operations is expected
to be approximately $150 million.
We consider Myriad's Bracanalysis as a valuable asset for
top-line growth as it has the potential to tap a widely unexplored
market. We are encouraged by the company's various initiatives to
achieve this objective. During fiscal 2012, the company had entered
into agreements with Cephalon, a subsidiary of
) and Pharma Mar to conduct companion diagnostic testing for their
The company has also entered into a loan and acquisition option
agreement with Crescendo Biosciences by making a $25 million debt
investment to secure an exclusive, three-year option to acquire it.
The completion of the potential acquisition would complement
Myriad's portfolio by adding autoimmune and inflammatory disease
products. Moreover, with a strong cash balance, the company is well
placed to expand its product portfolio and target new
However, operating expenses are on rise due to the company's
focus on international expansion and product development. As a
result, margin remains under pressure, although the bottom line
should benefit from the repurchase program.
We currently have a Neutral recommendation on Myriad. The stock
retains a Zacks #3 Rank (Hold) in the short term.
MYRIAD GENETICS (MYGN): Free Stock Analysis
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