Genomic Health Inc.
) reported fourth-quarter 2013 adjusted loss per share of 1 cent,
narrower than the Zacks Consensus Estimate of loss of 2 cents.
However, results significantly lagged the year-ago earnings of 6
cents per share.
Genomic Health reported net loss of $9.4 million in the fourth
quarter of 2013 against net income of $1.9 million recorded in
the year-ago period.
For full year 2013, adjusted net loss was $3.8 million a (loss of
12 cents per share), against net income of $8.2 million (or an
earnings of 26 cents per share) in the previous year. The
adjusted figure compares favorably with the Zacks Consensus
Estimate of loss of 14 cents per share.
Revenue in Detail
Total revenues rose 13.8% year over year to $68.8 million, but
marginally missed the Zacks Consensus Estimate of $69 million.
The improvement can be attributed to the 11.7% year over year
increase in product revenues to $67.0 million, accompanied by a
robust rise in contract revenues to $1.7 million.
For full year 2013, revenues were $261.5 million, reflecting
growth of 11.2% over the prior year.
During the reported quarter, international product revenues grew
16% year over year to $10.1 million. Genomic Health provided
22,720 Oncotype DX test results, up 21% from the year-ago
The 14.2% rise in gross profit to $58.0 million, can be
attributed to the significant development in the core business of
the company. Accordingly Genomic Health posted gross margin of
84.3%, an expansion of 24 basis points.
On the other hand, Genomic Health incurred a 36.5% rise in
operating expenses to $66.5 million, due to higher research and
development (up 81.0% to $24.1 million), selling and marketing
(up 21.4% to $29.0 million), and general and administrative (up
15.5% to $13.3 million) expenses.
In the reported quarter, Genomic Health recorded an operating
loss of 8.4 million as compared to the year ago operating income
of $2.0 million.
Genomic Health exited the fourth quarter with cash and cash
equivalents, and short-term marketable securities of $105.3
million, from $99.1 million at the end of 2012.
In the reported quarter, Genomic Health expanded its total breast
cancer coverage outside the U.S. to more than 115 million, with
an additional 7.5 million lives covered through contracts made
with insurers in countries like Czech Republic, Mexico and Peru.
Further it also received notice of allowance from the U.S. Patent
Trade Office for patent claims related to the Oncotype DX
prostate cancer test algorithm.
Besides, on Nov 25, 2013 Genomic Health entered into an exclusive
in-licensing agreement with Almac Group for technology and
intellectual property in order to develop a multi-gene test used
for predicting benefits from DNA damage-based chemotherapy
drugs. The test is expected to benefit high-risk breast
cancer patients who are particularly eligible for anthracycline
chemotherapy based on their Oncotype DX score.
Moreover, Genomic Health presented results from multiple studies
at the 36th Annual CTRC-AACR San Antonio Breast Cancer Symposium,
demonstrating the unique value of the Oncotype DX test in
early-stage breast cancer.
In addition, results from multiple Oncotype DX colon cancer
studies at the 2014 American Society of Clinical Oncology
Gastrointestinal Cancer (ASCO GI), confirmed through clinical
evidence, the real-life impact on patient and physician treatment
decisions of Oncotype DX colon cancer test.
The Journal of Clinical Oncology also published positive
results from the third successful validation of the Oncotype DX
colon cancer test in patients with stage II disease and the first
validation study in patients with stage III of the disease.
Genomic Health provided both its revenue and EPS outlook for full
year 2014. The company expects total revenue to vary in the range
of $278 million to $286 million. The Zacks Consensus Estimate of
$291 million remains within the predicted range.
However, the company anticipates a net loss in the range of 95
cents to 75 cents per share, on account of the increased
investment in the U.S. prostate business. The current Zacks
Consensus Estimate of 11 cents for EPS, remains far ahead of the
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Genomic Health also plans to deliver 98,000 to 102,500 Oncotype
DX tests for full-year ending Dec 31, 2014
Despite the loss anticipated in 2014, management hopes to lead
the genomics diagnostics industry on the back of increased
investment to expand its U.S prostate business, successful core
business and multiple commercial opportunities with the Oncotype
DX tests. It intends to facilitate the cancer affected patients
with promising product launches going forward.
We believe Genomic Health's constant initiatives to capitalize on
the $400 million opportunity in breast cancer in Europe and
attempts to augment the prostate cancer investment in the more
than $400 million strong U.S. market should act as major revenue
drivers for the company.
Currently, Genomic Health carries a Zacks Rank #5 (Strong Sell).
However, some of the well-placed stocks that are worth a look in
the MedBio Gene industry include
Biogen Idec Inc.
). All the stocks carry a Zacks Rank #1 (Strong Buy).