Genomic Health, Inc. (GHDX)
Q4 2012 Earnings Call
February 6, 2013 4:30 p.m. ET
Kim Popovits - Chairman, CEO
Dean Schorno - CFO
G. Bradley Cole - COO
Steve Shak - CMO, EVP of Research and Development
Emily Faucette - IR
Tycho Peterson - JP Morgan
Dane Leone - Macquarie Research
Isaac Ro - Goldman Sachs
Amanda Murphy - William Blair
Vamil Divan – Credit Suisse
Bill Quirk - Piper Jaffray
George Zavoico – MLV & Co.
Doug Schenkel - Cowen Research
Dan Leonard - Leerink Swann
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Thank you. Good afternoon, everyone and welcome to Genomic Health conference call to review our fourth quarter and year end 2012 financial results.
Before we begin, I'd like to remind you that various remarks that we make on this call that are not historical, including those about our future financial and operating results, our plans and prospects, our ability to leverage our existing infrastructure, the success of our business strategy, economic benefits and value to payers of our tests; growth opportunities, our planned launch of a test for prostate cancer patients, future products, product enhancements and our product pipeline, demand for our tests and drivers of demand, payer coverage and progress in reimbursement and patient access, our investment in our product pipeline, international expansion and commercial organization, clinical outcomes and timing of clinical studies and product launches, and our expectations regarding our ability to comply with potential FDA regulation, constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act.
We refer you to our quarterly report on Form 10-Q for the quarter ended September 30, 2012, filed with the SEC, in particular to the section entitled Risk Factors, for additional information on factors that could cause actual results to differ materially from our current expectations. These forward-looking statements speak only as of the date hereof, and we disclaim any obligation to update these forward-looking statements.
Joining me on the call today are Kim Popovits, our Chairman of the Board, Chief Executive Officer and President; Brad Cole, our Chief Operating Officer; Dean Schorno, our Chief Financial Officer; Steve Shak, our Chief Medical Officer and Executive Vice President of Research and Development; and Kathy Hibbs, Senior Vice President and General Counsel.
I'll now turn the call over to Kim.
Thanks Emily. Good afternoon everyone and welcome. We delivered strong full-year 2012 financial results including a $0.2 million in net income and 14% year over year revenue growth, highlighted by a record revenue in the fourth quarter. These results reflects continued market expansion in the U.S. and significant international growth. Looking ahead, we are focused on several near term milestones that we expect will further diversify our business and similar (ph) long term growth. Importantly we believe the anticipated publication of our DCIS clinical validation study will support our ongoing efforts to increase reimbursement and extend patient access to the DCIS score.
Additionally, we remain on track to launch the Oncotype DX prostate cancer test, our third product franchise, in the second quarter and look forward to sharing full results from the positive UCSF clinical validation study at the American Urological Association meeting in early May in San Diego.
I will now turn the call over to Dean, Brad and Steve to provide further detail on our fourth quarter and year end financial results, our worldwide commercial and operations progress and our recent clinical updates. I will then conclude with our business priorities for 2013. Dean?
Thank you, Kim. During the fourth quarter, we delivered record revenue of $60.4 million compared with $53.4 million in the fourth quarter of 2011. Product revenue was $60 million compared with $53.2 million for the fourth quarter of 2011. Contract revenue comprised the balance of total revenue for both periods.
During the quarter we delivered $2 million in net income compared to $2.6 million in the same period of 2011 which included an approximate $1 million incremental benefits from a license fee reduction. We delivered more than 18,820 Oncotype DX tests in the fourth quarter reflecting a 10% year over year increase. 60% of tests delivered and 68% of product revenue were recorded on an accrual basis in the fourth quarter of 2012.
Our gross margin for the quarter was 84%. For the full year 2012, total revenue increased to $235.2 million compared with $206.1 million in 2011, an increase of 14%. Product revenue was $233.5 million for the full year of 2012 compared with $204.8 million in 2011. International revenues were 12% of product revenues, an increase of approximately 45% compared with 2011.
Our annual net income was $8.2 million compared with $7.8 million in 2011. In 2012, we delivered more than 74,520 tests, an increase of 12% compared with 2011. Cash, cash equivalents and marketable securities at December 31, 2012 were $99.1 million after funding a $30 million share repurchase compared with $100.5 million at December 31, 2011. The share repurchase program was initiated in December and was completed on Friday, February 1 with the repurchase of approximately 1,061,000 shares. Net cash provided by operating activities for the full year was $25.8 million.