Myriad Genetics, Inc. (MYGN)
F2Q12 Earnings Call
January 31, 2012 04:30 p.m. ET
Peter D. Meldrum – President and CEO
Mark C. Capone – President, Myriad Genetic Laboratories
James S. Evans – CFO
Rebecca Chambers – Director of IR
Amanda Murphy - William Blair & Company
Jon Wood – Jefferies & Company
Scott Gleason - Stephens Inc.
Michael Yee - RBC Capital Markets
Doug Schenkel - Cowen & Co.
Tycho Peterson – JP Morgan
Isaac Ro - Goldman Sachs & Co.
William Quirk - Piper Jaffray
Dan Leonard - Leerink Swann
Peter Lawson - Mizuho Securities USA Inc.
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I would now like to turn the conference over to Rebecca Chambers, Director of Investor Relations. Please go ahead, ma’am.
Thank you, Lindsey. Good afternoon everyone, and welcome to the Myriad Genetics’ Second Fiscal Quarter Earnings Call. During the call we will review the financial results we released today and the progress we have made this quarter on our strategic directives, after which we will host a question-and-answer session. If you have not had a chance to review the earnings release it can be found in the Investor Relations section of our website at www.myriad.com.
Presenting from Myriad today will be Pete Meldrum, President and Chief Executive Officer; Mark Capone, President, Myriad Genetic Laboratories; and Jim Evans, Chief Financial Officer. This call can be heard live via webcast along with the slide presentation at www.myriad.com. The call is being recorded and will be archived along with the presentation in the Investor section of our website.
Please note that some of the information presented here today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management’s current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company’s annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.
With that, I’ll now turn the call over to Pete.
Thank you, Rebecca. To begin, I would like to provide highlights of our second quarter results and introduce the company’s updated financial guidance for fiscal 2012. I’m extremely pleased to report that our second quarter revenue increased 22% year-over-year to a record $122.8 million. This is the second quarter in a row that grows in the total company revenues exceeded 20%.
Molecular diagnostic revenue grew 17% as compared to the second quarter of fiscal 2011, with all of our products demonstrating strong growth, especially COLARIS. For the second quarter in a row demand for the COLARIS test exceeded expectations as product sales grew 56% year-over-year to $10.9 million. We remain excited about the clinical value of this product and expect strong growth to continue in the future.
Our profitability improved during the second quarter as operating income grew 18% year-over-year to $45.5 million and diluted earnings per share increased 27% to $0.33. Given these strong results, we’ve increased our guidance for fiscal 2012.
Revenue is now expected to be $465 million to $475 million, which represents a 16% to 18% growth over the prior fiscal year and a significant increase from our original fiscal 2012 revenue guidance of $445 million to $465 million.
Our expectation for higher revenue growth is due to the strong results we’ve seen from several initiatives that we have put in place to expand our oncology and women’s health markets. Mark will provide an update on each of these initiatives later on in the call.
Diluted earnings per share guidance has also been increased to $1.24 to $1.28 representing a 13% to 16% over fiscal 2011 earnings per share of a $1.10 and up from the original guidance of $1.20 to $1.25. These strong results have positioned us well for continued success particularly when combined with the strategic directives that we’re focusing on for a long term revenue growth.
First, we’re aggressively growing our existing tests and markets. Second, we’re committed to expanding our business internationally. Third, we intend to launch new transformative products across diverse set of major disease indication. Mark will provide an update on the first strategic directive, to grow existing tests and markets and I’ll focus my remaining comments on our European operations and new product development.
With respect to our international strategy, I’m pleased to report that our laboratory in Munich, Germany is open and operational as of the beginning of January. As a reminder this lab has sufficient capacity to generate $50 million in revenues each year, a level which we believe is achievable within the next five years. We’ve hired country managers for all five major markets that we’re focused on, Germany, France, Italy, Spain and Switzerland.
These individuals will be travelling to Salt Lake in February to complete their training sales program, after which they’ll be focused on growing various presence in each of their respective countries. We’ve obtained reimbursement in all five major markets for three of our products, BRACAnalysis, COLARIS and COLARIS AP.