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Myriad Genetics (MYGN) Q2 Earnings Top, Gross Margin Down

Myriad Genetics, Inc. MYGN reported adjusted earnings per share (EPS) of 4 cents in the second quarter of 2022, surpassing the Zacks Consensus Estimate of an adjusted EPS of 2 cents. However, the metric plunged 66.7% from the year-ago quarter’s figure of 12 cents.

The quarter’s adjustments exclude certain acquisition-amortization of intangible asset expenses and equity compensation, among others.

GAAP loss per share was 18 cents compared with the prior-year quarter’s loss of 6 cents.

Revenues

Total revenues fell 5.3% year over year to $179.3 million in the quarter under review. However, the figure surpassed the Zacks Consensus Estimate by 6.7%.

Excluding divested business revenues, RBM, Autoimmune and myPath, second-quarter revenues increased 7% year over year.

Total test volumes in the quarter were 260,000, reflecting a rise of 9% year over year (excluding divested businesses). Sequentially, volume rose 7%.

Quarter in Detail

Segment-wise, Molecular Diagnostic tests recorded total revenues of $179.3 million, up 0.3% year over year.

Within the segment, Hereditary Cancer testing revenues fell 8% year over year to $79.4 million. Pharmacogenomics testing revenues were $33.1 million, up 46% year over year.

Myriad Genetics, Inc. Price, Consensus and EPS Surprise

 

Myriad Genetics, Inc. Price, Consensus and EPS Surprise
Myriad Genetics, Inc. Price, Consensus and EPS Surprise

Myriad Genetics, Inc. price-consensus-eps-surprise-chart | Myriad Genetics, Inc. Quote

 

Tumor Profiling testing revenues rose 11% year over year to $33.5 million. Prenatal testing revenues came in at $33.3 million, up 13%.

Margin Trends

The gross margin in the quarter under review contracted 238 basis points (bps) to 72.3%.

Research and development expenses rose 4.1% year over year to $20.3 million. Selling, general and administrative expenses fell 5.9% to $127.1 million in the reported quarter.

The adjusted operating loss was $17.8 million compared with an adjusted operating loss of $13.3 million in the year-ago quarter.

Financial Position

Myriad Genetics exited the second quarter of 2022 with cash and cash equivalents of $105.2 million compared with $165.2 million at the end of the first quarter of 2022. However, the company had no debt on its balance sheet at the end of the second quarter of 2022.

Cumulative net cash used by operating activities at the end of the second quarter of 2022 was $96.8 million compared with the year-ago cumulative net cash provided by operating activities of $67.4 million.

Guidance

The company has updated its 2022 guidance.

For 2022, the company has reaffirmed revenue expectations in the range of $670-$700 million. The Zacks Consensus Estimate for the same is pegged at $685.3 million.

Adjusted EPS are now expected in the band of a loss of 10 cents to break-even level (previous guidance was in the band of 0-20 cents). The Zacks Consensus Estimate for the metric is pegged at 11 cents.

Our Take

Myriad Genetics exited second-quarter 2022 with better-than-expected results. Robust performance across the Women’s Health business bodes well for the company. The improvement in Pharmacogenomics, Tumor Profiling and Prenatal testing sales are impressive. Within the Mental Health business, the company recorded strong volumes for its GeneSight Psychotropic test, instilling optimism. Gross margin expansion looks encouraging as well. The company’s strategic partnerships with Intermountain Precision Genomics and Epic Systems Corporation in the reported quarter are added upsides.

However, the year-over-year decline in revenues is worrying. The company incurred an operating loss in the quarter under review. The slashed adjusted EPS outlook for 2022 also raises apprehension.

Zacks Rank and Key Picks

Myriad Genetics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, Molina Healthcare, Inc. MOH and Merck & Co. MRK.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 7.0% compared with the industry’s 3.2%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Molina Healthcare, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $ 4.55, which beat the Zacks Consensus Estimate by 4.8%. Revenues of $8.1 billion outpaced the consensus mark by 6.2%.

Molina Healthcare has a long-term estimated growth rate of 16.4%. MOH’s earnings surpassed estimates in the trailing four quarters, the average being 3.2%.

Merck reported second-quarter 2022 adjusted earnings of $1.87 per share, beating the Zacks Consensus Estimate of $1.67. Revenues of $14.6 billion surpassed the Zacks Consensus Estimate by 5.4%. It currently has a Zacks Rank #2.

Merck has a long-term estimated growth rate of 10.1%. MRK’s earnings surpassed estimates in the trailing four quarters, the average surprise being 16.8%.


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