Myriad Genetics (MYGN) Q3 Earnings Miss, Gross Margin Falls

Myriad Genetics, Inc. MYGN reported an adjusted loss per share (EPS) of 19 cents for the third quarter of 2022, significantly wider than the Zacks Consensus Estimate of a loss of 4 cents and the year-ago quarter’s loss of 2 cents per share.

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

GAAP loss per share was 43 cents against the prior-year quarter’s earnings of 30 cents.

Revenues

Total revenues fell 6.5% year over year to $156.4 million in the quarter under review. The figure, however, surpassed the Zacks Consensus Estimate by 9.1%.

Excluding divested business revenues, third-quarter revenues declined 2.3% year over year.

Testing volumes (excluding divested businesses) grew 12% year over year.

Quarter in Detail

Hereditary Cancer testing revenues fell 11% year over year to $70.5 million. Pharmacogenomics testing revenues were $33 million, up 37% year over year.

Tumor Profiling testing revenues were down 6% year over year to $30.8 million. Prenatal testing revenues came in at $22.1 million, down 6%.

Margin Trends

The gross margin in the quarter under review contracted 365 basis points (bps) to 67.8%.

Research and development expenses rose 9% year over year to $20.5 million. Selling, general and administrative expenses fell 27.7% to $130.5 million in the reported quarter.

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

The adjusted operating loss was $45 million compared with an adjusted operating loss of $79.9 million in the year-ago quarter.

Financial Position

Myriad Genetics exited the third quarter of 2022 with cash and cash equivalents of $193.2 million compared with $105.2 million at the end of the second quarter of 2022. However, the company had no debt on its balance sheet at the end of the third quarter of 2022.

The cumulative net cash used in operating activities at the end of the third quarter of 2022 was $98.6 million compared with the year-ago cumulative net cash provided by operating activities of $28.1 million.

Guidance

The company updated its 2022 guidance.

For 2022, the company reduced revenue expectations to the range of $668-$672 million (from the earlier guidance of $670-$700 million). The Zacks Consensus Estimate for the same is pegged at $693.9 million.

The bottom line, on an adjusted basis, is expected to be in the range of a loss of 30 cents to a loss of 35 cents (previous guidance was in the range of a loss of 10 cents to breakeven). The Zacks Consensus Estimate for the metric is pegged at a loss of 4 cents per share.

Our Take

Myriad Genetics exited third-quarter 2022 with lower-than-expected earnings. In the face of external headwinds like a stronger U.S. dollar, significant cost pressure on wages, supply chain and freight charges and problems to advance commercial strategy as planned, the company’s Q3 performance remained sluggish. Significant gross margin contraction and operating loss as a result of mounting cost pressure are concerning. The slashed adjusted EPS outlook for 2022 also raises apprehension.

On a positive note, Hereditary Cancer testing volume returned to growth in the third quarter. GeneSight, within Hereditary Cancer testing, had yet another strong performance with volume improvement. GeneSight continues to produce strong results with two years of consecutive quarterly volume growth.

Zacks Rank and Key Picks

Myriad Genetics currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. ELV, Medpace Holdings, Inc. MEDP and Merit Medical Systems, Inc. MMSI.

Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.

Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.

Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.

Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.

Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.

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