Zacks_Analysts' Blog : Myriad Beats, Guides In line - Analyst Blog

Myriad Genetics (MYGN) reported an EPS of 30 cents for the fourth quarter of fiscal 2011, beating the Zacks Consensus Estimate of 28 cents, but lower than the year-ago quarter’s adjusted EPS of 39 cents (after taking into account a one-time income tax benefit of $11.5 million).

For fiscal 2011, the EPS came in at $1.10, surpassing the Zacks Consensus Estimate by a penny, although lower than the previous year’s adjusted EPS of $1.41.

Revenues were $107.4 million, up 14% compared with the year-ago quarter and higher than the Zacks Consensus Estimate of $104.0 million. For fiscal 2011, revenues increased 11% to $402.1 million, beating the Zacks Consensus Estimate of $399 million.

Myriad recorded revenues from two businesses – Molecular diagnostic testing and Companion diagnostic services of $105.4 million (up 12.2% year over year) and $2 million, respectively. The company acquired the Companion diagnostic business following the acquisition of Rules-Based Medicine in May 2011. Molecular diagnostic testing revenue is derived from both Oncology (up 11% to $74.7 million) and Women’s Health (up 15% to $30.6 million).

While Myriad markets several molecular diagnostic products, the company's flagship product is Bracanalysis (representing 86% of total revenues during the quarter), which studies BRCA1 and BRCA2 genes for assessing woman's risk of developing hereditary breast and ovarian cancers. This test recorded a 12.5% growth in revenues to $92.8 million. Moreover, revenues derived from Colaris and Colaris AP, which assess a patient's risk of developing hereditary colorectal and uterine cancers, increased 2.7% to $7.6 million.

Gross profit (representing 88.3% of revenue) increased 14.8% year over year to $94.9 million. Operating expenses increased by 17.9% during the quarter to $53.1 million, due to a 10.2% rise in selling, general and administrative expenses ($43.9 million) while research and development (R&D) expenses increased 75.7% ($9.2 million). Due to the rise in operating expenses, operating margin declined 110 basis points to reach 38.9%.

Myriad exited the fiscal with cash, cash equivalents and marketable securities of $417.3 million, down from $488.4 million at the end of fiscal 2010. The company repurchased 9.8 million shares during the fiscal for $200.5 million. The consistent share buyback program had a favorable impact on the company’s bottom line.

Guidance

Myriad provided its guidance for fiscal 2012. The company expects to report revenues of $445-$465 million resulting in an EPS of $1.20-$1.25. While the current Zacks Consensus Estimate of $451 million in revenues is within the company’s guidance, the Zacks Consensus Estimate of $1.25 in earnings lies at the highest point of the company’s range.  Molecular diagnostic testing and Companion diagnostic services are expected to record revenues of $421-$439 million and $24-$26 million, respectively.