
Myriad Shows Significant Progress With Evident Share Gains in 3Q23; Reimbursement Changes Could Put Company on Course Back to Profitability When Combined With Expense Control
11-7-23 (by: Scot Gleason) Myriad Genetics has released its third-quarter 2023 financial results with total revenue reaching $191.9 million. This compares with consensus estimates of $179.2 million. While revenue benefitted from out-of-period revenue accrual adjustments (there was a $7.1 million change of estimate in the current quarter, compared to a $(5.3) million change of estimate in the third quarter of 2022) growth still above expectations at 14%. The strong results could be the result of market share gains as distressed competitors such as Invitae and GeneDx are in active cost cutting mode trying to fight for financial survival with deteriorating balance sheets. Management noted that they added 5,000 providers in the quarter which supports this trend. The company saw an overall 18% increase in total testing volumes, and notable the core hereditary cancer franchise saw 18% growth in volume. Furthermore, important testing categories such as their market leading pharmacogenomic test GeneSight and their prenatal testing franchise also saw robust growth in the quarter. Importantly, the company also renewed its UnitedHealthcare contract providing forward pricing visibility. The company also announced positive reimbursement wins for GeneSight and Prolaris. Management also noted the recent changes with state biomarker legislation which we addressed in our recent call with Hillary Gee Goeckner from Cancer Action Network. While the impact is small currently, given the states that have passed legislation this could have a significant impact over time.
*does not incorporate revenue changes from out of period adjustments
The company also made significant progress in shoring up its liquidity position and expanded its asset-based credit facility to $115.0 million from $90.0 million in the quarter. However, operating expenses did grow at a healthy rate on par with revenue in the quarter, and the company has dramatically increased its CAPEX with its lab of the future investments. Cash flow from operations was ($22) million in the quarter and liquidity will remain one of the biggest investor concerns until the company shows the ability to again drive sustained profitability. The company ended the quarter with $86 million in cash at cash equivalents and $39 million in long-term debt.
Myriad Genetics settled the Ravgen litigation, with $5 million paid on October 31, 2023. An additional $5 million is payable on or before October 31, 2024, and $2.75 million is payable on or before October 31, 2025. Depending on future events, an extra $21.25 million, if payable, would be disbursed in five annual installments commencing no earlier than January 1, 2026. Ravgen has been suing multiple NIPT companies based on intellectual property and has won large settlements from other labs including a $272 settlement from Labcorp. This removes a significant overhang from the stock given Myriad’s significant market position in prenatal testing.
The company increased its revenue guidance to a range of $747 million to $753 million, representing a 10% to 11% growth over 2022, up from the previous range of $730 million to $750 million.
Furthermore, Myriad Genetics has introduced its 2024 revenue guidance, anticipating revenues between $815 million and $835 million, signifying a growth rate of 9% to 11% over the mid-point of the 2023 revenue guidance range. This is in line with its stated long term growth goals and the company reiterated plans to reach future profitability. With expense control and continued growth, Myriad has a realistic path back to profitability in the next few years.