Genomic Health, Inc. Announces Year-End 2011 Financial Results, Provides 2012 Financial Outlook

REDWOOD CITY, Calif., Feb. 6, 2012 /PRNewswire/ -- Genomic Health, Inc. (Nasdaq: GHDX) today reported financial results and business progress for the year ended December 31, 2011.

Total revenue for the year ended December 31, 2011 increased to $206.1 million, compared with $178.1 million in 2010, an increase of 16 percent. Product revenue was $204.8 million, compared with $174.9 million in 2010, an increase of 17 percent. Contract revenue comprised the balance of total revenue for each of these periods.

Net income was $7.8 million for the year ended December 31, 2011, compared with $4.3 million in 2010. Basic and diluted net income per share applicable to common stockholders was $0.27 and $0.26, respectively in 2011, compared with $0.15 and $0.14 per share, respectively, in 2010.

Total revenue for the fourth quarter of 2011 increased to $53.4 million, compared with $47.1 million in the fourth quarter of 2010. Product revenue was $53.2 million in the fourth quarter of 2011, compared with $46.3 million for the fourth quarter of 2010, an increase of 15 percent. Net income in the fourth quarter of 2011 was $2.6 million, compared with $1.7 million in the fourth quarter of 2010. Basic and diluted net income per share applicable to common stockholders was $0.09 and $0.08, respectively, for the fourth quarter of 2011, compared with $0.06 per share in the fourth quarter of 2010.

"In 2011, we increased our financial strength and generated $7.8 million in profit while making important progress across our commercial and pipeline programs," said Kim Popovits, President and Chief Executive Officer of Genomic Health. "As we look ahead, we remain focused on providing solutions that deliver better outcomes for cancer patients worldwide by continuing to expand our Oncotype DX^® services to include prostate cancer and by accelerating the development of next generation genomic and genetic services."

In a separate press release issued today the company announced plans to establish a wholly owned genetics subsidiary with the intention of making clinically relevant genetic information available to physicians and patients beginning in 2013. Genomic Health plans to invest up to $20 million in the new subsidiary over the next two years and has incorporated this into its 2012 financial outlook provided below.

Additional Year-End and Fourth Quarter 2011 Financial Results

Total operating expenses for the year ended December 31, 2011 were $197.9 million, including cost of product revenues of $33.8 million, compared with total operating expenses for the comparable period in 2010 of $174.2 million, including cost of product revenues of $34.6 million. Included in operating expenses for the year ended December 31, 2011 were non-cash charges of $19.0 million, including $11.7 million of stock-based compensation expense and $7.3 million of depreciation and amortization expenses, compared with non-cash charges for the same period in 2010 of $17.5 million, including $10.3 million of stock-based compensation expense and $7.2 million of depreciation and amortization expenses.

Cash and cash equivalents and short-term investments at December 31, 2011 were $100.5 million, compared with $76.8 million at December 31, 2010, an increase of $23.7 million.

Total operating expenses for the fourth quarter of 2011 were $50.7 million, including cost of product revenues of $7.4 million, compared with total operating expenses for the comparable period in 2010 of $45.8 million, including cost of product revenues of $8.7 million. Included in operating expenses for the fourth quarter of 2011 were non-cash charges of $4.7 million, including $2.9 million of stock-based compensation expense and $1.8 million of depreciation and amortization expenses, compared with non-cash charges for the same period in 2010 of $4.2 million, including $2.3 million of stock-based compensation expense and $1.9 million of depreciation and amortization expenses.

More than 66,600 Oncotype DX test results were delivered for the year ended December 31, 2011, an increase of 16 percent, compared with more than 57,270 test results delivered in 2010. In the fourth quarter of 2011, more than 17,080 Oncotype DX test results were delivered, an increase of 13 percent, compared with more than 15,180 test results delivered in the same period in 2010.

2012 Financial Outlook

The company is providing the following financial guidance for the full year ending December 31, 2012:

• Total revenue of $230 to $240 million
• Oncotype DX test results delivered of 75,000 to 77,000
• Full-year net income of $5 to $8 million before an incremental loss of up to $8 million in new subsidiary

"In 2012, we plan to further strengthen our cancer genomics business by making key investments aimed at driving top-line revenue growth with positive cash from operations," said Dean Schorno, Chief Financial Officer of Genomic Health. "Over the next several years, we plan to aggressively invest in what we believe are significant opportunities presented by our growing worldwide business, the recent launch of our breast cancer DCIS Score, our prostate cancer program and next generation products."

Recent Business Highlights:

Oncotype DX Breast Cancer Commercial Progress

• Began providing the Oncotype DX DCIS Score to physicians and patients worldwide.
• Established node-positive reimbursement for an additional eight million U.S. lives through policies or arrangements with BCBS Michigan, Tufts Associated Health Maintenance Organization, Presbyterian Health Plan, BCBS South Carolina HMO and Priority Health.
• Established Medicaid reimbursement for node-negative breast cancer in Minnesota, Michigan, Vermont and Oregon.
• The British Columbia Breast Tumour Group recommended the Ministry of Health begin paying for Oncotype DX for node-negative breast cancer patients in British Columbia, Canada.
• Secured reimbursement coverage with a leading German Sick fund for patients participating in a study conducted by the West German Study Group.
• NCIC researchers in Canada began enrolling node-positive patients in the NCI-sponsored RxPONDER trial, which requires the Oncotype DX Recurrence Score® for study entry.
• Established distribution agreements to provide Oncotype DX in Hungary, Romania and Peru.

Oncotype DX Colon Cancer Commercial Progress

• The Journal of Clinical Oncology published results from the landmark QUASAR clinical validation study, which demonstrated that the Oncotype DX colon cancer test predicts recurrence risk in stage II colon cancer patients following surgery.
• Began providing mismatch repair (MMR) testing for recurrence risk that allows physicians to identify the approximately 15 percent of stage II colon cancer patients with MMR-deficient tumors, who have low recurrence risk and thus may be more appropriately considered for observation following surgery.
• Presented results of the first clinical decision making study of the Oncotype DX colon cancer test at the Gastrointestinal (GI) Cancers Symposium, demonstrating a 29 percent change in treatment recommendations.
• Established reimbursement for an additional 3.8 million U.S. lives through policies or arrangements with Wellmark BCBS of Iowa, Wellmark BCBS of South Dakota, Wisconsin Physicians Service Insurance Corporation, Preferred One and AvMed.

Product Pipeline, Peer-Reviewed Publications and Medical Meeting Presentations

• Initiated large clinical validation study of prostate cancer test.
• Accelerated next generation sequencing (NGS) program in development to be used in clinical studies later this year.
• Presented 16 Oncotype DX studies at the San Antonio Breast Cancer Symposium (SABCS) in December, including:
  • Complete results from the study of Oncotype DX in patients with DCIS.
  • Multiple international studies on changing treatment decisions and/or cost effectiveness of Oncotype DX in the United Kingdom, Germany, France, Ireland, Israel, Canada, Hungary, Japan, Singapore, Australia, and Venezuela.
  • Positive results from the first clinical outcomes study for biomarker discovery using NGS for whole transcriptome profiling of fixed tumor specimens.
• Presented results from a large clinical study in prostate cancer at the Genitourinary (GU) Cancer Symposium evaluating the relationship of microRNAs, a novel class of biomarkers, to clinical outcomes for patients with early stage prostate cancer.

Conference Call Details

To access the live conference call on February 6 at 4:30 p.m. Eastern Time via phone, please dial (877) 303-7208 from the United States and Canada or +1(224) 357-2389 internationally. Please dial in approximately ten minutes prior to the start of the call. A telephone replay will be available beginning approximately two hours after the call through February 13, and may be accessed by dialing (855) 859-2056 from the United States and Canada or +1(404) 537-3406 internationally. The replay passcode is 45978166.

To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of the company's Web site at http://investor.genomichealth.com. Please connect to the web site at least 15 minutes prior to the call to allow for any software download that may be necessary.

About Genomic Health

Genomic Health, Inc. (NASDAQ: GHDX) is a global cancer company focused on the development and commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. Its lead product, the Oncotype DX® breast cancer test, has been shown to predict the likelihood of chemotherapy benefit as well as recurrence in invasive breast cancer and has been shown to the predict the likelihood of recurrence in ductal carcinoma in situ (DCIS). In addition to this widely adopted test, Genomic Health provides the Oncotype DX colon cancer test, the first multigene expression test developed for the assessment of risk of recurrence in patients with stage II disease. As of December 31, 2011, more than 10,000 physicians in over 65 countries had ordered more than 265,000 Oncotype DX tests. Genomic Health has a robust pipeline focused on developing tests to optimize the treatment of prostate and renal cell cancers, as well as additional treatment decisions in breast and colon cancers. The company is based in Redwood City, California with European headquarters in Geneva, Switzerland. For more information, please visit, www.GenomicHealth.com. To learn more about Oncotype DX tests, visit: www.OncotypeDX.com and www.mybreastcancertreatment.org.