Genomic Health, Inc. reported financial results and business progress for the quarter ended March 31, 2018.
Reported Record Revenue of $92.6M and Delivered 13 Percent Revenue Growth on a Pre-606 Adjusted Basis
Reported Net Loss of $3.8M Including First Quarter Charge of $8.5M for Realignment of Resources
Delivered $4.6M Profit on a Non-GAAP Basis
REDWOOD CITY, Calif., May 2, 2018 /PRNewswire/ -- Genomic Health, Inc. (NASDAQ: GHDX) today reported financial results and business progress for the quarter ended March 31, 2018.
"In the first quarter of 2018, we delivered 13 percent growth in revenue and delivered a non-GAAP profit demonstrating continued operating leverage for the 11th consecutive quarter of improved profitability," said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. "We delivered a strong start to the year with multiple revenue drivers, including the implementation of PAMA and AJCC breast cancer staging criteria, and the recent strengthening of NCCN prostate cancer guidelines. With several additional catalysts on the near-term horizon, including ECOG's presentation of TAILORx results at ASCO and the anticipated finalization of the Medicare LCD for the Oncotype DX AR-V7 Nucleus Detect test, we expect strong revenue growth in the second half of the year."
Pre-606 Adjusted Revenue
Effective January 1, 2018, the company adopted the new ASC 606 accounting standard for revenue, using the modified retrospective method, which applies the new standard prospectively and does not impact prior years' financial statements. Since the as-reported 2017 quarterly and annual financial statements will not be restated to reflect the new accounting standard, the company has provided a supplemental financial schedule in the non-GAAP tables at the end of this release, reflecting an estimate of revenue as if the new standard had been applied as of January 1, 2017 referred to herein as "pre-606 adjusted revenue."
First Quarter Financial Results
Total revenue was $92.6 million in the first quarter of 2018, compared with pre-606 adjusted revenue of $82.3 million for the first quarter of 2017, an increase of 13 percent, and an increase of 12 percent on a non-GAAP constant currency basis. Revenue was $84.0 million in the first quarter of 2017.
U.S. product revenue was $78.9 million in the first quarter of 2018, compared with pre-606 adjusted revenue of $69.2 million for the first quarter of 2017, an increase of 14 percent. U.S. product revenue was $70.6 million in the first quarter of 2017. U.S. invasive breast revenue from Oncotype DX Breast Recurrence Score® tests was $71.0 million in the first quarter of 2018, compared with U.S. invasive breast pre-606 adjusted revenue of $63.4 million for the first quarter of 2017, an increase of 12 percent. U.S. invasive breast revenue was $64.8 million in the first quarter of 2017. U.S. prostate test revenue from Oncotype DX® Genomic Prostate Score™ (GPS™) tests was $5.8 million in the first quarter of 2018, compared with $3.3 million in the first quarter of 2017, an increase of 75 percent.
International product revenue was $13.8 million in the first quarter of 2018, compared with pre-606 adjusted revenue of $13.1 million for the first quarter of 2017, an increase of 5 percent, and a 1 percent increase on a non-GAAP constant currency basis. International product revenue was $13.4 million in the first quarter of 2017.
Net loss was $3.8 million, or $0.11 per share on a basic and diluted basis, in the first quarter of 2018, compared with a net loss of $0.8 million, or $0.02 per share on a basic and diluted basis, in the first quarter of 2017. Operating loss was $4.4 million in the first quarter of 2018, compared with an operating loss of $2.8 million in the first quarter of 2017.
On a non-GAAP basis, excluding the $8.5 million one-time charge for the realignment of resources that was completed in the quarter and certain other one-time charges, net income was $4.6 million in the first quarter of 2018, compared with a $2.8 million non-GAAP net loss in the first quarter of 2017. On a non-GAAP basis, operating income was $4.2 million in the first quarter of 2018, compared with a non-GAAP operating loss of $2.8 million in the first quarter of 2017.
More than 32,440 Oncotype™ test results were delivered in the first quarter of 2018, an increase of 3 percent, compared with more than 31,580 test results delivered in the same period in 2017. Oncotype DX Breast Recurrence Score tests delivered in the U.S. grew 4 percent in the first quarter of 2018 compared with the same period in 2017. Oncotype DX Genomic Prostate Score tests delivered in the U.S. grew 25 percent in the first quarter of 2018 compared with the same period in 2017. International tests delivered decreased by 7 percent compared with the same period in 2017 and represented approximately 22 percent of total test volume in the first quarter of 2018.
Cash and cash equivalents and short-term marketable securities at March 31, 2018 were $130.4 million, which included the fair value of the company's investment in marketable equity securities of $3.8 million, compared with $129.6 million at December 31, 2017, which included the fair value of the company's investment in marketable equity securities of $3.5 million.
Recent Business Highlights
- Results from the landmark ECOG-ACRIN Cancer Research Group TAILORx study were accepted for presentation at the Plenary Session at the 2018 American Society of Clinical Oncology Annual Meeting (ASCO) on Sunday, June 3.
- Multiple private insurers established new coverage for the Oncotype DX Genomic Prostate Score test, bringing the total number of U.S. covered lives to more than 71 million.
- Palmetto GBA, a Medicare Administrative Contractor (MAC) that assesses molecular diagnostic technologies, issued a draft local coverage determination (LCD) for the Oncotype DX AR-V7 Nucleus Detect™ test.
- The National Institute for Health and Care Excellence (NICE) in the United Kingdom issued a revised Diagnostics Consultation Document (DCD) including the Oncotype DX Breast Recurrence Score test for continued use to guide adjuvant chemotherapy decisions for patients with hormone receptor-positive, HER2-negative, node-negative early-stage breast cancer.
- Secured tender with the UNICANCER hospital group in France for the Oncotype DX Breast Recurrence Score test increasing access to approximately 20 percent of the French market.
- Established new public coverage for the Oncotype DX Breast Recurrence Score test in Germany, bringing the total number of German covered lives to more than 17 million.
- Secured public coverage with the province of Manitoba for the use of the Oncotype DX Breast Recurrence Score test in early-stage breast cancer patients with node-negative disease, increasing the total number of covered lives in Canada to 35 million.
- The Oncologist published positive results from a study conducted by Sunnybrook Health Sciences Centre in Canada, demonstrating a 37 percent reduction in chemotherapy among breast cancer patients with up to three positive nodes, as well as an increase in physicians' and patients' confidence (49 and 54 percent, respectively) when Oncotype DX was used to make adjuvant treatment decisions.
- Presented results from three studies at the 11th European Breast Cancer Conference (EBCC-11) in March.
- Received acceptance to present two studies utilizing the Oncotype DX Genomic Prostate Score test at the American Urological Association Annual Meeting in May.
Non-GAAP Disclosure
The company makes reference in this press release to "non-GAAP operating income (loss)" which excludes 2018 expenses resulting from the restructuring charges for the cessation of Oncotype SEQ, including the Oncotype SEQ Liquid Select™ test, and Oncotype SEQ product development and commercialization activities (restructuring charges). Additionally, the company references "non-GAAP net income (loss)" which excludes the Q1 2018 restructuring charges as well as fair value adjustments related to its collaborations with Biocartis and Cleveland Diagnostics in the first quarter of 2018 and the gain on sale of marketable equity securities in the first quarter of 2017. The company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the company's ongoing operating performance while improving comparability to prior periods, and, as such, may provide investors with an enhanced understanding of the company's past financial performance and prospects for the future. The company also considers the impact of foreign currency exchange rates on its global business as described in the constant currency table accompanying this press release. The company's management uses such non-GAAP measures internally to evaluate and assess its core operations and to make ongoing operating decisions. This information is not intended to be considered in isolation or as a substitute for income (loss) from operations or net income (loss) information prepared in accordance with GAAP. An explanation and reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this press release.
Conference Call Details
To access the live conference call today, May 2, 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. The conference call ID is 2186716. Please dial in approximately ten minutes prior to the start of the call. 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 presentation to allow for any software download that may be necessary.
About Genomic Health
Genomic Health, Inc. (NASDAQ: GHDX) is the world's leading provider of genomic-based diagnostic tests that help optimize cancer care, including addressing the overtreatment of the disease, one of the greatest issues in healthcare today. With its Oncotype IQ® Genomic Intelligence Platform, the company is applying its world-class scientific and commercial expertise and infrastructure to lead the translation of clinical and genomic big data into actionable results for treatment planning throughout the cancer patient journey, from diagnosis to treatment selection and monitoring. The Oncotype IQ portfolio of genomic tests and services currently consists of the company's flagship line of Oncotype DX® gene expression tests that have been used to guide treatment decisions for more than 900,000 cancer patients worldwide. Genomic Health is expanding its test portfolio to include additional liquid- and tissue-based tests, including the recently launched Oncotype DX® AR-V7 Nucleus Detect™ test. The company is based in Redwood City, California, with international headquarters in Geneva, Switzerland. For more information, please visit www.GenomicHealth.com and follow the company on Twitter: @GenomicHealth, Facebook, YouTube and LinkedIn.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the company's beliefs regarding its future performance, including the company's beliefs regarding its revenue growth for the remainder of 2018 and the drivers of growth; the commercial performance of its tests, including the recent launch of AR-V7 Nucleus Detect; the anticipated Medicare coverage of AR-V7 Nucleus Detect; the ability of new Medicare rates under PAMA to result in additional revenue in 2018; the favorable impact of TAILORx results on revenue in 2018; the attributes and focus of the company's product pipeline; the ability of any potential tests the company may develop to optimize cancer treatment; the ability of the company to develop and commercialize and collaborate with third parties to commercialize additional tests in the future; the ability of the company to increase worldwide access through the development of in vitro diagnostic tests; expectations regarding additional public and private reimbursement coverage for our tests worldwide and the ability of additional coverage to result in additional revenue; and the company's methodology for calculating financial performance under the new ASC 606 accounting standard as compared against prior periods under the previously applicable ASC 605 accounting standard. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the risk that the company may not achieve revenue growth in for the remainder of 2018; the risks and uncertainties associated with the regulation of the company's tests; the results of clinical studies and their impact on reimbursement and adoption; the applicability of clinical study results to actual outcomes; the company's ability to develop and commercialize new tests and expand into new markets domestically and internationally; the commercial success of any collaborations entered into by the company; the risk that the company may not obtain or maintain sufficient levels of reimbursement, domestically or abroad, for its existing tests and any future tests it may develop; the risks of competition; unanticipated costs or delays in research and development efforts; the company's ability to obtain capital when needed and the other risks set forth in the company's filings with the Securities and Exchange Commission, including the risks set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2017. These forward-looking statements speak only as of the date hereof. Genomic Health disclaims any obligation to update these forward-looking statements.
NOTE: The Genomic Health logo, Oncotype, Oncotype DX, Recurrence Score, DCIS Score, Oncotype SEQ, Liquid Select, Genomic Prostate Score, GPS Oncotype DX AR-V7 Nucleus Detect and Oncotype IQ are trademarks or registered trademarks of Genomic Health, Inc. All other trademarks and service marks are the property of their respective owners.
GENOMIC HEALTH, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2018 2017
---- ----
REVENUES:
Product
revenues
-United
States $78,867 $70,587
Product
revenues
-
Outside
of the
United
States 13,758 13,392
------ ------
Total
revenues 92,625 83,979
OPERATING
EXPENSES
(1):
Cost of
product
revenues 18,733 13,672
Research
and
development 16,807 14,874
Selling
and
marketing 41,755 41,507
General
and
administrative 19,718 16,751
------ ------
Total
operating
expenses 97,013 86,804
------ ------
Loss from
operations (4,388) (2,825)
Interest
income 417 158
Gain on
sales of
marketable
securities - 2,807
Other
income
(expense),
net 436 95
--- ---
Income
(loss)
before
income
taxes (3,535) 235
Income
tax
expense 240 1,041
--- -----
Net loss $(3,775) $(806)
======= =====
Basic and
diluted
net loss
per
share $(0.11) $(0.02)
====== ======
Shares
used in
computing
basic
and
diluted
net loss
per
share 35,198 34,009
====== ======
________________________
(1) Included in operating expenses for the three months
ended March 31, 2018 were non-cash charges of $8.3
million, including $5.2 million of stock-based
compensation expense and $3.1 million of depreciation
and amortization expenses, compared with non-cash
charges for the same period in 2017 of $7.5 million,
including $5.1 million of stock-based compensation
expense and $2.4 million of depreciation and
amortization expenses.
GENOMIC HEALTH, INC.
Condensed Consolidated Balance Sheets
(In thousands)
As of As of
March 31, December 31,
2018 2017
---- ----
(Unaudited) (1)
Cash and cash equivalents $42,085 $45,518
Short-term marketable
securities (2) 88,302 84,057
Accounts receivable, net 46,567 31,161
Prepaid expenses and other
current assets 14,035 13,524
------ ------
Total current assets 190,989 174,260
Property and equipment, net 40,824 46,440
Other assets 11,126 10,917
------ ------
Total assets $242,939 $231,617
======== ========
Accounts payable $4,744 $156
Accrued expenses and other
current liabilities 33,904 39,360
Other liabilities 3,899 3,810
Stockholders' equity 200,392 188,291
------- -------
Total liabilities and
stockholders' equity $242,939 $231,617
======== ========
_______________________
(1) The condensed consolidated balance sheet at December
31, 2017, has been derived from the audited
consolidated financial statements at that date
included in the company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017.
(2) Included in short-term marketable securities as of
March 31, 2018 and December 31, 2017 is $3.8 million
and $3.5 million, respectively, of corporate equity
securities, representing the company's investment in
Biocartis N.V.
GENOMIC HEALTH, INC.
GAAP to Non-GAAP Reconciliations
(In thousands)
(Unaudited)
Three Months Ended
March 31,
---------
2018 2017
---- ----
Loss from operations
reconciliation:
GAAP loss from operations $(4,388) $(2,825)
Cost of product revenues -
cessation of Oncotype SEQ 3,576 -
Research and development -
cessation of Oncotype SEQ 3,063 -
Selling and marketing - cessation
of Oncotype SEQ 995 -
General and administrative -
cessation of Oncotype SEQ 909 -
--- ---
Non-GAAP income (loss) from
operations $4,155 $(2,825)
====== =======
Net income (loss) reconciliation:
GAAP net loss $(3,775) $(806)
Cost of product revenues -
cessation of Oncotype SEQ 3,576 -
Research and development -
cessation of Oncotype SEQ 3,063 -
Selling and marketing - cessation
of Oncotype SEQ 995 -
General and administrative -
cessation of Oncotype SEQ 909 -
Other income - Biocartis -change
in fair value (127) -
Other income - Cleveland
Diagnostics -note discount
accretion (62) -
Non-recurring gain on sale of
marketable securities - (2,807)
Reduced income tax expense from the
sale of marketable securities - 821
--- ---
Non-GAAP net income (loss) $4,579 $(2,792)
====== =======
GENOMIC HEALTH, INC.
Non-GAAP Constant Currency Reconciliations
(In thousands)
(Unaudited)
Three Months Ended
March 31,
---------
2018 2017
---- ----
Constant currency reconciliations:
International Revenue:
International revenue (1) $13,758 $13,124
Currency exchange adjustments (2) (476) -
---- ---
Non-GAAP International revenue $13,282 $13,124
======= =======
Period over period constant currency
increase 158
Period over period constant currency
increase percentage 1%
Total Revenue:
Total revenue (1) $92,625 $82,305
Currency exchange adjustments (2) (476) -
---- ---
Non-GAAP total revenue $92,149 $82,305
======= =======
Period over period constant currency
increase 9,844
Period over period constant currency
increase percentage 12%
_________________
(1) For the three months ended March 31,
2018, International revenue and
total revenue is based on GAAP under
ASC 606 and for the three months
ended March 31, 2017, International
revenue and total revenue is based
on the Pre-606 Adjusted revenue on
the following table.
(2) Constant currency is a non-GAAP
measure that is calculated by
comparing the company's quarterly
average foreign exchange rates for
the three months ended March 31,
2018 and 2017. The constant currency
disclosures take current local
currency revenue and translate it
into U.S. dollars based upon the
foreign currency exchange rates used
to translate the local currency
revenue for the applicable
comparable period in the prior year,
rather than the actual exchange
rates in effect during the current
period. It does not include any
other effect of changes in foreign
currency rates on the company's
results or business. The company
believes this non-GAAP financial
measure is useful to investors in
assessing the operating performance
of the business. This non-GAAP
measure should not be considered in
isolation or as an alternative to
GAAP measures.
GENOMIC HEALTH, INC.
Non-GAAP Supplemental Financial Information (1)
(In thousands)
(Unaudited)
First Quarter Second Third Fourth Full Year
Quarter Quarter Quarter
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
U.S. Product revenue, under ASC
605:
Invasive breast test revenue $64,838 $65,629 $63,050 $66,210 $259,727
Prostate test revenue 3,315 4,124 5,501 4,990 17,930
All other test revenue 2,434 2,656 2,330 2,286 9,706
----- ----- ----- ----- -----
Total U.S. product revenue 70,587 72,409 70,881 73,486 287,363
------ ------ ------ ------ -------
Adjustment related to new ASC
606 accounting standard:
Invasive breast test revenue 1,406 1,432 1,404 1,465 5,707
Prostate test revenue - - - - -
All other test revenue - - - - -
--- --- --- --- ---
Total ASC 606 adjustment to
U.S. product revenue 1,406 1,432 1,404 1,465 5,707
----- ----- ----- ----- -----
Pre-606 Adjusted U.S. Product
revenue, net of adjustments:
Invasive breast test revenue 63,432 64,197 61,646 64,745 254,020
Prostate test revenue 3,315 4,124 5,501 4,990 17,930
All other test revenue 2,434 2,656 2,330 2,286 9,706
----- ----- ----- ----- -----
Total Pre-606 Adjusted U.S.
product revenue $69,181 $70,977 $69,477 $72,021 $281,656
======= ======= ======= ======= ========
International product revenue,
under ASC 605:
Invasive breast test revenue $13,220 $12,888 $12,811 $13,517 $52,436
Prostate test revenue 35 30 41 23 129
All other test revenue 137 160 88 138 523
--- --- --- --- ---
Total International product
revenue 13,392 13,078 12,940 13,678 53,088
------ ------ ------ ------ ------
Adjustment related to new ASC
606 accounting standard:
Invasive breast test revenue 268 273 267 279 1,087
Prostate test revenue - - - - -
All other test revenue - - - - -
--- --- --- --- ---
Total ASC 606 adjustment to
International product revenue 268 273 267 279 1,087
--- --- --- --- -----
Pre-606 Adjusted International
product revenue, net of
adjustments:
Invasive breast test revenue 12,952 12,615 12,544 13,238 51,349
Prostate test revenue 35 30 41 23 129
All other test revenue 137 160 88 138 523
--- --- --- --- ---
Total Pre-606 Adjusted
International product revenue $13,124 $12,805 $12,673 $13,399 $52,001
======= ======= ======= ======= =======
Total Product Revenue, under
ASC 605:
Invasive breast test revenue $78,058 $78,517 $75,861 $79,727 $312,163
Prostate test revenue 3,350 4,154 5,542 5,013 18,059
All other test revenue 2,571 2,816 2,418 2,424 10,229
----- ----- ----- ----- ------
Total product revenue 83,979 85,487 83,821 87,164 340,451
------ ------ ------ ------ -------
Adjustment related to new ASC
606 accounting standard:
Invasive breast test revenue 1,674 1,705 1,671 1,744 6,794
Prostate test revenue - - - - -
All other test revenue - - - - -
--- --- --- --- ---
Total ASC 606 adjustment to
total product revenue 1,674 1,705 1,671 1,744 6,794
----- ----- ----- ----- -----
Pre-606 Adjusted Total product
revenue, net of adjustments:
Invasive breast test revenue 76,384 76,812 74,190 77,983 305,369
Prostate test revenue 3,350 4,154 5,542 5,013 18,059
All other test revenue 2,571 2,816 2,418 2,424 10,229
----- ----- ----- ----- ------
Total Pre-606 Adjusted total
product revenue $82,305 $83,782 $82,150 $85,420 $333,657
======= ======= ======= ======= ========
(1) Effective January 1, 2018, the
company adopted new accounting
guidance ASC Topic 606 ("ASC
606"), related to revenue from
contracts with customers, using
a modified retrospective method.
Since the 2017 annual and
quarterly financial statements
will not be restated to reflect
ASC 606, the company is
providing this supplemental
schedule to present 2017 revenue
reflecting an estimate as if ASC
606 had been applied effective
January 1, 2017. This Pre-606
adjusted revenue information is
intended to provide investors
with a basis for considering the
potential directional impact the
adoption of ASC 606 might have
on the company's financial
information that will be
reported in 2018. The Pre-606
adjusted revenue information is
provided only for illustrative
purposes and does not constitute
a restatement of the company's
historical financial statements
previously filed with the SEC,
which should be considered by
investors in their entirety as
filed.
GHDX-F
CONTACT: Investors: Emily Faucette, Genomic Health, 650-569-2824, investors@genomichealth.com or Media: Victoria Steiner, Genomic Health, 415-370-5804, media@genomichealth.com
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SOURCE Genomic Health, Inc.
Company Codes: NASDAQ-NMS:GHDX |
