Total revenue was $83.8 million in the third quarter of 2017, compared with $82.3 million in the third quarter of 2016.
Delivered 2 Percent Increase in Revenue; 5 Percent Increase in Test Volume
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| [08-November-2017] |
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REDWOOD CITY, Calif., Nov. 8, 2017 /PRNewswire/ -- Genomic Health, Inc., Inc. (NASDAQ: GHDX) today reported financial results and business progress for the quarter ended September 30, 2017. Total revenue was $83.8 million in the third quarter of 2017, compared with $82.3 million in the third quarter of 2016, an increase of 2 percent. Revenue was negatively impacted by approximately $3 million due to the hurricane disruption in certain regions of the United States. U.S. product revenue was $70.9 million in the third quarter of 2017, compared with $70.0 million in the third quarter of 2016. U.S. invasive breast revenue from Oncotype DX Breast Recurrence Score® tests was $63.1 million in the third quarter of 2017, compared with $64.6 million in the third quarter of 2016. U.S. prostate revenue from Oncotype DX® Genomic Prostate Score™ (GPS™) tests was $5.5 million in the third quarter of 2017, compared with $2.3 million in the third quarter of 2016. International product revenue was $12.9 million in the third quarter of 2017, compared with $12.1 million in the third quarter of 2016, an increase of 7 percent. "In the third quarter, we generated solid results including a 2 percent increase in revenue and a 5 percent increase in test volume, despite disruption in U.S. regions affected by hurricanes. We also reported a net loss of $2.2 million, and on a non-GAAP basis delivered a $1.1 million profit in the third quarter. Importantly, we expect to deliver full-year profit, excluding transaction costs from our collaboration with Biocartis," said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. "We look forward to significant revenue drivers in 2018 including a new higher Medicare rate under PAMA and anticipated TAILORx results, while we expand our business model to increase worldwide access through the development of an in vitro diagnostic, or IVD, version of the Oncotype DX breast cancer test." More than 31,580 Oncotype™ test results were delivered in the third quarter of 2017, an increase of 5 percent, compared with more than 29,990 test results delivered in the same period in 2016. U.S. test volume was negatively impacted by approximately 3 percent due to the hurricane disruption in certain regions of the country. Oncotype DX Breast Recurrence Score tests delivered in the U.S. were consistent with the third quarter of the prior year. Oncotype DX Genomic Prostate Score tests delivered in the U.S. grew 39 percent compared with the third quarter of the prior year. International tests delivered grew 14 percent compared with the same period of the prior year and represented approximately 26 percent of total test volume in the third quarter of 2017. Operating loss for the third quarter of 2017 improved to $2.6 million, compared with $3.0 million for the third quarter of 2016. Net loss was $2.2 million, or $0.06 per share, for the third quarter of 2017, compared with a net loss of $2.8 million, or $0.08 per share, for the third quarter of 2016. Basic and diluted net loss per share was $0.06 for the third quarter of 2017, compared with basic and diluted net loss per share of $0.08 for the third quarter of 2016. Total revenue for the nine months ended September 30, 2017 was $253.3 million compared with $245.1 million for the nine months ended September 30, 2016, an increase of 3 percent. On a constant currency basis, revenue increased 4 percent compared with the same period in the prior year.i International product revenue was $39.4 million for the nine months ended September 30, 2017, compared with $34.8 million for the nine months ended September 30, 2016, an increase of 13 percent, and an increase of 16 percent on a constant currency basis.i Operating loss improved to $8.6 million for the nine months ended September 30, 2017, compared with an operating loss of $16.9 million for the nine months ended September 30, 2016. Net loss was $5.7 million, or $0.17 per share, for the nine months ended September 30, 2017, compared with a net loss of $15.3 million, or $0.46 per share, for the nine months ended September 30, 2016. Cash and cash equivalents and short-term marketable securities at September 30, 2017 were $119.0 million, compared with $97.0 million at December 31, 2016 which included the fair value of the company's investment in a marketable security of $9.3 million at December 31, 2016. The non-GAAP financial measures used adjust for specified items that can be highly variable or difficult to predict. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this release. 2017 Financial Outlook
Recent Business Highlights
Conference Call Details About Genomic Health 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 achieving its financial guidance for the full year 2017; the commercial performance of its tests; 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 estimated impact of the recent hurricanes on the company's business; 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; and the ability of the Company to increase worldwide access through the development of an in vitro diagnostic version of its tests. 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 its 2017 guidance estimates and the assumptions underlying such guidance; 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 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. i Constant currency is a non-GAAP measure that is calculated by comparing the company's quarterly average foreign exchange rates for the nine months ended September 30, 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.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
REVENUES:
Product revenues - United
States $70,881 $70,041 $213,878 $210,092
Product revenues - Outside
of the United States 12,940 12,095 39,409 34,824
------ ------ ------ ------
Total product revenues 83,821 82,136 253,287 244,916
Contract revenues - 122 - 210
--- --- --- ---
Total revenues 83,821 82,258 253,287 245,126
OPERATING EXPENSES (1)(2):
Cost of product revenues 13,433 13,425 40,904 45,177
Research and development 17,212 14,746 47,868 45,303
Selling and marketing 38,303 38,838 120,464 116,327
General and administrative 17,505 18,268 52,651 55,243
------ ------ ------ ------
Total operating expenses 86,453 85,277 261,887 262,050
------ ------ ------- -------
Loss from operations (2,632) (3,019) (8,600) (16,924)
Interest income 263 117 627 282
Gain on sales of marketable
securities - - 2,807 2,009
Other income (expense), net 340 (111) 792 (174)
--- ---- --- ----
Loss before income taxes (2,029) (3,013) (4,374) (14,807)
------ ------ ------ -------
Income tax expense 162 (193) 1,362 464
--- ---- ----- ---
Net loss $(2,191) $(2,820) $(5,736) $(15,271)
======= ======= ======= ========
Basic and diluted net loss
per share $(0.06) $(0.08) $(0.17) $(0.46)
Shares used in computing
basic and diluted net loss
per share 34,675 33,391 34,373 33,141
====== ====== ====== ======
(1) Included in operating expenses for
the three months ended September
30, 2017, were non-cash charges
of $8.1 million, including $5.0
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 2016 of $7.0
million, including $4.7 million of
stock-based compensation expense
and $2.3 million of depreciation
and amortization expenses.
(2) Included in operating expenses for
the nine months ended September
30, 2017, were non-cash charges
of $23.8 million, including $15.2
million of stock-based
compensation expense and $8.6
million of depreciation and
amortization expenses, compared
with non-cash charges for the
same period in 2016 of $20.8
million, including $14.1 million
of stock-based compensation
expense and $6.7 million of
depreciation and amortization
expenses.
GENOMIC HEALTH, INC.
Condensed Consolidated Balance Sheets
(In thousands)
As of As of
December 31,
September 30,
2016
2017
----
(Unaudited) (1)
Cash and cash equivalents $43,019 $40,404
Short-term marketable
securities (2) 75,942 56,585
Accounts receivable, net 35,584 35,179
Prepaid expenses and other
current assets 11,506 13,796
------ ------
Total current assets 166,051 145,964
Property and equipment, net 47,411 45,688
Other assets 9,522 9,462
----- -----
Total assets $222,984 $201,114
======== ========
Accounts payable $8,475 $2,864
Accrued expenses and other
current liabilities 35,947 38,311
Other liabilities 3,867 3,834
Stockholders' equity 174,695 156,105
------- -------
Total liabilities and
stockholders' equity $222,984 $201,114
======== ========
(1) The condensed consolidated
balance sheet at December 31,
2016, 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, 2016.
(2) Included in short-term
marketable securities as of
December 31, 2016 is $9.3
million of corporate equity
securities, representing the
Company's investment in Invitae
Corporation. All remaining
shares of Invitae Corporation
were sold during the quarter
ended March 31, 2017.
GENOMIC HEALTH, INC.
GAAP to Non-GAAP Reconciliations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Income (loss) from operations
reconciliation:
GAAP (loss) from operations $(2,632) $(3,019) $(8,600) $(16,924)
Research and development -
collaboration with Biocartis,
upfront license and option fee 3,249 - 3,249 -
Selling and marketing -
impairment charge for
previously capitalized software - 2,600 - 2,600
--- ----- --- -----
Non-GAAP income (loss) from
operations $617 $(419) $(5,351) $(14,324)
==== ===== ======= ========
Interest and other income
(expense), net reconciliation:
GAAP interest and other income
(expense), net $603 $6 $4,226 $2,117
Non-recurring gain on sale of
marketable securities - - (2,807) (2,009)
--- --- ------ ------
Non-GAAP interest and other
income (expense), net $603 $6 $1,419 $108
==== === ====== ====
Income tax (benefit) expense
reconciliation:
GAAP income tax (benefit)
expense $162 $(193) $1,362 $464
Reduced income tax expense from
the sale of marketable
securities - - (821) (347)
--- --- ---- ----
Non-GAAP income tax (benefit)
expense $162 $(193) $541 $117
==== ===== ==== ====
Net income (loss)
reconciliation:
GAAP net (loss) $(2,191) $(2,820) $(5,736) $(15,271)
Research and development -
collaboration with Biocartis,
upfront license and option fee 3,249 - 3,249 -
Selling and marketing -
impairment charge for
previously capitalized software - 2,600 - 2,600
Non-recurring gain on sale of
marketable securities - - (2,807) (2,009)
Reduced income tax expense from
the sale of marketable
securities - - 821 347
Non-GAAP net income (loss) $1,058 $(220) $(4,473) $(14,333)
====== ===== ======= ========
GENOMIC HEALTH, INC.
GAAP to Non-GAAP Reconciliations (continued)
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Non-GAAP adjustment
summary:
Research and development
expense adjustments $3,249 $ - $3,249 $ -
Selling and marketing
expense adjustments - 2,600 - 2,600
Gain on sale of marketable
securities - - (2,807) (2,009)
--- --- ------ ------
Total non-GAAP adjustments
before tax 3,249 2,600 442 591
Income tax effect - - 821 347
--- --- --- ---
Total non-GAAP adjustments
after tax $3,249 $2,600 $1,263 $938
====== ====== ====== ====
The Company makes reference in this press release to "non-GAAP net income" which excludes research and development expense recorded for a one-time upfront license and option fee, for the Company's collaboration with Biocartis N.V.; and certain other non-recurring income and expenses. 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. In addition, 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, net loss or other income (expense) information prepared in accordance with GAAP. GHDX-F
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Company Codes: NASDAQ-NMS:GHDX |
