Myriad (MYGN) Down 44.1% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Myriad Genetics (MYGN). Shares have lost about 44.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Myriad due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Myriad Genetics Misses Q2 Earnings & Revenue Estimates

Myriad Genetics, Inc. reported adjusted earnings per share of 23 cents in the second quarter of fiscal 2020, down 39.5% year over year. Adjusted EPS also lagged the Zacks Consensus Estimate by 25.8%. Sharp year-over-year decline in revenues stemming from disappointing performance within prenatal business put pressure on the bottom line.

On a reported basis, loss per share was 11 cents against the prior-year quarter’s earnings of 3 cents.

Revenues

Total revenues dropped 10% year over year to $195.1 million in the quarter under review. The figure also missed the Zacks Consensus Estimate by 6.7%. In fiscal second quarter, the company saw lower-than-expected cash collections from its prenatal business. Prenatal cash collections were affected by issues in billing operations that occurred during the conversion of the homegrown Counsyl billing system to an industry standard system used by Myriad Genetics.

Quarter in Detail

Segment-wise, Molecular diagnostic tests recorded total revenues of $181.1 million, down 11% year over year.

Within this segment, Hereditary Cancer testing revenues fell 7% year over year to $117.7 million. EndoPredict testing revenues rose 18% year over year to $2.6 million. Vectra testing revenues were $10.3 million, down 13% year over year. Other testing revenues surged 380% to $4.8 million year on year.

Further, GeneSight testing revenues fell 6% year over year to $22.5 million in the reported quarter. Prolaris tests raked in revenues of $6.8 million, up 12% year over year. Prenatal testing revenues came in at $16.4 million, down 47%.

Pharmaceutical and clinical service revenues in the quarter under review totaled $14 million, up 1% on a year-over-year basis.

Margin Trends

Gross margin in the quarter under review contracted 139 basis points (bps) to 74.6%. Research and development (R&D) expenses fell 16.1% year over year to $18.8 million along with 0.3% increase in selling, general and administrative (SG&A) expenses to $135.6 million in the reported quarter. Adjusted operating loss was $9 million against adjusted operating profit of $7.1 million in the year-ago quarter.

Financial Position

Myriad Genetics exited second-quarter of fiscal 2020 with cash and cash equivalents of $81.2 million compared with $89.9 million at the end of the first quarter of fiscal 2020.Cumulative cash flow from operating activities at the end of the second quarter was $13.9 million compared with $45.6 million at the end of the year-ago quarter.

2020 Guidance

Myriad Genetics lowered the guidance for fiscal 2020 revenues. The company expects fiscal 2020 revenues to be $735 million compared with the previous guidance of $800-810 million. The Zacks Consensus Estimate for the metric is pegged at $806.5 million.

On the bottom-line front, the company lowered adjusted earnings to 45 cents from the earlier projection of $1.00-$1.10. The current consensus mark for the metric is at $1.06.

Management has also provided the guidance for third-quarter fiscal 2020. The company estimates adjusted EPS of 2 cents and total revenues of 172 million. The Zacks Consensus Estimate for adjusted EPS is pegged at at 32 cents. The same for revenues is at $201.8 million.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -120.07% due to these changes.

VGM Scores

At this time, Myriad has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Myriad has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.