Genomic Health Reports 19% Revenue Growth and Record Profit in Second Quarter 2019, Raises Full-Year Guidance
Delivered $114.1M in Revenue and Growth of 19.4% in the Second Quarter
Reported $16.0M in Profit and EPS of $0.42 Per Share on a Diluted Basis
Raises Full-Year 2019 Revenue and Net Income Guidance
Earnings Call and Webcast Previously Scheduled for Thursday, August 1 Will Now Occur Today Monday, July 29 at 8 a.m. Eastern Time as a Joint Transaction Call with Exact Sciences
REDWOOD CITY, Calif., July 29, 2019 /PRNewswire/ -- Genomic Health, Inc. (NASDAQ: GHDX) today reported financial results and business progress for the quarter ended June 30, 2019. The company's earnings call and webcast previously scheduled for Thursday, August 1 will now occur Monday, July 29 at 8 a.m. eastern time as a joint transaction call with Exact Sciences Corp.
"In the second quarter of 2019 we delivered 19% topline revenue growth and twice the profit compared to last year. These record results were driven by strength across our entire business with first-half revenue growth of 13% in U.S. invasive breast cancer, 44% in U.S. early-stage prostate cancer and 28% outside of the United States," said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. "With this record first-half performance, a public reimbursement recommendation in Germany and increasing private coverage for our urology tests, we are raising both our full-year 2019 revenue and net income guidance."
Second Quarter Financial Results
Total revenue for the second quarter of 2019 was $114.1 million compared with $95.6 million for the second quarter of 2018, an increase of 19.4%, and an increase of 20.1% on a non-GAAP constant currency basis. U.S. product revenue was $96.0 million for the second quarter of 2019 compared with $81.4 million for the second quarter of 2019, an increase of 17.9%.
Revenue delivered across key product areas was as follows:
- U.S. invasive breast revenue from Oncotype DX Breast Recurrence Score® tests was $82.2 million for the second quarter of 2019 compared with $72.5 million for the second quarter of 2019, an increase of 13.4%.
- U.S. prostate test revenue from Oncotype DX® Genomic Prostate Score® (GPS™) tests was $9.6 million for the second quarter of 2019 compared with $6.7 million for the second quarter of 2018, an increase of 42.3%.
- International product revenue for the second quarter of 2019 was $18.1 million compared with $14.2 million for the second quarter of 2018, an increase of 27.7%, and an increase of 32.7% on a non-GAAP constant currency basis.
Net income was $16.0 million, or $0.43 and $0.42 per share on a basic and diluted basis, respectively, for the second quarter of 2019, an improvement of $7.7 million, compared with net income of $8.3 million, or $0.23 per share on a basic and diluted basis, for the second quarter of 2018. Operating income was $15.5 million for the second quarter of 2019, an improvement of $8.4 million, compared with operating income of $7.1 million for the second quarter of 2018.
More than 38,470 Oncotype™ test results were delivered in the second quarter of 2019, an increase of 14.5%, compared with more than 33,590 test results delivered in the same period in 2018. Tests delivered across key product areas was as follows:
- Breast Recurrence Score tests delivered in the U.S. grew 13.3% in the second quarter of 2019 compared with the same period in 2018.
- GPS tests delivered in the U.S. grew 12.3% in the second quarter of 2019 compared with the same period in 2018.
- Oncotype DX international tests delivered grew 21.2% in the second quarter of 2019 compared with the same period in 2018 and represented approximately 23.9% of total test volume in the second quarter of 2019.
Six Months Ended June 30, 2019 Financial Results
Total revenue for the six months ended June 30, 2019, was $222.9 million compared with $188.2 million for the same period in 2018, an increase of 18.4%, and an increase of 19.1% on a non-GAAP constant currency basis. U.S. product revenue was $187.0 million for the six months ended June 30, 2019, compared with $160.3 million for the same period in 2018, an increase of 16.7%.
Revenue delivered across key product areas was as follows:
- U.S. invasive breast revenue from Breast Recurrence Score tests was $162.0 million for the six months ended June 30, 2019, compared with $143.4 million for the same period in 2018, an increase of 13.0%.
- U.S. prostate test revenue from GPS tests was $18.1 million for the six months ended June 30, 2019, compared with $12.5 million for the same period in 2018, an increase of 44.3%.
- International product revenue for the six months ended June 30, 2019 was $35.9 million compared with $27.9 million for the same period in 2018, an increase of 28.4%, and an increase of 33.2% on a non-GAAP constant currency basis.
Net income was $29.0 million, an improvement of $24.5 million, compared with net income of $4.5 million, for the same period in 2018. Operating income was $27.0 million for the six months ended June 30, 2019, an improvement of $24.3 million, compared with operating income of $2.7 million for the same period in 2018.
Cash, cash equivalents and short-term marketable securities at June 30, 2019 were $244 million, an increase of $34 million compared with $210 million at December 31, 2018.
Updated 2019 Financial Guidance
Below is a table summarizing the 2019 full-year guidance increases to both revenue and net income:
Updated Guidance | Former Guidance | ||||||||||
Low | High | Low | High | ||||||||
Revenue (1) | $ | 448 | $ | 452 | $ | 436 | $ | 448 | |||
Revenue Growth | 14% | 15% | 11% | 14% | |||||||
Net Income (1) | $ | 56 | $ | 60 | $ | 48 | $ | 54 | |||
Diluted EPS (2) | $ | 1.44 | $ | 1.54 | $ | 1.23 | $ | 1.38 | |||
(1) In millions. (2) Based on 39 million estimated shares outstanding for diluted EPS. | |||||||||||
Recent Business Highlights
Clinical/Guidelines
- Results from a new analysis of TAILORx confirmed the original, definitive conclusions reported in 2018 with additional detail on clinical risk, focusing on patients with early-stage breast cancer age 50 years or younger. These findings, published in The New England Journal of Medicine and presented at the 2019 ASCO Annual Meeting, showed that stratifying patients by clinical risk alone does not predict chemotherapy benefit.
- Updated American Society of Clinical Oncology (ASCO) guidelines established TAILORx-defined cutoffs for determining chemotherapy benefit with the Oncotype DX Breast Recurrence Score test in node-negative breast cancer, increasing the proportion of women who can be spared unnecessary treatment based on the landmark TAILORx and NSABP B-20 randomized clinical trials.
- Recently updated ESMO guidelines for early-stage breast cancer elevated the Breast Recurrence Score test to the highest 1A level of evidence based on the prospective TAILORx and PlanB studies.
Global Reimbursement
- On June 20, the German Federal Joint Committee (G-BA) issued an exclusive nationwide reimbursement decision for the Oncotype DX Breast Recurrence Score test. This decision follows the conclusion of the German Institute for Quality and Efficiency in Health Care (IQWiG) that only the Oncotype DX test has sufficient evidence to guide breast cancer adjuvant chemotherapy decisions based on results from the landmark TAILORx study.
- On July 1, a three-year registry program started in Belgium to provide patients with funded access to the Oncotype DX Breast Recurrence Score test in breast cancer reference centers throughout the country.
- Additional 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 116 million, including Medicare.
- Multiple private insurers established reimbursement for the Oncotype DX AR-V7 Nucleus Detect test, bringing the total number of U.S. covered lives to more than 75 million, including Medicare.
- Additional private insurers established reimbursement for the Oncotype DX Breast Recurrence Score test in patients with 1-3 positive nodes, bringing the total number of U.S. covered lives in this breast cancer population to more than 144 million, including Medicare.
Non-GAAP Disclosure
The company provides adjusted EBITDA and constant currency, which are non-GAAP financial measure, to supplement the financial information provided on a GAAP basis. Non-GAAP adjusted EBITDA excludes items that are included in GAAP income (loss) from operations, and excludes stock-based compensation expense and depreciation and amortization and their related tax effects. Constant currency is calculated by comparing the company's quarterly average foreign exchange rates for the three and six months ended June 30, 2019 and 2018. 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. Constant currency does not include any other effect of changes in foreign currency rates on the company's results or business. The company believes that these non-GAAP measures reflect 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. Non-GAAP information is not intended to be considered in isolation or as a substitute for comparable information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measure to their most directly comparable GAAP financial measures as detailed in the tables accompanying this press release.
Conference Call Details
To access the live conference call today, July 29, 2019, at 8:00 a.m. Eastern Time via phone, please dial (877) 201-0168 from the United States and Canada, or +1 (647) 788-4901 internationally. The conference call ID is 8288326. Please dial in approximately 10 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 website at http://investor.genomichealth.com. Please connect to the website 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 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 over 1 million cancer patients worldwide. Genomic Health is expanding its test portfolio to include additional liquid- and tissue-based tests, including the 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 updated 2019 financial guidance; the company's beliefs regarding its revenue growth for the remainder of 2019 and the drivers of growth; the company's belief regarding its ability to generate half a billion dollars in revenue in 2020; and the company's expectations regarding additional public and private reimbursement coverage for its tests worldwide and the ability of additional coverage to result in additional revenue. 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 expected revenue growth for the remainder of 2019 or 2020; 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 most recent Annual Report filed on Form 10-K and its most recent subsequently filed Quarterly Report on Form 10-Q. 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, Breast Recurrence Score, DCIS Score, 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 | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
REVENUES: | ||||||||||||
Product revenues - United States | $ | 96,029 | $ | 81,440 | $ | 187,035 | $ | 160,307 | ||||
Product revenues - Outside of the United States | 18,111 | 14,179 | 35,862 | 27,937 | ||||||||
Total product revenues | 114,140 | 95,619 | 222,897 | 188,244 | ||||||||
Contract revenues | — | — | 12 | — | ||||||||
Total revenues | 114,140 | 95,619 | 222,909 | 188,244 | ||||||||
OPERATING EXPENSES (1)(2): | ||||||||||||
Cost of product revenues | 17,674 | 14,383 | 34,681 | 33,116 | ||||||||
Research and development | 15,318 | 15,312 | 30,371 | 32,119 | ||||||||
Selling and marketing | 44,639 | 40,337 | 89,988 | 82,092 | ||||||||
General and administrative | 21,011 | 18,487 | 40,831 | 38,205 | ||||||||
Total operating expenses | 98,642 | 88,519 | 195,871 | 185,532 | ||||||||
Income (loss) from operations | 15,498 | 7,100 | 27,038 | 2,712 | ||||||||
Interest income | 1,334 | 400 | 2,485 | 817 | ||||||||
Unrealized gain (loss) on investments, net | (301) | 1,283 | 148 | 1,410 | ||||||||
Other income (expense), net | (204) | (248) | (78) | 61 | ||||||||
Income (loss) before income taxes | 16,327 | 8,535 | 29,593 | 5,000 | ||||||||
Income tax expense | 340 | 218 | 607 | 458 | ||||||||
Net income (loss) | $ | 15,987 | $ | 8,317 | $ | 28,986 | $ | 4,542 | ||||
Basic net income (loss) per share | $ | 0.43 | $ | 0.23 | $ | 0.79 | $ | 0.13 | ||||
Diluted net income (loss) per share | $ | 0.42 | $ | 0.23 | $ | 0.75 | $ | 0.12 | ||||
Shares used in computing basic net income (loss) per | 37,126 | 35,544 | 36,924 | 35,372 | ||||||||
Shares used in computing diluted net income (loss) per | 38,507 | 36,716 | 38,642 | 36,360 | ||||||||
(1) | Included in operating expenses for the three months ended June 30, 2019 were non-cash charges of $9.6 million, including $6.5 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 2018 of $8.3 million, including $5.2 million of stock-based compensation expense and $3.1 million of depreciation and amortization expenses. | ||||
(2) | Included in operating expenses for the six months ended June 30, 2019 were non-cash charges of $19.3 million, including $12.8 million of stock-based compensation expense and $6.5 million of depreciation and amortization expenses, compared with non-cash charges for the same period in 2018 of $16.5 million, including $10.3 million of stock-based compensation expense and $6.2 million of depreciation and amortization expenses. | ||||
GENOMIC HEALTH, INC. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In thousands) | |||||||
As of | As of | ||||||
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
(Unaudited) | (1) | ||||||
Cash and cash equivalents | $ | 90,925 | $ | 61,645 | |||
Short-term marketable securities (2) | 152,625 | 148,149 | |||||
Accounts receivable, net | 54,307 | 51,531 | |||||
Prepaid expenses and other current assets | 14,369 | 13,511 | |||||
Total current assets | 312,226 | 274,836 | |||||
Property and equipment, net | 43,098 | 39,532 | |||||
Operating lease right-of-use assets | 51,926 | — | |||||
Long-term marketable securities | — | 4,066 | |||||
Other assets | 18,913 | 15,938 | |||||
Total assets | $ | 426,163 | $ | 334,372 | |||
Accounts payable | $ | 6,683 | $ | 8,849 | |||
Accrued expenses and other current liabilities | 43,239 | 50,927 | |||||
Current portion of operating lease liabilities | 4,442 | — | |||||
Operating lease liabilities | 52,423 | — | |||||
Other liabilities | 2,155 | 4,436 | |||||
Stockholders' equity | 317,221 | 270,160 | |||||
Total liabilities and stockholders' equity | $ | 426,163 | $ | 334,372 | |||
(1) | The condensed consolidated balance sheet at December 31, 2018, 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, 2018. | ||||
(2) | Included in short-term marketable securities as of June 30, 2019 and December 31, 2018 is $3.2 million and $3.1 million, respectively, of corporate equity securities, representing the company's investment in Biocartis N.V. | ||||
GENOMIC HEALTH, INC. | ||||||||||||
Non-GAAP Constant Currency Reconciliations | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Constant currency reconciliations: | ||||||||||||
International Revenue: | ||||||||||||
International revenue (1) | $ | 18,111 | $ | 14,179 | $ | 35,862 | $ | 27,937 | ||||
Currency exchange adjustments | 707 | — | 1,354 | — | ||||||||
Non-GAAP International revenue | $ | 18,818 | $ | 14,179 | $ | 37,216 | $ | 27,937 | ||||
Period over period constant currency increase | 4,639 | 9,279 | ||||||||||
Period over period constant currency increase | 32.7% | 33.2% | ||||||||||
Total Revenue: | ||||||||||||
Total revenue (1) | $ | 114,140 | $ | 95,619 | $ | 222,909 | $ | 188,244 | ||||
Currency exchange adjustments | 707 | — | 1,354 | — | ||||||||
Non-GAAP total revenue | $ | 114,847 | $ | 95,619 | $ | 224,263 | $ | 188,244 | ||||
Period over period constant currency increase | 19,228 | 36,019 | ||||||||||
Period over period constant currency increase | 20.1% | 19.1% | ||||||||||
(1) | For the three and six months ended June 30, 2019 compared to the same period ended June 30, 2018, the increase in international revenue was 27.7% and 28.4%, respectively. | ||||
GENOMIC HEALTH, INC. | |||||||||||||
Adjusted EBITDA Reconciliations | |||||||||||||
(In thousands) | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Adjusted EBITDA reconciliation: | |||||||||||||
GAAP income (loss) from operations | $ | 15,498 | $ | 7,100 | $ | 27,038 | $ | 2,712 | |||||
Add: | |||||||||||||
Stock-based compensation expense | 6,506 | 5,155 | 12,787 | 10,341 | |||||||||
Depreciation and amortization | 3,102 | 3,069 | 6,514 | 6,224 | |||||||||
Adjusted EBITDA | $ | 25,106 | $ | 15,324 | $ | 46,339 | $ | 19,277 | |||||
GHDX-F
Contact:
Investors & Media
Emily Faucette
Genomic Health
650-569-2824
[email protected]
[email protected]
SOURCE Genomic Health, Inc.
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