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Myriad Genetics: Strong Revenue Growth, EPS Miss in Q3 2024

AInvestSaturday, Nov 9, 2024 7:18 am ET
2min read

Myriad Genetics, Inc. (NASDAQ: MYGN) reported its third quarter 2024 earnings, with revenues beating expectations but EPS lagging. Revenue grew 11% YoY to $213 million, driven by Pharmacogenomics (34%) and Prenatal (10%) segments. Adjusted EBITDA surged to $14.1 million from $1.4 million, reflecting improved gross margins and disciplined management. Despite the strong revenue growth, GAAP loss per share widened to $(0.24) from $(0.22), and adjusted EPS missed estimates at $0.06 vs. $0.07 expected. The company raised its full-year revenue guidance to $837-$843 million but lowered its EPS guidance to $0.12-$0.14. Myriad Genetics faces challenges in maintaining its growth trajectory, as UnitedHealthcare discontinued coverage of its GeneSight test, impacting $10 million in Q3 revenue. However, the company's diverse product portfolio and strategic initiatives position it for long-term growth.

Myriad Genetics' core product categories showed strong revenue growth in the third quarter of 2024, with Pharmacogenomics leading the way at 34% year-over-year, followed by Prenatal at 10%. Hereditary Cancer grew by 5%. The company's overall revenue of $213 million increased by 11% year-over-year, driven by these product categories and progress on payor coverage and revenue cycle initiatives.

Myriad Genetics' revenue growth in the third quarter of 2024 was primarily driven by strong performance in its Pharmacogenomics and Prenatal segments, which grew by 34% and 10% year-over-year, respectively. This growth was supported by progress on payor coverage and revenue cycle initiatives. Additionally, the company's Hereditary Cancer segment grew by 7% year-over-year. Compared to the previous quarter, revenue grew by 11%, reflecting a fifth consecutive quarter of double-digit year-over-year revenue growth. Looking at the same period last year, revenue increased by 13% year-over-year, demonstrating consistent growth momentum.
Myriad Genetics' operating expenses in the third quarter of 2024 were $139.1 million, up 2.2% year-over-year, while adjusted operating expenses increased 6% to $140.8 million. Gross margin expanded 24 basis points to 70.2%. Despite the increase in expenses, adjusted EBITDA surged to $14.1 million from $1.4 million in the same quarter last year. However, GAAP net loss improved to $22.1 million from a loss of $61.3 million, and adjusted earnings (loss) per share improved to $0.06 from ($0.03). The increase in gross margin and EBITDA, coupled with the improvement in revenue, suggests that Myriad Genetics' cost management and operational efficiency are driving earnings growth.
UnitedHealthcare's decision to discontinue coverage of multi-gene panel pharmacogenetic testing, including GeneSight, effective January 1, 2025, impacted Myriad Genetics' third-quarter earnings and outlook. The company generated approximately $10 million and $40 million of GeneSight revenue from UNH's commercial population in the third quarter and trailing twelve month period ended September 30, respectively. Despite the setback, Myriad Genetics continues to pursue a resolution with UNH to allow commercial enrollees to access the GeneSight test. The company's updated 2024 financial guidance reflects this impact, with full-year revenue moving to a range of $837 - $843 million and adjusted earnings per share (EPS) to a range of $0.12 - $0.14. Although the UNH decision may have a short-term impact on Myriad Genetics' earnings, the company's diversified product offerings and continued growth in other segments, such as Pharmacogenomics and Prenatal, should help mitigate the effect.
In conclusion, Myriad Genetics' strong revenue growth in the third quarter of 2024 is a testament to the company's strategic initiatives and product portfolio. Despite the EPS miss, the company's updated guidance and continued growth in key segments position it for long-term success. Investors should monitor the company's progress in resolving the GeneSight coverage issue and its ability to maintain its growth trajectory in the face of market challenges.
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