Genomic Health, Inc. Pushes Toward Profitability

By Markets Fool.com

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Image source: Getty Images.

Genomic Health (NASDAQ: GHDX) reported second-quarter earnings after the bell on Tuesday, raising the bottom-end of the company's 2016 guidance for tests delivered and revenue.

Genomic Health results: The raw numbers

Metric

Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)

Revenue

$82 million

$71 million

16%

(Loss) from Operations

($5.1 million)

($10.8 million)

N/A

(Loss) Per Share

($0.18)

($0.29)

N/A

Data source: Company press release.

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What happened with Genomic Health this quarter?

  • Tests performed for international customers drove revenue growth with a 24% year-over-year increase. U.S. product revenue only increased 15% year over year.
  • The number of tests performed increased 12% year over year. Genomic Health's prostate cancer and DCIS breast-cancer tests remain the big drivers, growing 23% and 24%, respectively, year over year.
  • Genomic Health launched its first liquid-biopsy test, Oncotype SEQ, and licensed a second one from Epic Sciences, pushing into sequencing-based blood tests.
  • Billings to Medicare for its prostate cancer test improved, with the company recording 70% of the eligible Medicare revenue in the second quarter compared to around 50% in the first quarter.

What management had to say

The number of invasive breast-cancer tests performed continued to grow -- up 8% year over year -- boosted by new data presented at the end of last year, which led Brad Cole, Genomic Health's CFO and COO, to make a bold prediction about the test's ability to stomp the competition. "This continued volume growth in invasive breast cancer supports our belief that our market penetration, currently above 50%, can reach 80%," Cole said.

Kim Popovits, Genomic Health's chairman, CEO, and president, thinks the company is making headway in its ongoing battle with Myriad Genetics'(NASDAQ: MYGN) prostate-cancer test Prolaris because of its unique GenomicProstate Score (GPS). "Physicians are getting the clinical differences among the tests" that are on the market, Popovits said, adding that physicians are "really seeing the advantages to using the GPS score, in particular for the low and very low risk patients."

Looking forward

Management increased the bottom of its 2016 guidance for both revenue and tests delivered. Genomic Health now expects to bring in between$325 million and $335 million this year, up from previous guidance of between $320 million and $335 million. The bottom of the guidance for tests delivered was increased by 1,000, and now stands at between 118,500 and 121,000 tests for the year.

The company continues to guide for a net loss in the range of $12 million to $18 million, assuming it hits the mid-point of its revenue guidance. Considering Genomic Health has already lost $12.5 million in the first half of the year, that goal looks achievable, as long as the net loss continues to trend down in the third quarter, and the company reaches its goal of being close to breakeven in the fourth quarter.

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Brian Orelli has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Genomic Health. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.