Myriad Genetics Faces Major Changes Amidst Coverage Cuts
Myriad Genetics Faces Cost Restructuring
In a significant announcement, Myriad Genetics Inc. is re-evaluating its cost structure as UnitedHealthcare has decided to discontinue coverage for its GeneSight multi-gene panel pharmacogenetic testing. This change affects various plans, including commercial, individual exchange, and selected managed Medicaid options.
Financial Impact of the Coverage Change
In the previous year, Myriad Genetics generated around $45 million from GeneSight testing through UnitedHealthcare. This included approximately $40 million from commercial plans and $5 million from managed Medicaid plans. The cessation of this coverage marks a pivotal moment for the company, prompting deeper considerations regarding its operational and financial strategy.
Ongoing Negotiations and Operational Adjustments
Myriad Genetics is actively seeking a resolution that enables continued patient access to the GeneSight test under UnitedHealthcare’s plans. However, the company acknowledges that success in these negotiations is not guaranteed. Consequently, Myriad has taken proactive steps to streamline operations and enhance its cost-efficiency to better navigate future challenges.
Company Performance Overview
Recently, Myriad Genetics reported its fourth-quarter earnings, revealing an adjusted earnings per share (EPS) of 3 cents. This was a slight decrease from the previous year’s 4 cents per share but aligned with market expectations. Despite this, the company achieved sales of $210.6 million, which represented a 7% increase year over year, although it did fall short of the consensus estimate of $211.62 million.
Sector-Specific Growth and Revenue Details
Myriad's Oncology segment saw an impressive revenue growth of $82.8 million in the last quarter, driven primarily by an 8% increase in hereditary cancer testing revenue. Additionally, the Women’s Health business segment reported revenues of $87.2 million, with prenatal testing revenue experiencing a significant growth of 12% over the same timeframe.
Future Guidance and Expectations
Looking forward, Myriad Genetics has reaffirmed its adjusted EPS guidance for the upcoming year, estimating between 7 to 11 cents per share, which is above the consensus expectation of 6 cents. Sales projections are set between $840 million and $860 million, while consensus estimates sit at $866.2 million.
Leadership Changes Affecting Strategic Direction
In an important transition, Myriad Genetics appointed Sam Raha as President, CEO, and board member. Raha, who previously served as the Chief Operating Officer, will take over leadership to steer the company through this transformative period, effective immediately. He succeeds Paul J. Diaz, who has decided to pursue opportunities in private equity.
Market Reactions and Analyst Insights
Analysts are closely observing Myriad's performance following the coverage changes and leadership transition. JPMorgan articulates that the company’s recent financial shortfall was largely influenced by the marketing strategies surrounding the launch of Prequel. Moreover, while there is acknowledgment of Myriad’s recovery efforts, uncertainty persists regarding the company’s long-term strategies beyond asset sales.
Current Stock Performance
As of the latest trading updates, Myriad Genetics’ stock has experienced a decline of 14.2%, now trading around $11.83. This drop reflects market responses to the company’s performance and ongoing challenges as it adapts to the changing landscape of healthcare coverage.
Frequently Asked Questions
What coverage changes is Myriad Genetics facing?
Myriad Genetics is facing a substantial loss in coverage for its GeneSight multi-gene panel pharmacogenetic testing as it is discontinued by UnitedHealthcare.
How much revenue did Myriad Genetics make from GeneSight testing?
In the previous year, Myriad Genetics earned about $45 million from GeneSight testing through UnitedHealthcare.
Who has been appointed as the new CEO of Myriad Genetics?
Sam Raha, previously the Chief Operating Officer, has been appointed as the new CEO of Myriad Genetics.
What are the financial projections for Myriad Genetics?
Myriad Genetics projects an adjusted EPS of 7 to 11 cents and expects sales between $840 million and $860 million for the upcoming year.
How has the market reacted to Myriad Genetics' latest performance?
The market has reacted moderately negatively, with Myriad Genetics stock falling by 14.2%, indicating investor concern over the coverage changes and overall performance.
About The Author
Contact Dylan Bailey privately here. Or send an email with ATTN: Dylan Bailey as the subject to contact@investorshangout.com.
About Investors Hangout
Investors Hangout is a leading online stock forum for financial discussion and learning, offering a wide range of free tools and resources. It draws in traders of all levels, who exchange market knowledge, investigate trading tactics, and keep an eye on industry developments in real time. Featuring financial articles, stock message boards, quotes, charts, company profiles, and live news updates. Through cooperative learning and a wealth of informational resources, it helps users from novices creating their first portfolios to experts honing their techniques. Join Investors Hangout today: https://investorshangout.com/
The content of this article is based on factual, publicly available information and does not represent legal, financial, or investment advice. Investors Hangout does not offer financial advice, and the author is not a licensed financial advisor. Consult a qualified advisor before making any financial or investment decisions based on this article. This article should not be considered advice to purchase, sell, or hold any securities or other investments. If any of the material provided here is inaccurate, please contact us for corrections.
