Publicly-Traded Esoteric Labs Post Healthy Growth Numbers for Quarter

These are booming times for the publicly-traded esoteric laboratories, with their most recent quarterly reports radiant with relentlessly upbeat revenue numbers.

NeoGenomics
At the top of this greenhouse of growth would be the Florida-based molecular cancer laboratory NeoGenomics. For the first quarter ending March 31, it reported a 159 percent increase in revenue, to $59.7 million from $23 million from the yearago quarter. Not only that, the company also broke into the black, reporting net income of $155,000, compared to a loss of $761,000 for the first quarter of 2015.

Company officials attributed that in part to the acquisition late last year of Clarient, Inc. for $190 million in cash and stock. That company, with annual revenue of $127 million in 2014, was among the biggest reasons for the enormous revenue boost.

“The acquisition of Clarient is providing scale advantages and we’re beginning to realize synergies as planned,” said NeoGenomics Chief Executive Officer Douglas Van Oort in a statement. “Customer retention has been excellent as a result of continued strong service levels. In addition, we achieved very strong core volume growth even as we engaged deeply in integration activities. Current and potential clients have responded exceptionally well to the acquisition, and our sales pipeline is very strong.” NeoGenomic’s own organic test volume grew by 36 percent compared to the first quarter of 2015.

As a result of the numbers, NeoGenomics increased its 2016 guidance by $2 million apiece for both revenue and pretax earnings. It expects the former to reach a range of $242 - $252 million, the latter in the range of $35 to $40 million.

Foundation Medicine
Although Massachusetts-based Foundation Medicine, which also offers complex molecular cancer tests, continued to operate in the red, it grew its first quarter revenue by 57 percent to $30.4 million. But it reported a net loss of $17.5 million, up from the $17 million loss reported in the first quarter of 2015.

Testing volume grew 14 percent during the quarter, compared to the first quarter of 2015. However, Chief Financial Officer Jason Ryan told analysts during a recent conference call the average reimbursement per test dropped from $3,200 in the fourth quarter last year to $3,100, a decline of nearly 4 percent. Diagnostic revenue dropped to $10.2 million from $11.1 million in the first quarter of 2015 and $12 million in the fourth quarter of last year. Ryan said that was linked to its non-small cell lung cancer testing going in-network with UnitedHealth, “which means we’re not currently getting paid for other indications.”

Much of the business growth actually occurred in the testing for biopharmaceutical customers. Revenue in that realm grew to $20.2 million from $8.2 million during the first quarter of 2015.

Despite the report in revenue growth, Foundation has not made any changes in its 2016 forecast, which includes revenue in the range of $110 and $120 million and expenses in the range of $175 to $185 million, meaning the company will not report a net profit in 2016.

Veracyte
South San Francisco, Calif.-based Veracyte has also been experiencing significant growth with its Afirma test centered around thyroid cancer, one of the most over-diagnosed diseases in health care, even though its losses grew.

The company reported revenue of $13.6 million, compared to $11.2 million for the first quarter of 2015, an increase of 21 percent. However, it reported a loss of $10.1 million, compared to $7.6 million a year ago, an increase of 33 percent.

“We achieved a strategic reimbursement milestone of signing a group-purchasing agreement that we believe will accelerate our ability to secure payer contracts for Afirma with key health plans this year,” said Veracyte Chief Executive Officer Bonnie Anderson. She added that the company was pushing for Medicare coverage for its bronchial genomic classification test. A similar test for idiopathic pulmonary fibrosis is expected to be launched by the end of this year.

Veracyte stuck to its guidance of $59 to $63 million in revenue for the year. It reported revenue of $49.5 million for 2015 and $38.2 million in 2014.

Genomic Health
Redwood City, Calif.-based Genomic Health narrowed its losses significantly while increase its revenue. It reported a loss of $6.4 million on revenue of $70.5 million. For the first quarter of 2015, it lost $15 million on revenue of $57.7 million.

Test volumes grew 16 percent during the quarter. However, the company also noted its rapid expansion globally, with test volume overseas growing 33 percent, while now accounting for 22 percent of total test volume. It represented $10.4 million of total revenue.

Chief Executive Officer Kim Popovits told analysts during a conference call that revenue for the year was expected to grow 12 to 17 percent, and that pre-tax earnings would eventually move into the black.

Amanda Murphy, an analyst with William Blair & Co. in Chicago, upped her revenue guidance for the year from $328 million to $333 million. “The ability for the company to reaccelerate growth with new products and indications has been impressive, which has been further enhanced by a benefit from meaningful outcomes data,” Murphy wrote.

Myriad Genetics
Salt Lake City-based Myriad Genetics continues its bounceback from the 2013 U.S. Supreme Court decision invalidating its patent on the BRCA gene.

The company reported net income of $32.6 million on revenue of $190.5 million for its fiscal third quarter. That compares to net income of $21.4 million on revenue of $180 million for the year-ago quarter.

“We made significant progress in securing new product reimbursement coverage this quarter, and coupled with positive developments in our other development programs, we remain confident in our ability to deliver on our ... strategic goals,” said Myriad CEO Mark C. Capone.

Although Myriad’s hereditary cancer testing revenue, its biggest book of business, dropped 2 percent compared to a year ago, all other segments rose. The biggest gain was made by the company’s Prolaris prostate cancer test. Prolaris revenues a year ago were $500,000 for the quarter. For the most recent quarter, they were $5.2 million.

Takeaway: The publicly-traded esoteric laboratories are posting relentlessly upbeat numbers for the first part of 2016.