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New Partnerships to Aid Myriad Genetics Stock Amid Macro Issues
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Myriad Genetics (MYGN - Free Report) has been gaining share in the hereditary cancer market, with volumes rising 3% year over year in the second quarter of 2024. The company continues to see momentum in its prenatal business as well, growing 25% year over year with a 12% increase in testing volume. This volume growth reflects ongoing initiatives to improve average selling prices (ASPs). The stock carries a Zacks Rank #3 (Hold) currently.
The company continues to enhance its customer targeting, digital marketing, and overall operating model to drive commercial leverage in 2024 and beyond. GeneSight revenues increased 22% in second-quarter 2024 from the comparable 2023 period, as the company reported nearly 129,000 tests. ASPs improved both on a year-over-year and quarter-over-quarter basis, reflecting improved revenue cycle management activities.
Myriad Genetics announced several new exciting strategic partnerships, including a collaboration with GlaxoSmithKline to improve access to homologous recombination deficiency (HRD) diagnostic testing for high-grade serous ovarian cancer patients. The company also partnered with QIAGEN to develop distributable HRD tests for global research and companion diagnostics applications. Earlier in 2024, Myriad Genetics and National Cancer Center Hospital East in Japan collaborated to study the prognostic and predictive value of molecular residual disease testing.
Further, the company has a disciplined approach to cost management and expects to maintain strong gross margins. Moreover, it focuses on effective capital deployment in key areas that will improve the customer experience, including new tech-enabled tools and capabilities, innovation, and commercial capabilities. Myriad Genetics developed the Labs of the Future program, aiming to drive innovation and operational excellence to continue delivering high-quality testing results at scale that meet regulatory requirements while shortening turnaround time and reducing cost per test.
Major Concerns for MYGN
On the flip side, the company has active sales operations in Germany, France and Japan, and production operations in Germany and also distributes its SneakPeek Early Gender DNA Test through distributors in the United Kingdom, Australia and other countries. Operating internationally brings various business, regulatory, political, operational, financial and economic risks for Myriad Genetics. These include conflicting and changing laws and regulations, ineffective marketing campaigns, managing multiple payor reimbursement regimes as well as logistics issues in shipping patient samples.
Added to this, political and economic instability, resulting in curtailment of trade and other business restrictions, and global inflationary pressure leading to higher costs of hiring and retaining skilled employees, producing test results and procuring lab supplies are creating significant pressure on the company’s profitability.
In the second quarter, the company recorded a 4% rise in selling, general and administrative expenses due to a $2.6 million increase in compensation costs. Adjusted operating loss in the quarter was $24.9 million.
Further, Myriad Genetics receives a considerable portion of its revenues and pays a portion of its expenses in foreign currencies. As a result, the company remains exposed to the risk of exchange rate fluctuations between foreign currencies and the U.S. dollar. If the dollar strengthens against foreign currencies, the translation of these foreign currency-denominated transactions will result in decreased revenues, operating expenses, and net income.
Management fears this may not be significantly outweighed by increased revenues. Moreover, management does not currently utilize hedging strategies to mitigate foreign currency risk. This is also worrying, given that currently, the dollar has strengthened, affecting many U.S. companies trading in foreign currencies in some of the previous quarters. For instance, in 2023, the company recognized a loss related to foreign currency of $3.4 million.
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New Partnerships to Aid Myriad Genetics Stock Amid Macro Issues
Myriad Genetics (MYGN - Free Report) has been gaining share in the hereditary cancer market, with volumes rising 3% year over year in the second quarter of 2024. The company continues to see momentum in its prenatal business as well, growing 25% year over year with a 12% increase in testing volume. This volume growth reflects ongoing initiatives to improve average selling prices (ASPs). The stock carries a Zacks Rank #3 (Hold) currently.
The company continues to enhance its customer targeting, digital marketing, and overall operating model to drive commercial leverage in 2024 and beyond. GeneSight revenues increased 22% in second-quarter 2024 from the comparable 2023 period, as the company reported nearly 129,000 tests. ASPs improved both on a year-over-year and quarter-over-quarter basis, reflecting improved revenue cycle management activities.
Myriad Genetics announced several new exciting strategic partnerships, including a collaboration with GlaxoSmithKline to improve access to homologous recombination deficiency (HRD) diagnostic testing for high-grade serous ovarian cancer patients. The company also partnered with QIAGEN to develop distributable HRD tests for global research and companion diagnostics applications. Earlier in 2024, Myriad Genetics and National Cancer Center Hospital East in Japan collaborated to study the prognostic and predictive value of molecular residual disease testing.
Further, the company has a disciplined approach to cost management and expects to maintain strong gross margins. Moreover, it focuses on effective capital deployment in key areas that will improve the customer experience, including new tech-enabled tools and capabilities, innovation, and commercial capabilities. Myriad Genetics developed the Labs of the Future program, aiming to drive innovation and operational excellence to continue delivering high-quality testing results at scale that meet regulatory requirements while shortening turnaround time and reducing cost per test.
Major Concerns for MYGN
On the flip side, the company has active sales operations in Germany, France and Japan, and production operations in Germany and also distributes its SneakPeek Early Gender DNA Test through distributors in the United Kingdom, Australia and other countries. Operating internationally brings various business, regulatory, political, operational, financial and economic risks for Myriad Genetics. These include conflicting and changing laws and regulations, ineffective marketing campaigns, managing multiple payor reimbursement regimes as well as logistics issues in shipping patient samples.
Myriad Genetics, Inc. Price
Myriad Genetics, Inc. price | Myriad Genetics, Inc. Quote
Added to this, political and economic instability, resulting in curtailment of trade and other business restrictions, and global inflationary pressure leading to higher costs of hiring and retaining skilled employees, producing test results and procuring lab supplies are creating significant pressure on the company’s profitability.
In the second quarter, the company recorded a 4% rise in selling, general and administrative expenses due to a $2.6 million increase in compensation costs. Adjusted operating loss in the quarter was $24.9 million.
Further, Myriad Genetics receives a considerable portion of its revenues and pays a portion of its expenses in foreign currencies. As a result, the company remains exposed to the risk of exchange rate fluctuations between foreign currencies and the U.S. dollar. If the dollar strengthens against foreign currencies, the translation of these foreign currency-denominated transactions will result in decreased revenues, operating expenses, and net income.
Management fears this may not be significantly outweighed by increased revenues. Moreover, management does not currently utilize hedging strategies to mitigate foreign currency risk. This is also worrying, given that currently, the dollar has strengthened, affecting many U.S. companies trading in foreign currencies in some of the previous quarters. For instance, in 2023, the company recognized a loss related to foreign currency of $3.4 million.
Key Picks
Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , TransMedics Group (TMDX - Free Report) and Boston Scientific (BSX - Free Report) . While Intuitive Surgical and TransMedics sport a Zacks Rank #1 (Strong Buy) each, Boston Scientific currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s shares have surged 57.1% in the past year. Estimates for the company’s earnings have remained constant at $6.67 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 8.97%. In the last reported quarter, it posted an earnings surprise of 16.34%.
Estimates for TransMedics’ 2024 earnings per share (EPS) have moved up 48.1% to $1.20 in the past 30 days. Shares of the company have soared 148.6% in the past year compared with the industry’s 13.2% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Boston Scientific’s 2024 EPS have increased 1.7% to $2.40 in the past 30 days. Year to date, shares of BSX have risen 40.4% compared with the industry’s 12.4% growth.
In the last reported quarter, BSX delivered an earnings surprise of 6.90%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.