UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  July 29, 2019

 

GENOMIC HEALTH, INC.

(Exact name of registrant as specified in its charter)

 

Delaware
(State or Other Jurisdiction of
Incorporation)

 

000-51541
(Commission File Number)

 

77-0552594
(I.R.S. Employer
Identification No.)

 

301 Penobscot Drive

 

 

Redwood City, California

 

94063

(Address of principal executive offices)

 

(Zip Code)

 

(650) 556-9300

(Registrant’s telephone number,
including area code)

 

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol(s) 

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

GHDX

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b—2 of the Securities Exchange Act of 1934 (§240.12b—2 of this chapter).

 

Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

 

 

 


 

Item 2.02                                            Results of Operations and Financial Condition.

 

On July 29, 2019, Genomic Health, Inc. issued a press release announcing financial results for its second fiscal quarter ended June 30, 2019.  The full text of the press release is furnished as Exhibit 99.1.

 

Item 9.01                                            Financial Statements and Exhibits.

 

(d)                                  Exhibits.

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press release issued by Genomic Health, Inc. dated July 29, 2019.

 

2


 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated:  July 29, 2019

 

 

GENOMIC HEALTH, INC.

 

 

 

 

By:

/s/ Jason W. Radford

 

 

Jason W. Radford

 

 

Chief Legal Officer

 

3


Exhibit 99.1

 

 

Contact:

 

Investors & Media

Emily Faucette

Genomic Health

650-569-2824

investors@genomichealth.com

media@genomichealth.com

 

Genomic Health Reports 19% Revenue Growth and Record Profit in Second Quarter 2019, Raises Full-Year Guidance

 

Delivered $114.1M in Revenue and Growth of 19.4% in the Second Quarter

 

Reported $16.0M in Profit and EPS of $0.42 Per Share on a Diluted Basis

 

Raises Full-Year 2019 Revenue and Net Income Guidance

 

Earnings Call and Webcast Previously Scheduled for Thursday, August 1 Will Now Occur Today Monday, July 29 at 8 a.m. Eastern Time as a Joint Transaction Call with Exact Sciences

 

REDWOOD CITY, Calif., August 1, 2019 — Genomic Health, Inc. (NASDAQ: GHDX) today reported financial results and business progress for the quarter ended June 30, 2019.  The company’s earnings call and webcast previously scheduled for Thursday, August 1 will now occur Monday, July 29 at 8 a.m. eastern time as a joint transaction call with Exact Sciences Corp.

 

“In the second quarter of 2019 we delivered 19% topline revenue growth and twice the profit compared to last year.  These record results were driven by strength across our entire business with first-half revenue growth of 13% in U.S. invasive breast cancer, 44% in U.S. early-stage prostate cancer and 28% outside of the United States,” said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. “With this record first-half performance, a public reimbursement recommendation in Germany and increasing private coverage for our urology tests, we are raising both our full-year 2019 revenue and net income guidance.”

 

Second Quarter Financial Results

 

Total revenue for the second quarter of 2019 was $114.1 million compared with $95.6 million for the second quarter of 2018, an increase of 19.4% , and an increase of 20.1% on a non-GAAP constant currency basis. U.S. product revenue was $96.0 million for the second quarter of 2019 compared with $81.4 million for the second quarter of 2019, an increase of 17.9%.

 

Revenue delivered across key product areas was as follows:

 

·                   U.S. invasive breast revenue from Oncotype DX Breast Recurrence Score ® tests was $82.2 million for the second quarter of 2019 compared with $72.5 million for the second quarter of 2019, an increase of 13.4%.

 


 

·                   U.S. prostate test revenue from Oncotype DX ®  Genomic Prostate Score ®  (GPS ) tests was $9.6 million for the second quarter of 2019 compared with $6.7 million for the second quarter of 2018, an increase of 42.3%.

 

·                   International product revenue for the second quarter of 2019 was $18.1 million compared with $14.2 million for the second quarter of 2018, an increase of 27.7%, and an increase of 32.7% on a non-GAAP constant currency basis.

 

Net income was $16.0 million, or $0.43 and $0.42 per share on a basic and diluted basis, respectively, for the second quarter of 2019, an improvement of $7.7 million, compared with net income of $8.3 million, or $0.23 per share on a basic and diluted basis, for the second quarter of 2018. Operating income was $15.5 million for the second quarter of 2019, an improvement of $8.4 million, compared with operating income of $7.1 million for the second quarter of 2018.

 

More than 38,470 Oncotype  test results were delivered in the second quarter of 2019, an increase of 14.5%, compared with more than 33,590 test results delivered in the same period in 2018. Tests delivered across key product areas was as follows:

 

·                   Breast Recurrence Score tests delivered in the U.S. grew 13.3% in the second quarter of 2019 compared with the same period in 2018.

 

·                   GPS tests delivered in the U.S. grew 12.3% in the second quarter of 2019 compared with the same period in 2018.

 

·                   Oncotype DX international tests delivered grew 21.2% in the second quarter of 2019 compared with the same period in 2018 and represented approximately 23.9% of total test volume in the second quarter of 2019.

 

Six Months Ended June 30, 2019 Financial Results

 

Total revenue for the six months ended June 30, 2019, was $222.9 million compared with $188.2 million for the same period in 2018, an increase of 18.4% , and an increase of 19.1% on a non-GAAP constant currency basis. U.S. product revenue was $187.0 million for the six months ended June 30, 2019, compared with $160.3 million for the same period in 2018, an increase of 16.7%.

 

Revenue delivered across key product areas was as follows:

 

·                   U.S. invasive breast revenue from Breast Recurrence Score tests was $162.0 million for the six months ended June 30, 2019, compared with $143.4 million for the same period in 2018, an increase of 13.0%.

 

·                   U.S. prostate test revenue from GPS tests was $18.1 million for the six months ended June 30, 2019, compared with $12.5 million for the same period in 2018, an increase of 44.3%.

 

·                   International product revenue for the six months ended June 30, 2019 was $35.9 million compared with $27.9 million for the same period in 2018, an increase of 28.4%, and an increase of 33.2% on a non-GAAP constant currency basis.

 

Net income was $29.0 million, an improvement of $24.5 million, compared with net income of $4.5 million, for the same period in 2018. Operating income was $27.0 million for the six months ended June 30, 2019, an improvement of $24.3 million, compared with operating income of $2.7 million for the same period in 2018.

 

Cash, cash equivalents and short-term marketable securities at June 30, 2019 were $244 million, an increase of $34 million compared with $210 million at December 31, 2018.

 


 

Updated 2019 Financial Guidance

 

Below is a table summarizing the 2019 full-year guidance increases to both revenue and net income:

 

 

 

Updated Guidance

 

 

Former Guidance

 

 

 

Low

 

High

 

 

Low

 

High

 

Revenue (1)

 

$

448

 

$

452

 

 

$

436

 

$

448

 

Revenue Growth

 

14

%

15

%

 

11

%

14

%

 

 

 

 

 

 

 

 

 

 

 

Net Income (1)

 

$

56

 

$

60

 

 

$

48

 

$

54

 

Diluted EPS (2)

 

$

1.44

 

$

1.54

 

 

$

1.23

 

$

1.38

 

 


(1)          In millions.

(2)          Based on 39 million estimated shares outstanding for diluted EPS.

 

Recent Business Highlights

 

Clinical/Guidelines

 

·                   Results from a new analysis of TAILORx confirmed the original, definitive conclusions reported in 2018 with additional detail on clinical risk, focusing on patients with early-stage breast cancer age 50 years or younger. These findings, published in The New England Journal of Medicine and presented at the 2019 ASCO Annual Meeting, showed that stratifying patients by clinical risk alone does not predict chemotherapy benefit.

 

·                   Updated American Society of Clinical Oncology (ASCO) guidelines established TAILORx-defined cutoffs for determining chemotherapy benefit with the Oncotype DX Breast Recurrence Score test in node-negative breast cancer, increasing the proportion of women who can be spared unnecessary treatment based on the landmark TAILORx and NSABP B-20 randomized clinical trials.

 

·                   Recently updated ESMO guidelines for early-stage breast cancer elevated the Breast Recurrence Score test to the highest 1A level of evidence based on the prospective TAILORx and PlanB studies.

 

Global Reimbursement

 

·                   On June 20, the German Federal Joint Committee (G-BA) issued an exclusive nationwide reimbursement decision for the Oncotype DX Breast Recurrence Score test. This decision follows the conclusion of the German Institute for Quality and Efficiency in Health Care (IQWiG) that only the Oncotype DX test has sufficient evidence to guide breast cancer adjuvant chemotherapy decisions based on results from the landmark TAILORx study.

 

·                   On July 1, a three-year registry program started in Belgium to provide patients with funded access to the Oncotype DX Breast Recurrence Score test in breast cancer reference centers throughout the country.

 

·                   Additional private insurers established new coverage for the Oncotype DX Genomic Prostate Score test, bringing the total number of U.S. covered lives to more than 116 million, including Medicare.

 

·                   Multiple private insurers established reimbursement for the Oncotype DX AR-V7 Nucleus Detect test, bringing the total number of U.S. covered lives to more than 75 million, including Medicare.

 


 

·                   Additional private insurers established reimbursement for the Oncotype DX Breast Recurrence Score test in patients with 1-3 positive nodes, bringing the total number of U.S. covered lives in this breast cancer population to more than 144 million, including Medicare.

 

Non-GAAP Disclosure

 

The company provides adjusted EBITDA and constant currency, which are non-GAAP financial measure, to supplement the financial information provided on a GAAP basis. Non-GAAP adjusted EBITDA excludes items that are included in GAAP income (loss) from operations, and excludes stock-based compensation expense and depreciation and amortization and their related tax effects.  Constant currency is calculated by comparing the company’s quarterly average foreign exchange rates for the three and six months ended June 30, 2019 and 2018. The constant currency disclosures take current local currency revenue and translate it into U.S. dollars based upon the foreign currency exchange rates used to translate the local currency revenue for the applicable comparable period in the prior year, rather than the actual exchange rates in effect during the current period. Constant currency does not include any other effect of changes in foreign currency rates on the company’s results or business. The company believes that these non-GAAP measures reflect operating results that are more indicative of the company’s ongoing operating performance while improving comparability to prior periods, and, as such, may provide investors with an enhanced understanding of the company’s past financial performance and prospects for the future. In addition, the company’s management uses such non-GAAP measures internally to evaluate and assess its core operations and to make ongoing operating decisions. Non-GAAP information is not intended to be considered in isolation or as a substitute for comparable information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measure to their most directly comparable GAAP financial measures as detailed in the tables accompanying this press release.

 

Conference Call Details

 

To access the live conference call today, July 29, 2019, at 8:00 a.m. Eastern Time via phone, please dial (877) 201-0168 from the United States and Canada, or +1 (647) 788-4901 internationally. The conference call ID is 8288326. Please dial in approximately 10 minutes prior to the start of the call. To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of the company’s website at http://investor.genomichealth.com. Please connect to the website at least 15 minutes prior to the presentation to allow for any software download that may be necessary.

 

About Genomic Health

 

Genomic Health, Inc. (NASDAQ: GHDX) is the world’s leading provider of genomic-based diagnostic tests that help optimize cancer care, including addressing the overtreatment of the disease, one of the greatest issues in healthcare today. With its Oncotype IQ ®  Genomic Intelligence Platform, the company is applying its world-class scientific and commercial expertise and infrastructure to lead the translation of clinical and genomic data into actionable results for treatment planning throughout the cancer patient journey, from diagnosis to treatment selection and monitoring. The Oncotype IQ portfolio of genomic tests and services currently consists of the company’s flagship line of Oncotype DX ®  gene expression tests that have been used to guide treatment decisions for over 1 million cancer patients worldwide. Genomic Health is expanding its test portfolio to include additional liquid- and tissue-based tests, including the Oncotype DX ®  AR-V7 Nucleus Detect  test. The company is based in Redwood City, California, with international headquarters in Geneva, Switzerland. For more information, please visit www.GenomicHealth.com and follow the company on Twitter: @GenomicHealth, Facebook, YouTube and LinkedIn.

 


 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the company’s beliefs regarding its future performance, including updated 2019 financial guidance; the company’s beliefs regarding its revenue growth for the remainder of 2019 and the drivers of growth; the company’s belief regarding its ability to generate half a billion dollars in revenue in 2020; and the company’s expectations regarding additional public and private reimbursement coverage for its tests worldwide and the ability of additional coverage to result in additional revenue. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the risk that the company may not achieve expected revenue growth for the remainder of 2019 or 2020; the risks and uncertainties associated with the regulation of the company’s tests; the results of clinical studies and their impact on reimbursement and adoption; the applicability of clinical study results to actual outcomes; the company’s ability to develop and commercialize new tests and expand into new markets domestically and internationally; the commercial success of any collaborations entered into by the company; the risk that the company may not obtain or maintain sufficient levels of reimbursement, domestically or abroad, for its existing tests and any future tests it may develop; the risks of competition; unanticipated costs or delays in research and development efforts; the company’s ability to obtain capital when needed and the other risks set forth in the company’s filings with the Securities and Exchange Commission, including the risks set forth in the company’s most recent Annual Report filed on Form 10-K and its most recent subsequently filed Quarterly Report on Form 10-Q. These forward-looking statements speak only as of the date hereof. Genomic Health disclaims any obligation to update these forward-looking statements.

 

NOTE: The Genomic Health logo, Oncotype, Oncotype DX, Breast Recurrence Score, DCIS Score, Genomic Prostate Score, GPS, Oncotype DX AR-V7 Nucleus Detect, and Oncotype IQ are trademarks or registered trademarks of Genomic Health, Inc. All other trademarks and service marks are the property of their respective owners.

 


 

GENOMIC HEALTH, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

REVENUES:

 

 

 

 

 

 

 

 

 

Product revenues - United States

 

$

96,029

 

$

81,440

 

$

187,035

 

$

160,307

 

Product revenues - Outside of the United States

 

18,111

 

14,179

 

35,862

 

27,937

 

Total product revenues

 

114,140

 

95,619

 

222,897

 

188,244

 

Contract revenues

 

 

 

12

 

 

Total revenues

 

114,140

 

95,619

 

222,909

 

188,244

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES (1)(2):

 

 

 

 

 

 

 

 

 

Cost of product revenues

 

17,674

 

14,383

 

34,681

 

33,116

 

Research and development

 

15,318

 

15,312

 

30,371

 

32,119

 

Selling and marketing

 

44,639

 

40,337

 

89,988

 

82,092

 

General and administrative

 

21,011

 

18,487

 

40,831

 

38,205

 

Total operating expenses

 

98,642

 

88,519

 

195,871

 

185,532

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

15,498

 

7,100

 

27,038

 

2,712

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,334

 

400

 

2,485

 

817

 

Unrealized gain (loss) on investments, net

 

(301

)

1,283

 

148

 

1,410

 

Other income (expense), net

 

(204

)

(248

)

(78

)

61

 

Income (loss) before income taxes

 

16,327

 

8,535

 

29,593

 

5,000

 

Income tax expense

 

340

 

218

 

607

 

458

 

Net income (loss)

 

$

15,987

 

$

8,317

 

$

28,986

 

$

4,542

 

Basic net income (loss) per share

 

$

0.43

 

$

0.23

 

$

0.79

 

$

0.13

 

Diluted net income (loss) per share

 

$

0.42

 

$

0.23

 

$

0.75

 

$

0.12

 

Shares used in computing basic net income (loss) per share

 

37,126

 

35,544

 

36,924

 

35,372

 

Shares used in computing diluted net income (loss) per share.

 

38,507

 

36,716

 

38,642

 

36,360

 

 


(1)          Included in operating expenses for the three months ended June 30, 2019 were non-cash charges of $9.6 million, including $6.5 million of stock-based compensation expense and $3.1 million of depreciation and amortization expenses, compared with non-cash charges for the same period in 2018 of $8.3 million, including $5.2 million of stock-based compensation expense and $3.1 million of depreciation and amortization expenses.

 

(2)          Included in operating expenses for the six months ended June 30, 2019 were non-cash charges of $19.3 million, including $12.8 million of stock-based compensation expense and $6.5 million of depreciation and amortization expenses, compared with non-cash charges for the same period in 2018 of $16.5 million, including $10.3 million of stock-based compensation expense and $6.2 million of depreciation and amortization expenses.

 


 

GENOMIC HEALTH, INC.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

As of

 

As of

 

 

 

June 30,

 

December 31,

 

 

 

2019

 

2018

 

 

 

(Unaudited)

 

(1)

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

90,925

 

$

61,645

 

Short-term marketable securities (2)

 

152,625

 

148,149

 

Accounts receivable, net

 

54,307

 

51,531

 

Prepaid expenses and other current assets

 

14,369

 

13,511

 

Total current assets

 

312,226

 

274,836

 

 

 

 

 

 

 

Property and equipment, net

 

43,098

 

39,532

 

Operating lease right-of-use assets

 

51,926

 

 

Long-term marketable securities

 

 

4,066

 

Other assets

 

18,913

 

15,938

 

Total assets

 

$

426,163

 

$

334,372

 

 

 

 

 

 

 

Accounts payable

 

$

6,683

 

$

8,849

 

Accrued expenses and other current liabilities

 

43,239

 

50,927

 

Current portion of operating lease liabilities

 

4,442

 

 

Operating lease liabilities

 

52,423

 

 

Other liabilities

 

2,155

 

4,436

 

Stockholders’ equity

 

317,221

 

270,160

 

Total liabilities and stockholders’ equity

 

$

426,163

 

$

334,372

 

 


(1)          The condensed consolidated balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date included in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

 

(2)          Included in short-term marketable securities as of June 30, 2019 and December 31, 2018 is $3.2 million and $3.1 million, respectively, of corporate equity securities, representing the company’s investment in Biocartis N.V.

 


 

GENOMIC HEALTH, INC.

Non-GAAP Constant Currency Reconciliations

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Constant currency reconciliations:

 

 

 

 

 

 

 

 

 

International Revenue:

 

 

 

 

 

 

 

 

 

International revenue (1)

 

$

18,111

 

$

14,179

 

$

35,862

 

$

27,937

 

Currency exchange adjustments

 

707

 

 

1,354

 

 

Non-GAAP International revenue

 

$

18,818

 

$

14,179

 

$

37,216

 

$

27,937

 

Period over period constant currency increase

 

4,639

 

 

 

9,279

 

 

 

Period over period constant currency increase percentage

 

32.7

%

 

 

33.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue:

 

 

 

 

 

 

 

 

 

Total revenue (1)

 

$

114,140

 

$

95,619

 

$

222,909

 

$

188,244

 

Currency exchange adjustments

 

707

 

 

1,354

 

 

Non-GAAP total revenue

 

$

114,847

 

$

95,619

 

$

224,263

 

$

188,244

 

Period over period constant currency increase

 

19,228

 

 

 

36,019

 

 

 

Period over period constant currency increase percentage

 

20.1

%

 

 

19.1

%

 

 

 


(1)          For the three and six months ended June 30, 2019 compared to the same period ended June 30, 2018, the increase in international revenue was 27.7% and 28.4%, respectively.

 


 

GENOMIC HEALTH, INC.

Adjusted EBITDA Reconciliations

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Adjusted EBITDA reconciliation:

 

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

$

15,498

 

$

7,100

 

$

27,038

 

$

2,712

 

Add:

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

6,506

 

5,155

 

12,787

 

10,341

 

Depreciation and amortization

 

3,102

 

3,069

 

6,514

 

6,224

 

Adjusted EBITDA

 

$

25,106

 

$

15,324

 

$

46,339

 

$

19,277

 

 

GHDX-F

 

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