Myriad Genetics reported double-digit revenue growth in the third quarter even as sales in its oncology business dropped following cuts in Medicare reimbursement for hereditary breast and ovarian cancer testing.
Net income fell to $36.7 million in the third quarter compared with $37.9 million in the third quarter of last year.
The company raised revenue expectations to a range of $770 million to $775 million for 2014. The previous guidance range was $740 million to $750 million.
Myriad, a Salt Lake City, Utah-based provider of genetic and molecular testing, sells tests for the BRCA genes, which are associated with higher risks of breast and ovarian cancers. The CMS in January implemented a reduction that lowered reimbursement for those tests to $1,438 but later reversed the decision, announcing April 1 that reimbursement would go up to $2,184 in 2015.
Revenue for Myriad's oncology business fell to $92.4 million in its third quarter, compared to $95.8 million in the same quarter a year ago. The company attributed the decline to the $6 million decrease in reimbursement.
The BRCA tests also were the focus of a patent lawsuit that went before the Supreme Court last year. The court's decision—it ruled that Myriad's patents for naturally occurring DNA were invalid—led to the first-time entry of other diagnostic firms that now offer BRCA tests in the U.S.
The company had boosted its sales efforts and expected the introduction of MyRisk Hereditary Cancer testing, a panel that tests for 25 genes associated with eight hereditary cancers, including melanoma, breast cancer and prostate cancer, to help “stabilize future market share” in the BRCA testing market, Myriad executives told investors during a call Tuesday.
Despite the decline in the oncology business, which includes revenue for BRCA tests covered by Medicare and not the company's total BRCA testing revenue, Myriad reported that overall revenue rose 17% to $182.9 million in the third quarter of 2014, compared with $156.4 in the third quarter of 2013. BRCA testing for patients not covered by Medicare was $119.7 million in the third quarter of 2014.
Myriad also on Tuesday announced that it had signed a three-year contract with UnitedHealthcare for the insurer to provide its hereditary cancer testing panel to patients that meet UnitedHealthcare's eligibility criteria. Myriad President CEO Peter Meldrum said during the call that the contract was “transformational” and he believed it validated the clinical value of the panel test, which was launched in September 2013.
A Myriad spokesman said by e-mail that this is the first major coverage decision by a payer for a multigene panel. He declined to provide financial terms, including pricing, of the contract.
Follow Jaimy Lee on Twitter: @MHjlee
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