Genomic Health Inc. (GHDX) suffered a third quarter loss of 2 cents per share, which was better than the Zacks Consensus Estimate of a loss of 9 cents. The company suffered a loss of 11 cents in the prior-year period.
Total revenues for the quarter came in at $39.5 million, compared with $28.1 million in the third quarter of 2008, up 40.6%. Product revenues from the Oncotype DX breast cancer test increased 39% to $38.9 million, compared with $28.1 million in the comparable quarter of 2008. Contract revenues accounted for the balance. In the third quarter, Genomic Health delivered in excess of 12,600 test results, compared with more than 10,220 test results in the comparable period of 2008, representing approximately a 23% year-over-year growth.
Research and development spend for the third quarter increased 31.9% to $9.1 million, compared to $6.9 million in the same period in 2008, due to increased spending related to the Oncotype DX colon cancer test, and other pipeline efforts.
Selling and marketing and general and administrative expenses increased 31% to $22.6 million from $17.3 million in the year ago period due to the expansion of the US sales force earlier in the year coupled with the growing international presence.
The company exited the quarter with cash, cash equivalents and short-term investments of $58.9 million as against $55.7 million at the end of the immediately preceding quarter and $56.7 million at the end of 2008.
Genomic Health reaffirmed its previous forecast of ending 2009 with revenues in the range of $148 million- $160 million.
Even though sales of Oncotype remain robust and the company remains optimistic about its prospects, we are highly concerned about the company’s reliance on the product for growth. We believe that Genomic needs to expand its product portfolio further in order to sustain growth. Furthermore we are also concerned about the company’s weak pipeline. Due to these concerns, we have an Underperform rating on the stock.
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