Myriad Genetics Inc. (MYGN) reported fiscal first-quarter earnings of 31 cents per share, a penny behind the Zacks Consensus Estimate. The company had earned 25 cents in the year-ago period.
Molecular diagnostic revenues for the quarter came in at $85.12 million as against $69.97 million in the prior-year quarter, a 21.6% increase. The improvement was attributable mainly to Myriad’s increased sales and marketing efforts.
However, revenue growth has slowed in the recent quarters due to the recession. Myriad has undertaken several measures, including adding new sales representatives, to reinvigorate sales.
Gross profit for the quarter came in at $74.1 million, or 87% of molecular diagnostic revenues, as against $60.2 million, or 86% of molecular diagnostic revenues last year. The margin growth was primarily attributable to improvements in technology coupled with efficiency gains in the operation of the molecular diagnostics laboratory.
Research and development expenses for the quarter stood at $5.7 million as against $4.4 million for the same period last year. The 29.5% increase was attributable to the increased investment in its product pipeline and new product development.
Selling, general and administrative expense for the quarter came in at $38.7 million compared with $32.4 million in the prior-year quarter. The 19.4% increase was attributable to the costs associated with the revenue growth in the quarter.
We believe that selling, general and administrative expenses will continue to fluctuate in the coming quarters due to new product launches and future non-cash stock option expense.
The company exited the quarter with approximately $417.0 million in cash, cash equivalents and marketable investment securities, as against $392.2 million at June 30, 2009.
We remind investors that the company had spun off its therapeutics business in July 2009 to exclusively focus on its core molecular diagnostics business. Consequently, Myriad Genetics will be able to pursue its long-term strategic initiatives, maximize its core technology strengths, seek new product  opportunities and have a capital structure appropriate for its financial profile.
Currently, we have an Underperform rating on the stock.
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