Myriad Genetics on Thursday named a new CEO: Paul Diaz, partner at healthcare investment firm Cressey & Company, a DaVita board member, and former chief executive at long-term acute-care hospital operator Kindred Healthcare. Analysts welcomed Diaz’s arrival, with those at SVB Leerink telling investors the “appointment holds potential for core business to turn the corner.”
The appointment was disclosed alongside financial results showing the scale of the challenges awaiting Diaz at the helm of Myriad. Sales fell 57% in the fiscal fourth quarter.
- COVID-19-related reductions in volume, which had started to ease by the end of the quarter, accounted for most of the decline but Myriad also faces more permanent problems. Pricing of Myriad’s key hereditary cancer and psychiatric disorder medication response tests fell 20% and 7%, respectively.
Mark Capone stepped down as CEO of Myriad earlier this year, ending his 17-year stint at the company. The resignation followed another earnings miss and downward revision of full-year guidance. Having missed its original 2019 sales target by $40 million, Myriad had already reduced its expectations for 2020 by $140 million at the halfway point of its fiscal year.
COVID-19 disruptions to Myriad's business ensured that the company fell well short of even that lowered forecast. In fourth quarter results posted Thursday, Myriad reported full-year sales of $639 million. Myriad went into its fiscal year expecting sales of $875 million.
The full-year results were negatively affected by a fourth quarter shaped by COVID-19 headwinds. Test volumes at the hereditary cancer unit, Myriad’s biggest business, fell 58% in the fourth quarter. Volumes of GeneSight, the pharmacogenomic test to help inform treatment for psychiatric disorders that Myriad gained in its $225 million upfront Assurex Health takeover, fell 69%.
Like other medtech companies, Myriad’s performance improved throughout the quarter. By the end of the quarter, hereditary cancer volumes were up to 72% of baseline. GeneSight volumes remained down around 50%. With volumes holding steady in July and home-collection kits now available, it is possible that the worst of the pandemic's effects are behind Myriad.
However, Myriad had competitive weaknesses before the coronavirus pandemic that remain unresolved. Responsibility for fixing those issues and returning the company to consistent growth will fall on Diaz, an executive who made a good initial impression on analysts on the strength of a resume defined by his time helping save Kindred Healthcare from bankruptcy.
“Diaz brings the right experience that is highly desired by a company that has lost significant market share and is now facing stiff competition in its core markets. CEO Diaz' experience at Kindred in expanding the revenue base while focusing on key business lines holds potential to drive [Myriad] on a new trajectory,” analysts at SVB Leerink wrote in a note to investors.
Cowen’s Doug Schenkel, who previously said “it is tough to have confidence” in Myriad’s leadership, also welcomed Diaz’s appointment, telling investors he is “enthused by potential for change.”