Shares of Myriad Genetics (MYGN -0.99%) rose over 14% today after the genetic testing pioneer announced fiscal fourth-quarter and full-year 2018 results. The business delivered a 31% year-over-year increase in adjusted EPS for the final three months of its fiscal year. The recent strength is just the latest indicator that the transition to a broader portfolio of products is proving to be a success.
That's important, considering Myriad Genetics was almost entirely dependent on its breast cancer diagnostics in the past. Those products quickly became a target of lower-cost competition, and the company's first new products got off to slow starts in fiscal 2016 and fiscal 2017. But they exited fiscal 2018 with the wind at their backs.
As of 2:59 p.m. EDT, the stock had settled to a 9.8% gain.
In fiscal 2018, hereditary cancer testing products accounted for 69% of total revenue, compared to 79% of total revenue in the previous year. The difference of $69 million was made up almost dollar-for-dollar by growth platforms GeneSight, Vectra DA, Prolaris, and EndoPredict -- each of which grew year-over-year revenue by double digits. Even with that, Myriad Genetics reported total revenue of $719 million for the full year, which was nearly identical to the year-ago total.
The stagnation on the top line was more than offset by a steep reduction in operating expenses, which resulted in fiscal full-year 2018 operating income of $119 million, an increase of 144% compared to the prior year. Net income saw a year-over-year increase of 539%.
GeneSight, the most important growth platform, grew 59% year over year and accounted for 17% of total revenue, up from just 11% in fiscal 2017. Meanwhile, Myriad Genetics closed the acquisition of reproductive genetic testing leader Counsyl on the last day of July, which will provide an important new growth opportunity. The company estimates reproductive genetic testing markets will reach $1.5 billion in annual revenue within the next five years. Both will prove key to pushing the company back to top-line growth in fiscal 2019.
The effort to diversify the business away from legacy hereditary cancer testing products is working, but so far the newer platforms have only replaced lost revenue. That's about to change. Myriad Genetics issued its first fiscal 2019 financial guidance, which calls for up to $890 million in revenue along with up to $1.75 in adjusted EPS. That would mark year-over-year growth of 24% and 70%, respectively. Simply put, it looks like shareholders will be rewarded for their patience during the last few years.