Shares of Myriad Genetics (MYGN -4.25%) fell over 28% last month, according to data provided by S&P Global Market Intelligence. The genetic testing pioneer announced mixed fiscal first-quarter 2019 operating results. On top of that, the business had to lower full-year revenue guidance after discovering "two issues that impacted revenue" for two of its growth products. Although the revision amounted to only 3% of the initial sales expectation, it wasn't the start to the fiscal year investors had been hoping for.
After years of struggling to offset falling sales of its lead products in hereditary cancer testing, Myriad Genetics believes recent diversification efforts will position its portfolio to return to growth in fiscal 2019. There were flashes of a recovery in the first quarter of the year, but the results were mixed.
While revenue jumped 13% compared to the year-ago period, and the business achieved a gross profit margin of 75.4%, that growth didn't come cheap. Sky-high operating expenses ate up nearly all gross profit and left behind an operating margin of just 0.6%. That means the business made $152.6 million in gross profit and just $1.2 million in operating profit.
After accounting for taxes and other expenses, Myriad Genetics lost a penny per share. It expects full-year 2019 earnings per share of just $0.40 to $0.45, unchanged from the original guidance.
The current performance puts investors in a tough spot. Myriad Genetics turned in twice as much revenue as its next closest competitor in the most recent quarter, but it's growing more slowly and is nowhere near as profitable. The business will need to lower operating expenses to boost earnings in fiscal 2020 and beyond.