Genomic Health Reports Record 2018 Fourth Quarter and Year-end Financial Results and Provides 2019 Financial Guidance

REDWOOD CITY, Calif., Feb. 20, 2019 /PRNewswire/ -- Genomic Health, Inc. (NASDAQ: GHDX) today reported financial results and business progress for the quarter and year ended December 31, 2018.

"2018 was a record year for Genomic Health. We delivered $394.1 million in revenue and non-GAAP net income of $39.7 million, exceeding expectations for the year. In December, we achieved a significant milestone delivering our one millionth Oncotype DX tests to cancer patients worldwide," said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. "Additionally, positive results from the landmark NCI-sponsored TAILORx trial, published in June, elevated Oncotype DX to a new global standard of care for early-stage breast cancer. In 2019, we expect this momentum to continue as we increase penetration of our Oncotype DX tests both in the U.S. and key European markets and broaden global access with national reimbursement progress. We also expect to continue the expansion and diversification of our portfolio through multiple platforms and partners for longer-term growth."

Full Year 2018 Financial Results
Total revenue for 2018 was $394.1 million, compared with pre-606 adjusted revenue* of $334.0 million for 2017, an increase of 18 percent. Reported revenue was $340.8 million for 2017.

U.S. product revenue was $334.7 million for the full year 2018, compared with pre-606 adjusted revenue* of $281.6 million for 2017, an increase of 19 percent. U.S. product reported revenue was $287.4 million for 2017. U.S. invasive breast revenue from Oncotype DX Breast Recurrence Score(® )tests was $299.4 million for 2018, compared with pre-606 adjusted revenue* of $254.0 million for 2017, an increase of 18 percent. U.S. invasive breast reported revenue was $259.7 million for 2017. U.S. prostate test revenue from Oncotype DX(®) Genomic Prostate Score(®) (GPS((TM))) tests was $26.8 million in 2018, compared with pre-606 adjusted revenue* of $17.9 million in 2017, an increase of 50 percent. U.S. prostate test reported revenue from GPS tests was $17.9 million in 2017.

International product revenue for 2018 was $59.4 million, compared with pre-606 adjusted revenue* of $52.0 million for 2017, an increase of 14 percent, and an increase of 12 percent on a non-GAAP constant currency basis. International product reported revenue was $53.1 million for 2017.

GAAP net income was $25.7 million, or $0.72 and $0.68 per share on a basic and diluted basis, respectively, for 2018, an improvement of $29.6 million, compared with a net loss of $3.9 million, or $0.11 per share on a basic and diluted basis, for 2017. GAAP operating income was $23.9 million for 2018, an improvement of $30.4 million, compared with an operating loss of $6.5 million for 2017.

Non-GAAP net income was $39.7 million for 2018, an improvement of $41.3 million, compared with a $1.6 million non-GAAP net loss for 2017. Non-GAAP operating income was $38.8 million for 2018, an improvement of $41.0 million, compared with a non-GAAP operating loss of $2.2 million for 2017.

2019 Financial Guidance
"We have entered 2019 with strong momentum in our business and expect to deliver revenue growth between 11 and 14 percent and significantly greater improvement in profitability for the full year with continued operating leverage," said Brad Cole, chief financial officer of Genomic Health. "In 2019, operating margin expansion is expected to deliver net income growth between 35 and 50 percent for the year on a non-GAAP basis."

The company is providing the following guidance for the full year ending December 31, 2019:


                            
     Low        
     High




     Revenue(1)                    $436          $448



     Revenue Growth                 11%          14%




      Net Income (GAAP) (1)          $48           $54


      GAAP Diluted EPS (2)         $1.23         $1.38




      Net Income (Non-GAAP)
       (1) (3)                       $54           $60


      Non-GAAP Diluted EPS
       (2)                        $1.38         $1.54






              (1)              In millions.



              (2)              Based on 39
                                  million
                                  estimated shares
                                  outstanding for
                                  Diluted EPS.



              (3)              Non-GAAP net
                                  income excludes
                                  charges for
                                  clinical and
                                  commercial
                                  development
                                  milestone
                                  payments;
                                  changes in fair
                                  value of
                                  investments and
                                  acquisition
                                  fees.

Additional 2018 Full Year and Fourth Quarter Financial Results
Total revenue was $104.6 million in the fourth quarter of 2018, compared with pre-606 adjusted revenue* of $85.7 million for the fourth quarter of 2017, an increase of 22 percent. Revenue growth in the fourth quarter would have been 18 percent excluding $3.5 million to reflect ASC-606 portfolio adjustments. Reported revenue was $87.5 million in the fourth quarter of 2017.

U.S. product revenue was $88.6 million in the fourth quarter of 2018, compared with pre-606 adjusted revenue* of $72.0 million for the fourth quarter of 2017, an increase of 23 percent. U.S. product reported revenue was $73.5 million in the fourth quarter of 2017. U.S. invasive breast revenue from Oncotype DX Breast Recurrence Score tests was $79.3 million in the fourth quarter of 2018, compared with pre-606 adjusted revenue* of $64.7 million in the fourth quarter of 2017, an increase of 22 percent. U.S. invasive breast reported revenue was $66.2 million in the fourth quarter of 2017. U.S. prostate test revenue from Oncotype DX GPS tests was $7.4 million in the fourth quarter of 2018, compared with pre-606 adjusted revenue* of $5.0 million in the fourth quarter of 2017, an increase of 48 percent. U.S. prostate test reported revenue from GPS tests was $5.0 million in the fourth quarter of 2017.

International product revenue was $16.0 million in the fourth quarter of 2018, compared with pre-606 adjusted revenue* of $13.4 million for the fourth quarter of 2017, an increase of 19 percent, and a 21 percent increase on a non-GAAP constant currency basis. International product reported revenue was $13.7 million in the fourth quarter of 2017.

GAAP net income was $8.9 million, or $0.25 and $0.23 per share on a basic and diluted basis, respectively, in the fourth quarter of 2018, an improvement of $7.0 million, compared with $1.9 million, or $0.05 per share on a basic and diluted basis, in the fourth quarter of 2017. GAAP operating income was $9.4 million in the fourth quarter of 2018, an improvement of $7.3 million, compared with $2.1 million in the fourth quarter of 2017.

Non-GAAP net income was $12.4 million in the fourth quarter of 2018, an improvement of $9.5 million, compared with non-GAAP net income of $2.9 million in the fourth quarter of 2017. Non-GAAP operating income was $12.3 million in the fourth quarter of 2018, compared with a non-GAAP operating income of $3.1 million in the fourth quarter of 2017.

More than 35,530 Oncotype((TM)) test results were delivered in the fourth quarter of 2018, an increase of 11 percent, compared with more than 31,990 test results delivered in the same period in 2017. Oncotype DX Breast Recurrence Score tests delivered in the U.S. grew 9 percent in the fourth quarter of 2018, compared with the same period in 2017. Oncotype DX GPS tests delivered in the U.S. grew 19 percent in the fourth quarter of 2018, compared with the same period in 2017. Oncotype DX international tests delivered grew 15 percent in the fourth quarter of 2018, compared with the same period in 2017 and represented approximately 24 percent of total test volume in the quarter.

More than 136,380 Oncotype test results were delivered for the year ended December 31, 2018, an increase of 8 percent, compared with more than 126,730 test results delivered in the same period in 2017. Oncotype DX Breast Recurrence Score tests delivered in the U.S. grew 7 percent in 2018 compared to the prior year. Oncotype DX GPS tests delivered in the U.S. grew 23 percent in 2018 compared to the prior year. Oncotype DX international tests delivered grew 4 percent in 2018 compared to the prior year and represented approximately 24 percent of total test volume in 2018.

Cash and cash equivalents and short-term marketable securities at December 31, 2018, were $209.8 million, an increase of $80.2 million compared with $129.6 million at December 31, 2017.

Recent Business Highlights

    --  Delivered, in collaboration with physicians around the world, more than
        1 million Oncotype DX tests to cancer patients worldwide since the first
        test was made available to patients in 2004. To date, more than 53,000
        physicians across 90 countries have used Oncotype DX to optimize
        treatment decisions for their breast, prostate and colon cancer
        patients, improving outcomes and saving more than $5 billion in
        healthcare costs.
    --  Expanded exclusive collaboration with Biocartis Group NV to include
        urology for the anticipated development of an in vitro diagnostic
        version of the Oncotype DX Genomic Prostate Score test on Biocartis'
        Idylla((TM)) platform.
    --  The U.K.'s National Institute for Health and Care Excellence (NICE)
        issued updated guidance again recommending the Oncotype DX Breast
        Recurrence Score test for use in clinical practice to guide adjuvant
        chemotherapy treatment decisions and expanding its prior recommendation
        to now include patients with micrometastases.
    --  The Breast published results from a French prospective decision impact
        study on the real-life utilization of the Oncotype DX Breast Recurrence
        Score test in clinical practice, demonstrating a 36 percent reduction in
        chemotherapy use. Consistent with other decision impact studies
        worldwide, these results highlight the value and need for broader
        patient access in France.
    --  Nature Partner Journals (NPJ) Breast Cancer published a new analysis of
        the randomized NSABP B-20 study confirming patients with Oncotype DX
        Breast Recurrence Score results greater than 25 receive life-saving
        benefit from chemotherapy, reinforcing the conclusions of the landmark
        TAILORx study.
    --  Presented results from two Oncotype DX studies at the 2018 San Antonio
        Breast Cancer Symposium reinforcing the real-world value of the Oncotype
        DX Breast Recurrence Score test in optimizing treatment and outcomes in
        breast cancer patients regardless of age or race.
    --  Received acceptance to present five studies at the 16(th) St. Gallen
        International Breast Cancer Conference in March 2019.
    --  Urology published results from a multi-center study establishing
        Oncotype DX as the first genomic prostate cancer test with prospective
        validation for predicting adverse pathology to identify patients for
        active surveillance.
    --  Presented results from multiple studies in men on active surveillance at
        the 2019 Genitourinary Cancers Symposium demonstrating association
        between the Oncotype DX GPS test and adverse pathology, underscoring its
        value in identifying patients who will ultimately require surgery due to
        disease progression.

*Pre-606 Adjusted Product Revenue
Effective January 1, 2018, the company adopted the new ASC 606 accounting standard for revenue, using the modified retrospective method, which applies the new standard prospectively and does not impact prior years' financial statements. Since the as-reported 2017 quarterly and annual financial statements will not be restated to reflect the new accounting standard, the company has provided a supplemental financial schedule in the non-GAAP tables at the end of this press release, reflecting an estimate of revenue as if the new standard had been applied to the historical 2017 product revenue portion of revenue as of January 1, 2017, referred to herein as "pre-606 adjusted revenue."

Non-GAAP Disclosure
The company makes reference in this press release to "non-GAAP operating income (loss)," which excludes 2018 expenses resulting from the restructuring charges for the cessation of the Oncotype SEQ(®) Liquid Select((TM)) test product development and commercialization activities in the first quarter of 2018, the cessation of its collaboration with Cleveland Diagnostics in the second quarter of 2018, the expenses for milestone payments to Biocartis N.V. (Biocartis) in the second and third quarters of 2018, as well as the payment to Biocartis for exercising its option to expand the collaboration to include urology in the fourth quarter of 2018. Additionally, the company references "non-GAAP net income (loss)," which also excludes fair value adjustments related to its collaborations with Biocartis and Epic Sciences, and the gain on sale of marketable securities in the first quarter of 2017. The company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the company's ongoing operating performance while improving comparability to prior periods, and, as such, may provide investors with an enhanced understanding of the company's past financial performance and prospects for the future. The company also considers the impact of foreign currency exchange rates on its global business as described in the constant currency table accompanying this press release. The company's management uses such non-GAAP measures internally to evaluate and assess its core operations and to make ongoing operating decisions. This information is not intended to be considered in isolation or as a substitute for income (loss) from operations or net income (loss) information prepared in accordance with GAAP. An explanation and reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this press release.

Conference Call Details
To access the live conference call today, February 20, 2019, at 4:30 p.m. Eastern Time via phone, please dial (877) 303-7208 from the United States and Canada, or +1 (224) 357-2389 internationally. The conference call ID is 8989205. Please dial in approximately 10 minutes prior to the start of the call. To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of the company's website at http://investor.genomichealth.com. Please connect to the website at least 15 minutes prior to the presentation to allow for any software download that may be necessary.

About Genomic Health
Genomic Health, Inc. (NASDAQ: GHDX) is the world's leading provider of genomic-based diagnostic tests that help optimize cancer care, including addressing the overtreatment of the disease, one of the greatest issues in healthcare today. With its Oncotype IQ(®) Genomic Intelligence Platform, the company is applying its world-class scientific and commercial expertise and infrastructure to lead the translation of clinical and genomic data into actionable results for treatment planning throughout the cancer patient journey, from diagnosis to treatment selection and monitoring. The Oncotype IQ portfolio of genomic tests and services currently consists of the company's flagship line of Oncotype DX(®) gene expression tests that have been used to guide treatment decisions for over 1 million cancer patients worldwide. Genomic Health is expanding its test portfolio to include additional liquid- and tissue-based tests, including the Oncotype DX(®) AR-V7 Nucleus Detect((TM)) test. The company is based in Redwood City, California, with international headquarters in Geneva, Switzerland. For more information, please visit www.GenomicHealth.com and follow the company on Twitter: @GenomicHealth, Facebook, YouTube and LinkedIn.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the company's beliefs regarding its future performance, including the company's beliefs regarding its long-term success; financial guidance and future profitability; revenue, net income and operating margin growth and operating leverage for the full year 2019; the commercial performance of its tests; the continued impact of TAILORx results on revenue in 2019 domestically and abroad; the attributes and focus of the company's product pipeline; the ability of any potential tests the company may develop to optimize cancer treatment; the ability of the company to develop and commercialize, and collaborate with third parties to commercialize, additional tests in the future; the ability of the company to increase worldwide access through the development of an in vitro diagnostic version of its tests; expectations regarding additional public and private reimbursement coverage for its tests worldwide and the ability of additional coverage to result in additional revenue; the company's methodology for calculating financial performance under the new ASC 606 accounting standard as compared against prior periods under the previously applicable ASC 605 accounting standard . Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the risk that the company may not achieve its 2019 guidance estimates and the assumptions underlying such guidance; the successful completion of the annual audit of the company's financial statements; the risks and uncertainties associated with the regulation of the company's tests; the results of clinical studies and their impact on reimbursement and adoption; the applicability of clinical study results to actual outcomes; the company's ability to develop and commercialize new tests and expand into new markets domestically and internationally; the commercial success of any collaborations entered into by the company; the risk that the company may not obtain or maintain sufficient levels of reimbursement, domestically or abroad, for its existing tests and any future tests it may develop; the risks of competition; unanticipated costs or delays in research and development efforts; the company's ability to obtain capital when needed and the other risks set forth in the company's filings with the Securities and Exchange Commission, including the risks set forth in the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018. These forward-looking statements speak only as of the date hereof. Genomic Health disclaims any obligation to update these forward-looking statements.

NOTE: The Genomic Health logo, Oncotype, Oncotype DX, Breast Recurrence Score, DCIS Score, Oncotype SEQ, Liquid Select, Genomic Prostate Score, GPS, Oncotype DX AR-V7 Nucleus Detect, and Oncotype IQ are trademarks or registered trademarks of Genomic Health, Inc. All other trademarks and service marks are the property of their respective owners.


                                                          
          
                GENOMIC HEALTH, INC.


                                                 
         
            Condensed Consolidated Statements of Operations


                                                     
         
            (In thousands, except per share amounts)


                                                             
           
                (Unaudited)




                                  Three Months Ended                                             Year Ended


                                     December 31,                                                December 31,



                                                2018                         2017                                  2018 2017




     REVENUES:


      Product revenues -United
       States                                           $
          88,628                               $
             73,486            334,682 $
       287,363


      Product revenues -Outside
       of the United States                                     15,981                                          13,678             59,429       53,088



      Total product revenues                                   104,609                                          87,164            394,111      340,451


      Contract revenues                                                                                           299                            299




     Total revenues                                           104,609                                          87,463            394,111      340,750




      OPERATING EXPENSES (1)(2):


      Cost of product revenues                                  15,692                                          13,814             64,326       54,718


      Research and development                                  16,648                                          14,944             64,200       62,811


      Selling and marketing                                     42,636                                          36,536            164,779      157,001


      General and administrative                                20,207                                          20,019             76,910       72,670



      Total operating expenses                                  95,183                                          85,313            370,215      347,200





      Income (loss) from
       operations                                                9,426                                           2,150             23,896      (6,450)





     Interest income                                              892                                             307              2,385          934


      Unrealized gain (loss) on
       investments, net                                          (662)                                                              875            7


      Gain on sales of marketable
       securities                                                                                                                             2,807


      Other income (expense), net                                (332)                                          (436)             (232)         349



      Income (loss) before income
       taxes                                                     9,324                                           2,021             26,924      (2,353)


      Income tax expense                                           414                                             142              1,247        1,504



      Net income (loss)                                  $
          8,910                                $
             1,879       $
        25,677 $
       (3,857)



      Basic net income (loss) per
       share                                              $
          0.25                                 $
             0.05         $
        0.72  $
       (0.11)



      Diluted net income (loss)
       per share                                          $
          0.23                                 $
             0.05         $
        0.68  $
       (0.11)



      Shares used in computing
       basic net income (loss)
       per share                                                36,227                                          34,856             35,727       34,495



      Shares used in computing
       diluted net income (loss)
       per share.                                               38,565                                          35,709             37,555       34,495






              (1)              Included in
                                  operating
                                  expenses for the
                                  three months
                                  ended December
                                  31, 2018 were
                                  non-cash charges
                                  of $8.6 million,
                                  including $5.3
                                  million of stock-
                                  based
                                  compensation
                                  expense and $3.3
                                  million of
                                  depreciation and
                                  amortization
                                  expenses,
                                  compared with
                                  non-cash charges
                                  for the same
                                  period in 2017 of
                                  $8.2 million,
                                  including $5.0
                                  million of stock-
                                  based
                                  compensation
                                  expense and $3.2
                                  million of
                                  depreciation and
                                  amortization
                                  expenses.



              (2)              Included in
                                  operating
                                  expenses for the
                                  year ended
                                  December 31, 2018
                                  were non-cash
                                  charges of $33.8
                                  million,
                                  including $21.1
                                  million of stock-
                                  based
                                  compensation
                                  expense and $12.7
                                  million of
                                  depreciation and
                                  amortization
                                  expenses,
                                  compared with
                                  non-cash charges
                                  for the same
                                  period in 2017 of
                                  $32.0 million,
                                  including $20.3
                                  million of stock-
                                  based
                                  compensation
                                  expense and $11.7
                                  million of
                                  depreciation and
                                  amortization
                                  expenses.


                                    
              
                GENOMIC HEALTH, INC.


                                  
       
                Condensed Consolidated Balance Sheets


                                       
              
                (In thousands)




                                          As of                                              As of


                                      December 31,                                       December 31,


                                              2018                                                2017



                                      (Unaudited)                                                 (1)




      Cash and cash equivalents                             $
              61,645                          $
         45,518


      Short-term marketable
       securities (2)                                                  148,149                                 84,057


      Accounts receivable, net                                          51,531                                 31,161


      Prepaid expenses and other
       current assets                                                   13,511                                 13,524



      Total current assets                                             274,836                                174,260




      Property and equipment, net                                       39,532                                 46,440


      Long-term marketable
       securities                                                        4,066



     Other assets                                                      15,938                                 10,917




     Total assets                                         $
              334,372                         $
         231,617






     Accounts payable                                       $
              8,849                             $
         156


      Accrued expenses and other
       current liabilities                                              50,927                                 39,360


      Other liabilities                                                  4,436                                  3,810


      Stockholders' equity                                             270,160                                188,291



      Total liabilities and
       stockholders' equity                                $
              334,372                         $
         231,617






              (1)              The condensed
                                  consolidated
                                  balance sheet
                                  at December
                                  31, 2017, has
                                  been derived
                                  from the
                                  audited
                                  consolidated
                                  financial
                                  statements at
                                  that date
                                  included in
                                  the company's
                                  Annual Report
                                  on Form 10-K
                                  for the
                                  fiscal year
                                  ended
                                  December 31,
                                  2017.



              (2)              Included in
                                  short-term
                                  marketable
                                  securities as
                                  of December
                                  31, 2018 and
                                  December 31,
                                  2017 is $3.1
                                  million and
                                  $3.5 million,
                                  respectively,
                                  of corporate
                                  equity
                                  securities,
                                  representing
                                  the company's
                                  investment in
                                  Biocartis
                                  N.V.


                                                                     
            
               GENOMIC HEALTH, INC.


                                                               
              
             GAAP to Non-GAAP Reconciliations


                                                                        
           
                (In thousands)


                                                                          
           
                (Unaudited)




                                                     Three Months Ended                                              Year Ended


                                                        December 31,                                                 December 31,



                                                                   2018                             2017                            2018 2017



                   Income (loss) from operations
                    reconciliation:


      GAAP income (loss) from operations                                     $
             9,426                          $
             2,150       $
        23,896 $
        (6,450)


      Cost of product revenues -
       cessation of Oncotype SEQ                                                                                                                   3,519


      Research and development -
       cessation of Oncotype SEQ                                                                                                                   3,039


      Selling and marketing - cessation
       of Oncotype SEQ                                                                                                                             1,064


      General and administrative -
       cessation of Oncotype SEQ                                                                                                                     909


      Research and development -
       Biocartis license and option fee
       payments                                                                         2,874                                                       4,043         3,249


      Research and development -
       discount on convertible
       promissory note                                                                                                             671                             671


      Research and development -
       discount on equity investment for
       lack of marketability during lock
       up period                                                                                                                   322                             322


      Research and development -
       milestone payment Biocartis                                                                                                                   990


      Research and development -
       Cleveland Diagnostics
       cancellation of collaboration
       agreement                                                                                                                                   1,329



      Non-GAAP income (loss) from
       operations                                                           $
             12,300                          $
             3,143       $
        38,789 $
        (2,208)





                   Net income (loss) reconciliation:



     GAAP net income (loss)                                                 $
             8,910                          $
             1,879       $
        25,677 $
        (3,857)


      Cost of product revenues -
       cessation of Oncotype SEQ                                                                                                                   3,519


      Research and development -
       cessation of Oncotype SEQ                                                                                                                   3,039


      Selling and marketing - cessation
       of Oncotype SEQ                                                                                                                             1,064


      General and administrative -
       cessation of Oncotype SEQ                                                                                                                     909


      Research and development -
       Biocartis license and option fee
       payments                                                                         2,874                                                       4,043         3,249


      Research and development -
       discount on convertible
       promissory note                                                                                                             671                             671


      Research and development -
       discount on equity investment for
       lack of marketability during lock
       up period                                                                                                                   322                             322


      Research and development -
       milestone payment Biocartis                                                                                                                   990


      Research and development -
       Cleveland Diagnostics
       cancellation of collaboration
       agreement                                                                                                                                   1,329


      Other income - Biocartis -change
       in fair value                                                                      591                                                         295


      Other income - Epic Sciences -
       revaluation of investment                                                                                                                 (1,171)


      Non-recurring gain on sale of
       marketable securities                                                                                                                                  (2,807)


      Reduced income tax expense from
       the sale of marketable securities                                                                                                                          821



      Non-GAAP net income (loss)                                            $
             12,375                          $
             2,872       $
        39,694 $
        (1,601)


                                                                               
            
                GENOMIC HEALTH, INC.


                                                                         
         
              Non-GAAP Constant Currency Reconciliations


                                                                                 
             
                (In thousands)


                                                                                   
             
                (Unaudited)




                                                      Three Months Ended                       
              
                Year Ended


                                                         December 31,                                                  December 31,



                                                                    2018                              2017                              2018 2017



                   Constant currency reconciliations:


                   International Revenue:


      International revenue (1)(2)                                          $
            15,981                                      $
     13,399        $
       59,429  $
      52,009


         Currency exchange adjustments (3)                                               231                                                          (1,162)



      Non-GAAP International revenue                                        $
            16,212                                      $
     13,399        $
       58,267  $
      52,009



         Period over period constant
          currency increase                                                            2,813                                                            6,258


         Period over period constant
          currency increase percentage                                                   21%                                                             12%




                   Total Revenue:



     Total revenue (1)(2)                                                 $
            104,609                                      $
     85,719       $
       394,111 $
      333,956


         Currency exchange adjustments (3)                                               231                                                          (1,162)




     Non-GAAP total revenue                                               $
            104,840                                      $
     85,719       $
       392,949 $
      333,956



         Period over period constant
          currency increase                                                           19,121                                                           58,993


         Period over period constant
          currency increase percentage                                                   22%                                                             18%






              (1)              For the three and
                                  twelve months
                                  ended December
                                  31, 2018,
                                  International
                                  revenue and total
                                  revenue is based
                                  on GAAP under ASC
                                  606 and for the
                                  three and twelve
                                  months ended
                                  December 31,
                                  2017,
                                  International
                                  revenue and total
                                  revenue is based
                                  on the Pre-606
                                  Adjusted revenue
                                  on the following
                                  table.



              (2)              For the three and
                                  twelve months
                                  ended December
                                  31, 2018 compared
                                  to the same
                                  periods ended
                                  December 31,
                                  2017, the
                                  increases in
                                  International
                                  revenue were 19%
                                  and 14%,
                                  respectively.
                                  For the three and
                                  twelve months
                                  ended December
                                  31, 2018 compared
                                  to the same
                                  periods ended
                                  December 31,
                                  2017, the
                                  increases in
                                  Total revenue
                                  were 22% and 18%
                                  respectively.



              (3)              Constant currency
                                  is a non-GAAP
                                  measure that is
                                  calculated by
                                  comparing the
                                  company's
                                  quarterly average
                                  foreign exchange
                                  rates for the
                                  three and twelve
                                  months ended
                                  December 31, 2018
                                  and 2017. The
                                  constant currency
                                  disclosures take
                                  current local
                                  currency revenue
                                  and translate it
                                  into U.S. dollars
                                  based upon the
                                  foreign currency
                                  exchange rates
                                  used to translate
                                  the local
                                  currency revenue
                                  for the
                                  applicable
                                  comparable period
                                  in the prior
                                  year, rather than
                                  the actual
                                  exchange rates in
                                  effect during the
                                  current period.
                                  It does not
                                  include any other
                                  effect of changes
                                  in foreign
                                  currency rates on
                                  the company's
                                  results or
                                  business.


                                                
             
                GENOMIC HEALTH, INC.


                                            
     
               Non-GAAP Supplemental Financial Information (1)


                                                  
              
                (In thousands)


                                                    
              
                (Unaudited)




                                                  Three Months Ended                                        Year Ended


                                                     December 31,                                          December 31,


                                                                2017                                                2017



                  U.S. Product revenue,
                   under ASC 605:


     Invasive breast test
      revenue                                                                           $
              66,210               $
      259,727


     Prostate test revenue                                                                           4,990                    17,930


     All other test revenue                                                                          2,286                     9,707



     Total U.S. product revenue                                                                     73,486                   287,364



                  Adjustment related to new
                   ASC 606 accounting
                   standard:


     Invasive breast test
      revenue                                                                                        1,465                     5,716


     Prostate test revenue


     All other test revenue



     Total ASC 606 adjustment
      to U.S. product revenue                                                                        1,465                     5,716



                  Pre-606 Adjusted U.S.
                   Product revenue, net of
                   adjustments:


     Invasive breast test
      revenue                                                                                       64,745                   254,011


     Prostate test revenue                                                                           4,990                    17,930


     All other test revenue                                                                          2,286                     9,707



     Total Pre-606 Adjusted
      U.S. product revenue                                                              $
              72,021               $
      281,648





                  International product
                   revenue, under ASC 605:


     Invasive breast test
      revenue                                                                           $
              13,517                $
      52,436


     Prostate test revenue                                                                              23                       129


     All other test revenue                                                                            138                       522



     Total International
      product revenue                                                                               13,678                    53,087



                  Adjustment related to new
                   ASC 606 accounting
                   standard:


     Invasive breast test
      revenue                                                                                          279                     1,078


     Prostate test revenue


     All other test revenue



     Total ASC 606 adjustment
      to International product
      revenue                                                                                          279                     1,078



                  Pre-606 Adjusted
                   International product
                   revenue, net of
                   adjustments:


     Invasive breast test
      revenue                                                                                       13,238                    51,358


     Prostate test revenue                                                                              23                       129


     All other test revenue                                                                            138                       522



     Total Pre-606 Adjusted
      International product
      revenue                                                                           $
              13,399                $
      52,009





                  Total Product Revenue,
                   under ASC 605:


     Invasive breast test
      revenue                                                                           $
              79,727               $
      312,163


     Prostate test revenue                                                                           5,013                    18,059


     All other test revenue                                                                          2,424                    10,229



     Total product revenue                                                                          87,164                   340,451



                  Adjustment related to new
                   ASC 606 accounting
                   standard:


     Invasive breast test
      revenue                                                                                        1,744                     6,794


     Prostate test revenue


     All other test revenue



     Total ASC 606 adjustment
      to total product revenue                                                                       1,744                     6,794



                  Pre-606 Adjusted Total
                   product revenue, net of
                   adjustments:


     Invasive breast test
      revenue                                                                                       77,983                   305,369


     Prostate test revenue                                                                           5,013                    18,059


     All other test revenue                                                                          2,424                    10,229



     Total Pre-606 Adjusted
      total product revenue                                                             $
              85,420               $
      333,657


            
              
                GENOMIC HEALTH, INC.


                            Non-GAAP Supplemental Financial Information
                                             (1)


               
              
                (In thousands)


                 
              
                (Unaudited)





              (1)              Effective January 1, 2018, the
                                  company adopted new accounting
                                  guidance ASC Topic 606 ("ASC
                                  606"), related to revenue from
                                  contracts with customers, using a
                                  modified retrospective method.
                                  Since the 2017 annual and
                                  quarterly financial statements
                                  will not be restated to reflect
                                  ASC 606, the company is providing
                                  this supplemental schedule to
                                  present 2017 revenue reflecting
                                  an estimate as if ASC 606 had
                                  been applied effective January 1,
                                  2017. This pre-606 adjusted
                                  revenue information is intended
                                  to provide investors with a basis
                                  for considering the potential
                                  directional impact the adoption
                                  of ASC 606 might have on the
                                  company's financial information
                                  that will be reported in 2018.
                                  The pre-606 adjusted revenue
                                  information is provided only for
                                  illustrative purposes and does
                                  not constitute a restatement of
                                  the company's historical
                                  financial statements previously
                                  filed with the SEC, which should
                                  be considered by investors in
                                  their entirety as filed.

GHDX-F

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SOURCE Genomic Health, Inc.