Boston, MA 04/02/2014 (wallstreetpr) – It was heart breaking for Myriad Genetics, Inc. (NASDAQ:MYGN) that Center for Medicare & Medicaid Services was going to pay a smaller amount in reimbursement than earlier expected. But the challenge is now out as the company raised its reimbursement pay to the gene-testing company.
The new twist -and good news – came late Tuesday when Myriad revealed that the government has agreed to pay a heftier amount in reimbursement, thus removing fear over serious cuts. Shares of the company jumped on the news.
CMS was considering paying $1,438.14 for each test for BRCA 1 and 2, a test which is associated with breast cancer vulnerability. The pay amount which CMS considered for the tests was way below the previously stated $2,795 per test. Perhaps the public comment which CMS opened in January helped lead to the change of heart as it has no decided to pay $2,184 per test. Although this is still below the earlier expected amount, it is far better than the serious cut that would have been suffered by Myriad Genetics, Inc. (NASDAQ:MYGN) if CMS maintained its reimbursement at $1,438.14 per test.
Higher revenue, thanks to revision
The positive reimbursement revision is now expected to significantly improve the revenue figure of Myriad Genetics, Inc. (NASDAQ:MYGN). And analysts are modeling fiscal 2014 to witness revenue in the region of $758 million.
The jump in revenue in the current year will particularly be realized due to the strength in Myriad brought about by its acquisition of Crescendo BioScience. This deal closed ahead of time and should therefore lead to better sales for the company in the year ending June 30.
Analyst sentiments
Following the new reimbursement rates adjustment and the benefits to be enjoyed from the acquisition of Crescendo BioScience, analysts have been upping their price targets on the stock. Leerink analysts now expect shares of Myriad to touch $35 per share, up from $28 per which they previously modeled for the stock. On their part, analysts at Jefferies lifted their price target on the stock of Myriad to $33 from $30, describing the change of heart at CMS as a surprise move. But shares of Myriad Genetics, Inc. (NASDAQ:MYGN) are already trading above these estimates. Both analysts have the stock rated at the equivalent of hold.
