Myriad Genetics (MYGN) Decline Tied to Clerical Error

October 1, 2013 8:08 AM EDT
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Price: $16.33 -0.24%

Rating Summary:
    7 Buy, 16 Hold, 6 Sell

Rating Trend: Up Up

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On Monday shares of Myriad Genetics (NASDAQ: MYGN) declined on concerns about medical reimbursement. In the view of Leerink Swann, the published reimbursement rate for BRCA1 & BRCA2 was an error, and the stock is likely to recover losses.

"MYGN's stock sold-off late in yesterday's trading session on concerns that the company's Medicare administrative contractor (MAC) Noridian slashed reimbursement for BRCA1 & BRCA2 full sequence (i.e., CPT code 81211) by ~48%. We have since learned that this was merely a clerical error; the reimbursement for code 81214 -- BRCA1 full sequence -- was entered into the spot for 81211 by mistake. Noridian continues to pay for BRCA testing at $2,795 versus the $1,449 rate that was published in error on CMS' website," said analyst Dan Leonard.

"As expected, Noridian reduced gapfill payment rates for COLARIS by ~46% to $2,612, consistent with the COLARIS rate Palmetto revised last week. COLARIS comprised ~8% of MYGN's FY2013 revenue. We estimate that ~15% of COLARIS revenue is Medicare, and thus the cut will present roughly a ~1% headwind to MYGN's FY2014E revenue," he added.

Leerink Swann has a Market Perform rating on Myriad Genetics with a price target of $26.

For an analyst ratings summary and ratings history on Myriad Genetics (NASDAQ: MYGN)click here. For more ratings news on Myriad Genetics click here.

Shares of Myriad Genetics closed at $23.50 yesterday.

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