Vermillion (VRML) & InVitae (NVTA) Critical Comparison

Vermillion (NASDAQ: VRML) and InVitae (NYSE:NVTA) are both small-cap medical companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.

Profitability

This table compares Vermillion and InVitae’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vermillion -332.10% -200.44% -114.50%
InVitae -206.95% -115.25% -67.79%

Volatility and Risk

Vermillion has a beta of 2.37, suggesting that its share price is 137% more volatile than the S&P 500. Comparatively, InVitae has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.

Earnings & Valuation

This table compares Vermillion and InVitae’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vermillion $2.64 million 41.14 -$14.96 million ($0.20) -9.05
InVitae $25.05 million 18.26 -$100.25 million ($2.56) -3.38

Vermillion has higher earnings, but lower revenue than InVitae. Vermillion is trading at a lower price-to-earnings ratio than InVitae, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

34.9% of Vermillion shares are held by institutional investors. Comparatively, 66.5% of InVitae shares are held by institutional investors. 3.7% of Vermillion shares are held by insiders. Comparatively, 9.9% of InVitae shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Vermillion and InVitae, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vermillion 0 0 1 0 3.00
InVitae 0 0 3 0 3.00

Vermillion currently has a consensus target price of $2.25, suggesting a potential upside of 24.31%. InVitae has a consensus target price of $14.33, suggesting a potential upside of 65.90%. Given InVitae’s higher possible upside, analysts clearly believe InVitae is more favorable than Vermillion.

Summary

InVitae beats Vermillion on 8 of the 12 factors compared between the two stocks.

About Vermillion

Vermillion, Inc. is a diagnostic service and bio-analytic solutions provider. The Company is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. It sells OVA1 risk of malignancy test for pelvic mass disease (OVA1). OVA1 is a blood test designed to, in addition to a physician’s clinical assessment of a woman with a pelvic mass, identify women who are at risk of having a malignant ovarian tumor prior to planned surgery. It developed OVA1 through pre-clinical studies in collaboration with various academic medical centers encompassing over 2,500 clinical samples. OVA1 is validated in a multi-center clinical trial encompassing approximately 30 sites reflective of the diverse nature of the clinical centers, at which ovarian adnexal masses are evaluated. Its ASPiRA LABS is a laboratory that provides diagnostic services using a biomarker-based diagnostic algorithm to inform clinical decision making and personalized treatment plans.

About InVitae

Invitae Corporation utilizes an integrated portfolio of laboratory processes, software tools and informatics capabilities to process deoxyribonucleic acid (DNA)-containing samples, analyze information about patient-specific genetic variation and generate test reports for clinicians and their patients. As of December 31, 2016, the Company’s products consisted of assays totaling over 1,100 genes that could be used for multiple indications, including hereditary cancer, neurological disorders, cardiovascular disorders, pediatric disorders and other hereditary conditions. The Company offers panels for a range of hereditary conditions in cancer, cardiology, neuromuscular, pediatric and rare diseases. The Company focuses on genetic testing, genome network and genome management. The Company offers full gene sequencing and deletion/duplication analysis as a standard for all of its tests. The Company holds interests in AltaVoice, a patient-centered data company.

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