Myriad Genetics, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strategy: Focus on the cancer care continuum, prenatal health, mental health, and sustained profitable growth. Key pillars include leveraging MyRisk, expanding the portfolio to include other cancer screening/diagnostic tests, strategic partnerships, a strong team with domain expertise, and execution excellence.
• Cancer Care Continuum: On track to launch the updated MyRisk test in November 2025. Collaborated with SOPHiA GENETICS for biomarker validation and CDx development. Making progress on the ultrasensitive Precise MRD test, set to launch in the first half of 2026. On track to launch the first Prolaris prostate cancer test in the first half of 2026 in partnership with PATHOMIQ.
• Prenatal and Mental Health: Commenced early access for the FirstGene multiple prenatal screen, expecting commercial launch in 2026. Continued growth of GeneSight by concentrating high-value accounts and leveraging state biomarker laws.
• Organizational Changes: Reallocating headcount and funding to support growth in the cancer care continuum, including expanding the commercial team and increasing funding for commercial launch and R&D programs. Moving to a functional organizational structure to reduce layers and drive efficiency.

Segment Performance

• Oncology: Total oncology revenue was $81.8 million, a 1% decline year-over-year. MyRisk test saw 16% volume growth in the affected market and 11% volume growth in the unaffected market. Prolaris revenue grew 3% year-over-year on positive volume growth.
• Women's Health: Delivered revenue of $85.2 million, a 3% increase over the prior year period. Hereditary cancer testing in the unaffected market had 4% revenue growth and 11% volume growth. Prenatal testing saw a modest rebound in volume growth from the second quarter.
• Mental Health: GeneSight revenues were $38.7 million in Q2 with 8% year-over-year volume growth, and a record number of ordering clinicians over 37,000 in the third quarter.
• Overall: Total revenue was $206 million, a 4% year-over-year decrease. Excluding certain headwinds, the business was stable compared to Q3 2024. Adjusted gross margin was 70.1%, and adjusted EBITDA was $10.3 million.

Guidance

• Reaffirmed 2025 financial guidance: Revenue range $818 million to $828 million, gross margin between 69.5% and 70%, adjusted operating expenses between $562 million and $568 million, adjusted EBITDA between $27 million and $33 million, and adjusted EPS between a loss of $0.02 and a gain of $0.02.
• Focus on growing revenue faster than operating expenses while maintaining disciplined capital deployment.

Risks

• Impact of UnitedHealthcare's coverage policy change on GeneSight revenue.
• Competition in the NIPT market with new entrants and potential share loss.
• Dependence on payer reimbursement and regulatory changes affecting test coverage and reimbursement rates.

Q: Higher-level question on commercial focus and profitability A: Sam and Ben discuss the focus on profitable growth, reallocation of resources to support growth in the cancer care continuum, and the commitment to growing revenue faster than operating expenses Q: NIPT business share shift A: Sam and Mark talk about recovery from Q2 operational issues, progress with FirstGene, and market dynamics including new entrants in the NIPT space Q: Friction on new ordering management system for NIPT A: Sam and Mark explain that operational execution challenges in Q2 led to volume shifts, but progress is being made to regain growth Q: Partnerships in the portfolio A: Sam discusses the focus on partnerships to expand into high-growth cancer care segments, citing collaborations with SOPHiA GENETICS and PATHOMIQ Q: Turnaround times for Prequel test A: Mark states that Myriad's turnaround times are industry standard or best, focusing on patient convenience and workflow rather than just result timing Q: ASP and reimbursement for GeneSight A: Ben discusses the impact of payer policies and biomarker laws on GeneSight's ASP, with expectations of continued support for reimbursement Q: Organizational structure changes and OpEx A: Sam explains the reallocation of resources to sales-related positions and key programs, with a focus on driving growth while managing OpEx Q: Clinical data releases for PATHOMIQ partnership A: Sam mentions the launch of the first combined Prolaris test in the first half of 2026 and future products in 2027 Q: MyRisk volume growth in unaffected segment A: Sam and Mark discuss the factors driving the acceleration in MyRisk volume growth, including EMR improvements and the upcoming launch of the expanded MyRisk panel Q: GeneSight priority and coverage policy A: Sam affirms GeneSight's importance in the portfolio but emphasizes the company's focus on prioritizing growth in the cancer care continuum