On November 7, 2024 Myriad Genetics, Inc. (NASDAQ: MYGN), a leader in genetic testing and precision medicine, reported financial results for its third quarter ended September 30, 2024 and updated its previously issued financial guidance on business performance for the full-year 2024 (Press release, Myriad Genetics, NOV 7, 2024, View Source [SID1234647938]).

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"During the third quarter of 2024, we grew revenue by 11%, compared to the third quarter of 2023, representing a fifth consecutive quarter of double-digit year-over-year revenue growth and have now delivered 13% revenue growth year-to-date as compared to the same nine-month period in 2023. This builds on the 11% revenue growth we reported for the full year 2023 and reflects the strength of our diversified product offerings, improved commercial execution, and the benefits of the enterprise-wide investments made over the last few years to improve customer service and ease of use," said Paul J. Diaz, President and CEO of Myriad Genetics. "We continue to focus on delivering profitable growth and free cash flow and are pleased with the significant progress we have made across the organization. These efforts, combined with prudent management of our cost structure, contributed to Myriad Genetics generating an improved net loss of $22.1 million and over $14 million in adjusted EBITDA in the third quarter. In October 2024, we hosted an investor event where we provided additional detail on our strategic initiatives, including enhancements to our existing products, and an update on our new product pipeline. These new products, once commercialized, have the potential to address a number of large market opportunities where we believe we will have highly differentiated proprietary solutions, providing us opportunities to accelerate growth going forward. These opportunities build on our mission and vision to reach more patients with life-changing precision medicine. Unfortunately, differentiated solutions often face obstacles to gain broad payor acceptance, as we recently experienced with UNH and its updated medical policy on multi-gene panel pharmacogenetic testing. We are disappointed UNH is restricting access to GeneSight, an important tool for healthcare providers, especially primary care providers, to help patients suffering from depression and anxiety to find the right medication treatment. We look forward to sharing additional clinical evidence for GeneSight with UNH and finding a positive resolution for patients."
Financial and Operational Highlights
•Test volumes of 376,000 in the third quarter of 2024 increased 6% year-over-year.
•The following table summarizes year-over-year testing volume changes in the company’s core product categories:

Three months ended September 30, Nine Months Ended September 30,
(in thousands)
2024 2023
% Change
2024 2023
% Change
Product volumes:
Hereditary cancer
74 71 5 % 219 207 5 %
Tumor profiling
13 13 — % 41 45 (9) %
Prenatal 162 156 3 % 506 469 8 %
Pharmacogenomics
127 116 10 % 380 343 11 %
Total 376 356 6 % 1,146 1,064 8 %

•The following table summarizes year-over-year revenue changes in the company’s core product categories:
Three months ended September 30, Nine Months Ended September 30,
(in millions)
2024 2023
% Change
2024 2023
% Change
Product revenues:
Hereditary cancer
$ 90.5 $ 86.5 5 % $ 270.1 $ 238.9 13 %
Tumor profiling
31.6 30.2 5 % 95.1 103.5 (8) %
Prenatal 43.5 39.5 10 % 132.2 111.3 19 %
Pharmacogenomics
47.7 35.7 34 % 129.6 102.9 26 %
Total $ 213.3 $ 191.9 11 % $ 627.0 $ 556.6 13 %

•Gross margin of 70.2% in the third quarter of 2024 increased 20 basis points year-over-year, reflecting operating leverage and improved average revenue per test. Adjusted gross margin in the third quarter of 2024 was 70.6%, an increase of 20 basis points year-over-year.
•Third quarter 2024 operating expenses were $169.8 million, decreasing 13% over the same period in the prior year due to significant legal costs incurred in the third quarter of 2023 that did not repeat in the third quarter of 2024. Operating expenses accounted for 80% of total revenue in the third quarter of 2024, down from 101% of total revenue in the third quarter of 2023. Adjusted operating expenses were $141.0 million, increasing 3% over the same period in the prior year and reflect ongoing investments in technology, research and development offset by cost management activities. Adjusted operating expenses accounted for 66% of total revenue in the third quarter of 2024, down from 72% of total revenue in the third quarter of 2023.
•Operating loss in the third quarter of 2024 was $20.0 million, improving $40.1 million year-over-year; adjusted operating income in the third quarter of 2024 was $9.5 million, improving $11.7 million year-over-year.

Business Performance and Highlights

Oncology
The Oncology business delivered revenue of $82.9 million in the third quarter of 2024.
•Third quarter 2024 hereditary cancer testing revenue in Oncology grew 11% year-over-year, reflecting both volume growth year-over-year and ongoing initiatives to improve average revenue per test.
•Third quarter 2024 tumor profiling revenue of $31.6 million grew 5% year-over-year, as contributions from Precise Tumor and Prolaris were partly offset by a challenged biopharma environment and the sale of the EndoPredict business on August 1, 2024.
•In October 2024, Myriad Genetics entered a collaboration with Flatiron Health, a leading health technology company, that allows physicians to order Myriad Genetics’ MyRisk Hereditary Cancer Test and view the results of the test directly in Flatiron’s cloud-based Electronic Medical Record (EMR) platform, OncoEMR.
•In October 2024, Myriad Genetics received a third patent relating to proprietary methods that generate ultra-sensitive detection of tumor-specific mutations in circulating tumor DNA (ctDNA), which is complementary to two patents granted earlier in the year for the company’s methods of preparing cell-free DNA. These patents support advancing commercialization of the company’s high sensitivity tumor informed molecular residual disease (MRD) assay.
•Myriad Genetics has established a number of additional research collaborations regarding the use of the company’s Precise MRD test for breast cancer patients, with leading cancer research institutions, including The University of Texas MD Anderson Cancer Center and the National Cancer Center Hospital East in Japan. Myriad Genetics has previously announced other MRD collaborations, including a metastatic breast cancer study with researchers at Memorial Sloan Kettering Cancer Center and a prospective pan-cancer study, including breast cancer, led by researchers at the National Cancer Center Hospital East in Japan.

Women’s Health
The Women’s Health business delivered revenue of $82.7 million in the third quarter of 2024.
•Prenatal testing revenue in the third quarter of 2024 grew 10% year-over-year, reflecting volume growth and ongoing initiatives to improve average revenue per test.
•Third quarter 2024 hereditary cancer testing revenue in Women’s Health declined 2% year-over-year with modest volume growth which was offset by the fact that a favorable change in estimate for average revenue per test in the third quarter of 2023 did not repeat in the third quarter of 2024. Year-to-date 2024 hereditary cancer testing revenue in Women’s Health grew 12% compared to the same nine-month period in 2023 as we believe more practitioners have seen the benefit of incorporating MyRisk with RiskScore as part of a comprehensive breast cancer risk assessment program.
•In October 2024, Myriad Genetics initiated a satellite media tour to coincide with new FDA guidelines to drive increased awareness and engagement around the connection between breast density and cancer risk. New FDA guidelines provide that mammography facilities are required to provide all patients receiving a mammogram with a breast density notification.
•In October 2024, Myriad Genetics established a strategic partnership with jscreen, a national organization providing access to genetic testing with a focus on high-risk populations. The partnership intends to reach hundreds of thousands of high-risk adults across the United States through targeted outreach and in-person genetic screenings.

Pharmacogenomics
In the pharmacogenomics business, GeneSight test revenue was $47.7 million in the third quarter of 2024.
•Third quarter 2024 GeneSight testing revenue grew 34% year-over-year, reflecting double-digit test volume growth year-over-year and ongoing initiatives to improve payor coverage and average revenue per test.
•Currently, biomarker legislation for state-regulated plans has passed in 15 states. In many of these states, commercial and managed Medicaid payers have modified their coverage policies to include GeneSight. Additionally, there are a number of states where legislation is in process. Myriad Genetics continues to see an increasing number of payors incorporating, or planning to incorporate, GeneSight into their coverage.
•During the third quarter of 2024, Myriad Genetics expanded payor coverage for several products, including GeneSight. Third quarter saw an additional 17 new contracts and expanded medical policies and coverage, enhancing access to our products, including GeneSight.

•On November 1, 2024, UNH updated its medical policy for pharmacogenetic testing to no longer provide coverage for certain multi-gene panel pharmacogenetic tests, including our GeneSight test, under its commercial and individual exchange benefit plans, effective January 1, 2025. After initial review of the updated policy, the company strongly disagrees with UNH’s decision and its rationale that there is insufficient evidence of efficacy to support coverage of GeneSight. Myriad Genetics is actively engaging with UnitedHealthcare to discuss additional evidence for Myriad Genetics’ proprietary and clinically differentiated mental health medication test, and is seeking to ensure that enrollees continue to have access to the test. We do not believe that the updated policy affects coverage of GeneSight by UNH under Medicare Advantage and managed Medicaid plans or coverage by other payors.

Cash Flow and Liquidity
For the third quarter of 2024, restricted and unrestricted cash increased by $8.6 million. As of the end of the third quarter of 2024, the company had cash and cash equivalents, excluding restricted cash, of $99.9 million and the ability to access an incremental $48.8 million of availability under its asset-based credit facility (the "ABL Facility"). The company had combined liquidity from its unrestricted cash and cash equivalents of $148.7 million.

Financial Guidance
Myriad Genetics does not provide forward-looking guidance on a GAAP basis for the measures on which it provides forward-looking non-GAAP guidance as the company is unable to provide a quantitative reconciliation of forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measure, without unreasonable effort, because of the inherent difficulty in accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliations that have not yet occurred, are dependent on various factors, are out of the company’s control, or cannot be reasonably predicted. Such adjustments include, but are not limited to, real estate optimization and transformation initiatives, certain litigation charges and loss contingencies, costs related to acquisitions/divestitures and the related amortization, impairment and related charges, and other adjustments. For example, stock-based compensation may fluctuate based on the timing of employee stock transactions and unpredictable fluctuations in the company’s stock price. Any associated estimate of these items and its impact on GAAP performance could vary materially.