MYRIAD GENETICS THIRD QUARTER 2026 FINANCIAL EARNINGS - MYRIAD GENETICS INC

Financial Performance:

• Q3 2026 total revenue reached $202.7 million, up 6% sequentially but down 1% year-over-year (YoY).
• Average Revenue Per Test (ARPT) increased 1% YoY and 7% sequentially, a significant improvement over the 9% YoY decline in Q2, driven by mix and revenue cycle initiatives.
• Gross margin improved 130 basis points (bps) sequentially to 67.9%, though down 200 bps YoY.
• Adjusted EBITDA improved to a loss of $5 million (up from $5.3M loss in Q2), resulting in an Adjusted EPS loss of $0.11.
• Adjusted operating expenses remained flat sequentially but increased $10M YoY due to commercial investments.
• Cash position ended the quarter at approximately $182 million in available capital.
• Hereditary Cancer Testing (HCT) volume grew 6% YoY; Precise MRD volume is being managed prudently pending reimbursement.

Guidance and Future Outlook:

• Full-year 2026 revenue guidance raised to $780–$790 million (midpoint $785 million) from prior $780 million, reflecting Q3 ARPT improvement and conservative prenatal volume assumptions.
• Post-divestiture of prenatal health, the company expects revenue growth to accelerate by >100 bps and gross margins to improve by >500 bps in 2027.
• Guidance anticipates modest ARPT headwinds for HCT long-term, averaging a 1–5% decline (likely 3–4%) due to market dynamics.
• Precise MRD reimbursement for breast cancer is targeted for H1 2027, with colorectal and renal cancer reimbursement expected later in 2027.
• The "Ascend" initiative to modernize operations is a multi-year effort expected to yield productivity and cost structure benefits starting in 2027.

Business Segments and Product Lines:

• Cancer Care Continuum: Revenue $124M (+1% YoY); Volume grew 4% to 98,000 tests, offset by a 3% ARPT decline. NCCN guideline expansions for endometrial, colorectal, and gastric cancers are expected to drive future growth.
• Prolaris Plus AI: Relaunched mid-year with positive feedback; volume impacted by NCCM guidelines recommending blood-based biomarkers prior to biopsy.
• GeneSight (Mental Health): Revenue $40M (+2% YoY); volume up 3% with over 40,000 ordering clinicians.
• Precise MRD: Interim MONSTAR III data shows 91% detection of recurrence in colorectal cancer patients at 1 month post-surgery; 50% of positives were ultra-sensitive.
• Prenatal Health: Revenue $39M (-12% YoY) with volume down 11%; business agreed to be sold to LabCorp for $210M plus inventory.

Market and Competitive Landscape:

• The company faces industry-wide reimbursement pressure characterized by an increase in "zero pay" denials rather than explicit rate cuts from contract renegotiations.
• The divestiture of prenatal health to LabCorp sharpens Myriad's focus on the cancer care continuum, where it maintains a strong market position.
• Competition in MRD testing remains intense; Myriad emphasizes the superior ultra-sensitive detection capabilities of its assay compared to other platforms.
• Market trends show continued guideline expansion for hereditary cancer testing (HCT), supporting long-term volume growth potential.

Risks and Challenges:

• Reimbursement Friction: Continued pressure on ARPT due to payer denials and zero payments remains a primary operational challenge, requiring unrelenting revenue cycle management.
• Prenatal Business Decline: Significant volume contraction in the prenatal segment necessitated the divestiture to preserve shareholder value.
• Regulatory/Market Shifts: NCCM guideline changes recommending blood-based biomarkers prior to biopsy negatively impact Prolaris Plus AI volumes.
• Integration Risks: While the LabCorp transaction is expected to be smooth, transition risks exist for the ~500 employees transferring to LabCorp.

Management Commentary and Tone:

• Management tone is cautiously optimistic, emphasizing decisive action on strategic pivot and early wins in revenue cycle management.
• CEO Sam Raha expressed satisfaction with the Q3 progress on the "Ascend" initiative and the strategic value of the LabCorp transaction.
• CFO Ben Wheeler highlighted the material strengthening of the balance sheet and the path to sustainable profitability in 2027.
• Management remains disciplined on capital allocation, prioritizing high-return investments while managing costs.

Analyst Questions and Answers:

• Q: Drivers of HCT ARPT decline? A: Driven primarily by "zero pay" denials and revenue cycle friction, not contract rate changes or medical policy shifts; early progress seen via ARPT initiatives.
• Q: Q4 Guidance assumptions? A: Guidance reflects a Q3 outperformance of ~$10M offset by ~$5M of prenatal volume softness due to the deal announcement; no material out-of-period adjustments.
• Q: Post-divestiture capital allocation? A: Net proceeds ($210M+) will be evaluated for debt reduction, internal/external growth investments, and general corporate purposes.
• Q: 2027 profitability profile? A: Expect meaningful progress in bottom-line profitability driven by higher margins, reduced overhead via "Ascend," and focused capital efficiency.

Other Key Points:

• Divestiture Details: Definitive agreement signed to sell prenatal health to LabCorp for $210M cash plus inventory (1.3x trailing 12-month revenue); expected to close with a smooth transition for patients and ~500 employees.
• Precise MRD Clinical Data: Early access sites are actively engaged; interim MONSTAR III data highlights clinical utility in colorectal cancer monitoring.
  Strategic Focus: The company is transitioning to a "new Myriad" focused exclusively on the cancer care continuum and mental health, with a streamlined cost structure and improved liquidity.