MYRIAD GENETICS INC

Previous wording

•other factors discussed under the heading "Risk Factors" contained in Item 1A of our Annual Report on Form 10-K filed with the SEC on February 28, 2024 and this Quarterly Report on Form 10-Q.

Current wording

•other factors discussed under the heading "Risk Factors" contained in Item 1A of our Annual Report on Form 10-K filed with the SEC on February 28, 2024, our Quarterly Report on Form 10-Q filed with the SEC on May 8, 2024, and this Quarterly Report on Form 10-Q.

Previous wording

Personalized genetic data and digital and virtual consumer trends are converging to change traditional models of care. We believe significant growth opportunities exist to help patient populations with pressing health care needs through innovative genetic and precision medicine solutions and services. Our focus is on innovation and growth in three key areas where we have specialized products, capabilities, and expertise: Oncology, Women's Health, and Pharmacogenomics. The pillars of our long-term growth strategy are founded on investments in science and innovation, technology-enabled operations, an elevated customer experience, strong commercial execution, and scalable operations. We believe our path to continued growth is driven by articulating our clinical differentiation, raising awareness with patients who we believe would benefit from testing products, and innovation that improves clinical outcomes, ease of use, and access. By investing in tech-enabled commercial tools, new laboratory facilities, advanced automation, and standardized processes and technology, we believe we will be able to reduce complexity and cost while enhancing our ability to scale and grow. We plan to expand some of our current products, such as our Foresight Universal Plus Test, which is an expanded carrier screening test that we anticipate launching in the second half of 2024. We also plan to launch new products, such as FirstGene, Precise Liquid, and Precise minimal residual disease, which we expect will help accelerate our growth. We intend to develop and enhance our products to support growth, improve patient and provider experience, and reach more patients of all backgrounds. We are committed to disciplined management of a key set of initiatives to fulfill our mission and drive long-term growth and profitability.

Current wording

Personalized genetic data and digital and virtual consumer trends are converging to change traditional models of care. We believe significant growth opportunities exist to help patient populations with pressing health care needs through innovative genetic and precision medicine solutions and services. Our focus is on innovation and growth in three key areas where we have specialized products, capabilities, and expertise: Oncology, Women's Health, and Pharmacogenomics. The pillars of our long-term growth strategy are founded on investments in science and innovation, technology-enabled operations, an elevated customer experience, strong commercial execution, and scalable operations. We believe our path to continued growth is driven by articulating our clinical differentiation, raising awareness with patients who we believe would benefit from our testing products, and innovation that improves clinical outcomes, ease of use, and access. By investing in technology-enabled commercial tools, new laboratory facilities, advanced automation, and standardized processes and technology, we believe we will be able to reduce complexity and cost while enhancing our ability to scale and grow. In June 2024, we launched the Universal Plus Panel to our Foresight® Carrier Screen (the "Foresight Universal Plus Test") which is an expanded carrier screening test. We also plan to launch new products, such as FirstGene, Precise Liquid, and Precise minimal residual disease, which we expect will help accelerate our growth. We intend to develop and enhance our products and services to support growth, improve patient and provider experience, and reach more patients of all backgrounds. We are committed to disciplined management of a key set of initiatives to fulfill our mission and drive long-term growth and profitability.

Previous wording

•First quarter 2024 testing volumes grew 9% year-over-year, driven by 13% growth year-over-year in GeneSight test volumes, 9% growth year-over-year in hereditary cancer test volumes, and 9% growth year-over-year in Prenatal test volumes, partially offset by a 16% decrease year-over-year in Tumor Profiling.

Current wording

•Second quarter 2024 testing volumes grew 9% year-over-year, driven by 12% growth year-over-year in Prenatal test volumes, 10% growth year-over-year in Pharmagenomics test volumes, and 3% growth year-over-year in Hereditary Cancer test volumes, partially offset by a 13% decrease year-over-year in Tumor Profiling test volumes.

Previous wording

•Revenue growth of 12% year-over-year for the quarter ended March 31, 2024.

Current wording

•Revenue growth of 15% year-over-year for the quarter ended June 30, 2024.

Previous wording

Cost of testing revenue for the three months ended March 31, 2024 increased $5.4 million compared to the same period in the prior year primarily due to an increase in volumes in Pharmacogenomics, Hereditary Cancer, and Prenatal products.

Current wording

Cost of testing revenue for the three months ended June 30, 2024 increased $6.6 million compared to the same period in the prior year primarily due to an increase in volumes in Pharmacogenomics, Hereditary Cancer, and Prenatal tests.

Previous wording

Other income (expense), net increased for the three months ended March 31, 2024 as compared to the same period in the prior year due primarily to the $2.2 million gain recognized on the Precise acquisition in the current period.

Current wording

Other income (expense), net decreased for the three months ended June 30, 2024 as compared to the same period in the prior year due primarily to the prior period loss on the sale of investments.

Previous wording

Our tax rate is the product of a U.S. federal effective rate of 21.0% and a blended state income tax rate of approximately 3.4%. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

Current wording

Our tax rate is the product of a U.S. federal effective rate of 21.0% and a blended state income tax rate of approximately 3.3%. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

Previous wording

For the three months ended March 31, 2024, there was $0.1 million income tax expense and our effective tax rate was (0.4)%. For the three months ended March 31, 2024, our effective tax rate differs from the U.S. federal statutory rate primarily due to the recognition of valuation allowances. Due to our cumulative loss and the exhaustion of future taxable income from the reversal of taxable temporary differences, our estimated annual effective tax rate for the current year includes a valuation allowance against the majority of the current year increase in deferred tax assets. For the three months ended March 31, 2023, our effective tax rate differs from the U.S. federal statutory rate primarily due to valuation allowances and uncertain tax positions.

Current wording

For the three months ended June 30, 2024, there was $0.5 million income tax benefit and our effective tax rate was 1.3%. For the three months ended June 30, 2023, there was no income tax expense or benefit and our effective tax rate was 0%. For the three months ended June 30, 2024 and 2023, our effective tax rate differs from the U.S. federal statutory rate primarily due to the recognition of valuation allowances and uncertain tax positions. Due to our cumulative loss and the exhaustion of future taxable income from the reversal of taxable temporary differences, our estimated annual effective tax rate for the current year includes a valuation allowance against the majority of the current year increase in deferred tax assets.

Previous wording

Test revenues increased $21.0 million for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to an increase in testing volume across the majority of our products. Hereditary Cancer revenues increased $12.4 million compared to the same period in the prior year due to a 9% increase in testing volume and a 7% increase in average revenue per test. Prenatal revenues increased $8.1 million compared to the same period in the prior year due to a 9% increase in testing volume and a 12% increase in average revenue per test due in part to retroactive coverage by a payor for one of our tests. Pharmacogenomics revenues increased $6.9 million compared to the same period in the prior year due primarily to a 13% increase in testing volume and a 7% increase in the average revenue per test. Tumor Profiling revenues decreased $6.4 million compared to the same period in the prior year due primarily to a decrease in volume for MyChoice CDx, which is largely driven by MyChoice CDx studies in the prior year.

Current wording

Test revenues increased $49.0 million for the six months ended June 30, 2024 compared to the same period in the prior year primarily due to an increase in the average revenue per test across the majority of our products, due in part to changes in contracted price and operational improvements, as well as an increase in test volumes. Hereditary Cancer revenues increased $27.2 million for the six months ended June 30, 2024 compared to the same period in the prior year due to an 11% increase in average revenue per test and a 6% increase in testing volume. Prenatal revenues increased $16.9 million for the six months ended June 30, 2024 compared to the same period in the prior year due to a 12% increase in average revenue per test and a 11% increase in testing volume. Pharmacogenomics revenues increased $14.7 million for the six months ended June 30, 2024 compared to the same period in the prior year due primarily to an 11% increase in testing volume and a 9% increase in the average revenue per test. Tumor Profiling revenues decreased $9.8 million for the six months ended June 30, 2024 compared to the same period in the prior year due primarily to a decrease in volume for MyChoice CDx, which was largely driven by MyChoice CDx studies in the prior year.

Previous wording

Research and development expense for the three months ended March 31, 2024 increased by $2.4 million compared to the same period in the prior year primarily due to a $2.5 million increase in compensation costs driven largely by an increase in the average compensation expense per employee.

Current wording

Research and development expense for the six months ended June 30, 2024 increased by $9.0 million compared to the same period in the prior year primarily due to a $6.0 million increase in compensation costs. Compensation expense increased in part due to estimated higher attainment of short-term incentive pay and an increase in the average cost per employee for the current period compared to the prior period.

Previous wording

Selling, general and administrative expense decreased by $11.1 million for the three months ended March 31, 2024 compared to the same period in the prior year primarily due toa $3.6 million decrease in depreciation expense driven by $5.7 million of accelerated depreciation in the prior period in connection with our decision to cease the use of our former corporate headquarters, a $2.8 million decrease in sales and marketing expenses, and a $1.7 million decrease in consulting costs.

Current wording

Selling, general and administrative expense decreased $7.5 million for the six months ended June 30, 2024 compared to the same period in the prior year primarily due to decreases in expense associated with our real estate optimization strategy, including a decrease in rent expense of $2.2 million, a decrease in depreciation expense of $1.8 million due to the prior year including $5.7 million of accelerated depreciation in connection with our decision to cease use of our former corporate headquarters, and a $1.2 million gain in the current period associated with a lease termination. The current period also includes a $2.5 million decrease in sales and marketing expenses. These decreases were partially offset by a $2.1 million increase in compensation cost in the current period.

Previous wording

Our primary sources of liquidity are our cash, cash equivalents and marketable investment securities, our expected cash flows from operations, and, in certain circumstances as discussed below, amounts available for borrowing under our asset-based revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent and issuing bank, and the other lender parties thereto (the "ABL Facility"). As of March 31, 2024, we had cash, cash equivalents and marketable investment securities of $104.3 million and availability under the ABL Facility was $41.3 million, subject to the minimum availability requirement under the ABL Facility. Our capital deployment strategy focuses on use of resources in the key areas of research and development, technology and acquisitions. We believe that investing organically through research and development and new product development or acquisitively to support our business strategy provides the best return on invested capital.

Current wording

Our primary sources of liquidity are our cash, cash equivalents and marketable investment securities, our expected cash flows from operations, and, in certain circumstances as discussed below, amounts available for borrowing under our asset-based revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent and issuing bank, and the other lender parties thereto (the "ABL Facility"). As of June 30, 2024, we had cash, cash equivalents and marketable investment securities of $97.3 million and availability under the ABL Facility was $41.5 million, subject to the minimum availability requirement under the ABL Facility. Our capital deployment strategy focuses on use of resources in the key areas of research and development, technology and acquisitions. We believe that investing organically through research and development and new product development or acquisitively to support our business strategy provides the best return on invested capital.

Previous wording

Our ABL Facility has a total maximum principal commitment of $115.0 million. The ABL Facility requires that we and our subsidiaries guaranteeing the indebtedness, on a consolidated basis, maintain minimum liquidity of $60.0 million and minimum availability of $25.0 million at all times before achieving a fixed charge coverage ratio of 1.0 to 1.0 and, thereafter, to maintain a fixed charge coverage ratio of 1.0 to 1.0 until achieving availability under the ABL Facility of greater of (a) $10.6 million and (b) 12.5% of the lesser of the maximum commitment amount and the borrowing base for a period of 30 consecutive days. As of March 31, 2024, we had $40.0 million outstanding under the ABL Facility and availability under the ABL Facility was $41.3 million, subject to the minimum availability requirement under the ABL Facility.

Current wording

Our ABL Facility has a total maximum principal commitment of $115.0 million. The ABL Facility requires that we and our subsidiaries guaranteeing the indebtedness, on a consolidated basis, maintain minimum liquidity of $60.0 million and minimum availability of $25.0 million at all times before achieving a fixed charge coverage ratio of 1.0 to 1.0 and, thereafter, to maintain a fixed charge coverage ratio of 1.0 to 1.0 until achieving availability under the ABL Facility of greater of (a) $10.6 million and (b) 12.5% of the lesser of the maximum commitment amount and the borrowing base for a period of 30 consecutive days. As of June 30, 2024, we had $40.0 million outstanding under the ABL Facility and availability under the ABL Facility was $41.5 million, subject to the minimum availability requirement under the ABL Facility.

Previous wording

The decrease in cash, cash equivalents, and marketable investment securities as of March 31, 2024 as compared to December 31, 2023 was primarily driven by $18.6 million in cash used by operations, $6.7 million used for capital expenditures, and $8.7 million used for the payment of withholding tax for the issuance of common stock, net of proceeds from the issuance of common stock.

Current wording

The decrease in cash, cash equivalents and marketable investment securities as of June 30, 2024 as compared to December 31, 2023 was primarily driven by $16.0 million in cash used by operations, $11.9 million in cash used for capital expenditures, $5.6 million in cash used for the capitalization of internal-use software, and $6.2 million in cash used for the payment of withholding tax for the issuance of common stock, net of proceeds from the issuance of common stock.

Previous wording

We used less cash for operating activities for the three months ended March 31, 2024 compared to the same period in the prior year, primarily due to an improvement in core operations driven by a 12% increase in revenues and a 12% decrease in expenses as a percentage of revenue, partially offset by the receipt of $13.2 million in tenant improvement allowance reimbursements in the prior period.

Current wording

We used less cash for operating activities for the six months ended June 30, 2024 compared to the same period in the prior year, primarily due to an improvement in core operations driven by a 13% increase in revenues and a 9% decrease in expenses as a percentage of revenue, excluding non-cash expenses for goodwill and long-lived asset impairment charges and accrued legal settlements. This increase in cash flows was partially offset by the receipt of $16.3 million in tenant improvement allowance reimbursements in the prior period.

Previous wording

The increase in cash flows used in investing activities for the three months ended March 31, 2024 compared to the same period in the prior year was primarily due to the $56.6 million decrease in cash flows from marketable investment securities, partially offset by a $16.8 million decrease in capital expenditures.

Current wording

The decrease in cash flows used in investing activities for the six months ended June 30, 2024 compared to the same period in the prior year was primarily due to the $84.7 million decrease in cash flows from marketable investment securities, partially offset by a $30.4 million decrease in capital expenditures in connection with the build-out of new facilities in the prior year.

Previous wording

The increase in cash flows used in financing activities for the three months ended March 31, 2024 compared to the same period in the prior year was due to a $3.8 million increase in cash used for the payment of withholding tax for the issuance of common stock, net of proceeds from the issuance of common stock.

Current wording

The decrease in cash flows used in financing activities for the six months ended June 30, 2024 compared to the same period in the prior year was primarily due to proceeds of $40.0 million under the ABL Facility in the prior period.

Previous wording

Critical accounting estimates are those policies which are both important to the presentation of a company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a further discussion of our critical accounting estimates, see our Annual Report on Form 10-K filed with the SEC on February 28, 2024. No significant changes to our accounting policies took place during the three months ended March 31, 2024.

Current wording

Critical accounting estimates are those policies which are both important to the presentation of a company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a further discussion of our critical accounting estimates, see our Annual Report on Form 10-K filed with the SEC on February 28, 2024. Other than the policy on held for sale assets and liabilities described in Note 1, “Basis of Presentation” in the Notes to Condensed Consolidated Financial Statements included herein, no significant changes to our accounting policies took place during the three months ended June 30, 2024.