Executive Summary / Key Takeaways

• Myriad Genetics is undergoing a strategic transformation, focusing on profitable growth and innovation in molecular diagnostics across Oncology, Women's Health, and Pharmacogenomics, underpinned by investments in technology and operational efficiency.
• Recent financial performance reflects this transition, with Q1 2025 revenue impacted by specific headwinds (UnitedHealthcare (UNH) GeneSight policy, EndoPredict sale, prior period adjustments) but showing underlying growth excluding these factors, alongside improved gross margins driven by operational efficiencies.
• Key technological differentiators like MyRisk with RiskScore, the HRD platform, and the developing Precise MRD and AI-enabled Prolaris assays offer quantifiable advantages in accuracy and clinical utility, positioning Myriad uniquely against competitors despite facing challenges in operational speed and cost structure.
• Updated 2025 guidance reflects anticipated volume softness in GeneSight (due to payer policy) and unaffected hereditary cancer testing (due to slower EMR ramp), offset by disciplined OpEx management and expected sequential revenue increases throughout the year.
• The long-term investment thesis hinges on successful execution of EMR integrations, realizing the potential of new product launches (FirstGene, Precise MRD, AI Prolaris, Precise Liquid), and navigating payer dynamics and competitive pressures to achieve sustained high single-digit to low double-digit revenue growth and improved profitability.

Setting the Stage: A Precision Medicine Leader in Transition

Myriad Genetics stands as a prominent molecular diagnostic testing and precision medicine company, dedicated to leveraging genetic insights to improve patient care and reduce healthcare costs. Operating across three core areas – Oncology, Women's Health, and Pharmacogenomics – Myriad aims to provide clinically differentiated tests that inform critical healthcare decisions, from assessing disease risk and progression to guiding treatment selection and monitoring. The company's history, particularly over the past few years, has been marked by a deliberate strategic shift under prior leadership, focusing on rationalizing its portfolio, enhancing operational efficiency, and prioritizing investments in areas with the highest growth potential. This transformation continues under new leadership, with a renewed emphasis on execution excellence and unlocking predictable, sustained profitable growth.

The genetic testing industry is dynamic and competitive, characterized by rapid technological advancements, evolving clinical guidelines, and complex reimbursement landscapes. Key publicly traded competitors like Illumina (ILMN), Invitae (NVTA), Guardant Health (GH), and NeoGenomics (NEO) vie for market share across various segments. While some competitors like Illumina lead in foundational sequencing technology and scale, others like Invitae focus on high-volume, lower-cost testing, and Guardant specializes in emerging areas like liquid biopsy. Myriad positions itself by focusing on clinically validated, high-value tests supported by proprietary technology and a strong emphasis on customer experience and evidence generation. However, this positioning comes with challenges, including navigating payer coverage decisions and ensuring seamless integration of its services within healthcare providers' workflows.

The Engine of Insight: Technology and Innovation

At the heart of Myriad's strategy lies its differentiated technological platform and commitment to innovation. The company's portfolio includes tests built on robust scientific foundations, offering tangible benefits over alternative approaches.

A prime example is the MyRisk Hereditary Cancer Test with RiskScore. While competitors offer NGS-based panels, Myriad's RiskScore integrates a polygenic risk score (PRS) for all ancestries with traditional risk factors. A study highlighted that RiskScore delivered two times the ability to predict breast cancer risk than the widely used Tyrer-Cuzick model alone, demonstrating a significant quantifiable advantage in predictive accuracy. This differentiation supports Myriad's position as the "gold standard" in hereditary cancer testing and contributes to its pricing power and customer loyalty, potentially boosting margins and exploiting accuracy gaps in competitors' offerings.

In oncology, Myriad's HRD platform is considered the gold standard for homologous recombination deficiency detection. Its integration into platforms like Illumina's TruSight Oncology assays further validates its technological strength and expands its reach. This proprietary technology provides a 25% edge in HRD detection, a critical factor in guiding targeted therapies, helping Myriad differentiate against broader oncology testing providers like Guardant and NeoGenomics.

Looking ahead, Myriad is investing heavily in its pipeline of new technologies aimed at serving the cancer care continuum and expanding its prenatal offerings. The Precise MRD (Molecular Residual Disease) test is a key focus. This tumor-informed, whole genome sequencing-based assay is designed for exceptional sensitivity, particularly for low-shedding cancers. Positive clinical data has been presented at major conferences like AACR and ASCO, illustrating its ability to detect very low ctDNA levels and potentially inform treatment de-escalation strategies. With multiple studies underway involving over 4,000 patients and more than 30,000 time points of data, Myriad is building the clinical evidence base for a targeted commercial launch in first half of 2026, starting with breast cancer. The strategic intent is clear: to offer a highly sensitive MRD assay that addresses a significant unmet need and positions Myriad competitively in this emerging market, where Guardant Health is also active with its liquid biopsy platform.

Furthermore, Myriad is on track to launch its first AI-enabled Prolaris test by the end of 2025 through a partnership with PATHOMIQ. This collaboration provides exclusive US access to PATHOMIQ's AI platform for prostate cancer, allowing Myriad to offer AI-powered solutions alongside its existing molecular Prolaris test. This is a strategic move to enhance the clinical utility of Prolaris, which already holds NCCN Category 2A evidence for low, intermediate, and high-risk patients at biopsy, and to accelerate the timeline for gaining Simon Level 1 evidence. The partnership also enables Myriad to enter the post-radical prostatectomy/radiation market, where it currently does not participate, providing a molecular-plus-AI solution set across the prostate cancer care continuum. This unique combination of AI, biomarker, germline (MyRisk), and tumor profiling (Precise Tumor) testing positions Myriad distinctly against competitors like NeoGenomics in the urology market.

In Women's Health, the upcoming FirstGene Multiple Prenatal Screen, expected to launch within months (early access announced June 2025), represents a significant innovation. This combined carrier screening and NIPS assay aims to streamline prenatal risk assessment by integrating multiple testing modalities into a single blood draw, potentially without the need for paternal testing. The stated goal is to provide a more complete fetal genetic risk assessment faster than traditional methods, enhancing the customer experience and expanding the market opportunity, particularly ahead of potential ACOG guideline updates for expanded carrier screening.

While Myriad's technology offers strong clinical differentiation, it faces challenges in operational efficiency compared to some competitors. Its operational costs per test are estimated to be higher than those of high-volume providers like Invitae and NeoGenomics, potentially impacting gross margins. Furthermore, innovation speed, while improving, may still lag behind platforms like Illumina's NGS technology, which offers faster processing speeds. Addressing these aspects through operational improvements and strategic partnerships is crucial for Myriad to fully capitalize on its technological advantages.

Operational Execution and Financial Performance

Myriad's strategic focus on profitable growth is reflected in its operational initiatives and recent financial performance. The Labs of the Future program, with over $75 million invested, aims to drive operational excellence, shorten turnaround times, and reduce cost per test through new facilities, automation, and standardized processes. While the full benefits are yet to be realized as lab moves continue through the end of 2025, these investments are foundational to improving efficiency and supporting future scale.

EMR integrations are another critical operational focus, aimed at improving customer experience and driving volume growth by enabling seamless test ordering and result delivery within provider workflows. Myriad has doubled its investment in EMR programs and significantly increased the pace of new site integrations, adding over 4,500 new clinic locations in 2024. However, the ramp-up in testing volume from these integrations, particularly for unaffected hereditary cancer testing, has been slower than anticipated due to workflow disruptions that require account-by-account stabilization efforts. This operational challenge is a key factor impacting near-term volume growth in a strategically important market segment.

Financially, Myriad's performance in Q1 2025 showed a 3% year-over-year revenue decline to $196 million. This was primarily driven by specific headwinds: a 20% year-over-year decrease in Pharmacogenomics revenue (down $7.9 million to $31.0 million), largely due to a 22% drop in average revenue per GeneSight test following UnitedHealthcare's coverage policy change, and a $1.6 million decrease in Tumor Profiling revenue (down to $29.3 million) primarily due to the sale of the EndoPredict business. Hereditary Cancer revenue also saw a 2% decline to $86.3 million, impacted by a 5% decrease in average revenue per test despite a 3% volume increase.

However, excluding the estimated $16 million impact from the UnitedHealthcare GeneSight policy, the EndoPredict divestiture, and a one-time retroactive coverage benefit in Q1 2024, Q1 2025 revenue grew 5% year-over-year. This underlying growth was bolstered by a strong performance in Prenatal revenue, which increased 11% year-over-year to $49.3 million, driven by an 11% increase in average revenue per test and continued traction from the new Prequel at 8 weeks launch.

Despite the revenue decline, Myriad demonstrated operational efficiency, with cost of revenue decreasing year-over-year due to a reduction in cost per test. Operating expenses remained relatively consistent, reflecting disciplined cost management while maintaining investments in R&D. The company reported an operating loss of $29.0 million in Q1 2025, slightly wider than the $27.9 million loss in Q1 2024. However, a significant income tax benefit of $29.3 million related to the release of unrecognized tax benefits from CARES Act refund claims resulted in a minimal net loss of $0.1 million for the quarter, a substantial improvement from the $26.0 million net loss in Q1 2024.

Liquidity remains a focus. As of March 31, 2025, Myriad held $91.8 million in cash and cash equivalents. Availability under its ABL facility was $41.9 million. While management believes existing resources are sufficient for the next 12 months, they continue to evaluate opportunities to strengthen the balance sheet. The expected receipt of a $13 million tax refund in 2025 will provide an additional cash inflow.

Net cash used in operating activities improved in Q1 2025, while net cash provided by financing activities increased significantly due to incremental ABL borrowing.

Competitive Dynamics and Strategic Responses

Myriad operates in highly competitive markets, facing rivals with varying strengths. In hereditary cancer, Myriad's MyRisk is the "gold standard," but faces competition from companies like Invitae, which offers lower-cost, high-volume testing, and broader NGS providers like Illumina. Myriad's strategy leverages its superior predictive accuracy (RiskScore) and proprietary platforms (HRD) to maintain pricing power and differentiate, while actively pursuing EMR integrations and partnerships (like the HRD integration with Illumina) to expand access and counter competitors' scale and efficiency advantages. Recent market dislocations (e.g., Invitae's challenges, Tempus's (TEM) acquisition of Ambry) are seen as opportunities for Myriad to gain market share by highlighting its reliability and service quality.

In the urology market, Prolaris competes with tests from companies like Decipher (Veracyte (VCYT)) and NeoGenomics. While all hold similar NCCN evidence levels, Myriad's partnership with PATHOMIQ to integrate AI into Prolaris and expand into the post-treatment market provides a unique, multi-modal offering that differentiates it as the only company providing AI, biomarker, germline, and tumor profiling for prostate cancer. This strategic move aims to enhance Prolaris's clinical utility and capture new market segments, countering competitors' existing positions.

The prenatal market, while experiencing some price rationalization, remains competitive. Myriad's Prequel and Foresight tests compete with offerings from various providers. The launch of Prequel at 8 weeks and the upcoming FirstGene aim to differentiate through earlier insights and streamlined testing, leveraging Myriad's established presence in Women's Health to gain share.

The Pharmacogenomics market, dominated by GeneSight, faces significant payer scrutiny, as highlighted by the UnitedHealthcare policy change. While GeneSight is the market leader with strong provider adoption, the policy decision underscores the ongoing challenge of demonstrating sufficient clinical and economic utility to secure broad, favorable reimbursement. Myriad's strategy involves continuing to build clinical evidence (including economic utility data), engaging directly with payers like UnitedHealthcare, and optimizing revenue cycle processes and patient payment options to mitigate the impact of coverage restrictions. The company does not currently expect other payers to follow UnitedHealthcare's lead, partly due to the influence of state biomarker laws, but this remains a key risk to monitor.

Overall, Myriad's competitive strategy is to leverage its technological strengths and clinical evidence to offer differentiated, high-value tests, while improving operational efficiency and expanding market access through EMR integrations and strategic partnerships. This approach positions it to compete effectively against rivals focused on scale, low cost, or specific emerging technologies, although execution on EMR integration and navigating payer policies remain critical factors influencing its ability to capture market share and achieve profitable growth.

Outlook and Risks

Myriad has updated its full-year 2025 financial guidance, reflecting the challenges and opportunities identified in Q1. The company now expects annual revenue between $807 million and $823 million, down from previous guidance. This revised outlook incorporates the anticipated negative impact of the UnitedHealthcare GeneSight policy and the slower-than-expected ramp in unaffected hereditary cancer testing volumes from EMR integrations.

Despite the revenue adjustment, Myriad is implementing disciplined cost management, with updated Adjusted OpEx guidance between $555 million and $565 million. This reduction in discretionary spend aims to preserve investments in key strategic areas like the commercial organization and new product development. The company is targeting Adjusted EPS between a loss of $0.02 and a gain of $0.02 and Adjusted EBITDA between $19 million and $27 million for the full year 2025. Management anticipates modest sequential increases in revenue throughout the remainder of 2025.

The long-term growth target is currently viewed as high single-digit to low double-digit, supported by the attractive markets Myriad serves, its differentiated capabilities, market access initiatives, and the pipeline of new products. Key catalysts for future growth include the successful launch and adoption of FirstGene, Precise MRD, AI-enabled Prolaris, and Precise Liquid, as well as realizing the full volume potential from EMR integrations and breast cancer risk assessment programs.

However, several risks could impact this outlook. The UnitedHealthcare GeneSight policy remains a significant headwind, and there is a risk, though not currently anticipated by management, that other payers could adopt similar restrictive policies. The pace of EMR integration ramp-up for unaffected hereditary cancer testing is critical, and continued workflow challenges could further delay volume growth. Changes in broader healthcare policy, including potential impacts from legal challenges to the ACA, could affect coverage and reimbursement levels across the portfolio. IT system disruptions, including those related to EMR integrations or third-party services, pose operational risks. Finally, ongoing legal proceedings, such as the Qui Tam lawsuit, could result in adverse outcomes impacting financial condition.

Conclusion

Myriad Genetics is navigating a pivotal phase, marked by strategic focus, technological innovation, and operational adjustments. While recent financial results reflect specific headwinds, particularly from payer policy changes and slower-than-anticipated EMR integration benefits, the underlying business shows signs of resilience and potential, excluding these factors. The company's core technological strengths, including the predictive power of RiskScore and the developing ultra-sensitive MRD and AI-enabled platforms, provide a foundation for differentiation in competitive markets.

The updated 2025 guidance acknowledges near-term volume challenges but highlights a commitment to disciplined cost management and continued investment in future growth drivers. The long-term thesis relies on Myriad's ability to successfully execute its strategic initiatives, particularly the launch and commercialization of its pipeline products and the effective integration of its services within healthcare workflows. Investors should closely monitor the trajectory of GeneSight reimbursement, the pace of EMR-driven volume growth in unaffected hereditary cancer testing, and the progress and market reception of the new product launches, as these will be key determinants of Myriad's ability to achieve its targeted profitable growth and unlock long-term value.