Greetings and welcome to the Myriad Genetics Fourth Quarter 2021 Financial Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. As a reminder, this conference is being recorded Thursday, February 24, 2022. I would now like to turn the conference over to Nathan Smith, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Kevin. Good afternoon and welcome to the Myriad Genetics fourth quarter 2021 earnings call. During the call, we will review the financial results we released today. And afterwards, we will host a question-and-answer session. Our quarterly earnings release was issued this morning on Form 8-K and can be found on our website at investor.myriad.com. I'm Nathan Smith, the Senior Vice President of Investor Relations. And on the call today with me are Paul Diaz, our President and Chief Executive Officer; Bryan Riggsbee, our Chief Financial Officer; and Nicole Lambert, our Chief Operating Officer. This call can be heard live via webcast at investor.myriad.com and a recording will be archived in the Investors section of our website. In addition, following the call, the slide presentation will be available on the Investors section of our website. Please note that some of the information presented today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on Management's current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission. Specifically, the company's annual transition report on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. With that, I will now turn the time over to Paul.

Thanks, Nathan. Good afternoon, everyone and thank you for joining us. On today's call, we will discuss our Q4 results, along with highlights of the quarter and updates on our strategic transformation and growth plans. As always, I want to thank all of our teammates for their hard work and dedication this year. I also want to thank our healthcare provider partners for their continued confidence in us. 2021 posed many challenges for everyone but I'm proud of everything we have done to advance our mission and improve the health and well-being of our patients. When we step back and look at the millions of patients we've reached over the years, the importance of our work is clear. We see an opportunity to reach more patients, lower costs, create a seamless user experience and combine data from millions of diagnostic tests with other clinical data sets to help physicians, health systems and payers better manage and care. Despite COVID-19 headwinds and inflationary pressures, we saw solid quarterly operating and financial results during the fourth quarter of 2021. In the quarter, revenues of $160.8 million increased 4% year-over-year and diagnostic test volumes of 237,000 were flat compared to last year. Importantly, excluding the impact of our divested assets, quarterly revenue increased 19% year-over-year and 34% for the year, demonstrating strong growth in our core business. Average revenue per test in the quarter increased 10% year-over-year, reflecting the investments made in and the execution of our revenue cycle plan. Total operating expenses were $158.1 million, and adjusted operating expenses decreased $6.2 million sequentially to $115.3 million, as we continue to manage our costs more effectively and prioritize our operating expenses to our strategic initiatives. Our GAAP operating loss in the quarter was $43.1 million with an adjusted operating income that was breakeven and an adjusted operating loss per share of $0.02. At the end of the fourth quarter, we had approximately $400 million in cash, cash equivalents and investments and no long-term debt. As noted last quarter, our progress toward long-term profitability will not be linear. The COVID-19 virus and its variant strains continue to limit access to providers and patients and has challenged our workforce. This could be seen in our hereditary cancer business as women are visiting their doctors less, delaying routine screening. However, our path of profitability remains clear and our confidence in our financial guidance for 2022 is unchanged and reflects the challenges we face as well as the benefits of our transformation plan. Myriad's position as a trusted differentiated partner with specialized expertise is underpinned by three strategic priorities: first, we are working to develop best-in-class products, services, and accessibility to accelerate growth and reach more patients of all backgrounds; second, we are building new enterprise capabilities to accelerate growth and leverage our scope and scale and to capture new market opportunities, including M&A; third, we are focused on disciplined execution and consistent results as we work to deliver on a key set of initiatives to fulfill our mission and drive long-term growth and profitability. We continue to make progress on each of these priorities and are excited about the opportunities they will create in 2022 and beyond. Our transformation and growth strategy has been focused on three phases. The first phase, resetting our base of operations was successfully completed ahead of schedule, reinforcing who we are as a company, developing our new commercial model, recovering test volumes, completing multiple divestitures and returning roughly $400 million to the balance sheet. In the second phase, we work to elevate our current portfolio to its full potential, debuting a new brand and marketing strategy, restructuring our sales force, enhancing reimbursement and revenue cycle capabilities, fostering diversity and inclusion, and launching new and exciting products that reflect our mission and our value proposition. As we enter the third phase and look to accelerate growth, we have the opportunity to expand on the foundation we've established over the past year. We continue to scale our technology-enabled commercial capabilities with an investment of over $50 million intended to drive volume and improve customer engagement with Myriad's more than 60,000 active ordering physicians. We will build on these capabilities to support new product development consumer engagement channels, the launch and expansion of our unified portal and the rollout of new sequencing technologies in our lab of the future. At the same time, we are seeking acquisitions and partnerships; we continue to invest in our technology infrastructure and core capabilities. Our commercial platform is gaining traction, fueled by a $12 million investment in commercial and marketing capabilities. We recently gave guidance for top-line organic growth of 9% to 12% from 2022 through 2024. This begins with stabilizing revenue from myRisk with riskScore for all ancestries by streamlining our ordering and billing services, further integrating electronic medical records into our systems and developing more consumer engagement. We anticipate a 4% to 5% revenue growth contribution from our Mental Health business, driven by the continued momentum in GeneSight. For our Women's Health business, we expect a 3% to 4% contribution in revenue driven by enhancements to our current products, favorable medical association guidelines and the future launch of FirstGene, our combined carrier and prenatal screening test. In our oncology business, we anticipate a modest 2% to 3% revenue contribution through 2024. We expect this growth will be driven by our entry into the tumor profiling market with precise oncology solutions, launching in the next few weeks. Nicole will talk more about the power of precise in a few minutes. Looking to 2024 and beyond, we are excited to pursue additional growth areas such as liquid biopsy and measurable residual disease monitoring, women's health products and channel expansion and additional pharma partnerships to take advantage of our companion diagnostic capabilities. With that, I'd like to turn things over to Nicole, our Chief Operating Officer, to discuss the Q4 operating results and the new innovations in more detail.

Thank you, Paul. I'd like to start with our core business unit performance. There's no question that the mental health crisis in the U.S. has worsened as a result of the pandemic. Trial and error are still prevalent when it comes to determining the most effective medications to treat depression, anxiety, ADHD, and other mental illnesses. Our research shows that more than half of those diagnosed with depression have tried four or more medications in their lifetimes in an effort to find the right one. Our GeneSight psychotropic test addresses this mental health crisis by helping physicians better understand how antidepressants and other drugs will affect their patients with just a single cheek swab sample that can be taken at a patient's home. Driven by GeneSight, our Mental Health business reported $29.4 million in revenue for the fourth quarter of 2021, an increase of 63% year-over-year and 22% sequentially from the third quarter of 2021. With roughly 78,000 tests ordered in the quarter, we saw some 2,900 physicians ordering GeneSight for the first time. The total number of ordering physicians for GeneSight increased 7% from last year and 95% of our ordering physicians are now using our online portal. Volumes for GeneSight are growing in new provider segments, including general practice physicians and nurse practitioners. About 30% of our tests are home-based kits. We look forward to exploring new partnerships in neurology to develop early detection and treatment selection options for Alzheimer's patients. GeneSight also recently earned a 2-year certification from the High Trust Alliance for safeguarding sensitive information, privacy, and information systems. I should also note that the peer-reviewed journal Psychiatry Research highlighted the advantages of GeneSight in its February 2022 edition. This is now the third study published by Psychiatry Research articulating how GeneSight can help clinicians better understand gene/drug interactions and how they may affect patient outcomes with commonly prescribed antidepressants and other psychiatric medications. Shifting now to our Women's Health business. Last year, we launched our myRisk hereditary cancer test with riskScore for all ancestries which is the only polygenic breast cancer risk assessment available for all women. With this new test, we estimate that 56% of women qualify for medical management changes after Myriad testing versus 10% who would qualify with standard hereditary cancer testing. Since launching myRisk with riskScore for all ancestries, we have been able to provide genetic insights to some 16,000 women of non-European descent who would otherwise not have been able to benefit from riskScore. We plan to significantly increase that number this year and we are excited about the potential opportunities to develop risk stratification capabilities. With riskScore, clinicians can gain critical insights to help treat women with increased risk for breast cancer, who likely do not have an identifiable mutation in one of the breast cancer genes. As Paul mentioned, we are progressing towards the launch of FirstGene, our combined non-invasive prenatal screen and carrier test which is expected to be available early next year. Today, only one in three patients undergo both carrier screening and non-invasive prenatal screening during their pregnancy. FirstGene combines the two tests into one, simplifying the screening process and making it easier for patients to get the answers they need from just one single maternal blood draw. In the fourth quarter, our Women's Health business reported $64 million in revenue, a 14% increase year-over-year and 8% sequentially from the third quarter of 2021. Reported test volumes were roughly 114,000. Hereditary cancer volumes were adversely affected by continued COVID-19 challenges, including physician office staffing constraints, fewer in-person office visits, and limited sales force productivity due to the high levels of positive cases. Under Melissa Gonzales' leadership, we have overcome many operational challenges that included limited technology tools, leading to friction in our customer experience, and a sales force with high levels of turnover. We are excited about the number of new initiatives, including the launch of our unified ordering portal in mid-2022, a more stabilized sales force that is gaining traction, as well as investments in additional consumer-driven channels that we expect will help improve hereditary cancer performance in the back half of the year. Our Oncology business delivered $67.4 million of revenue in the fourth quarter, an increase of 12% year-over-year and a decrease of 12% sequentially from the third quarter of 2021. Reported test volumes were roughly 45,000. This month, we soft launched a precise tumor pilot program and saw that roughly 82% of the Precise Tumor test also had an attached myRisk or myChoice CDx order attached. And as Paul mentioned, we will be launching our comprehensive suite of precise Oncology Solutions in the next few weeks to guide treatment decisions and provide personalized integrated care for patients. This follows an extension of consultation and feedback from leading physicians and members of our Medical Advisory Board and development partners. We've taken a very rigorous approach to field readiness, training, and marketing, all of which are in their final stages of development. This new suite of solutions will include our precise tumor molecular profiling test, the first of its kind to provide a streamlined testing experience that combines germline testing, tumor profiling and companion diagnostic options, including Myriad's leading myChoice CDx companion diagnostic HRD test. With this new solution, Myriad Genetics is advancing in oncology, keeping up with Intermountain Precision Genomics and Illumina to merge the power of companion diagnostics, next-gen sequencing and world-class testing services. In urology, the new NCCN prostate guidelines are favorable for both our Prolaris prostate cancer test as well as our myRisk hereditary cancer test. Myriad Genetics is the only company that is able to offer both a tumor prognostic and hereditary cancer test to our partner urologists as well as a companion diagnostic therapy selection. Myriad was also recently awarded a contract with Blue Cross Blue Shield of Michigan which we believe unlocks a substantial market in the U.S. for Prolaris. We believe we will continue to expand the biopsy market for patients with prostate cancer for Prolaris and look forward to continued growth there. Looking to the near future, we plan to continue to broaden and deepen our oncology product portfolio to support the needs of cancer patients across the entirety of the continuum of care. Myriad offers EndoPredict to help breast cancer patients make the right treatment decision. We offer BRACAnalysis CDx and myChoice CDx, our proprietary and patented germline and HRD companion diagnostic tests. We are working to expand our oncology portfolio by adding liquid biopsy therapy selection testing as well as MRD capabilities. Myriad's vision is to become the precision medicine partner for cancer patients, supporting them throughout their difficult journey with simple and high-quality testing solutions. I would now like to turn the call over to Bryan to discuss our Q4 financial results.

Thank you, Nicole. I would like to start by reviewing our financial highlights. We had another good quarter as we reported total revenue of $160.8 million, up 4% year-over-year and excluding divested assets, increased 19% year-over-year. Our quarterly results were driven by stable test volumes which despite COVID-19 disruptions increased 13% year-over-year, excluding divested assets. Additionally, we saw improving average selling prices across our businesses. The stability in ASP and better-than-expected cash collections on orders from prior periods was driven by our improved execution on revenue cycle management which has been a major component of our transformation and growth plan. In the fourth quarter, we reported an adjusted loss per share of $0.02. We remain on track to return to profitability and deliver consistent growth in 2022. Adjusted gross margin was 71.8% and adjusted operating expenses were $115.3 million. We have experienced increased inflationary pressures, increased labor costs due to staffing constraints and competition for talent as well as increased material costs due to global supply chain disruption. In addition, volumes at the end of the quarter and into January were negatively impacted by the Omicron variant which significantly disrupted physician office access and limited our own sales force which experienced high numbers of positive cases. However, as the number of reported cases both within and outside of Myriad are beginning to decrease, we are seeing volumes return to expected levels. Turning to revenue by product; hereditary cancer revenue in the fourth quarter was $74.8 million versus $78.7 million in the fourth quarter of last year. Our hereditary cancer test volumes increased 2% sequentially and decreased 9% year-over-year. Excluding positive revenue adjustments related to better-than-expected cash collections on tests ordered in prior periods, ASP for hereditary cancer during the quarter increased 3% year-over-year and decreased 3% sequentially. In Women's Health, revenue was $64 million in the fourth quarter, an increase of 14% year-over-year and 8% sequentially. Prenatal revenue increased 43% year-over-year and 27% sequentially, driven by our proprietary amplify technology which significantly enhances the performance of our Prequel non-invasive prenatal screening test and works to reduce test failure rates so that patients may avoid unnecessary invasive procedures. And oncology revenue in the fourth quarter was $67.4 million, an increase of 12% year-over-year and a decrease of 12% sequentially. Tumor profiling revenue increased 57% compared to the same period in the prior year and decreased 19% sequentially. The decrease sequentially is partially due to a $4 million milestone payment received in the prior quarter. Pharmacogenomic testing in Mental Health delivered fourth quarter revenue of $29.4 million, an increase of 63% year-over-year and 22% sequentially, representing consistent growth, six quarters in a row. Now looking at product performance this quarter compared to last quarter and the fourth quarter of 2020, total Q4 test volumes were flat year-over-year and down 5% sequentially. Total revenue increased 4% year-over-year and decreased 4% sequentially. Excluding revenue from divested businesses, total revenue in Q4 increased 19% year-over-year and 1% sequentially. Excluding divested business, quarterly volumes were up 13% year-over-year and 5% sequentially. These results demonstrate strong growth in the core business despite COVID headwinds. In January, we provided 2022 financial guidance that we would like to reiterate. We are giving revenue guidance of $670 million to $700 million based off an 8% to 13% baseline growth rate from 2021 revenue that excludes divested assets of $53 million and $16 million of positive cash collections from prior periods. Using our annualized fourth quarter revenue as a base, our top line guidance represents a growth rate of roughly 4% to 9%. In January, we experienced constraints in access to healthcare providers and a large number of positive COVID cases within Myriad's sales force. As a direct result, we expected a negative $7 million to $9 million impact on our total revenue for the first quarter of 2022. While these obstacles were most prevalent in January, we have seen recent volumes return to levels that are within our expectations. As an offset to the Q1 COVID impact, the delay of PAMA in 2022 will provide a pricing benefit of approximately $7 million. As such, we remain confident in our revenue targets for 2022 and expect to see acceleration of growth in the second half of the year with the rollout in Q1 and Q2 of our new commercial model, tech-enabled tools and the launch of precise oncology solutions. Our guidance for gross margins is 70% to 72%, which is in line with the adjusted gross margin of 71.8% reported in Q4 and includes the impact of inflationary pressures offset by lab optimization initiatives and efficiencies. Adjusted operating expenses are expected to be $470 million to $480 million. The growth in adjusted operating expenses of 2% to 4% is based on our annualized fourth quarter adjusted operating expense of $116 million and includes investments in technology commercial tools and R&D as well as the impact of various inflationary pressures. Finally, we are guiding adjusted earnings per share of $0.00 to $0.20 per share based on a pro forma share count of 82 million shares. We continue to be excited about the business going into 2022 and believe that we have set the stage for a profitable year. While we remain confident in these long-term goals, we are focused on mitigating the COVID-19 and inflationary pressures we are experiencing due to the current macroeconomic environment. We believe that over time, the market will favor the most efficient, effective providers and that our focus on improving customer service levels, our new commercial strategy and our plans for an automated lab of the future will position us to deliver on our long-term goals. We exited the year with a strong balance sheet that has approximately $400 million of cash and equivalents and $250 million undrawn on our revolver that will help fund our growth initiatives and M&A activity. I'll now turn it back over to Paul for closing remarks.

Thanks, Bryan. We are pleased with the progress that we have made this past year in a tough operating environment. Our primary focus now is the launch of our new products and commercial initiatives in Q1 with the goal of accelerating growth in the second half of 2022. As we continue to invest in our business, elevate our products to their full potential and introduce new innovative offerings while pursuing strategic acquisitions and partnerships. Now more than ever, we're exploring new ways to illuminate the path to better health through genetic insights. We look forward to a bright future ahead for Myriad Genetics as we continue to work to better serve our patients and customers and deliver sustained growth and profitability for our shareholders. Now, I'll turn it back to Nathan for Q&A.

As a reminder, during today's call, we use certain non-GAAP financial measures. A reconciliation of the GAAP financial measures to find GAAP financial results and a reconciliation of GAAP to non-GAAP financial guidance can be found under the Investor Relations section of our website. Now we are ready to begin the Q&A session. To ensure broad participation we are asking participants to please ask only one question and one follow-up. Operator, we are now ready for the Q&A portion of the call.

The first question is from Andrew Cooper with Raymond James. Your line is open.

Hi guys, this is Liam on for Andrew. I appreciate you taking my question. So with divestitures in the rearview now, the balance sheet has cleaned up significantly. There's capacity on the revolver. How are you viewing the M&A market today, especially with valuations at much lower levels? And has that changed your thinking at all? And looking at liquid biopsy and MRD specifically, is your just positioned to acquire or partner?

That's a great question, and the situation is evolving. As you know, valuations in the private market tend to take longer to adjust, and sellers often hold onto their expectations. However, we are encouraged by the opportunities for capital deployment. I want to emphasize that the expected growth rate of 9% to 12% is supported by initiatives we have already identified and developed business cases for, with an allocated budget of $30 million to $50 million in capital expenditures. This growth is not reliant on acquisitions. If we come across opportunities, especially in minimal residual disease, that can accelerate our growth and entry into that market, we will definitely consider those. We are also exploring additional Women's Health products to expand our product range. Regarding liquid biopsy and MRD, we recently had a meeting, and we have a clear path forward along with a few partnership discussions that can help us achieve our goals with competitive products. I want to stress that we do not require additional dry powder to reach our targets for liquid biopsy or MRD. Our in-house capabilities and investments in our five-year plan will allow us to do this with only modest operating expenses and capital.

I appreciate that color. And just as a quick follow-up. You guys briefly mentioned physician office access being constrained in January which is understandable given the COVID-case dynamics. How are we looking so far in terms of a February rebound? And how do you feel about that access going forward?

Sure. Thanks for the question. We absolutely are seeing that rebound. I think in January, there were a number of cases. We had some of our own reps that had COVID and weren't able to go in the field but also the reps that were able to go in the field many times, doctors' offices weren't open. They would only open for limited hours or certain days a week because they just didn't have the staff to keep the office open. And we're seeing a very different picture in February; things are starting to rebound fairly quickly.

Great. Thanks, again.

Next question is from Jack Meehan with Nephron Research. Please go ahead.

Thank you and good afternoon. I want to start with Bryan just with the guidance here. You talked about some of the headwinds to start the quarter. Can you just tell us within the revenue guidance of $670 million to $700 million you laid out, like what's an appropriate landing spot for the first quarter?

Yes, Jack, we didn't give guidance for the first quarter. We just talked about how we see the profile for the year in terms of the impact in Q1 from COVID and then the PAMA offset sort of being spread over the remainder of the year and then the acceleration of some of the commercial strategies through the back half of the year. So we just gave qualitative guidance relative to the quarterly profile.

Yes. Well, I think it's pretty straightforward, Jack. I mean, we have a hit in the first quarter for COVID and then we have a good guide in terms of PAMA that will be spread out over the course of the year. And as I said, we've got a significant number of initiatives that are rolling out this quarter. To some extent, it's worked out well because our sales force has been locked down. So we've been able to do some sales training. But really look to the back half of the year as you think about your modeling your quarters where you should see an acceleration. And again, I just want to underscore to try to simplify this. If you look at our fourth quarter and you adjust it, what's usually a seasonally strong quarter and adjust it for COVID but net the divestiture, so it's a clean quarter. It's a great way to gain confidence in our guidance for '22 because it's modest growth levers on the revenue side. And we've tried to help investors by giving you each component piece from revenue to gross margins to OpEx to EPS modeling from that fourth quarter. And so again, we're trying to do everything we can to help everyone in their models. And from an operator standpoint, I thought using the Q4 baseline should increase everybody's confidence that our numbers are achievable in our guidance.

Yes, typically the fourth quarter is seasonally strong while the first quarter tends to be weaker, but there is also the impact of COVID to consider. My current model reflects no change sequentially. Do you think these factors balance each other out, or should we expect a decrease in the first quarter?

Jack, we're trying to be helpful but that's as much color as we can give you. And I think what we underscore the confidence in the annual number has not diminished at all. And even with the COVID hit, I guess, that's the bottom line.

And I guess speaking of the annual number, what's your forecast for hereditary cancer testing within the overall guidance?

We don't break out guidance. I think we give you folks a lot more details around each of our product lines and our competitors, certainly but we don't give guidance on a product-by-product basis. As Nicole spoke to and I've spoken to over the last couple of quarters, we continue to work on a turnaround in our Women's Health business. And for those unaffected women, they've been particularly resistant and hesitant to go in the office or do screening. But the initiatives we're rolling out this quarter, we really think we'll see a nice rebound in hereditary cancer volumes in the rest of the year. And our pilots and modeling around that, that we've seen from the pilots of some of these products, some of these initiatives reinforce our view that we can continue to see stabilizing moderate growth in volumes. And as you've seen in the last couple of quarters, very stable ASP.

Okay. Last question. You mentioned the cash balance and that you've set aside $62 million for legal liabilities. What is the timing you anticipate for that payout? And what do you expect the cash on hand to be by the end of the year?

Yes, Jack. I mean, I would just say, relative to the timing, it's somewhat dependent on when related to the key TAM. There are certain things that have to happen prior to the payments. So I don't know that I can provide a specific time but I would just say probably it's likely in the first half of the year. And then we didn't give guidance for the full year cash balance. But we've made some adjustments to our EPS sort of over the course of the years in terms of breaking out stock comp and tangible amortization that makes it a pretty good proxy for cash and the fact that we're guiding $0.00 to $0.20, I wouldn't expect any sort of significant cash burn in the year.

No. I think that we're going to have most of the powder we talked about to invest in strategic initiatives going into '23 to the extent we don't deploy that capital in the back half of this year and we're more actively starting to look at those kinds of opportunities through partnerships and M&A. And as I said, our 5-year plan really calls for us self-financing our growth initiatives and leaving capital for M&A. So we feel like we're in a really good spot in a market where changes are happening that give us some opportunities.

Thank you, guys.

Thanks, Jack.

Next question is from Sung Ji Nam with BTIG. Your line is open.

Hi, thanks for taking the questions. For the FirstGene test that's expected to launch next year, what's the barrier to replicating that for your competitors? Are there proprietary aspects to the technology? Or is the differentiation really the first mover advantage?

No, there's actually one competitor out there that is working on a similar kind of product. I think what's been overlooked is our accuracy and the scalability of our product, especially when considering the automated lab of the future in South San Francisco and the robots we have there, along with the AMPLIFY technology and the sequencing we perform. We believe it's important to remain vigilant as competition and innovation are always present. We're focused on creating a differentiated product and providing a unique customer experience with one simple maternal blood draw. This is where we believe we can excel and grow our Women's Health business while also expanding into other product lines.

Got you. For the improving ASP across all your product lines, it's great to see that. Do you think that's sustainable throughout 2022, or are there potential factors we should consider?

Yes, I consistently believe that some of our out-of-period results have a carryover effect. This contributes to overall stability and improvement in our average selling price. For instance, when we examine hereditary cancer, year-over-year, excluding prior periods, we saw a positive growth of 3% in the quarter. We will keep focusing on ensuring we receive payment for the testing we conduct. As we face pressure on contracted rates over time, our objective will be to counterbalance that with improved collection capabilities and a better experience for our patients and customers.

Got you. Great. Thank you for taking the questions.

Thank you.

Next question is from Matt Sykes with Goldman Sachs. And your line is open.

Hey guys, this is Dave on for Matt. Thanks for the questions. Really excited to hear about your ambition to enter MRD and liquid and your internal capabilities there and potential for partnerships. Any thoughts on what indications could be best fit for Myriad to go in for your first product in the space?

Yes. I believe we will primarily focus on the areas where we already excel, such as breast, ovarian, prostate, and pancreatic cancers. Similarly, regarding the expansion of companion diagnostics, these are fields and channels that we are familiar with and have established relationships. We have a solid understanding of everything from labs to production to reimbursement, and there is significant market opportunity available. Therefore, we don’t need to target $5 billion; even $1 billion would be sufficient. We believe we have identifiable total addressable markets that we are concentrating on.

Great. That makes sense. And then on FirstGene, can you tell us more about the value proposition of combining those two tests? And is there any way you could quantify how much you expect that to drive revenue growth?

Sure. So a little bit about the customer experience with FirstGene. I think right now, you have patients that come in for carrier screening, often women are not screened. So they're doing the carrier screen at the same time as they're doing their non-invasive prenatal screen. And if something comes up positive on the mother's carrier screen, we've got to track down the father, they've got to come in through a blood draw. They're going to see when what their results are, are they carriers for the same thing. And then we're trying to decide that we do an invasive procedure to diagnosis. It's a very long timeline and it causes a lot of anxiety for families. And so this is an opportunity to combine that, that you go in for one single blood draw at around the same time you would go in for your non-invasive prenatal screen. And we will be able to get all of those answers at once and you're done. You don't have to track down additional patients. You don't have to wait for the results, it's a much cleaner experience for these expected mothers and for these families. In terms of the revenue lift that we would expect from FirstGene, I don't think that we've given any guidance on that.

No. But our base case there and this is net of some patients that would otherwise have chosen Prequel or Foresight is about a 10% to 15% lift once we get to full deployment. I think what is in our business case model roughly. So it's a substantial opportunity for us to grow market share. And I think there's upside there but that's sort of our modest case based on the business, the bottom of business case we developed.

Thanks, guys.

Thank you.

Next question is from Derek De Bruin with Bank of America. Please go ahead.

Hi Derek.

Hey guys, this is on for Derek. Thanks for the question. So to start on the precise tumor combo test launch, can you talk us through when you expect material sales from the launch how should we think about differentiating factors? It's a pretty competitive environment here.

It is. It is a very competitive environment. And I think what is different about our offering is that it combines all of these tests into one. So for a busy practicing oncologist to have to track down a tumor specimen that they're going to send to us for myChoice for the FDA-approved companion diagnostic. And then also, they want to get a broader panel, so they're sending out to another lab. Then at some point, they want germline. And there really isn't anyone in the market that is able to offer all three, whereas the oncologists can package up the tumor and the blood in one box, send them to one laboratory and get one comprehensive result. The other difficult thing for these physicians is you get a result back from three different laboratories and they may differ. The BRCA test you may get in a tumor versus a germline may differ and how should they be thinking about that, right? It really leaves the physician in a quandary to use their own judgment to figure out how to synchronize these different test results and go forward and treat their patients. This is a different offering and that Myriad does that for that. Myriad is able to put together with our team of scientists, what do all of these things mean together? And I think that we have a clear advantage in something like ovarian cancer where we have an FDA-approved companion diagnostic. And we're really a leader in hereditary cancer testing and have been for many, many years in that indication. So that's the place where we feel like we have a real clear right to win. And we offer a different experience to what any other given competitor might be able to offer.

Yes. And it's early but the pilot exceeded expectations so far. And in a number of the anecdotal things coming out of the pilot, people have switched over from some of those competitors that you referenced. Because of the ease of use with all three tests; they want them. Our survey work that we did with Bain before we went down this path was that 80% of oncologists wanted all three tests. But what they also wanted was one set of interpretations so they can go treat. And that's the linchpin of what we're trying to do here is bring relevant science in the hands of physicians that is more easily actionable and can be integrated into care plans in a much more seamless way. And this offering goes right to that. And with an 82% attachment rate, we think this really can lift all the boats, particularly going into the back half of the year and help in hereditary cancer and these other products as well.

Great. And then another one on genetic testing for MRD liquid biopsy. Again, it's a pretty competitive environment. What's your asset approach to securing share here? Like what's kind of the key focus for those tests?

Well, it's a big market. It's highly competitive but we've had a 25-year history in oncology and very well-established relationships and brand and reputation. The unified order portal allows people to do business with us a lot easier. And so again, we're conscious of competitive factors. And as we think about the total addressable market that often our competitors talk about, our focus is on what's the actionable market and in the portion of that actionable market, we think we can win more than our fair share. And so we think this can be a real contributor to getting us to the high end of that growth range and beyond.

Great, thank you.

Thank you.

Next question is from Tycho Peterson with JPMorgan. And your line is open.

Hi, this is Rachel on for Tycho. Thanks for taking the questions you guys. So we've talked a lot about oncology here, so maybe I'll ask a few on GeneSight. Your long-term guidance assumes a 4% to 5% contribution from Mental Health. So can you just walk us through how you arrived at that number? Is there anything included from expansion into other tests like Alzheimer's or neuro that you mentioned today?

No.

And then how much of that growth includes deeper penetration and GeneSight in the primary care channel versus private payer adoption?

Well, there's sort of one and the same but we continue to see just great momentum in GeneSight which has been enabled by the commercial and technological capabilities that Nicole spoke to. 95% of the doctors are ordering online. 30% growing our home-based kits. This is where healthcare is being provided today. And we are and Eric Santa is working really hard on expanding our telehealth partnerships. So when we talk about consumer engagement which is different than a consumer ordering the test, let me just underscore that. If a consumer comes to our website because their family members struggling with depression or anxiety and they're drawn to what we do. If they don't have a physician, we can link them to a physician who can then order the test. And then at that point, make determinations about what the appropriate drug use. But this is such an important issue in the context of mental health today and the challenges we have in workforce and productivity. I don't know anybody on this call or in this room that hasn't struggled or somebody in their family hasn't struggled in anxiety and depression. And so when we see 2,900 new ordering physicians, that's because people are coming into their office and they're struggling. And they're struggling with trying four or five meds. As we said, we had a new clinical study put out last night that I think further the bodies of evidence. We have a VA study that should come out later this year. Again, that's an important constituency that we think GeneSight could help. So a 20% plus growth rate which is I think how you get to the math to its component is really what we are seeing and expecting. And I'll tell you, while other parts of the business are slow to bounce back as of yesterday, GeneSight was at 110% of target going into the week. So it is continuing to perform well.

And then a follow-up to that. So on private payer coverage, can you just talk about how the private payer conversations are going for GeneSight? And do you expect any coverage decisions this year? And then as a follow-up to that, can you just talk about how you're leveraging value-based agreements as well for GeneSight?

Yes. We've talked about this in last several calls. I wouldn't expect some big announcement that moves the needle, quite frankly, it's more of a ground game, including Medicaid Managed Care plans, where we have some really good active discussions, as you mentioned, some value-based arrangements. But both on building a broader clinical body of evidence. There's a whole team continuing to work on that. And we've got quite a strategic work going on and expanding more broadly the payer coverage, including in Medicaid and the Medicare Advantage plans. So again, we've got a couple of smaller contracts that we just recently signed and it's something that obviously the group is attended to. But our growth plan is not predicated on some big expansion of coverage. So I just want to underscore that. It's continuing to win the hearts and minds of patients and nurse practitioners that are dealing with the mental health issues.

Great. That's it for me. Thank you.

You're welcome. Thanks.

Nothing further from the phone. I'll turn it back to the presenters.

All right. This concludes our earnings call. A replay will be available via webcast on our website for one week. Thank you again for joining us this afternoon.

Thanks, everybody.

And that does conclude our call for today. And we thank everyone for participating and you can now disconnect.