Good day, and thank you for standing by. Welcome to the Myriad Genetics Second Quarter 2024 Financial Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Matt Scalo, Senior Vice President of Investor Relations. Please go ahead. Thanks, Gerald, and good afternoon and welcome to the Myriad Genetics second quarter 2024 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 afternoon on Form 8-K and can be found on our website at investor.myriad.com. I'm Matt Scalo, Senior Vice President of Investor Relations and on the call with me today are Paul Diaz, our President and Chief Executive Officer; Scott Leffler, our Chief Financial Officer; Sam Raha, our Chief Operating Officer; and Mark Verratti, our Chief Commercial 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 along with this slide presentation. Please note that some of the information presented today contains 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 SEC, specifically the company’s annual 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 result to differ materially from those contained in our projections or forward-looking statements. I will now turn the call over to Paul.

Thanks, Matt, and good afternoon, everyone, and thank you for joining us. On today's call, we will discuss the highlights from our strong second quarter performance and provide an update on the progress we continue to make accelerating profitable revenue growth. First, I want to thank my Myriad teammates and our provider partners for their continued support and commitment to advancing our mission and vision to make genetic testing and precision medicine more accessible to help people take more control of their health. Our Board of Directors and the entire Myriad team are incredibly excited about how our management team has come together this year under the leadership of Sam Raha, our Chief Operating Officer; Scott Leffler, our Chief Financial Officer; and Dr. George Daneker, the new President of our Oncology division. We're also thrilled to welcome Jennifer Fox as our new Chief Legal Officer along with several strong new additions to our Payer markets, Technology, Women's Health, and Urology teams. We continue to deliver on our commitment to our patients and shareholders as we achieved 15% revenue growth in the second quarter compared to last year, reflecting both volume and revenue per test improvements across the portfolio. Our focus on profitable growth came through as we reported a 17% increase in gross profits, adjusted EBITDA of $12 million, and a positive adjusted EPS of $0.05 in the second quarter. We also generated positive adjusted free cash flow of $8 million as our capital expenditures continue to return to a more normalized level compared to last year. Market dislocation contributed modestly to the 25% revenue growth in prenatal testing this quarter, which should accelerate in the second half of 2024. As I mentioned last quarter, we expect market share gains will take time to realize but we are excited to be in the process of converting three large new health system accounts in the fourth quarter of this year. The second quarter saw continued payer coverage wins including a recent decision by Blue Shield of California to follow the state's biomarker law and add GeneSight to its medical policy for commercial and managed Medicaid beneficiaries. We also continue to reinforce our prenatal offerings with the launch of our expanded carrier screening panel, Foresight Universal Plus. In light of our continued positive momentum, we are raising our 2024 financial guidance and increasing our long-term revenue growth target to 12%. This is an important step-up that reflects the progress we've made over the last four years. We remain optimistic about our future and the evolution of our product portfolio as we continue to enhance our existing products, publish additional clinical validation studies, improve reimbursement and launch new products. At the same time, we continue to improve access and ease of use for our customers as we accelerate EMR integrations for new customers and make meaningful progress in our Labs of the Future initiative. We continue to anchor ourselves around those things that our customers tell us they rank as the most important: diagnostic tools that have proven clinical validity and utility; a lab that offers a comprehensive set of offerings; reliable fast turnaround times ease of use from the time of order to the receipt of clinically actionable results; and tests that are affordable for their patients. These customer insights continue to solidify our strategic pillars to drive long-term profitable growth and innovation, including increased investment in research and development and continuous improvement in customer service and commercial execution as we invest in our technology platform, including AI tools to power our operations and scale our infrastructure in lab revenue cycle and administrative support functions to improve everything we do. Now I'll turn it over to Mark.

Thanks, Paul. I'll start on slide 7 to talk about our strong performance and our product growth. What you are seeing this quarter is an increased focus from the commercial team on profitable growth, working with our customers to maintain access and ensure payment to reduce our no-pay rates across all of our products. Starting with hereditary cancer testing, Myriad continues to lead the market with differentiated insights offered by MyRisk with the RiskScore test. Last 12 months year-over-year revenue growth through Q2 of 15% demonstrates the growth potential of our category and our commercial capabilities. Let me provide a bit more color regarding this performance. As you may recall, our hereditary cancer testing business includes both MyRisk and BRACAnalysis CDx. We continue to see strong volume growth in MyRisk with increased adoption and strong payer coverage, which was slightly offset by lower BRACAnalysis CDx volumes in the quarter. Looking forward, MyRisk is expected to continue its strong growth as it benefits from expanded guidelines and acceleration in EMR integrations, which are on track for Q3 of this year. In fact, we have begun transitioning several large accounts, including several multi-state health systems. As Paul mentioned in the last earnings call, Myriad is focused on investing in EMR integrations as they play an important role in the overall customer experience and revenue cycle management. Importantly, we expect to achieve double-digit growth in hereditary cancer testing volumes with stable average revenue per test in 2025. In the second quarter, our women's health team delivered 29% prenatal revenue growth year-over-year. This result was driven by a 12% increase in testing volume over the same period as we continue to sell deeper into current accounts and win new accounts. We remain focused on evaluating new potential accounts and we believe the market is becoming more rational regarding market pricing for these services. We continue to see growth opportunities with new customers as we move throughout the year. In June, we launched our expanded carrier screening test, Foresight Universal Plus, which features an expanded panel of genes as well as more efficient workflows. While we wait for the ACOG action, we believe the expanded guidelines will improve patient health and expand the market opportunity for carrier screening. Once ACOG publishes expanded guidelines for carrier screening, we believe the rest of the market and payers will also adapt, which will likely result in growing demand and adoption along with revenue per test improvements. Guideline expansion would also support our multiple prenatal test screen, FirstGene, that we expect to launch next year. In the second quarter, GeneSight revenues increased 22% year-over-year as we reported approximately 129,000 tests. GeneSight revenue per test improved both year-over-year and quarter-over-quarter in the second quarter, reflecting a combination of revenue cycle management and improving payer coverage driven in part by a growing list of states that have active biomarker laws, as Scott will discuss later. I will close with brief pipeline activity highlights. We continue to see positive momentum with our precise tumor test, which we acquired in early 2024. We remain on track to move this test into our Salt Lake City facility in Q4 of this year. We are also excited to have launched Foresight Universal Plus in June and await ACOG guideline updates that could potentially expand this market opportunity. Sam will address precise liquid and MRD as these new products provide tremendous value for our providers and support growth above and beyond the long-term revenue growth target of 12%. I look forward to giving additional color on these products and other commercial updates at our investor event this call. Now I will turn the call over to our Chief Operating Officer, Sam Raha.

Thanks, Mark. Let me start on slide 13 with an update on select operational highlights from the quarter. We continue to see a high level of teammate engagement across the company and have been recognized again as a great place to work. Our team's commitment is also reflected in our low turnover level. Along with high internal engagement, we are honored to have been recently recognized by Time Magazine as one of America's best midsized companies of 2024, and to report a customer net promoter score of 72. In terms of efficiency and productivity, we continue to deliver rapid test turnaround times to support healthcare providers make timely treatment decisions. In the quarter, we also increased commercial productivity by 21% compared to last year as a result of the continued execution for our commercial transformation, including improved sales planning and process optimization that Mark and his team are leading. We also had a 6% year-over-year increase in the average revenue per test based on the continued programmatic focus and rigor we are putting into the revenue cycle activities, including expanding their coverage. The overall objective of our Labs of the Future program is to drive innovation and operational excellence at scale to continue delivering high-quality testing results that meet regulatory requirements while shortening turnaround times and reducing our cost per test. The work we've been doing on this program supports our ongoing focus to improve the overall patient and provider experience. As you may recall, we completed construction of our new lab facilities in Salt Lake City and South San Francisco in 2023. Last quarter, we made important progress at both sites. After gaining our New York state permit in Salt Lake City, we have started to ramp the volume of samples processed for both Polaris, our prostate test, as well as precise MRD for our biopharma partners and clinical validation research participants. We also continue to make good progress in moving precise tumor, our therapy selection test that we acquired from Intermountain Precision Genomics, and are on track to complete validation and start processing samples in Q4 of this year. With full ownership of the precise tumor ordering through report delivery process, we continue to see improvement in turnaround times for delivering results. We're also seeing monthly sample volume growth and expect this trend to continue accelerating as we head into 2025. We're aiming to launch precise liquid in late 2025 to early 2026. In South San Francisco, we have completed the required validation of both Prequel, our NIPS test, and Foresight, our expanded carrier screening test. The transition of Prequel to this lab is already underway and we will transition Foresight in Q4 of this year. Based on our continued progress, we're on track with our plans to complete the moves at both sites by the end of 2025. Coming out of ASCO in June, a shout-out to Dr. George Daneker and Mark, our Oncology team for setting up deep engagement with many key customers. After speaking with numerous oncologists, their excitement is evident and we see a meaningful opportunity for Myriad to serve community oncologists and healthcare systems, who trust Myriad's gold standard hereditary cancer and HRD tests with precise tumor now and would precise MRD, a differentiated highly sensitive MRD assay in the future. Over the last couple of months, we have strengthened our freedom to operate and ability to deliver tumor-informed high-definition MRD assays with the issuance of a second foundational method patent from the USPTO for detecting circulating tumor DNA and patient fluid samples. In addition to our recent agreement with Personalis to cross-license our patent states covering tumor-informed approaches to MRD. We view these announcements as both fortifying our IP position, as well as enabling us to broaden patient access to the benefits of a new standard of MRD testing. We have continued to add studies this year, including a research collaboration with the National Cancer Center Hospital East in Japan to study the prognostic and predictive value of MRD. In the strong MONSTAR-SCREEN-3 study to monitor circulating tumor DNA over time in patients diagnosed with a wide array of solid and hematological cancers. At ASCO, we shared data developed in collaboration with the MD Anderson Cancer Center on the comparison of primary versus metastatic tumor tissue using our MRD assay, and we look forward to sharing more data from ongoing studies later this year. We have also had strong engagement with the biopharma company and are starting to run their samples in our new Salt Lake City lab, where we bring together the power of high-performance MRD assay along with our efficient lab workflows and cutting-edge infrastructure. As we head into the back half of the year and into 2025, we're committed to significantly increasing the number of clinical studies that we take on, as well as the amount of pharma service work that we do, all supporting a targeted commercial launch in early 2026. We're excited about the sizable opportunity for Myriad to serve the market with our MRD assay as part of our precise oncology solutions portfolio, enabling the thousands of providers and healthcare systems that count on us to serve their patients through the continuum of cancer care. I look forward to updating you on our progress. And with that, let me turn the call over to our Chief Financial Officer, Scott Leffler.

Thanks, Sam. I'll start on Slide 17. Q2 revenue growth was driven broadly by hereditary cancer testing, prenatal testing, and pharmacogenomics, bolstered by an improving customer experience and continued commercial execution. We have spoken about how the commercial team, with enhanced analytical tools, is addressing healthcare provider needs while more effectively generating revenue growth. On the next slide, I'll address the standout contribution from our revenue cycle efforts in the second quarter. We continue to see positive traction from ongoing investments in revenue cycle workflow, which improve our ability to process timely prior authorizations, collect medical records, and automate workflows, ultimately resulting in improved revenue per test across our portfolio. We are also seeing improvements from our ongoing payer engagement activities, including working with health plans to encourage their implementation of medical policies that conform to state biomarker legislation. As discussed on prior earnings calls, there is a growing list of states that have passed legislation focused on providing quality care for their citizens, including access to precision medicine and advanced diagnostics. As Paul mentioned, we recently received expanded commercial and managed Medicaid coverage with Blue Shield and a large managed Medicaid plan in the Southeast that added GeneSight to their medical policy effective July of 2024. Several other payers have also recently taken a positive step forward with GeneSight coverage, giving us momentum in both commercial and managed Medicaid coverage. In addition to these examples of positive momentum for GeneSight, which is our least mature product from a reimbursement standpoint, we are similarly encouraged by an improving reimbursement environment for our more mature products. In particular, the revenue per test environment for our hereditary cancer testing, which has historically been viewed by some as having more significant downward pricing pressure, continued to improve and has reached a sustainable level. These efforts are supported by a more positive industry backdrop for reimbursement as there is wider acceptance of the medical necessity of genetic testing and the competitive landscape has matured and become more rational. Q2 revenue per test includes only immaterial benefit from revenue from prior periods. Our blended revenue per test increased by 6% year-over-year. But individual products generally improved by even more than that, with the blended total being somewhat diluted by the impact of product mix. Recall that Q2 of last year saw revenue per test that were negatively impacted by the transition of multiple Blues health plans to a new claims administrative process, which impacted the year-over-year comps for this quarter. We also saw a favorable change in estimated revenue benefits in the second half of 2023 as disruptions were normalized. As we move into the second half of 2024, nominal dollar revenue per test levels are expected to remain stable at these Q2 levels, but the year-over-year percentage increase in the second half of the year will be impacted by this nuance relating to the 2023 comps. While I will discuss updates to our 2024 guidance shortly, I do want to take a moment here to mention our updated longer-term revenue growth target of 12%, which Paul mentioned a few minutes ago. Overall, we have increasing levels of confidence in our ability to consistently grow the top line at this pace. But the most recent update to our revenue growth target is bolstered by our improved reimbursement profile that I just described for Q2 and which we have generally been seeing all year. Much of the downward pressure on contracted rates that we have seen in the past year has moderated and we see a maturation in both our revenue cycle activities and the reimbursement environment more broadly in our space. Next slide. With our focus on profitable growth, we recently closed the sale of our EndoPredict business. We incurred a one-time non-cash charge in Q2 and expect minimal cash restructuring costs. Overall, the reorganization and sale will have about an $11 million annual run rate impact on revenue, but importantly, will be accretive by more than $4 million per year to our go-forward adjusted operating income by streamlining our cost structure. The second half of 2024 impact on revenue and OpEx are reflected in the updated guidance that I'll be discussing shortly. Next slide. Following last quarter's announcement of the reorganization of our international operations, we wanted to highlight the relative performance of our domestic and international businesses in the second quarter. Total U.S. revenue in Q2 was $195 million, growing 20% over the year-ago period. U.S. growth was driven by 25% growth in domestic prenatal revenue, 25% growth in domestic hereditary cancer testing revenue, and 22% growth in domestic pharmacogenomic revenue year-over-year. Our revenue for the rest of the world in the second quarter was approximately $17 million, declining 21% from the prior year period. Rest of World revenue performance was driven by parts of the business impacted by the reorganization as well as depreciation of the Japanese yen. We view the underperformance of the international business as a good representation of why we chose to enter into the international reorganization, allowing us to focus on the higher growth and more profitable elements of our business. Next slide. Second quarter adjusted gross margin of 70.1% improved 110 basis points compared to last year despite picking up incremental operating costs associated with the IPG lab and precise tumor and liquid assets that were acquired in February of this year. Second quarter adjusted OpEx of $141 million was up modestly, but importantly our adjusted OpEx as a percentage of sales declined to 67% in Q2 of this year compared to 73% in the prior year period. As you'll see in our updated 2024 financial guidance, we do expect our OpEx run rate to be higher in the second half of the year as we ramp up spending to accommodate growth and strategic development. Year-to-date SG&A is down more than $8 million while we have accelerated tech and R&D investment by around $9 million. We are pleased to be concentrating more of our spend in these critical areas. Our strong revenue growth and margins in Q2 drove significant improvement in overall profitability including an adjusted EPS of $0.05 versus a loss of $0.08 in the second quarter of last year. Next slide. Gross profit dollars in the second quarter grew 17% over the year-ago period. This reflects double-digit revenue growth and improved margins supported by positive revenue per test trends in the quarter. Building off a strong gross profit base and being mindful of ongoing strategic investments, we generated $12 million of positive adjusted EBITDA compared to a loss of $4 million in the prior year period. We saw meaningful year-over-year improvement in adjusted operating cash flow with an inflow of approximately $16 million in the second quarter of 2024 versus $6 million in the second quarter of 2023. Importantly, we expect to be free cash flow positive for the remainder of 2024. In addition, we maintained a robust liquidity position to support continued investment in the business. We finished Q2 in a solid position with approximately $97.3 million in cash, cash equivalents and marketable investments and have $41.5 million of availability under our credit facility. Next slide. We are pleased to update and raise our full year 2024 financial guidance. For 2024 revenue, we are increasing our guided range to between $835 million and $845 million from our previous range of between $820 million and $840 million. This new range represents annual growth between 11% and 12%. Our updated 2024 revenue guidance range reflects a strong first half performance, the impact of our international restructuring, and modest share gains in prenatal and hereditary cancer testing in the second half of 2024. Please recall that we typically experience some seasonal variability in Q3 and Q4, with Q3 revenue typically at or below Q2 levels and Q4 historically being the strongest quarter of the year. Also, please recall that the second half of 2023 is a somewhat distorted comp, with Q3 of 2023 having a $7 million benefit from revenue related to prior periods, which included partial recovery from the Carillon disruption. Lastly, our second half of 2024 revenue considers an approximately $5 million impact from the divestiture of our EndoPredict business. For comparison purposes, if we exclude both of these items, we arrive at an expected low double-digit revenue growth rate in the second half of 2024 compared to the second half of 2023. We are also updating our gross margin outlook to a range of 70% to 70.5% and increasing our projected OpEx to a range of $575 million to $585 million. Regarding EPS for the year, we have raised our adjusted EPS range to between $0.08 and $0.12 from a previous range of $0.00 to $0.05. I emphasize, we intend to increase spending to accelerate actionable commercial opportunities in a changing competitive landscape to further drive the top line. An example of that accelerated spend would be our EMR integration efforts, where new customer wins are often dependent on our ability to meet the IT requirements of prospective customers. Overall, we are optimistic regarding the business trends and the company's ability to grow at or above industry growth rates. Now, let me turn the call back to Paul.

Thanks, Scott. These strong results are consistent with prior quarters, as we continue to build on our pillars of long-term growth, profitability, and innovation. The momentum we continue to see across the enterprise supports our decision to raise full year 2024 financial guidance and adjust our long-term revenue growth target to 12%. We remain confident in our ability to serve the underpenetrated markets that we operate in, with clinically differentiated products that deliver value in real-world settings and are supported by technology and automation. Our new labs and workflows are yielding faster turnaround times and reduced operating costs, all of this reinforcing our position as a trusted and reliable lab, with specialized expertise committed to quality and service excellence. We continue to energize the enterprise around our shared mission and vision to make genetic testing and precision medicine more accessible, helping people take more control of their health and enabling providers to better treat and prevent disease. I'll pass it back now to Matt for Q&A.

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

Thank you. At this time, we will conduct the Q&A session.

Hi, good afternoon. Thanks for taking my questions. Congrats on the quarter. Maybe just to start out, Paul, you were making some comments and the team was making comments on the prenatal market share gains. Understanding the consolidation that market has gone under over the past few years, could you maybe talk about what some of the drivers of those market share gains are and where you're seeing some of the wins in your business, whether it's from the new product side or other?

Thanks, Matt. Let me let Mark take that, and I can add any color after.

Yes, Matt. I think, as we discussed on the call, we're seeing it from both our existing customers. As you know, the prenatal business has been continuing to grow over the last five to seven quarters pretty strongly. But because of the market dislocation, that's opened up an opportunity for us to win also in the new customer segment. I think, as we have shown, we're being very focused on that and making sure that the customers we win back, we are making sure that we are profitable. I think, as far as the new products are concerned, we've seen our customer base go to the expanded panel. I would say we're just launching the Foresight Universal Plus in June. We're seeing a modest uptick there. But I think we will see that continue as we await the ACOG guideline expansion and we'll see more growth in those expanded panels in the back half of the year or when ACOG released the guidelines. Paul, would you like to add?

Yes. I mean I would just put a little more clarity. Most of the gains are wallet share gains. As we talked about the last couple of quarters, the new customers are just starting to roll in, Matt. Importantly, it's profitable growth and maintaining access to patients that we're focused on. Melissa and her team just did a really great job. So, we've got some big customers that should maintain this growth rate going into next year on the volume side for sure.

Great. Thanks. And just for a follow-up maybe a higher-level question for Scott or Paul. Just as you guys think about the operating leverage in the business, clearly, with the EBITDA and EPS guidance raise, you're displaying some of that. I just kind of want to know how you're thinking about funding the new pipeline predominantly MRD while at the same time moderating OpEx on some of your more mature tests. Are you going to be able to continue to fund that MRD spend or pipeline spend? And at the same time moderate some of the spend that you're seeing in your mature category? I just want to understand how you think about that.

Yes, absolutely, Matt. I mean – and Scott can add. I think we've been very disciplined to continue to find productivity gains, as Sam talked about in our labs, in our commercial operations. So you're seeing, and Scott sort of referenced this in his prepared remarks, that we dropped sales and marketing expenses. We dropped G&A. And we are funding more in MRD studies. You'll see a little bit more of a ramp-up as a percentage of OpEx in the back half of the year. But we absolutely expect to be able to self-fund our precise liquid FirstGene, as well as precise MRD clinical studies and growth. And that's a product all the way up and down the P&L of productivity gains and creating leverage across the enterprise, whether it's Sam in the labs or Mark in the commercial teams. We are talking about launching new products, FirstGene, precise liquid, getting great interest in precise tumor as Sam and Mark talked about and Dr. Daneker's led. And so this is without incremental commercial investments or incremental expense other than additional studies, which we again fully confident we can fund over the next couple of years.

And I'll just add to that. I mean, Matt, in your question, you talked about operating leverage. And so clearly, you can see some of that showing up in the numbers now and giving us more flexibility to fund strategic opportunities. But there's a lot more to come from an operating leverage and scalability standpoint. Sam gave a great update on all of the progress that he and his team have made on the Labs of the Future project. And that the operating leverage and scalability that comes from that initiative is still to come. That's not reflected anywhere yet in our P&L. And as the benefits of that initiative ramp up beginning next year, then you begin to see more opportunity to fund investment organically as well.

And I guess the last point. I mean, I would hope that we're ramping up studies and other investments in IT and MRD to the tune of $20 million or $30 million but that we can fund that. That's kind of what we have our sights set on in terms of incremental investments in technology and R&D.

Great. Thanks, very helpful.

Our next question comes from the line of Doug Schenkel from Wolfe Research. The floor is yours.

Hi, thanks for the question. This is Colleen Babington on for Doug. I have a question on your updated long-range – long-term revenue growth target of 12%. The Street's modeling about 6% to 7% growth over the next few years. As your team has looked at Street models. Are there any areas in particular that you think the Street is missing or overlooking?

I'm about to jump out of my chair. Yes, the fact that we grew 9% in 2022, 11% in 2023, 13% year-to-date, and 15% this quarter across the product portfolio both volumes and ASP. So the numbers are all there. And the fact that the Street is still at 7% or 8% confounds me. But we have – I think this quarter gives you more data to support and raise our long-term target, which had originally been 10% which we blow and pass. So we're very confident in that 12% number and I'm assuming that people will adjust their models accordingly.

All right. Thanks very much.

Thank you for your question. Our next question comes from Subbu Nambi from Guggenheim Securities. The floor is yours.

Good afternoon. This is Rickie on for Subbu from Guggenheim. Thanks for taking our question. I was wondering if you could provide some color on volume trend seasonality for the second half of the year for the different testing segments in your portfolio. And then I have a follow-up question.

Yes. I think we discussed usually Q3, we do have some seasonality within Q4 being slightly stronger. So, I think we expected growth as we mentioned in the back half of the year, both in volume and as well as stable ASPs. So, I'm not sure we can provide much color more than that.

We don't really break out those numbers in terms of our guidance, sorry.

No, that's helpful. That's okay. And then for you mentioned then just referencing on the revenue seasonality, are there any seasonal terms of gross margin that we should be aware of in the second half? Or is that just going to be based on the volume and revenue seasonality? Thanks.

No, I think you can take the guide for what it is at a high confidence level in our guide for 2024. As Scott laid out, that includes the OpEx we took on to integrate IPG that includes the benefit of the international restructuring. So there are a bunch of puts and takes. We think that there's upside in our biopharma business heading into next year. We saw some softness there. So we have a number of different levers, I think to grow and meet or exceed our guidance this year and certainly, to hopefully achieve our targeted 12% next year.

Great. Thank you.

Thank you for your question. Our next question comes from the line of Andrew Cooper with Raymond James. The floor is yours.

Hi, everybody. Thanks for the questions. Maybe just first on the hereditary cancer piece when we think about pricing, I think the last Analyst Day was the last update. And you had said kind of 3% to 5% ASP decline there and now it sounds like you're saying more stable. So how much of that is that you think you can continue to improve versus the end market pricing environment actually being more stabilized?

So Andy, when we talked about that, it was overall, no doubt in our 12% long-term target. We're seeing that as a combination, as we've talked about, of pricing has moderated revenue cycle including reduction of no pay. Every percentage of no pay reduction is $8 million. We knocked off 2% this quarter. So, I think you should think about a pricing environment of zero to plus 2%. And 10% volume growth is how we sort of back of the envelope gets you to 12%.

Okay. Great. That is helpful. And then can you just maybe give us a sense for when you're out there competing for pharma contracts on MRD what does that competitive landscape look like? There's a lot of players there on that side of it, less so on the commercial side. So would just love kind of what you're seeing out there and maybe what matters most as you're having these discussions.

Yes. Thank you for the question. It starts, as you're probably aware, with the pharma feeling comfortable with our analytical validation that we've done, the fundamental performance of the test. And as a reminder, for our MRD test, it is, as we call high definition. We shared some of this at ASCO our ability to really look at very low parts per million of circulating tumor DNA within the overall blood stream. As well, what pharma partners are really looking for is companies that have tested and true ability to not only do the study, but ultimately be a partner in the long run, right? That means the right regulatory and quality capabilities, the ability to scale, the ability to commercialize to support them. Now, it's also important for them that we have a backbone assay that we're doing the right work that can support them in their clinical studies, right? That means in terms of the filings that we're prepared for that we're working on to support the work that they do. So I think, it's that together with listen pharma also, like we're hearing from a number of peers. I mentioned that at ASCO, they would prefer when they can to work with a partner across, for example, HRD, we're the gold standard. You can leverage that relationship, you can leverage that work sometimes even the same samples as you go into MRD work. So, that's some of the dynamics of the space.

Yes. I mean the only thing I would add is our partnership with Qiagen, which has really demonstrated a demonstration of the differentiation that Sam was speaking to. And that some of the MRD studies are not proving themselves to be sensitive enough, and we believe ours is, and that's what's coming through our labs today, as Sam talked about. So we expect to be ramping that up in Q4 and next year, and all providing the support to help us prepare for a commercial launch as well.

Perfect. I'll stop there and let others ask. Thanks.

Thank you for your question. One moment, please. Our next question comes from the line of Rachel Vatnsdal from JPMorgan. The floor is yours.

Great. Thank you. This is Casey on for Rachel. My first one is just on GeneSight. What are you contemplating in terms of biomarker bill benefit there? You called out the California legislation during the prepared driving some incremental coverage decisions. I'm just curious if that drove part of the GeneSight performance in the quarter? And then how that momentum is factored into the guide for the rest of the year if more biomarker build-related coverage decisions are factored in or if that's upside for GeneSight?

Yes, the two we mentioned, Blue Shield of California and the major managed Medicaid plan in the Southeast, will be effective July 1. This also applies to some of the other biomarker legislation. These are real coverage decisions and policies. There has been a significant amount of groundwork, as we've discussed, and Chris Howe and his team have done an excellent job in various states and with different payers, including Blue Shield of Rhode Island and others. We believe we are still in the early stages of this groundwork, and the biomarker bills, along with provider demand due to the utility of GeneSight, are key factors. Providers are requesting GeneSight based on its clinical utility, and the biomarker bills provide us with additional support to influence payers on both the commercial side and managed Medicaid, which includes many Blue plans. Therefore, when we refer to stable and especially improving reimbursement for GeneSight, we see that many opportunities are still ahead of us.

The only thing I would add to that is, if you recall last year, we moved GeneSight to a specific PLA code. And so we moved off of the miscellaneous code, and we said last year that it would take a while for payers to recognize it. And I think what you're seeing is to Paul's point, the really great work that our payer markets team has been able to do. So yes, we think it will be stable moving forward.

Same thing with MyRisk in hereditary cancer. We argued to some that having our own codes and the differentiation of our products would enable us for the long term to differentiate in the minds of payers. And so we're seeing expanded coverage guidelines for MyRisk hereditary cancer test and expanded coverage like we saw with United Healthcare for MyRisk. That's part of the ASP benefit we saw in the first half of this year by way of example. So, again, that's going back to the earlier question, I think why we feel more confident in the stability of our current revenue per test and the ability to hopefully continue to build on that modestly in the future.

Got it. That's helpful. And then maybe just as a follow-up, can you just talk about the initial feedback that you've seen from the Foresight Universal Plus launch in the quarter? And maybe just elaborate on how you're positioned in that market if ACOG guidelines come in positively. I think you previously talked about a $10 million to $20 million revenue benefit there upon guideline inclusion. So just is that still the right way to think about it? And yes, any feedback on that launch. Thank you.

Yes. So I think you're right. In our comments, we related to what the opportunity is. I think you're seeing on the adoption side. Myriad is very well positioned regarding that test as well as our other prenatal tests. So I think adoption is there. But I think what we're really being focused on is making sure that we really wait for the ACOG guideline expansion, right? I think providers often get way out in front of where the payer markets are or even the guidelines. And so I think we're just being very choiceful. We are being very focused. But we have a very competitive panel and lots of providers appreciate doing business with us.

Thank you for your question. One moment, please. Our next question comes from the line of Sung Ji Nam from Scotiabank. The floor is yours.

Hey, this is Cory Rosenbaum on for Sung Ji. Thanks for taking my questions. So first on MRD, with regard to the cross-licensing agreement with Personalis that you recently announced. Could there be opportunities or interest down the road to potentially collaborate on developing MRD assays together? Any color you could provide on this agreement and its impact on the MRD business would be much appreciated.

Yes. We have a collaboration agreement of biopharma already with Personalis and we really appreciate the relationship we have with Chris and the whole team there. And principally, the cross-licensing agreement is protecting each company's freedom to operate. And quite frankly, we share the philosophy that the MRD opportunity is just too big for patients and too big to change the paradigm of oncology care to be restrictive. There’s plenty of market opportunity both on the biopharma side and commercially for both companies. Certainly, we continue dialogue with them about further collaborations. But we think this accelerates the MRD path for both companies in a number of different ways, and we'll continue to work with our partners and Personalis to do that.

Great. Thanks for that insight. And again, on MRD, can you discuss any key data readouts we could expect over the next 12 to 18 months? Maybe remind us what was the first indications are on the consideration for Medicare submissions and maybe when that takes place. Well, I think you mentioned this in the prepared remarks, the commercial launch as well.

I believe we will have significantly more information to present at our Investor Day this fall, including updates on some of our ongoing studies. This will put us in a much better position to share insights. As Sam mentioned, we are very pleased with the progress in analytical validation and the work being done with MD Anderson and other partners. The momentum is strong in that area, and Dale and his team are doing excellent work. Additionally, the recent ASCO conference has greatly increased biopharma partners' interest in collaborating with us on minimal residual disease (MRD) projects. This bodes well for future studies and submissions, and we are enthusiastic about establishing our presence in the MRD market, where we believe we will be highly competitive.

Thank you for your question. One moment please. Our next question comes from the line of Puneet Souda from Leerink Partners. The floor is yours.

Yeah. Hi, Paul. Thanks for taking my question. So first one, just wondering, and I'm not sure if this was already covered, but just what's your expectation on the ACOG front with the microdeletions potentially here also on carrier screening, any updates on timing for that?

No. We're still waiting to hear and expecting that. We are well prepared if microdeletions get included; it's currently an opt-in scenario. While it requires some effort, we can activate that feature. As Mark mentioned, we've already taken steps to advance Foresight Universal Plus, but we need clarity on the final teams outlined in the guidelines. We're very excited about the potential for patient opportunities and how this could influence adoption rates over time. There's a projected $20 million opportunity from the panels we offer, which represents significant upside in the future. However, like everyone else, we're waiting for updates and will have to see the direction things take. Additionally, payers will need more time; they won't immediately rush to cover or increase payments for carrier screening. Meanwhile, we're actively organizing our efforts with United, Aetna, Cigna, and others.

Got it. And then could you talk a little bit about where you stand with the cross-sell opportunities you have multiple tests on the hereditary and automatic testing side. Just trying to understand where you're getting traction and where there's more work to be done?

Yeah. Let me comment on that. So I think you're seeing in the growth, we are seeing traction across multiple tests. Whether it's within our oncology team of hereditary mixing with precise tumor or whether within our prenatal team of multiple prenatal products and/or adding hereditary cancer. So I would say, we are just in the early innings. We've got a lot of growth to happen there, and some of that is going to happen by the EMR enablement, where it makes it easier to order multiple tasks through a single provider. So I'd see that as growth. And again, that's just the confidence that we have in terms of the long-term guidance that both Scott and Paul talked about.

It's an interesting thing you get what you measure and get what you pay for. But our commercial teams have really responded well to their revenue incentives, and they are really responding well to the cross-selling incentives. There are just many offices where we're selling Prequel but not Foresight. We're selling hereditary cancer and not prenatal in women's health. Melissa and Ruben and the team are all over that. So as Mark said, I think our best days are yet to come. But again, in the near term, we've been really focused on profitable growth and making sure that at the end of the day, it's the revenue that's growing, not just pushing out volume that we're not going to get paid for.

Got it. And then just the last question, Paul, I'm wondering if you can provide some more insight into where you stand with the market position regarding GeneSight. Has anything changed in the competitive landscape? Also, where do you think the market penetration currently stands and what opportunities do you see for growth?

Yeah, yeah, let me comment. So GeneSight remains the market leader. That's not to say that there isn't any competition. There are several that are in the space, but GeneSight by far is out in front. And the reality is it is a very, very large market. Roughly, we're less than 15% penetrated. So unfortunately, there are a lot of people who suffer from mental illness, and a lot of that is being treated by primary care providers and nurse practitioners. So it is a vast market, and I think we continue to improve the GeneSight test. And as Paul mentioned, and as we commented on the call, to have 129,000 tests in the quarter. We didn’t comment this time, but previously, we've counted on. We continue to add providers in the thousands quarter-over-quarter. So the market is expansive and GeneSight is well positioned to continue to lead.

Yeah. I mean, we would expect more competition when people see success. And so we know we have some competitors that they've recently launched. The near-term focus is coverage, which we're making great progress in. I think longer term, Puneet, we're pretty excited about the energy around pharmacogenomics generally. Our only hesitation to expanding or offering new products there is making sure the payment is there. But in our R&D, we've got a fair amount of work around other medication administration opportunities and challenges that pharmacogenomics can solve too. I think learning the lesson that we've learned over the last four years is when we come to market with a new pharmacogenomic, we're going to have a better line of sight on reimbursement as well as adoption. And so that's something in R&D hopefully we'll be talking about down the road.

That's helpful. All right. Congrats, guys.

Thanks, Puneet.

Thanks for your question. That concludes the question-and-answer session. I would now like to turn it back to Matt Scalo, Senior Vice President of Investor Relations for closing remarks.

Okay. Thanks, Gerald. And this does conclude the earnings call. A replay will be available via webcast on our website for one week. Thank you again for joining us this afternoon. Have a good day.

Thanks everybody.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.