On February 23, 2021 Myriad Genetics, Inc. (NASDAQ: MYGN), a leader in genetic testing and precision medicine, reported financial results for its quarter ended Dec. 31, 2020 and provided an update on recent business performance (Press release, Myriad Genetics, FEB 23, 2021, View Source [SID1234575465]).

Financial Highlights:
Myriad Genetics delivered total revenue in the quarter of $154.6 million which declined 21% year-over-year but increased 6% sequentially from the fiscal quarter ending Sep. 30, 2020, with improved commercial execution and a more stable pricing environment.

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Total test volumes of 224,000 declined 5% year-over-year but increased 7% sequentially. Average revenue per test declined 1% sequentially, demonstrating an increasingly stable pricing environment for the company’s products and was driven by mix shift increases from non-hereditary cancer product and the reduction of zero pay tests.
During the quarter, revenue was impacted by $5.3 million due to changes associated with an increase in our payer reserve, predominantly associated with hereditary cancer revenue. The Company also had immaterial net positive adjustments to revenues related to prior periods.
GAAP gross margin was 69.5% and non-GAAP gross margin was 70.1%. Adjusted gross margin improved 30 basis points sequentially, impacted positively by test volume growth and negatively by increased revenue mix from prenatal testing.
GAAP total operating expenses were $155.7 million. Total adjusted operating expenses declined $7.9 million year-over-year to $119.6 million in the December 2020 quarter.
GAAP operating loss in the quarter was ($48.2) million; non-GAAP operating loss of ($11.3) million.
GAAP earnings per share (EPS) were ($0.59) and adjusted EPS were ($0.12) which improved by $0.03 sequentially.
Free cash flow in the quarter was ($20.4) million, and cash utilization improved by 66% sequentially. The company ended the quarter with $171.7 million in cash and equivalents and investments. In February, Myriad received a tax refund from the U.S. government providing an additional $89 million in cash.
The company negotiated an amendment to its credit facility providing increased financial flexibility. Under the new amendment certain financial covenants are waived until the June 2022 quarter and there is added flexibility around future deployment of capital. The company ended the December quarter with $224.8 million drawn on the $300 million facility. Near-term plans include using proceeds from business unit divestitures to pay down the existing credit facility balance.
Business Performance and Highlights

Women’s Health
The Myriad Women’s Health business — which serves women who are assessing their risk of cancer, and women who are pregnant or planning a family — recorded revenue of $56.3 million in the quarter, a decline of 33% year-over-year. Elective testing for hereditary cancer has been negatively impacted by the COVID-19 pandemic due to delayed elective office visits. The COVID-19 surge in the December quarter led many women to postpone elective testing. The company’s prenatal business continued to demonstrate improving fundamentals with test volumes increasing 15% year-over-year and 7% sequentially.

Myriad myRisk Hereditary Cancer
myRisk Hereditary Cancer test volumes for the Women’s Health business declined 30% year-over-year but increased 6% relative to the September 2020 quarter.
Myriad Foresight Carrier Screen
Technological enhancements to Myriad’s Foresight carrier screen test in the December quarter increased the detection rate for alpha thalassemia inherited blood conditions from 90% to >99% in high-risk ethnicities such as Hispanic patients where the risk of alpha thalassemia can be 200 times greater than the risk of cystic fibrosis. These changes reduced the risk of a false negative by 10 times and improved the accuracy of the Foresight test for ethnic minority populations.
Myriad Prequel Prenatal Screen
The scientific journal Genetics in Medicine published a study demonstrating that Myriad’s proprietary AMPLIFY technology increases the accuracy of the Prequel prenatal screen for five common microdeletions by an average of 9 times. For these microdeletions the Prequel test demonstrated 97.2% sensitivity and 99.8% specificity.
Oncology
The Myriad Oncology business provides hereditary cancer testing for patients who have cancer, and products such as the EndoPredict breast cancer prognostic test, the Prolaris prostate cancer test, and it’s myChoice CDx and BRACAnalysis CDx products for predicting response to PARP inhibitors. The Oncology business delivered total revenue of $60.4 million, down 6% relative to revenue in the December quarter of last year.

Myriad myRisk Hereditary Cancer
myRisk Hereditary Cancer test volumes for the Oncology business declined 16% year-over-year but increased 5% relative to the September 2020 quarter.
Myriad Prolaris Prostate Cancer
Received a new local coverage determination (LCD) for the Prolaris prostate cancer test from Palmetto GBA and CGS Administrators, LLC, two of the administrative contractors for the Centers for Medicare & Medicaid Services, which took effect December 6th. The new LCD expands benefit entitlements for patients with unfavorable intermediate and high-risk prostate cancer and was partially responsible for the 31% sequential growth in Prolaris revenue.
Received acceptance for a new study publication in The Prostate demonstrating high accuracy for Prolaris in predicting metastases and disease specific mortality in men following radical prostatectomy.
A new study in Genitourinary Cancer demonstrated that the Prolaris test can accurately predict which patients will benefit from multi-modality therapy. Using the newly established threshold, 27% of men with newly diagnosed high-risk disease and 73% with unfavorable intermediate-risk disease could avoid multimodality therapy.
Myriad BRACAnalysis CDx
Saw significant increases in BRACAnalysis CDx test volume in Japan with total revenue from the country increasing 167% year-over-year to $8.8 million.
Myriad myChoice CDx
Announced a strategic collaboration with Illumina, Inc. for Illumina to create a kit-based version of the myChoice companion diagnostic (CDx) test for select international markets.
Received new reimbursement for the myChoice diagnostic system in Japan effective January 1, 2021.
Myriad EndoPredict
Received new public reimbursement for EndoPredict in Germany which will take effect between March and June 2021. Currently almost half of European EndoPredict volumes come from Germany.
Mental Health
Myriad’s Mental Health business — which consists of the GeneSight Psychotropic test that helps physicians understand how genetic alterations impact response to antidepressant and other psychotropic medications — saw revenue of $18.0 million in the quarter compared to $22.5 million in the same period last year. Total revenue for GeneSight was up 51% sequentially and test volumes increased 13% sequentially.

Myriad GeneSight
Saw a strong increase in new ordering providers with over 2,100 physicians ordering GeneSight for the first time in the quarter. Strong growth in new ordering physicians was a contributor to the 13% sequential growth in test volume despite COVID-19 related headwinds.
Had two important publications on GeneSight. The first was a new publication in Psychiatry Research demonstrated that the GeneSight combinatorial test was superior to single gene testing using the Clinical Pharmacogenetics Implementation Consortium (CPIC) guidelines. In a sub-analysis utilizing the GUIDED study data, only the GeneSight combinatorial approach was able to accurately predict variations in outcomes for patients with depression and statistically significantly predicted remission, response, and symptom improvement. The second was a meta-analysis of 1,556 patients based upon four prospective controlled clinical trials and published in Pharmacogenomics. The meta-analysis demonstrated statistically significant improvements in remission, response and symptom improvement. Myriad is actively in discussions with commercial payers based upon these positive data-sets.
Autoimmune
Myriad’s Autoimmune business — which consists of the Vectra test for measuring disease activity in rheumatoid arthritis — generated revenue of $8.9 million in the quarter compared to $10.3 million in the same period last year.

Vectra
Shared new data at the American College of Rheumatology annual meeting further demonstrating that Vectra testing and three additional biomarkers, combined with traditional risk factors, can predict the risk of cardiovascular events in patients with rheumatoid arthritis. The study, which evaluated over 44,000 patients, found that a one-point increase in the Vectra score was associated with being approximately four times greater risk of having a cardiovascular event.
Announced the decision to pursue strategic alternatives for the Myriad Autoimmune business units as part of the company’s transformation and growth plan.
Other
Other revenue – comprised of Myriad RBM contract research services for the pharmaceutical industry and the myPath Melanoma diagnostic test in dermatology — was $11.0 million in the December quarter versus $14.3 million in the same period in the prior year. The decline in revenue is entirely attributable to the previously announced sale of Myriad’s German clinic which occurred at the beginning of calendar year 2020.

Announced the decision to pursue strategic alternatives for the Myriad RBM and Dermatology business units as part of the company’s transformation and growth plan.
In-Network Provider with Anthem Blue Cross Blue Shield

Further expanding coverage for its genetic tests in the United States, Myriad recently signed a contract with the majority of the affiliated commercial health plans of Anthem Blue Cross Blue Shield, the second largest commercial payer in the country. The contract returns all Myriad products to in-network status, including hereditary cancer testing. While the new agreement is not expected to materially impact revenue in fiscal year 2021, it will aid in providing easier access to testing for patients and providers, and reducing non-payment on tests across all the company’s product lines.
Investor Day

Myriad plans to host an investor day to provide an update on its strategic transformation and growth plan on May 4th. The investor day will be a virtual event hosted on the company’s website.
Financial Guidance
Given the continued unpredictability surrounding the COVID-19 pandemic and the impact it has had on the healthcare environment, customer behavior and the ability to market tests to physicians, the company will not provide financial guidance for the quarter ending March 31, 2021 or fiscal year 2021.

Conference Call and Webcast
A conference call will be held today, Tuesday, Feb. 23, 2021, at 5 p.m. EST to discuss Myriad’s financial results for the December quarter and business developments. The dial-in number for domestic callers is 1-800-584-2088. International callers may dial 1-212-231-2924. All callers will be asked to reference reservation number 21990097. An archived replay of the call will be available for seven days by dialing 1-800-633-8284 and entering the reservation number above. The conference call along with a slide presentation will be available through a live webcast at www.myriad.com.