On February 28, 2023 Myriad Genetics, Inc. (NASDAQ: MYGN), a leader in genetic testing and precision medicine, reported financial results for its fourth quarter ended December 31, 2022 and provided its outlook on business performance for 2023 (Press release, Myriad Genetics, FEB 28, 2023, View Source [SID1234627864]).

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"Myriad Genetics ended 2022 with a strong fourth quarter. Our market-leading hereditary cancer test, MyRisk, achieved double-digit year-over-year growth in the quarter – a reflection of our team’s hard work and the execution of our strategic growth plan," said Paul J. Diaz, president and CEO, Myriad Genetics. "We believe 2023 will be an exciting year as we continue to invest in our Labs of the Future strategy and enabling technologies to enhance our ability to better serve our patients and provider partners. We plan to introduce a number of new products in the second half of 2023, including Precise Liquid and FirstGene. And we are on-track to introduce Precise MRD to our pharma partners for research use." Mr. Diaz concluded, "We remain confident in our ability to achieve our goal of 10%+ annual growth by 2024 based on the progress we made in 2022 and the strong start to the year we are seeing through February. As we look to 2024 and beyond, we are excited about our robust product pipeline and a capital structure that enables Myriad Genetics to invest in future innovation and growth."

Financial and Operational Highlights:
•Diagnostic test volumes of approximately 299,000 in the fourth quarter of 2022 increased 26% year-over-year. Hereditary cancer and pharmacogenomics volumes grew 16% and 23%, respectively, in the fourth quarter of 2022 compared to the fourth quarter of 2021.
•The following table summarizes year-over-year volume changes in the company’s core product categories:
Three months ended December 31, Year ended December 31,

2022 2022
Product volumes:
Hereditary cancer 16 % 1 %
Tumor profiling — % 1 %
Prenatal 40 % 9 %
Pharmacogenomics 23 % 35 %
Total 26 % 14 %

•Fourth quarter revenue of $177.8 million compared to the same period in 2021 was impacted by currency translations of $(3.6) million.
•The following table summarizes year-over-year revenue changes in the company’s core businesses by product category:
Three months ended Twelve months ended
(in millions)
December 31, 2022 December 31, 2021 % Change December 31, 2022 December 31, 2021 % Change
Product revenues:
Hereditary cancer $ 84.9 $ 74.8 14 % $ 305.5 $ 316.3 (3) %
Tumor profiling 31.7 26.5 20 % 128.6 120.9 6 %
Prenatal 29.1 30.1 (3) % 116.4 106.8 9 %
Pharmacogenomics 32.1 29.4 9 % 127.6 93.7 36 %
Total $ 177.8 $ 160.8 11 % $ 678.1 $ 637.7 6 %

•GAAP gross margins of 69.7% in the fourth quarter of 2022 decreased 180 basis points year-over-year, reflecting changes in product/volume mix as well as the impact of currency translation and inflationary pressures.
•GAAP total operating expenses in the fourth quarter of 2022 were $176.1 million, decreasing $18.0 million year-over-year. Adjusted operating expenses in the fourth quarter of 2022 increased $23.3 million year-over-year to $138.6 million, and reflects the incremental investments in research and development, technology and commercial tools, pipeline development and sales and marketing programs, and Gateway Genomics, as well as the impact of the inflationary environment.
•GAAP operating loss in the fourth quarter of 2022 was $52.2 million, increasing $9.1 million year-over-year; adjusted operating loss was $13.9 million, increasing $14.0 million year-over-year from adjusted operating income of $0.1 million in the fourth quarter of 2021.

•Ended the fourth quarter of 2022 with $169.7 million in cash, cash equivalents and marketable investment securities as compared to $257.2 million at the beginning of the quarter. The decrease was driven primarily by the acquisition of Gateway Genomics (closed November 1) and ongoing capital expenditures and investments in the company’s laboratories of the future strategy.
•Cash used in operating activities in the fourth quarter of 2022 was $7.7 million.
•The company ended the quarter with no debt outstanding.

Business Performance and Highlights:

Oncology
The Myriad Genetics Oncology business provides hereditary cancer testing, including the MyRisk hereditary cancer test for patients who have cancer. It also provides tumor profiling products such as the myChoice CDx companion diagnostic test, the Prolaris prostate cancer test, and the EndoPredict breast cancer prognostic test. The Oncology business delivered revenue of $75.9 million in the fourth quarter of 2022.
•Fourth quarter hereditary cancer testing volumes in Oncology grew 13% year-over-year. In addition, Prolaris continued to see strong demand as fourth quarter testing volumes grew 17% year-over-year.
•Researcher enrollment in the first release of Myriad’s Precise treatment registry has already reached approximately 100 individuals, spanning a broad mix of community and academic institutions. Clinicians have access to our cohort browser portal developed in partnership with DNANexus. The portal has already supported multiple collaborative research projects to advance cancer care.
Women’s Health
The Myriad Genetics Women’s Health business serves women of all ancestries by assessing their risk of cancer and offers prenatal testing solutions for those who are pregnant or planning a family. The Women’s Health business delivered revenue of $69.8 million in the fourth quarter of 2022.
•Fourth quarter hereditary cancer testing volumes in Women’s Health grew 19% year-over-year and were higher than any prior quarter in 2022.
•Fourth quarter results include a partial quarter contribution from the acquisition of Gateway Genomics, a personal genomics company and developer of consumer genetic tests including the No. 1 selling SneakPeek Early Gender DNA Test.
•Excluding the contribution from Gateway Genomics, prenatal testing volumes in the fourth quarter of 2022 grew 2% sequentially versus the third quarter of 2022 and were down 1% versus the fourth quarter of 2021.

•In February, 2023, the Journal of Genetic Counseling, the official journal of the National Society of Genetic Counselors (NSGC), published evidence-based guidelines for expanded carrier screening, which supports the potential increasing adoption and the growth of the company’s carrier screening test, Foresight.

Mental Health
The Myriad Genetics Mental Health business consists of the GeneSight test that covers 64 medications commonly prescribed for depression, anxiety, attention deficit hyperactivity disorder, and other psychiatric conditions. GeneSight helps physicians understand how genetic alterations impact patient response to antidepressants and other drugs. In the pharmacogenomics category, the GeneSight test recorded revenue of $32.1 million in the fourth quarter of 2022.
•GeneSight, under Proprietary Laboratory Analyses (PLA) code 0345U, has been priced on the Medicare Clinical Lab Fee Schedule at $1,336 per test.
•In the fourth quarter, Myriad Genetics added over 3,000 clinicians who ordered GeneSight for the first time.
•The results of the Veterans Affairs research study (PRIME Care) using GeneSight to improve treatment for veterans with depression was identified as a top 10 genomic advancement for 2022 by the Genomic Medicine Working Group of the National Human Genome Research Institute’s (NHGRI) Advisory council. The annual list of the most significant advances and accomplishments in genomic medicine was published by the American Journal of Human Genetics.
Corporate Growth Initiatives Update:
Myriad Genetics continues to execute its commercial and operational growth initiatives, including the enhancement of its core infrastructure to better communicate the company’s differentiated value proposition, remove friction from engagement with healthcare providers and their patients, and gain reimbursement levels that reflect the value of Myriad’s offering. With the ongoing support from partners, Bain Consulting and KPMG, Myriad has been able to speed decision making and increase productivity across the enterprise.

Growth Strategy
In the fourth quarter of 2022, with the help of Bain Consulting, management conducted a strategic review of its current products and product pipeline, markets, competitive positioning and developed a roadmap for all of its products ("Product 360"). The purpose of this review was to gain a more rigorous and data driven "outside in" perspective of the company’s competitiveness and ability to position each product to their full potential. This review sharpened its view on how to better address the needs of its provider partners and patients in Women’s Health, Mental Health and Oncology. In addition, this review highlighted a focus on key patient sub-segments, such as the estimated 13 million women that meet the National Comprehensive Cancer Network (NCCN) guidelines for the company’s market leading hereditary cancer test, MyRisk, as well as opportunities to better position and expand indications for Prolaris and MyChoice.

Commercial
The company continues to implement digital tools and enabling technologies to improve patient, provider, and payer awareness, engagement, ease of use, and overall experience. Myriad Genetics has made significant progress on the following:
•Enhanced corporate web presence to more fully digitize provider, patient and payor engagement.
•Initiated limited launch of the unified ordering portal in early 2023 with roll out planned through 2023.
•Launched first Epic EMR integration with a phased roll out through 2023 and beyond.
•Continued to refine revenue cycle management (RCM) activities that have already seen significant improvement during 2021-2022 to further improve reimbursement of its products.

Operations
Myriad Genetics’ laboratories of the future strategy enters 2023 with significant progress as we establish and move into modern and scalable facilities. This strategy supports the company’s long-term goals to expand laboratory capacity, reduce cost and enhance testing automation. The company remains on-track to substantially complete both new facility construction and related developments and capital expenditure targets in 2023.

Financial Guidance
Below is a table summarizing Myriad Genetics’ fiscal year 2023 financial guidance*:
(in millions, except per share amounts) FY 2023 FY 2023 Comments Q1 2023 Q1 2023 Comments
Revenue $720 – $750 Reflects annual growth of between 6% – 11% over 2022 $170 – $172 Expected to decrease ~3% from Q4 ’22 reflecting seasonality
Gross margin % 68% – 70% GM expected to remain within range given seasonality 68% GM expected to decrease 200 basis points from Q4 ’22 due to seasonality
GAAP OPEX $628 – $648 $165 – $167
Adjusted OPEX $530 – $550 Adjusted operating expenses expected to remain flat-to-down from annualized Q4 ’22 range $138 – $140 Adjusted operating expenses expected to remain flat in nominal dollars compared to Q4 ’22
GAAP EPS $(1.43) – $(1.23) $(0.47) – $(0.45)
Adjusted EPS $(0.40) – $(0.20) Adjusted EPS is expected to improve through 2023, reaching positive adjusted profitability and operating cash flow in Q4 ’23 $(0.20) – $(0.18) Adjusted EPS loss expected to be greater than Q4 ’22 due to ongoing investments combined with seasonality

* Assumes currency rates as of February 28, 2023

Myriad Genetics’ fiscal year 2023 non-GAAP guidance begins with the comparable GAAP financial measure and excludes the estimated impact of stock-based compensation expense of approximately $40.0 million, non-cash amortization associated with acquisitions of approximately $43.0 million and special items such as costs related to transformation initiatives of approximately $15.0 million.
Myriad Genetics’ fiscal first quarter of 2023 non-GAAP guidance begins with the comparable GAAP financial measure and excludes the estimated impact of stock-based compensation expense of approximately $10 million, non-cash amortization associated with acquisitions of approximately $11 million and special items such as costs related to transformation initiatives of approximately $6 million.
These projections are forward-looking statements and are subject to the risks summarized in the safe harbor statement at the end of this press release.
Conference Call and Webcast
A conference call will be held today, Tuesday, February 28, 2023, at 4:30 p.m. EST to discuss Myriad Genetics’ financial results and business developments for the fourth quarter 2022. The dial-in number for domestic callers is 1-800-920-6941. International callers may dial 1-212-231-2939. All callers will be asked to reference reservation number 22025948. An archived replay of the call will be available for seven days by dialing 1-800-257-4607 and entering the reservation number above. The conference call and slide presentation will be available through a live webcast at www.myriad.com.