Myriad Genetics - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue was $210.6M, up 7% year-over-year; GAAP gross margin improved to 71.7% and adjusted gross margin to 72.0%. Adjusted EPS was $0.03 and adjusted EBITDA $10.6M.
• Strength came from Prenatal (+12% YoY to $44.9M) and GeneSight pharmacogenomics (+14% YoY to $40.6M), while Tumor Profiling declined 4% YoY to $30.8M.
• Management reaffirmed FY2025 guidance (revenue $840–$860M; GM% 69.5–70.5%; adjusted EPS $0.07–$0.11) and introduced Q1 2025 outlook (revenue $196–$204M; adjusted EPS loss of $(0.04)–$(0.08)).
• Catalysts: exclusive AI collaboration with PATHOMIQ for prostate cancer diagnostics; CEO succession (Sam Raha to become CEO 4/30/2025); watch headwinds from UnitedHealthcare’s policy change on GeneSight (~$45M 2024 revenue exposure).

What Went Well and What Went Wrong

What Went Well

• Margin expansion: Q4 GAAP GM rose 300 bps YoY to 71.7%; adjusted gross margin reached 72.0% on improved revenue per test and lab efficiencies.
• Segment growth: Prenatal revenue +12% YoY; GeneSight +14% YoY; Oncology hereditary cancer revenue growth and total Oncology revenue $82.8M in Q4.
• Strategic initiatives: Exclusive PATHOMIQ AI partnership to complement Prolaris and deliver AI+molecular testing across the prostate cancer journey. “Our molecular science expertise, combined with the latest in machine learning and AI, will uniquely position Myriad to deliver higher-quality insights” (Myriad Oncology President).

What Went Wrong

• Volume softness in unaffected hereditary cancer: Q4 volumes slowed as focus shifted to launching Prequel at 8 weeks and EMR workflow conversions took longer to stabilize (quarterly impact acknowledged by CCO).
• Tumor Profiling revenue fell 4% YoY in Q4; EndoPredict divestiture reduced annual revenue run rate by ~$11M and pressured international results.
• Reimbursement headwinds: UnitedHealthcare updated policy to discontinue coverage of multi-gene panel PGx tests (including GeneSight) for commercial/individual exchange and certain managed Medicaid plans in H1 2025 (~$45M 2024 revenue at risk).

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Myriad Genetics Q4 2024 Financial Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Matt Scalo. Please go ahead.

Matt Scalo (SVP of Investor Relations)

Thanks, Latonya. Good afternoon, and welcome to the Myriad Genetics Q4 and Full Year 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 Investor 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 results to differ materially from those contained in our projections or forward-looking statements. And now I'll turn the call over to our CEO, Paul Diaz.

Paul Diaz (President and CEO)

Thanks, Matt. Good afternoon, everyone, and thank you for joining us. On today's call, we will discuss our Q4 and full year performance and provide an update on the progress we continue to make to accelerate profitable revenue growth and innovation in advanced diagnostics. 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.

Delivering on our mission would not be possible without our Myriad teammates, who continue to recognize our company as a great place to work, with approximately 84% of our teammates rating us as such. Additionally, Forbes recently named Myriad in its list of best employers for 2025.

Most everyone you meet at Myriad loves what they do, and we see it played out daily as our teammates go above and beyond to serve our provider partners and their patients. This is reinforced by our strong 72 Net Promoter Score, which captures how different external groups, from providers to payers, score their interactions with Myriad.

Our active pipeline of innovative and clinically relevant products is supported by the clinical studies and data that we continue to produce at an accelerated rate. As we continue to invest to bring new science to the marketplace, we continue to maintain industry-leading margins, achieve profitability, and are seeing growth across the enterprise. I want to now highlight the progress that Myriad Genetics has made over the past five years.

We're a very different company than when we started this journey in 2020, and our proven ability to innovate, grow organically, and reach profitability has set us apart from many of our respected peers in the industry. Top-tier science and innovation are at the foundation of Myriad Genetics as we deliver clinically differentiated products supported by technology to deliver value in real-world clinical settings and enable early detection and better treatment decisions for providers and their patients.

Combining our mission and vision with expertise in our lab operations and our technical capabilities, together with our in-depth regulatory compliance and revenue cycle management, we find ourselves in a position to serve our customers at scale and profitably. We continue to deliver on our commitment to shareholders as we achieve 11% revenue growth in 2024 as compared to 2023, reflecting both volume and revenue per test improvements across the portfolio.

Our focus on profitable growth continues as we generated approximately $589 million in adjusted gross profits, $40 million of adjusted EBITDA, positive adjusted EPS of $0.14, and maintained approximately $158 million in liquidity in 2024. Continued execution of our strategic priorities and commercial growth strategy support our long-term financial targets, which, together with our recent and new pending product launches, give us the confidence we can accelerate growth in 2026 and beyond.

Today, we announced an exclusive partnership with PATHOMIQ to apply their advanced AI technology platform to our suite of oncology products, enabling Myriad to provide urologists and radiation oncologists with molecular and AI-powered testing solutions to inform decisions both before treatment, at the time of biopsy for active surveillance, and following surgery or radiation treatment. This complements Myriad's existing offerings of combining germline and comprehensive tumor profiling as recommended by NCCN guidelines for prostate cancer care.

With that, I'll now turn the call over to Sam.

Sam Raha (COO)

Thank you, Paul. I want to take a moment to recognize the hard work that you and our Myriad team have put in over the past four and a half years to deliberately focus in on areas of strategic importance: divesting non-strategic assets, restructuring to get our cost basis under control, and shifting to invest and prioritize for growth. Thank you, Paul, for your leadership.

Next slide. As we move forward into 2025 and beyond, we will continue to be guided by our mission to advance health and well-being for all, along with our commitment to delivering predictable, sustained, profitable growth. Core elements of our strategy in oncology, women's health, and pharmacogenomics remain intact, as does our focus on providing an easy-to-use customer experience across our product portfolio, from learning about our offerings to test ordering to results delivery, along with patient and provider education and support.

We will continue to increase our focus on innovation and providing relevant, compelling product offerings for sizable, attractive market opportunities where we can leverage Myriad's differentiated capabilities and right to win. We will also have a stepped-up focus on execution excellence across the company to support the achievement of our strategic intent and ongoing business and financial objectives.

Next slide. MyRisk remains the gold standard in the market for hereditary cancer testing. Building on this cornerstone, our strategy in oncology remains to serve the continuum of patient care from screening and prognostics with products including MyRisk and Prolaris to therapy selection with products including MyChoice and Precise Tumor to monitoring and therapy adjustment, including Precise MRD, for the most prevalent cancer indications, including breast, prostate, and ovarian.

We will drive growth by focusing on products that are most needed by community oncologists and healthcare providers, leveraging our broad commercial reach and established reputation for quality and delivering diagnostic insights with clear clinical utility. As we develop and update products, we will be deliberate about having a clear path to guideline inclusion and reimbursement.

Our biopharma service business will help drive evidence generation for key applications while also supporting our pipeline of new cancer diagnostic tests and providing profitable revenue. Next slide. Our strategy for women's health remains centered on providing relevant, trusted testing solutions throughout a woman's reproductive journey and beyond. We're excited about the potential for our women's health business, including the sizable MyRisk cancer screening opportunity related to an estimated 50 million unaffected women in the United States that meet guidelines for hereditary cancer testing.

We will continue establishing and strengthening partnerships with hospital systems and provider networks to identify and serve these unaffected patients. We will also continue to bring differentiated, clinically relevant prenatal health products to market for carrier screening and NIPS, such as Prequel, which delivers critical insights at eight-week gestational age as compared to 10 to 12 weeks for other available tests.

Next slide. Turning now to pharmacogenomics. Mental health continues to be a significant issue in the United States and continues to be a meaningful opportunity for Myriad. One in five Americans develop a major depressive disorder in their lifetime, and our GeneSight test provides an important tool to healthcare providers to get patients on the right medication faster than conventional medical practice. As Mark will discuss later, we continue to see good demand for GeneSight and are excited about the momentum we see with biomarker legislation.

Our strategy for GeneSight growth includes continuing highly effective digital engagement, from driving provider and patient awareness to provider onboarding. It also includes optimizing patient-direct payment options and optimizing revenue cycle workflows to maximize reimbursement. Next slide. Looking ahead, let me share some of the key elements that will enable Myriad's sustained growth.

First, as Paul and I have already touched on, an important part of the growth will come from a stream of organically developed innovative products. This includes the recently launched Prequel for early gestational age, the upcoming launches of FirstGene and Precise MRD. Our growth will also come from the increased focus on executing corporate programs that have the potential to drive material testing volume increase, including the breast cancer risk assessment program and EMR integration value realization.

Finally, in a dynamic, fast-paced market where technology is advancing quickly, there will be times where partnering is the faster, more efficient path to capture an opportunity by complementing our own areas of expertise. We will supplement our organic efforts with purposeful partnerships that enable us to serve high-growth, attractive market opportunities with a focus of bringing compelling solutions to our targeted customers with speed, with the potential of drawing high return on invested capital. Next slide.

The PATHOMIQ collaboration that we announced earlier today illustrates how we will leverage strategic partnerships. PATHOMIQ's validated AI technology platform extracts hidden insights from complex cancer morphological structures to quickly and efficiently deploy new use cases to predict patient outcome, treatment response, and genotype mutations. This image-based AI technology can deliver results one or two days after receiving the digital images from a patient sample.

PATHOMIQ was founded around prostate cancer and has a deep clinical expertise and extensive relationships with KOLs in this area. While the current PATHOMIQ model is specific for use in patients with prostate cancer, the underlying foundational model provides opportunities for applications in virtually all solid tumor cancers that are diagnosed through a biopsy with H&E staining.

Also, the partnership with PATHOMIQ will help accelerate the timeline for gaining Simon-level I evidence for Prolaris. Next slide. For prostate cancer, Myriad is a leader for diagnostic testing at the time of biopsy with Prolaris, which is a molecular test in the form of active surveillance. The collaboration with PATHOMIQ will enable us to also provide urologists and radiation oncologists with an AI-based testing solution post-radical prostatectomy or radiation, where we do not participate today, to guide treatment options.

Within 2025, Myriad will have a molecular plus AI solution set to serve the market opportunities for both biopsy, pre-active surveillance, and treatment selection post-radical prostatectomy or radiation from diagnosis to metastatic disease. Also, as Paul mentioned, the NCCN guidelines recommend the use of germline and somatic information to support cancer care.

With our MyRisk and PreciseTumor tests, we will deliver a comprehensive set of solutions for providers to care for patients across the prostate care continuum, from diagnosis and therapy selection to monitoring and therapy adjustment and over time for remission. Now, as I hand it off to Mark Verratti, I want to take a moment to thank you, Mark, for your leadership of our commercial organization and for driving meaningful revenue growth and sales force productivity over the past few years. Thank you as well for your partnership from the moment I joined Myriad.

Really looking forward to continuing working closely with you as our Chief Operating Officer. Mark.

Mark Verratti (Chief Commercial Officer)

Thanks, Sam, for the kind words, trust, and leadership. I also want to echo Sam's comments and thank Paul for his leadership, guidance, and partnership over the last four and a half years. Turning to slide 17, full year 2024 revenue grew 11% year-over-year, and our ASP remained stable with 3% growth over the year. For the Q4, hereditary cancer testing revenue increased 6% compared to last year, while prenatal revenue grew 12% over the same period. GeneSight continued to show strong demand as well, with revenues up 14% in the quarter.

I do want to address our slower-than-expected volume growth in Q4. Our prenatal, GeneSight, and affected hereditary business remained on track, while our unaffected business slowed due to attention placed on the launch of Prequel at eight weeks gestational age and EMR workflow conversions taking longer than expected. Next slide.

EMR solutions continue to be a key area of investment across our enterprise as we seek to improve the customer and patient experience. Our efforts with EMR systems are making a difference in the way we engage with our customers and will be an important driver of future volume growth.

As Sam has mentioned on previous calls, over the past two years, we have doubled our investment in EMR through engineering, integration, and commercial pull-through, resulting in more than 4,500 new clinic locations in 2024. We have system integrations across 15-plus different vendors, including strategic partnerships with key EMRs like Athena, Epic, Flatiron for oncology, and Lumea for urology.

This has been an incredible effort by all our teams, although we have seen workflow disruptions as certain health systems take longer to fully integrate and often take several quarters to stabilize and yield increased volumes. Next slide.

In 2024, our women's health team delivered 14% revenue growth year over year as we continue to sell deeper into current accounts and win new accounts. We are leveraging our breast cancer risk assessment program and establishing key partnerships with hospital systems and provider networks to identify and serve those unaffected patients.

Over the course of 2024, our women's health team successfully launched exciting new collaborations, including partnerships with jscreen, CancerCARE to expand access to prenatal and MyRisk testing. Next slide. In 2024, we launched our expanded carrier screening test, Foresight Universal Plus, which features an expanded panel of genes as well as more efficient workflows. Guideline and payer coverage expansion for carrier screening is something we are excited about as we look for ways to expand access to Foresight Universal Plus.

In Q4, we launched our new Prequel product, which delivers critical insights at eight weeks gestational age as compared to 10 or 12 weeks, significantly increasing the provider and pati ent experience by delivering critical information to pregnant parents much sooner than any other test of its kind. Next slide. In 2024, GeneSight continued to see double-digit growth with revenues up 23% year over year.

We continue to work with UnitedHealthcare to find a solution for the recent decision to not cover this category of test for their patients. Despite this reimbursement challenge, our volume demand remains strong, and we are committed to our pharmacogenomics business and the important role it plays for more than 30,000 clinicians who use GeneSight to inform how they treat their patients.

Data from the Optum study showing increased economic utility of GeneSight was recently accepted for publication and is expected to appear in print form in the next few weeks. Additionally, new meta-analysis data is expected to be published in the first half of this year, with more data to follow in the second half of the year. Next slide. In 2024, our oncology team delivered 24% MyRisk-affected revenue growth year over year.

We saw consistent volume and ASP growth throughout the year as we focused on large-account EMR integrations and driving paired testing across multiple products. Additionally, we recently placed our urology team within our oncology team to drive greater synergies in marketing, medical affairs, and sales resources. Turning to prostate cancer on the next slide.

There has been some confusion regarding the updated NCCN guidelines, and we want to share that Prolaris is included in those guidelines for low, intermediate, and high-risk patients at the time of initial biopsy. Furthermore, every test in the urology market that Prolaris competes with has the same NCCN Category 2A level of evidence. Guidelines also state the need for germline and tumor profiling testing for certain prostate cancer patients.

Now that we have added PATHOMIQ's AI technology platform to our portfolio, Myriad is the only company that offers AI, biomarker, germline, and tumor profiling testing. Although these updated guidelines were met with some confusion in the marketplace, in speaking with our 20 largest urology accounts, they have reinforced their belief in the clinical utility and relevance of Prolaris, with the demand for testing showing no signs of slowing down in 2025.

We are increasing capacity in prostate cancer sales, medical affairs, marketing, and now AI products, leveraging these investments to support urologists from the time of biopsy through post-surgery with radiation oncologists. Next slide. In closing, we are excited about 2025 and our focus on accelerating integrations, driving depth through paired testing, and our expanded pipeline and product launches. We look forward to MyRisk gene expansion, Precise Liquid, FirstGene, and MRD in the coming quarters. I will now turn the call over to our CFO, Scott Leffler.

Scott Leffler (CFO)

Thanks, Mark. I'll start on the next slide. We are pleased with our continued progress this year, having generated 11% total revenue growth, including domestic revenue growth of 15%. This growth was driven across a number of areas. Hereditary cancer testing revenue grew 11%, while prenatal and pharmacogenomics grew 17% and 23%, respectively. 2024 revenue growth also reflects a positive, sustainable pricing environment, which we have highlighted on past calls.

Regarding Q4 results, total revenue grew 7% year over year. Domestic revenue grew 11% in the quarter, partly offset by the Q3 of 2024 divestiture of our EndoPredict business in Europe, which removes approximately $11 million of annual run rate revenue. Mark addressed the commercial dynamics affecting Q4 volume growth, and I reiterate our belief that test volume growth in hereditary cancer and prenatal will re-accelerate as the year progresses.

We did benefit modestly from a favorable change of estimates from prior periods in Q4, but the amount was less than either Q3 of 2024 or Q4 of 2023. Next slide. We have been highlighting key drivers for sustainable progress in average revenue per test, including various investments and initiatives by both our revenue cycle and payer markets teams. These include, among other things, working with health plans to encourage their implementation of medical policies that conform to state biomarker legislation.

There is a growing list of states that have passed biomarker legislation that lends itself to ensuring access to precision medicine and advanced diagnostics. Generally, no one of these wins is likely to have a material impact on revenue, but we certainly expect the accumulation of many small and medium-sized wins over time to contribute to the rate environment for our products.

In Q4, we again saw stability in underlying rates across our portfolio, which represents another proof point for the great work being done by our revenue cycle and payer markets teams, along with others throughout the company. Next slide. Our 7% revenue growth in Q4 also translated to 12% year-over-year growth in gross profit dollars and a 72% gross margin. That improved 300 basis points over last year.

This year-over-year improvement in gross margin partially reflects improvements in average revenue per test, as well as overall lab efficiencies. Adjusted operating expenses increased year-over-year and were driven primarily by greater investment in R&D and the timing of incremental marketing spend. We continue to focus on striking the right balance between investment for future growth and profitability, as we generated a third consecutive quarter of positive adjusted EPS, reporting $0.03 in the Q4.

It's a testament to the health of the underlying business that we were able to deliver a strong bottom-line performance while still absorbing the incremental investment in R&D. Next slide. The profit and cash-generating potential of the business are also highlighted by our improving positive adjusted EBITDA profile, with $11 million of adjusted EBITDA for the Q4 and $40 million for the full year.

We also finished Q4 in a strong liquidity position, with $158 million of total liquidity from a combination of cash and cash equivalents and availability under our revolver. We saw sequential increases in cash and cash equivalent balances from Q3 to Q4 and delivered adjusted free cash flow of approximately $10 million in Q4 as well.

During the Q4, we also determined that the previously recorded $21 million contingent payment to Ravgen, which was to be paid out beginning in 2026, was no longer probable. We therefore reversed the accrual and, importantly, no longer feel that this contingent payment will impact our liquidity needs in the future. Next slide.

For the full year 2025, we reaffirm our financial guidance as previously issued in January, with a revenue range of $840 million-$860 million, a gross margin range of 69.5%-70.5%, and adjusted OpEx of between $575 million and $595 million. This results in positive adjusted EPS of between $0.07 and $0.11 for the full year 2025. We are also targeting adjusted operating cash flow of between $20 million and $30 million.

While we don't guide on a quarterly basis, we wanted to set appropriate expectations for the Q1 of this year. We anticipate generating Q1 revenue of between $196 million and $204 million. As a reminder, we had a total of $7 million of benefits in Q1 of 2024 from a combination of change of estimates and an unusual payer markets win from a payer retroactively granting coverage of one of our products. Those make for a more difficult growth comp in Q1 of this year. We also anticipate a Q1 adjusted EPS loss of between $0.04 and $0.08. Now, let me turn the call back to Paul.

Paul Diaz (President and CEO)

Thanks, Scott. I'd like to close by saying thank you to our board of directors for the opportunity to serve here at Myriad Genetics the past four and a half years, to my colleagues in the industry, and to everyone in the investment community on the line today for helping me to learn advanced diagnostics and your advice over the years.

And most importantly, to my Myriad teammates for their commitment and friendship as we work together to reset Myriad Genetics culture, our foundation for continued growth, innovation, and value creation for all of our stakeholders. And I'll pass it back to Matt for Q&A.

Matt Scalo (SVP of Investor Relations)

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 and a reconciliation of GAAP to non-GAAP financial guidance can be found in our earnings release and under the investor relations section of our website. Now we are ready to begin our Q&A session. To ensure broad participation, we're asking participants, please ask only one question and one follow-up. Latonya, we are now ready to address the Q&A portion of this call.

Operator (participant)

Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. And our first question will be coming from Doug Schenkel of Wolfe Research. Your line is open, Doug.

Madeline Mollman (Analyst)

Hi, this is Madeline Mollman on for Doug. Just wanted to touch on the operating expense. On the 25% increase in R&D spend, should we assume this is primarily allocated towards clinical evidence generation for Precise MRD? And given this increase, is it reasonable to assume that SG&A would decline year-over-year to align with the overall OPEX guidance for 2025? And then, are you still targeting a 1,000 basis points SG&A reduction by 2026 versus 2023?

Paul Diaz (President and CEO)

So, yeah, the quarter definitely reflected, you know, our acceleration of our investments in clinical studies and advance of the launch of FirstGene and Precise MRD, where we're continuing to be excited about the studies that should come out this summer. As referenced earlier in the call and in the earnings release, you know, we've made certain changes in our operating cost model to reflect the UnitedHealthcare payment changes.

So, across commercial SG&A and R&D, but I think what you will see is a 25% increase in R&D to support future growth, about an 8% increase in our technology spend, and, you know, belt tightening elsewhere in the organization for an overall pretty modest 3% increase, Scott. I think we're forecasting year over year. You know, I think that just reflects our ongoing discipline about operating expense management, dealing with UnitedHealthcare change in a pragmatic way, but reallocating our investment dollars for future growth.

Madeline Mollman (Analyst)

Great. Thank you.

Operator (participant)

One moment for our next question. Our next question will be coming from Matt Sykes of Goldman Sachs. Matt, your line is open.

Will Ortmayer (Equity Research Analyst)

Hi, this is Will Ortmayer on for Matt. Thanks for taking our questions today. Just wanted to shift over to hereditary cancer. With the unaffected market still around 10% penetrated, you mentioned some good traction in your breast cancer risk assessment program recently. Can you talk a little bit more about the progress you're making in that unaffected market and the runway you're seeing for sustained growth there?

Matt Scalo (SVP of Investor Relations)

Yeah. As we said in the call, we think that that is a real sweet spot for Myriad. We think we have a competitive advantage with our breast cancer risk assessment program, and we are gaining traction. And in large part, a lot of that EMR integration that we talked about will help fuel that, I think. But as we also mentioned, as you could imagine, switching workflows, especially in the unaffected market where it requires a lot of patient education, it requires gathering family history.

There's a lot of ancillary parts other than just ordering the test, but we see a lot of future growth. And as you mentioned, it's only 10% penetrated. And so that is definitely an area that we're excited about moving forward into 2025, not to mention, as Sam mentioned, the 50 million women who really can benefit by getting hereditary cancer testing.

Will Ortmayer (Equity Research Analyst)

That's helpful. Thank you. And then just to follow up, you mentioned some opportunity from the recent market dislocation in that space. Has that been playing out for you to start the year? And how big of a tailwind could those share gains be throughout the year? Thank you.

Paul Diaz (President and CEO)

So, as we said last quarter, you know, the integration with LabCorp really just sort of happened here in January in terms of potential impact for customers. You know, LabCorp does a fine job, but that certainly presents an opportunity for people that are looking for a different experience.

The Ambry, you know, acquisition by Tempus just occurred a couple of weeks ago. And so typically, you know, these kinds of changes in the marketplace take several quarters to sort of play out, but they do provide an opportunity for us, given our value proposition about reliability, consistency, accuracy, fast turnaround times to gain share in these markets, particularly in hereditary cancer.

Operator (participant)

One moment for our next question. Our next question will be coming from Tejas Savant of Morgan Stanley. Your line is open.

Hi, this is Madison for Tejas. Just wanted to start off, as we look out to the next year, how should we be thinking about revenue phasing? And is there any seasonality we should be keeping in mind and just giving us maybe a little bit of a sense of weighting between first half and second half?

Matt Scalo (SVP of Investor Relations)

Yeah. I mean, generally, I would say we made some comments on the call about expecting an acceleration in the volume growth trajectory in the second half of the year based on some of these initiatives, including accelerating ramp from EMR. So that, I think, will weigh a little bit more heavily towards the second half of the year.

Other than that, I would say, you know, bear in mind some of the typical seasonality that we see as a business. We have talked in the past about, for example, Q3 being a relatively lighter quarter and Q4 being a relatively stronger quarter.

Paul Diaz (President and CEO)

Yeah. Q2 and Q4 are typically where we see a little bit more bounce.

Got it. Okay. That's really helpful. And then previously, I know you discussed MyChoice CDx experiencing a bit of underperformance due to the disruptions in Europe, given the AstraZeneca decentralization of their product. I was just wondering if you could kind of speak to the trends you're seeing there now for MyChoice and what assumptions you have baked into the guide for how the test should perform during the year?

Yeah. I would say that most of that change is behind us. And so we expect to see stable to modest growth of MyChoice going forward. The thing that we're the most excited about, MyChoice, is expansion to other indications. We're making progress to expand beyond ovarian to breast and prostate, much bigger TAMs.

And so, you know, that's very, very little in terms of growth in 2025 is based on MyChoice. But the expansion of indications really set us up well for bigger growth in 2026 and 2027.

Got it. Okay. That's really helpful. Thanks so much.

Operator (participant)

And one moment for our next question. Our next question will be coming from Subbu Nambi of Guggenheim. Your line is open.

Hey, guys. This is Thomas on for Subbu. Just one on Prolaris. So, thinking about NCCN guideline updates and the confusion in recent months, just curious where your focus is with Prolaris today and where can you add the most value this year for growth in that test.

Matt Scalo (SVP of Investor Relations)

Yeah. I think there's a couple of things. So number one, we continue to work with our KOLs, as we mentioned on the call, as well as those that are in charge of writing the guidelines to potentially get that confusion removed. So I think that's sort of step one. I think step two, as we said, we are increasing our investments across marketing, medical affairs, KOL engagement across the board because we're excited not only about where our product sits today, but as well as the announcement that we made with PATHOMIQ and our ability to bring the pairing together of AI as well as Prolaris.

And then, as we also mentioned, also within those guidelines was our ability to bring MyRisk, Precise Tumor also to the table. So we see this as an area that we're going to strongly invest in, and we expect growth in the future.

Great. Thank you. And then my second one's on GeneSight. So, you know, over the last couple of months, Myriad has made it a point to get out in front of investors and customers following some draft decisions that didn't go your way.

Curious if you can share what that time has been spent in terms of where you're spending your attention on your sales force, or is it being more customer-facing, or is that time spent in front of commercial payers? And then where have you seen the most benefit given the situation, and where will you continue to aim your focus this year?

Yeah. Let me clarify. So the sales force hasn't changed its focus at all, right? So the sales force remains completely focused on those providers that are treating mental health patients, and they've been continuing to do that, which is why the GeneSight demand continues to remain strong, why they're the market leader, and also, unfortunately, because of the mental illness crisis that is happening today.

Internally, as an executive team, we've been working with United. We've had our different medical affairs teams working on data evidence generation, as well as our government affairs team working with advocacy support and so on. So two very completely separate things, and we think that's the way it needs to be so that we can remain focused and we can make sure that the patients who need GeneSight continue to get GeneSight while we continue to work through this.

Paul Diaz (President and CEO)

Yeah. Maybe to uplevel the answer a little bit, you know, as Mark stated, and I think sort of implicit in your question, we continue to see strong demand for GeneSight, and so our market approach really hasn't changed. What we continue to see is the opportunity to mitigate the UHC policy change.

Again, putting aside our continued work with UHC to carve out or reverse that policy is our biomarker legislation and our advocacy efforts there, which, again, we're investing more in time and energy in. You know, I would just underscore sort of two things.

We have not seen, as we sit here today on 24 February, any effect on this with respect to GeneSight volumes, and we have not seen any impact on our Prolaris volumes because of some of the confusion around NCCN guidelines.

And in fact, as Mark stated, the underlying strategic premise and Sam spoke to of our ability to bring a comprehensive set of offerings in prostate cancer and other places is really the future opportunity in this company that we're most excited about.

Great. Thank you.

Operator (participant)

One moment for our next question. Our next question will be coming from Tycho Peterson of Jefferies. Your line is open.

Tycho Peterson (Managing Director)

Hey, thanks. I just want to go back to Prolaris for a minute. I mean, can you maybe walk through the exact steps, you know, you think you need to take here to get to level 1B and guidelines? And, you know, do you think this is viable? Is there a timeline on this? And can you—I know you don't guide for Prolaris, but can you actually give us some sense of what you've baked into numbers, just given, you know, all the moving pieces around it?

Matt Scalo (SVP of Investor Relations)

Maybe I'll take the first part, Mark. You can take the second part. As it relates to, you know, getting Simon-level I evidence, I think we've been pretty open about it. One of our challenges has been access to the samples that are needed to get that designation.

The partnership now with PATHOMIQ, who has this deep-seated set of relationships, they started with prostate cancer. And, you know, we are excited, and we're seeing receptivity to, you know, the working with us when you have the combination of clinical collaboration, which includes not just molecular, which is our base of Prolaris, but combined with the AI element that PATHOMIQ brings. So we haven't quantified yet. Give us just a little bit of time.

We announced the collaboration formally this morning, but we are confident that the timelines, which, you know, we've been working under, are going to be accelerated, and we look forward to sharing more of that with you in the upcoming months.

Paul Diaz (President and CEO)

As you said, Tycho, we don't guide at the individual product level, but what I can tell you is that we are expecting growth, revenue, and volume growth from Prolaris in 2025.

Tycho Peterson (Managing Director)

Thank you.

Operator (participant)

One moment for our next question. Our next question will be coming from Sung Ji Nam of Scotiabank. Your line is open.

Sung Ji Nam (Senior Healthcare Equity Research Analyst)

Hi. Thanks for taking the questions, and congrats to Paul, Sam, and Mark. I'll just ask my questions together. Just, you know, we're hearing more and more about these kind of AI-enabled testing technologies, capabilities, etc. So just kind of curious, you know, with this exclusive partnership with PATHOMIQ, you know, why is PATHOMIQ the right partner?

Is the multimodal testing approach, you know, pretty unique to what you guys are trying to do? And then what do you think differentiates, you know, the different AI technology platforms out there? Is it just the access to the amount of patient data that you have, or is it just some sort of, you know, differentiated technology, AI technology platform that kind of provides the competitive advantage? Thank you.

Matt Scalo (SVP of Investor Relations)

Yeah. Thank you very much for the thoughtful question. You know, I'd start off by saying, by the way, we've been employing AI in various parts of operations for a long time, including for a lot of our pipelines for variant calling and so forth. But to your question, why PATHOMIQ? What really gets us excited as we were doing our diligence to look at potential partners is really related to the fact, again, I'll restate, PATHOMIQ started with prostate cancer.

That's where they have deep roots. If you look at the PATHOMIQ team, there are a number of folks. This is what they've done for their entire career. Beyond that, the established relationships that they have with leading medical institutes that are 100% focused on prostate cancer, that gives not only the ability to access the samples, but it also gives, once again, a broader network. We're 100% focused on prostate.

So for us, it's the combination of that together with the IP position that, as we looked at what they have, which we believe is strong and gives us together the freedom to operate and to build on. And we've been impressed also. We haven't talked about this yet today. The actual product, the way it will be brought to market, will be able to start from H&E staining.

And as you might know, in pathology, H&E staining, that's the most foundational or fundamental way of staining. Being able to start from those slides, digital images, to then be able to bring the proprietary AI algorithm for the analysis and interpretation, which can all be, you know, in the partnership, which Myriad will then be able to handle, leveraging our commercial channel and our customer service.

We think that combination with our channel is what really, you know, what really allows us to feel confident. One further thing, we've been spending time looking at options and opportunities for some period of time, including doing pilots with PATHOMIQ to gain the confidence that they are the right partner. So we couldn't be more thrilled with Rajat, the CEO and that team, and looking forward to a very exciting partnership, which we'll be able to share more about in the coming months.

Sung Ji Nam (Senior Healthcare Equity Research Analyst)

Great. Thank you much.

Operator (participant)

One moment for our next question. Our next question will be coming from Bill Bonello of Craig-Hallum. Your line is open.

Bill Bonello (Senior Research Analyst)

Hey, guys. Thanks for taking the call, and also congratulations, Sam and Mark, and best wishes to you, Paul.

Paul Diaz (President and CEO)

Thanks, Bill.

Bill Bonello (Senior Research Analyst)

I guess just a question on the CEO transition, which isn't, you know, necessarily surprising given the timing of when you brought Sam and Scott on, and you've been asked about it a lot, I think, over the course of the last year. But maybe you could give us some sense of, you know, why is now the right time? Or maybe if I ask it a little bit differently, why is it not the wrong time right now?

Paul Diaz (President and CEO)

It certainly would have felt a lot better before the United decision. But, you know, Bill, the truth is that Sam has done an exceptional job here, as has Mark. And, you know, there's always more work to be done. There's always more opportunity. But this was a personal decision for me and my family. And I've got an opportunity to join Cressey & Company as a managing partner, which is not typically what an operator like me gets to go do for his last chapter.

And so that's really what drove the timing. My confidence in our strategy, in the team, in the platform that we have built, the opportunities that we have, you know, are significant. You know, never a perfect time, but it was the right time given the opportunity that was presented to me personally and the significant runway that Sam and Mark and the rest of the team have here.

Bill Bonello (Senior Research Analyst)

Okay. All right. That's helpful to understand that it was sort of driven by the timing of your opportunity as well.

Paul Diaz (President and CEO)

For sure.

Bill Bonello (Senior Research Analyst)

I guess just, oh, go ahead.

Paul Diaz (President and CEO)

No, yeah. I mean, that really was what may have been a year from now or something like that, you know, was driven by the opportunity today to pursue this opportunity for myself and for my family. So thank you.

Bill Bonello (Senior Research Analyst)

Sure. Okay. Appreciate that. And then maybe just in terms of the Q1 commentary, you know, obviously it wasn't that long ago that you, you know, updated your full year guidance. And, you know, I get it was early in the quarter, but you kind of had every opportunity to talk about Q1. I guess I'm just trying to get a feel for this.

I mean, are you characterizing Q1 as a typical Q1, or some of the commentary I heard over the course of the call made me feel like, you know, maybe the year isn't getting off to quite as good a start as you would have hoped it was? So if you can just kind of characterize that a bit.

Paul Diaz (President and CEO)

Just to clarify, and sorry if I misunderstood your question, but we had made previously comments about the full year. We had not previously made any comments about Q1 expectations.

Bill Bonello (Senior Research Analyst)

That's what I said. You could have, but you didn't.

Paul Diaz (President and CEO)

Yeah. I mean, I think it would have just been premature for us to do that, quite frankly. But really, if you go back to the comments that I made, one of the areas that I flagged was that we did have a fairly significant favorable out-of-period in Q1 of last year.

And so, you know, certainly there's always a possibility that you could get a repeat of something like that that continues to provide a tailwind. But where we sit today, we just feel like that is going to make it a more difficult comp as a quarter. And then, obviously, we're still ramping in some of the other areas that Mark highlighted during the call.

Bill Bonello (Senior Research Analyst)

Okay. So, I mean, in terms of if the year is getting off to sort of how you hoped it would, I mean, the comp was always there. So just, you know, just curious how you'd characterize how things are going relative to your expectations?

Paul Diaz (President and CEO)

Yeah. We reiterated our full year guide, so nothing has changed in that respect. And as we said, we have been expecting a ramp that would accelerate throughout the year.

Nothing has changed from when we gave initial guidance in our views of the year or, quite frankly, the seasonality that we typically see in the quarter. You know, you have co-pays and deductibles. If you look back over the last couple of years, Bill, you know, as we talked about earlier on the call, you typically have Q1 and Q3 seasonality.

Bill Bonello (Senior Research Analyst)

Yeah. I get that. And obviously, nobody brought their consensus numbers down after your guidance. And so that's part of the disconnect there.

Paul Diaz (President and CEO)

The fact that my past CEOs have not updated their consensus numbers is a little bit of a challenge, but yeah, we've sort of scratched our heads about that.

Bill Bonello (Senior Research Analyst)

Try initiating into that.

Operator (participant)

In one moment.

Paul Diaz (President and CEO)

Any of that.

Question?

Thank you.

Operator (participant)

Our next question will be coming from Puneet Souda of Leerink Partners. Your line is open.

Puneet Souda (Senior Managing Director)

Hey, Sam. Yeah. Thanks for taking my question. And congrats, Sam and team and Paul. Great working with you here. You know, thanks. So listen, so my question is really, you know, looking forward, just, you know, diagnostics has been relatively spared so far. Fingers crossed, just given all of the concerns out there.

But just, and questions out there, but just can you elaborate a little bit on the Medicaid exposure? And I'm just trying to understand, you know, how much of a risk would that be if, you know, new administration pursues some Medicaid spending cuts?

Paul Diaz (President and CEO)

Yeah. If you think about Medicaid spending cuts as a consequence of block grants or anything, and where our Medicaid reimbursement comes from, it's mainly going to be in prenatal, and that is not historically where, and I've been on the other end of Medicaid cuts in many other sectors, not where state legislatures go, so you know, look, there's a lot of questions in terms of policy right now, but when we look at the distribution of our revenues in terms of Medicare, commercial, and Medicaid, and where in our products the Medicaid revenue falls, we don't think we have a lot of exposure to Medicaid block grants or some other changes in Medicaid reimbursement.

Puneet Souda (Senior Managing Director)

Got it. And then maybe first, Sam, I mean, just looking at the portfolio, can you maybe just elaborate on how are you prioritizing investments? And again, you know, when we're thinking about, you know, the potential opportunity, there's ACOG and for NIPT, other things that could potentially be tailwinds despite the headwinds that you're seeing in the marketplace. So maybe just elaborate what are some focus areas for you investment-wise? Thank you.

Matt Scalo (SVP of Investor Relations)

Yeah. Thank you, Puneet. That's a great question. And as I mentioned, at this point, you know, I feel privileged that I've been an important part along with Mark and Paul and Scott and others of developing our strategy and areas of focus, right? So, you know, in the near term, at least, you know, there is no intention of changing our strategy or focus. You're right.

When you talk about, "We are excited," you know, we've already developed our expanded carrier screening Foresight Universal Plus product. So we're ready to catch the wave, if you will, when ACOG guidelines are updated. That's exciting for us. And, you know, oncology remains another, you know, probably at the heart of the company still, a great opportunity to build on the cornerstones that we have. And it's not just MyRisk. It's, you know, MyChoice.

We are the HRD gold standard. And we're, you know, looking at other opportunities to take HRD broader into the market. We announced with Illumina, I think, a few months ago how it'll get integrated into their TSO kits as well. But really, it's serving the continuum of cancer care. I'll go back to that, right? Really filling out those gold standard positions with new offerings, which allow us to look at therapy selection with Precise Tumor to build on that, to get a liquid solution for therapy selection to market in 2026 as well.

And of course, you know, there continues to be a lot of real engagement and work on MRD. Again, our first indication that we're going to bring a product to market is going to be breast cancer. And, you know, we have nearly 20 different clinical studies in MRD that are underway.

You know, a total of, you know, more than 4,000 patients that either are or are in the process of being enrolled. Since you look at multiple data points in the journey of a patient, you know, looking at remission and relapse, you know, we're talking at over 30,000 data points. The focus there, and then the opportunity again, is really about, you know, the continuum of cancer care.

The partnership like that we announced with PATHOMIQ, which we're very excited about, complements what we have to give us a solution where, honestly, we were not participating already, right? Excuse me. We were not participating today in post-radical prostatectomy. We're going to have a solution there by the end of 2025 with our partnership. Very excited about that. Just kind of a foreshadowing, I think I mentioned it in my prepared remarks.

We understand that along with the great organic work that we do, that there's opportunities to get to market faster with select deep partnerships. So PATHOMIQ is a great example, but there will be more to come that allows us to accelerate the path that Myriad has been on organically.

Operator (participant)

One moment for our next question. Our next question will be coming from Ben Mee of Stephens. Your line is open.

Ben Mee (Research Associate)

Hi. Thanks for taking the question. This is Ben on for Mason. So I just want to start with the launch of Prequel at eight weeks there. I was hoping you'd be able to provide some commentary sort of on what you're hearing from the docs there, just really how that early adoption and market reception has been?

Matt Scalo (SVP of Investor Relations)

Yeah. Let me just frame it by. We launched it in November of last year, so we're still in early innings, but as I called out on the call, one of the keys within that space is that first OB visit is typically at eight weeks, and so historically, when you've got a 10-week test or you've got a 12-week test, that kind of disrupts workflows. It's not the best for the patient. It certainly isn't the best for the provider, so we've seen a lot of excitement about it, and it is something very unique because of our amplified technology.

So Prequel was always sort of one of the best tests out there, so now that it is at eight weeks, we're seeing a lot of acceptance, and you will hear more from us in the upcoming quarters. It's just still a little early for us to really comment and get into more details.

Ben Mee (Research Associate)

Okay. Got it. Thank you. And I believe you've pointed to sort of in 2025, double-digit growth in hereditary cancer testing volumes and have guided stable ASPs there. One, can you confirm this? And then with some of the initiatives that you have.

Paul Diaz (President and CEO)

I don't think we've guided to—you're breaking up. Sorry. I mean, we haven't guided to specific volume numbers. Scott has talked about, you know, stable ASPs and hopefully continued contribution there, you know, a couple of percentage points if we're continuing to execute. But we don't guide on specific volumes for any products.

Ben Mee (Research Associate)

Got it. Thank you.

Operator (participant)

And one moment for our next question. Our next question will be coming from Tycho Peterson of Jefferies. Your line is open. Again, Tycho. Tycho, your line is open.

Tycho Peterson (Managing Director)

Yeah. Thanks for taking the follow-up. Just a question on the LRP. The language here is changing a little bit. You're going from 12% to double-digit revenue growth. Can you maybe comment on that?

Paul Diaz (President and CEO)

We took a $45 million run rate hit for United. So that kind of, you know, knocked us back a little bit. So, and GeneSight has been a big contributor to our growth, 23% this past year. So, you know, we still have a long-term growth objective of 12%, but we're thinking in intermediate term, getting back to double-digit in 2025 and growing from there, you know, X.

Tycho Peterson (Managing Director)

Yeah. I was commenting specifically on the 2026 and beyond guidance that you have applied.

Paul Diaz (President and CEO)

Well, again, we'll be launching new products in 2026. But you are correct. We have, because of the contribution of GeneSight and because it'll be early in the launches of FirstGene and Precise MRD, you know, we have modified that to double-digit, call it 10% as opposed to 12%, obviously with our expectation that we can get back there quickly. But we were certainly on that path to that and beyond, you know, before we sustained the United piece.

And I just want to underscore that we continue to work with United on what we think was an error in their policymaking process here. And as Mark talked about, we'll continue to submit clinical evidence and engage with them.

Hopefully, certainly by the end of the year when they revisit their policy, we'll have submitted, you know, two or three different studies that underscore, you know, the value proposition of GeneSight and, quite frankly, get at a couple of the points that people have criticized vis-à-vis the prime study and other things, so.

Tycho Peterson (Managing Director)

Thanks.

Paul Diaz (President and CEO)

Thank you.

Operator (participant)

I would now like to turn the conference back to Matt for closing remarks.

Matt Scalo (SVP of Investor Relations)

Okay. Thanks, Latonya. This concludes our earnings call. A replay will be available via webcast on our website for one week. Thank you again for joining us and have a good afternoon.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.