To the Mira Aida Genetics Accusation of Counsyl Conference Call. During the presentation, all participants will be in a listen only mode. Afterwards, we'll As a reminder, this conference is being recorded on Tuesday, May 29, 2018. I would now like to turn the conference over to Scott Gleason, VP, Investor Relations. Please go ahead, sir.
Thanks, Tara, and good morning. We're pleased to host a special conference call today to discuss our acquisition of Counsyl that we announced yesterday. My name is Scott Gleason. I'm the VP of Investor Relations. Joining me on the call today will be Mark Capone, our President and Chief Executive Officer and Brian Riggsby, our Chief Financial Officer.
This call can be heard live via webcast@myriad.com. The call is being recorded and will be archived in the Investors section of our website. In addition, there is a slide presentation pertaining today's call on the Investors section of our website and which was filed this morning on 8 ks. Please note that some of the information presented today may contain projections or other forward looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from these expectations for a variety of reasons.
We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual report on Form 10 ks, its quarterly reports on Form 10 Q and its current reports on Form 8 ks. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward looking statements. With that, I'm now pleased to turn the call over to Mark.
Thanks, Scott. Good morning and thank you for joining the call today. I am excited to announce that Myriad has signed a definitive agreement to acquire Counsyl Inc, our largest acquisition as a company to date. This acquisition brings with it 2 best in class products in the reproductive testing market, which is one of the fastest growing areas in diagnostic testing. Our previous acquisitions of Crescendo and Assurex were bolt on acquisitions to build out our strategic commercial channels consistent with the 4 and 6 strategy.
Having established these 6 commercial channels, future acquisitions will be tuck in acquisitions designed to leverage these investments. The acquisition of Counsyl is consistent with this strategy and allows Myriad to leverage our substantial infrastructure in the women's health channel to create the premier women's health genetic testing company in the world. We will acquire Counsyl for $375,000,000 with a combination of cash and up to 3,000,000 shares of Myriad common stock. The Counsyl team has done a remarkable job driving substantial growth since launching its first test in 2,009. On a trailing 12 month basis, Counsyl generated over $134,000,000 in revenue and delivered 280,000 test results to patients.
Brian will go into more details on Counsyl's financials at the end of the call. All of our acquisitions must meet the strategic criteria we have established for an attractive asset. These criteria include assets that are in large markets that fit our 4 and 6 strategy, have material revenue with the opportunity for double digit growth and have clear line of sight to profitability. This acquisition fits all of those criteria. 1st, the reproductive health market is exceptionally large with the potential for 8,000,000 tests per year.
It is currently only 25% penetrated and it is rapidly growing with a 5 year CAGR of greater than 15%. 2nd, this acquisition is a clear fit for our 4 and 6 strategy and adds world class tests to our existing women's health channel. 3rd, these tests are broadly reimbursed today. So unlike most of our groundbreaking diagnostics, where we are developing a new market, we already have reimbursement coverage established. Also, there are opportunities for additional reimbursement, which could materially increase average selling price and expand indications for use.
4th, there are significant opportunities for revenue synergies because the number of direct sales representatives selling Counsyl's products will triple with the combined companies. Finally, we see a meaningful opportunity to reduce costs and increase strategic capabilities by combining the enterprise functions of the 2 organizations. I would now like to discuss each of these strategic benefits in more detail. First, I would like to discuss our growth outlook for the reproductive testing market over the next 5 years, beginning with the market growth drivers. Counsyl currently offers 3 products in the women's health market, including foresight, an expanded carrier screening test Prelude, a non invasive prenatal screening test and Reliant, a hereditary cancer test.
Counsyl has been growing rapidly with a 22% revenue CAGR over the last 3 Myriad fiscal years. In Myriad's fiscal year 2018, Counsyl should perform almost 300,000 tests. The largest component of their business is their market leading Foresight carrier screening test at 64% of revenue, followed by Prelude at 28 percent of revenue and Reliant at 8% of revenue. The expanded carrier screening market is exceptionally large with approximately 4,200,000 female prenatal patients in the U. S.
Every year. Carrier screening testing is currently performed on screening, the majority is for limited carrier screening, which only includes cystic fibrosis, spinal muscular atrophy and Fragile X. Consequently, growth opportunities include both deeper penetration and increased utilization of expanded carrier screening. Additionally, partner testing is more frequently being offered to expect in fathers and increasingly many couples choose to get screened prior to conception. In the non invasive prenatal screening market, the market is defined the number of pregnancies that occur in the U.
S. Every year. Non invasive prenatal screening has been growing rapidly and is increasingly used beyond the 20% of pregnant women with high risk pregnancies and into the average risk population. In aggregate, this market is only about 25% penetrated today. When evaluating growth dynamics, we estimate that the carrier screening market has increased from approximately 500,000 tests in fiscal year 2015 to approximately 900,000 tests in fiscal year 2018, representing a 16% compound annual growth rate.
Going forward, we believe this business will grow to approximately 1,500,000 tests by fiscal year 2023, representing an 11% compound annual growth rate. On the non invasive prenatal screening side, since 2015, the volume of testing has increased from approximately 900,000 tests to 1,300,000 tests, representing a 13% compound annual growth rate. Looking forward, we believe over the next 5 years, the testing volume for non invasive prenatal screening could increase to approximately 2,000,000 tests, representing a 9% compound annual growth rate. In aggregate, we believe testing will grow at a low double digit growth rate to approximately 3,500,000 tests by 2023, representing a U. S.
Market of greater than $1,500,000,000 annually. Next, I would like to talk about how this acquisition transforms Myriad into a comprehensive women's health genetic service provider. First, let me discuss strategic fit within our 4 in 6 strategy. To recognize the strategic opportunity provided by this acquisition, Counsyl will be merged with the Myriad Preventive Care business unit into a new business unit called Myriad Women's Health. This business unit will now focus solely on OBGYNs and reproductive medicine healthcare providers.
It will be our largest business unit with revenues in excess of $400,000,000 based on fiscal year 2018 projections. One tangible benefit of this transition transaction is that it transforms the company into a provider of a comprehensive suite of genetic testing solutions for OBGYNs. With the addition of Foresight and Prelude, Myriad now has a complete portfolio of the major genetic tests ordered by OBGYNs and reproductive specialists. Notably, there are almost 10x the number of carrier screening and NIPS tests performed in this channel today compared to hereditary cancer. In aggregate, we believe these three genetic tests represent an annual market opportunity in the women's health channel of greater than $5,000,000,000 per year.
Now I would like to discuss Counsyl's market leading foresight carrier screening. Counsel was the pioneer in providing expanded carrier screening for prospective parents. The Foresight test screens patients for over 175 recessive genetic disorders to assess the potential risk of genetic disease in their offspring. This is a once in a lifetime test that can either be performed prior to or during pregnancy. We estimate the United States annual market potential for this test is approximately 4,200,000 tests per year and in our fiscal year 2018, we believe approximately 900,000 carrier screening tests will be performed in the United States.
Counsyl is the market leader with approximately a 20% market share. Traditionally, most patients were screened for cystic fibrosis, spinal muscular atrophy and Fragile X. However, expanded carrier screening has gained significant momentum given the additional clinical clinically actionable information provided to patients and physicians. We believe this trend will continue to gain momentum with ACOG supporting expanded carrier screening in their calendar year 2017 guidelines. Next, I would like to discuss Prelude, Counsyl's non invasive prenatal screening test.
Prelude test for trisomies including Down syndrome, sex chromosome disorders and microdeletions in a fetus using a maternal blood sample. Non invasive prenatal screening has become increasingly popular in the United States over the last decade, replacing less accurate screening modalities such as serum blood based tests and nuchotranslucency testing. NIPS testing has lower false positive and false negative rates, which in turn decreases the number of amniocentesis and chorionic villus sampling procedures that are expensive, invasive and carry up to a 2% risk of miscarriage. Prelude entered this market in 2016 and has already gained an estimated 8% market share. Next, I would like to provide an overview of Counsyl's current reimbursement and the prospects for future increases in average selling price.
Over 90% of Counsyl's revenue today comes from commercial insurance with the remaining portion largely from Medicaid. However, approximately half of births in United States are covered by Medicaid. So there is significant potential to expand reimbursement in this segment of the market. Counsyl has strong relationships and is in network with 90% of commercial payers in the country. We see the addition of these portfolio tests as a means to further strengthen our relationships with commercial insurers by offering even a broader portfolio of diagnostic products.
Both non invasive prenatal screening and expanded carrier screening are strongly supported by professional guidelines from the American College of Gynecology, the Society For Maternal Fetal Medicine and several additional professional organizations. Language in these guidelines has increasingly gravitated towards non invasive prenatal screening and expanded carrier screening becoming the standard of care tests recommended for patients. It is possible that the American College of Gynecology could strengthen their endorsement of non invasive prenatal screening this year in their 2018 professional guidelines. There are several potential areas where reimbursement could be expanded for both foresight and prelude in the future. With foresight, it is widely anticipated that the new expanded carrier screening code will be priced by Medicare at a rate that is higher than what is received on average by commercial insurers for the test today.
If payers broadly update their guidelines to cover expanded carrier screening, this code could lead to material increases in the average selling price for foresight. With Prelude, we see 3 important drivers of potential reimbursement expansion. First, while average risk women are only reimbursed by approximately 40% of commercial payers, this number has been steadily increasing. Furthermore, reimbursement by Medicaid states has increased meaningfully and now over half of Medicare lives have coverage for non invasive prenatal screening. We expect this percentage to continue to increase in the future.
Finally, more sensitive technologies have been developed to detect microdeletions, and this procedure has a new category 1 CPT code that is priced at $7.59 on the clinical laboratory fee schedule and is increasingly being reimbursed by commercial payers. Next, I would like to discuss the strong potential for revenue synergies associated with this transaction. Counsyl currently has a field sales team of approximately 80 sales representatives, while Myriad's preventive care sales force is 225 individuals. The combined companies will be able to triple our reach into the women's health market for reproductive testing. In addition, the combination of these sales forces will be more than double the size of our next largest competitor.
We believe this could lead to significant revenue synergies since every 5% gain in market share will translate to approximately $50,000,000 in incremental revenue and $25,000,000 in incremental EBITDA. Finally, I would like to discuss the potential for cost and capability synergies with this transaction given the ability to leverage enterprise wide functions. The integration team will be the same team which oversaw the Assurex Health acquisition and will be led by our CFO, Brian Rigsby. The integration for Assurex exceeded all expectations since the company was losing $9,000,000 per quarter at the time of acquisition, yet achieved breakeven in 9 months, which was 6 months ahead of our original schedule. Building upon that success, we see even more synergy opportunities in this acquisition.
In addition, there is the opportunity to leverage enterprise wide myriad functions such as research and development and payer markets. Furthermore, we anticipate operational efficiencies and cost synergies by standardizing informatics and IT platforms across the organizations, including our enterprise wide transition to salesforce.com. Finally, from a production standpoint, we see the opportunity to leverage supplier purchasing power given the significant scale of the combined companies. Beyond cost synergies, we see opportunities to leverage unique strategic capabilities built by Counsyl. For example, Counsyl has invested heavily in simplifying the workflow for testing that can be applied across the entire Myriad enterprise.
This includes an innovative cell phone based patient cost estimator to provide transparency on patient out of pocket costs and digital integration through electronic ordering, electronic reporting and electronic medical record connections. As another example, the addition of the Counsyl test into the Myriad portfolio provides opportunities for our payer markets team to have broader portfolio contracting discussions with commercial payers. In summary, we believe the Counsyl acquisition will be transformative for our women's health business unit and provide a significant revenue and profitability growth engine for the company in the coming years. The acquisition clearly establishes Myriad as the global leader in women's health genetics and provides us with a comprehensive suite of products for women's healthcare providers in the high growth reproductive testing market. Counsyl's products are already broadly reimbursed with the potential for meaningful increases in average selling prices in the future.
Also, this acquisition will generate significant revenue and cost synergies, which will drive additional earnings growth. We are extremely excited to welcome the Counsyl team into our organization. With that, I will turn the call over to Brian to provide additional financial details on the transaction.
Thanks, Mark. I am pleased to provide you some additional financial information on the acquisition of Counsyl. As Mark mentioned, this transaction is valued at $375,000,000 in cash, with shareholders having the right to receive up to 25% of that consideration in Myriad common stock based on a trailing 30 day average share price. The number of shares delivered to former council shareholders will not exceed 3,000,000 shares. At the end of the fiscal Q3, Myriad had cash and cash equivalents of $209,000,000 231,000,000 dollars in availability on its revolving credit facility.
Consistent with our stated capital deployment priorities, following we plan to use our free cash flow to pay down debt, creating capacity for potential future acquisitions or share repurchases. We are anticipating the acquisition will close in the fiscal Q1 of 2019, and we will provide financial guidance for fiscal year 2019, including the Counsyl acquisition on our 4th quarter earnings call in August. I would now like to provide some additional color on how will impact our fiscal year 2019 guidance. Due to territory realignments with the sales teams as we combine the 2 companies, our financial guidance will assume short term revenue disruption. Given the early stages of the transaction, our guidance will not assume any revenue synergies in the 1st year.
And as with all of our products, we will assume only known reimbursement for foresight and Prelude. Obviously, these assumptions could prove to be conservative. It will provide upside to our fiscal 2019 guidance. Assuming no revenue synergies, we anticipate the acquisition will be neutral to fiscal year 2019 earnings and more than 0 point $0.20 accretive in fiscal year 2020. Over the trailing 12 months through the end of the March quarter, Counsyl generated $134,000,000 in revenue.
Current gross margins for the business are in the high 50% range, and we believe long term the operating margins for the women's health business unit will be consistent with our overall portfolio. We believe this transaction will have an attractive long term ROIC profile and will create substantial value for shareholders. Importantly, the addition of these products will aid in the long term achievement of our strategic goal, especially when combined with the expected inflection and reimbursement for GeneSight, Prolaris, Mypath Melanoma and Vectra DA. With that, I would now like to turn the call back over to Scott for Q and A.
Thanks, Brian. We're now ready to begin our Q and A session. In order to ensure broad participation in today's Q and A session, we're asking participants to please ask only one question and one follow-up. Operator, we're now ready for the Q and A portion of the
call. Thank you. And our first question comes from the line of Amanda Murphy from William Blair. Please proceed.
Hi, good morning. I just had a quick one on, I guess, just kind of financing choice. So obviously, you talked about using some equity. Maybe talk a little bit about that, given the strength of the balance sheet. And then also, just kind of talk about the timing of the acquisition.
Obviously, NIPT has been getting traction for some time. So just curious kind of the why now question. Was it opportunistic? Or was it something that's been in the works for a while? Thank you.
Thanks, Amanda. Let me talk about timing and then I'll have Brian talk about the financing discussions. From a timing perspective, one of the things we noted as we look to acquire assets is to ensure that we see line of sight for those assets to be accretive to earnings. We know this is something our shareholders appreciate. We certainly did that in the Assurex acquisition.
I think that was an excellent example where in the space of 9 months, we went from a run rate of close to $40,000,000 in losses to profitability. Thanks to the relative to a short period of time are going to be in a position to be accretive to earnings for the company. Given the outstanding growth profile we saw in Counsyl and the unrealized adoption at this point, we see a similar path where we can quickly turn this asset into something that is accretive to earnings. And so timing was really appropriate at this point to jump in. And they've made significant progress over the last couple of years.
So we've been watching this field for some time. And given the short path to accretion, we thought now was a perfect opportunity to intervene. You to talk about financing?
Sure. Thanks, Amanda. Just a couple of notes on the financing. With respect to the mix of cash via debt as well as equity, I think the important thing to note there is that, when you look at where others are currently trading in the market and multiples that would be required in order to get to a payout there. We're transacting here at a level that's pretty significantly below that.
And I think the reason for that is the Counsyl shareholders placed a significant value as we do on the value of our shares. And so when you do the math around where the intrinsic value of the shares is, it will be significantly higher than where we're trading today. So I think it was really just a function of the combination of that lower transaction multiple along with the value that the Council shareholders place on Myriad and the prospects for the combination.
Okay, got it. And then just quick one on last one on the new CPT code that's in the works for the extended carrier screening. Can you just talk about that a little bit? So obviously, that's an opportunity. But just in terms of I suppose, is there any risk around that in terms of how they might price that and what's being billed today?
And I'm assuming that the expanded carrier screening part is not getting reimbursed, is that what you said? And that's the opportunity going forward in terms of private payers? Sorry, if I missed that point. Thanks.
No problem, Amanda. So right now, there are the codes generally for SMA and cystic fibrosis are well established and broadly reimbursed from an NIPS standpoint. And certainly, the vast majority of the 175 genes that are part of the expanded carrier screening are not at this point. This code will basically handle any test with more than 15 different genes that are being analyzed as part of the NIPS test. And so that will get priced for effective, we believe, for January calendar year 2019.
Obviously, the Obviously, the expectation is when you start to analyze a significant number of genes beyond the few that are currently being reimbursed that that reimbursement rate will be higher than what today's rate is for those individual genes. And so we'll have to see what that rate is. But to your point, ultimately, if that reimbursement is higher than the individual codes that are reimbursed today, and it becomes standard of care, which is the trend that it appears will be the case, then you would look at an increase in ASP once those two things happen. The code is established, it's priced and it's in guidelines, you would see a lift in ASP based on that. So we're not speculating on what that new price would be, but certainly it would be expected to be in excess of the current codes that are reimbursed today.
Amanda, right now, the Ashkenazi Jewish panel, which is a similar which has less markers in it, that test is reimbursed by Medicare around $2,000 or so.
Got it. Okay. Thanks very much.
Thank you. And our next question comes from the line of Doug Schenkel with Cowen and Company. Please proceed.
Hi, there. This is Adam Wisshaus on for Doug. Thanks for taking my questions. On the surface, your combined women's health sales force of over 300 reps would further your market lead in this space. How much of your internal volume growth forecast for Counsyl is due to taking market share versus just overall market growth rates?
Thank you.
Yes. Thanks, Adam. As Brian mentioned, I think there's 2 answers to that. I think the first is what are we going to assume when we provide guidance in August. Obviously, that's in a few months from now and the transaction is in its early days and still needs to close.
And so from a guidance perspective, we will not be assuming that there are any revenue synergies by bringing the combined teams together. We just think that's prudent given that we will not have had any data upon which to base any other guide. And so at this point, for guidance, we will assume no revenue synergies. Now, certainly my expectation and the expectation of both teams is that when you triple the size of the sales force and you are more than double the size of your leading competitor that we would fully expect that to lead to in revenue as those teams begin to work together. And that growth then will come from 2 places.
1st, the market is under penetrated. So tripling the size of the voice out there will inherently lead to additional penetration in a market that's under penetrated. But as you mentioned, it also gives us the opportunity to increase our share. And so the combination between market growth and increase in share is obviously the revenue synergies that we see as possible in the future as these two teams come together.
Okay. Maybe for a follow-up, could you maybe provide the Counsyl's cross sell rate between its carrier testing and NIPT products? And are there things that Myriad can bring to the table that could improve that cross selling rate both with in Counsyl and between the Counsyl and Myriad products? Thank you.
Yes, there certainly is and they track that actually quite well, the cross sell opportunities and that's been increasing over time. So we certainly see significant numbers of providers now that order both tests. They actually have providers that order all three tests as well. So I think the trajectory for the 2 test cross sell has been on a very nice trajectory. Obviously, as we bring Myriad into this with the hereditary cancer side, we've got an opportunity to significantly change that trajectory so that we can actually increase the number of hereditary and vice versa for the number of hereditary tests that the preventive care team gets, there's the opportunity to now bring in some of the reproductive tests.
And so on both sides, we think there's opportunities to begin to increase the utilization by each provider of all three tests. So that again is a revenue synergy that we haven't actually won't factor into guidance, but we would fully expect those trends to continue. What we have seen and to Amanda's initial question, one of the reasons why we think it's important to move forward with this at this point, increasingly we see women's health providers asking us to be a one stop shop for all of their genetic testing. It just makes their lives easier to go to one trusted source. And so we think we're going to be that premier company that can provide that one stop shopping for these providers.
Okay, great.
Thank you. And our next question comes from the line of Bill Quirk with Piper Jaffray. Please proceed.
Great. Thanks. Good morning and congratulations on the deal announcement. The First question is just thinking about, I guess, somewhat building off of Amanda's question on carrier screening, but can you help us think about what sort of incremental reimbursement assumptions you are targeting both for NIPT as well as carrier screening to hit the 2020 profitability target?
Yes. Thanks, Bill. I think as Brian mentioned in his script, we see the operating profile at today's reimbursement consistent with our company goals. And so as we think about this transaction, we view any incremental ASP as really upside to that. So we didn't really build all of this with the expectation of increased reimbursement, because we want to make sure that the platform upon which we're building this that the current status alone could meet some of those goals.
And so it's really not something we've built in, but we do think there's significant opportunities for increased ASP for all the reasons we just mentioned. Certainly NIPS has a large number of opportunities as does carrier screening.
Okay. That's very helpful. Thank you. And then secondly on microdeletions, presumably, is this a pipeline product of theirs? And if so, when would you expect to see them introduce that to the market as well?
Thanks, guys.
Yes. They have the capability of doing microdeletions. And so to the point that we mentioned that increasingly that's becoming standard of care. So at the ClinLab fee scheduled pricing is $7.59 for the code. As that becomes standard of care, we'll be able to introduce that into our coding and billing and that to us is another significant opportunity for increased ASP.
Got it. Thank you.
Thank you. And our next question comes from the line of Jack Meehan from Barclays. Please proceed.
Thanks and good morning. I was hoping, could you elaborate on the plans for the sales force realignment you mentioned? Is that all in the women's health channel? And would you expect that to impact growth in the legacy Hereditary business or the legacy Counsyl business?
Yes. Thanks, Jack. As we mentioned, we've got 2 different teams. We've got an 80 person team at Counsyl. We've got 2 25 representatives in the historical preventive care market.
While there is some overlap in physician customers, there are also a large number of customers that are called on uniquely by each of those sales forces. So we'll have to take some time to see exactly how best to map over all of these territories, and that will be part of Brian's work from an integration perspective to see what's the best way to serve these customers. But I think the opportunities exist both ways. 1st, for the 225 people that are currently calling on OBGYNs only for hereditary cancer, we can immediately introduce the prenatal testing for those 225. And in addition, for the Counsyl team, they're going to have an opportunity now to get access to Myriad's hereditary cancer suite of products, including Risk Score, which of course comes with a myRisk test.
And that's particularly important for that audience because these are all unaffected women that are interested in understanding their lifetime risks. And with riskScore, 100% of those women will now get an answer to that question. So we think both teams now will have an opportunity to do some cross selling of each other's products. And again, significant opportunity for revenue synergies that we won't necessarily put in guidance, but we'll look to the future to provide.
Thanks, Mark. And then just want to clarify on the equity issuance. Is the only equity being considered to be up to 3,000,000 shares to counsel? Or would you consider funding the deal with additional equity? And just if so, what do you think is the appropriate mix versus cash in the revolver?
Yes, Jack. It's up to 3
Yes, Jack. It's up to 3,000,000 shares. So there's nothing beyond that and we wouldn't consider going beyond that level. And we believe we'll have enough capacity within our current revolver to fund the transaction.
Thanks for the clarification.
Thank you. And our next question comes from the line of Patrick Donnelly from Goldman Sachs. Please proceed.
Great, thanks. Maybe just one on the NIPT market, obviously a very competitive market. I know you noted the company holds about 8% share. Can you just talk through your view of the market? What differentiates your product?
Where you see that share going? And then also just how you're feeling about pricing in that market going forward?
Yes. Thanks, Patrick. Keep in mind that Counsyl only entered that market 2 years ago. So to go from nothing to 8% market share over a 2 year period, they've actually done a really remarkable job. And I think that's because, again, what they bring is an integrated solution to these customers.
One of the things they are uniquely positioned to provide is because of the tech based approach they've used from the founding of the company is the integrated work flow solution. That I think is what's really led to the fact that physician can easily order both these tests. It works into their current workflow and processes incredibly easily. And that's what's really provided that type of adoption. So from our perspective, that's a unique capability that we can use across the entire portfolio.
Now we bring in the world's leading hereditary cancer tests into that same type of workflow and that gives us an opportunity to penetrate each of those markets. So I think we're well positioned from a competitive standpoint. Technologically, the team has done an excellent job. The quality of the results they give, they have the lowest number of inconclusive answers, which is particularly important for that patient group relative to their competitors. And that has been a very important differentiator in the market that has also attributed to that increase in share.
So we think they have some technical and technology capabilities that we'll leverage as we continue in the future. From a pricing standpoint, as I noted, despite all the upsides in pricing that could result in this market, as we looked at the evaluation of the transaction, we did not assume any of that. And so to the extent that those materialize, that actually would be upside to what we've contemplate as we calculated the value of the transaction.
Great. Thanks. And maybe one for Brian on the financial side. High-50s gross margin, obviously, well below what your corporate average is. So wondering when you think about the cost synergies and the financials going forward, how much expansion potential do you see on the gross margin side just moving maybe some of these tests on to the Myriad platform?
You guys obviously have shown the ability to be pretty efficient with the COGS side. So just wondering what your thoughts are there?
Yes. So I think the primary thing I would point to would just be greater scale and ability to negotiate lower pricing with our vendors. And so that would probably be the initial thing, just given our size in the market. But I think there's even with our core products, we're always looking for opportunities in order to increase our margin profile. I think the other thing too that would be important there would be any upside relative to reimbursement would obviously have an impact on the gross margin line as a percentage.
Thank you. And our next question comes from the line of Sanjay Namm from BTIG. Please proceed.
Hi, thanks for taking the questions. Just a couple of quick ones. So Mark, if you look at Counsyl's historical growth, would you be able to comment on what was it largely due to volume growth or was there some contribution from ASP growth as well?
Thanks, Sung Ji. Their growth was really fueled by volume growth, not ASP. So I think that's a measure of the effectiveness their sales team has had as well as the technology solutions they brought to the market. So it's really been fueled by volume.
Okay. And then just quickly on the patient centric software you talked about, just curious as to kind of what the near term impact could be? And then also how long do you think how quickly can you adapt that throughout other Myriad products? Thank you.
Yes. Thanks, Sung Ji. I think we're in the early stages of looking at how the integration might occur. So it's probably a little too early to speculate on exactly how we might do that together. Just an underscore that any of those synergies are things that we won't factor into guidance.
And as those materialize, those would end up being upsides. We do see significant opportunities. I've been very impressed at how well this team has developed software. And we do certainly see across our entire portfolio of 11 products, the opportunity to begin to use that technology. Exactly how we do that and when and the impact or things will probably leave for another day.
But without question, we're going to take advantage of their capabilities.
Thank you. And our next question comes from the line of Tycho Peterson from JPMorgan. Please proceed.
Hey, thanks. A couple of follow ups. On Prelude, Mark, can you talk on what you think it might take to get the remaining payers on board for average risk reimbursement? And on the pricing question, I didn't hear if you answered where you think pricing is going for Prelude?
Yes. Thanks, Tycho. Yes, I
think the move to average risk is really going to be fueled from guidelines that come from ACOG. I think as we've always seen and as you know in the diagnostic industry in general, guidelines are particularly important for fueling expanded coverage. And so that's what we would expect. They've obviously noted ACOG has increasingly continues to occur, you're going to see that work its way into guidelines and see continues to occur, you're going to see that work its way into guidelines and see average risk reimbursed. So we have seen a lot of progress in the space.
We expect there will continue to be a lot of progress even within the next year. From a pricing standpoint, I think it the question really depends on the three drivers of pricing that we outlined and when you might see microdeletion coverage. I don't think we're prepared to speculate on when that might occur. But our expectation is that as they do, that could lead to increases in ASP.
Okay. And then, Counsyl had laid off their oncology sales force last year. Can you talk on that restructuring? And is that largely behind them or are there additional steps that are being taken there?
No. They I think they realized that penetrating the oncology space was a significant investment. And of course, that was all designed to try to sell hereditary cancer in that space. They came face to face with the Myriad team in that area. And I don't think the progress was what they had hoped.
And so as a result, they didn't see line of sight for that being a profitable business and are out of that business. I think everything from that perspective that they had made all the changes. So there's nothing more to do from the oncology space. From their perspective, they have been exclusively focused on women's health for the last year plus.
Okay. And then on the pipeline front, anything you're willing to talk about in terms of their own pipeline? I think in the past, Dave talked about liquid biopsy as have others and healthy exome panels. Is that something that is of interest to you guys?
At this point, we haven't really focused on things that are in their pipeline. This transaction was really all justified with current products and current pricing without upsides in potential pricing or revenue synergies for that matter. So that's the way we've looked at this transaction. We'll have an opportunity to sit down with them to explore some of the additional products they have in the pipeline and see how those might fit with our portfolio. But certainly, that was not one of the justifications for this transaction.
Okay. Thank you.
Thank you. And there are no further questions at this time. I'll turn the call back over to you gentlemen.
Thank you. This concludes our call. A replay will be available via webcast on our website for 1 week. Thank you again for joining us this morning.
Thank you. Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.