Get started. All right. Thank you, everyone. Welcome to the third day of the Wells Fargo Healthcare Conference. Apologize, I am losing my voice, getting a little sick, so bear with me. This is the end of the life science tools and diagnostics portion of the conference, and we are happy to have Myriad here, CEO Sam Raha, CFO Ben Wheeler. We will kick it off here, starting with Q2. Revenues were down 11%, ASPs down 9%. You had to reduce guidance. What changed most dramatically in the quarter, and what were the key takeaways for investors?
Yeah. First of all, Evan, thank you very much for having us. Pleasure to be here.
Of course.
Let me start with this. The two primary drivers, both that led to our Q2 performance as well as the guidance change, are a continued softness in our prenatal testing volume and average revenue per test there, as well as pressure on reimbursement for hereditary cancer testing. As we shared on our prior earnings call, we have activated and are actively working on a number of initiatives that address these challenges as well as I think will set up Myriad to be in a much stronger place. Let me just highlight some of these, and these are the things that really are some of the key takeaways for investors.
One, though we do it rigorously on a regular basis, we are taking a strategic view of our portfolio, both products as well as business segments, to really determine which parts of our product portfolio in the business we believe really fit in this next phase of Myriad going forward. What I can tell you is we feel like we're making good progress with this, and we hope to be able to share within the next couple of months actions that will significantly strengthen the financial position of Myriad going forward. We've also talked about an initiative called Project Ascend. It's an internal name. This is really about modernizing how we operate the company. It's about organizational as well as process optimization, all with the intention of how can we better serve customers, increase our win rate, while becoming more productive, more efficient, and scaling for the future.
We expect to share more on this also coming up probably on our next earnings call. Now, one of the bigger challenges that I mentioned that we faced in Q2 is our average revenue per test for hereditary cancer testing. So we have a number of initiatives here to address that. First one's related all the way from contracting to billing and collections, focused on the revenue cycle management. I think you'll probably have some more questions. Ben can get into that a little deeper later. We're also taking a mid to long-term view to be proactive with all our major payers and the things we can do from a policy approach there as well. Now, all that being said, the key takeaway for investors is that we understand the challenges. We're all over it. We're making good progress.
As well, the guidance that we've provided we think is adequately conservative. For example, we have not factored in any improvement in our average revenue per test in the second half. We haven't factored in any contribution from the additional salespeople that we've added, any of the new products, any of those things. Also, traditionally, if you look historically, I should say, over the last several years, more than 51, almost 52% of our revenue is in the second half of the year versus the first half. But what we've done in setting our guidance is really you can multiply the first half by two, and that's close to the midpoint of what we've said. So we believe we're adequately positioned there on the guide and all these other things and the progress we're already making and seeing, I'll say gives us pep in our step.
Great. That's super helpful. So during the quarter and on the call, you did talk about friction on the reimbursement front. Prior authorizations, medical record requests, and denials, and as you mentioned, that was particularly in hereditary cancer and prenatal testing. What was it about now? Why Q2, and what actions can you realistically improve realized reimbursement?
Ben?
Absolutely. From a timing standpoint, really if I were to opine on why Q2 is the time that we encountered additional revenue cycle management friction, I would be speaking on behalf of organizations that drove that friction, so it would just be a guess. What I will say is, as Sam mentioned, we identified the challenge, and we have deployed two initiatives that we have made very good progress over the last couple of months on. The first initiative we call the revenue cycle management optimization initiative. I think about that initiative as driving exceptional tactical execution as it relates to the RCM process, making sure that we are evaluating the people, the processes, the tools in order to remove friction from the process where we are billing payers and ultimately collecting and driving better yield on those collections. Again, we went to work very quickly.
This is an initiative where we have done a lot of work, and there is lots more work to do, but we are really pleased with the progress that we have seen. The second initiative is related to MyRisk reimbursement, and I view this more of a strategic initiative that will have medium and longer-term implications as we partner with payers, LBMs, other constituencies that will help us drive alignment between the way doctors are practicing medicine using technology and services or tools provided by laboratories like us that is ahead of where medical guidelines recommend use in some cases, and then also where medical policies from a payer standpoint are aligned. We have an opportunity to drive alignment across technology, medical policy, and medical guidelines, and this initiative is really focused on that.
Great. Yeah. You talked about these mitigation efforts. How much of this is self-help stuff inside your control versus really dependent on this handful of payers changing their behavior?
Yeah. There is a number of things that we can do to drive different outcomes. When you look at the revenue cycle management landscape, particularly for our industry, changes in payer behavior are something that happen all the time, and that is something that will continue to occur. What that means is we need to be positioned to identify those changes and pivot quickly so that we can eliminate that friction as quickly as possible and make sure that we collect on those tests that we are performing. There are absolutely things that we can do and we are actively working on. When I talk about evaluating people, process, tools, capabilities with that revenue cycle management optimization initiative, it is focused on addressing friction today, but it is building capabilities so that we can pivot to changes in the future as well.
Great. You talked about these, I think the three different mitigation efforts. One of those is to align medical policy with clinical practice. But you also said that the reimbursement pressure is not a result of changes in medical policy. Can you just help us understand that?
Yeah. Sure. To clarify, the specific pressures from a handful of payers that were the primary drivers of what we saw in Q2, they are not about medical policy. Medical policy is intact. However, we are talking about medical policy because with an eye to the future, core to what we are doing, both our mission and our financial future, is ensuring we stay within medical policy and how we can expand access into new medical policies or coverage for additional individuals. That takes time.
It takes a lot of effort and a lot of engagement. So we are just being proactive. This is more about the mid and longer-term opportunity to actually drive value.
Right. You did mention the guidance in your initial remarks, how first half, second half, no improvements in ASPs from Q2. So no contribution from recent product launches and sales force. So how would you contextualize the upside and downside scenarios from your most recent update to the guide?
Yeah. Let me start here, and then I'll hand to you, Ben. I'll just frame by saying, listen, we understand it's very important for us to earn back trust from investors. An important step for that is to be very prudent and thoughtful of the guide that we provide and really minimizing downside risk. That's what we've taken into account.
Sam's touched on a couple of these things that I'm going to double-click on, but just because of the implications or the way I think it's important to think about them as it relates to guidance, I'll provide some additional context. First off, historically, when you look at Myriad's revenue, the second half of the year is typically 52% of the year thereabout. If you look at our updated guidance and you take H1 and you multiply it by two, you're going to be a couple million dollars high of the midpoint. That alone lays the framework for being appropriately conservative when you think about seasonality or progression through the year. Sam also talked about the assumption around ASP as it relates to H2. We have assumed that the suppressed ASP that we experienced in Q2 persists.
I just shared details around various initiatives that we've been focused on driving different outcomes. We've been pleased with the progress. History suggests that when we identify opportunities to improve ASP because of a payer's change in behavior, we oftentimes are able to drive some change in the outcomes. So we've done good work, we've worked quickly, and we're pleased with the progress. The guidance assumes that we're not going to see benefit from that. From a volume standpoint, the assumption around adding additional headcount to our sales force is not factored in. We've talked about adding approximately 100 salespeople to our sales force in the first half of the year. It takes quarters for salespeople to be efficient and effective when you compare them to their peers. There's an assumption that there's no improvement or benefit from these incremental sales folks when we look at H2.
Those things give us additional confidence in the appropriate level of conservatism in that updated guide.
Got you. You're saying that the guide does not assume any revenue from these additional salespeople, or it's just that they're less efficient than-
I would frame it the latter.
Latter. Yeah.
It assumes that the level of efficiency that we saw in Q2 persists.
Great. Thanks.
Maybe moving to hereditary cancer. MyRisk continues to do well on the volume front. What is driving this momentum, and really how much more runway remains from the sales force, EMR integration, and just broader guidelines adoption?
Well, first of all, just acknowledging what you said, we have been pleased with the volume growth that we have been able to drive with MyRisk for several quarters in a row. There is a number of factors, which I will just enumerate here in a moment, which give us the confidence that there is a lot of runway to come to continue this really high single-digit, low double-digit for the duration. I will start with the fact that if you look across the total hereditary cancer market opportunity, it is $7 billion. $5 billion or so of that is in the unaffected part of the market, which is less than a third penetrated. So that is just a great setup for a market and opportunity that exists.
Specific to Myriad on the next one, we see the benefit and the differentiation related to some new products we put on the market, particularly as it relates to the unaffected side. We launched just earlier this year an updated polygenic risk score, we call it polygenic risk score, which helps individuals or patients and providers understand the level of risk of developing cancer over a 5 or a 10-year period. That is differentiated, that is having traction. Along with that, a decision we made and we enacted as of April 1, so we took what used to be a women's health sales team, and we bifurcated it. So now we have a dedicated sales organization calling on OBGYN and other docs related to unaffected. Focus drives results, and that is another reason for optimism.
We're also driving programs to further activate the market because it is still to be grown through. We've talked about breast cancer risk assessment programs. We have other activation campaigns we've done, for example, using a TV star from Netflix to drive awareness, and we've seen interest from that coming directly through marketing leads. I'll finally just add, this is on the affected side, but still overall for MyRisk. We also benefit when there's guideline changes or new guidelines that are added. Just in 2026, there's been a number of them, including now for anyone who has ovarian cancer, it is recommended that hereditary cancer testing is done to determine the course of care. Maybe even more significantly in terms of numbers for individuals that have both colorectal cancer and gastric cancer. Any age, any stage of cancer, now it's recommended. These are both new NCCN 2026.
These are the sort of drivers that we believe will continue to allow us to grow and have strong performance in hereditary cancer.
Great. Maybe moving to MRD. You've expanded into colorectal and renal, breast you submitted to MolDX. What are the early learnings from early access sites, and what kind of things are you doing ahead of the broader launch next year?
Just to restate for those that aren't as familiar with it, we launched what we called Alpha for breast cancer in the March timeframe. Middle of the year, we expanded colorectal and to renal cancer. To measure our success and also prepare us for a broader launch, there's a number of things we're measuring, including test utilization, customer experience, and our internal operational efficiency. I'll tell you in terms of the first one, we have seen that we've also been very intentional about how many sites we go to before we have MolDX and reimbursement to manage our financial profile, if you will. We're in more than a dozen sites. We have more than that in actual number of users. We've seen not only a growing number of actual orders, but we've seen many of these doctors now come back for different increasing number of patients.
I think that's a really good sign. In terms of customer experience, what has really been called out is the quality of our tests, which is a great thing. We've gotten some input, which we're using to improve other elements of ordering and the reporting, but this is exactly what you do in this phase before commercial launch. Internal operational efficiency-wise, we're pleased with the robustness of the assay. We have a very low failure rate, which is a differentiator overall internally and externally. We are also working on how do we become more efficient? How do we batch? How do we do other things in advance of the launch? I will tell you, we are on track.
We submitted to MolDX at the end of July, and our expectation we had shared at the beginning of this year remains that first half of 2027, we should get reimbursement for breast. We should also be submitting for colorectal and renal towards the end of this year or early next year.
Speaking of reimbursement, how are those discussions evolving across the different tumor types? What are the milestones, I think you touched on some of them,
Yeah
that investors should be focused on to track that progress?
Yeah. I will start by saying our primary focus in terms of reimbursement at this point has been Medicare. You start there. Though we are in earlier-stage discussions with private payers as well. Again, as I cited already, MolDX submission and ultimately approval is the important gating factor there. I will not repeat those timelines. We are making progress as we have intended. I will also share that along the way, important drivers which will help both in the reimbursement but in actual adoption, and I think also tied to getting into guidelines for us and as an industry, are more publications and papers. We have collaborations, and active studies in the teens. The number of programs we are doing across colorectal, renal, breast, ovarian, endometrial, with collaborators including MSK, MD Anderson Cancer Center, National Cancer Center Hospital East in Japan, and others.
We expect to have these updates on data coming out at important, like San Antonio Breast Cancer Symposium, ASCO GI in January, American Association for Cancer Research, the next American Society of Clinical Oncology, and so forth. Those are the publications and the dates that will support the MolDX timeline that I have just outlined.
Great. Early on you talked about Ascend. As you have gone through that process, realizing it is early stages, it sounds like you are attacking it very quickly. What are the largest opportunities you have found, and when should these benefits become more obvious to investors?
Yeah, let me start, and then Ben Wheeler, you can add anything you would like. Again, to recap, Ascend is a multifaceted initiative that really is intended to make us more productive, more efficient, and scalable. We are taking a view, this is a multi-year program, but we expect the initial benefits absolutely in 2027, but also there will be other actions that we take that will go into 2028. I also want to just be clear that we see benefits in two major buckets.
There is a cost-out related component of this, which is important, but there is also revenue synergy by doing things better. So for each amount of work that we do, there is more quanta of value that is generated. The areas that we are working on include all the way from how we run commercial to revenue cycle management to other factors. Ben Wheeler, what would you add?
Yeah. Only that similar to how I described the RCM optimization initiative, looking at people, process, tools, capabilities, that is the same way that we are thinking about different components of the Ascend initiative as well. Part of the value comes when you look at process streams across the organization, instead of focusing on optimizing commercial or optimizing RCM, but understan ding how they interact and how choices in one area have downstream impacts. We are keenly focused on making sure that we are taking a holistic view, again, to drive scalability across the organization through this initiative.
Great. Kind of related, you also talked about the review of the whole portfolio. As y ou are doing that, it sounds like there is an increased focus on cancer care. What criteria Oh my God, I am really losing my voice. What criteria will determine where to invest, partner, divest, or reduce spending?
Yeah, great question. Yes, you are absolutely right. As part of the instituting a regular review cadence, after I became CEO last year, the first most important decision was to declare that the cancer care continuum is the most important opportunity for Myriad going forward, and therefore our resources, our focus, and funding really have been disproportionately placed there. As we look forward, t he sort of questions that are the criteria that are helping us advance our work include what is our best way to maximize value for patients, for healthcare providers, and for investors? What are relationships that we have with customers that we can leverage more broadly across a broader suite of products? What are the capabilities and assets that we have that we believe will allow us to compete and be the rightful owners of different components?
What are the things that we have either within the company or other things we can do to drive increased profitability? These sort of criteria and questions, together with a bias towards action, is what gives us the conviction that we hope to be able to share some of the important decisions we are making within the next couple of months. Again, the most important criteria for all of this work is how do we set up Myriad in a transformative way to be financially a lot materially stronger? When I say stronger, I mean in terms of revenue, in terms of profitability, in terms of gross margin, which is part of profitability, and as well as liquidity. Would you add anything to that, Ben?
Yeah, maybe only that when we think about the portfolio assessment, we also think about the Ascend initiative driving scalability. How do you leverage capabilities within the organization to create an efficient, more profitable organization?
Got you. No, it sounds like you're taking a very strong look at the portfolio. Stay tuned, right?
Yeah.
It sounds like it's very important. You guys are very focused on this. Sou nds like that's the message. Moving to prenatal. Volumes were down 9%, remain below expectations. How much of this is attributable to sales force timing, competitive losses, and what would indicate that the business has stabilized for you guys?
Yeah. Well, first I'll acknowledge that our volume performance in prenatal has been disappointing for us, and it has underperformed. We've stated it's a very big part of the reason we underperformed in Q2, as well as our updated guidance. Many of the factors that you stated are contributing to that. Clearly we believe competition has intensified, particularly between two of the leading provi ders here. It presents a strategic challenge for us because, again, the cancer care continuum is the most important part for us, so we want to be measured the level of resourcing and other things, including how many sales reps we have there. That's been a challenge. There's been just other things along the way that you've mentioned, including when we bifurcated our sales organization, many of the more tenured individuals really wanted to.
We allowed them to go with hereditary cancer testing, which is more important to us, if you will, than prenatal. So those things and changes are taking time. We will know in terms of how do we know that we're getting back to where w e want. Well, first, we will lessen the level of decline that we're seeing on a quarterly basis. Two, we will see that the number of new customers we are adding with the volume coming from them is starting to balance out the losses we have seen from other important customers. Finally, of course, the volume overall, it stabilizes, and we start to grow. I will point out again, though, as Ben and I have already called out, our updated guidance is based on prudence and not counting on improvements to the prenatal health volume, that it will persist as it was in Q2.
Got you. You speak of your competitors. We spoke to one of them yesterday, and one interesting thing that they talked about, they distinguish the market between health centers, so larger organizations where you have multiple docs, high volume versus more individual.
Community based.
Community centers. They talked about they are heavily geared towards community centers. I was just curious in terms of your business, where you lean towards.
Yeah. The disproportionate focus that we have and the presence is in the community. It's OBGYN, it's docs that are a part of these practices rather than academic centers.
Got you. A bunch of new products for you guys. FirstGene, now comme rcially launched. What's the early feedback? Where is the product winning accounts, and how should we think about reimbursement there during the ramp?
Yeah. Let me start with this, and then Ben Wheeler, you can talk about the reimbursement part. Yeah. FirstGene, as you likely know, is an innovative product, which all-in-one is a screen that allows simultaneously from one single blood draw, the mother's status as well as for the fetus, single gene chromosome, as well as RhD status. And what differentiates it is it could be done at industry-l eading eight-week gestational age, as well as the overall turnaround time. Rather than using a reflex methodology, the total results comes in within 14 days. So we're pleased with the inter. It's only been launched for about a month, I think, on the market, so it is early days commercially.
But what we're hearing in terms of feedback is particularly the combination of the RhD status together with the other information on the fetus is really useful, how it's all received at one time. We have seen customers return to try FirstGene, customers that we had lost, if you will, over the last year due to some other challenges. So, that's pleasing, but it's early to tell.
The level of impact. We are not counting on FirstGene impact in a material way at all
Yeah
within our guidance. Maybe a little bit on the reimbursement side.
From a reimbursement standpoint, we bill FirstGene with existing codes. When you think about the economics around FirstGene, the ultimate average revenue per test that we are receiving is higher than what we see on the leg acy prenatal portfolio. From a COG standpoint, it is consistent. Ultimately, FirstGene tests are accretive to gross margin and profitability for the organization.
Yeah. Helpful. Moving it, GeneSight. Volumes grew, but you had this aged receivables write-off. How should investors think about this, about payer progress, and what is a go-forward sustainable growth rate for the franchise?
Yeah. I will start by reminding everyone that coming off about a year and a half ago, a policy decision that UnitedHealthcare made. We determined as part of our new strategy and the focus on the cancer care continuum, that for us, success in mental health for our GeneSight test, the measure of that is being able to grow at or above market and in a way that we are able to do that with focusing a very deliberate, managed level of resourcing and attention. I think the team has done actually a really nice job on that. If you look at the underlying growth and volume for now six quarters in a row, it has been really exactly where we want it to be. This is the nature of the business. You are going to have AR and other out-of-period things that you have to factor in.
But when you take the organic ASP or the revenue per test within the quarter, it is very strong. It has been really good. I will tell you that we continue to have the We are the leading test in the market. We have extremely high NPS. We still we are benefiting, and I think there is a lot of head tailwind to benefit from the biomarker state legislations that are going into effect now in more th an 21 states. Would you add anything to this?
Yeah, just that in connection with our Q2 earnings, when we talked about the update to guidance, when we think about specific to GeneSight and the aged receivable, the assumption is that the ASP that we saw inclusive of the aged receivable write-off in Q2 would persist in Q3 and Q4. That will not persist into 2027. Then much like Sam Raha said, if you isolate for the aged receivable , we have seen significant improvement in ASP for GeneSight over the last six, eight quarters. Much of that is driven by our payer markets team doing fantastic work in states where biomarker laws have been passed, engaging with plans in those states, and then securing coverage. None of those coverage wins are significant in isolation, but in aggregate, we have seen really nice gains.
Okay. Your second half guidance for ASPs for GeneSight assume a $10 million receivable that will not repeat, so it will be naturally higher, but your guidance does not assume that. Is that what you are saying?
Essentially, in Q2, we talked about a headwind of about $4 million for GeneSight.
Okay. Got you.
We would assume a persistent headwind in Q3 and Q4.
Okay. Got it.
and either collect or write it off by the end of 2026, is what that amounts to.
Okay. That's helpful. Prolaris new product with AI, what's been the early resp onse to that, particularly in surveillance, and how does this kind of upgrade improve your competitive positioning?
Yeah. Listen, first of all, now that we have Prolaris + AI on the market for a few months, it is the only test that brings together the power of molecular plus AI. For us at Myriad, we're also positioned uniquely in that we can put that together w ith hereditary cancer testing, and we're starting to see some connectivity with MyRisk, because that can better inform the course of treatment. We can also provide Precise Tumor, so you have the genomic interface there. All of that, I think, is going to help differentiate. It's early days still, but we've seen a lot of interest, particularly for those individuals. When you look at a score on a molecular basis, there are individuals, men, that fall into a threshold where a doc is uncertain exactly what to do.
The AI really helps increase the confidence of if an individual should continue active surveillance or have a surgical resection. That is driving interest, and we think this is going to be an important, this offering, to allow us to start gaining share again. We have an industry headwind NCCN guideline related to recommending biomarker testing before you do biopsies. Overall, I think this is going to be a good guide for us.
Great. Okay, we got about two minutes left. Maybe I'll end it with, you guys suspended your profitability guidance with your guidance update. You have Ascend, which we talked about, portfolio review, which sounds imminent in terms of an u pdate there. In the meantime, how are you guys prioritizing cash preservation, debt obligations, and also investments in the business through 2027?
Yeah. Our Q2 total liquidity at the end of Q2 was $190 million. We're very comfortable with that level of liquidity. As Sam talked about, our focus on prioritizing investments to drive growth and success in the cancer care continuum, that's exactly how we prioritize our dollars. You also touched on the fact that when you think about the initiatives that we're focused on, we absolutely believe that they will enable us to drive profitable growth as an organization. Just to sum up, very comfortable with the $190 million of total liquidity at the end of Q2. We've recognized what opportunities we have to drive changes in the organization. We're pursuing those.
Great. We have 30 seconds left. I'm not going to ask you something else, but do you have anything you want to leave the audience with?
Yeah, no. I just summarize again, the key takeaways I would say for investors is we understand our challenges. We're taking on head-on. We're making, we believe, really good progress on the initiatives related to that. The guide was prudently set, so the progress we're making, both in the quarter as well as on the initiatives, really believes that we're on the path to transform the company and givin g us conviction.
Great. We're out of time. Thank you so much.
Thanks for having us.