UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-26642

MYRIAD GENETICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

322 North 2200 West, Salt Lake City, UT

(Address of principal executive offices)

87-0494517

(I.R.S. Employer Identification No.)

84116

(Zip Code)

Registrant's telephone number, including area code: (801) 584-3600

Not applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

MYGN

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of ~~July 28, 2023,~~May 1, 2024, the registrant had ~~81,883,426~~90,507,981 shares of $0.01 par value common stock outstanding.

MYRIAD GENETICS, INC.

INDEX TO FORM 10-Q


		Page
	PART I - Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of ~~June~~March 3 01 , ~~2023~~202 4 (unaudited) and December 31, ~~2022~~20 23	4

	Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~June~~March 31, 202 4 and 202 3 0 ~~, 2023 and 2022~~ (unaudited)	5

	Condensed Consolidated Statements of Comprehensive Loss for the three ~~and six~~months ended ~~June 30~~March 31, 2024 and 2023 ~~, 2023 and 2022~~ (unaudited)	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three ~~and six~~ months ended ~~June~~ 3 0 ,March 31, 2024 and 2023 ~~and 2022~~ (unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June~~ 3 0 ,March 31, 2024 and 2023 ~~and 2022~~ (unaudited)	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2624

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3429

Item 4.	Controls and Procedures	3530

	PART II - Other Information

Item 1.	Legal Proceedings	3631

Item 1A.	Risk Factors	3631

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3833

Item 3.	Defaults Upon Senior Securities	3833

Item 4.	Mine Safety Disclosures	3833

Item 5.	Other Information	3933

Item 6.	Exhibits	3934

	Signatures	4035

Table of Contents

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in ~~millions, except share information)~~millions)


		June 30, 2023		December 31, 2022
		(unaudited)
	March 31, 2024						March 31, 2024	December 31, 2023
	(unaudited)
ASSETS
ASSETS
ASSETS	ASSETS
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	102.8	$	56.9
Marketable investment securities	Marketable investment securities	18.8		58.0
Trade accounts receivable	Trade accounts receivable	111.7		101.6
Inventory	Inventory	22.5		20.1
Prepaid taxes	Prepaid taxes	17.7		17.6
Prepaid expenses and other current assets	Prepaid expenses and other current assets	20.8		20.4
Total current assets	Total current assets	294.3		274.6
Operating lease right-of-use assets	Operating lease right-of-use assets	106.6		103.9
Long-term marketable investment securities		6.2		54.8

Property, plant, and equipment, net
Property, plant, and equipment, net
Property, plant, and equipment, net	Property, plant, and equipment, net	112.0		83.4
Intangibles, net	Intangibles, net	358.8		379.7
Goodwill	Goodwill	287.2		286.8
Other assets	Other assets	22.1		15.5
Total assets	Total assets	$	1,187.2	$	1,198.7
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	39.8	$	28.8
Accrued liabilities	Accrued liabilities	164.3		94.3
Current maturities of operating lease liabilities	Current maturities of operating lease liabilities	17.0		14.1

Total current liabilities	Total current liabilities	221.1		137.2
Total current liabilities
Total current liabilities
Unrecognized tax benefits	Unrecognized tax benefits	29.0		26.8
Long-term deferred taxes		3.7		3.5

Long-term debt
Long-term debt
Long-term debt	Long-term debt	38.4		—
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	148.4		130.9
Other long-term liabilities	Other long-term liabilities	11.4		14.5
Total liabilities	Total liabilities	452.0		312.9
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders’ equity:	Stockholders’ equity:
Common stock, 81.9 million and 81.2 million shares outstanding at June 30, 2023 and December 31, 2022, respectively		0.8		0.8
Common stock, 90.5 million and 89.9 million shares outstanding at March 31, 2024 and December 31, 2023, respectively
Common stock, 90.5 million and 89.9 million shares outstanding at March 31, 2024 and December 31, 2023, respectively
Common stock, 90.5 million and 89.9 million shares outstanding at March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital	Additional paid-in capital	1,276.8		1,260.1
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(5.4)		(8.9)
Accumulated deficit	Accumulated deficit	(537.0)		(366.2)

Total stockholders' equity	Total stockholders' equity	735.2		885.8

Total stockholders' equity

Total stockholders' equity
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,187.2	$	1,198.7

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (unaudited)

(in millions, except per share amounts)


		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
		2024
		2024
		2024
		Three months ended June 30,				Six months ended June 30,
Testing revenue
		2023		2022		2023		2022
Testing revenue

Testing revenue	Testing revenue	$	183.5	$	179.3	$	364.7	$	344.2

Costs and expenses:	Costs and expenses:

Costs and expenses:

Costs and expenses:
Cost of testing revenue
Cost of testing revenue
Cost of testing revenue	Cost of testing revenue	57.8		49.7		117.0		97.7
Research and development expense	Research and development expense	21.2		20.3		43.7		41.5
Research and development expense
Research and development expense
Selling, general, and administrative expense	Selling, general, and administrative expense	140.7		127.1		292.4		237.7
Legal charges pending settlement		77.5		—		77.5		—
Goodwill and long-lived asset impairment charges		—		—		—		10.7
Selling, general, and administrative expense
Selling, general, and administrative expense

Total costs and expenses

Total costs and expenses

Total costs and expenses	Total costs and expenses	297.2		197.1		530.6		387.6
Operating loss	Operating loss	(113.7)		(17.8)		(165.9)		(43.4)
Operating loss
Operating loss
Other income (expense):
Other income (expense):
Other income (expense):	Other income (expense):
Interest income	Interest income	0.5		0.4		1.2		0.5
Interest income
Interest income
Interest expense
Interest expense
Interest expense	Interest expense	(0.5)		(0.6)		(1.0)		(1.5)
Other	Other	(2.4)		0.1		(3.0)		0.1
Total other expense, net		(2.4)		(0.1)		(2.8)		(0.9)
Other
Other
Total other income (expense), net
Total other income (expense), net
Total other income (expense), net
Loss before income tax	Loss before income tax	(116.1)		(17.9)		(168.7)		(44.3)
Income tax expense (benefit)		—		(3.8)		2.1		(9.7)
Loss before income tax
Loss before income tax
Income tax expense
Income tax expense
Income tax expense
Net loss
Net loss
Net loss	Net loss	$	(116.1)	$	(14.1)	$	(170.8)	$	(34.6)

Net loss per share:	Net loss per share:

Net loss per share:

Net loss per share:
Basic and diluted
Basic and diluted
Basic and diluted	Basic and diluted	$	(1.42)	$	(0.18)	$	(2.10)	$	(0.43)

Weighted average shares outstanding:	Weighted average shares outstanding:

Weighted average shares outstanding:

Weighted average shares outstanding:
Basic and diluted
Basic and diluted
Basic and diluted	Basic and diluted	81.7		80.4		81.5		80.3

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

(in millions)


		Three months ended June 30,				Six months ended June 30,
		2023		2022		2023		2022
		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
		2024
		2024
		2024
Net loss
Net loss
Net loss	Net loss	$	(116.1)	$	(14.1)	$	(170.8)	$	(34.6)
Change in unrealized loss on available-for-sale debt securities, net of tax	Change in unrealized loss on available-for-sale debt securities, net of tax	1.0		(0.8)		2.2		(2.1)
Change in unrealized loss on available-for-sale debt securities, net of tax
Change in unrealized loss on available-for-sale debt securities, net of tax
Change in foreign currency translation adjustment, net of tax	Change in foreign currency translation adjustment, net of tax	0.5		(0.5)		0.8		(1.7)
Reclassification adjustments for losses (gains) included in net income, net of tax		0.9		—		1.4		—
Change in foreign currency translation adjustment, net of tax
Change in foreign currency translation adjustment, net of tax

Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity, net of tax

Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity, net of tax

Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity, net of tax	Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity, net of tax	0.5		—		0.5		—
Comprehensive loss	Comprehensive loss	$	(113.2)	$	(15.4)	$	(165.9)	$	(38.4)
Comprehensive loss
Comprehensive loss

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)

(in millions)


		Common stock		Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Myriad Genetics, Inc. Stockholders’ equity
BALANCES AT DECEMBER 31, 2021		$	0.8	$	1,226.3	$	(5.1)	$	(254.2)	$	967.8
	Common stock											Common stock	Additional paid-in capital	Accumulated other comprehensive loss	Accumulated deficit	Myriad Genetics, Inc. Stockholders’ equity
BALANCES AT DECEMBER 31, 2022
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	—		(4.8)		—		—		(4.8)
Stock-based payment expense	Stock-based payment expense	—		10.1		—		—		10.1
Net loss	Net loss	—		—		—		(20.5)		(20.5)
Other comprehensive loss, net of tax		—		—		(2.5)		—		(2.5)
BALANCES AT MARCH 31, 2022		$	0.8	$	1,231.6	$	(7.6)	$	(274.7)	$	950.1
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax		—		2.3		—		—		2.3
Stock-based payment expense		—		10.4		—		—		10.4
Net loss		—		—		—		(14.1)		(14.1)
Other comprehensive loss, net of tax		—		—		(1.3)		—		(1.3)
BALANCES AT JUNE 30, 2022		$	0.8	$	1,244.3	$	(8.9)	$	(288.8)	$	947.4
Other comprehensive income, net of tax
BALANCES AT MARCH 31, 2023

BALANCES AT DECEMBER 31, 2022		$	0.8	$	1,260.1	$	(8.9)	$	(366.2)	$	885.8
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax		—		(4.9)		—		—		(4.9)
Stock-based payment expense		—		7.5		—		—		7.5
Net loss		—		—		—		(54.7)		(54.7)
Other comprehensive income, net of tax		—		—		1.5		—		1.5
BALANCES AT MARCH 31, 2023		$	0.8	$	1,262.7	$	(7.4)	$	(420.9)	$	835.2
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax		—		2.9		—		—		2.9
Stock-based payment expense		—		11.2		—		—		11.2
Net loss		—		—		—		(116.1)		(116.1)
Other comprehensive income, net of tax		—		—		2.0		—		2.0
BALANCES AT JUNE 30, 2023		$	0.8	$	1,276.8	$	(5.4)	$	(537.0)	$	735.2

BALANCES AT DECEMBER 31, 2023

BALANCES AT DECEMBER 31, 2023

BALANCES AT DECEMBER 31, 2023
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax
Stock-based payment expense
Net loss
Other comprehensive loss, net of tax
BALANCES AT MARCH 31, 2024

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (unaudited)

(in millions)

Six months ended
June 30,

2023

2022

Three months ended
March 31,

2024

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

(170.8)

(34.6)

Net loss

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

32.7

25.9

Non-cash lease expense

5.8

5.7

Non-cash lease expense

Stock-based compensation expense

18.7

20.5

Deferred income taxes

(0.7)

(10.6)

Deferred income taxes

Unrecognized tax benefits

2.3

(0.2)

Net realized losses on marketable investment securities

1.4

—

Impairment of goodwill and long-lived assets

—

10.7

Impairment of goodwill and long-lived assets

Gain on termination of lease

Gain on acquisition

Other non-cash adjustments

1.7

0.4

Changes in assets and liabilities:

Prepaid expenses and other current assets

—

2.3

Trade accounts receivable

(10.1)

(18.9)

Trade accounts receivable

Inventory

(2.3)

(0.1)

Prepaid taxes

(0.1)

(0.9)

Prepaid taxes

Other assets

(5.1)

(0.4)

Tenant improvement allowance received

16.3

—

Tenant improvement allowance received

Accounts payable

10.7

(8.2)

Accrued expenses and other liabilities

65.3

(82.9)

Accounts payable

Accrued liabilities

Deferred revenues

0.1

(4.9)

Net cash used in operating activities

(34.1)

(96.2)

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(42.3)

(13.0)

Capital expenditures

Capitalization of internal-use software costs

Purchases of marketable investment securities

—

(85.5)

Proceeds from maturities and sales of marketable investment securities

88.7

45.2

Net cash provided by (used in) investing activities

46.4

(53.3)

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from common stock issued under stock-based compensation plans

—

3.0

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of tax withheld for common stock issued under stock-based compensation plans

(5.1)

(5.3)

Proceeds from revolving credit facility

40.0

—

Fees associated with issuance of revolving credit facility

(1.4)

—

Net cash provided by (used in) financing activities

33.5

(2.3)

Proceeds from revolving credit facility

Repayment of revolving credit facility

Payment on finance leases

Net cash used in financing activities

Effect of foreign exchange rates on cash, cash equivalents, and restricted cash

0.5

(0.8)

Net increase (decrease) in cash, cash equivalents, and restricted cash

46.3

(152.6)

Effect of foreign exchange rates on cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of the period

66.4

258.8

Cash, cash equivalents, and restricted cash at end of the period

112.7

106.2

Cash, cash equivalents, and restricted cash at end of the period

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.BASIS OF PRESENTATION

Myriad Genetics, Inc. (together with its subsidiaries, the “Company” or “Myriad”) is a leading genetic testing and precision medicine company dedicated to advancing health and well-being for all. Myriad provides insights that help people take control of their health and enable healthcare providers to better detect, treat, and prevent disease. Myriad develops and offers ~~genetic~~ tests that help assess the risk of developing disease or disease progression and guide treatment decisions across medical specialties where genetic insights can significantly improve patient care and lower health care costs. The Company currently operates as a single reporting segment. The Company’s principal executive office is located in Salt Lake City, Utah.

The accompanying Condensed Consolidated Financial Statements for the Company have been prepared in accordance with United States ("U.S.") generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly all financial statements in accordance with GAAP. The Condensed Consolidated Financial Statements herein should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (the “Form 10-K”).

The preparation of financial statements in ~~conformity~~accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period.

The Company has historically experienced seasonality in its ~~business. The volume of testing is typically negatively impacted by the summer season, which is generally reflected~~business, particularly in the quarter ended ~~September 30. The volume~~March 31. Due to the annual reset of ~~testing in~~patient deductibles at the ~~quarter ended December 31 is generally strong as~~beginning of the ~~Company typically experiences an increase in test volumes from patients who have met their annual insurance deductible. In the quarter ended March 31,~~year, the Company has ~~typically~~historically experienced a decrease in test volumes ~~due~~and reduction in the average revenue per test in the quarter ended March 31. For the quarter ended March 31, 2024 and 2023, the Company did not experience this seasonality impact to the ~~annual reset of patient deductibles; however,~~same extent as prior years. Additionally, operating results for the three months ended March 31, 2023, the Company experienced an increase sequentially in volumes across its Prenatal, Pharmacogenomics, and Tumor Profiling products. Historical patterns of seasonality may not continue in future periods. Additionally, operating results for the three and six months ended June 30, 20232024 may not necessarily be indicative of results to be expected for any other interim period or for the full ~~year.~~year and historical patterns of seasonality may continue in future periods.

Recent Accounting Pronouncements

In November 2023, the FASB issued accounting standards update ("ASU") 2023-07, which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements. ASU 2023-07 is effective for the Company for annual reporting periods beginning after December 15, 2023 and for interim periods within fiscal years December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its segment disclosures.

In December 2023, the FASB issued ASU 2023-09, which requires enhanced income tax disclosures, including disaggregation of information on the rate reconciliation table and disaggregated information related to income taxes paid. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures.

Table of Contents

2.REVENUE

The Company primarily generates revenue by performing genetic testing. Testing revenues are primarily derived from the following categories of products: Hereditary Cancer ~~(myRisk,~~(MyRisk, BRACAnalysis, BRACAnalysis CDx), Tumor Profiling (MyChoice CDx, Prolaris, Precise Tumor, and EndoPredict), Prenatal (Foresight, Prequel, and SneakPeek), and Pharmacogenomics (GeneSight). Revenue is recorded at the estimated transaction price. The Company has determined that the communication of test results indicates transfer of control for revenue recognition purposes.

The following table presents detail regarding the composition of the Company’s total revenue by product type and by geographical region, either U.S. or rest of world (“RoW”):


		Three months ended June 30,
		2023						2022
	Three months ended March 31,																			Three months ended March 31,
	2024																2024					2023
(in millions)	(in millions)	U.S.		RoW		Total		U.S.		RoW		Total		(in millions)	U.S.	RoW		Total	U.S.		RoW		Total
Testing revenues:	Testing revenues:
Hereditary Cancer
Hereditary Cancer
Hereditary Cancer	Hereditary Cancer	$	64.5	$	12.2	$	76.7	$	69.8	$	9.6	$	79.4
Tumor Profiling	Tumor Profiling	27.3		8.7		36.0		21.5		12.0		33.5
Prenatal	Prenatal	35.4		0.2		35.6		33.1		0.2		33.3
Pharmacogenomics	Pharmacogenomics	35.2		—		35.2		33.1		—		33.1

Total revenue	Total revenue	$	162.4	$	21.1	$	183.5	$	157.5	$	21.8	$	179.3

		Six months ended June 30,
		2023						2022
(in millions)		U.S.		RoW		Total		U.S.		RoW		Total
Testing revenues:
Hereditary Cancer		$	128.5	$	23.9	$	152.4	$	130.5	$	19.8	$	150.3
Tumor Profiling		56.1		17.2		73.3		41.2		24.8		66.0
Prenatal		71.4		0.4		71.8		64.8		0.4		65.2
Pharmacogenomics		67.2		—		67.2		62.4		—		62.4
Autoimmune		—		—		—		0.3		—		0.3
Total revenue

Total revenue	Total revenue	$	323.2	$	41.5	$	364.7	$	299.2	$	45.0	$	344.2

Under ASC 606, Revenue from Contracts with Customers ("ASC 606"), an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company performs its obligation under a contract with a customer by processing tests and communicating the test results to customers, in exchange for consideration from the customer. The Company has the right to bill its customers upon the completion of performance obligations and thus does not record contract assets. Occasionally, customers make payments prior to the Company’s performance of its contractual obligations. When this occurs, the Company records a contract liability as Deferred revenue, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets.

In accordance with ASC 606, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year. Furthermore, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its agreements wherein the Company’s right to payment is in an amount that directly corresponds with the value of the Company’s performance to date.

In determining the transaction price, the Company includes an estimate of the expected amount of consideration as revenue. The Company applies this method consistently for similar contracts when estimating the effect of any uncertainty on an amount of variable consideration to which it will be entitled. An estimate of transaction price does not include any estimated amount of variable consideration that is constrained. In addition, the Company considers all the information (historical, current, and forecast) that is reasonably available to identify possible consideration amounts. In determining the expected value, the Company considers the probability of the variable consideration for each possible scenario. The Company also has significant experience with historical discount patterns and uses this experience to estimate transaction prices.

~~Table of Contents~~

The estimate of revenue is affected by assumptions in payor behavior such as changes in payor mix, payor collections, current customer contractual requirements, and experience with collections from third-party payors. When assessing the total consideration for insurance carriers and patients, revenues are further constrained for estimated refunds. The Company reserves certain amounts in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets in anticipation of requests for refunds of payments made previously by insurance carriers, which are accounted for as reductions in revenues in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

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Cash collections for certain tests delivered may differ from rates estimated, primarily driven by changes in the estimated transaction price due to contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met, and settlements with ~~third party~~third-party payors. As a result of this new information, the Company updates its estimate of the amounts to be recognized for previously delivered tests. During the quarter ended March 31, 2024, the Company recognized $3.0 million in revenue due to a retroactive coverage change by a payor for one of its prenatal products. Revenue recognized due to a change in estimate for tests in which the performance obligation was met in prior periods was immaterial. During the three months ended March 31, 2023, the impact of ~~which~~the amounts to be recognized for previously delivered tests was not material to the Company's Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2023. During the three and six months ended June 30, 2022, the Company recognized $11.7 million and $19.9 million in revenue, respectively, which resulted in a $0.11 and $0.19 impact to earnings per share, respectively, for tests in which the performance obligation of delivering test results was met in prior periods primarily driven by changes in the estimated transaction price.Operations.

The Company applies the practical expedient related to costs to obtain or fulfill a contract since the amortization period for such costs will be one year or less. Accordingly, no costs incurred to obtain or fulfill a contract have been capitalized. The Company also applies the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects very little cash from customers under payment terms and the vast majority of payment terms have a payback period of less than one year.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Substantially all of the Company’s accounts receivable are with companies in the healthcare industry, U.S. and state governmental agencies, and individuals. The Company does not believe that receivables due from U.S. and state governmental agencies, such as Medicare, represent a credit risk since the related healthcare programs are funded by the U.S. and state governments. The Company only has one payor, Medicare, that represents greater than 10% of its revenues. Revenues received from Medicare represented 12% and 11% of total revenue for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and March 31, 2023, ~~respectively, and 13% of total revenue for each of the three and six months ended June 30, 2022.~~respectively. Concentrations of credit risk are mitigated due to the number of the Company’s customers as well as their dispersion across many geographic regions. NoThe Company has only one payor that accounted for more than 10% of accounts receivable at ~~June 30, 2023 or~~March 31, 2024 and December 31, ~~2022.~~2023. The balance of accounts receivable from the payor represented 15% and 12% of the total accounts receivable balance as of March 31, 2024 and December 31, 2023, respectively. The Company does not require collateral from its customers.

3.MARKETABLE INVESTMENT SECURITIES

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for debt securities classified as available-for-sale securities by major security type and class of security at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows:


(in millions)	(in millions)	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value		(in millions)	Amortized cost	Gross unrealized holding gains	Gross unrealized holding losses	Estimated fair value
June 30, 2023
March 31, 2024
Cash and cash equivalents:	Cash and cash equivalents:
Cash and cash equivalents:
Cash and cash equivalents:
Cash
Cash
Cash	Cash	$	102.2	$	—	$	—	$	102.2
Cash equivalents	Cash equivalents	0.6		—		—		0.6
Total cash and cash equivalents	Total cash and cash equivalents	102.8		—		—		102.8
Available-for-sale:	Available-for-sale:
Corporate bonds and notes	Corporate bonds and notes	10.9		—		(0.3)		10.6
Corporate bonds and notes
Corporate bonds and notes
Municipal bonds	Municipal bonds	8.1		—		(0.1)		8.0
Federal agency issues	Federal agency issues	3.5		—		(0.1)		3.4
U.S. government securities		3.0		—		—		3.0

Total	Total	$	128.3	$	—	$	(0.5)	$	127.8
Total
Total

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(in millions)	(in millions)	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value		(in millions)	Amortized cost	Gross unrealized holding gains	Gross unrealized holding losses	Estimated fair value
December 31, 2022
December 31, 2023
Cash and cash equivalents:	Cash and cash equivalents:
Cash and cash equivalents:
Cash and cash equivalents:
Cash
Cash
Cash	Cash	$	53.6	$	—	$	—	$	53.6
Cash equivalents	Cash equivalents	3.3		—		—		3.3
Total cash and cash equivalents	Total cash and cash equivalents	56.9		—		—		56.9
Available-for-sale:	Available-for-sale:
Corporate bonds and notes	Corporate bonds and notes	66.7		—		(1.6)		65.1
Corporate bonds and notes
Corporate bonds and notes
Municipal bonds	Municipal bonds	16.3		—		(0.3)		16.0
Federal agency issues		20.7		—		(0.7)		20.0
U.S. government securities		11.8		—		(0.1)		11.7

Total	Total	$	172.4	$	—	$	(2.7)	$	169.7

Total

Total

Cash, cash equivalents, and maturities of debt securities classified as available-for-sale securities were as follows at ~~June 30, 2023:~~March 31, 2024:


(in millions)	(in millions)	Amortized cost		Estimated fair value		(in millions)	Amortized cost	Estimated fair value
Cash	Cash	$	102.2	$	102.2
Cash equivalents	Cash equivalents	0.6		0.6
Available-for-sale:	Available-for-sale:
Due within one year	Due within one year	19.0		18.8
Due after one year through five years		6.5		6.2
Due after five years		—		—
Due within one year
Due within one year

Total	Total	$	128.3	$	127.8

Total

Total

The cost of a security sold, or amount reclassified out of accumulated other comprehensive income or loss into net ~~income,~~loss, is determined based on the specific identification method. The Company does not intend to sell these available-for-sale debt securities, and it is not more likely than not that the Company will be required to sell these securities prior to recovery of their amortized cost basis. Additional information relating to fair value of marketable investment securities can be found in Note 4.

4.FAIR VALUE MEASUREMENTS

The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels:

Level 1—quoted prices in active markets for identical assets and liabilities.

Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities.

Level 3—unobservable inputs.

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All of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. For Level 2 securities, the Company uses a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. For Level 3 contingent consideration related to the acquisitions of Sividon Diagnostics GmbH ("Sividon") and Gateway Genomics, LLC ("Gateway"), the Company reassesses the fair value of each expected contingent consideration and the corresponding liability each reporting period using the Monte Carlo Method, which is consistent with the initial measurement of the expected contingent consideration liability. This fair value measurement is considered a Level 3 measurement because the Company estimates projections during the expected measurement periods of approximately 1211.25 years and ~~1.75 years~~1 year for Sividon and Gateway, respectively, utilizing various potential pay-out scenarios. Probabilities were applied to each potential scenario and the resulting values were discounted using a rate that considers weighted average cost of capital as well as a specific risk premium associated with the riskiness of the contingent consideration itself, the related projections, and the overall business. The contingent consideration liabilities are classified as components of Accrued liabilities and Other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets. Changes to contingent consideration liabilities are reflected in Selling, general and administrative expense in the Company’s Condensed Consolidated Statements of Operations. Changes to the unobservable inputs could have a material impact on the Company’s financial statements.

The fair value of the Company’s long-term debt, which it considers a Level 2 measurement, is estimated using discounted cash flow analyses, based on the Company’s current estimated incremental borrowing rates for similar borrowing arrangements. The fair value of the Company’s long-term debt is estimated to be ~~$40.0~~$39.8 million at ~~June 30, 2023.~~March 31, 2024.

The following table sets forth the fair value of the financial assets and liabilities that the Company re-measures on a regular basis:


(in millions)	(in millions)	Level 1		Level 2		Level 3		Total		(in millions)	Level 1	Level 2	Level 3	Total
June 30, 2023
March 31, 2024
Money market funds (a)
Money market funds (a)
Money market funds (a)	Money market funds (a)	$	0.6	$	—	$	—	$	0.6
Corporate bonds and notes	Corporate bonds and notes	—		10.6		—		10.6
Municipal bonds	Municipal bonds	—		8.0		—		8.0
Federal agency issues		—		3.4		—		3.4
U.S. government securities		—		3.0		—		3.0

Contingent consideration

Contingent consideration

Contingent consideration	Contingent consideration	—		—		(7.6)		(7.6)
Total	Total	$	0.6	$	25.0	$	(7.6)	$	18.0

(a)Money market funds are primarily comprised of exchange traded funds and accrued interest.


(in millions)	(in millions)	Level 1		Level 2		Level 3		Total		(in millions)	Level 1	Level 2	Level 3	Total
December 31, 2022
December 31, 2023
Money market funds (a)
Money market funds (a)
Money market funds (a)	Money market funds (a)	$	3.3	$	—	$	—	$	3.3
Corporate bonds and notes	Corporate bonds and notes	—		65.1		—		65.1
Municipal bonds	Municipal bonds	—		16.0		—		16.0
Federal agency issues		—		20.0		—		20.0
U.S. government securities		—		11.7		—		11.7

Contingent consideration

Contingent consideration

Contingent consideration	Contingent consideration	—		—		(6.8)		(6.8)
Total	Total	$	3.3	$	112.8	$	(6.8)	$	109.3

(a)Money market funds are primarily comprised of exchange traded funds and accrued interest.

The following table reconciles the change in the fair value of the contingent consideration during the periods presented:


(in millions)	Carrying Amount
Balance at December 31, ~~2022~~2023	$	~~6.8~~ (5.4)
Change in fair value recognized in the Statements of Operations	~~0.8~~0.2
Translation adjustments recognized in Other comprehensive loss	(0.2)
Ending balance at ~~June 30, 2023~~March 31, 2024	$	~~7.6~~ (5.4)

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5.PROPERTY, PLANT AND EQUIPMENT, NET

The property, plant and equipment at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows:


(in millions)	(in millions)	June 30, 2023		December 31, 2022		(in millions)	March 31, 2024	December 31, 2023
Leasehold improvements	Leasehold improvements	$	90.8	$	67.9
Equipment	Equipment	136.1		124.7
Property, plant and equipment, gross	Property, plant and equipment, gross	226.9		192.6
Less accumulated depreciation	Less accumulated depreciation	(114.9)		(109.2)
Property, plant and equipment, net	Property, plant and equipment, net	$	112.0	$	83.4

During the three months ended March 31, 2023, the Company incurred $5.7 million of accelerated depreciation of leasehold improvements and equipment in connection with the Company's decision to cease the use of its corporate headquarters in Salt Lake City and transition corporate support operations to its new facility in west Salt Lake City. The Company ~~expects~~formally assigned the previous corporate headquarters lease to ~~designate~~ a ~~sub-lessee or new tenant for the facility and therefore has not recognized a loss on the lease~~third party as of ~~June 30,~~December 31, 2023. ~~See Note 15 for further discussion.~~

During the three months ended March 31, 2022, the Company ceased the use of certain leased Salt Lake City facilities. As a result, the Company recognized a $2.1 million impairment on the property, plant and equipment associated with the leases, which consisted primarily of leasehold improvements. See Note 15 for further discussion.

The Company recorded depreciation during the respective periods as follows:


		Three months ended June 30,				Six months ended June 30,
		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
(in millions)
(in millions)
(in millions)	(in millions)	2023		2022		2023		2022
Depreciation expense	Depreciation expense	$	2.7	$	2.8	$	11.4	$	5.6
Depreciation expense
Depreciation expense

6.GOODWILL AND INTANGIBLE ASSETS

Goodwill

The ~~following table summarizes the~~ changes in the carrying amount of goodwill for the ~~six~~three months ended ~~June 30, 2023:~~March 31, 2024 are as follows:


(in millions)	Total
Beginning balance	$	~~286.8~~287.4
Translation adjustments	~~0.4~~ (0.4)
Ending balance	$	~~287.2~~287.0

Intangible Assets

Intangible assets consist of amortizable assets of developed technologies, customer relationships, and trademarks. The following summarizes the amounts reported as intangible assets:


(in millions)	(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		(in millions)	Gross Carrying Amount	Accumulated Amortization	Net
At June 30, 2023
At March 31, 2024
Developed technologies	Developed technologies	$	625.6	$	(274.0)	$	351.6
Developed technologies
Developed technologies
Internal-use software
Internal-use software (in-process)
Customer relationships	Customer relationships	1.6		(0.1)		1.5
Trademarks	Trademarks	6.1		(0.4)		5.7
Total intangible assets	Total intangible assets	$	633.3	$	(274.5)	$	358.8

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(in millions)	(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		(in millions)	Gross Carrying Amount	Accumulated Amortization	Net
At December 31, 2022
At December 31, 2023
Developed technologies	Developed technologies	$	625.0	$	(252.9)	$	372.1
Developed technologies
Developed technologies
Internal-use software
Internal-use software (in-process)
Customer relationships	Customer relationships	1.6		—		1.6
Trademarks	Trademarks	6.1		(0.1)		6.0
Total intangible assets	Total intangible assets	$	632.7	$	(253.0)	$	379.7

The Company recorded amortization expense during the respective periods for these intangible assets as follows:


		Three months ended June 30,				Six months ended June 30,
		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
(in millions)
(in millions)
(in millions)	(in millions)	2023		2022		2023		2022
Amortization of intangible assets	Amortization of intangible assets	$	10.6	$	10.2	$	21.3	$	20.3
Amortization of intangible assets
Amortization of intangible assets

7.ACCRUED LIABILITIES

The Company's accrued liabilities at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows:


(in millions)	(in millions)	June 30, 2023		December 31, 2022		(in millions)	March 31, 2024	December 31, 2023
Employee compensation and benefits	Employee compensation and benefits	$	37.0	$	41.2

Accrued taxes payable	Accrued taxes payable	4.6		4.8
Accrued taxes payable
Accrued taxes payable
Refunds payable and reserves	Refunds payable and reserves	17.4		19.3
Short-term contingent consideration	Short-term contingent consideration	5.7		—

Accrued royalties	Accrued royalties	5.1		4.8
Legal charges pending settlement		77.5		—
Accrued royalties
Accrued royalties
Legal settlement
Lease termination accrual

Other accrued liabilities
Other accrued liabilities
Other accrued liabilities	Other accrued liabilities	17.0		24.2
Total accrued liabilities	Total accrued liabilities	$	164.3	$	94.3

8.LONG-TERM DEBT

On June 30, 2023, the Company entered into an asset-based revolving credit facility (the “ABL Facility”) with an initial maximum principal amount of $90.0 million, with JPMorgan Chase Bank, N.A. as administrative agent and issuing bank, the other lender parties thereto, and certain of the Company's domestic subsidiaries (the "Guarantors"). ~~The~~On October 31, 2023, the Company entered into an amendment to the ABL Facility ~~includes an option for the Company~~ to ~~request an~~ increase in the maximum principal amount of the available revolving line of credit by ~~up to~~ $25.0 million for a total maximum principal commitment of $115.0 ~~million.~~million under the ABL Facility, which was effected through a new commitment provided by a new lender, Goldman Sachs Bank USA. The ABL Facility ~~replaced the Company's previous credit facility and~~ matures on June 30, 2026. The obligations of the Company are guaranteed by the Guarantors, and the ABL Facility is secured by substantially all of the assets of the Company and the Guarantors. The Company had long-term debt of $40.0 million under the ABL Facility at ~~June 30,~~March 31, 2024 and December 31, 2023, net of $1.3 million and ~~incurred $1.6~~$1.5 million of debt issuance costs, ~~during the three months ended June 30, 2023. The proceeds of~~respectively. Proceeds from the ABL Facility were or will be used for the working capital needs and general corporate purposes of the Company and its ~~subsidiaries, including, without limitation, consummating permitted acquisitions and refinancing existing indebtedness.~~subsidiaries.

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Availability under the ABL Facility is subject to a borrowing base, which is the lesser of (a) 85% of the Company's and the Guarantor's eligible accounts receivable plus certain cash held in a segregated and fully-blocked account with the administrative agent in an amount up to $20.0 million ("Eligible Cash") minus any reserves established by the administrative agent in accordance with the ABL Facility, and (b) the aggregate amount of cash collections from eligible accounts of the Company and the Guarantors for the 60 consecutive days most recently ended. Subject to certain conditions, the Company can freely withdraw cash from the Eligible Cash account, provided that any reduction in the Eligible Cash amount will have a corresponding reduction in the borrowing base.

~~Table of Contents~~

Loans outstanding under the ABL Facility will bear interest at a rate per annum equal to, at the option of the Company, either (a) the greatest of (i) the daily Prime Rate, (ii) the daily NYFRB Rate plus 0.50%, and (iii) the monthly Adjusted Term SOFR Rate (as defined below) plus 1.00% (the “ABR”) plus an applicable margin ranging from 1.00% to 1.50% depending on the aggregate average unused availability under the ABL Facility during the prior quarter or (b) term SOFR for a tenor of one, three or six months (at the Company’s election) plus 0.10% (the “Adjusted Term SOFR Rate”) plus an applicable margin ranging from 2.00% to 2.50% depending on the average unused availability under the ABL Facility during the prior quarter, with an ABR floor of 1.00% and an Adjusted Term SOFR Rate floor of 0.00%. Under the ABL Facility the undrawn fee ranges from 37.5 to 50 basis points based on the daily amount of the available revolving commitment. The weighted average interest rate for borrowings under the ABL Facility as of ~~June 30, 2023~~March 31, 2024 was ~~7.59%~~8.71%.

The Company may elect to prepay all or any portion of the amounts owed prior to the maturity date without premium or penalty. The ABL Facility is also subject to customary mandatory prepayments with the proceeds of unpermitted indebtedness and upon the occurrence of an over-advance. Voluntary and mandatory prepayments and all other payments of the ABL Facility must be accompanied by payment of accrued interest on the principal amount repaid or prepaid.

The ABL Facility contains customary loan terms, interest rates, representations and warranties and affirmative and negative covenants, in each case, subject to customary limitations, exceptions and exclusions. Covenants under the ABL Facility limit or restrict the Company and its subsidiaries' ability to incur liens, incur indebtedness, dispose of assets, make investments, make certain restricted payments, merge or consolidate and enter into certain speculative hedging arrangements. The ABL Facility requires the Company and the Guarantors, on a consolidated basis, to maintain minimum liquidity of $60.0 million and minimum availability of $25.0 million at all times before achieving a fixed charge coverage ratio of 1.0 to 1.0 and thereafter, to maintain a fixed charge coverage ratio of 1.0 to 1.0 until achieving availability under the ABL Facility of greater than the greater of (a) $10.6 million and (b) 12.5% of the lesser of the maximum commitment amount and the borrowing base for a period of 30 consecutive days. As of ~~June 30, 2023,~~March 31, 2024, availability under the ABL Facility was ~~$48.5~~$41.3 million. In addition, the ABL Facility includes a number of customary events of default. If any event of default occurs (subject, in certain instances, to specified grace periods), the principal, premium, if any, interest and any other monetary obligations on all the ~~then outstanding~~then-outstanding amounts under the ABL Facility may become due and payable immediately.

Under the terms of the ABL Facility, if (i) an event of default has occurred and is continuing or (ii) availability under the ABL Facility is less than the greater of (a) $12.5 million and (b) 15% of the lesser of the maximum commitment amount and the borrowing base, the Company will become subject to cash dominion, upon which the administrative agent will apply funds credited to a collection account to first prepay any outstanding protective advances, second to prepay any revolving loans and third, to cash collateralize any outstanding letter of credit exposure. Such cash dominion period will end when availability has remained in excess of the greater of (i) $12.5 million and (ii) 15% of the lesser of the maximum commitment amount and the borrowing base for a period of 45 consecutive days and no event of default is continuing.

~~The Company had no outstanding balances under the previous credit facility as of December 31, 2022 or June 30, 2023, the date such facility was replaced with the ABL Facility.~~

9.OTHER LONG-TERM LIABILITIES

The Company's other long-term liabilities at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows:


(in millions)	(in millions)	June 30, 2023		December 31, 2022		(in millions)	March 31, 2024	December 31, 2023
Contingent consideration	Contingent consideration	$	1.9	$	6.8
Escrow liability	Escrow liability	7.5		7.5
Legal settlement
Other	Other	2.0		0.2
Total other long-term liabilities	Total other long-term liabilities	$	11.4	$	14.5

Contingent consideration as of ~~June 30, 2023~~March 31, 2024 consisted of the long-term portion of contingent consideration related to the acquisition of Sividon. As of December 31, 2022, contingent consideration consisted of the long-term portion of contingent consideration related to the acquisitions of Sividon and Gateway. As of June 30, 2023, the contingent consideration related to the acquisition of Gateway is recorded to Accrued Liabilities in the Condensed Consolidated Balance Sheets. Additionally, a corresponding amount of cash to the escrow liability of $7.5 million has been restricted for the potential payment to Gateway under the indemnity and escrow provisions of the Gateway acquisition agreement. See Note 16 for additional information on the Gateway acquisition.

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On October 23, 2023 (the "Effective Date"), the Company and Ravgen, Inc. ("Ravgen") entered into a settlement agreement pursuant to which the parties agreed to settle a pending lawsuit. Subject to the terms of the settlement agreement, the Company agreed to pay Ravgen a contingent payment of $21.25 million payable in five annual installments, with (1) the first installment of $5.0 million payable on the later of (a) 30 days after notification in writing by Ravgen of the successful conclusion in favor of Ravgen of all of Ravgen's litigations and patent reexaminations pending as of the Effective Date and (b) January 1, 2026 (the "Contingent Payment Date"); (2) the second installment of $5.0 million on the first anniversary of the Contingent Payment Date; (3) the third installment of $5.0 million on the second anniversary of the Contingent Payment Date; (4) the fourth installment of $5.0 million on the third anniversary of the Contingent Payment Date; and (5) $1.25 million on the fourth anniversary of the Contingent Payment Date. Additionally, the Company agreed to pay Ravgen a minimum of $12.75 million in three installment payments of which $7.75 million is outstanding as of March 31, 2024. The remaining payments will be made in two installments: (1) $5.0 million on or before October 31, 2024 and (2) $2.75 million on or before October 31, 2025. The Company has accrued $5.0 million in Accrued Liabilities and $24.0 million in Other long-term liabilities for these payments in the Company's Condensed Consolidated Balance Sheet as of March 31, 2024.

10.PREFERRED AND COMMON STOCKHOLDERS' EQUITY

The Company is authorized to issue up to 5.0 million shares of preferred stock, par value $0.01 per share. There were no shares of preferred stock outstanding at ~~June 30, 2023.~~March 31, 2024.

The Company is authorized to issue up to 150.0 million shares of common stock, par value $0.01 per share. There were ~~81.9~~90.5 million shares of common stock issued and outstanding at ~~June 30, 2023.~~March 31, 2024.

Shares of common stock issued and outstanding


		Six months ended June 30,
	Three months ended March 31,					Three months ended March 31,
(in millions)	(in millions)	2023	2022	(in millions)	2024		2023
Beginning common stock issued and outstanding	Beginning common stock issued and outstanding	81.2	80.0
Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plan	Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plan	0.7	0.6

Common stock issued and outstanding at end of period	Common stock issued and outstanding at end of period	81.9	80.6
Common stock issued and outstanding at end of period
Common stock issued and outstanding at end of period

Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed based on the weighted-average number of shares of common stock, including the dilutive effect of common stock equivalents, outstanding. In periods when the Company has a net loss, stock awards are excluded from the calculation of diluted net loss per share as their inclusion would have an antidilutive effect.

The following is a reconciliation of the denominators of the basic and diluted earnings per share (“EPS”) computations:

Three months ended
June 30,

Six months ended
June 30,

Three months ended
March 31,

(in millions)

2023

2022

2023

2022

Denominator:

Weighted-average shares outstanding used to compute basic EPS

81.7

80.4

81.5

80.3

Effect of dilutive shares

—

Effect of dilutive shares

Weighted-average shares outstanding and dilutive securities used to compute diluted EPS

81.7

80.4

81.5

80.3

Weighted-average shares outstanding and dilutive securities used to compute diluted EPS

Certain outstanding options and restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. These potential dilutive shares of common stock, which may be dilutive to future diluted earnings per share, are as follows:

Three months ended
June 30, Six months ended
June 30,
(in millions) 2023 2022 2023 2022
Anti-dilutive options and RSUs excluded from EPS computation 5.5 5.4 5.5 5.4

~~Stock Repurchase Program~~

In June 2016, the Company’s Board of Directors authorized a share repurchase program of $200.0 million of the Company’s outstanding common stock. The Company may repurchase its common stock from time to time or on an accelerated basis through open market transactions or privately negotiated transactions as determined by the Company's management. The amount and timing of stock repurchases under the program will depend on business and market conditions, stock price, trading restrictions, acquisition activity and other factors. As of June 30, 2023, the Company has $110.7 million remaining under its current share repurchase authorization. No shares were repurchased during the six months ended June 30, 2023 or June 30, 2022 under this authorization.


	Three months ended March 31,
(in millions)	2024	2023
Anti-dilutive options and RSUs excluded from EPS computation	6.3	5.6

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11.STOCK-BASED COMPENSATION

On November 30, 2017, the Company’s stockholders approved the adoption of the 2017 Employee, Director and Consultant Equity Incentive Plan (as amended, the “2017 Plan”). The 2017 Plan allows the Company, under the direction of the Compensation and Human Capital Committee (the "CHCC") of the Board of Directors, to make grants of restricted stock and restricted stock unit awards to employees, consultants, and directors. Stockholders have subsequently approved amendments to the 2017 Plan increasing the shares available to grant thereunder, including most recently at the Company's annual meeting of stockholders held on June 1, 2023, when stockholders approved an amendment to the 2017 Plan to increase the aggregate number of shares of common stock available thereunder for the granting of awards by an additional 4.8 million shares. As of ~~June 30, 2023,~~March 31, 2024, the Company ~~has 4.9~~had 2.5 million shares of common stock available for grant under the 2017 Plan. If an RSU awarded under the 2017 Plan is cancelled or forfeited without the issuance of shares of common stock, the unissued or reacquired shares that were subject to the RSU will again be available for issuance pursuant to the 2017 Plan.

The number of shares, terms, and vesting periods are generally determined by the Company’s Board of Directors or the CHCC on an award-by-award basis. RSUs granted to employees generally vest either ratably over three or four years or as cliff vesting after three years either on the anniversary of the date on which the RSUs were granted or during the month in which such anniversary dates occur. The number of performance-based RSUs ("PSUs") awarded to certain employees may be increased or reduced based on certain additional performance and market metrics. RSUs granted to non-employee directors vest in full upon the earlier of the completion of one year of service following the date of the grant or the date of the next annual meeting of stockholders following such grant. Options granted to the Company's President and Chief Executive Officer as an inducement to his employment expire on August 13, 2027.

The performance and market conditions associated with PSU awards granted during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 include vesting that is based on revenue targets (34% weighting), adjusted earnings per share targets (33% weighting), and relative total stockholder return (33% weighting) measured against the Nasdaq Health Care Index (IXHC) using the 20-trading day averages at the beginning and end of the measurement period. The measurement period for the relative total stockholder return metric is January 1, ~~2023~~2024 through December 31, ~~2025,~~2026, and the revenue and adjusted earnings per share metrics will be measured based on fiscal year ~~2025~~2026 results. The Company estimates the likelihood of achievement of performance conditions for all PSU awards at the end of each period. To the extent those awards or portions thereof are considered probable of being achieved, such awards or portions thereof are expensed over the performance period. The portion of the awards pertaining to relative total stockholder return represent market conditions and, accordingly, the estimated fair value of such awards are recognized over the performance period.

Stock Options

A summary of the stock option activity for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 is as follows:

(number of shares in millions) Number
of
Shares Weighted
Average
Exercise
Price
Options outstanding at December 31, 2022 0.7 $ 13.38
Less:
Options exercised — $ —
Options canceled or expired — $ —
Options outstanding at June 30, 2023 0.7 $ 13.38
Options exercisable at June 30, 2023 0.4 $ 13.38


(number of shares in millions)	Number of Shares	Weighted Average Exercise Price
Options outstanding at December 31, 2023	0.7	$	13.38




Options outstanding at March 31, 2024	0.7	13.38
Options exercisable at March 31, 2024	0.5	$	13.38

As of ~~June 30, 2023,~~March 31, 2024, there was ~~$0.8~~$0.3 million of total unrecognized stock-based compensation expense related to stock options that will be recognized over a weighted-average period of ~~1.2~~0.4 years. There were no options granted during the ~~six~~three months ended ~~June 30, 2023.~~March 31, 2024.

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Restricted Stock Units

A summary of the RSU awards activity under the Company’s equity plan and inducement awards, including PSU awards, for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 is as follows:


(number of shares in millions)	(number of shares in millions)	Number of Shares	Weighted Average Grant Date Fair Value		(number of shares in millions)	Number of Shares	Weighted Average Grant Date Fair Value
RSUs unvested and outstanding at December 31, 2022		3.7	$	25.08
RSUs unvested and outstanding at December 31, 2023
RSUs granted	RSUs granted	2.0	$	24.07
Less:	Less:
RSUs vested	RSUs vested	(0.7)	$	26.42
RSUs vested
RSUs vested
RSUs canceled	RSUs canceled	(0.2)	$	24.95
RSUs unvested and outstanding at June 30, 2023		4.8	$	24.47
RSUs unvested and outstanding at March 31, 2024

Employee Stock Purchase Plan

The Company also has an Employee Stock Purchase Plan that was initially approved by stockholders in 2012 and was amended and approved by the Board of Directors of the Company on September 23, 2021 and the stockholders on June 2, 2022 (the "Amended and Restated 2012 Purchase Plan"), under which 4.0 million shares of common stock were authorized. Shares are issued under the Amended and Restated 2012 Purchase Plan twice yearly at the end of each offering period and the number of shares that may be purchased by any participant during an offering period is limited to 5,000 shares. The first offering period of 2024 started on December 1, 2023 and will end on May 31, 2024. The second offering period of 2024 will begin on June 1, 2024 and will end on November 30, 2024. As of ~~June 30, 2023, 1.5~~March 31, 2024, 1.3 million shares of common stock were available for issuance under the Amended and Restated 2012 Purchase Plan. Shares purchased under, and compensation expense associated with, the Amended and Restated 2012 Purchase Plan for the three months ended March 31, 2024 and 2023 are as follows:


	Three months ended March 31,
(in millions)	2024		2023
Shares purchased under the plan	—		—
Plan compensation expense	$	0.5	$	0.5

Stock-Based Compensation Expense

Stock-based compensation expense recognized and included in the Condensed Consolidated Statements of Operations and Comprehensive Loss was allocated as follows:


		Three months ended June 30,				Six months ended June 30,
		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
(in millions)
(in millions)
(in millions)	(in millions)	2023		2022		2023		2022
Cost of testing revenue	Cost of testing revenue	$	0.4	$	0.5	$	0.7	$	0.8

Cost of testing revenue
Cost of testing revenue
Research and development expense
Research and development expense
Research and development expense	Research and development expense	1.1		1.0		1.7		3.4
Selling, general, and administrative expense	Selling, general, and administrative expense	9.7		8.9		16.3		16.3
Selling, general, and administrative expense
Selling, general, and administrative expense
Total stock-based compensation expense	Total stock-based compensation expense	$	11.2	$	10.4	$	18.7	$	20.5
Total stock-based compensation expense
Total stock-based compensation expense

As of ~~June 30, 2023,~~March 31, 2024, there was ~~$84.4~~$104.2 million of total unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of ~~2.4~~2.5 years. The Company recognizes forfeitures as they occur. In the event that a PSU is determined to be improbable of vesting, the Company records an adjustment to reverse all previously recognized expense associated with the equity award in the current period.

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12.INCOME TAXES

In order to determine the Company’s quarterly provision for income taxes, the Company used an estimated annual effective tax rate that is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rate from quarter to quarter.

~~Table of Contents~~

For the three months ended ~~June 30, 2023,~~March 31, 2024, there was no$0.1 million in income tax expense, or approximately 0%(0.4)% of pre-tax loss, compared to an income tax ~~benefit~~expense of ~~$3.8~~$2.1 million, or approximately ~~21.2%~~(4.0)% of pre-tax loss, for the three months ended June 30, 2022. Income tax expense for the six months ended June 30, 2023 was $2.1 million, or approximately (1.24)% of pre-tax loss, compared to an income benefit of $9.7 million, or approximately 21.9% of pre-tax loss for the six months ended June 30, 2022.March 31, 2023. For the three ~~and six~~ months ended ~~June 30, 2023,~~March 31, 2024, the Company’s effective tax rate differs from the U.S. federal statutory rate primarily due to the recognition of valuation allowances. Due to the Company's cumulative loss and the exhaustion of future taxable income from the reversal of taxable temporary differences, the Company's estimated annual effective tax rate for the current year includes a valuation allowance against the majority of the current year increase in deferred tax assets. For the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023, the Company’s effective tax rate differs from the U.S. federal statutory rate primarily due to ~~disallowed executive compensation, disallowed meals~~the recognition of valuation allowances and ~~entertainment expenses, stock compensation expenses, and asset impairment expenses.~~uncertain tax positions.

13.COMMITMENTS AND CONTINGENCIES

The Company is involved from time to time in various disputes, claims and legal actions, including class actions and other litigation, including the matters described below, arising in the ordinary course of business. Such actions may include allegations of negligence, product or professional liability or other legal claims, and could involve claims for substantial compensatory and punitive damages or claims for indeterminate amounts of damages. The Company is also involved, from time to time, in investigations by governmental agencies regarding its business which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of the government or private payors. The Company has received subpoenas from time to time related to billing or other practices based on the False Claims Act or other federal and state statutes, regulations or other laws.

The Company intends to defend its current litigation matters, but cannot provide any assurance as to the ultimate outcome or that an adverse resolution would not have a material adverse effect on its financial condition, results of operations or cash flows.

The Company assesses legal contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. When evaluating legal contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the proceedings may be in early stages, there may be uncertainty as to the outcome of pending appeals or motions, there may be significant factual issues to be resolved, and there may be complex or novel legal theories to be presented. In addition, damages may not be specified or the damage amounts claimed may be unsupported, exaggerated or unrelated to possible outcomes, and therefore, such amounts are not a reliable indicator of potential liability.

As of ~~June 30, 2023,~~March 31, 2024, except as noted below, the Company has not recorded any material accrual for loss contingencies associated with legal proceedings or other matters or determined that an unfavorable outcome is probable and reasonably estimable in accordance with ASC 450, Contingencies. However, it is possible that the ultimate resolution of legal proceedings or other matters, if unfavorable, may be material to the Company's results of operations, financial condition or cash flows. Further, in the event that damages from an unfavorable resolution of one or more of these proceedings exceed the aggregate amount of the coverage limits of the Company’s insurance, or if the Company’s insurance carriers disclaim coverage, the amounts payable by the Company could also have a material adverse impact on the Company’s results of operations, financial condition or cash flows.

~~Securities Class Action~~

On September 27, 2019, a class action complaint was filed in the U.S. District Court for the District of Utah against the Company, its former President and Chief Executive Officer, Mark C. Capone, and its Chief Financial Officer, R. Bryan Riggsbee (Defendants). On February 21, 2020, the plaintiff filed an amended class action complaint, which added the Company's former Executive Vice President of Clinical Development, Bryan M. Dechairo, as an additional Defendant. This action, captioned ~~In re Myriad Genetics, Inc. Securities Litigation~~ (No. 2:19-cv-00707-DBB), is premised upon allegations that the Defendants made false and misleading statements regarding the Company's business, operations, and acquisitions. The lead plaintiff seeks the payment of damages allegedly sustained by it and the purported class by reason of the allegations set forth in the amended complaint, plus interest, and legal and other costs and fees. On March 16, 2021, the U.S. District Court for the District of Utah denied the Company's motion to dismiss. On December 1, 2021, the U.S. District Court for the District of Utah granted plaintiff's motion for class certification. On August 3, 2023, the Company entered into a stipulation and agreement of settlement (the "Settlement Agreement") to resolve this lawsuit. Also on August 3, 2023, the parties filed a motion seeking court approval of the settlement. Defendants continue to deny any liability.

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Pursuant to the terms of the Settlement Agreement, the Company has agreed to pay a settlement amount of $77.5 million (the “Settlement Amount”), consisting of at least $20 million in cash (the “Initial Cash Amount”) and up to $57.5 million in freely tradeable shares of common stock. Within ten business days of preliminary court approval of the settlement, which is expected to occur in the third quarter of 2023, the Company is required to deposit the Initial Cash Amount into an escrow account controlled by plaintiff's counsel. Prior to the hearing on the final approval of the settlement (the “Final Approval Hearing”), the Company can elect to pay all or a portion of the remaining $57.5 million of the Settlement Amount in cash (the “Additional Cash Amount”) or shares of common stock (the “Stock Component”). The number of shares of common stock, if any, that the Company will issue in connection with the settlement (the "Settlement Shares") will be calculated by dividing the Stock Component by the volume-weighted average price of common stock for the ~~ten~~ consecutive trading days immediately preceding the date of the Final Approval Hearing. The Company expects that any Settlement Shares issued in connection with the settlement will be made in reliance on an exemption from registration under Section 3(a)(10) of the Securities Act of 1933, as amended, which will require court approval following a hearing on the fairness of the exchange. The Company is required to issue and deliver any Settlement Shares and/or deposit any Additional Cash Amount in the settlement fund within three calendar days of the date that final judgment is entered by the court, which is expected to occur in the first quarter of 2024, provided that, with respect to the Stock Component, if the volume-weighted average price of the common stock drops to a level that would require the Company to issue shares in excess of 5% of the total number of outstanding shares of common stock, then the Company will have four months from the date of the Final Approval Hearing to pay in cash any Settlement Amount that remains unpaid following payment of the Initial Cash Amount. The Company intends to pay the majority of the Settlement Amount in cash from its cash on hand, operating cash flow and asset based credit facility.

As part of the settlement, the settlement class has agreed to release the Company, the other defendants named in the lawsuit, and certain of their respective related parties from any and all claims, suits, causes of action, damages, demands, liabilities, or losses that are based upon, arise from, or relate to (a) the purchase, acquisition or trading of any common stock during the class period from August 9, 2017 until February 6, 2020; and (b) the allegations, transactions, facts, matters or occurrences, representations, or omissions involved, set forth, or referred to in the class action. The Settlement Agreement contains no admission of liability, wrongdoing or responsibility by any of the parties. The settlement is subject to court approval.

~~The Company has accrued $77.5 million for the pending settlement of this action, which is included in Accrued liabilities in the Company's Condensed Consolidated Balance Sheet as of June 30, 2023.~~

Stockholder Derivative Actions

On August 9, 2021, a stockholder derivative complaint was filed in the Delaware Court of Chancery against the Company's former President and Chief Executive Officer, Mark C. Capone, its former Chief Financial Officer, R. Bryan Riggsbee, its former Executive Vice President of Clinical Development, Bryan M. Dechairo, and certain of the Company's current and former directors, Lawrence C. Best, Walter Gilbert, John T. Henderson, Heiner Dreismann, Dennis Langer, Lee N. Newcomer, S. Louise Phanstiel, and Colleen F. Reitan (collectively, the ~~Individual Defendants)~~"Individual Defendants"), and the Company, as nominal defendant. The complaint is premised upon similar allegations asthat were set forth in the securities class action lawsuit that was settled and then dismissed by the U.S. District Court for the District of Utah in December 2023 (the "Securities Class Action"), including that the Individual Defendants made false and misleading statements regarding the Company's business and operations. The plaintiff, Donna Hickock, asserts breach of fiduciary duty and unjust enrichment claims against the Individual Defendants and seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged breaches, or disgorgement or restitution, from each of the Individual Defendants, plus interest. Plaintiff Hickock also seeks legal and other costs and fees relating to this action. On November 19, 2021, this action was stayed by the Delaware Court of Chancery pending the resolution of the securities class action lawsuit.

On January 18, 2022, a stockholder derivative complaint was filed in the Delaware Court of Chancery against the Individual Defendants, and the Company, as nominal defendant. The action is premised upon similar allegations as set forth in the ~~securities class action~~Securities Class Action and the Hickock stockholder derivative action. The plaintiff, Esther Kogus, asserts that the Individual Defendants breached their fiduciary duties and also asserts unjust enrichment and aiding and abetting breaches of fiduciary duty claims against the Individual Defendants. Plaintiff Kogus seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged breaches and claims, and restitution from the Individual Defendants. On behalf of herself, plaintiff Kogus seeks legal and other costs and fees relating to this action.

On March 3, 2022, the Delaware Court of Chancery consolidated the Hickock and Kogus derivative actions and stayed the consolidated action.

~~Table~~ On April 19, 2024, the Court of ~~Contents~~

Chancery ordered that Leo Shumacher be substituted for Ms. Kogus as a plaintiff in this consolidated action.

On September 17, 2021, a stockholder derivative complaint was filed in the U.S. District Court in the District of Delaware against the Individual Defendants, and the Company, as nominal defendant. The action is premised upon similar allegations as set forth in the ~~securities class action~~Securities Class Action and Hickock stockholder derivative action. The plaintiff, Karen Marcey, asserts that the Individual Defendants violated U.S. securities laws and breached their fiduciary duties, and also asserts unjust enrichment, waste of corporate assets and insider trading claims against all or some of the Individual Defendants. Plaintiff Marcey seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged violations and restitution from the Individual Defendants, plus interest and, on behalf of herself, legal and other costs and fees relating to this action. On January 4, 2022, this action was stayed by the U.S. District Court for the District of Delaware pending the resolution of the securities class action lawsuit.

~~Other Legal Proceedings~~

On ~~December 21, 2020, Ravgen, Inc. filed~~April 30, 2024, the parties across all of the foregoing stockholder derivative actions entered into a ~~lawsuit against~~global stipulation of settlement to resolve the ~~Company and its wholly owned subsidiary, Myriad Women's Health, Inc., in~~actions (the "Settlement"). On May 3, 2024, the ~~U.S. District Court for~~parties submitted the District of Delaware, alleging infringement of two Ravgen-owned patents. The lawsuit seeks monetary damages, enhancement of those damages for willfulness, injunctive relief, and recovery of attorney's fees and costs. Various third parties have filed challengesSettlement to the ~~validity~~Delaware Court of ~~the asserted patents with the U.S. Patent and Trademark Office, which challenges have been instituted~~Chancery for review. On March 14, 2022, the case was stayed pending the outcome of the first of these validity challenges. On February 13, 2023, the court lifted the stay and litigation of the case has resumed. The parties are currently engaged in fact discovery.

On February 3, 2022, a purported class action lawsuit was filed against the Company in the U.S. District Court in the Northern District of California by Ashley Carroll. Plaintiff alleges, among other things, that the Company made false statements about the accuracy of its Prequel prenatal screening test. The complaint seeks unspecified monetary damages, as well as punitive damages and injunctive relief. On April 1, 2022, the Company filed a motion to dismiss the lawsuit. On May 2, 2022, the plaintiff amended her complaint. On June 2, 2022, the Company filed a motion to dismiss the amended complaint. On July 26, 2022, the court granted and denied in part the Company's motion to dismiss the amended complaint.approval. As part of the ~~court's order, plaintiff was granted leave to file a second amended complaint. The plaintiff filed a second amended complaint on August 16, 2022. On September 6, 2022,~~Settlement, (i) the Company ~~filed a motion~~agreed to ~~dismiss~~adopt or implement certain corporate governance reforms; and (ii) the ~~second amended complaint. On November 9, 2022,~~parties agreed that plaintiffs' counsel will apply to the court for an award of attorneys' fees and expenses not to exceed $950,000 to be paid by the Company, and that the Individual Defendants and the Company will not oppose or object to the requested fee award. The Settlement contains no admission of liability, wrongdoing or responsibility by any of the parties. The Settlement is subject to approval by the Delaware Court ~~granted and denied in part~~of Chancery.

The Company has accrued $950,000 for the ~~Company's motion to dismiss~~pending settlement of the ~~second amended complaint. The case is currently in on-going non-expert fact discovery,~~foregoing stockholder derivative actions, which is ~~set to close on May 13,~~included in Accrued Liabilities in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2024.

Other Legal Proceedings

From time to time, the Company receives recoupment requests from third-party payors for alleged overpayments. The Company disagrees with the contentions of the pending requests or has recorded an estimated reserve for the alleged overpayments.

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14.SUPPLEMENTAL CASH FLOW INFORMATION

The Company's supplemental cash flow information for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and March 31, 2023 ~~and June 30, 2022~~ are as follows:

Six months ended
June 30,
(in millions) 2023 2022
Cash paid for income taxes $ 1.1 $ 1.0
Non-cash investing and financing activities:
Establishment of operating lease right-of-use assets and lease liabilities
Operating lease right-of-use assets $ 8.4 $ 15.5
Operating lease liabilities 8.7 15.5
Tenant improvement allowance not yet received — 16.0
Purchases of property, plant and equipment in accounts payable and accrued liabilities 7.5 4.3

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	Three months ended March 31,
(in millions)	2024		2023
Cash paid for income taxes	$	—	$	0.3
Cash paid for interest	0.2		—

Non-cash investing and financing activities:
Change in operating lease right-of-use assets and lease liabilities
Operating lease right-of-use assets	$	(0.3)	$	6.0
Operating lease liabilities	(3.1)		6.0
Tenant improvement allowance not yet received	—		2.7
Purchases of property, plant and equipment and capitalization of internal-use software in accounts payable and accrued liabilities	4.5		8.0

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Balance Sheets that agrees to the amounts included in the Condensed Consolidated Statements of Cash Flows.

Six months ended
June 30,

Three months ended
March 31,

(in millions)

2023

2022

Cash and cash equivalents

102.8

104.2

Cash and cash equivalents

Restricted cash

9.9

2.0

Total cash, cash equivalents, and restricted cash

112.7

106.2

Total cash, cash equivalents, and restricted cash

15.LEASES

The Company leases certain office spaces and research and development laboratory facilities, vehicles, and office equipment with remaining lease terms ranging from approximately one to fifteen years. Operating leases are included in Operating lease right-of-use assets, Noncurrent operating lease liabilities, and Current maturities of operating lease liabilities in the Condensed Consolidated Balance Sheets. Finance leases are included in Other assets, Accrued liabilities, and Other long-term liabilities in the Condensed Consolidated Balance Sheets.

Due to the increase in remote and hybrid work ~~by the Company's employees~~ and the Company's ~~plans~~need to ~~build new laboratory~~ensure its facilities are designed to handle future growth, the Company ishas been executing on a multi-year strategy to reset its real estate footprint. As part of that strategy, in fiscal year 2022, the Company entered into new leases in west Salt Lake City, Utah and South San Francisco, California with the intent to relocate much of its core operations to these new facilities. Duringduring the three months ended March 31, 2023, the Company took full possession of the remaining phases of the west Salt Lake City facility and recognized an additional $5.9 million right-of-use asset and corresponding lease liability, net of tenant improvement allowance not yet received. ~~Total future rent payments under~~Also during the ~~west Salt Lake City lease are approximately $79.6 million.~~

~~The Company has also vacated certain existing facilities. During the six~~three months ended June 30, 2022, the Company ceased the use of one of its leased facilities in Salt Lake City. As a result, the Company recorded an impairment charge on right-of-use assets of $8.6 million and an impairment charge of $2.1 million on the related leasehold improvements. The total $10.7 million impairment is included in Goodwill and long-lived asset impairment charges in the Condensed Consolidated Statements of Operations.

~~During the six months ended June 30,~~March 31, 2023, the Company decided to cease the use of its corporate headquarters in Salt Lake City and transition corporate support operations to its new facility in west Salt Lake ~~City. The~~City, and as of December 31, 2023, the Company ~~expects to designate a sub-lessee or new tenant for the facility and therefore has not recognized a loss on~~had formally assigned the lease asfor its previous corporate headquarters to a third party.

During the three months ended March 31, 2024, the Company terminated the lease for one of ~~June 30, 2023.~~its Salt Lake City facilities. As a result of the termination, the short-term lease liability of $3.1 million associated with the lease was removed from the Company's Condensed Consolidated Balance Sheets. The ~~Company will remain liable for all rent payments until a sub-lessee or new tenant can be found.~~total net gain recognized associated with the termination of the lease was $1.2 million, which is included in Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.

As of ~~June 30, 2023,~~March 31, 2024, except as noted above, the Company expects to continue to occupy ~~our~~its existing facilities until the expiration of the leases.

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16.~~BUSINESS ACQUISITIONS~~

On November 1, 2022, the Company acquired all of the membership interests of Gateway, a San Diego-based personal genomics company and developer of consumer genetic tests that give families insight into their future children.

The acquisition date fair value of the consideration transferred was $68.7 million. The following table summarizes the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition.


~~(in thousands)~~	~~Estimated fair value~~
~~Identifiable assets acquired~~
~~Current assets~~	$	~~1,053~~
~~Inventory~~	~~1,900~~
~~Intangible assets~~
~~Developed technology~~	~~10,100~~
~~Trademarks~~	~~6,100~~
~~Customer relationships~~	~~1,600~~
~~Total intangible assets~~	~~17,800~~
~~Other non-current assets~~	~~161~~
~~Total identifiable assets acquired~~	~~20,914~~
~~Liabilities assumed~~
~~Accounts payable~~	~~(246)~~
~~Accrued liabilities~~	~~(693)~~
~~Total liabilities assumed~~	~~(939)~~
~~Net identifiable assets acquired~~	~~19,975~~
~~Goodwill~~	~~48,723~~
~~Total fair value of Purchase Price~~	$	~~68,698~~

~~Pro Forma Information~~

The pro forma results presented below include the effects of Gateway acquisition as if it had been consummated as of January 1, 2022, with adjustments to give effect to pro forma events that are directly attributable to the acquisition, which includes adjustments related to the amortization of acquired intangible assets, interest income and expense, and depreciation.

The pro forma results do not reflect any operating efficiency or potential cost savings that may result from the consolidation of Gateway with the Company. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operation of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations and are not necessarily indicative of results that might have been achieved had the acquisition been consummated as of January 1, 2022. The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma earnings.

Three Months Ended
June 30, 2022 Six Months Ended
June 30, 2022
(in thousands)
Revenue $ 184,466 $ 354,675
Net loss (14,663) (35,775)

Revenue and net loss from Gateway included in the Company's Consolidated Statements of Operations during the three and six months ended June 30, 2023 is $5.1 million and $(1.6) million, respectively, and $10.6 million and $(2.2) million, respectively.

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~~17.~~ ACCUMULATED OTHER COMPREHENSIVE LOSS

The functional currency of the Company’s international subsidiaries is the local currency. For those subsidiaries, expenses denominated in the functional currency are translated into U.S. dollars using average exchange rates in effect during the period and assets and liabilities are translated using period-end exchange rates. The foreign currency translation adjustments are included in Accumulated other comprehensive loss as a separate component of Stockholders’ equity.

The following table shows the cumulative translation adjustments included in Accumulated other comprehensive loss (in millions):


Ending balance December 31, ~~2022~~2023	$	~~(6.2)~~(3.7)
Period translation adjustments	~~0.8~~ (1.3)
Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity	~~0.5~~0.7
Ending balance ~~June 30, 2023~~March 31, 2024	$	~~(4.9)~~(4.3)

17.ACQUISITION

On February 1, 2024, the Company acquired from Intermountain Health select assets for an immaterial amount from its Intermountain Precision Genomics ("IPG") laboratory business, including the Precise Tumor Test, the Precise Liquid Test, and IPG's CLIA-certified laboratory in St. George, Utah ("Precise acquisition"). In connection with the Precise acquisition, the Company recognized a gain of $2.2 million, which is included in Other income in the Company's Condensed Consolidated Statements of Operations.

18.SUBSEQUENT EVENT

On April 10, 2024, the Company amended the lease for its west Salt Lake City, Utah headquarters to include approximately 63,000 additional square feet in anticipation of future operating needs. The lease has a term of 12 years, which is expected to commence in fiscal year 2026. Total future rent payments for the additional space are approximately $18.2 million.

On May 7, 2024, the Company signed a definitive agreement to sell its EndoPredict business to Eurobio Scientific ("Eurobio") for $10.0 million plus contingent consideration subject to certain earn-out conditions. As part of the transaction, the Company will license the rights to continue to produce and sell EndoPredict as a laboratory developed test in the U.S. and will license to Eurobio the right to sell Prolaris in vitro diagnostic kits outside the U.S. The closing of the transaction is subject to customary closing conditions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollars and shares in millions, except per share ~~data)~~data)

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the related notes thereto included in this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, ~~2022~~2023 included in our Annual Report on Form 10-K filed with the SEC on ~~March 1, 2023. “We,~~February 28, 2024.

“We,” “us,” “our,” “Myriad” and the “Company” as used in this Quarterly Report on Form 10‑Q refer to Myriad Genetics, Inc., a Delaware corporation, and its subsidiaries.

Myriad, the Myriad logo, BRACAnalysis, BRACAnalysis CDx, Colaris, ColarisAP, MyRisk, Myriad myRisk, MyRisk Hereditary Cancer, myChoice, Tumor BRACAnalysis CDx, MyChoice CDx, Prequel, Prequel with Amplify, Amplify, Foresight, Foresight Universal Plus, Precise Tumor, Precise Oncology Solutions, Precise Liquid, Precise MRD, FirstGene, SneakPeek, SneakPeek Early Gender DNA Test, SneakPeek Snap, Urosuite, Mygenehistory, Health.Illuminated., RiskScore, Prolaris, GeneSight, and EndoPredict are registered trademarks or trademarks of Myriad. Solely for convenience, trademarks, trade names and service marks referred to in this Quarterly Report on Form 10-Q may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks.

Cautionary Statement Regarding Forward-Looking Statements

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10‑Q contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Words such as “may,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “believes,” “seek,” “could,” “continue,” “likely,” “will,” “strategy” and “goal” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of known and unknown risks and uncertainties that could cause actual results, conditions, and events to differ materially and adversely from those anticipated. These risks include, but are not limited to:

•the risk that sales and profit margins of our existing tests may ~~decline or~~decline;

•the risk that we may not be able to operate our business on a profitable basis;

•risks related to our ability to achieve certain revenue growth targets and generate sufficient revenue from our existing product portfolio or in launching and commercializing new tests to be profitable;

•risks related to changes in governmental or private insurers’ coverage and reimbursement levels for our tests or our ability to obtain reimbursement for our new tests at comparable levels to our existing tests;

•risks related to increased competition and the development of new competing tests;

•the risk that we may be unable to develop or achieve commercial success for additional tests in a timely manner, or at all;

•the risk that we may not successfully develop new markets or channels for our ~~tests, including our ability to successfully generate substantial revenue outside the United States;~~tests;

•the risk that licenses to the technology underlying our tests and any future tests are terminated or cannot be maintained on satisfactory terms;

•risks related to delays or other problems with ~~constructing~~operating our laboratory testing facilities and ~~operating~~the transition of such facilities to our new laboratory testing facilities;

•risks related to public concern over genetic testing in general or our tests in particular;

•risks related to regulatory requirements or enforcement in the United States and foreign countries and changes in the structure of the healthcare system or healthcare payment systems;

•risks related to our ability to obtain new corporate collaborations or licenses and acquire or develop new technologies or businesses on satisfactory terms, if at all;

•risks related to our ability to successfully integrate and derive benefits from any technologies or businesses that we license, acquire, or develop;

•the risk that we are not able to secure additional financing to fund our business, if needed, in a timely manner or on favorable terms, if it all;

•~~continued uncertainties associated with COVID-19, including its possible effects on our operations and the demand for our products;~~

•risks related to our projections or estimates about the potential market opportunity for our current and future products;

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•the risk that we or our licensors may be unable to protect or that third parties will infringe the proprietary technologies underlying our tests;

•the risk of patent-infringement claims or challenges to the validity of our patents;

•risks related to changes in intellectual property laws covering our tests, or patents or enforcement, in the United States and foreign countries;

•risks related to security breaches, loss of data and other disruptions, including from cyberattacks;

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•risks of new, changing and competitive technologies in the United States and internationally, and that we may not be able to keep pace with the rapid technology changes in our industry, or properly leverage new technologies to achieve or sustain competitive advantages in our products;

•the risk that we may be unable to comply with financial or operating covenants under our credit or lending agreements;

•~~risks related~~the risk that we may not be able to ~~our inability to achieve and~~ maintain effective disclosure controls and procedures and internal control over financial reporting;

•risks related to current and future investigations, claims or lawsuits, including derivative claims, product or professional liability claims, ~~including the risk that the court does not approve the settlement of the class action lawsuit,~~ and risks related to the amount of our insurance coverage limits and scope of insurance coverage with respect thereto; and

•other factors discussed under the heading "Risk Factors" contained in Item 1A of our Annual Report on Form 10-K filed with the SEC on ~~March 1, 2023, our Quarterly Report on Form 10-Q filed with the SEC on May 4, 2023,~~February 28, 2024 and this Quarterly Report on Form 10-Q.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report on Form 10-Q, or in any document incorporated by reference might not occur. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law. All forward-looking statements in this Quarterly Report on Form 10-Q attributable to us or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

General

We are a leading genetic testing and precision medicine company dedicated to advancing health and well-being for all. We develop and offer tests that help assess the risk of developing disease or disease progression and guide treatment decisions across medical specialties where genetic insights can significantly improve patient care and lower health care costs. Our genetic tests provide insights that help people take control of their health and enable healthcare providers to better detect, treat, and prevent disease. We develop and offer genetic tests that help assess the risk of developing disease or disease progression and guide treatment decisions across medical specialties where critical genetic insights can significantly improve patient care and lower health care costs.

Personalized genetic data and digital and virtual consumer trends are converging to change traditional models of care. ~~Significant~~We believe significant growth opportunities exist to help patient populations with pressing health care needs through innovative genetic and precision medicine solutions and services. Our focus is on ~~organic~~innovation and growth ~~deployment of capital, including through opportunistic acquisitions, and the launch of new products. We are focusing our efforts~~ in three key areas where we have specialized products, capabilities, and expertise: Oncology, Women's Health, and ~~Mental Health.~~Pharmacogenomics. The pillars of our long-term growth strategy are founded on investments in science and innovation, technology-enabled operations, an elevated customer experience, strong commercial execution, and scalable operations. We believe our path to ~~organic~~continued growth is driven by articulating our clinical differentiation, ~~advancing a new commercial model in our Oncology and Women's Health businesses to reach a broader set of physicians and patients,~~ raising awareness with patients who we believe would benefit from testing products, and innovation that improves clinical outcomes, ease of use, and access. By investing in tech-enabled commercial tools, new laboratory facilities, ~~and~~ advanced automation, and standardized processes and technology, we believe we will be able to reduce complexity and ~~cost. With a foundation of financial, commercial, operational,~~cost while enhancing our ability to scale and ~~technological strength, we~~grow. We plan to expand some of our current products, such as our Foresight ~~Carrier Screen~~Universal Plus Test, which is an expanded carrier screening test ~~and~~that we anticipate launching in the second half of 2024. We also plan to launch new products, such as FirstGene, Precise Liquid, and ~~on a research use only basis,~~ Precise minimal residual disease, ~~(MRD),~~ which we expect will help accelerate our growth. We intend to develop and enhance our products to support growth, improve patient and provider experience, and reach more patients of all backgrounds. We are committed to disciplined management of a key set of initiatives to fulfill our mission and drive long-term growth and profitability.

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Business Updates

~~During the quarter ended June 30, 2023, our~~Our recent significant business updates and financial highlights include the following:

•~~Second~~First quarter ~~2023~~2024 testing volumes grew ~~38%~~9% year-over-year, ~~and 17% year-over-year excluding the contribution from our SneakPeek Early Gender DNA Test,~~ driven by ~~20%~~13% growth year-over-year in ~~MyRisk~~GeneSight test volumes, 9% growth year-over-year in hereditary cancer test volumes, and ~~23%~~9% growth year-over-year in ~~GeneSight~~Prenatal test ~~volumes.~~volumes, partially offset by a 16% decrease year-over-year in Tumor Profiling.

•Revenue growth of 2%12% year-over-year for the quarter ended ~~June 30, 2023 as compared to the quarter ended June 30, 2022.~~March 31, 2024.

•~~Achieved~~In February 1, 2024, we acquired select assets from Intermountain Healthcare's Intermountain Precision Genomics (IPG) laboratory business, including the ~~Great Place to Work~~® ~~Certification for 2023.~~Precise Tumor Test, the Precise Liquid Test, and IPG's CLIA-certified laboratory in St. George, Utah.

•~~Added the Folate Receptor Alpha test to Precise~~TM ~~Oncology Solutions to expand treatment options for women living with ovarian cancer.~~In January 2024, we named George Daneker Jr., MD as President and Chief Clinical Officer of Oncology.

•~~Appointed Adam Brufsky, MD, PhD, FACP as~~In February 2024, we announced a ~~Scientific Advisor~~collaboration with the National Cancer Center Hospital East to ~~our Oncology business unit.~~study the prognostic and predictive value of molecular residual disease (MRD) testing.

•~~Announced research collaboration to use our minimal residual disease testing platform~~In March 2024, we announced that a foundational patent granted for MRD with ~~the University of Texas MD Anderson Cancer Center.~~

•~~Established~~an early priority date and a ~~new $90.0 million asset-based credit facility (the "ABL Facility") with JPMorgan Chase Bank, N.A. as administrative agent and issuing bank, and the other lender parties thereto.~~patent granted for SneakPeek Snap Device.

Results of Operations for the Three Months Ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~

The results of operations for the three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ are discussed below.

Revenue


		Three months ended June 30,				Change		% of total revenue
	Three months ended March 31,															Three months ended March 31,										Change			% of total revenue
(in millions)	(in millions)	2023		2022		2023		2023	2022	(in millions)		2024					2023								2024			2023
Testing revenues:	Testing revenues:
Hereditary Cancer
Hereditary Cancer
Hereditary Cancer	Hereditary Cancer	$	76.7	$	79.4	$	(2.7)	42%	44%	$	88.1			$			$	75.7		$		$	12.4	44%			44%			42%
Tumor Profiling	Tumor Profiling	36.0		33.5		2.5		19%	19%	Tumor Profiling		30.9			37.3				37.3		(6.4)			(6.4)		15%		15%			20%
Prenatal	Prenatal	35.6		33.3		2.3		19%	19%	Prenatal		44.3			36.2				36.2		8.1			8.1		22%		22%			20%
Pharmacogenomics	Pharmacogenomics	35.2		33.1		2.1		19%	18%	Pharmacogenomics		38.9			32.0				32.0		6.9			6.9		19%		19%			18%

Total revenue	Total revenue	$	183.5	$	179.3	$	4.2	100%	100%

Total revenue

Total revenue												$	202.2				$	181.2				$	21.0					100%

Test revenues increased ~~$4.2~~$21.0 million for the three months ended ~~June 30, 2023~~March 31, 2024 compared to the same period in the prior year primarily due to an increase in testing volume across the majority of our ~~products, partially offset by~~products. Hereditary Cancer revenues increased $12.4 million compared to the same period in the prior year due to a ~~decline~~9% increase in ~~the~~testing volume and a 7% increase in average revenue per test. ~~For~~Prenatal revenues increased $8.1 million compared to the ~~three months ended June 30, 2022, we recorded $11.7 million of revenue as~~same period in the prior year due to a ~~change of estimate related to previously delivered tests; the amount of revenue recorded as~~9% increase in testing volume and a ~~change of estimate for the three months ended June 30, 2023 was not material. In addition, the~~12% increase in average revenue per test due in part to retroactive coverage by a payor for ~~the three months ended June 30, 2023 was affected by payor-related administrative activity,~~ ~~including changes in contracted rates. Tumor profiling~~one of our tests. Pharmacogenomics revenues increased ~~$2.5~~$6.9 million compared to the same period in the prior year due primarily to a 13% ~~and 9%~~ increase in testing volume and a 7% increase in the average revenue per ~~test, respectively, for the Prolaris product. Prenatal~~test. Tumor Profiling revenues increased $2.3 million compared to the same period in the prior year due primarily to revenue from SneakPeek of $5.1 million. As the acquisition of Gateway Genomics, LLC occurred on November 1, 2022, there were no corresponding SneakPeek revenues in the prior period. Revenues from Pharmacogenomics increased $2.1decreased $6.4 million compared to the same period in the prior year due primarily to a ~~23% increase in testing volume offset by a 14%~~ decrease in ~~the average revenue per test. Hereditary Cancer revenues decreased $2.7 million compared to the same period~~volume for MyChoice CDx, which is largely driven by MyChoice CDx studies in the prior ~~year due to a 19% decrease in the average revenue per test due primarily to changes in estimates, partially offset by a 20% increase in testing volume.~~

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year.

Cost of Sales


		Three months ended June 30,
	Three months ended March 31,
(in millions)
(in millions)
(in millions)	(in millions)	2023			2022			Change		2024				2023				Change
Cost of testing revenue	Cost of testing revenue	$	57.8		$	49.7		$	8.1	Cost of testing revenue	$	64.6	$		$	59.2	$		$	5.4
Cost of testing revenue as a percentage of revenue		31.5		%	27.7		%

Cost of testing revenue as a % of total revenue

~~The cost~~Cost of testing revenue as a percentage of revenue increased from 27.7% to 31.5% during the three months ended June 30, 2023 compared to the same period in the prior year. The increase was primarily driven by the shift in the product mix for the current period and an increase in compensation costs due to higher headcount and an increase in the average cost per employee.

~~Research and Development Expense~~

Three months ended June 30,
(in millions) 2023 2022 Change
Research and development expense $ 21.2 $ 20.3 $ 0.9
Research and development expense as a % of total revenue 11.6 % 11.3 %

~~Research and development expense~~ for the three months ended ~~June 30, 2023~~March 31, 2024 increased ~~by $0.9~~$5.4 million compared to the same period in the prior year primarily due to an increase in volumes in Pharmacogenomics, Hereditary Cancer, and Prenatal products.

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Research and Development Expense


	Three months ended March 31,
(in millions)	2024			2023			Change
Research and development expense	$	24.9		$	22.5		$	2.4
Research and development expense as a % of total revenue	12.3		%	12.4		%

Research and development expense for the three months ended March 31, 2024 increased by $2.4 million compared to the same period in the prior year primarily due to a $2.5 million increase in compensation costs driven largely by an increase in ~~headcount.~~the average compensation expense per employee.

Selling, General and Administrative Expense


		Three months ended June 30,
	Three months ended March 31,
(in millions)
(in millions)
(in millions)	(in millions)	2023			2022			Change		2024				2023				Change
Selling, general and administrative expense	Selling, general and administrative expense	$	140.7		$	127.1		$	13.6	Selling, general and administrative expense	$	140.6	$		$	151.7	$		$	(11.1)
Selling, general and administrative expense as a % of total revenue	Selling, general and administrative expense as a % of total revenue	76.7		%	70.9		%

Selling, general and administrative expense ~~increased~~decreased by ~~$13.6~~$11.1 million for the three months ended ~~June 30, 2023~~March 31, 2024 compared to the same period in the prior year primarily due to a ~~$5.6~~$3.6 million ~~increase~~decrease in ~~compensation costs~~depreciation expense driven by ~~an increase~~$5.7 million of accelerated depreciation in ~~both headcount and cost per employee,~~the prior period in connection with our decision to cease the use of our former corporate headquarters, a ~~$2.3~~$2.8 million increase in rent expense as we transition to new facilities, a $2.1 million increase in severance costs, a $2.0 million increase in general legal costs, a $1.8 million increase in commission expense due to increased testing volume, and a $1.1 million increasedecrease in sales and marketing expenses, ~~due to more in-person sales~~ and ~~marketing events in the current period compared to the prior period, partially offset by $4.1~~a $1.7 million decrease in consulting costs.

~~Legal charges pending settlement~~

Three months ended June 30,
(in millions) 2023 2022 Change
Legal charges pending settlement $ 77.5 $ — $ 77.5
Legal charges pending settlement as a % of total revenue 42.2 % — %

The three months ended June 30, 2023 includes $77.5 million related to the pending securities class action settlement recorded in the current period. See Note 13 in the Condensed Consolidated Financial Statements for further information. There were no corresponding legal charges pending settlement in the prior period.

Other Income (Expense), Net


		Three months ended June 30,
	Three months ended March 31,
(in millions)
(in millions)
(in millions)	(in millions)	2023		2022		Change		2024				2023				Change
Other income (expense), net	Other income (expense), net	$	(2.4)	$	(0.1)	$	(2.3)	Other income (expense), net	$	2.0	$		$	(0.4)	$		$	2.4

Other ~~expense~~income (expense), net increased for the three months ended ~~June 30, 2023~~March 31, 2024 as compared to the same period in the prior year due primarily to ~~losses due to foreign currency fluctuations and~~the $2.2 million gain recognized on ~~sales of investment securities~~the Precise acquisition in the current ~~year.~~

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period.

Income Tax Expense ~~(Benefit)~~


		Three months ended June 30,
	Three months ended March 31,
(in millions)	(in millions)	2023			2022			Change
Income tax expense (benefit)		$	—		$	(3.8)		$	3.8
(in millions)
(in millions)											2024			2023			Change
Income tax expense										Income tax expense	$	0.1		$	2.1		$	(2.0)
Effective tax rate	Effective tax rate	—		%	21.2		%			Effective tax rate	(0.4)		%	(4.0)		%

Our tax rate is the product of a U.S. federal effective rate of 21.0% and a blended state income tax rate of approximately ~~4.2%~~3.4%. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

For the three months ended ~~June 30, 2023,~~March 31, 2024, there was no$0.1 million income tax expense and our effective tax rate was 0%(0.4)%. For the three months ended ~~June 30,~~March 31, 2024, our effective tax rate differs from the U.S. federal statutory rate primarily due to the recognition of valuation allowances. Due to our cumulative loss and the exhaustion of future taxable income from the reversal of taxable temporary differences, our estimated annual effective tax rate for the current year includes a valuation allowance against the majority of the current year increase in deferred tax assets. For the three months ended March 31, 2023, our effective tax rate differs from the U.S. federal statutory rate primarily due to valuation allowances and uncertain tax positions. For the three months ended June 30, 2022, our effective tax rate differs from the U.S. federal statutory rate primarily due to disallowed executive compensation, disallowed meals and entertainment expenses, stock compensation expenses and asset impairment expenses.

~~Results of Operations for the Six Months Ended June 30, 2023 and 2022~~

~~The results of operations for the six months ended June 30, 2023 and 2022 are discussed below.~~

~~Revenue~~

Six months ended June 30, Change % of Total Revenue
(in millions) 2023 2022 2023 2023 2022
Testing revenues:
Hereditary Cancer $ 152.4 $ 150.3 $ 2.1 42% 44%
Tumor Profiling 73.3 66.0 7.3 20% 19%
Prenatal 71.8 65.2 6.6 20% 19%
Pharmacogenomics 67.2 62.4 4.8 18% 18%
Autoimmune — 0.3 (0.3) —% —%
Total revenue $ 364.7 $ 344.2 $ 20.5 100% 100%

Test revenues for the six months ended June 30, 2023 increased $20.5 million compared to the same period in the prior year due to an increase in testing volume across the majority of our products, partially offset by a decline in the average revenue per test. For the six months ended June 30, 2022, we recorded $19.9 million of revenue as a change of estimate related to previously delivered tests; the revenue amount recorded as a change of estimate for the six months ended June 30, 2023 was not material. In addition, the average revenue per test for the six months ended June 30, 2023 was affected by payor-related administrative activity, including changes in contracted rates. Tumor Profiling revenues increased $7.3 million compared to the same period in the prior year due to a 17% and 7% increase in testing volume and average revenue per test, respectively, for the Prolaris product. Prenatal revenues increased $6.6 million compared to the same period in the prior year due primarily to revenue from SneakPeek of $10.6 million. As the acquisition of Gateway Genomics, LLC occurred on November 1, 2022, there were no corresponding SneakPeek revenues in the prior period. Revenues from Pharmacogenomics increased $4.8 million compared to the same period in the prior year due primarily to a 27% increase in testing volume, partially offset by a 15% decrease in the average revenue per test. Hereditary Cancer revenues increased $2.1 million compared to the same period in the prior year due to a 22% increase in testing volume, partially offset by a 17% decrease in the average revenue per test.

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~~Cost of Sales~~

Six months ended June 30,
(in millions) 2023 2022 Change
Cost of testing revenue $ 117.0 $ 97.7 $ 19.3
Cost of testing revenue as a percentage of revenue 32.1 % 28.4 %

The cost of testing revenue as a percentage of revenue increased from 28.4% to 32.1% during the six months ended June 30, 2023 compared to the same period in the prior year. The increase was primarily driven by the shift in the product mix for the current period and an increase in compensation costs due to both an increase in the number of employees and an increase in the average cost per employee.

~~Research and Development Expense~~

Six months ended June 30,
(in millions) 2023 2022 Change
R&D expense $ 43.7 $ 41.5 $ 2.2
R&D expense as a % of total revenue 12.0 % 12.1 %

Research and development expense for the six months ended June 30, 2023 increased by $2.2 million compared to the same period in the prior year primarily due to an increase in compensation costs, driven by an increase in headcount.

~~Selling, General and Administrative Expense~~

Six months ended June 30,
(in millions) 2023 2022 Change
Selling, general and administrative expense $ 292.4 $ 237.7 $ 54.7
Selling, general and administrative expense as a % of total revenue 80.2 % 69.1 %

~~Selling, general and administrative expense increased for the six months ended June 30, 2023 compared to the same period in the prior year primarily due t~~o a $15.2 million increase in compensation costs driven by an increase in both headcount and cost per employee, a $15.5 million change in general legal expenses due to the receipt of $12.0 million from insurers in the prior period to offset the previously accrued Abelli settlement and other legal expenses, a $6.7 million increase in commission expense due to increased testing volume, $6.1 million increase in depreciation and amortization expense due to the accelerated depreciation for certain leasehold improvements and equipment in connection with our decision to cease the use of our corporate headquarter~~s, $5.3 million increase in sales and marketing expenses due to more in-person sales and marketing events in the current period c~~ompared to the prior period, a $4.0 million increase in rent expense as we transition to new facilities, and a $3.0 million increase in severance costs, partially offset by a $4.5 million decrease in consulting costs.

~~Legal charges pending settlement~~

Six months ended June 30,
(in millions) 2023 2022 Change
Legal charges pending settlement $ 77.5 $ — $ 77.5
Legal charges pending settlement as a % of total revenue 21.3 % — %

The six months ended June 30, 2023 included $77.5 million of accruals related to the pending securities class action settlement recorded in the current period. See Note 13 in the Condensed Consolidated Financial Statements for further information. There were no corresponding legal charges pending settlement in the prior period.

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~~Goodwill and long-lived asset impairment charges~~

Six months ended June 30,
(in millions) 2023 2022 Change
Goodwill and long-lived asset impairment charges $ — $ 10.7 $ (10.7)
Goodwill and long-lived asset impairment charges as a % of total revenue — % 3.1 %

Goodwill and long-lived asset impairment charges for the six months ended June 30, 2022 included an $8.6 million impairment to right-of-use assets and a $2.1 million impairment to the related leasehold improvements as a result of our decision to no longer use certain of our facilities in order to consolidate space. There were no impairments recognized in the current period.

~~Other Income (Expense), Net~~

Six months ended June 30,
(in millions) 2023 2022 Change
Other income (expense), net $ (2.8) $ (0.9) $ (1.9)

Other expense increased for the six months ended June 30, 2023 compared to the same period in the prior year due primarily to a $1.7 million loss due to foreign currency fluctuations and a $1.4 million loss on investment securities in the current period.

~~Income Tax Benefit~~

Six months ended June 30,
(in millions) 2023 2022 Change
Income tax benefit $ 2.1 $ (9.7) $ (0.5)
Effective tax rate (1.2) % 21.9 %

Our tax rate is the product of a blended U.S. federal effective rate of 21.0% and a blended state income tax rate of approximately 4.2%. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

Income tax expense for the six months ended June 30, 2023 was $2.1 million, and our effective tax rate was (1.2)%. For the six months ended June 30, 2023, our recognized effective tax rate differs from the U.S. federal statutory rate primarily due to valuation allowances and uncertain tax positions. For the six months ended June 30, 2022, our recognized effective tax rate differs from the U.S. federal statutory rate primarily due to disallowed executive compensation expenses, disallowed meals and entertainment expenses, stock compensation expenses and asset impairment expenses.

Liquidity and Capital Resources

Our primary sources of liquidity are our cash, cash equivalents and marketable investment securities, ~~and~~ our expected ~~future~~ cash flows from ~~operations.~~operations, and, in certain circumstances as discussed below, amounts available for borrowing under our asset-based revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent and issuing bank, and the other lender parties thereto (the "ABL Facility"). As of March 31, 2024, we had cash, cash equivalents and marketable investment securities of $104.3 million and availability under the ABL Facility was $41.3 million, subject to the minimum availability requirement under the ABL Facility. Our capital deployment strategy focuses on use of resources in the key areas of research and development, technology and acquisitions. We believe that investing organically through research and development and new product development or acquisitively to support our business strategy provides the best return on invested capital.

~~On June 30, 2023, we entered into the~~Our ABL Facility ~~an asset-based credit facility with an initial~~has a total maximum principal ~~amount~~commitment of $90.0 million, with an option for us to request an increase in the maximum principal amount by up to $25.0 million. As of June 30, 2023, we had $40.0 million outstanding under the ABL Facility and availability of $48.5$115.0 million. The ABL Facility requires that we and our subsidiaries guaranteeing the indebtedness, on a consolidated basis, maintain minimum liquidity of $60.0 million and minimum availability of $25.0 million at all times before achieving a fixed charge coverage ratio of 1.0 to 1.0 and, thereafter, to maintain a fixed charge coverage ratio of 1.0 to 1.0 until achieving availability under the ABL Facility of greater of (a) $10.6 million and (b) 12.5% of the lesser of the maximum commitment amount and the borrowing base for a period of 30 consecutive days.

~~Table~~ As of ~~Contents~~

March 31, 2024, we had $40.0 million outstanding under the ABL Facility and availability under the ABL Facility was $41.3 million, subject to the minimum availability requirement under the ABL Facility.

We believe that our existing ~~cash, cash equivalents and marketable securities of $127.8 million as of June 30, 2023, and our expected cash flow from operations~~capital resources will be sufficient to meet our ~~anticipated cash~~projected operating requirements for at least the next 12 months, including expected cash payments under our recent securities class action settlement agreement — see Note 13, "Commitments and Contingencies" in Notes to Condensed Consolidated Financial Statements for additional information about the settlement agreement. We expect to pay the majority of the settlement amount in the securities class action settlement in cash from our cash on hand, operating cash flow and asset based credit facility.months. Our available capital resources, however, may be consumed more rapidly than currently expected, or may be insufficient for our business needs for many reasons, including as a result of our operational cash needs, capital expenditures, and litigation related costs not covered by, or above the limits set forth in, our insurance. In addition, we are subject to covenants under our ABL Facility which could limit our ability to incur additional indebtedness or impact our ability to pursue other financing. If we do not generate sufficient cash from operations, if our capital resources are consumed more rapidly than expected, or if we no longer have access to additional funds under our ABL Facility and we are unable to secure additional funds on acceptable terms, or at all, we may be forced to delay, ~~the build-out of our new laboratories; delay,~~ scale back or eliminate some of our sales and marketing efforts, research and development activities, or other operations; or delay development of our tests in an effort to provide sufficient funds to continue our operations. If any of these events occurs, our ability to achieve our development and commercialization goals could be adversely affected.

From time to time, we enter into purchase commitments or other agreements that may materially impact our liquidity position in future periods. In April 2024, we entered into an amendment of our lease in west Salt Lake City, Utah to include approximately 63,000 additional square feet. The lease has a term of 12 years, which is expected to commence in the second half of 2026. Total future rent payments for the additional space are approximately $18.2 million.

Because of the technical nature of our business and our focus on science, research, and development, we are highly dependent upon our ability to attract and retain highly qualified and experienced management, scientific, and technical ~~personnel. Competition and increased compensation for such personnel and other qualified personnel have increased the difficulty and cost of hiring and retaining qualified~~ personnel. Loss of the services of or failure to recruit additional key management, scientific, and technical personnel and other qualified personnel who are necessary to operate our business would adversely affect our business, and it may have a material adverse effect on our business as a whole. Additionally, disruptions to our supply chain could cause shortages of critical materials required to conduct our business, which may have a material adverse effect on our business as a whole. In addition, as discussed below, inflation has had, and ~~we expect it will~~may continue to have, an impact on the costs we incur to attract and retain qualified personnel, costs to generate sales and produce ~~diagnostic~~ testing results, and costs of ~~lab~~laboratory supplies.

The following table represents the balances of cash, cash equivalents and marketable investment securities as of the dates set forth in the table below:


(in millions)	(in millions)	June 30, 2023		December 31, 2022		Change
(in millions)
(in millions)								March 31, 2024	December 31, 2023	Change
Cash and cash equivalents	Cash and cash equivalents	$	102.8	$	56.9	$	45.9
Marketable investment securities	Marketable investment securities	18.8		58.0		(39.2)
Long-term marketable investment securities		6.2		54.8		(48.6)

Cash, cash equivalents and marketable investment securities	Cash, cash equivalents and marketable investment securities	$	127.8	$	169.7	$	(41.9)
Cash, cash equivalents and marketable investment securities
Cash, cash equivalents and marketable investment securities

The decrease in cash, cash equivalents, and marketable investment securities as of March 31, 2024 as compared to December 31, 2023 was primarily driven by ~~$34.1~~$18.6 million in cash used by operations, ~~$42.3~~$6.7 million used for capital expenditures, and ~~$5.1~~$8.7 million used for the payment of withholding tax for the issuance of common stock, net of proceeds from the issuance of common ~~stock, partially offset by proceeds from the ABL Facility~~stock.

Table of ~~$40.0 million.~~Contents

The following table represents the Condensed Consolidated Cash Flow Statement:

Six Months Ended June 30,
(in millions) 2023 2022 Change
Cash flows used in operating activities $ (34.1) $ (96.2) $ 62.1
Cash flows provided by (used in) investing activities 46.4 (53.3) 99.7
Cash flows provided by (used in) financing activities 33.5 (2.3) 35.8
Effect of foreign exchange rates on cash, cash equivalents, and restricted cash 0.5 (0.8) 1.3
Net decrease in cash and cash equivalents, and restricted cash 46.3 (152.6) 198.9
Cash, cash equivalents, and restricted cash at the beginning of the period 66.4 258.8 (192.4)
Cash, cash equivalents, and restricted cash at the end of the period $ 112.7 $ 106.2 $ 6.5

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	Three Months Ended March 31,
(in millions)	2024		2023		Change
Cash flows used in operating activities	$	(18.6)	$	(33.2)	$	14.6
Cash flows provided by (used in) investing activities	(7.1)		34.6		(41.7)
Cash flows provided by (used in) financing activities	(8.8)		(4.9)		(3.9)
Effect of foreign exchange rates on cash, cash equivalents, and restricted cash	(0.8)		0.2		(1.0)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(35.3)		(3.3)		(32.0)
Cash, cash equivalents, and restricted cash at the beginning of the period	140.9		66.4		74.5
Cash, cash equivalents, and restricted cash at the end of the period	$	105.6	$	63.1	$	42.5

Cash Flows from Operating Activities

We used less cash for operating activities for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024 compared to the same period in the prior year, primarily due to an improvement in core operations driven by a 12% increase in ~~the operating loss~~revenues and ~~the timing~~a 12% decrease in expenses as a percentage of ~~payments for legal settlements. The prior year period included legal settlement payments of $50.0 million, net of amounts received from insurers to~~revenue, partially offset ~~settlement costs. In addition, the period in the current year included~~by the receipt of ~~$16.3~~$13.2 million in tenant improvement allowance reimbursements ~~with no corresponding receipts~~ in the prior period.

Cash Flows from Investing Activities

The increase in cash flows ~~from~~used in investing activities for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024 compared to the same period in the prior year was primarily due to the ~~$129.0~~$56.6 million ~~net change~~decrease in cash flows from marketable investment securities, ~~due to sales of marketable securities for the six months ended June 30, 2023 in comparison to the purchase of marketable securities for the six months ended June 30, 2022. These increases were~~ partially offset by a ~~$29.3~~$16.8 million ~~increase~~decrease in capital ~~expenditures from the prior period in connection with the build-out of new facilities.~~expenditures.

Cash Flows from Financing Activities

The increase in cash flows ~~from~~used in financing activities for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024 compared to the same period in the prior year was due ~~primarily~~ to a $3.8 million increase in cash used for the payment of withholding tax for the issuance of common stock, net of proceeds from the issuance of ~~$40.0 million under the ABL Facility in the current period.~~common stock.

Effects of Inflation

Inflation has had, and may continue to have, an impact on the labor costs we incur to attract and retain qualified personnel, costs to generate sales and produce testing results, and costs of ~~lab~~laboratory supplies. Inflationary costs have impacted our profitability and may continue to adversely affect our business, financial condition and results of operations. In addition, increased inflation has had, and may continue to have, an effect on interest rates. Increased interest rates may adversely affect our borrowing rate and our ability to obtain, or the terms under which we can obtain, ~~any potential~~ additional funding.

Critical Accounting Estimates

Critical accounting estimates are those policies which are both important to the presentation of a company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a further discussion of our critical accounting estimates, see our Annual Report on Form 10-K filed with the SEC on ~~March 1, 2023.~~February 28, 2024. No significant changes to our accounting policies took place during the ~~six~~three months ended ~~June 30, 2023.~~March 31, 2024.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates and foreign currency exchange risks.

We are exposed to interest rate risk primarily through borrowings under our ABL Facility. Our ABL Facility has a variable interest rate based on the Prime Rate, the NYFRB Rate, or the Secured Overnight Financing Rate ("SOFR"). An incremental change in the borrowing rate of 100 basis points would increase or decrease our annual interest expense by $0.4 million based on our $40.0 million debt outstanding on our ABL Facility as of March 31, 2024.

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We have been and may continue to be exposed to fluctuations in foreign currencies with regard to certain agreements with service providers. While our expenses are predominantly denominated in U.S. dollars, approximately 9% of our revenues are denominated in other currencies, primarily in Japanese yen. A hypothetical 10% change in the value of the Japanese yen relative to the U.S. dollar would result in a 1% change in our revenues. Although we also have certain operations denominated in euros, Swiss francs, and British pounds, among other currencies, those operations are subject to less overall market risk due to the revenue and expenses being denominated in the same currency. During the three months ended March 31, 2024, our revenues were not materially impacted by foreign currency fluctuations but may be in the future. We do not currently utilize hedging strategies to mitigate foreign currency risk.

We maintain an investment portfolio in accordance with our written investment policy. ~~The primary objectives of our investment policy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields.~~ Our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure to any single issue, issuer or type of investment.

Our investments consist of debt securities of various types and maturities of ~~two years~~one year or ~~less. These securities~~less and are classified as available-for-sale. Available-for-sale securities are recorded on the balance sheet at fair market value with unrealized gains or losses reported as part of Accumulated other comprehensive loss. Realized gains and losses on investment security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned. A decline in the market value of any available-for-sale security below cost that is deemed other-than-temporary results in a charge to earnings and establishes a new cost basis for the security.

Although our investment policy guidelines are intended to ensure the preservation of principal, market conditions can result in high levels of uncertainty. Our ability to trade or redeem the securities in which we invest, including certain corporate bonds, may become difficult. Valuation and pricing of these securities can also become variable and subject to uncertainty. As of ~~June 30, 2023, we had $0.5 million in~~March 31, 2024, the unrealized losses in our investment ~~portfolio.~~portfolio were determined to be immaterial. We do not utilize derivative financial instruments to manage our interest rate risks.

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We are exposed to interest rate risk primarily through borrowings under our ABL Facility. An incremental change in the borrowing rate of 100 basis points would increase or decrease our annual interest expense by $0.4 million based on our $40.0 million debt outstanding on our ABL Facility as of June 30, 2023.

We have been and may continue to be exposed to fluctuations in foreign currencies with regard to certain agreements with service providers. While our expenses are predominantly denominated in U.S. dollars, approximately 10% of our revenues are denominated in other currencies, primarily in Japanese yen. A hypothetical 10% change in the value of the Japanese yen relative to the U.S. dollar would result in a 1% change in our revenues. Although we also have certain operations denominated in euros, Swiss francs, and Great British pounds, among other currencies, those operations are subject to less overall market risk due to the revenue and expenses being denominated in the same currency. We do not currently utilize hedging strategies to mitigate foreign currency risk.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (“Disclosure Controls”) within the meaning of Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our Disclosure Controls are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Our Disclosure Controls are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our Disclosure Controls, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily applied its judgment in evaluating and implementing possible controls and procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we evaluated the effectiveness of the design and operation of our Disclosure Controls, which was done under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on the evaluation of our Disclosure Controls, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~June 30, 2023,~~March 31, 2024, our Disclosure Controls were effective to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There were no changes in our internal control over financial reporting that occurred during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - Other Information

Item 1. Legal Proceedings.

For information regarding certain current legal proceedings, see Note 13, "Commitments and Contingencies" in Notes to Condensed Consolidated Financial Statements, which are included herein.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our Annual Report on Form 10-K filed with the SEC on ~~March 1, 2023, our Quarterly Report on Form 10-Q filed with the SEC on May 4, 2023,~~February 28, 2024 and this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K, ~~and our Quarterly Report on Form 10-Q filed with the SEC on May 4, 2023~~ other than the updates to the risk factors set forth below. We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC.

We depend on a limited number of third parties, or, in some cases, single-source suppliers, for equipment, reagents, other supplies, and specimen collection services. If these supplies or services become unavailable or are disrupted, then we may not be able to successfully perform our research, operate our business, or perform our tests on a timely basis or at all.

We currently rely on a small number of suppliers, or, in some cases, single-source suppliers, to provide our gene sequencing equipment, content enrichment equipment, multiplex protein analysis equipment, robots, and specialty reagents and other laboratory supplies required in connection with our testing and research and development activities. We believe that currently there are limited alternative suppliers of the equipment, robots, reagents and certain other supplies that we use in our business. The equipment, robots, reagents or other supplies may not remain available in commercial quantities at acceptable costs. In addition, we rely upon a limited number of commercial delivery services to provide us with laboratory supplies, and the disruption of such delivery services could adversely impact our business. If we ~~do not generate sufficient cash flow from operations and~~ are unable to ~~secure~~obtain when needed additional ~~funding,~~or alternative equipment or robots, or an adequate supply of reagents or other ingredients or supplies at commercially reasonable rates, our ability to continue to identify genes and perform testing would be adversely affected. In addition, any loss or failure to perform by a single-source supplier could have a disruptive effect on our business, including our ability to perform testing, and could adversely affect our results of operations.

Furthermore, we rely on third-party laboratories and phlebotomy clinics to perform specimen collection services for us for patients taking some of our tests such as the Myriad Genetics Prequel® non-invasive prenatal screening test. In some locations, we rely on a limited number of third-party laboratories and phlebotomy clinics to perform these specimen collection services for us.The inability or refusal of a third-party laboratory or phlebotomy clinic to provide these services to us could significantly impede our ability to test patients and, consequently, could adversely affect our business. In addition, the consolidation of large laboratories and phlebotomy clinics may decrease the specimen collection facility options that are available to us, thus amplifying the risk if access to the remaining laboratories and phlebotomy clinics is denied.

In addition, the spread of disease globally could further adversely affect our manufacturing and supply chain. Parts of our direct and indirect supply chain are located overseas and both international and domestic components have been subject to ~~reduce our operations.~~

~~While we believe that our existing cash, cash equivalents~~disruption as a result of COVID-19 and ~~marketable securities,~~responses to it. We have experienced and may in the future ~~cash flow from operations,~~experience a shortage of certain laboratory supplies and amounts available for borrowing under our ABL Facility (as defined below) will be sufficient to meet our anticipated cash requirements for at least the next 12 months, changes could occur that would consume available capital resources more quickly than we currently expectequipment, and we may ~~need~~experience a suspension of services from other laboratories or ~~want~~third parties as a result of a global pandemic and responses to ~~raise~~it. Political, administrative, legislative, legal or regulatory actions in response to a global pandemic could create additional ~~financing.~~supply shortages, disruptions or other uncertainties affecting our research and business. If the supplies and components necessary to manufacture our products become unavailable or are disrupted, then we may not be able to successfully perform our research or operate our business on a timely basis or at all.

On June 30, 2023, we entered into an asset-based revolving credit facility (the “ABL Facility”) with an initial maximum principal amount of $90.0 million with JPMorgan Chase Bank, N.A. as administrative agent and issuing bank,

Further, disruption in the global supply chain related to hostilities in Ukraine and the ~~other lender parties thereto. As of June 30, 2023,~~Middle East could impact our supply chain. For example, Houthi forces have attacked freighters in the Red Sea due to the ongoing conflict between Israel and Gaza. While we ~~had $40.0 million of outstanding borrowings under the ABL Facility. The ABL Facility limits our ability~~have not experienced material supply chain disruptions related to ~~incur additional indebtedness and requires us~~these global hostilities to ~~comply with certain minimum liquidity and minimum availability covenants.~~

Ifdate, we ~~do not generate sufficient cash from operations, if our capital resources are consumed more rapidly than expected, or if we no longer have access to additional funds under our ABL Facility and~~ are unable to ~~secure~~predict how these conflicts will develop or guarantee that we will not experience material supply chain disruptions in the future.

Changes in the way the FDA regulates tests performed by laboratories like ours could result in delay or additional funding, on acceptable terms or at all, we may be forced to delay the build-out of our new laboratories, delay, scale back or eliminate some of our sales and marketing activities, research and development activities, or other operations, and potentially delay development ofexpense in offering our tests ~~in an effort to provide sufficient funds to continue our operations. If any of these events occur, our ability to achieve our development~~ and ~~commercialization goals could be adversely affected.~~

~~Our future capital requirements will depend on many factors that are currently unknown to us, including:~~

•~~the scope, progress, results and cost of development, clinical testing and pre-market studies of any new~~ tests that we may develop ~~or acquire;~~

•~~the progress, results, and costs to develop additional tests;~~

•~~our ability to operate our business on a profitable basis;~~

•~~the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our current issued patents, and defending intellectual property-related claims;~~

•~~our ability to enter into collaborations, licensing or other arrangements favorable to us;~~

•~~the costs of acquiring technologies or businesses, and our ability to successfully integrate and achieve the expected benefits of our business development activities and acquisitions;~~

•~~the progress, cost and results of our international efforts;~~

•~~the costs of expanding our sales and marketing functions and commercial operation facilities~~ in the ~~United States and in new markets;~~

•~~the costs, timing and outcome of any litigation against us; and~~

•~~the costs to satisfy our current and future obligations.~~future.

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~~We are subject~~Historically, the FDA has exercised enforcement discretion with respect to ~~debt covenants~~most laboratory developed tests (LDTs) and has generally not required laboratories that ~~impose operating and financial restrictions on us and if we are not able~~furnish LDTs to comply with ~~them, it could have a material adverse impact on~~the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality systems regulations, premarket clearance or premarket approval, and post-market controls). As of December 31, 2023, none of our ~~operations~~products other than MyChoice CDx and ~~liquidity.~~

Covenants in the ABL Facility impose operating and financial restrictions on us. These restrictions may prohibit or place limitations on, among other things, our ability to incur liens, incur indebtedness, dispose of assets, make investments, make certain restricted payments, merge or consolidate and enter into certain speculative hedging arrangements. WeBRACAnalysis CDx are also required to maintain minimum liquidity of $60.0 million and minimum availability of $25.0 million at all times before achieving a fixed charge coverage ratio of 1.0 to 1.0 and thereafter, to maintain a fixed charge coverage ratio of 1.0 to 1.0 until achieving availabilitymarketed by us under the ~~ABL Facility~~FDA's requirements for medical devices. In recent years, the FDA publicly announced its intention to regulate certain LDTs and issued two draft guidance documents that set forth a proposed phased-in risk-based regulatory framework that would apply varying levels of ~~greater than~~FDA oversight to LDTs. However, these guidance documents were not finalized, and in 2017, the ~~greater of (a) $10.6 million and (b) 12.5%~~FDA issued an informal discussion paper reflecting some of the ~~lesser of~~feedback the ~~maximum commitment amount and~~FDA had received on the borrowing base for a period of 30 consecutive days. In addition, the ABL Facility includes a number of customary events of default. If any event of default occurs (subject, in certain instances, to specified grace periods), the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the ABL Facility may become due and payable immediately, which could have a material adverse impact on our operations and liquidity.proposed LDT regulatory system.

~~We are currently subject~~Subsequently, in October 2023, the FDA issued a proposed rule to regulate LDTs under the current medical device framework and proposed to phase out the current enforcement discretion policy; the public comment period ended in early December 2023. The agency’s final rule was released to the public on April 29, 2024 and then officially published in the ~~future~~Federal Register on May 6, 2024, with an effective date of July 5, 2024.

The final rule provides that the LDT enforcement policy phase-out process will occur in gradual stages over a total period of four years, with premarket approval applications for high-risk tests to be submitted by the 3.5-year mark. Moderate-risk and low-risks tests are expected to be in compliance at the 4-year mark, although FDA has stated that if premarket submissions are pending review it will continue to exercise enforcement discretion with respect to those tests. Litigation challenging the agency’s authority to adopt this final rule is highly likely, although the outcome of such litigation is uncertain. Litigation challenging the final rule may also have an impact on the FDA’s plans to implement these new LDT requirements, making the potential implementation timeline somewhat uncertain. Affected stakeholders continue to press for a comprehensive legislative solution to create a harmonized paradigm for oversight of LDTs by both the FDA and CMS, instead of implementation of the administrative agency action, which may be ~~subject~~disruptive to ~~securities class action lawsuits~~the industry and ~~stockholder derivative actions,~~to patient access to certain diagnostic tests. Until any regulatory changes become effective, the FDA is expected to continue to exercise enforcement discretion; although it may attempt to regulate certain LDTs on a case-by-case basis at any time, which could result in delay or additional expense in offering our tests and tests that we may develop in the future.

In addition, for several years bipartisan members of Congress have been negotiating legislation with the FDA and industry stakeholders to regulate in vitro clinical tests including LDTs under a shared FDA/CMS framework. Most recently, reform legislation entitled the Verifying Accurate, Leading-edge IVCT Development (VALID) Act received increasing congressional support. As drafted and re-introduced for consideration by the current Congress, the VALID Act would codify into law the term “in vitro clinical test” (IVCT) to create a new medical product category separate from medical devices that includes products currently regulated as in vitro diagnostics (IVDs) as well as ~~product or professional liability claims. These,~~LDTs. If enacted, the VALID Act's regulatory framework would give the FDA the authority to ensure IVCTs are both analytically and ~~potential similar or related litigation, could result in substantial losses~~clinically valid while CMS would retain the authority to ensure the quality of operations within laboratories. All LDTs on the market prior to enactment of the legislation would be grandfathered and ~~have a material adverse effect on our business, cash position, operating results or financial condition.~~

~~We are currently~~not subject to the new regulation. The FDA’s October 2023 publication of the LDT proposed rule that would apply the existing medical device framework to laboratory-developed products renewed stakeholder calls for a ~~variety~~more targeted approach to modernizing federal oversight of ~~litigation, including~~clinical diagnostic tests. Most recently, on March 21, 2024, the House Energy and Commerce held a ~~securities class action lawsuit filed in~~subcommittee hearing titled “Evaluating Approaches to Diagnostic Test Regulation and the ~~United States District Court~~Impact of the FDA’s Proposed Rule.” The private witnesses testifying at the hearing expressed broad support for the ~~District~~bipartisan VALID Act instead of ~~Utah, and stockholder derivative actions filed~~the FDA’s proposal to use its medical device authorities. It remains possible that congressional action in this area could displace the ~~Delaware Court of Chancery and the United States District Court~~need for the ~~District of Delaware. On August 2, 2023, we entered~~FDA to implement its recently finalized rulemaking.

It is unclear whether Congress will take action, through the VALID Act or otherwise, to supersede FDA’s recent final rule with comprehensive diagnostic reform legislation, or whether such legislation would be signed into ~~a stipulation~~law by the President. In addition, at this time it is unclear what testing and agreement of settlement, which is subject to court approval, to resolve the securities class action lawsuit. Pursuant to the terms of the settlement, we have agreed to pay a settlement amount of $77.5 million, consisting of at least $20.0 million in cash and up to $57.5 million in freely tradeable shares of common stock. We alsodata may be ~~subject~~required to future securities class action and stockholder derivative claims. Such litigation, including the court's failure to approve the settlement of the securities class action lawsuit, may adversely impact our business, cash position, results of operationssupport any required FDA clearance or ~~financial condition and divert management's time and attention from our business.~~

~~In addition, the marketing, sale and use~~approval of our tests, ~~could subject us to liability for errors in, misunderstandings of, or inappropriate reliance on, information we provide to clinicians, geneticists or patients,~~should the final rule be fully implemented as envisioned by FDA and lead to claims against us if someone were to allege that a test failed to perform as it was designed or marketed, if we failed to provide a correct test result to a patient, if we failed to correctly interpretHHS. If the ~~test results, if we failed to update the test results due to a reclassification of the variants according to new published guidelines,~~VALID Act is enacted, or if the ~~ordering physician or patient~~FDA were to ~~misinterpret test results or improperly rely on them when making a clinical decision. We could also be subject~~fully implement the final rule to claims, lawsuits or liability if the biological materials we receive for analysis were not properly attributed to the correct patient or if we failed to maintain custody of or properly track the biological materials. A product liability or professional liability claim could result in substantial damages and be costly and time-consuming for us to defend. For example, on January 24, 2022, we paid $14.0 million to settle a lawsuit that alleged negligence, breach of contract and associated torts in connection with an alleged error in testing performed by us in 2004.

Although we maintain liability insurance for certain claims, including director and officer's insurance and insurance for errors and omissions, we cannot assure you that such insurance would fully protect us from the financial impact of defending against outstanding or future claims or any judgments, fines or settlement costs arising out of any outstanding or future claims. Any claim, including the securities class action and stockholders derivative claims or an errors and omissions liability claim, brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future. If we were successfully sued for product or professional liability claims or in connection with current or future securities class action and stockholder derivative claims, we could face substantial losses that exceed our insurance coverage and our other resources. For example, we have depleted our director and officer's insurance coverage for the securities class action lawsuit and no insurance proceeds are available to us to pay the cash portion of the settlement amount. We plan to pay the majority of the settlement amount in cash from our cash on hand, operating cash flow and asset based credit facility. If we are not successful in our defense of any such litigation, we could be forced to make significant payments to or other settlements with our stockholders and their lawyers outside of our insurance coverage, and such payments or settlement arrangements could have a material adverse effect on our business, cash position, operating results or financial condition. Additionally, any lawsuit could cause injury to our reputation or cause us to suspend sales of our tests. The occurrence of any of these eventsregulate most LDTs as medical devices, it could have a materially adverse ~~effect~~impact on our ~~reputation, cash position, and~~ results of operations.

FDA regulation of our GeneSight Psychotropic test could be disruptive to our business.

As described further above, the FDA has long claimed authority to regulate LDTs but has exercised its “enforcement discretion” to limit enforcement of in vitro diagnostic regulatory requirements on this category of products. In May 2024, the FDA issued a final rule to regulate LDTs under the current medical device framework and proposed to phase out the current enforcement discretion policy. Further, the FDA has from time to time appeared to increase its attention to the marketing of pharmacogenomic tests. For example, in late 2018, the FDA issued a safety communication regarding “genetic tests that claim results can be used to help physicians identify which antidepressant medication would have increased effectiveness or side effects compared to other antidepressant medications.” This safety communication explained that the FDA had reached out to several firms marketing such pharmacogenomic tests where the FDA believed the relationship between genetic variations and a medication’s effects had not been established, including a warning letter to Inova Genomics Laboratory.

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In early 2019, we provided the FDA with clinical evidence and other information to support our GeneSight Psychotropic test. Later that year, the FDA requested changes to the GeneSight test offering. Although we disagreed that changes to the test were required, we submitted a proposal regarding the reporting of GeneSight test results to healthcare providers that we believed addressed the FDA’s principal concerns and would not affect the benefits that we believe are provided by the GeneSight test.

~~Future sales~~Since submitting our proposal to the FDA, we engaged with our trade association in their efforts to defend the offering of pharmacogenomic tests and ~~issuances of our common stock would result in dilution~~to monitor broader developments across the stakeholder community. In response to public letters from the national laboratory trade association and patient groups, on February 20, 2020, the FDA announced a new “collaboration between FDA’s Center for Devices and Radiological Health and Center for Drug Evaluation and Research intended to provide the agency’s view of the ~~percentage ownership~~state of ~~our stockholders and could cause~~ the ~~price~~current science in pharmacogenomics.” Although the announcement again asserted that some pharmacogenomic test offerings may be potentially dangerous, the agency also acknowledged that pharmacogenomic testing “offers promise for informing the selection or dosing of ~~our common stock~~some medications for certain individuals” when there is sufficient evidence demonstrating a relationship between how a person's genes may impact their metabolism of a drug or how they may respond to ~~decline.~~

~~From time to time, we may issue additional securities or sell common stock, convertible securities or other securities in one or more transactions at prices and in a manner we determine.~~the drug. In ~~connection~~conjunction with the ~~settlement~~announcement, the FDA also released an updated “Table of Pharmacogenomic Associations,” which lists gene-drug interactions that the agency believes are supported by FDA-approved drug labeling and/or “sufficient scientific evidence based on published literature.” The Table has been updated periodically since that time. Based on our discussions with the agency and these developments, we have not implemented our proposal to the FDA regarding the GeneSight test. While we see these developments as signaling a positive shift in the FDA’s approach to regulating pharmacogenomic tests, we cannot predict with certainty the outcome of this matter, its timing or whether the ultimate form of the securities class action lawsuit, we may issue up to $57.5 million in freely tradeable shares of our common stock. We also plan to continue to grant equity awards that convert into shares of our common stock to employees and directors pursuant to our equity incentive plan. If we sell or issue common stock, convertible securities or other equity securities, or common stock is issued pursuant to equity incentive plans, holders of our common stock mayGeneSight Psychotropic Mental Health Medication test offering, if it must be ~~materially diluted. In addition, we may issue common stock or other equity securities in connection with~~changed, will have an acquisition or other strategic transaction, which would cause dilution to our existing stockholders. New investors in such transactions could gain rights, preferences and privileges senior to those of holders of our common stock.

~~We do not intend to pay dividends~~adverse effect on our ~~common stock so any returns will be limited to changes in~~revenues from the ~~value of our common stock.~~

We currently intend to retain any future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, the terms of our ABL Facility restrict our ability to pay dividends. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the foreseeable future.

Our restated certificate of incorporation and our restated bylaws designate specific state or federal courts as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our restated bylaws provide that a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our restated certificate of incorporation or our restated bylaws, or any action asserting a claim against us governed by the internal affairs doctrine. Our restated certificate of incorporation provides that the federal district courts of the United States of America are the exclusive forum for the resolution of any claims under the Securities Act of 1933, as amended. These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits. Alternatively, if a court were to find these exclusive forum provisions to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition and results of operations.test.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

Our Board of Directors has previously authorized us to repurchase up to $200.0 million of our outstanding common stock, of which $110.7 million is still available to repurchase as of June 30, 2023. We are authorized to complete the repurchase through open market transactions or through an accelerated share repurchase program, in each case to be executed at management’s discretion based on business and market conditions, stock price, trading restrictions, acquisition activity and other factors. The repurchase program may be suspended or discontinued at any time without prior notice.

~~No stock repurchases were made under our stock repurchase program during the six months ended June 30, 2023.~~None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

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Item 5. Other Information.

Rule 10b5-1 Trading Plans

During the fiscal quarter ended ~~June 30, 2023,~~March 31, 2024, none of our directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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Item 6. Exhibits.


~~3.1~~			~~Restated Certificate of Incorporation, as amended~~

~~10.1~~			Credit Agreement, dated June 30, 2023, among Myriad Genetics, Inc., the other loan parties from time to time party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as the administrative agent and issuing bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on ~~Form~~ ~~8-K, File No. 000-26642, filed with~~ ~~the~~ ~~SEC on July 6, 2023).~~

~~10.2~~			Pledge and Security Agreement dated June 30, 2023, among Myriad Genetics, Inc., each of the other Guarantors and JPMorgan Chase Bank, N.A., as administrative agent for the secured parties (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, File No. 000-26642, filed with the SEC on July 6, 2023).

~~10.3+~~			2017 Employee, Director and Consultant Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8, Registration No. 333-272327, filed with the SEC on June 1, 2023).

~~10.4+~~			~~Non-Employee Director Compensation Policy~~

31.1			Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.

32.1			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished).

101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2023~~March 31, 2024 has been formatted in Inline XBRL.

~~(+) Management contract or compensatory plan arrangement~~

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	MYRIAD GENETICS, INC.

Date: ~~August 4, 2023~~May 8, 2024	By:	/s/ Paul J. Diaz
		Paul J. Diaz
		President and Chief Executive Officer
		(Principal executive officer)



Date: ~~August 4, 2023~~May 8, 2024	By:	/s/ ~~R. Bryan Riggsbee~~Scott J. Leffler
		~~R. Bryan Riggsbee~~Scott J. Leffler
		Chief Financial Officer
		(Principal financial officer)



Date: ~~August 4, 2023~~May 8, 2024	By:	/s/ Natalie Munk
		Natalie Munk
		Chief Accounting Officer
		(Principal accounting officer)

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	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
(in thousands)
Revenue	$	184,466	$	354,675
Net loss	(14,663)		(35,775)