News Release

Myriad Genetics Reports Fiscal First-Quarter 2020 Financial Results

• Total First-Quarter Revenues of $186.3 Million
  
• Excluding Out-of-Period Adjustments Revenue Would Have Been $197.5 Million
• First-Quarter Diluted EPS of ($0.28) and Adjusted EPS of $0.08

SALT LAKE CITY, Nov. 04, 2019 (GLOBE NEWSWIRE) -- Myriad Genetics, Inc. (NASDAQ: MYGN, “Myriad” or the “Company”), a global leader in molecular diagnostics and precision medicine, today announced financial results for its fiscal first-quarter 2020, provided an update on recent business highlights and provided revised fiscal year and second-quarter 2020 financial guidance.

"We had a challenging start to fiscal year 2020 as hereditary cancer revenue accrual from small payers was impacted by the deletion of the historical hereditary cancer CPT codes. We had assumed this administrative change would have a minor impact to cash collections, but unfortunately, that has not proven to be the case.  While the hereditary cancer business has returned to strong double-digit volume growth, the revenue accrual impact from these changes have led us to lower our financial outlook for the year,” said Mark C. Capone, president and CEO, Myriad Genetics. “Despite this setback, we expect earnings to be significantly higher in the second half of the fiscal year and believe that a number of important upsides will materialize during the fiscal year generating momentum as we transition into fiscal year 2021.” 

Financial Highlights
The following table summarizes the financial results for the fiscal first-quarter of 2020:

Revenue
		Fiscal First-Quarter
($ in millions)		2020				2019			% Change
Molecular diagnostic testing revenue
Hereditary Cancer	$	104.5			$	116.3			(10	%)
GeneSight®		22.7				29.3			(22	%)
Prenatal		23.5				18.1			30	%
Vectra®		11.0				13.0			(15	%)
Prolaris®		6.5				6.2			5	%
EndoPredict®		2.3				2.4			(4	%)
Other		1.5				3.7			(60	%)
Total molecular diagnostic testing revenue		172.0				189.0			(9	%)
Pharmaceutical and clinical service revenue		14.3				13.3			8	%
Total Revenue	$	186.3			$	202.3			(8	%)
Income Statement
		Fiscal First-Quarter
($ in millions)		2020				2019			% Change
Total Revenue	$	186.3			$	202.3			(8	%)
Gross Profit		136.6				152.6			(10	%)
Gross Margin		73.3	%			75.4	%
Operating Expenses		157.5				151.4			4	%
Operating Income		(20.9	)			1.2			NM
Operating Margin		(11.2	%)			0.6	%
Adjusted Operating Income		7.6				37.1			(80	%)
Adjusted Operating Margin		4.1	%			18.3	%
Net Income		(20.6	)			(0.7	)		NM
Diluted EPS		(0.28	)			(0.01	)		NM
Adjusted EPS	$	0.08			$	0.43			(81	%)

Recent Business Highlights

•  Hereditary Cancer

• In the fiscal first-quarter, Myriad made approximately an $11 million reserve adjustment for hereditary cancer revenue due to lower cash collections from small payers as a result of the deletion of the current procedural terminology (CPT^®) codes 81211 and 81213. As a result, the company has revised its revenue accrual rate, and is forecasting lower hereditary cancer rates for fiscal year 2020. Myriad will provide a detailed summary of the changes on its fiscal first-quarter 2020 earnings call.
• Hereditary cancer volumes grew at a double-digit growth rate on a year-over-year basis for both the company’s oncology and women’s health business units.

•  GeneSight^®

• Announced coverage decision from UnitedHealthcare, the largest commercial payer in the United States, covering GeneSight for patients that have a diagnosis of major depressive disorder or anxiety and have failed at least one prior medication.
• Signed master service agreement with a large pharmacy benefit manager in the United States to offer GeneSight to its commercial payer and self-funded employer customers. A Fortune 50 company has already opted into the master service agreement.
• Published the precision medicine analysis of the GUIDED study in the Journal of Clinical Psychiatry. The study evaluated 787 patients at baseline who were on medications with known gene drug interactions.  The analysis showed that patients who had their treatment guided by GeneSight saw a 70 percent improvement in remission, 42 percent improvement in response, and a 23 percent improvement in symptoms, all of which were statistically significant.  

•  Prenatal

• Received acceptance for publication for new data in Prenatal Diagnosis demonstrating that Prequel^® is the only non-invasive prenatal screening (NIPS) test that outperforms traditional measures of aneuploidy detection across all classes of obesity. Other NIPS testing methodologies can have failure rates up to 24 percent in obese patients leading the American College of Gynecology to recommend against using NIPS in patients with significant obesity.

•  Prolaris^®

• Published a clinical outcomes study in Personalized Medicine that demonstrated the Prolaris^® test can identify men with low-risk prostate cancer who can safely select active surveillance (AS) and defer the need for costly treatments such as radiation therapy or surgery. In the study of 664 men with low risk prostate cancer, 82.4 percent selected AS for their initial treatment and only 0.4 percent experienced disease progression. Additionally, the AS decision was durable with 91.2 percent of men remaining on AS at year one and 65.2 percent at year four. 

•  Companion Diagnostics

• Filed a supplementary Premarket Approval Application with the U.S. Food and Drug Administration (FDA) to authorize BRACAnalysis^® CDx as a companion diagnostic test for olaparib in metastatic, castrate-resistant, prostate cancer patients with germline BRCA mutations. 
• Received the first FDA approval for myChoice^® CDx as a companion diagnostic to identify women with ovarian cancer who are candidates for Zejula^® monotherapy in the late-line setting.
• Submitted our myChoice CDx test for approval by Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) in ovarian cancer.                  

Fiscal Year 2020 and Fiscal Second-Quarter 2020 Financial Guidance
Below is a table summarizing Myriad’s fiscal year 2020 and fiscal second-quarter 2020 financial guidance:

				Revenue		GAAP Diluted Earnings Per Share		Adjusted Earnings Per Share
		Fiscal Year 2020		$800-810 million		($0.25)-($0.15)		$1.00-$1.10
		Fiscal Second-Quarter 2020		$210-$212 million		($0.02)-$0.00		$0.30-$0.32

Myriad’s fiscal year 2020 and second-quarter 2020 adjusted earnings per share guidance excludes the impact of stock based compensation expense, non-cash amortization associated with acquisitions and certain non-recurring expenses. These projections are forward-looking statements and are subject to the risks summarized in the safe harbor statement at the end of this press release.  The company will provide further details on its business outlook during the conference call today and discuss the fiscal first-quarter financial results and fiscal year 2020 financial guidance.

Conference Call and Webcast
A conference call will be held today, Monday, November 4, 2019, at 4:30 p.m. EDT to discuss Myriad’s financial results for the fiscal first-quarter, business developments and financial guidance.  The dial-in number for domestic callers is 1-800-945-0427.  International callers may dial 1-212-231-2918.  All callers will be asked to reference reservation number 21931991.  An archived replay of the call will be available for seven days by dialing (800) 633-8284 and entering the reservation number above.  The conference call along with a slide presentation will also will be available through a live webcast at www.myriad.com.

About Myriad Genetics
Myriad Genetics, Inc., is a leading precision medicine company dedicated to being a trusted advisor transforming patient lives worldwide with pioneering molecular diagnostics.  Myriad discovers and commercializes molecular diagnostic tests that: determine the risk of developing disease, accurately diagnose disease, assess the risk of disease progression, and guide treatment decisions across six major medical specialties where molecular diagnostics can significantly improve patient care and lower healthcare costs.  Myriad is focused on five critical success factors:  building upon a solid hereditary cancer foundation, growing new product volume, expanding reimbursement coverage for new products, increasing RNA kit revenue internationally and improving profitability with Elevate 2020.  For more information on how Myriad is making a difference, please visit the Company's website: www.myriad.com.

Myriad, the Myriad logo, BART, BRACAnalysis, Colaris, Colaris AP, myPath, myRisk, Myriad myRisk, myRisk Hereditary Cancer, myChoice, myPlan, BRACAnalysis CDx, Tumor BRACAnalysis CDx, myChoice HRD, EndoPredict, Vectra, GeneSight, riskScore Prolaris, ForeSight and Prequel are trademarks or registered trademarks of Myriad Genetics, Inc. or its wholly owned subsidiaries in the United States and foreign countries. MYGN-F, MYGN-G.

MYRIAD GENETICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share amounts)
	Three months ended
	September 30,
	2019				2018
Molecular diagnostic testing	$	172.0			$	189.0
Pharmaceutical and clinical services		14.3				13.3
Total revenue		186.3				202.3
Costs and expenses:
Cost of molecular diagnostic testing		41.2				42.3
Cost of pharmaceutical and clinical services		8.5				7.4
Research and development expense		21.3				21.1
Change in the fair value of contingent consideration		0.7				0.4
Selling, general, and administrative expense		135.5				129.9
Total costs and expenses		207.2				201.1
Operating income		(20.9	)			1.2
Other income (expense):
Interest income		0.9				0.7
Interest expense		(2.9	)			(2.2	)
Other		0.6				1.1
Total other expense:		(1.4	)			(0.4	)
Income before income tax		(22.3	)			0.8
Income tax provision		(1.7	)			1.6
Net income	$	(20.6	)		$	(0.8	)
Net loss attributable to non-controlling interest		—				(0.1	)
Net income attributable to Myriad Genetics, Inc. stockholders	$	(20.6	)		$	(0.7	)
Earnings per share:
Basic	$	(0.28	)		$	(0.01	)
Diluted	$	(0.28	)		$	(0.01	)
Weighted average shares outstanding:
Basic		73.7				73.0
Diluted		73.7				73.0

Consolidated Balance Sheets (Unaudited)
(in millions)
	September 30,				June 30,
ASSETS	2019				2019
Current assets:
Cash and cash equivalents	$	89.9			$	93.2
Marketable investment securities		52.7				43.7
Prepaid expenses		14.0				16.6
Inventory		28.1				31.4
Trade accounts receivable		117.0				133.9
Prepaid taxes		23.0				25.1
Other receivables		4.8				4.7
Total current assets		329.5				348.6
Property, plant and equipment, net		55.0				57.3
Operating lease right-of-use assets		71.3				—
Long-term marketable investment securities		51.5				54.9
Intangibles, net		667.8				684.7
Goodwill		416.1				417.2
Total assets	$	1,591.2			$	1,562.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	24.0			$	33.3
Accrued liabilities		73.0				78.9
Current maturities of operating lease liabilities		13.0				—
Short-term contingent consideration		3.3				3.4
Deferred revenue		2.1				2.2
Total current liabilities		115.4				117.8
Unrecognized tax benefits		22.1				21.7
Noncurrent operating lease liabilities		62.6				—
Other long-term liabilities		7.3				7.8
Contingent consideration		7.4				10.4
Long-term debt		225.0				233.5
Long-term deferred taxes		76.9				82.6
Total liabilities		516.7				473.8
Commitments and contingencies
Stockholders’ equity:
Common stock, 74.4 and 73.5 shares outstanding at September 30, 2019 and June 30, 2019 respectively		0.7				0.7
Additional paid-in capital		1,076.3				1,068.0
Accumulated other comprehensive loss		(7.5	)			(5.4	)
Retained earnings		5.0				25.6
Total Myriad Genetics, Inc. stockholders’ equity		1,074.5				1,088.9
Non-Controlling Interest		—				—
Total stockholders' equity		1,074.5				1,088.9
Total liabilities and stockholders’ equity	$	1,591.2			$	1,562.7

Consolidated Statement of Cash Flows (Unaudited)
(in millions)
	Three months ended
	September 30,
	2019				2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income attributable to Myriad Genetics, Inc. stockholders	$	(20.6	)			(0.7	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		18.2				18.3
Non-cash interest expense		0.1				(1.3	)
Gain on disposition of assets		(0.1	)			(1.0	)
Share-based compensation expense		8.8				7.7
Deferred income taxes		(5.1	)			2.7
Unrecognized tax benefits		0.4				(2.6	)
Change in fair value of contingent consideration		0.7				(0.4	)
Changes in assets and liabilities:
Prepaid expenses		2.6				1.8
Trade accounts receivable		16.7				(3.3	)
Other receivables		(0.1	)			(0.3	)
Inventory		3.1				3.5
Prepaid taxes		2.1				(3.6	)
Accounts payable		(9.3	)			(8.4	)
Accrued liabilities		(1.7	)			(4.4	)
Deferred revenue		—				(0.2	)
Net cash provided by operating activities		15.8				7.8
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(1.4	)			(1.3	)
Acquisitions, net of cash acquired		—				(279.6	)
Purchases of marketable investment securities		(23.1	)			(14.4	)
Proceeds from maturities and sales of marketable investment securities		17.4				16.3
Net cash used in investing activities		(7.1	)			(279.0	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from common stock issued under share-based compensation plans		(0.4	)			2.1
Payment of contingent consideration recognized at acquisition		(3.3	)			—
Net proceeds from revolving credit facility		—				290.0
Repayment of revolving credit facility		(8.6	)			(40.0	)
Net cash provided by (used in) financing activities		(12.3	)			252.1
Effect of foreign exchange rates on cash and cash equivalents		0.3				1.5
Net decrease in cash and cash equivalents		(3.3	)			(17.6	)
Cash and cash equivalents at beginning of the period		93.2				110.9
Cash and cash equivalents at end of the period	$	89.9			$	93.3

Safe Harbor Statement
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to significantly higher earnings in the second half of the fiscal year; a number of important upsides materializing during the fiscal year generating momentum as the Company transitions into fiscal year 2021; the Company’s fiscal year 2020 and fiscal second-quarter 2020 financial guidance for revenue, GAAP diluted earnings per share, and adjusted earnings per share under the caption “Fiscal Year 2020 and Fiscal Second-Quarter 2020 Financial Guidance”; and the Company’s strategic imperatives under the caption “About Myriad Genetics.” These “forward-looking statements” are management’s present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those described or implied in the forward-looking statements. These risks include, but are not limited to: the risk that sales and profit margins of the Company’s existing molecular diagnostic tests and pharmaceutical and clinical services may decline or will not continue to increase at historical rates; risks related to the Company’s ability to successfully transition from its existing product portfolio to its new tests; risks related to changes in the governmental or private insurers’ reimbursement levels for the Company’s tests or the Company’s ability to obtain reimbursement for its new tests at comparable levels to its existing tests; risks related to increased competition and the development of new competing tests and services; the risk that the Company may be unable to develop or achieve commercial success for additional molecular diagnostic tests and pharmaceutical and clinical services in a timely manner, or at all; the risk that the Company may not successfully develop new markets for its molecular diagnostic tests and pharmaceutical and clinical services, including the Company’s ability to successfully generate revenue outside the United States; the risk that licenses to the technology underlying the Company’s molecular diagnostic tests and pharmaceutical and clinical services tests and any future tests are terminated or cannot be maintained on satisfactory terms; risks related to delays or other problems with operating the Company’s laboratory testing facilities; risks related to public concern over the Company’s genetic testing in general or the Company’s 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 the Company’s ability to obtain new corporate collaborations or licenses and acquire new technologies or businesses on satisfactory terms, if at all; risks related to the Company’s ability to successfully integrate and derive benefits from any technologies or businesses that it licenses or acquires; risks related to the Company’s projections about the potential market opportunity for the Company’s products; the risk that the Company or its licensors may be unable to protect or that third parties will infringe the proprietary technologies underlying the Company’s tests; the risk of patent-infringement claims or challenges to the validity of the Company’s patents; risks related to changes in intellectual property laws covering the Company’s molecular diagnostic tests and pharmaceutical and clinical services and patents or enforcement in the United States and foreign countries, such as the Supreme Court decision in the lawsuit brought against us by the Association for Molecular Pathology et al; risks of new, changing and competitive technologies and regulations in the United States and internationally; the risk that the Company may be unable to comply with financial operating covenants under the Company’s credit or lending agreements; the risk that the Company will be unable to pay, when due, amounts due under the Company’s credit or lending agreements; and other factors discussed under the heading “Risk Factors” contained in Item 1A of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

Statement regarding use of non-GAAP financial measures
In this press release, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and to manage the Company’s business. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached schedules.

Following is a description of the adjustments made to GAAP financial measures:

• Acquisition – amortization of intangible assets: Represents recurring amortization charges resulting from the acquisition of intangible assets, including developed technology and database rights.
• Acquisition – integration related costs: Costs related to closing and integration of acquired companies
• Equity compensation – non-cash equity based compensation provided to Myriad employees
• Deferred Tax impact of non-GAAP adjustments: Changes in effective tax rate based upon ASU 2016-09 and the deferred tax impact of non-deductible acquisition costs
• Potential future consideration related to acquisitions: Non-cash expenses related to valuation adjustments of earn-out and milestone payments tied to recent acquisitions
• Elevate Initiatives: Expenses tied to Elevate 2020 program

The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Non-GAAP financial results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. 

Reconciliation of GAAP to Non-GAAP Financial Measures
for the Three months ended September 30, 2019
(Unaudited data in millions, except per share amount)
	Three Months Ended
	Sep 30, 2019				Sep 30, 2018
Revenue	$	186.3			$	202.3
GAAP Cost of molecular diagnostic testing		41.2				42.3
GAAP Cost of pharmaceutical and clinical services		8.5				7.4
Equity Compensation		(0.3	)			(0.2	)
Elevate initiatives		(0.2	)			(3.1	)
Non-GAAP COGS	$	49.2			$	46.4
Non-GAAP Gross Margin		73.6	%			77.1	%
GAAP Research and Development	$	21.3			$	21.1
Acquisition - amortization of intangible assets		—				(0.1	)
Equity compensation		(1.5	)			(1.2	)
Elevate initiatives		(0.7	)			(0.6	)
Non-GAAP R&D	$	19.1			$	19.2
GAAP Contingent Consideration	$	0.7			$	0.4
Potential future consideration related to acquisitions		(0.7	)			(0.4	)
Non-GAAP Contingent Consideration	$	—			$	—
GAAP Selling, General and Administrative	$	135.5			$	129.9
Acquisition - amortization of intangible assets		(15.2	)			(13.2	)
Acquisition - Integration related costs		(0.6	)			(9.6	)
Equity compensation		(7.0	)			(6.3	)
Elevate initiatives		(2.3	)			(1.2	)
Non-GAAP SG&A	$	110.4			$	99.6
GAAP Operating Income	$	(20.9	)		$	1.2
Acquisition - Integration related costs		0.6				9.6
Acquisition - amortization of intangible assets		15.2				13.3
Equity compensation		8.8				7.7
Elevate initiatives		3.2				4.9
Potential future consideration related to acquisitions		0.7				0.4
Non-GAAP Operating Income	$	7.6			$	37.1
Non-GAAP Operating Margin		4	%			18	%
GAAP Net Income Attributable to Myriad Genetics, Inc. Stockholders	$	(20.6	)		$	(0.7	)
Acquisition - Integration related costs		0.6				9.6
Acquisition - amortization of intangible assets		15.2				13.3
Equity compensation		8.8				7.7
Elevate initiatives		3.2				4.9
Potential future consideration related to acquisitions		0.7				0.4
Deferred tax impact of non-GAAP adjustments		1.4				2.7
Tax effect associated with non-GAAP adjustments		(3.5	)			(5.1	)
Non-GAAP Net Income	$	5.8			$	32.8
GAAP Diluted EPS	$	(0.28	)		$	(0.01	)
Non-GAAP Diluted EPS	$	0.08			$	0.43
Diluted shares outstanding		75.4				77.0
Free Cash Flow Reconciliation
(Unaudited data in millions)
	Three Months Ended
	Sep 30, 2019				Sep 30, 2018
GAAP cash flow from operations	$	15.8			$	7.8
Capital expenditures		(1.4	)			(1.3	)
Free cash flow	$	14.4			$	6.5
Elevate initiative costs		3.2				4.7
Acquisition - Integration related costs		0.6				8.1
Tax effect associated with non-GAAP adjustments		(1.1	)			(2.9	)
Non-GAAP Free cash flow	$	17.1			$	16.4

Reconciliation of GAAP to Non-GAAP for Fiscal Year 2020
The Company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from guidance set forth below. Some of the factors that could affect the Company’s financial results are stated in the safe harbor statement of this press release. More information on potential factors that could affect the Company’s financial results are included under the heading "Risk Factors" contained in Item 1A in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

		Fiscal Year 2020
	Diluted net income per share
	GAAP diluted net income per share	($0.25) - ($0.15)
	Stock Based Compensation Expense	0.30
	Acquisition - amortization of intangible assets	0.80
	Adjustments to GAAP financial measures	0.15
	Non-GAAP diluted net income per share	$1.00 - $1.10
		Fiscal Second-Quarter 2020
	Diluted net income per share
	GAAP diluted net income per share	($0.02) - $0.00
	Stock Based Compensation Expense	0.08
	Acquisition - amortization of intangible assets	0.20
	Adjustments to GAAP financial measures	0.04
	Non-GAAP diluted net income per share	$0.30 - $0.32

Media Contact:
Ron Rogers
(801) 584-3065
rrogers@myriad.com

Investor Contact:
Scott Gleason
(801) 584-1143
sgleason@myriad.com