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 ~~March 31,~~June 30, 2023


☐			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)

~~320 Wakara Way,~~322 North 2200 West, Salt Lake City, UT

(Address of principal executive offices)

87-0494517

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

~~84108~~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 ~~April~~July 28, 2023, the registrant had ~~81,555,161~~81,883,426 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 ~~March 31,~~June 3 0 , 2023 (unaudited) and December 31, 2022	4

	Condensed Consolidated Statements of Operations for the three and six months ended ~~March~~June 313 0 , ~~202~~3 2023 and ~~202~~2 2022 (unaudited)	5

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

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended M ~~arch~~June 3 10 , ~~202~~3 2023 and ~~202~~2 2022 (unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended June 3 ~~March 31~~0 , ~~202~~3 2023 and ~~202~~2 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	2526

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3134

Item 4.	Controls and Procedures	3235

	PART II - Other Information

Item 1.	Legal Proceedings	3336

Item 1A.	Risk Factors	3336

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3538

Item 3.	Defaults Upon Senior Securities	3538

Item 4.	Mine Safety Disclosures	3638

Item 5.	Other Information	3639

Item 6.	Exhibits	3639

	Signatures	3740

Table of Contents

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

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


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	53.6	$	56.9	Cash and cash equivalents	$	102.8	$	56.9
Marketable investment securities	Marketable investment securities	25.1		58.0		Marketable investment securities	18.8		58.0
Trade accounts receivable	Trade accounts receivable	119.1		101.6		Trade accounts receivable	111.7		101.6
Inventory	Inventory	21.8		20.1		Inventory	22.5		20.1
Prepaid taxes	Prepaid taxes	17.6		17.6		Prepaid taxes	17.7		17.6
Prepaid expenses and other current assets	Prepaid expenses and other current assets	24.4		20.4		Prepaid expenses and other current assets	20.8		20.4
Total current assets	Total current assets	261.6		274.6		Total current assets	294.3		274.6
Operating lease right-of-use assets	Operating lease right-of-use assets	107.0		103.9		Operating lease right-of-use assets	106.6		103.9
Long-term marketable investment securities	Long-term marketable investment securities	30.4		54.8		Long-term marketable investment securities	6.2		54.8
Property, plant, and equipment, net	Property, plant, and equipment, net	96.3		83.4		Property, plant, and equipment, net	112.0		83.4
Intangibles, net	Intangibles, net	369.4		379.7		Intangibles, net	358.8		379.7
Goodwill	Goodwill	287.1		286.8		Goodwill	287.2		286.8
Other assets	Other assets	17.5		15.5		Other assets	22.1		15.5
Total assets	Total assets	$	1,169.3	$	1,198.7	Total assets	$	1,187.2	$	1,198.7
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	36.5	$	28.8	Accounts payable	$	39.8	$	28.8
Accrued liabilities	Accrued liabilities	91.7		94.3		Accrued liabilities	164.3		94.3
Current maturities of operating lease liabilities	Current maturities of operating lease liabilities	15.1		14.1		Current maturities of operating lease liabilities	17.0		14.1

Total current liabilities	Total current liabilities	143.3		137.2		Total current liabilities	221.1		137.2
Unrecognized tax benefits	Unrecognized tax benefits	28.7		26.8		Unrecognized tax benefits	29.0		26.8
Long-term deferred taxes	Long-term deferred taxes	4.1		3.5		Long-term deferred taxes	3.7		3.5
Long-term debt						Long-term debt	38.4		—
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	146.5		130.9		Noncurrent operating lease liabilities	148.4		130.9
Other long-term liabilities	Other long-term liabilities	11.5		14.5		Other long-term liabilities	11.4		14.5
Total liabilities	Total liabilities	334.1		312.9		Total liabilities	452.0		312.9
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock, 81.5 million and 81.2 million shares outstanding at March 31, 2023 and December 31, 2022, respectively		0.8		0.8
Common stock, 81.9 million and 81.2 million shares outstanding at June 30, 2023 and December 31, 2022, respectively						Common stock, 81.9 million and 81.2 million shares outstanding at June 30, 2023 and December 31, 2022, respectively	0.8		0.8
Additional paid-in capital	Additional paid-in capital	1,262.7		1,260.1		Additional paid-in capital	1,276.8		1,260.1
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(7.4)		(8.9)		Accumulated other comprehensive loss	(5.4)		(8.9)
Accumulated deficit	Accumulated deficit	(420.9)		(366.2)		Accumulated deficit	(537.0)		(366.2)

Total stockholders' equity	Total stockholders' equity	835.2		885.8		Total stockholders' equity	735.2		885.8
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,169.3	$	1,198.7	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 June 30,				Six months ended June 30,
		2023		2022				2023		2022		2023		2022

Testing revenue	Testing revenue	$	181.2	$	164.9		Testing revenue	$	183.5	$	179.3	$	364.7	$	344.2

Costs and expenses:	Costs and expenses:						Costs and expenses:
Cost of testing revenue	Cost of testing revenue	59.2		48.0			Cost of testing revenue	57.8		49.7		117.0		97.7
Research and development expense	Research and development expense	22.5		21.2			Research and development expense	21.2		20.3		43.7		41.5
Selling, general, and administrative expense	Selling, general, and administrative expense	151.7		110.6			Selling, general, and administrative expense	140.7		127.1		292.4		237.7
Legal charges pending settlement							Legal charges pending settlement	77.5		—		77.5		—
Goodwill and long-lived asset impairment charges	Goodwill and long-lived asset impairment charges	—		10.7			Goodwill and long-lived asset impairment charges	—		—		—		10.7
Total costs and expenses	Total costs and expenses	233.4		190.5			Total costs and expenses	297.2		197.1		530.6		387.6
Operating loss	Operating loss	(52.2)		(25.6)			Operating loss	(113.7)		(17.8)		(165.9)		(43.4)
Other income (expense):	Other income (expense):						Other income (expense):
Interest income	Interest income	0.7		0.1			Interest income	0.5		0.4		1.2		0.5
Interest expense	Interest expense	(0.5)		(0.9)			Interest expense	(0.5)		(0.6)		(1.0)		(1.5)
Other	Other	(0.6)		—			Other	(2.4)		0.1		(3.0)		0.1
Total other expense, net	Total other expense, net	(0.4)		(0.8)			Total other expense, net	(2.4)		(0.1)		(2.8)		(0.9)
Loss before income tax	Loss before income tax	(52.6)		(26.4)			Loss before income tax	(116.1)		(17.9)		(168.7)		(44.3)
Income tax expense (benefit)	Income tax expense (benefit)	2.1		(5.9)			Income tax expense (benefit)	—		(3.8)		2.1		(9.7)
Net loss	Net loss	$	(54.7)	$	(20.5)		Net loss	$	(116.1)	$	(14.1)	$	(170.8)	$	(34.6)

Net loss per share:	Net loss per share:						Net loss per share:
Basic and diluted	Basic and diluted	$	(0.67)	$	(0.26)		Basic and diluted	$	(1.42)	$	(0.18)	$	(2.10)	$	(0.43)

Weighted average shares outstanding:	Weighted average shares outstanding:						Weighted average shares outstanding:
Basic and diluted	Basic and diluted	81.3		80.1			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 March 31,				Three months ended June 30,				Six months ended June 30,
		2023		2022				2023		2022		2023		2022
Net loss	Net loss	$	(54.7)	$	(20.5)		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	1.2		(1.3)			Change in unrealized loss on available-for-sale debt securities, net of tax	1.0		(0.8)		2.2		(2.1)
Change in foreign currency translation adjustment, net of tax	Change in foreign currency translation adjustment, net of tax	0.3		(1.2)			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							Reclassification adjustments for losses (gains) included in net income, net of tax	0.9		—		1.4		—
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	$	(53.2)	$	(23.0)		Comprehensive loss	$	(113.2)	$	(15.4)	$	(165.9)	$	(38.4)

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

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

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)


		Three months ended March 31,					Six months ended June 30,
		2023		2022			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	Net loss	$	(54.7)	$	(20.5)	Net loss	$	(170.8)	$	(34.6)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	19.4		13.0		Depreciation and amortization	32.7		25.9
Non-cash interest expense		0.3		0.2

Non-cash lease expense	Non-cash lease expense	2.9		3.1		Non-cash lease expense	5.8		5.7
Tenant improvement allowance received		13.2		—

Stock-based compensation expense	Stock-based compensation expense	7.5		10.1		Stock-based compensation expense	18.7		20.5
Deferred income taxes	Deferred income taxes	0.1		(5.9)		Deferred income taxes	(0.7)		(10.6)
Unrecognized tax benefits	Unrecognized tax benefits	1.9		0.2		Unrecognized tax benefits	2.3		(0.2)

Net realized losses on marketable investment securities	Net realized losses on marketable investment securities	0.5		—		Net realized losses on marketable investment securities	1.4		—
Impairment of goodwill and long-lived assets	Impairment of goodwill and long-lived assets	—		10.7		Impairment of goodwill and long-lived assets	—		10.7

Other non-cash adjustments						Other non-cash adjustments	1.7		0.4
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(4.0)		(3.0)		Prepaid expenses and other current assets	—		2.3
Trade accounts receivable	Trade accounts receivable	(17.5)		(10.5)		Trade accounts receivable	(10.1)		(18.9)
Inventory	Inventory	(1.7)		(0.2)		Inventory	(2.3)		(0.1)
Prepaid taxes	Prepaid taxes	—		(0.4)		Prepaid taxes	(0.1)		(0.9)
Other assets	Other assets	(2.3)		(0.3)		Other assets	(5.1)		(0.4)
Tenant improvement allowance received						Tenant improvement allowance received	16.3		—
Accounts payable	Accounts payable	7.6		(3.2)		Accounts payable	10.7		(8.2)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(6.5)		(35.3)		Accrued expenses and other liabilities	65.3		(82.9)
Deferred revenues	Deferred revenues	0.1		(4.5)		Deferred revenues	0.1		(4.9)
Net cash used in operating activities	Net cash used in operating activities	(33.2)		(46.5)		Net cash used in operating activities	(34.1)		(96.2)
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(23.5)		(6.3)		Capital expenditures	(42.3)		(13.0)

Purchases of marketable investment securities	Purchases of marketable investment securities	—		(52.1)		Purchases of marketable investment securities	—		(85.5)
Proceeds from maturities and sales of marketable investment securities	Proceeds from maturities and sales of marketable investment securities	58.1		17.1		Proceeds from maturities and sales of marketable investment securities	88.7		45.2
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	34.6		(41.3)		Net cash provided by (used in) investing activities	46.4		(53.3)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issued under stock-based compensation plans	Proceeds from common stock issued under stock-based compensation plans	—		0.3		Proceeds from common stock issued under stock-based compensation plans	—		3.0
Payment of tax withheld for common stock issued under stock-based compensation plans	Payment of tax withheld for common stock issued under stock-based compensation plans	(4.9)		(5.1)		Payment of tax withheld for common stock issued under stock-based compensation plans	(5.1)		(5.3)

Net cash used in financing activities		(4.9)		(4.8)
Proceeds from revolving credit facility						Proceeds from revolving credit facility	40.0		—
Fees associated with issuance of revolving credit facility						Fees associated with issuance of revolving credit facility	(1.4)		—
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	33.5		(2.3)
Effect of foreign exchange rates on cash, cash equivalents, and restricted cash	Effect of foreign exchange rates on cash, cash equivalents, and restricted cash	0.2		(0.6)		Effect of foreign exchange rates on cash, cash equivalents, and restricted cash	0.5		(0.8)
Net decrease in cash, cash equivalents, and restricted cash		(3.3)		(93.2)
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	46.3		(152.6)
Cash, cash equivalents, and restricted cash at beginning of the period	Cash, cash equivalents, and restricted cash at beginning of the period	66.4		258.8		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	Cash, cash equivalents, and restricted cash at end of the period	$	63.1	$	165.6	Cash, cash equivalents, and restricted cash at end of the period	$	112.7	$	106.2

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 (the “Form 10-K”).

The preparation of financial statements in conformity 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. In the quarter ended March 31, the Company has typically experienced a decrease in volumes due to the annual reset of patient deductibles; however, for the three months ended March 31, 2023, the Company experienced an increase sequentially in volumes across its Prenatal, Pharmacogenomics, and Tumor Profiling products. Additionally, theThe volume of testing is typically negatively impacted by the summer season, which is generally reflected in the quarter ended September 30. The volume of testing in the quarter ended December 31 is generally strong as the Company typically experiences an increase in test volumes from patients who have met their annual insurance deductible. In the quarter ended March 31, the Company has typically experienced a decrease in test volumes due to the annual reset of patient deductibles; however, 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 ~~March 31,~~June 30, 2023 may not necessarily be indicative of results to be expected for any other interim period or for the full year.

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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, BRACAnalysis, BRACAnalysis CDx), Tumor Profiling (MyChoice CDx, Prolaris, 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 March 31,														Three months ended June 30,
		2023							2022							2023						2022
(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:														Testing revenues:
Hereditary Cancer	Hereditary Cancer	$	64.0	$	11.7	$	75.7		$	60.7	$	10.2	$	70.9	Hereditary Cancer	$	64.5	$	12.2	$	76.7	$	69.8	$	9.6	$	79.4
Tumor Profiling	Tumor Profiling	28.8		8.5		37.3			19.7		12.8		32.5		Tumor Profiling	27.3		8.7		36.0		21.5		12.0		33.5
Prenatal	Prenatal	36.0		0.2		36.2			31.7		0.2		31.9		Prenatal	35.4		0.2		35.6		33.1		0.2		33.3
Pharmacogenomics	Pharmacogenomics	32.0		—		32.0			29.3		—		29.3		Pharmacogenomics	35.2		—		35.2		33.1		—		33.1
Other		—		—		—			0.3		—		0.3

Total revenue	Total revenue	$	160.8	$	20.4	$	181.2		$	141.7	$	23.2	$	164.9	Total revenue	$	162.4	$	21.1	$	183.5	$	157.5	$	21.8	$	179.3

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

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.

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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 payors. As a result of this new information, the Company updates its estimate of the amounts to be recognized for previously delivered tests, the impact of which was not material to the Company's Condensed Consolidated Statements of Operations for the three months and six months ended ~~March 31,~~June 30, 2023. During the three and six months ended ~~March 31,~~June 30, 2022, the Company recognized ~~$12.4~~$11.7 million and $19.9 million in revenue, respectively, which resulted in a ~~$0.12~~$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.

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, 2023, respectively, and 13% of total revenue for each of the three and six months ended ~~March 31, 2023 and March 31, 2022, respectively.~~June 30, 2022. Concentrations of credit risk are mitigated due to the number of the Company’s customers as well as their dispersion across many geographic regions. No payor accounted for more than 10% of accounts receivable at ~~March 31,~~June 30, 2023 or December 31, 2022. 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 available-for-sale securities by major security type and class of security at ~~March 31,~~June 30, 2023 and December 31, 2022 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
March 31, 2023
June 30, 2023										June 30, 2023
Cash and cash equivalents:	Cash and cash equivalents:									Cash and cash equivalents:
Cash	Cash	$	51.9	$	—	$	—	$	51.9	Cash	$	102.2	$	—	$	—	$	102.2
Cash equivalents	Cash equivalents	1.7		—		—		1.7		Cash equivalents	0.6		—		—		0.6
Total cash and cash equivalents	Total cash and cash equivalents	53.6		—		—		53.6		Total cash and cash equivalents	102.8		—		—		102.8
Available-for-sale:	Available-for-sale:									Available-for-sale:
Corporate bonds and notes	Corporate bonds and notes	29.3		—		(0.9)		28.4		Corporate bonds and notes	10.9		—		(0.3)		10.6
Municipal bonds	Municipal bonds	8.7		—		(0.1)		8.6		Municipal bonds	8.1		—		(0.1)		8.0
Federal agency issues	Federal agency issues	14.5		—		(0.4)		14.1		Federal agency issues	3.5		—		(0.1)		3.4
U.S. government securities	U.S. government securities	4.5		—		(0.1)		4.4		U.S. government securities	3.0		—		—		3.0
Total	Total	$	110.6	$	—	$	(1.5)	$	109.1	Total	$	128.3	$	—	$	(0.5)	$	127.8

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(in millions)	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
December 31, 2022
Cash and cash equivalents:
Cash	$	53.6	$	—	$	—	$	53.6
Cash equivalents	3.3		—		—		3.3
Total cash and cash equivalents	56.9		—		—		56.9
Available-for-sale:
Corporate bonds and notes	66.7		—		(1.6)		65.1
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	$	172.4	$	—	$	(2.7)	$	169.7

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


(in millions)	(in millions)	Amortized cost		Estimated fair value		(in millions)	Amortized cost		Estimated fair value
Cash	Cash	$	51.9	$	51.9	Cash	$	102.2	$	102.2
Cash equivalents	Cash equivalents	1.7		1.7		Cash equivalents	0.6		0.6
Available-for-sale:	Available-for-sale:					Available-for-sale:
Due within one year	Due within one year	25.4		25.1		Due within one year	19.0		18.8
Due after one year through five years	Due after one year through five years	31.6		30.4		Due after one year through five years	6.5		6.2
Due after five years	Due after five years	—		—		Due after five years	—		—
Total	Total	$	110.6	$	109.1	Total	$	128.3	$	127.8

The cost of a security sold, or amount reclassified out of accumulated other comprehensive income or loss into net income, 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 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 ~~12.25~~12 years and 21.75 years 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 million at June 30, 2023.

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
March 31, 2023
June 30, 2023										June 30, 2023
Money market funds (a)	Money market funds (a)	$	1.7	$	—	$	—	$	1.7	Money market funds (a)	$	0.6	$	—	$	—	$	0.6
Corporate bonds and notes	Corporate bonds and notes	—		28.4		—		28.4		Corporate bonds and notes	—		10.6		—		10.6
Municipal bonds	Municipal bonds	—		8.6		—		8.6		Municipal bonds	—		8.0		—		8.0
Federal agency issues	Federal agency issues	—		14.1		—		14.1		Federal agency issues	—		3.4		—		3.4
U.S. government securities	U.S. government securities	—		4.4		—		4.4		U.S. government securities	—		3.0		—		3.0
Contingent consideration	Contingent consideration	—		—		(6.8)		(6.8)		Contingent consideration	—		—		(7.6)		(7.6)
Total	Total	$	1.7	$	55.5	$	(6.8)	$	50.4	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)	Level 1		Level 2		Level 3		Total
December 31, 2022
Money market funds (a)	$	3.3	$	—	$	—	$	3.3
Corporate bonds and notes	—		65.1		—		65.1
Municipal bonds	—		16.0		—		16.0
Federal agency issues	—		20.0		—		20.0
U.S. government securities	—		11.7		—		11.7
Contingent consideration	—		—		(6.8)		(6.8)
Total	$	3.3	$	112.8	$	(6.8)	$	109.3

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

~~There was no significant~~The following table reconciles the change in the fair value of ~~total~~the contingent consideration ~~between December 31, 2022 and March 31, 2023.~~during the periods presented:


(in millions)	Carrying Amount
Balance at December 31, 2022	$	6.8
Change in fair value recognized in the Statements of Operations	0.8

Ending balance at June 30, 2023	$	7.6

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5.PROPERTY, PLANT AND EQUIPMENT, NET

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


(in millions)	(in millions)	March 31, 2023		December 31, 2022		(in millions)	June 30, 2023		December 31, 2022
Leasehold improvements	Leasehold improvements	$	80.4	$	67.9	Leasehold improvements	$	90.8	$	67.9
Equipment	Equipment	128.1		124.7		Equipment	136.1		124.7
Property, plant and equipment, gross	Property, plant and equipment, gross	208.5		192.6		Property, plant and equipment, gross	226.9		192.6
Less accumulated depreciation	Less accumulated depreciation	(112.2)		(109.2)		Less accumulated depreciation	(114.9)		(109.2)
Property, plant and equipment, net	Property, plant and equipment, net	$	96.3	$	83.4	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. ~~As the~~The Company expects to ~~recover the carrying value of the related right-of-use assets through the designation of~~designate a sub-lessee or new tenant for the facility ~~the Company~~and therefore has not recognized a loss on the lease as of ~~March 31,~~June 30, 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 March 31,				Three months ended June 30,				Six months ended June 30,
(in millions)	(in millions)	2023		2022			(in millions)	2023		2022		2023		2022
Depreciation expense	Depreciation expense	$	8.7	$	2.8		Depreciation expense	$	2.7	$	2.8	$	11.4	$	5.6

6.GOODWILL AND INTANGIBLE ASSETS

Goodwill

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


(in millions)	Total
Beginning balance	$	286.8
Translation adjustments	~~0.3~~0.4
Ending balance	$	~~287.1~~287.2

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 March 31, 2023
At June 30, 2023								At June 30, 2023
Developed technologies	Developed technologies	$	625.6	$	(263.5)	$	362.1	Developed technologies	$	625.6	$	(274.0)	$	351.6
Customer relationships	Customer relationships	1.6		(0.1)		1.5		Customer relationships	1.6		(0.1)		1.5
Trademarks	Trademarks	6.1		(0.3)		5.8		Trademarks	6.1		(0.4)		5.7
Total intangible assets	Total intangible assets	$	633.3	$	(263.9)	$	369.4	Total intangible assets	$	633.3	$	(274.5)	$	358.8

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(in millions)	Gross Carrying Amount		Accumulated Amortization		Net
At December 31, 2022
Developed technologies	$	625.0	$	(252.9)	$	372.1
Customer relationships	1.6		—		1.6
Trademarks	6.1		(0.1)		6.0
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 March 31,				Three months ended June 30,				Six months ended June 30,
(in millions)	(in millions)	2023		2022			(in millions)	2023			2022		2023		2022
Amortization of intangible assets	Amortization of intangible assets	$	10.7	$	10.2		Amortization of intangible assets	$	10.6		$	10.2	$	21.3	$	20.3

7.ACCRUED LIABILITIES

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


(in millions)	(in millions)	March 31, 2023		December 31, 2022		(in millions)	June 30, 2023		December 31, 2022
Employee compensation and benefits	Employee compensation and benefits	$	39.1	$	41.2	Employee compensation and benefits	$	37.0	$	41.2

Accrued taxes payable	Accrued taxes payable	4.7		4.8		Accrued taxes payable	4.6		4.8
Refunds payable and reserves	Refunds payable and reserves	18.5		19.3		Refunds payable and reserves	17.4		19.3
Short-term contingent consideration	Short-term contingent consideration	3.0		—		Short-term contingent consideration	5.7		—

Accrued royalties	Accrued royalties	5.0		4.8		Accrued royalties	5.1		4.8
Legal charges pending settlement						Legal charges pending settlement	77.5		—
Other accrued liabilities	Other accrued liabilities	21.4		24.2		Other accrued liabilities	17.0		24.2
Total accrued liabilities	Total accrued liabilities	$	91.7	$	94.3	Total accrued liabilities	$	164.3	$	94.3

8.LONG-TERM DEBT

On ~~December 23, 2016,~~June 30, 2023, the Company entered into ~~a senior secured~~an asset-based revolving credit facility (the ~~“Facility”~~“ABL Facility”) with an initial maximum principal amount of $90.0 million, with JPMorgan Chase Bank, N.A. as ~~borrower,~~administrative agent and issuing bank, the other lender parties thereto, and certain of the Company's domestic subsidiaries (the "Guarantors"). The ABL Facility includes an option for the Company to request an increase in the maximum principal amount by up to $25.0 million for a total maximum principal commitment of $115.0 million. 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, 2023 and incurred $1.6 million of debt issuance costs during the three months ended June 30, 2023. The proceeds of 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.

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 ~~lenders~~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 ~~time to time party thereto. On July 31, 2018,~~eligible accounts of the Company entered into Amendment No. 1 to the Facility, which effected an “amend and extend” transaction with respect to the Facility by which the maturity date thereof was extended to July 31, 2023 (the "Maturity Date") and the ~~maximum aggregate principal commitment was increased from $300.0 million~~Guarantors for the 60 consecutive days most recently ended. Subject to ~~$350.0 million. On May 1, 2020,~~certain conditions, the Company ~~entered into Amendment No. 2 to~~can freely withdraw cash from the Facility, which waived the Company’s compliance with certain covenants and modified the interest rate and other terms during the modification period from March 31, 2020 through June 30, 2021 (as modified, the “Modification Period”). This amendment included a modification to the leverage covenant and the interest coverage ratio covenant, which were waived through March 31, 2021, as well as revisions to certain negative covenants of the Facility during the Modification Period. On February 22, 2021, the Company entered into Amendment No. 3 to the Facility, which waived compliance with the leverage ratio and the interest coverage ratio covenants through the quarter ended March 31, 2022 and also lowered the minimum liquidity covenant (which was added by Amendment No. 2) to $150 million, and made it applicable through such quarter. Amendment No. 3 also restricted the Company from borrowing under the Facility if unrestricted cash, cash equivalents and marketable investment securities exceed $150.0 million, unless such borrowings are in connection with permitted acquisitions, decreased the maximum aggregate principal commitment from $350.0 million to $300.0 million, with a furtherEligible Cash account, provided that any reduction in the ~~maximum aggregate principal commitment from $300.0 million to $250.0 million by September 30, 2021, extended~~Eligible Cash amount will have a corresponding reduction in the Modification Period for an additional year through June 30, 2022, and revised certain negative covenants in connection with the extension. The amendments were accounted for as modifications pursuant to guidance in ASC 470-50, Debt. On July 26, 2022, the Company entered into Amendment No. 4 to the Facility (the "Amended Facility"), which extended the Modification Period through the Maturity Date, decreased the maximum aggregate principal commitment from $250.0 million to $200.0 million, with a further reduction to $150.0 million as of December 31, 2022, waived compliance with the leverage ratio and interest coverage ratio covenants through the Maturity Date, and provided for monthly reporting of the Company's liquidity if the total revolving credit exposure is greater than $0, without giving effect to the dollar amount of any letter of credit exposure not in excess of $5.0 million.borrowing base.

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~~Covenants in~~Loans outstanding under the ~~Amended~~ABL Facility ~~impose operating~~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 ~~financial restrictions~~(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 ~~Company. These restrictions may prohibit~~aggregate average unused availability under the ABL Facility during the prior quarter or ~~place limitations on, among other things,~~(b) term SOFR for a tenor of one, three or six months (at the Company’s ~~ability~~election) plus 0.10% (the “Adjusted Term SOFR Rate”) plus an applicable margin ranging from 2.00% to ~~incur additional indebtedness~~2.50% depending on the average unused availability under the ~~Amended~~ABL Facility ~~or otherwise, create certain types~~during the prior quarter, with an ABR floor of ~~liens,~~1.00% and ~~complete mergers, consolidations, or change in control transactions. The Amended~~an Adjusted Term SOFR Rate floor of 0.00%. Under the ABL Facility ~~may also prohibit or place limitations~~the undrawn fee ranges from 37.5 to 50 basis points based on the ~~Company’s ability to sell assets, pay dividends or provide other distributions to stockholders.~~daily amount of the available revolving commitment. The interest rate for borrowings under the ABL Facility as of June 30, 2023 was 7.59%.

The ~~Amended~~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 ~~Amended~~ABL Facility ~~also contains certain~~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, availability under the ABL Facility was $48.5 million. In addition, the ABL Facility includes a number of customary events of default. ~~Amendment No. 2 modified~~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 ~~to increase~~may become due and payable immediately.

Under the ~~interest rate to be fixed at a spread~~terms of ~~LIBOR plus 350 basis points on drawn balances~~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 ~~undrawn fee was increased~~borrowing base, the Company will become subject to ~~50 basis points during~~cash dominion, upon which the ~~Modification Period. Amendment No. 4 replaced~~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 ~~option to make Eurodollar borrowings, which bore interest by reference to~~greater of (i) $12.5 million and (ii) 15% of the ~~LIBOR rate, with term benchmark loans, which will bear interest by reference to~~lesser of the ~~secured overnight financing rate ("SOFR"). Amendment No. 4 did not modify~~maximum commitment amount and the ~~applicable margins~~borrowing base for a period of 45 consecutive days and ~~undrawn fee amounts. The interest rate for term benchmark loans continues to be fixed at a spread~~no event of SOFR plus 350 basis points on drawn balances and undrawn fees continue to be 50 basis points. The SOFR floor was revised to 0.0%. The Company was in compliance with all applicable financial covenants at March 31, 2023.default is continuing.

The Company had no outstanding balances under the ~~Amended Facility~~previous credit facility as of ~~March 31, 2023 and~~ December 31, ~~2022. The Amended Facility expires on July 31, 2023. There is no guarantee that~~2022 or June 30, 2023, the ~~Company will be able to replace~~date such facility was replaced with the Amended Facility or that the Company will be able to secure additional funding or other financing options in a timely manner or on favorable terms, if at all. If the Company is unable to secure additional funding or other financing options when needed or desired, the Company's operations could be negatively impacted in future periods.ABL Facility.

9.OTHER LONG-TERM LIABILITIES

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


(in millions)	(in millions)	March 31, 2023		December 31, 2022		(in millions)	June 30, 2023		December 31, 2022
Contingent consideration	Contingent consideration	$	3.8	$	6.8	Contingent consideration	$	1.9	$	6.8
Escrow liability						Escrow liability	7.5		7.5
Other	Other	7.7		7.7		Other	2.0		0.2
Total other long-term liabilities	Total other long-term liabilities	$	11.5	$	14.5	Total other long-term liabilities	$	11.4	$	14.5

~~The Company's balance~~Contingent consideration as of ~~other~~June 30, 2023 consisted of the long-term ~~liabilities at March 31, 2023 and~~portion of contingent consideration related to the acquisition of Sividon. As of December 31, 2022, contingent consideration consisted ~~primarily~~ of the long-term portion of contingent consideration related to the acquisitions of Sividon and ~~Gateway and a liability~~Gateway. As of June 30, 2023, the contingent consideration related to the acquisition of ~~Gateway. A~~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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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 ~~March 31,~~June 30, 2023.

The Company is authorized to issue up to 150.0 million shares of common stock, par value $0.01 per share. There were ~~81.5~~81.9 million shares of common stock issued and outstanding at ~~March 31,~~June 30, 2023.

Shares of common stock issued and outstanding

Three months ended
March 31,
(in millions) 2023 2022
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 0.3 0.3
Common stock issued and outstanding at end of period 81.5 80.3

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	Six months ended June 30,
(in millions)	2023	2022
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	0.7	0.6

Common stock issued and outstanding at end of period	81.9	80.6

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 March 31,		Three months ended June 30,			Six months ended June 30,
(in millions)	(in millions)	2023	2022		(in millions)	2023		2022	2023	2022
Denominator:	Denominator:				Denominator:
Weighted-average shares outstanding used to compute basic EPS	Weighted-average shares outstanding used to compute basic EPS	81.3	80.1		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	—	—		Effect of dilutive shares	—		—	—	—
Weighted-average shares outstanding and dilutive securities used to compute diluted EPS	Weighted-average shares outstanding and dilutive securities used to compute diluted EPS	81.3	80.1		Weighted-average shares outstanding and dilutive securities used to compute diluted EPS	81.7		80.4	81.5	80.3

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 March 31,		Three months ended June 30,			Six months ended June 30,
(in millions)	(in millions)	2023	2022		(in millions)	2023		2022	2023	2022
Anti-dilutive options and RSUs excluded from EPS computation	Anti-dilutive options and RSUs excluded from EPS computation	5.6	5.5		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 ~~March 31,~~June 30, 2023, the Company has $110.7 million remaining under its current share repurchase authorization. No shares were repurchased during the ~~three~~six months ended ~~March 31,~~June 30, 2023 or ~~March 31,~~June 30, 2022 under this authorization.

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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 stock unit awards to employees, consultants, and directors. Stockholders have subsequently approved amendments to the 2017 Plan increasing the shares available to ~~grant.~~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 ~~March 31,~~June 30, 2023, the Company has ~~0.1~~4.9 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 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 ~~may be~~ 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.

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The performance and market conditions associated with PSU awards granted during the ~~three~~six months ended ~~March 31,~~June 30, 2023 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 through December 31, 2025, and the revenue and adjusted earnings per share metrics will be measured based on fiscal year 2025 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 ~~three~~six months ended ~~March 31,~~June 30, 2023 is as follows:


(number of shares in millions)	(number of shares in millions)	Number of Shares	Weighted Average Exercise Price		(number of shares in millions)	Number of Shares	Weighted Average Exercise Price
Options outstanding at December 31, 2022	Options outstanding at December 31, 2022	0.7	$	13.38	Options outstanding at December 31, 2022	0.7	$	13.38

Less:	Less:				Less:
Options exercised	Options exercised	—	$	—	Options exercised	—	$	—
Options canceled or expired	Options canceled or expired	—	$	—	Options canceled or expired	—	$	—
Options outstanding at March 31, 2023		0.7	$	13.38
Options exercisable at March 31, 2023		0.4	$	13.38
Options outstanding at June 30, 2023					Options outstanding at June 30, 2023	0.7	$	13.38
Options exercisable at June 30, 2023					Options exercisable at June 30, 2023	0.4	$	13.38

As of ~~March 31,~~June 30, 2023, there was ~~$0.9~~$0.8 million of total unrecognized stock-based compensation expense related to stock options that will be recognized over a weighted-average period of ~~1.4~~1.2 years. There were no options granted during the ~~three~~six months ended ~~March 31,~~June 30, 2023.

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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 ~~three~~six months ended ~~March 31,~~June 30, 2023 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	RSUs unvested and outstanding at December 31, 2022	3.7	$	25.08	RSUs unvested and outstanding at December 31, 2022	3.7	$	25.08
RSUs granted	RSUs granted	1.8	$	24.19	RSUs granted	2.0	$	24.07
Less:	Less:				Less:
RSUs vested	RSUs vested	(0.6)	$	28.07	RSUs vested	(0.7)	$	26.42
RSUs canceled	RSUs canceled	—	$	25.42	RSUs canceled	(0.2)	$	24.95
RSUs unvested and outstanding at March 31, 2023		4.9	$	24.41
RSUs unvested and outstanding at June 30, 2023					RSUs unvested and outstanding at June 30, 2023	4.8	$	24.47

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. As of ~~March 31,~~June 30, 2023, ~~1.7~~1.5 million shares of common stock were available for issuance under the Amended and Restated 2012 Purchase Plan.

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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 March 31,				Three months ended June 30,				Six months ended June 30,
(in millions)	(in millions)	2023		2022			(in millions)	2023			2022		2023		2022
Cost of testing revenue	Cost of testing revenue	$	0.3	$	0.3		Cost of testing revenue	$	0.4		$	0.5	$	0.7	$	0.8

Research and development expense	Research and development expense	0.6		2.4			Research and development expense	1.1			1.0		1.7		3.4
Selling, general, and administrative expense	Selling, general, and administrative expense	6.6		7.4			Selling, general, and administrative expense	9.7			8.9		16.3		16.3
Total stock-based compensation expense	Total stock-based compensation expense	$	7.5	$	10.1		Total stock-based compensation expense	$	11.2		$	10.4	$	18.7	$	20.5

As of ~~March 31,~~June 30, 2023, there was ~~$95.0~~$84.4 million of total unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of ~~2.7~~ 2.4 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.

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.

~~Income tax expense for~~

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For the three months ended ~~March 31,~~June 30, 2023, there was ~~$2.1 million,~~no income tax expense, or approximately ~~(4.0)%~~0% of pre-tax loss, compared to an income tax benefit of ~~$5.9~~$3.8 million, or approximately ~~22.3%~~21.2% of pre-tax loss, for the three months ended ~~March 31,~~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. For the three and six months ended ~~March 31,~~June 30, 2023, 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 ~~March 31,~~June 30, 2022, the Company’s 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.

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.

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As of ~~March 31,~~June 30, 2023, 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 ~~currently~~from any and all claims, suits, causes of action, damages, demands, liabilities, or losses that are ~~engaged~~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 ~~expert discovery.~~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 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), and the Company, as nominal defendant. The complaint is premised upon similar allegations as set forth in 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 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.

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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 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.

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Other Legal Proceedings

On December 21, 2020, Ravgen, Inc. filed a lawsuit against the Company and its wholly owned subsidiary, Myriad Women's Health, Inc., in the U.S. District Court for 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 challenges to the validity of the asserted patents with the U.S. Patent and Trademark Office, which challenges have been instituted 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. 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, the Company filed a motion to dismiss the second amended complaint. On November 9, 2022, the Court granted and denied in part the Company's motion to dismiss the second amended complaint. The case is currently in on-going non-expert fact discovery, which is set to close on May 13, 2024.

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.

14.SUPPLEMENTAL CASH FLOW INFORMATION

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


		Three months ended March 31,					Six months ended June 30,
(in millions)	(in millions)	2023		2022		(in millions)	2023		2022
Cash paid for income taxes	Cash paid for income taxes	$	0.3	$	0.3	Cash paid for income taxes	$	1.1	$	1.0

Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Establishment of operating lease right-of-use assets and lease liabilities	Establishment of operating lease right-of-use assets and lease liabilities					Establishment of operating lease right-of-use assets and lease liabilities
Operating lease right-of-use assets	Operating lease right-of-use assets	$	6.0	$	—	Operating lease right-of-use assets	$	8.4	$	15.5
Operating lease liabilities	Operating lease liabilities	6.0		0.8		Operating lease liabilities	8.7		15.5
Tenant improvement allowance not yet received	Tenant improvement allowance not yet received	2.7		—		Tenant improvement allowance not yet received	—		16.0
Purchases of property, plant and equipment in accounts payable and accrued liabilities	Purchases of property, plant and equipment in accounts payable and accrued liabilities	8.0		0.9		Purchases of property, plant and equipment in accounts payable and accrued liabilities	7.5		4.3

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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.


		Three months ended March 31,				Six months ended June 30,
(in millions)	(in millions)	2023		2022			(in millions)	2023		2022
Cash and cash equivalents	Cash and cash equivalents	$	53.6	$	164.2		Cash and cash equivalents	$	102.8	$	104.2
Restricted cash	Restricted cash	9.5		1.4			Restricted cash	9.9		2.0
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	$	63.1	$	165.6		Total cash, cash equivalents, and restricted cash	$	112.7	$	106.2

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15.LEASES

The Company leases certain office spaces and research and development laboratory facilities, vehicles, and office equipment with remaining lease terms ranging from 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 to build new laboratory facilities, the Company is executing 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. During the three months ended March 31, 2023, the Company took 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 the west Salt Lake City lease are approximately $79.6 million.

The Company has also vacated certain existing facilities. During the ~~three~~six months ended ~~March 31,~~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 ~~three~~six months ended ~~March 31,~~June 30, 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. ~~As the~~The Company expects to ~~recover the carrying value of the related right-of-use assets through the designation of~~designate a sub-lessee or new tenant for the facility ~~the Company~~and therefore has not recognized a loss on the lease as of ~~March 31,~~June 30, 2023. The Company will remain liable for all rent payments until a sub-lessee or new tenant can be found.

As of ~~March 31,~~June 30, 2023, except as noted above, the Company expects to continue to occupy our 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 March 31, 2022~~
~~(in thousands)~~
~~Revenue~~	$	~~170,103~~
~~Net loss~~	~~(21,192)~~


	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 ~~March 31,~~June 30, 2023 is ~~$5.5~~$5.1 million and ~~$(0.6)~~$(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	$	(6.2)
Period translation adjustments	~~0.3~~0.8
Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity	0.5
Ending balance ~~March 31,~~June 30, 2023	$	~~(5.9)~~(4.9)

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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)

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 included in our Annual Report on Form 10-K filed with the SEC on March 1, 2023. “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.

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 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;

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

•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;

•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 and operating our 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 about the potential market opportunity for our current and future products;

•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 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.~~2023, our Quarterly Report on Form 10-Q filed with the SEC on May 4, 2023, 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 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 growth opportunities exist to help patient populations with pressing health care needs through innovative solutions and services. Our focus is on organic 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. We believe our path to organic 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, and innovation that improves clinical outcomes, ease of use, and access. By investing in tech-enabled commercial tools, new laboratory facilities, and advanced automation, we believe we will be able to reduce complexity and cost. With a foundation of financial, commercial, operational, and technological strength, we plan to expand some of our current products, such as our Foresight Carrier Screen test, and launch new products, such as FirstGene, 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 ~~March 31,~~June 30, 2023, ~~we continued to fulfill~~ our ~~mission and execute upon our strategic growth plan. Significant~~significant business updates and financial highlights ~~since the beginning of the first quarter 2023~~ include the following:

•~~First~~Second quarter 2023 testing volumes grew ~~45%~~38% year-over-year and ~~21%~~17% year-over-year excluding the contribution from our SneakPeek Early Gender DNA Test, driven by ~~24%~~20% growth year-over-year in MyRisk hereditary cancer test volumes and ~~31%~~23% growth year-over-year in GeneSight ~~pharmacogenomics~~ test volumes.

•Revenue growth of ~~10%~~2% year-over-year for the quarter ended ~~March 31,~~June 30, 2023 as compared to the quarter ended ~~March 31,~~June 30, 2022.

•~~Expanded our strategic partnership with Illumina, Inc.~~Achieved the Great Place to ~~broaden access to, and availability of, oncology homologous recombination deficiency (HRD) testing in the U.S. This expanded partnership also establishes a unique companion diagnostic (CDx) alliance~~Work® Certification for ~~the pharmaceutical industry, which we believe will enable more clinical research for gene-based, targeted therapies.~~2023.

•~~In April 2023, we announced a planned collaboration~~Added the Folate Receptor Alpha test to PreciseTM Oncology Solutions to expand treatment options for women living with ~~SimonMed~~® ~~Imaging to launch a new hereditary cancer assessment program that combines diagnostic imaging, genetic risk assessment utilizing MyRisk~~® ~~with RiskScore~~® ~~and patient education.~~ovarian cancer.

•~~In April 2023, Myriad Genetics~~Appointed Adam Brufsky, MD, PhD, FACP as a Scientific Advisor to our Oncology business unit.

•Announced research collaboration to use our minimal residual disease testing platform with the University of Texas MD Anderson Cancer Center.

•Established a new $90.0 million asset-based credit facility (the "ABL Facility") with JPMorgan Chase Bank, N.A. as administrative agent and ~~Intermountain Precision Genomics became certified to offer solid tumor testing in all 50 U.S. states after receiving~~issuing bank, and the ~~New York State Clinical Laboratory Permit.~~other lender parties thereto.

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

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

Revenue


		Three months ended March 31,				Change		% of total revenue			Three months ended June 30,				Change		% of total revenue
(in millions)	(in millions)	2023		2022		2023		2023	2022	(in millions)	2023		2022		2023		2023	2022
Testing revenues:	Testing revenues:									Testing revenues:
Hereditary Cancer	Hereditary Cancer	$	75.7	$	70.9	$	4.8	42%	43%	Hereditary Cancer	$	76.7	$	79.4	$	(2.7)	42%	44%
Tumor Profiling	Tumor Profiling	37.3		32.5		4.8		20%	20%	Tumor Profiling	36.0		33.5		2.5		19%	19%
Prenatal	Prenatal	36.2		31.9		4.3		20%	19%	Prenatal	35.6		33.3		2.3		19%	19%
Pharmacogenomics	Pharmacogenomics	32.0		29.3		2.7		18%	18%	Pharmacogenomics	35.2		33.1		2.1		19%	18%
Other		—		0.3		(0.3)		—%	—%

Total revenue	Total revenue	$	181.2	$	164.9	$	16.3	100%	100%	Total revenue	$	183.5	$	179.3	$	4.2	100%	100%

Test revenues increased ~~$16.3~~$4.2 million for the three months ended ~~March 31,~~June 30, 2023 compared to the same period in the prior ~~year. Hereditary Cancer revenues increased $4.8 million compared to the same period in the prior~~ year primarily due to ~~a 24%~~an increase in ~~volumes~~testing volume across the majority of our products, partially offset by a ~~14% decrease~~decline in the average revenue per test. For the three months ended June 30, 2022, we recorded $11.7 million of revenue as a change of estimate related to previously delivered tests; the amount of revenue recorded as a change of estimate for the three months ended June 30, 2023 was not material. In addition, the average revenue per test ~~due primarily to~~for the three months ended June 30, 2023 was affected by payor-related administrative activity, including changes in ~~estimates.~~contracted rates. Tumor profiling revenues increased ~~$4.8~~$2.5 million compared to the same period in the prior year due primarily to a ~~22%~~13% and 5%9% increase in ~~volumes~~testing volume and average ~~reimbursement~~revenue per test, respectively, for the Prolaris product. Prenatal revenues increased ~~$4.3~~$2.3 million compared to the same period in the prior year due primarily to revenue from ~~SneakPeak~~SneakPeek of ~~$5.5~~$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 ~~$2.7~~$2.1 million compared to the same period in the prior year due primarily to a ~~31%~~23% increase in testing volume offset by a ~~17%~~14% decrease in the average revenue per test. Hereditary Cancer revenues decreased $2.7 million compared to the same period 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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Cost of Sales


		Three months ended March 31,									Three months ended June 30,
(in millions)	(in millions)	2023			2022			Change		(in millions)	2023			2022			Change
Cost of testing revenue	Cost of testing revenue	$	59.2		$	48.0		$	11.2	Cost of testing revenue	$	57.8		$	49.7		$	8.1
Cost of testing revenue as a percentage of revenue	Cost of testing revenue as a percentage of revenue	32.7		%	29.1		%			Cost of testing revenue as a percentage of revenue	31.5		%	27.7		%

The cost of testing revenue as a percentage of revenue increased from ~~29.1%~~27.7% to ~~32.7%~~31.5% during the three months ended ~~March 31,~~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 March 31,									Three months ended June 30,
(in millions)	(in millions)	2023			2022			Change		(in millions)	2023			2022			Change
Research and development expense	Research and development expense	$	22.5		$	21.2		$	1.3	Research and development expense	$	21.2		$	20.3		$	0.9
Research and development expense as a % of total revenue	Research and development expense as a % of total revenue	12.4		%	12.9		%			Research and development expense as a % of total revenue	11.6		%	11.3		%

Research and development expense for the three months ended ~~March 31,~~June 30, 2023 increased by ~~$1.3~~$0.9 million compared to the same period in the prior year primarily due to an increase in compensation costs, driven by an increase in ~~headcount, and information technology related costs.~~headcount.

Selling, General and Administrative Expense


		Three months ended March 31,									Three months ended June 30,
(in millions)	(in millions)	2023			2022			Change		(in millions)	2023			2022			Change
Selling, general and administrative expense	Selling, general and administrative expense	$	151.7		$	110.6		$	41.1	Selling, general and administrative expense	$	140.7		$	127.1		$	13.6
Selling, general and administrative expense as a % of total revenue	Selling, general and administrative expense as a % of total revenue	83.7		%	67.1		%			Selling, general and administrative expense as a % of total revenue	76.7		%	70.9		%

Selling, general and administrative expense increased by ~~$41.1~~$13.6 million for the three months ended ~~March 31,~~June 30, 2023 compared to the same period in the prior year primarily due to a ~~$9.6~~$5.6 million increase in compensation costs driven by an increase in both headcount and cost per employee, ~~the receipt of $11.4 million in the prior period from insurers to offset previously accrued legal expenses and settlements with no corresponding receipt in the current period,~~ a ~~$5.9~~$2.3 million increase in ~~depreciation and amortization~~rent expense ~~due~~as we transition to ~~the accelerated depreciation of certain leasehold improvements and equipment~~new facilities, a $2.1 million increase in ~~connection with our decision to cease the use of our corporate headquarters,~~severance costs, a ~~$4.9~~$2.0 million increase in general legal costs, a $1.8 million increase in commission expense due to increased ~~volumes,~~testing volume, and a ~~$4.2~~$1.1 million increase in sales and marketing expenses due to more in-person sales and marketing events in the current period compared to the prior ~~period.~~period, partially offset by $4.1 million decrease in consulting costs.

~~Goodwill and long-lived asset impairment~~Legal charges pending settlement

Three months ended March 31,
(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 — % 6.5 %


	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		%	—		%

~~Goodwill and long-lived asset impairment charges for the~~The three months ended ~~March 31, 2022 included an $8.6~~June 30, 2023 includes $77.5 million ~~impairment to right-of-use assets and a $2.1 million impairment~~related to the ~~related leasehold improvements as a result of our decision to no longer use one of our facilities~~pending securities class action settlement recorded in ~~order to consolidate space.~~the current period. See Note 13 in the Condensed Consolidated Financial Statements for further information. There were no ~~impairments recognized~~corresponding legal charges pending settlement in the ~~current~~prior period.

Other Income (Expense), Net


		Three months ended March 31,							Three months ended June 30,
(in millions)	(in millions)	2023		2022		Change		(in millions)	2023		2022		Change
Other income (expense), net	Other income (expense), net	$	(0.4)	$	(0.8)	$	0.4	Other income (expense), net	$	(2.4)	$	(0.1)	$	(2.3)

Other ~~income (expense), net was consistent~~expense increased for the three months ended ~~March 31,~~June 30, 2023 as compared to the same period in the prior year ~~as there was no significant activity~~due primarily to losses due to foreign currency fluctuations and on sales of investment securities in ~~either period.~~the current year.

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Income Tax Expense (Benefit)


		Three months ended March 31,									Three months ended June 30,
(in millions)	(in millions)	2023			2022			Change		(in millions)	2023			2022			Change
Income tax expense (benefit)	Income tax expense (benefit)	$	2.1		$	(5.9)		$	8.0	Income tax expense (benefit)	$	—		$	(3.8)		$	3.8
Effective tax rate	Effective tax rate	(4.0)		%	22.3		%			Effective tax rate	—		%	21.2		%

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%. 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~~For the three months ended ~~March 31,~~June 30, 2023, there was ~~$2.1 million,~~no income tax expense and our effective tax rate was ~~(4.0)%~~0%. For the three months ended ~~March 31,~~June 30, 2023, our effective tax rate differs from the U.S. federal statutory rate primarily due to valuation ~~allowance. Due to our cumulative loss~~allowances and ~~the exhaustion of the future taxable income from the reversal of taxable temporary differences, our estimated annual effective~~uncertain tax ~~rate for the current year includes a valuation allowance against the majority of the current year increase in deferred tax assets.~~positions. For the three months ended ~~March 31,~~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 to 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 headquarters, $5.3 million increase in sales and marketing expenses due to more in-person sales and marketing events in the current period compared 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 ~~stock compensation.~~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. 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.

~~All previously~~On June 30, 2023, we entered into the ABL Facility, an asset-based credit facility with an initial maximum principal amount 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 ~~borrowings~~ under the ABL Facility and availability of $48.5 million. The ABL Facility requires that we and our ~~Amended~~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 ~~which matures on July 31, 2023, were repaid on July~~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 ~~2021 using cash generated from divestitures and as such, we have no outstanding borrowings as~~consecutive days.

Table of ~~March 31, 2023. Our Amended Facility expires on July 31, 2023.~~Contents

We believe that our existing cash, cash equivalents and marketable securities of ~~$109.1~~$127.8 million as of ~~March 31,~~June 30, 2023, and our expected cash flow from operations will be sufficient to meet our anticipated cash requirements for at least the next 12 ~~months.~~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. 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. ~~As a result,~~In addition, we ~~may need~~are subject to covenants under our ABL Facility which could limit our ability to incur additional indebtedness or ~~want~~impact our ability to ~~raise~~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 ~~financing. There is no guarantee that the Company will be able to replace the Amended~~funds under our ABL Facility or that the Company will be able to secure additional funding or other financing options in a timely manner or on favorable terms, if at all. The current rising interest rate environment, together with recessionary headwinds, could make any potential financing more difficult or expensive to obtain. If the Company isand we are unable to secure additional ~~funding~~funds on acceptable terms, or ~~other financing options when needed or desired, the Company's operations could be negatively impacted in future periods. Without additional funds,~~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.

The Amended Facility restricts our ability to make future borrowings if unrestricted cash, cash equivalents and marketable securities exceed $150.0 million, unless such borrowings are in connection with certain permitted acquisitions. Unrestricted cash, cash equivalents and marketable securities totaled $109.1 million as of March 31, 2023. In addition, we are subject to a minimum liquidity covenant, which requires us to maintain liquidity—defined as the sum of our unrestricted cash, cash equivalents and marketable investment securities plus the aggregate undrawn and available amount of the revolving commitments—of $150.0 million.

From time to time, we enter into purchase commitments or other agreements that may materially impact our liquidity position in future periods.

~~Table of Contents~~

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, inflation has had, and we expect it will 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 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)	March 31, 2023		December 31, 2022		Change		(in millions)	June 30, 2023		December 31, 2022		Change
Cash and cash equivalents	Cash and cash equivalents	$	53.6	$	56.9	$	(3.3)	Cash and cash equivalents	$	102.8	$	56.9	$	45.9
Marketable investment securities	Marketable investment securities	25.1		58.0		(32.9)		Marketable investment securities	18.8		58.0		(39.2)
Long-term marketable investment securities	Long-term marketable investment securities	30.4		54.8		(24.4)		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	$	109.1	$	169.7	$	(60.6)	Cash, cash equivalents and marketable investment securities	$	127.8	$	169.7	$	(41.9)

The decrease in cash, cash equivalents, and marketable investment securities was primarily driven by ~~$33.2~~$34.1 million in cash used by operations, ~~$23.5~~$42.3 million used for capital expenditures, and ~~$4.9~~$5.1 million used for the payment of withholding tax for the issuance of common stock, net of proceeds from the issuance of common ~~stock.~~stock, partially offset by proceeds from the ABL Facility of $40.0 million.

The following table represents the Condensed Consolidated Cash Flow Statement:


		Three Months Ended March 31,							Six Months Ended June 30,
(in millions)	(in millions)	2023		2022		Change		(in millions)	2023		2022		Change
Cash flows used in operating activities	Cash flows used in operating activities	$	(33.2)	$	(46.5)	$	13.3	Cash flows used in operating activities	$	(34.1)	$	(96.2)	$	62.1
Cash flows provided by (used in) investing activities	Cash flows provided by (used in) investing activities	34.6		(41.3)		75.9		Cash flows provided by (used in) investing activities	46.4		(53.3)		99.7
Cash flows used in financing activities		(4.9)		(4.8)		(0.1)
Cash flows provided by (used in) financing activities								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	Effect of foreign exchange rates on cash, cash equivalents, and restricted cash	0.2		(0.6)		0.8		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	Net decrease in cash and cash equivalents, and restricted cash	(3.3)		(93.2)		89.9		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	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 beginning of the period	66.4		258.8		(192.4)
Cash, cash equivalents, and restricted cash at the end of the period	Cash, cash equivalents, and restricted cash at the end of the period	$	63.1	$	165.6	$	(102.5)	Cash, cash equivalents, and restricted cash at the end of the period	$	112.7	$	106.2	$	6.5

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Cash Flows from Operating Activities

We used less cash for operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2023, compared to the same period in the prior year, primarily due to an increase in the operating loss and the timing of payments for legal settlements. The prior year period included legal settlement payments of $50.0 million, net of amounts received from insurers to offset settlement costs. In addition, the period in the current year included the receipt of ~~$13.2~~$16.3 million in tenant improvement allowance reimbursements ~~in the current period~~ with no corresponding receipts in the prior ~~period and a $28.8 million decrease in the cash used for accrued liabilities from the prior period. These changes were partially offset by the change in net loss period over~~ period.

Cash Flows from Investing Activities

The increase in cash flows from investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2023, compared to the same period in the prior year, was primarily due to the ~~$41.0~~$129.0 million ~~increase~~net change in ~~proceeds~~cash flows from marketable securities ~~as compared~~due to sales of marketable securities for the six months ended June 30, 2023 in comparison to the ~~prior year. In addition, the prior period included $52.1 million in purchases~~purchase of marketable ~~investment~~ securities ~~that did not occur in~~for the ~~current period.~~six months ended June 30, 2022. These increases were partially offset by a ~~$17.2~~$29.3 million increase in capital expenditures from the prior ~~period.~~period in connection with the build-out of new facilities.

Cash Flows from Financing Activities

The increase in cash flows ~~used in~~from financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~was consistent with~~compared to the same period in the prior year, ~~with both periods driven by~~was due primarily to proceeds ~~from~~of $40.0 million under the ~~exercise of stock options, net of shares exchanged for payroll withholding tax.~~

~~Table of Contents~~

ABL Facility in the current period.

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 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. No significant changes to our accounting policies took place during the ~~three~~six months ended ~~March 31,~~June 30, 2023.

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 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 ~~five~~two years or less. These securities 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 ~~March 31,~~June 30, 2023, we had ~~$1.5~~$0.5 million in unrealized losses in our investment portfolio. 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.

~~Table of Contents~~

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 ~~March 31,~~June 30, 2023, 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 ~~three~~six months ended ~~March 31,~~June 30, 2023 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, 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 ~~factor~~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.

If our existing capital resources and expected net cash to be generated from sales of our tests is not sufficient for us to maintain our currently planned operations, we may find it necessary to raise additional funding, which may not be available on favorable terms, or at all.

We believe that our existing cash, cash equivalents and marketable securities of $109.1 million as of March 31, 2023, and our expected cash flow from operations will be sufficient to meet our anticipated cash requirements for at least the next 12 months. However, we base this expectation on our current operating plan, which may change. We have incurred, and will continue to incur, significant costs in the development and marketing of current and prospective tests. Our ongoing efforts to develop tests and expand our business, which may be through internally developed products, partnerships, in-licensing and mergers and acquisitions, will continue to require substantial cash resources. In addition, we have incurred, and may continue to incur, substantial costs in defending and settling legal proceedings. We may also be required to pay an additional $32.5 million to the former equity and vested incentive unit holders of Gateway, if certain revenue, volume and earnings targets set forth in the acquisition agreement are achieved. If adequate funds are not available, we may be required to raise additional funds. Sources of potential additional capital resources may include, but are not limited to, public or private equity financings, replacing our Amended Facility, or selling convertible or non-convertible debt securities. Any additional funding, if necessary, may not be available to us on reasonable terms, or at all.

Because of our potential long-term capital requirements, we may access the public or private equity or debt markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. Under Securities and Exchange Commission rules, we currently qualify as a well-known seasoned issuer (WKSI), and can at any time file a registration statement registering securities to be sold to the public which would become effective and available for use upon filing. If additional funds are raised by issuing equity or equity-based securities, existing stockholders may suffer significant dilution. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances, partnerships and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or tests or grant licenses on terms that are not favorable to us.

If we do not generate sufficient cash flow from operations and are unable to secure additional funding, we may have to reduce our operations.

While we believe that our existing cash, cash equivalents and marketable securities, ~~of $109.1 million as of March 31, 2023, and our expected~~future cash flow from operations, 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 expect and we may need or want to raise additional financing.

On ~~December 23, 2016,~~June 30, 2023, we entered into ~~a senior secured~~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 ~~borrower, with~~administrative agent and issuing bank, and the ~~lenders from time to time party thereto, which was amended on July 31, 2018, May 1, 2020, February 22, 2021 and July 26, 2022 (the "Amended Facility").~~other lender parties thereto. As of ~~March 31,~~June 30, 2023, we ~~have no~~had $40.0 million of outstanding borrowings under the ABL Facility. The ABL Facility limits our ~~Amended~~ability to incur additional indebtedness and requires us to comply with certain minimum liquidity and minimum availability covenants.

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 our revolving commitment amount was $150.0 million. However, the Amended Facility expires on July 31, 2023. There is no guarantee that we will be able to replace the Amended Facility or that we will be ableare unable to secure additional funding, on acceptable terms or ~~other financing options in a timely manner or on favorable terms, if~~ at ~~all.~~

~~Table of Contents~~

~~Without additional funds,~~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 of 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.

~~If the government and third-party payors fail to provide coverage and adequate payment for our existing and future tests, if any, our revenue and prospects for profitability will be harmed~~.

In both domestic and foreign markets, sales of our tests or any future tests will depend in large part, upon the availability of reimbursement from third-party payors. Such third-party payors include state and federal health care programs such as Medicare, managed care organizations, private health insurers and other organizations. These third-party payors are increasingly attempting to contain health care costs by demanding price discounts and limiting both coverage regarding which tests they will pay for and the amounts that they will pay for existing and new tests. We have experienced coverage limitations and price reductions for many of our products, including for our GeneSight Psychotropic Mental Health Medication Test, and we may continue to experience future coverage limitations and price reductions from CMS, managed care organizations, and other third-party payors. The fact that a test has been approved for reimbursement in the past, for any particular indication or in any particular jurisdiction, does not guarantee that such a test will be approved or remain approved for reimbursement, that the reimbursement amount approved for such test will not be reduced in the future, or that similar or additional tests will be approved for reimbursement in the future. Historically, we have not received reimbursement from third-party payors or payment from patients for many of our tests. Moreover, there can be no assurance that any new tests we have launched or may launch will be reimbursed at rates that are comparable to the rates that we historically obtained for our existing product portfolio. As a result, third-party payors may not cover or provide adequate payment for our current or future tests to enable us to maintain past levels of revenue or profitability with respect to such tests. Further, third-party reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development.

In addition, under PAMA, Medicare reimbursement for any given test is based on the weighted-median of the payments made by private payors for such test, rendering private payor payment levels even more significant. As a result, future Medicare payments may fluctuate more often and become subject to the willingness of private payors to recognize the value of tests generally and any given test individually. On December 10, 2021, Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act, which included a provision that delays the next PAMA reporting period for clinical laboratory tests that are not advanced diagnostic tests to January 1, 2023 through March 31, 2023. The Consolidated Appropriations Act, 2023, enacted on December 29, 2022, delayed the next PAMA reporting period for clinical laboratory tests that are not advanced diagnostic tests to January 1, 2024 through March 31, 2024. In addition, the next round of rate cuts will not be implemented until 2024, with tests receiving cuts of up to 15 percent a year from 2024 through 2026. Any declines in average selling prices of our products due to pricing pressures may have an adverse impact on our business, results of operations and financial condition.

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~~Third-party payors may also dispute our billing or coding~~We are subject to debt covenants that impose operating and ~~may decide to deny payment or recoup payment for testing that they contend to have been not medically necessary, against their coverage determinations, or for which they have otherwise overpaid,~~financial restrictions on us and if we may be required to refund reimbursements already received. We have also experienced delays or denials of coverage for failure to adequately comply with procedural requirements imposed by third-party payors to obtain reimbursement. We also periodically receive and respond to requests for recoupment from third-party payors in the ordinary course of business. When a third-party payor denies payment for testing, we often are not able to ~~collect payment from the patient,~~comply with them, it could have a material adverse impact on our operations and therefore, we do not receive any revenue from our testing. In addition, if a third-party payor successfully proves that payment for prior testing was in breach of contract or otherwise contrary to law, they may recoup payment, which amounts could be significant and would impact our results of operations. We may also continue to negotiate and settle with third-party payers in order to resolve allegations of overpayment.liquidity.

Third-party payors, such as commercial health insurers and government payors and programs, may also adopt requirements, programs or policies that may restrict or adversely affect our business. For example, in September 2022, the California Department of Public Health (CDPH) promulgated certain regulatory amendments to the California Prenatal Screening (PNS) Program that made the PNS Program the exclusive means of obtaining cfDNA trisomy screening in California. These regulatory amendments set a price that participating laboratories would receive for each cfDNA test that was substantially lower than laboratories had previously charged, and prohibited laboratories that did not contract with CDPH from participatingCovenants in the ~~PNS Program~~ABL Facility impose operating and ~~from offering~~financial restrictions on us. These restrictions may prohibit or ~~performing cfDNA trisomy screening in California. As we~~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. We are ~~not currently~~also required to maintain minimum liquidity of $60.0 million and minimum availability of $25.0 million at all times before achieving a ~~participating laboratory~~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 ~~PNS Program, we would be prohibited from offering or performing our Prequel screening test in California. On September 16, 2022, we filed jointly with Laboratory Corporation~~ABL Facility of ~~America Holdings (Labcorp) a writ petition in~~greater than the ~~Superior Court~~greater of (a) $10.6 million and (b) 12.5% of the ~~State~~lesser of ~~California, County of San Francisco, against~~ the ~~CDPH~~maximum commitment amount and ~~its Director challenging CDPH’s ability to make~~ the ~~PNS Program the exclusive means of obtaining cfDNA trisomy screening in California. On September 16, 2022, we also moved jointly with Labcorp~~borrowing base for a ~~preliminary injunction to enjoin the implementation and enforcement~~period of the new exclusivity regulation. On November 2, 2022, the Superior Court granted our motion for a preliminary injunction, which allowed us to continue to offer our Prequel screening test in California. On December 17, 2022, we filed jointly with Labcorp a motion for judgment on our writ, through which we are seeking a permanent injunction to enjoin the implementation and enforcement of the new exclusivity regulation. On April 28, 2023, the Superior Court issued an order granting our motion for a permanent injunction to enjoin the implementation and enforcement of the new exclusivity regulation. Myriad Genetics and its co-plaintiffs have filed a proposed final judgment and writ of mandate consistent with that order, per the Court's instructions, and are awaiting the Court's entry of a final judgment and writ. Should it elect to do so, CDPH will have 60 days from entry of the final judgment and writ to file a notice of appeal. Pending the outcome of this ongoing litigation, we cannot be certain that we will be able to continue offering or performing our Prequel screening test in California. If the exclusivity regulation is ultimately determined to be valid and we are either not able to offer our Prequel screening test in California at all, or must do so through the PNS Program at lower rates than we currently charge, our financial and operating results will likely be adversely affected.30 consecutive days. In addition, the ~~ongoing possibility that we~~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.

We are currently subject to, and in the future may be ~~unable~~subject to, ~~continue to offer our Prequel screening test~~securities class action lawsuits and stockholder derivative actions, as well as product or professional liability claims. These, and potential similar or related litigation, could result in ~~California has had~~substantial losses and have a ~~chilling~~material adverse effect on ~~sales~~our business, cash position, operating results or financial condition.

We are currently subject to a variety of ~~our Prequel screening test in California.~~

U.S. and foreign governments continue to propose and pass legislation designed to reduce the cost of health care. For example, in some foreign markets, the government controls the pricing of many health care products. We expect that there will continue to be federal and state proposals to implement governmental controls or impose health care requirements. In addition, the Medicare program and increasing emphasis on managed carelitigation, including a securities class action lawsuit filed in the United States ~~will~~District Court for the District of Utah, and stockholder derivative actions filed in the Delaware Court of Chancery and the United States District Court for the District of Delaware. On August 2, 2023, we entered into a stipulation 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 also may be subject 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 operations or financial condition and divert management's time and attention from our business.

In addition, the marketing, sale and use 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, 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 interpret the test results, if we failed to update the test results due to a reclassification of the variants according to new published guidelines, or if the ordering physician or patient were to misinterpret test results or improperly rely on them when making a clinical decision. We could also be subject 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 events could have a materially adverse effect on our reputation, cash position, and results of operations.

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Future sales and issuances of our common stock would result in dilution of the percentage ownership of our stockholders and could cause the price of our common stock 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. In connection with the settlement 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 ~~put pressure~~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 may be materially diluted. In addition, we may issue common stock or other equity securities in connection with 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 on ~~product pricing. Cost control initiatives could decrease~~our common stock so any returns will be limited to changes in the ~~price that we would receive~~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 ~~tests~~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 ~~would~~could limit our ~~revenue~~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 ~~profitability.~~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.

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 ~~March 31,~~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 ~~three~~six months ended ~~March 31,~~June 30, 2023.

Item 3. Defaults Upon Senior Securities.

None.

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Item 4. Mine Safety Disclosures.

Not applicable.

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Item 5. Other Information.

~~None.~~Rule 10b5-1 Trading Plans

During the fiscal quarter ended June 30, 2023, 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.”

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 ~~of Restricted Stock Unit Agreement under~~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, ~~(Employee)+~~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 ~~March 31,~~June 30, 2023 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: ~~May~~August 4, 2023	By:	/s/ Paul J. Diaz
		Paul J. Diaz
		President and Chief Executive Officer
		(Principal executive officer)



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



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

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