~~Table of Conten~~t s

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 September 30, ~~2020~~2021


☐			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, Salt Lake City, UT

(Address of principal executive offices)

87-0494517

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

84108

(Zip Code)

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

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 ~~November 2, 2020,~~October 27, 2021, the registrant had ~~75,210,480~~79,854,649 shares of $0.01 par value common stock outstanding.

~~Table of Conten~~t s

MYRIAD GENETICS, INC.

INDEX TO FORM 10-Q


		Page
	PART I - Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30,, 2021 (unaudited) and December 31, 2020 ~~(Unaudited)and June 30,~~ 20 20	3

	~~Condensed Consolidated Statements of Operations~~ ~~for the three~~ ~~months ended~~ ~~September 30, 2020 and 2019(Unaudited)~~	4

	Condensed Consolidated Statements of ~~ComprehensiveLoss~~Operations for the three and nine months ended ~~September~~Sept ember 30,, 2021 and 2020 ~~and 2019(Unaudited)~~(unaudited)	5

	Condensed Consolidated Statements of ~~Stockholders’ Equity~~Comprehensive Income (Loss) for the three and nine months ended September 3 0 , 30, 2021 and 2020 ~~and 2019(Unaudited)~~(unaudited)	6

	Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity for the three and ~~three~~n ine months ended September 3 0 ,30, 2021 and 2020 ~~and 2019(Unaudited)~~(unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)	8

	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~(unaudited)	89

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2124

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2733

Item 4.	Controls and Procedures	2734

	PART II - Other Information

Item 1.	Legal Proceedings	2836

Item 1A.	Risk Factors	2838

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2940

Item 3.	Defaults Upon Senior Securities	2940

Item 4.	Mine Safety Disclosures	3040

Item 5.	Other Information	3040

Item 6.	Exhibits	3041

	Signatures	3142

Table of ~~Conten~~t sContents

MYRIAD GENETICS, INC.

~~AND SUBSIDIARIES~~

Condensed Consolidated Balance Sheets

(Inin millions)


							September 30, 2021		December 31, 2020
							(unaudited)
ASSETS	ASSETS	September 30, 2020		June 30, 2020		ASSETS
		(Unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	118.3	$	163.7	Cash and cash equivalents	$	295.2	$	117.0
Marketable investment securities	Marketable investment securities	42.1		54.1		Marketable investment securities	70.9		33.7
Prepaid expenses		12.5		13.8
Trade accounts receivable						Trade accounts receivable	93.6		89.5
Inventory	Inventory	26.6		29.1		Inventory	18.6		27.1
Trade accounts receivable		85.1		68.1
Prepaid taxes	Prepaid taxes	107.9		0		Prepaid taxes	0.4		108.4
Other receivables		2.0		2.9
Prepaid expenses and other current assets						Prepaid expenses and other current assets	20.2		13.7
Total current assets	Total current assets	394.5		331.7		Total current assets	498.9		389.4
Property, plant and equipment, net		36.7		37.0
Operating lease right-of-use assets	Operating lease right-of-use assets	62.7		66.0		Operating lease right-of-use assets	83.6		59.7
Long-term marketable investment securities	Long-term marketable investment securities	30.2		37.0		Long-term marketable investment securities	47.5		21.0
Property, plant, and equipment, net						Property, plant, and equipment, net	43.4		40.7
Intangibles, net	Intangibles, net	590.9		605.3		Intangibles, net	414.8		576.5
Goodwill	Goodwill	328.3		327.6		Goodwill	239.7		329.2
Other assets	Other assets	1.2		0		Other assets	8.0		2.3
Total assets	Total assets	$	1,444.5	$	1,404.6	Total assets	$	1,335.9	$	1,418.8
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	19.1	$	21.7	Accounts payable	$	15.7	$	20.5
Accrued liabilities	Accrued liabilities	65.4		75.9		Accrued liabilities	163.2		79.1
Current maturities of operating lease liabilities	Current maturities of operating lease liabilities	13.6		13.5		Current maturities of operating lease liabilities	12.8		13.6
Short-term contingent consideration		3.3		3.1
Deferred revenue		32.3		32.8
Deferred revenues						Deferred revenues	11.5		32.7
Total current liabilities	Total current liabilities	133.7		147.0		Total current liabilities	203.2		145.9
Unrecognized tax benefits	Unrecognized tax benefits	37.4		23.5		Unrecognized tax benefits	32.0		30.5
Long-term deferred taxes	Long-term deferred taxes	75.3		26.6		Long-term deferred taxes	40.7		71.3
Noncurrent operating lease liabilities						Noncurrent operating lease liabilities	80.7		50.6
Long-term debt	Long-term debt	224.6		224.4		Long-term debt	—		224.8
Noncurrent operating lease liabilities		53.5		56.9
Other long-term liabilities	Other long-term liabilities	10.7		8.0		Other long-term liabilities	10.8		14.7
Total liabilities	Total liabilities	535.2		486.4		Total liabilities	367.4		537.8
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock, 75.2 and 74.7 shares outstanding at September 30, 2020 and June 30, 2020 respectively		0.8		0.7
Common stock, 79.7 million and 75.4 million shares outstanding at September 30, 2021 and December 31, 2020, respectively						Common stock, 79.7 million and 75.4 million shares outstanding at September 30, 2021 and December 31, 2020, respectively	0.8		0.8
Additional paid-in capital	Additional paid-in capital	1,101.2		1,096.6		Additional paid-in capital	1,218.8		1,109.5
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3.6)		(5.2)		Accumulated other comprehensive loss	(4.4)		(2.3)
Accumulated deficit	Accumulated deficit	(189.1)		(173.9)		Accumulated deficit	(246.6)		(227.0)
Total Myriad Genetics, Inc. stockholders’ equity	Total Myriad Genetics, Inc. stockholders’ equity	909.3		918.2		Total Myriad Genetics, Inc. stockholders’ equity	968.6		881.0
Non-controlling interest	Non-controlling interest	0		0		Non-controlling interest	(0.1)		—
Total stockholders' equity	Total stockholders' equity	909.3		918.2		Total stockholders' equity	968.5		881.0
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,444.5	$	1,404.6	Total liabilities and stockholders’ equity	$	1,335.9	$	1,418.8

See accompanying notes to ~~condensed consolidated financial statements.~~

~~Table of Conten~~t s

~~MYRIAD GENETICS, INC.~~

~~AND SUBSIDIARIES~~

Condensed Consolidated ~~Statements of Operations (Unaudited)~~

~~(In millions, except per share amounts)~~

Three months ended
September 30,
2020 2019
Molecular diagnostic testing $ 135.7 $ 172.0
Pharmaceutical and clinical services 9.5 14.3
Total revenue 145.2 186.3
Costs and expenses:
Cost of molecular diagnostic testing 39.9 41.2
Cost of pharmaceutical and clinical services 4.3 8.5
Research and development expense 17.6 21.3
Change in the fair value of contingent consideration (1.1) 0.7
Selling, general, and administrative expense 124.1 135.5
Total costs and expenses 184.8 207.2
Operating loss (39.6) (20.9)
Other income (expense):
Interest income 0.4 0.9
Interest expense (2.9) (2.9)
Other (1.6) 0.6
Total other expense, net (4.1) (1.4)
Loss before income tax (43.7) (22.3)
Income tax benefit (28.5) (1.7)
Net loss (15.2) (20.6)
Net loss attributable to non-controlling interest 0 0
Net loss attributable to Myriad Genetics, Inc. stockholders $ (15.2) $ (20.6)
Net loss per share:
Basic and diluted $ (0.20) $ (0.28)
Weighted average shares outstanding:
Basic and diluted 74.7 73.7

~~See accompanying notes to condensed consolidated financial statements.~~Financial Statements.

Table of ~~Conten~~t sContents

MYRIAD GENETICS, INC.

~~AND SUBSIDIARIES~~

Condensed Consolidated Statements of ~~Comprehensive Loss (Unaudited)~~Operations (unaudited)

(~~In millions)~~in millions, except per share amounts)

Three months ended
September 30,
2020 2019
Net loss attributable to Myriad Genetics, Inc. stockholders $ (15.2) $ (20.6)
Unrealized loss on available-for-sale debt securities, net of tax (0.2) 0
Change in foreign currency translation adjustment, net of tax 1.8 (2.2)
Comprehensive loss (13.6) (22.8)
Comprehensive loss attributable to non-controlling interest 0 0
Comprehensive loss attributable to Myriad Genetics, Inc. shareholders $ (13.6) $ (22.8)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenues:
Molecular diagnostic testing	$	167.3	$	135.7	$	505.6	$	369.5
Pharmaceutical and clinical services	—		9.5		24.2		32.9
Total revenue	167.3		145.2		529.8		402.4
Costs and expenses:
Cost of molecular diagnostic testing	47.8		39.9		139.9		115.2
Cost of pharmaceutical and clinical services	—		4.3		11.9		15.8
Research and development expense	18.8		17.6		61.4		54.7
Selling, general, and administrative expense	180.2		124.1		460.5		364.4
Change in the fair value of contingent consideration	0.4		(1.1)		1.7		(4.5)
Goodwill and long-lived asset impairment charges	—		—		1.8		98.4
Total costs and expenses	247.2		184.8		677.2		644.0
Operating loss	(79.9)		(39.6)		(147.4)		(241.6)
Other income (expense):
Interest income	0.2		0.4		0.6		1.7
Interest expense	(1.1)		(2.9)		(6.1)		(8.3)
Other	120.6		(1.6)		139.3		14.9
Total other income (expense), net	119.7		(4.1)		133.8		8.3
Income (loss) before income tax	39.8		(43.7)		(13.6)		(233.3)
Income tax expense (benefit)	15.2		(28.5)		6.0		(47.4)
Net income (loss)	24.6		(15.2)		(19.6)		(185.9)
Net loss attributable to non-controlling interest	—		—		—		(0.1)
Net income (loss) attributable to Myriad Genetics, Inc. stockholders	$	24.6	$	(15.2)	$	(19.6)	$	(185.8)
Net income (loss) per share:
Basic	$	0.31	$	(0.20)	$	(0.25)	$	(2.49)
Diluted	$	0.30	$	(0.20)	$	(0.25)	$	(2.49)
Weighted average shares outstanding:
Basic	78.8		74.7		77.3		74.6
Diluted	81.5		74.7		77.3		74.6

See accompanying notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Table of ~~Conten~~t sContents

MYRIAD GENETICS, INC.

~~AND SUBSIDIARIES~~

Condensed Consolidated Statements of ~~Stockholders’ Equity~~Comprehensive Income (Loss) (unaudited)

(Inin millions)

Common
stock Additional
paid-in
capital Accumulated
other
comprehensive
loss Retained
earnings
(accumulated
deficit) Myriad
Genetics, Inc.
Stockholders’
equity
BALANCES AT JUNE 30, 2019 $ 0.7 $ 1,068.0 $ (5.4) $ 25.6 $ 1,088.9
Issuance of common stock under share-based compensation plans, net of shares exchanged for withholding tax — (0.5) — — (0.5)
Share-based payment expense — 8.8 — — 8.8
Net loss — — — (20.6) (20.6)
Other comprehensive loss, net of tax — — (2.1) — (2.1)
BALANCES AT SEPTEMBER 30, 2019 $ 0.7 $ 1,076.3 $ (7.5) $ 5.0 $ 1,074.5
BALANCES AT JUNE 30, 2020 $ 0.7 $ 1,096.6 $ (5.2) $ (173.9) $ 918.2
Issuance of common stock under share-based compensation plans, net of shares exchanged for withholding tax 0.1 (3.8) — — (3.7)
Share-based payment expense — 8.4 — — 8.4
Net loss — — — (15.2) (15.2)
Other comprehensive income, net of tax — — 1.6 — 1.6
BALANCES AT SEPTEMBER 30, 2020 $ 0.8 $ 1,101.2 $ (3.6) $ (189.1) $ 909.3


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Net income (loss) attributable to Myriad Genetics, Inc. stockholders	$	24.6	$	(15.2)	$	(19.6)	$	(185.8)
Unrealized gain (loss) on available-for-sale debt securities, net of tax	(0.2)		(0.2)		(0.5)		0.5
Change in foreign currency translation adjustment, net of tax	(0.2)		1.8		(1.6)		1.1
Comprehensive income (loss)	24.2		(13.6)		(21.7)		(184.2)
Comprehensive income (loss) attributable to Myriad Genetics, Inc. stockholders	$	24.2	$	(13.6)	$	(21.7)	$	(184.2)

See accompanying notes to ~~consolidated financial statements.~~Condensed Consolidated Financial Statements.

Table of ~~Conten~~t sContents

MYRIAD GENETICS, INC.

~~AND SUBSIDIARIES~~

Condensed Consolidated Statements of ~~Cash Flows (Unaudited)~~Stockholders’ Equity

(Inin millions)

Three months ended
September 30,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to Myriad Genetics, Inc. stockholders $ (15.2) $ (20.6)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 17.7 18.2
Non-cash interest expense 0.2 0.1
Non-cash lease expense 3.3 3.2
Loss (gain) on disposition of assets 0.1 (0.1)
Share-based compensation expense 8.4 8.8
Deferred income taxes 48.4 (5.1)
Unrecognized tax benefits 13.9 0.4
Change in fair value of contingent consideration (1.1) 0.7
Changes in assets and liabilities:
Prepaid expenses 1.2 2.6
Trade accounts receivable (17.0) 16.7
Other receivables 0.9 (0.1)
Inventory 2.6 3.1
Prepaid taxes (107.9) 2.1
Other assets (1.2) 0
Accounts payable (3.2) (9.3)
Accrued liabilities (9.8) (4.9)
Deferred revenue (0.6) 0
Net cash (used in) provided by operating activities (59.3) 15.8
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1.5) (1.4)
Purchases of marketable investment securities 0 (23.1)
Proceeds from maturities and sales of marketable investment securities 18.6 17.4
Net cash provided by (used in) investing activities 17.1 (7.1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for tax withholding for common stock issued under share-based compensation plans (3.8) (0.4)
Payment of contingent consideration recognized at acquisition (0.1) (3.3)
Repayment of revolving credit facility 0 (8.6)
Net cash used in financing activities (3.9) (12.3)
Effect of foreign exchange rates on cash and cash equivalents 0.7 0.3
Net decrease in cash and cash equivalents (45.4) (3.3)
Cash and cash equivalents at beginning of the period 163.7 93.2
Cash and cash equivalents at end of the period $ 118.3 $ 89.9


	Common stock		Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Non-controlling interest		Total stockholders’ equity
BALANCES AT DECEMBER 31, 2019	$	0.7	$	1,085.1	$	(5.3)	$	(3.3)	$	0.1	$	1,077.3
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	—		0.2		—		—		—		0.2
Stock-based payment expense	—		7.5		—		—		—		7.5
Non-controlling interest	—		—		—		—		(0.1)		(0.1)
Net loss	—		—		—		(115.2)		—		(115.2)
Reclassification out of accumulated other comprehensive loss upon the deconsolidation of a subsidiary	—		—		0.1		—		—		0.1
Other comprehensive loss, net of tax	—		—		(2.6)		—		—		(2.6)
BALANCES AT MARCH 31, 2020	$	0.7	$	1,092.8	$	(7.8)	$	(118.5)	$	—	$	967.2
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	—		1.9		—		—		—		1.9
Stock-based payment expense	—		1.9		—		—		—		1.9
Net loss	—		—		—		(55.4)		—		(55.4)
Other comprehensive income, net of tax	—		—		2.6		—		—		2.6
BALANCES AT JUNE 30, 2020	$	0.7	$	1,096.6	$	(5.2)	$	(173.9)	$	—	$	918.2
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	0.1		(3.8)		—		—		—		(3.7)
Stock-based payment expense	—		8.4		—		—		—		8.4
Net loss	—		—		—		(15.2)		—		(15.2)
Other comprehensive income, net of tax	—		—		1.6		—		—		1.6
BALANCES AT SEPTEMBER 30, 2020	$	0.8	$	1,101.2	$	(3.6)	$	(189.1)	$	—	$	909.3

BALANCES AT DECEMBER 31, 2020	$	0.8	$	1,109.5	$	(2.3)	$	(227.0)	$	—	$	881.0
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	—		26.0		—		—		—		26.0
Stock-based payment expense	—		9.0		—		—		—		9.0
Net loss	—		—		—		(39.5)		—		(39.5)
Other comprehensive loss, net of tax	—		—		(1.3)		—		—		(1.3)
BALANCES AT MARCH 31, 2021	$	0.8	$	1,144.5	$	(3.6)	$	(266.5)	$	—	$	875.2
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	—		23.5		—		—		—		23.5
Stock-based payment expense	—		8.9		—		—		—		8.9
Non-controlling interest	—		—		—		—		(0.1)		(0.1)
Net loss	—		—		—		(4.7)		—		(4.7)
Other comprehensive loss, net of tax	—		—		(0.4)		—		—		(0.4)
BALANCES AT JUNE 30, 2021	$	0.8	$	1,176.9	$	(4.0)	$	(271.2)	$	(0.1)	$	902.4
Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax	—		31.9		—		—		—		31.9
Stock-based payment expense	—		10.0		—		—		—		10.0
Net income	—		—		—		24.6		—		24.6
Other comprehensive loss, net of tax	—		—		(0.4)		—		—		(0.4)
BALANCES AT SEPTEMBER 30, 2021	$	0.8	$	1,218.8	$	(4.4)	$	(246.6)	$	(0.1)	$	968.5

See accompanying notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Table of ~~Conten~~Contents

MYRIAD GENETICS, INC.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in millions)


	Nine months ended September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to Myriad Genetics, Inc. stockholders	$	(19.6)	$	(185.8)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	49.5		53.3
Non-cash interest expense	1.3		0.4
Non-cash lease expense	9.8		9.6
Stock-based compensation expense	27.9		17.8
Deferred income taxes	(27.8)		(0.6)
Unrecognized tax benefits	1.5		14.9
Change in fair value of contingent consideration	1.7		(4.5)
Loss on inventory	6.5		—
Impairment of goodwill and long-lived assets	1.8		98.4
Gain on sale of businesses and assets	(162.0)		(1.0)
Changes in assets and liabilities:
Prepaid expenses and other current assets	(6.7)		5.4
Trade accounts receivable	(11.6)		33.3
Inventory	(1.6)		1.7
Prepaid taxes	108.0		(83.2)
Other assets	(3.6)		(1.2)
Accounts payable	(4.8)		(2.6)
Accrued liabilities	78.2		3.1
Deferred revenues	(20.4)		28.5
Net cash provided by (used in) operating activities	28.1		(12.5)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(14.6)		(6.8)
Proceeds from sale of businesses and assets	379.1		21.3
Purchases of marketable investment securities	(101.0)		(15.8)
Proceeds from maturities and sales of marketable investment securities	36.8		51.9
Net cash provided by investing activities	300.3		50.6
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issued under stock-based compensation plans	90.0		2.2
Payment of tax withheld for common stock issued under stock-based compensation plans	(8.6)		(3.9)
Payment of contingent consideration recognized at acquisition	(3.3)		(0.1)
Fees associated with refinancing of revolving credit facility	(1.2)		(1.0)
Repayment of revolving credit facility	(226.4)		—
Net cash used in financing activities	(149.5)		(2.8)
Effect of foreign exchange rates on cash and cash equivalents	(0.7)		0.3
Change in cash and cash equivalents classified as held for sale	—		1.5
Net increase in cash and cash equivalents	178.2		37.1
Cash and cash equivalents at beginning of the period	117.0		81.2
Cash and cash equivalents at end of the period	$	295.2	$	118.3

See accompanying notes to Condensed Consolidated Financial Statements.

t sTable of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

~~(1)~~1.BASIS OF PRESENTATION

~~The accompanying condensed consolidated financial statements for~~ Myriad Genetics, Inc. and its subsidiaries ~~(the~~(collectively, the “Company” or “Myriad”) discover and commercialize genetic tests that determine the risk of developing disease, assess the risk of disease progression, and guide treatment decisions across medical specialties where critical genetic insights can significantly improve patient care and lower healthcare costs. The Company's mission and purpose is to advance health and well-being for all, empower individuals with vital genetic insights and enable healthcare providers to better detect, treat and prevent disease. The Company generates revenue by performing molecular diagnostic tests and, prior to the sale of Myriad RBM, Inc. on July 1, 2021 as described in Note 16, by providing pharmaceutical services to the pharmaceutical and biotechnology industries and medical research institutions utilizing its multiplexed immunoassay technology. The Company’s corporate headquarters are located in Salt Lake City, Utah.

The accompanying Condensed Consolidated Financial Statements for the Company have been prepared in accordance with 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~~Condensed Consolidated Financial Statements herein should be read in conjunction with the Company’s audited ~~consolidated financial statements~~Consolidated Financial Statements and notes thereto included in the Company’s ~~Annual~~Transition Report on Form 10-K for the ~~fiscal year~~transition period ended ~~June 30, 2020.~~December 31, 2020 (the “Transition Report on Form 10-K”).

The preparation of financial statements in conformity with ~~U.S.~~ 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. Operating results for the three and nine months ended September 30, ~~2020~~2021 may not necessarily be indicative of results to be expected for any other interim period or for the full year.

The full impact of the COVID-19 outbreak continues to evolve and its future impact remains highly uncertain and unpredictable. As such, it is uncertain as to the full magnitude of the effect that the pandemic will have on the Company's financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on the Company's financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evaluation of the COVID-19 outbreak and the global responses to curb its spread, the Company ~~is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for future periods.~~

~~We have~~has historically experienced seasonality in ~~our~~its testing business. The volume of testing is negatively impacted by the summer season, which is generally reflected in the quarter ~~ended~~ending June 30 and the quarter ending September 30. The quarter ending December 31 is generally strong as ~~we see~~the Company sees an increase in volumes from patients who have met their annual insurance deductible. Conversely, the quarter ending March 31 is typically negatively impacted by the annual reset of patient deductibles.

Due to the COVID-19 global pandemic, ~~we cannot predict if~~including variants of COVID-19 (“COVID-19”), seasonality ~~will~~may not follow the same pattern as in prior years. Volumes and results of operations were impacted negatively in calendar year 2020 by COVID-19. As such, the Company’s year over year results may not be comparable. Management continues to monitor the impact of COVID-19 on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the variants of COVID-19 that have surfaced around the world, the Company is not able to fully estimate the effects of COVID-19 on results of operations, financial condition, or liquidity for future periods.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation. The reclassifications have no impact on the total assets, total liabilities, stockholders’ equity, cash flows from operations, or net ~~loss~~income (loss) for the period.

Recent Accounting Pronouncements

Recently Adopted Standards

In June 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”) which introduces new guidance for the accounting for credit losses on certain instruments within its scope. ASU 2016-13 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. For trade receivables, the Company is required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses, which reflects losses that are probable. Credit losses relating to available-for-sale debt securities are also recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. On July 1, 2020, the Company adopted ASU 2016-13 under the modified retrospective approach by initially applying ASU 2016-13 at the adoption date, rather than at the beginning of the earliest comparative period presented. This guidance was adopted with no material impact to the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use

~~Table of Conten~~t s

software license. On July 1, 2020, the Company adopted ASU 2018-15 on a prospective basis with no material impact to the Company's consolidated financial statements as of September 30, 2020. The amounts capitalized may be material in future periods; implementation costs incurred in cloud computing arrangements are capitalized as part of the other assets financial statement line item in the consolidated balance sheets.

~~Standards Effective in Future Years and Not Yet Adopted~~

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("(“ASU ~~2019-12"~~2019-12”). ~~ASC~~ASU 2019-12 is a new accounting standard to simplify accounting for income taxes and remove, modify, and add to the disclosure requirements of income taxes. The standard is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. ~~The Company is currently evaluating the~~This guidance was adopted with no material impact ~~this new standard will have on the consolidated financial statements.~~to the Company's Condensed Consolidated Financial Statements.

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~~(2)~~2.REVENUE

Myriad generates revenue by performing molecular diagnostic testing, and prior to the sale of Myriad RBM, Inc. on July 1, 2021, pharmaceutical services. Molecular diagnostic revenues consists of the following categories (products): Hereditary Cancer (myRisk, BRACAnalysis, BRACAnalysis CDx), Tumor Profiling (myChoice CDx, Prolaris, and EndoPredict), Prenatal (Foresight and Prequel), Pharmacogenomics (GeneSight), Autoimmune (Vectra), and Other. The Company previously provided pharmaceutical services and clinical services ~~until selling~~prior to the sale of Myriad RBM, Inc. and Privatklinik Dr. Robert Schindlbeck GmbH & Co. KG (the ~~"Clinic"~~“Clinic”) ~~in February 2020. Revenue from~~, respectively. Prior to the sale of ~~molecular~~the Myriad myPath, LLC laboratory in May 2021 and select assets of the Myriad Autoimmune (Vectra) business unit in September 2021, the associated revenue was included within Molecular diagnostic ~~tests and pharmaceutical and clinical services~~revenues. See Note 16 for a discussion of these divestitures. Revenue is recorded at the estimated amount of consideration to be received. The Company has determined that the communication of test results or the completion of ~~clinical~~pharmaceutical and ~~pharmaceutical~~clinical services indicates transfer of control for revenue recognition purposes.

The following table presents detail regarding the composition of ~~our~~the Company’s total revenue by ~~product~~category and by U.S. versus rest of world ~~“RoW”~~(“RoW”):

Three months ended September 30,
2020 2019
(In millions) U.S. RoW Total U.S. RoW Total
Molecular diagnostic revenues:
Hereditary Cancer Testing $ 72.1 $ 8.5 $ 80.6 $ 100.6 $ 3.9 $ 104.5
Prenatal 16.4 0.1 16.5 23.5 0 23.5
GeneSight 11.9 0 11.9 22.7 0 22.7
Vectra 9.1 0 9.1 11.0 0 11.0
myChoice CDx 7.6 0.2 7.8 1.3 0 1.3
Prolaris 6.4 0 6.4 6.5 0 6.5
EndoPredict 0.4 2.4 2.8 0.5 1.8 2.3
Other 0.6 0 0.6 0.1 0.1 0.2
Total molecular diagnostic revenue 124.5 11.2 135.7 166.2 5.8 172.0
Pharmaceutical and clinical service revenue 9.5 0 9.5 8.5 5.9 14.3
Total revenue $ 134.0 $ 11.2 $ 145.2 $ 174.7 $ 11.7 $ 186.3


	Three months ended September 30,
	2021						2020
(in millions)	U.S.		RoW		Total		U.S.		RoW		Total
Molecular diagnostic revenues:
Hereditary Cancer	$	68.2	$	11.2	$	79.4	$	72.0	$	8.5	$	80.5
Tumor Profiling	21.4		11.5		32.9		14.4		2.6		17.0
Prenatal	23.5		0.1		23.6		16.5		0.1		16.6
Pharmacogenomics	24.1		—		24.1		11.9		—		11.9
Autoimmune	7.3		—		7.3		9.1		—		9.1
Other	—		—		—		0.6		—		0.6
Total molecular diagnostic revenue	144.5		22.8		167.3		124.5		11.2		135.7
Pharmaceutical and clinical services revenue	—		—		—		9.5		—		9.5
Total revenue	$	144.5	$	22.8	$	167.3	$	134.0	$	11.2	$	145.2

	Nine months ended September 30,
	2021						2020
(in millions)	U.S.		RoW		Total		U.S.		RoW		Total
Molecular diagnostic revenues:
Hereditary Cancer	$	207.1	$	34.4	$	241.5	$	188.2	$	17.4	$	205.6
Tumor Profiling	63.9		30.5		94.4		33.7		7.5		41.2
Prenatal	76.3		0.4		76.7		53.2		0.3		53.5
Pharmacogenomics	64.3		—		64.3		40.8		—		40.8
Autoimmune	28.2		—		28.2		26.8		—		26.8
Other	—		0.5		0.5		1.6		—		1.6
Total molecular diagnostic revenue	439.8		65.8		505.6		344.3		25.2		369.5
Pharmaceutical and clinical services revenue	24.2		—		24.2		29.0		3.9		32.9
Total revenue	$	464.0	$	65.8	$	529.8	$	373.3	$	29.1	$	402.4

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The Company performs its obligation under a contract with a customer by processing diagnostic 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~~Company’s performance of its contractual obligations. When this occurs, the Company records a contract liability as deferred revenue. Included within the Company's deferred revenues are advance Medicare payments. During the fiscal year ended June 30, 2020, the Company received approximately $29.7 million in advance Medicare payments to provide relief from the economic impacts of COVID-19 on the Company. The ~~advance~~advanced Medicare payments began being applied against services performed in April 2021 and will continue until the funds previously received are ~~included in the beginning and ending balance of deferred revenue.~~fully earned. A reconciliation of the beginning and ending balances of deferred ~~revenue~~revenues is shown in the table below:

~~Table of Conten~~t s


		Three months ended September 30,					Nine months ended September 30,
		2020		2019
Deferred revenue - beginning balance		$	32.8	$	2.2
(in millions)						(in millions)	2021		2020
Deferred revenues - beginning balance						Deferred revenues - beginning balance	$	32.7	$	3.6
Revenue recognized	Revenue recognized	(2.3)		(0.4)		Revenue recognized	(30.3)		(8.4)
Prepayments	Prepayments	1.8		0.3		Prepayments	10.1		37.1
Deferred revenue - ending balance		$	32.3	$	2.1
Divestitures						Divestitures	$	(1.0)	$	—
Deferred revenues - ending balance						Deferred revenues - ending balance	$	11.5	$	32.3

In accordance with ~~ASU 2014-09,~~ASC Topic 606, Revenue from Contracts with Customers, 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. However, the Company periodically enters into arrangements with customers to provide diagnostic testing and/or pharmaceutical and clinical services that may have terms longer than one year and include multiple performance obligations. As of September 30, 2020, the aggregate amount of the transaction price of such contracts that is allocated to the remaining performance obligations is $2.8.

~~The Company may provide discounts to its customers.~~ In determining the transaction price, ~~Myriad~~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. ~~The Company applies the expected value method for sales where the Company has a large number~~An estimate of ~~contracts with similar characteristics.~~

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. 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.

The ~~Company excludes~~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 the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer. for example, sales tax, value added tax, etc.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~~Accrued liabilities onin the ~~balance sheet~~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 ~~consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations and ~~comprehensive loss. As of September 30, 2020, the Company recorded a $2.2 accrued liability and corresponding reduction in revenues for future refund of payments.~~

Comprehensive Income (Loss).

Cash collections for certain diagnostic tests delivered may differ from rates originally 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,~~During the three and nine months ended September 30, 2021, the Company ~~updates our estimate~~recognized $7.6 million and $16.6 million in revenue, respectively, which resulted in a $0.07 impact and $0.16 impact to earnings per share, respectively, for tests in which the performance obligation of delivering the ~~amounts to be recognized for previously delivered~~ tests results was met in prior periods. The changes were primarily driven by changes in the ~~impact of which was not material to our consolidated statements of operations for~~estimated transaction price. Additionally, during the three months ended ~~September 30, 2020.~~March 31, 2021, the Company recognized $6.8 million of revenue due to expanded coverage for Prolaris, for which revenue was fully constrained in a prior period.

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, 0no 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.

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Concentration of Credit Risk

Financial instruments that potentially subject usthe 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 that make payments on the customer's behalf, and ~~with~~ 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 approximately 17% of total revenue for each of the three and nine months ended September 30, 2021, and 16% and ~~14%~~15% of total revenue for the three and nine months ended September 30, 2020, ~~and 2019,~~ respectively. Concentrations of credit risk are mitigated due to the number of the Company’s customers as well as their dispersion across many geographic regions. No payor accounted for more than 10% of accounts receivable at September 30, ~~2020~~2021 or ~~2019.~~December 31, 2020. The Company does not require collateral from its customers.

~~Table of Conten~~t s

~~(3)~~3.MARKETABLE INVESTMENT SECURITIES

The Company has classified its debt investment securities as available-for-sale securities. These securities are carried at estimated fair value with unrealized holding gains and losses, net of the related tax effect, included in accumulated other comprehensive loss in stockholders’ equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned. The Company’s cash equivalents consist of short-term, highly liquid investments that are readily convertible to known amounts of cash. 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 September 30, ~~2020~~2021 and ~~June 30,~~December 31, 2020 were as follows:


		Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
At September 30, 2020:
(in millions)										(in millions)	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
September 30, 2021										September 30, 2021
Cash and cash equivalents:	Cash and cash equivalents:									Cash and cash equivalents:
Cash	Cash	$	68.3	$	—	$	—	$	68.3	Cash	$	208.8	$	—	$	—	$	208.8
Cash equivalents	Cash equivalents	50.0		—		—		$	50.0	Cash equivalents	86.4		—		—		86.4
Total cash and cash equivalents	Total cash and cash equivalents	118.3		—		—		118.3		Total cash and cash equivalents	295.2		—		—		295.2
Available-for-sale:	Available-for-sale:									Available-for-sale:
Corporate bonds and notes	Corporate bonds and notes	40.5		0.6		0		41.1		Corporate bonds and notes	90.7		0.2		(0.1)		90.8
Municipal bonds	Municipal bonds	12.6		0.2		0		12.8		Municipal bonds	19.4		0.1		—		19.5
Federal agency issues	Federal agency issues	4.0		0.1		0		4.1		Federal agency issues	2.6		—		—		2.6
US government securities	US government securities	14.2		0.1		0		14.3		US government securities	5.5		—		—		5.5
Total	Total	$	189.6	$	1.0	$	0	$	190.6	Total	$	413.4	$	0.3	$	(0.1)	$	413.6

Amortized
cost Gross
unrealized
holding
gains Gross
unrealized
holding
losses Estimated
fair value
At June 30, 2020:
Cash and cash equivalents:
Cash $ 132.8 $ — $ — $ 132.8
Cash equivalents 30.9 — — 30.9
Total cash and cash equivalents 163.7 — — 163.7
Available-for-sale:
Corporate bonds and notes 50.1 0.8 0 50.9
Municipal bonds 17.8 0.2 0 18.0
Federal agency issues 5.5 0.1 0 5.6
US government securities 16.4 0.2 0 16.6
Total $ 253.5 $ 1.3 $ 0 $ 254.8

In accordance with the adoption of ASC 2016-13, the Company assesses any unrealized loss positions for available-for-sale debt securities for which an allowance for credit losses has not been recorded. The aggregate amount of unrealized losses of these securities was not significant, and the impact of the securities in a continuous loss position to the condensed consolidated statements of operations and comprehensive loss were not material as of September 30, 2020.


(in millions)	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses		Estimated fair value
December 31, 2020:
Cash and cash equivalents:
Cash	$	47.9	$	—	$	—	$	47.9
Cash equivalents	69.1		—		—		69.1
Total cash and cash equivalents	117.0		—		—		117.0
Available-for-sale:
Corporate bonds and notes	28.8		0.5		—		29.3
Municipal bonds	9.4		0.2		—		9.6
Federal agency issues	4.0		—		—		4.0
US government securities	11.7		0.1		—		11.8
Total	$	170.9	$	0.8	$	—	$	171.7

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Table of ~~Conten~~t sContents

Cash, cash equivalents, and maturities of debt securities classified as available-for-sale securities ~~are~~were as follows at September 30, ~~2020:~~2021:


		Amortized cost		Estimated fair value
(in millions)						(in millions)	Amortized cost		Estimated fair value
Cash	Cash	$	68.3	$	68.3	Cash	$	208.8	$	208.8
Cash equivalents	Cash equivalents	50.0		50.0		Cash equivalents	86.4		86.4
Available-for-sale:	Available-for-sale:					Available-for-sale:
Due within one year	Due within one year	41.8		42.1		Due within one year	70.7		70.9
Due after one year through five years	Due after one year through five years	29.5		30.2		Due after one year through five years	47.5		47.5
Due after five years	Due after five years	0		0		Due after five years	—		—
Total	Total	$	189.6	$	190.6	Total	$	413.4	$	413.6

There were no debt securities classified as available-for-sale in a gross unrealized loss position as of September 30, 2021 or December 31, 2020.

Additional information relating to fair value of marketable investment securities can be found in Note 4.

~~(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.

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. The fair value of contingent consideration related to the Sividon Diagnostics GmbH ("Sividon") acquisition in fiscal year 2016 as well as long-term debt are categorized as Level 3 liabilities, as the measurement amount is based primarily on significant inputs not observable in the market. For Level 3 contingent consideration, 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 earn out liability. This fair value measurement is considered a Level 3 measurement because the Company estimates projections during the expected measurement period of approximately ~~9.25~~13.8 years, 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 earn-out itself, the related projections, and the overall business. The contingent earn-out liabilities are classified as ~~a component~~components of Accrued liabilities and Other long-term ~~and short-term contingent consideration~~liabilities in the Company’s ~~consolidated balance sheets.~~Condensed Consolidated Balance Sheets. Changes to ~~the earn-out~~contingent consideration liabilities are reflected in ~~change~~Change in the fair value of contingent consideration in ~~our consolidated statements~~the Company’s Condensed Consolidated Statements of ~~operations.~~Operations. Changes to the unobservable inputs could have a material impact on the Company’s financial statements.

The fair value of our long-term debt, which we consider a Level 3 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 long-term debt is estimated to be $226.5 at September 30, 2020.

1213

Table of ~~Conten~~t sContents

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


		Level 1		Level 2		Level 3		Total
September 30, 2020
(in millions)										(in millions)	Level 1		Level 2		Level 3		Total
September 30, 2021										September 30, 2021
Money market funds (a)	Money market funds (a)	$	50.0	$	0	$	0	$	50.0	Money market funds (a)	$	86.4	$	—	$	—	$	86.4
Corporate bonds and notes	Corporate bonds and notes	0		41.1		0		41.1		Corporate bonds and notes	—		90.8		—		90.8
Municipal bonds	Municipal bonds	0		12.8		0		12.8		Municipal bonds	—		19.5		—		19.5
Federal agency issues	Federal agency issues	0		4.1		0		4.1		Federal agency issues	—		2.6		—		2.6
US government securities	US government securities	0		14.3		0		14.3		US government securities	—		5.5		—		5.5
Contingent consideration	Contingent consideration	0		0		(5.9)		(5.9)		Contingent consideration	—		—		(8.8)		(8.8)
Total	Total	$	50.0	$	72.3	$	(5.9)	$	116.4	Total	$	86.4	$	118.4	$	(8.8)	$	196.0

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


		Level 1		Level 2		Level 3		Total
June 30, 2020
(in millions)										(in millions)	Level 1		Level 2		Level 3		Total
December 31, 2020										December 31, 2020
Money market funds (a)	Money market funds (a)	$	30.9	$	0	$	0	$	30.9	Money market funds (a)	$	69.1	$	—	$	—	$	69.1
Corporate bonds and notes	Corporate bonds and notes	0		50.9		0		50.9		Corporate bonds and notes	—		29.3		—		29.3
Municipal bonds	Municipal bonds	0		18.0		0		18.0		Municipal bonds	—		9.6		—		9.6
Federal agency issues	Federal agency issues	0		5.6		0		5.6		Federal agency issues	—		4.0		—		4.0
US government securities	US government securities	0		16.6		0		16.6		US government securities	—		11.8		—		11.8
Contingent consideration	Contingent consideration	0		0		(6.8)		(6.8)		Contingent consideration	—		—		(10.9)		(10.9)
Total	Total	$	30.9	$	91.1	$	(6.8)	$	115.2	Total	$	69.1	$	54.7	$	(10.9)	$	112.9

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

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


(in millions)	Carrying ~~amount~~Amount
Balance ~~June 30,~~December 31, 2020	$	~~6.8~~10.9
Payment of contingent consideration	~~(0.1)~~(3.3)
Change in fair value recognized in the income statement	~~(1.1)~~1.7
Translation adjustments recognized in other comprehensive loss	~~0.3~~ (0.5)
Ending balance September 30, ~~2020~~2021	$	~~5.9~~8.8

The fair value of contingent consideration for the three months ended September 30, 2020 decreased compared to the same period in the prior year due to changes in timing of expected cash payments associated with the contingent consideration related to the Sividon acquisition.

~~(5)~~5.PROPERTY, PLANT AND EQUIPMENT, NET


		September 30, 2020		June 30, 2020
(in millions)						(in millions)	September 30, 2021		December 31, 2020
Leasehold improvements	Leasehold improvements	$	32.6	$	31.8	Leasehold improvements	$	38.1	$	35.7
Equipment	Equipment	114.1		112.1		Equipment	110.3		117.9
		146.7		143.9
Property, plant and equipment, gross						Property, plant and equipment, gross	148.4		153.6
Less accumulated depreciation	Less accumulated depreciation	(110.0)		(106.9)		Less accumulated depreciation	(105.0)		(112.9)
Property, plant and equipment, net	Property, plant and equipment, net	$	36.7	$	37.0	Property, plant and equipment, net	$	43.4	$	40.7

The change in equipment from December 31, 2020 to September 30, 2021 was primarily due to the sales of Myriad RBM, Inc. and select assets of the Myriad Autoimmune business. See Note 16 for additional information on these divestitures.


	Three months ended September 30,				Nine months ended September 30,
(in millions)	2021		2020		2021		2020
Depreciation expense	$	2.6	$	2.4	$	8.9	$	7.5

1314

Table of ~~Conten~~t sContents

Three months ended
September 30,
2020 2019
Depreciation expense $ 2.4 $ 2.9

~~(6)~~6.GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the ~~three~~nine months ended September 30, ~~2020, are as follows:~~2021:


		Diagnostic		Other		Total
(in millions)								(in millions)	Diagnostic		Other		Total
Beginning balance	Beginning balance	$	270.7	$	56.9	$	327.6	Beginning balance	$	272.3	$	56.9	$	329.2
Divestitures								Divestitures	(31.6)		(56.9)		(88.5)
Translation adjustments	Translation adjustments	0.7		0		0.7		Translation adjustments	(1.0)		—		(1.0)
Ending balance	Ending balance	$	271.4	$	56.9	$	328.3	Ending balance	$	239.7	$	—	$	239.7

~~The Company will perform its annual goodwill impairment testing during~~During the quarter ended December 31, 2020 as a result of its change in fiscal year end (see Note 16). The upcoming annual assessment may result in impairment charges if there is deterioration in business conditions, negative changes in market factors, or changes in the strategic priorities ofSeptember 30, 2021, the Company completed the sale of Myriad RBM, Inc. and ~~its reporting units.~~select operating assets and intellectual property, including the Vectra® test, from the Myriad Autoimmune business unit. See Note 16 for additional information on these divestitures.

Intangible Assets

Intangible assets have primarily ~~consist~~consisted of amortizable assets of purchased licenses and technologies, customer relationships, and trade names as well as non-amortizable intangible assets of in-process technologies and research and development. As of September 30, 2021, the Company's intangible assets consist of only purchased licenses and technologies due to the completion of the sales of Myriad RBM, Inc. and select operating assets and intellectual property, including the Vectra® test, from the Myriad Autoimmune business unit. In connection with these sales, the Company sold $199.1 million in purchased licenses and technologies, $4.8 million in-process research and development intangible assets, $4.7 million in customer relationships, and $3.0 million in trademarks, resulting in an aggregate decrease of intangible assets of $120.0 million, net of $91.6 million in accumulated amortization. See Note 16 for additional information on these divestitures. The following summarizes the amounts reported as intangible assets:

Gross
Carrying
Amount Accumulated
Amortization Net
At September 30, 2020:
Purchased licenses and technologies $ 816.6 $ (232.4) $ 584.2
Customer relationships 4.7 (4.4) 0.3
Trademarks 3.0 (1.4) 1.6
Total amortized intangible assets 824.3 (238.2) 586.1
In-process research and development 4.8 — 4.8
Total unamortized intangible assets 4.8 — 4.8
Total intangible assets $ 829.1 $ (238.2) $ 590.9


(in millions)	Gross Carrying Amount		Accumulated Amortization		Net
At September 30, 2021:
Purchased licenses and technologies	$	617.4	$	(202.6)	$	414.8
Total amortized intangible assets	617.4		(202.6)		414.8
Total intangible assets	$	617.4	$	(202.6)	$	414.8

Gross
Carrying
Amount Accumulated
Amortization Net
At June 30, 2020:
Purchased licenses and technologies $ 815.6 $ (217.1) $ 598.5
Customer relationships 4.6 (4.2) 0.4
Trademarks 3.0 (1.4) 1.6
Total amortized intangible assets 823.2 (222.7) 600.5
In-process research and development 4.8 — 4.8
Total unamortized intangible assets 4.8 — 4.8
Total intangible assets $ 828.0 $ (222.7) $ 605.3

~~Table of Conten~~t s


(in millions)	Gross Carrying Amount		Accumulated Amortization		Net
At December 31, 2020:
Purchased licenses and technologies	$	818.2	$	(248.2)	$	570.0
Customer relationships	4.7		(4.5)		0.2
Trademarks	3.0		(1.5)		1.5
Total amortized intangible assets	825.9		(254.2)		571.7
In-process research and development	4.8		—		4.8
Total unamortized intangible assets	4.8		—		4.8
Total intangible assets	$	830.7	$	(254.2)	$	576.5

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

Three months ended
September 30,
2020 2019
Amortization of intangible assets $ 15.3 $ 15.3


	Three months ended September 30,				Nine months ended September 30,
(in millions)	2021		2020		2021		2020
Amortization of intangible assets	$	11.6	$	15.3	$	40.6	$	45.8

~~(7)~~Table of Contents

7.ACCRUED LIABILITIES


		September 30, 2020		June 30, 2020
(in millions)						(in millions)	September 30, 2021		December 31, 2020
Employee compensation and benefits	Employee compensation and benefits	$	47.2	$	47.4	Employee compensation and benefits	$	54.0	$	48.9
Legal accrual						Legal accrual	48.0		—
Accrued taxes payable	Accrued taxes payable	3.5		6.1		Accrued taxes payable	17.3		4.3
Other		14.7		22.4
Refunds payable and reserves						Refunds payable and reserves	8.9		9.3
Short-term contingent consideration						Short-term contingent consideration	3.3		3.4
Accrued royalties						Accrued royalties	5.0		3.8
Purchase commitment						Purchase commitment	5.2		—
Other accrued liabilities						Other accrued liabilities	21.5		9.4
Total accrued liabilities	Total accrued liabilities	$	65.4	$	75.9	Total accrued liabilities	$	163.2	$	79.1

During the quarter ended September 30, 2021, the Company accrued $48.0 million for a potential settlement of the qui tam lawsuit against Crescendo Bioscience, Inc. and the Company. Refer to Note 13 for additional information.

~~(8)~~8.LONG-TERM DEBT

On December 23, 2016, the Company entered into a senior secured revolving credit facility (the “Facility”) by and among Myriad, as borrower, and the lenders from time to time party thereto. On July 31, 2018, the Company entered into Amendment No. 1 which effected an “amend and extend” transaction with respect to the Facility by which the maturity date thereof was extended to July 31, 2023 and the maximum aggregate principal commitment was increased from $300.0 million to ~~$350.0.~~$350.0 million. On May 1, 2020, the Company entered into Amendment No. 2, ~~(the “Amended Facility”),~~ which waived the ~~Company's~~Company’s compliance with certain financial covenants, amended compliance with certain operating covenants, and modified the interest rate and other terms during ~~the Amendment Period~~a modification period from March 31, 2020 through June 30, 2021 (the ~~"Amendment Period"~~“Modification Period”). ~~Both~~On February 22, 2021, the Company entered into Amendment No. 3 (the “Amended Facility”), which, among other things, decreased the maximum aggregate principal commitment from $350.0 million to $300.0 million, with a further reduction in the maximum aggregate principal commitment from $300.0 million to $250.0 million by September 30, 2021 (if not previously reduced to such amount in connection with certain specified asset sales), waived the Company’s compliance with certain financial covenants through the quarter ending March 31, 2022, extended 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.~~

Pursuant to the Amended Facility, the Company borrowed revolving loans in an aggregate principal amount of $300.0 with $1.8 in upfront fees and $0.3 debt issuance costs recorded as a debt discount to be amortized over the term of the Amended Facility. The Company incurred an additional $1.0 in upfront fees as a result of Amendment No. 2, which was also recorded as a debt discount that will be amortized over the term of the Amended Facility. The current balance of the net long-term debt is $224.6. There are 0 scheduled principal payments of the Amended Facility prior to its maturity date.470-50, Debt.

The Amended Facility contains customary loan terms, interest rates, representations and warranties, affirmative and negative covenants, in each case, subject to customary limitations, exceptions and exclusions. The Amended Facility also contains certain customary events of default. Amendment No. 2 modified the Facility to increase the interest rate to be fixed at a spread of LIBOR plus 350 basis points on drawn balance and the undrawn fee was increased to 50 basis points during the ~~Amendment~~Modification Period. At the end of the ~~Amendment~~Modification Period, interest rates return to the previous pricing based on a spread of ~~200~~LIBOR plus 150-250 basis points on drawn balances and an undrawn fee ranging from 25 to 45 basis points, in each case, based on the Company's leverage ratio. The LIBOR floor was also increased to 1.0% during the ~~Amendment~~Modification Period. ~~The interest rate as of September 30, 2020 was 4.5%.~~

Covenants in the Amended Facility impose operating and financial restrictions on the Company. These restrictions may prohibit or place limitations on, among other things, the Company’s ability to incur additional indebtedness, create certain types of liens, and complete mergers, consolidations, or ~~complete~~ change in control transactions. The Amended Facility may also prohibit or place limitations on the Company’s ability to sell assets, pay dividends or provide other distributions to ~~shareholders. The~~stockholders. Beginning with the quarter ended June 30, 2022, the Company must maintain specified leverage and interest ratios measured as of the end of each quarter as a financial covenant in the Amended Facility. Amendment No. 2 modified the Amended Facility's compliance with the leverage covenant and the interest coverage ratio covenant, which were waived through March 31, 2021. ~~A minimum liquidity covenant was added for the period beginning May 2020 until March 2021, and a minimum EBITDA covenant was added for the quarters ending December 31, 2020 and March 31, 2021.~~ Amendment No. 2 also revised certain negative covenants of the Amended Facility during the Modification Period. Amendment ~~Period.~~No. 3 waived compliance with the leverage ratio and the interest coverage ratio covenants through the quarter ending March 31, 2022 and also lowered the minimum liquidity covenant, which was added by Amendment No. 2, to $150.0 million, and made it applicable through such quarter. Amendment No. 3 restricted the Company from borrowing under the Amended Facility if unrestricted cash and cash equivalents exceed $150.0 million, unless such borrowings are in connection with acquisitions. The Company was in compliance with all applicable financial covenants at September 30, 2020. Based on the continued uncertainty regarding the impact of COVID-19 on the Company’s future operations, it is possible that the Company could be in violation of certain financial covenants contained in the Amended Facility within the Amendment Period, which runs through June 30, 2021. The Company may seek waivers or amendments from the lenders in order to avoid a future potential covenant violation, in addition to taking other potential actions. If the Company were unable to comply with the covenants in the future, it could result in an increase in the rate of interest and limits on the Company's ability to incur certain additional indebtedness and it could potentially cause the loan repayment to be

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Table of ~~Conten~~t sContents

~~accelerated, any of which could have a material adverse impact~~During the nine months ended September 30, 2021, the Company made principal repayments totaling $226.4 million on the ~~Company’s operations and liquidity. The~~Amended Facility, including a voluntary principal payment on July 30, 2021 of $106.4 million to pay off the remaining outstanding balances on the Amended Facility. As a result, the Company ~~has and continues to take actions to mitigate the risk of an event of default~~had no outstanding balances under the Amended Facility ~~however there is no assurance it will be successful in doing so.~~

as of September 30, 2021. During the transition period ended December 31, 2020, the Company did not make any principal repayments. The $1.8 million long-term debt discount associated with the Amended Facility is ~~secured by a first-lien security interest~~recorded to Other assets in ~~substantially all of~~ the ~~assets of Myriad and certain of~~Condensed Consolidated Balance Sheet. The Company's maximum aggregate principal commitment on its ~~domestic subsidiaries and each such domestic subsidiary of Myriad has guaranteed the repayment of the Amended Facility. Amounts outstanding under the~~ Amended Facility ~~and Facility were~~is $250.0 million as ~~follows:~~of September 30, 2021.

September 30,
2020 June 30,
2020
Long-term debt $ 226.7 $ 226.7
Long-term debt discount (2.1) (2.3)
Net long-term debt $ 224.6 $ 224.4
As of December 31, 2020, the Company had a long-term debt balance of $224.8 million, net of a $1.9 million long-term debt discount.

~~(9)~~9.OTHER LONG-TERM LIABILITIES

September 30,
2020 June 30,
2020
Contingent consideration $ 2.6 $ 3.7
Other 8.1 4.3
Total other long-term liabilities $ 10.7 $ 8.0


(in millions)	September 30, 2021		December 31, 2020
Contingent consideration	$	5.5	$	7.4
Other	5.3		7.3
Total other long-term liabilities	$	10.8	$	14.7

The Company's balance of other long-term liabilities as of September 30, 2021 and December 31, 2020 ~~and June 30, 2020~~primarily consists of the ~~Company's~~Company’s portion of social security taxes that have been deferred under the Coronavirus Aid, Relief, and Economic Security Act (“CARES ~~Act~~Act”) that do not have to be ~~deposited~~remitted until ~~December 2021 and~~ December 2022.

~~(10)~~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 0no preferred shares outstanding at September 30, ~~2020.~~2021.

The Company is authorized to issue up to 150.0 million shares of common stock, par value $0.01 per share. There were ~~75.2~~79.7 million shares issued and outstanding at September 30, ~~2020.~~2021.

Common shares issued and outstanding


		Three months ended September 30,	Year ended June 30,		Nine months ended September 30,
		2020	2020
(in millions)				(in millions)	2021	2020
Beginning common stock issued and outstanding	Beginning common stock issued and outstanding	74.7	73.5	Beginning common stock issued and outstanding	75.4	74.5
Common stock issued upon exercise of options, vesting of restricted stock units and employee stock plans		0.5	1.2
Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plan				Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plan	4.3	0.7

Common stock issued and outstanding at end of period	Common stock issued and outstanding at end of period	75.2	74.7	Common stock issued and outstanding at end of period	79.7	75.2

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.

~~Table of Conten~~t s

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


		Three months ended September 30,			Three months ended September 30,		Nine months ended September 30,
		2020	2019
(in millions)				(in millions)	2021	2020	2021	2020
Denominator:	Denominator:			Denominator:
Weighted-average shares outstanding used to compute basic EPS	Weighted-average shares outstanding used to compute basic EPS	74.7	73.7	Weighted-average shares outstanding used to compute basic EPS	78.8	74.7	77.3	74.6
Effect of dilutive shares	Effect of dilutive shares	0	0	Effect of dilutive shares	2.7	—	—	—
Weighted-average shares outstanding and dilutive securities used to compute diluted EPS	Weighted-average shares outstanding and dilutive securities used to compute diluted EPS	74.7	73.7	Weighted-average shares outstanding and dilutive securities used to compute diluted EPS	81.5	74.7	77.3	74.6

Table of Contents

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 common shares, which may be dilutive to future diluted earnings per share, are as follows:

Three months ended
September 30,
2020 2019
Anti-dilutive options and RSUs excluded from EPS computation 7.3 1.7


	Three months ended September 30,		Nine months ended September 30,
(in millions)	2021	2020	2021	2020
Anti-dilutive options and RSUs excluded from EPS computation	0.1	7.3	4.9	7.3

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 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 September 30, ~~2020,~~2021, the Company is authorized to repurchase up to $110.7 million of shares under this authorization. ~~NaN~~No shares were repurchased during the ~~three~~nine months ended September 30, ~~2020~~2021 or ~~2019.~~2020.

~~(11)~~11.~~SHARE-BASED~~STOCK-BASED COMPENSATION

On November 30, 2017, the Company’s ~~shareholders~~stockholders approved the adoption of the 2017 Employee, Director and Consultant Equity Incentive Plan (as amended, the “2017 Plan”). ~~On November 29, 2018 and December 5, 2019, the shareholders approved amendments to the 2017 Plan increasing the shares available to grant.~~ The 2017 Plan allows the Company, under the direction of the Compensation and Human Capital Committee of the Board of Directors, to make grants of restricted and unrestricted stock awards to employees, consultants, and directors. Stockholders have approved amendments to the 2017 Plan increasing the shares available to grant. As of September 30, ~~2020,~~2021, the Company ~~may grant additional~~has 3.6 million shares of common stock available for grant under the 2017 Plan with respect to the 0.1 options outstanding under our 2003 Plan and 4.8 options and restricted stock units outstanding under our 2010 Plan, to the extent that those options and restricted stock units expire or are cancelled without delivery of shares of common stock.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 ~~which~~that were subject to the RSU ~~shall~~will again be available for issuance pursuant to the 2017 Plan. To the extent that awards outstanding under the Company's prior equity plans expire or are cancelled without delivery of shares of common stock, they also will 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 a committee thereof on an award-by-award basis. RSUs granted to employees generally vest ratably over four years either on the anniversary ~~date~~ of the ~~designated day of~~date on which the ~~last week of~~RSUs were granted or during the month in which ~~the RSUs are granted.~~such anniversary dates occur. The number of RSUs awarded to certain ~~executive officers~~employees may be increased or reduced based on certain additional performance metrics. Options and RSUs granted to ~~our~~ non-employee directors vest in full upon completion of one year of service on the anniversary following the date of the grant. Options generally vest ratably over service periods of four years. Options granted after December 5, 2012 expire eight years from the date of grant, and options granted prior to that date generally expire ten years from the date of grant. ~~In September 2014, the Company began generally issuing RSUs in lieu of stock options.~~

During the three months ended September 30, 2020, the Company granted stock-based awards to the Company's new President and Chief Executive Officer as an inducement material to his commencement of employment and entry into an employment agreement with the Company. The inducement awards were made in accordance with Nasdaq Stock Market rules and were not made under the Company's existing equity plans; the inducement awards are included in the tables below.

~~Table of Conten~~t s

Stock Options

A summary of the stock option activity under the Company’s equity plans ~~including the Company's~~and inducement awards, for the ~~three~~nine months ended September 30, ~~2020~~2021 is as follows:


		Number of shares	Weighted average exercise price
Options outstanding at June 30, 2020		4.8	$	24.47
(number of shares in millions)					(number of shares in millions)	Number of Shares	Weighted Average Exercise Price
Options outstanding at December 31, 2020					Options outstanding at December 31, 2020	5.2	$	23.24
Options granted	Options granted	0.7	$	13.38	Options granted	—	$	—
Less:	Less:				Less:
Options exercised	Options exercised	0	$	0	Options exercised	(3.6)	$	24.26
Options canceled or expired	Options canceled or expired	(0.1)	$	16.40	Options canceled or expired	(0.1)	$	25.03
Options outstanding at September 30, 2020		5.4	$	23.19
Options exercisable at September 30, 2020		4.7	$	24.62
Options outstanding at September 30, 2021					Options outstanding at September 30, 2021	1.5	$	20.57
Options exercisable at September 30, 2021					Options exercisable at September 30, 2021	1.1	$	23.20

Table of Contents

As of September 30, ~~2020,~~2021, there was ~~$5.2~~$2.6 million of total unrecognized ~~share-based~~stock-based compensation expense related to ~~the inducement~~ stock options that will be recognized over a weighted-average period of ~~2.8~~2.3 years.

Restricted Stock Units

A summary of the RSU activity under the Company’s equity plans ~~including the Company's~~and inducement awards, ~~and~~including RSU awards with performance metrics, for the ~~three~~nine months ended September 30, ~~2020~~2021 is as follows:


		Number of shares	Weighted average grant date fair value
RSUs outstanding at June 30, 2020		2.3	$	32.50
(number of shares in millions)					(number of shares in millions)	Number of Shares	Weighted Average Grant Date Fair Value
RSUs outstanding at December 31, 2020					RSUs outstanding at December 31, 2020	3.2	$	20.56
RSUs granted	RSUs granted	0.4	$	13.24	RSUs granted	1.7	$	29.95
Less:	Less:				Less:
RSUs vested	RSUs vested	(0.8)	$	33.07	RSUs vested	(0.8)	$	24.00
RSUs canceled	RSUs canceled	0	$	0	RSUs canceled	(0.7)	$	24.63
RSUs outstanding at September 30, 2020		1.9	$	27.70
RSUs outstanding at September 30, 2021					RSUs outstanding at September 30, 2021	3.4	$	23.91

As of September 30, ~~2020,~~2021, there was ~~$44.1~~$68.2 million of total unrecognized ~~share-based~~stock-based compensation expense related to RSUs that will be recognized over a weighted-average period of ~~2.5~~2.6 years.

Employee Stock Purchase Plan

The Company also has an Employee Stock Purchase Plan that was approved by ~~shareholders~~stockholders in 2012 (the “2012 Purchase Plan”), under which 2.0 million shares of common stock have been authorized. On September 23, 2021, the Board of Directors of the Company approved an amended and restated 2012 Employee Stock Purchase Plan, which authorizes an additional 2.0 million shares of common stock and extends the term of the 2012 Purchase Plan to November 30, 2032, subject in each case to obtaining stockholder approval. The amended and restated 2012 Employee Stock Purchase Plan also amended certain provisions of the 2012 Purchase Plan effective upon approval by the Board of Directors, including expanding the definition of "offering period" to provide that the Board of Directors may determine the period in accordance with the terms of the plan, and capping the number of shares that may be purchased by any participant during an offering period at 5,000 shares. Shares are issued under the 2012 Purchase Plan twice yearly at the end of each offering period. As of September 30, ~~2020,~~2021, approximately ~~0.3~~0.1 million shares of common stock are available for issuance under the 2012 Purchase Plan.

~~Share-Based~~Stock-Based Compensation Expense

~~Share-based~~Stock-based compensation expense recognized and included in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations and ~~comprehensive loss~~Comprehensive Income (Loss) was allocated as follows:


		Three months ended September 30,					Three months ended September 30,				Nine months ended September 30,
		2020		2019
(in millions)						(in millions)	2021		2020		2021		2020
Cost of molecular diagnostic testing	Cost of molecular diagnostic testing	$	0.3	$	0.2	Cost of molecular diagnostic testing	$	0.4	$	0.3	$	1.1	$	1.0
Cost of pharmaceutical and clinical services	Cost of pharmaceutical and clinical services	0.1		0.1		Cost of pharmaceutical and clinical services	—		0.1		0.1		0.3
Research and development expense	Research and development expense	1.3		1.5		Research and development expense	0.8		1.3		3.3		3.6
Selling, general, and administrative expense	Selling, general, and administrative expense	6.7		7.0		Selling, general, and administrative expense	8.8		6.7		23.4		12.9
Total share-based compensation expense		$	8.4	$	8.8
Total stock-based compensation expense						Total stock-based compensation expense	$	10.0	$	8.4	$	27.9	$	17.8

~~Table of Conten~~t s

~~(12)~~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. ~~Under the Tax Cuts and Jobs Act, the federal corporate tax rate is 21% for calendar year 2020.~~ Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rate from quarter to quarter.

Table of Contents

Income tax ~~benefit~~expense for the three months ended September 30, ~~2020~~2021 was ~~$28.5,~~$15.2 million, or approximately 38.2% of pre-tax income compared to an income tax benefit of $28.5 million, or approximately 65.2% of pre-tax loss, for the three months ended September 30, 2020. Income tax expense for the nine months ended September 30, 2021 was $6.0 million, or approximately (44.1)% of pre-tax loss compared to an income tax benefit of ~~$1.7,~~$47.4 million, or approximately ~~7.6%~~20.3% of pre-tax loss, for the ~~three~~nine months ended September 30, ~~2019.~~2020. Income tax ~~benefit~~expense for the three and nine months ended September 30, ~~2020~~2021 is based on the Company’s estimated annualized effective tax rate for the ~~six-month transition period~~fiscal year ending December 31, ~~2020,~~2021, adjusted byfor discrete items recognized during the ~~period.~~respective periods. For the three and nine months ended September 30, ~~2020,~~2021, the Company’s recognized effective tax rate differs from the U.S. federal statutory rate primarily due to ~~carrying back net operating losses due to the CARES Act.~~

~~On March 27, 2020, the Coronavirus Aid, Relief,~~disallowed executive compensation expenses, disallowed meals and Economic Security Act (“CARES”) was enacted. CARES impacted several provisions to the U.S. tax code that have affected our six-month transition period ending December 31, 2020, including, but not limited to, (1) NOL carry-back and carry-forward provisions, (2) deductibilityentertainment expenses, stock compensation expenses, benefit recorded as a result of interest, (3) acceleration of corporate AMT credits, and (4) classification of qualified improvement property. As of the quarter ended September 30, 2020, the Company recognized an income tax net benefit of $20.0 related to the CARES Act, ~~which included an increase in~~asset impairment expenses, release of a valuation allowance, and differences between the ~~uncertain~~book and tax ~~benefit accrual~~basis of $14.3, related to carrying back net operating losses to tax years with higher corporate tax rates than the year the net operating loss originated. The Company will continue to evaluate the application of any and all provisions through the remainder of the six-month transition period ending December 31, 2020.assets divested.

The Company files U.S., foreign and state income tax returns in jurisdictions with various statutes of limitations. The Company is currently under audit by the ~~state~~State of California for the fiscal years ended June 30, 2017-2018, the State of New Jersey for the fiscal years ended June 30, ~~2013 through 2017; the state of New York and Massachusetts for the fiscal years June 30, 2014 through 2016;~~2013-2017; Germany for the fiscal years ended June 30, ~~2013 through 2015;~~2013-2015; and Switzerland for the fiscal years ended June 30, ~~2015 through 2016.~~2015-2016. Annual and interim tax provisions include amounts considered necessary to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued.

~~(13)~~13.COMMITMENTS AND CONTINGENCIES

The Company is subject to various claims and legal proceedings covering matters that arise in the ordinary course of its business ~~activities.~~ activities, including the matters described below. Estimates for resolution of legal and other contingencies are accrued when losses are probable and reasonably estimable in accordance with ASC 450, Contingencies.

Qui Tam Lawsuit

In June 2016, the Company's wholly owned subsidiary, Crescendo Bioscience, Inc. (“CBI”), received a subpoena from the Office of Inspector General of the Department of Health and Human Services requesting that CBI produce documents relating to entities that received payment from CBI for the collection and processing of blood specimens for testing, including a named unrelated company, healthcare providers and other third party entities. The Office of Inspector General subsequently requested additional documentation in December 2017. CBI provided to the Office of Inspector General the documents requested. On January 30, 2020, the United States District Court for the Northern District of California unsealed a qui tam complaint, filed on April 16, 2016 against CBI and the Company, alleging violations of the Federal and California False Claims Acts and the California Insurance Fraud Prevention Act. On January 22, 2020, after a multi-year investigation into CBI’s and the Company’s alleged conduct, the United States declined to intervene. On January 27, 2020, the State of California likewise filed its notice of declination. The Company was not aware of the complaint until after it was unsealed. On May 23, 2020, the court denied CBI and the Company’s motion to dismiss. The Company has accrued $48.0 million for a potential settlement of this qui tam lawsuit against CBI and the Company, which is included in accrued liabilities in the Company's Condensed Consolidated Balance Sheet. If no settlement is reached, the Company intends to continue to vigorously defend this case, but it cannot predict with any degree of certainty the ultimate resolution of this matter or determine whether, or to what extent, any loss with respect to this matter may exceed the amount that it has accrued.

Purported Securities Class Action

On September 27, 2019, a purported class action complaint was filed in the United States 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 United States District Court for the District of Utah denied the Company’s motion to dismiss. The Company intends to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

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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 its 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. The Company intends to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

On September 17, 2021, a second stockholder derivative complaint was filed in the United States District Court for 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. The Company intends to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

Other Matters

On July 27, 2020, a lawsuit was filed against the Company in the Superior Court of Suffolk County, Massachusetts, by Heide Abelli and Victor Pricolo. The plaintiffs claim negligence, breach of contract and associated torts in connection with an alleged error in testing performed by the Company in 2004. The plaintiffs seek damages allegedly sustained by them by reason of the allegations set forth in their complaint, together with interest and costs. The Company intends to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

As of September 30, ~~2020,~~2021, the management of the Company believes any reasonably possible liability that may result from the resolution of ~~these~~any other matters will not have a material adverse effect on the Company’s consolidated financial position, operating results, or cash flows. However, it is possible that the ultimate resolution of other matters, if unfavorable, may be material to the results of operations or financial condition for a particular period.

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)~~ 14.SEGMENT AND RELATED INFORMATION

The Company’s business is aligned with how the chief operating decision maker reviews performance and makes decisions in managing the Company. The business units have been aggregated into 2 reportable segments: (i) diagnostics and (ii) other. The diagnostics segment provides testing and collaborative development of testing that is designed to ~~assess an individual’s~~determine the risk ~~for~~of developing disease, ~~later in life, identify a patient’s likelihood of responding to drug therapy and guide a patient’s dosing to ensure optimal treatment, or~~ assess ~~a patient’s~~the risk of disease progression, and ~~disease recurrence.~~guide treatment decisions across medical specialties where critical genetic insights can significantly improve patient care and lower healthcare costs. The other segment provides testing products and services to the pharmaceutical, biotechnology and medical research industries, research and development, and clinical services for patients, and includes corporate services such as finance, human resources, legal and information technology.

1921

Table of ~~Conten~~t sContents

Segment revenue and operating income (loss) were as follows during the periods presented:


(in millions)								(in millions)	Diagnostics		Other		Total
Three months ended September 30, 2021								Three months ended September 30, 2021
Revenues								Revenues	$	161.7	$	5.6	$	167.3
Depreciation and amortization								Depreciation and amortization	13.1		1.1		14.2
Segment operating loss								Segment operating loss	(21.7)		(58.2)		(79.9)
		Diagnostics		Other		Total
Three months ended September 30, 2020	Three months ended September 30, 2020							Three months ended September 30, 2020
Revenues	Revenues	$	130.5	$	14.7	$	145.2	Revenues	$	130.5	$	14.7	$	145.2
Depreciation and amortization	Depreciation and amortization	16.7		1.0		17.7		Depreciation and amortization	16.7		1.0		17.7
Segment operating loss	Segment operating loss	(0.3)		(39.3)		(39.6)		Segment operating loss	(0.3)		(39.3)		(39.6)
Three months ended September 30, 2019

Nine months ended September 30, 2021								Nine months ended September 30, 2021
Revenues	Revenues	$	170.4	$	15.9	$	186.3	Revenues	$	496.6	$	33.2	$	529.8
Depreciation and amortization	Depreciation and amortization	16.9		1.3		18.2		Depreciation and amortization	45.8		3.7		49.5
Segment operating income (loss)	Segment operating income (loss)	17.3		(38.2)		(20.9)		Segment operating income (loss)	26.3		(173.7)		(147.4)

Nine months ended September 30, 2020								Nine months ended September 30, 2020
Revenues								Revenues	$	362.0	$	40.4	$	402.4
Depreciation and amortization								Depreciation and amortization	50.2		3.1		53.3
Segment operating loss								Segment operating loss	(127.7)		(113.9)		(241.6)


		Three months ended September 30,					Three months ended September 30,				Nine months ended September 30,
		2020		2019
(in millions)						(in millions)	2021		2020		2021		2020
Total operating loss for reportable segments	Total operating loss for reportable segments	$	(39.6)	$	(20.9)	Total operating loss for reportable segments	$	(79.9)	$	(39.6)	$	(147.4)	$	(241.6)
Unallocated amounts:	Unallocated amounts:					Unallocated amounts:
Interest income	Interest income	0.4		0.9		Interest income	0.2		0.4		0.6		1.7
Interest expense	Interest expense	(2.9)		(2.9)		Interest expense	(1.1)		(2.9)		(6.1)		(8.3)
Other	Other	(1.6)		0.6		Other	120.6		(1.6)		139.3		14.9
Loss from operations before income taxes		(43.7)		(22.3)
Income tax benefit		(28.5)		(1.7)
Net loss		(15.2)		(20.6)
Income (loss) from operations before income taxes						Income (loss) from operations before income taxes	39.8		(43.7)		(13.6)		(233.3)
Income tax expense (benefit)						Income tax expense (benefit)	15.2		(28.5)		6.0		(47.4)
Net income (loss)						Net income (loss)	24.6		(15.2)		(19.6)		(185.9)
Net loss attributable to non-controlling interest	Net loss attributable to non-controlling interest	0		0		Net loss attributable to non-controlling interest	—		—		—		(0.1)
Net loss attributable to Myriad Genetics, Inc. stockholders		$	(15.2)	$	(20.6)
Net income (loss) attributable to Myriad Genetics, Inc. stockholders						Net income (loss) attributable to Myriad Genetics, Inc. stockholders	$	24.6	$	(15.2)	$	(19.6)	$	(185.8)

15.SUPPLEMENTAL CASH FLOW INFORMATION


	Nine months ended September 30,
(in millions)	2021		2020
Cash paid during the period for income taxes	$	2.4	$	2.3
Cash paid for interest	2.1		6.9
Cash received for income tax receivables	89.9		—
Establishment of operating lease right-of-use assets and lease liabilities
Operating lease right-of-use assets	$	40.5	$	—
Operating lease liabilities	46.8		—

~~(15) SUPPLEMENTAL CASH FLOW INFORMATION~~

Three months ended
September 30,
2020 2019
Cash paid during the period for income taxes $ 1.3 $ 0.2
Cash paid for interest 2.6 2.8
Establishment of operating lease right-of-use assets and lease liabilities
Operating lease right-of-use assets $ — $ 74.5
Operating lease liabilities — (78.8)
Accrued liabilities and other long-term liabilities — 4.3

~~(16) SUBSEQUENT EVENTS~~

~~Change in Fiscal Year~~

On October 9, 2020, the Company’s Board of Directors approved a change in the Company’s fiscal year from a fiscal year ending on the last day of June of each year to a calendar fiscal year ending on the last day of December of each year, effective January 1, 2021. Accordingly, the Company will be issuing financial statements for a six-month transition period ending December 31, 2020 and calendar year financial statements thereafter.

2022

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16.DIVESTITURES

On May 28, 2021, the Company completed its sale of the Myriad myPath, LLC laboratory to Castle Biosciences, Inc. for cash consideration of $32.5 million. The transaction was accounted for as a sale of assets and the Company recognized a gain of $31.2 million, net of transaction costs of $1.3 million, in Other income (expense) on the Company’s Condensed Consolidated Statements of Operations related to the sale. Prior to the sale, Myriad myPath operations were included in the Company’s diagnostics reporting segment.

On July 1, 2021, the Company completed its sale of Myriad RBM, Inc., a wholly owned subsidiary of the Company, to IQVIA RDS, Inc. for cash consideration of $197.0 million. The transaction was accounted for as a sale of a business and the Company recognized a gain of $121.0 million, net of transaction costs of $4.8 million, in Other income (expense) on the Company's Condensed Consolidated Statements of Operations. Prior to the sale, Myriad RBM, Inc. operations were included in the Company’s other reporting segment.

On September 13, 2021, the Company completed its sale of select operating assets and intellectual property, including the Vectra® test, from the Myriad Autoimmune business unit to Laboratory Corporation of America Holdings for cash consideration of $150.0 million. The transaction was accounted for as a sale of a business and the Company recognized a loss of $0.6 million, net of transaction costs of $4.4 million, in Other income (expense) on the Company's Condensed Consolidated Statements of Operations. Prior to the sale, the Myriad Autoimmune business operations were included in the Company’s diagnostics reporting segment.

The operating results of these businesses do not qualify for reporting as discontinued operations.

Inventory

In connection with the divestiture transactions, the Company recognized losses of $5.2 million and $6.5 million for a non-cancelable inventory purchase commitment and inventory, respectively, during the nine months ended September 30, 2021, as the Company will no longer have use for the goods. Both of these losses are included in Other income (expense) in the Company's Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021.

The following table details the amounts recognized in Other income for the three and nine months ended September 30, 2021:


(in millions)	Three months ended September 30, 2021		Nine months ended September 30, 2021
Gain on sale of Myriad RBM, Inc.	$	121.0	$	121.0
Gain on sale of Myriad myPath, LLC laboratory	—		31.2
Gain (loss) on inventory	0.8		(11.7)
Loss on sale of Myriad Autoimmune assets	(0.6)		(0.6)
Other	(0.6)		(0.6)
Total Other Income	$	120.6	$	139.3

17.SUBSEQUENT EVENTS

The Company evaluated subsequent events from the balance sheet date through the date the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

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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 transition period ended December 31, 2020 included in our Transition Report on Form 10-K filed with the SEC on March 16, 2021. “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 ~~Securities and Exchange Commission~~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~~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 risks and uncertainties that could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to:

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

•risks related to our ability to efficiently and flexibly manage our business amid uncertainties ~~related to~~associated with COVID-19;

•the risk that sales and profit margins of our existing molecular diagnostic tests ~~and pharmaceutical and clinical services~~ may decline or ~~will~~that we may not ~~continue~~be able to ~~increase at historical rates;~~ operate our business on a profitable basis;

•risks related to our ability to ~~successfully transition~~generate sufficient revenue from our existing product portfolio ~~to our~~or in launching and commercializing new tests;

•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 and services;

•the risk that we may be unable to develop or achieve commercial success for additional molecular diagnostic tests ~~and pharmaceutical and clinical services~~ in a timely manner, or at all;

•the risk that we may not successfully develop new markets for our molecular diagnostic tests, ~~and pharmaceutical and clinical services,~~ including our ability to successfully generate revenue outside the United States;

•the risk that licenses to the technology underlying our molecular diagnostic ~~tests and pharmaceutical and clinical services~~ tests and any future tests are terminated or cannot be maintained on satisfactory terms;

•risks related to delays or other problems with operating 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 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 or acquire;

•risks related to our projections about the potential market opportunity for our 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;

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

•risks related to changes in intellectual property laws covering our molecular diagnostic tests, ~~and pharmaceutical and clinical services and~~or patents or enforcement, in the United States and foreign ~~countries, such as the Supreme Court decisions in~~ countries;

•~~Mayo Collab. Servs. v. Prometheus Labs., Inc.~~risks related to security breaches, loss of data and other disruptions, including from cyberattacks;

•~~, 566 U.S. 66 (2012),~~ ~~Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013), and~~ ~~Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014);~~ risks of new, changing and competitive technologies and regulations in the United States and internationally;

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

•risks related to the ~~risk that we will be unable~~material weakness related to ~~pay, when due, amounts due under~~ our ~~credit or lending agreements;~~quarterly income tax provision process, including the impact thereof and ~~other factors discussed under the heading “Risk Factors” contained in Item 1A of~~ our Annual report on Form 10-K for the fiscal year ended June 30, 2020, which has been filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in our Quarterly Reports on Form 10-Q (including Item 1A below in this report) or Current Reports on Form 8-K.remediation plan.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report, 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. 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. All ~~subsequent~~ forward-looking statements in this Quarterly Report 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 precision medicine company acting as a trusted advisor to transform patient lives through pioneering molecular diagnostics. Through our proprietary technologies, we believe we are positioned to identify important disease genes, the proteins they produce,discover and the biological pathways in which such genes and proteins are involved to better understand the molecular basis of certain human diseases. We believe that identifying these biomarkers (i.e., DNA, RNA and proteins) will enable us to develop novel molecular diagnosticcommercialize genetic tests that ~~can provide important information to solve unmet medical needs. During~~determine the ~~three months ended September 30, 2020, we reported total revenues~~risk of ~~$145.2 and net loss of $(15.2) resulting in $(0.20) net loss per share.~~

Our business units have been aligned with how the chief operating decision maker reviews performance and makes decisions in managing the Company. The business units have been aggregated into two reportable segments: (i) diagnostics and (ii) other. The diagnostics segment provides testing and collaborative development of testing that is designed to assess an individual’s risk for developing disease, ~~later in life, identify a patient’s likelihood of responding to drug therapy and guide a patient’s dosing to ensure optimal treatment, or~~ assess ~~a patient’s~~the risk of disease progression, and ~~disease recurrence. The other segment provides testing~~guide treatment decisions across medical specialties where critical genetic insights can significantly improve patient care and lower healthcare costs. Since our founding in 1992, we have performed tests for approximately five million patients. Our mission and purpose is to advance health and well-being for all, empower individuals with vital genetic insights and enable healthcare providers to better detect, treat and prevent disease.

We are currently developing and executing upon a strategic transformation plan that is focused on the following strategic priorities: (1) put patients and customers first; (2) build new tech-enabled commercial capabilities; (3) elevate core products to their full potential; and (4) create new avenues for growth. In connection with these strategic priorities, we are focusing our efforts on our Hereditary Cancer, Tumor Profiling, Prenatal and Pharmacogenomics products and, ~~services~~as described below, have divested certain non-core assets and businesses. We intend to ~~the pharmaceutical, biotechnology and medical research industries,~~execute on our transformation plan by prioritizing product innovation, research and ~~development,~~technology initiatives, strategic collaborations and ~~clinical services for patients,~~investments, and ~~includes corporate services such~~defining and deploying a customer-centric technology-enabled commercial model. We believe that by focusing on these strategic priorities, we will be able to reduce complexity and cost, improve our financial performance, build a more effective and cost-efficient sales model, and enhance our reimbursement and revenue cycle capabilities. In addition, we believe we can accelerate growth as ~~finance, human resources, legal~~we invest in innovation, research and ~~information technology.~~partnerships, develop capabilities to support our sales team with new digital tools and add more direct-to-consumer engagement, and build commercial capabilities to support new products and acquisitions.

Business Updates

During the quarter ended September 30, ~~2020,~~2021, we continued to see improvement in business fundamentals ~~including test volumes,~~ for our diagnostic products which have been affected by the COVID-19 pandemic. ~~Total test volumes reached 90 percent of pre-pandemic levels by the end of the quarter compared to 75 percent of pre-pandemic levels at the end of the prior quarter ended June 30, 2020.~~ We have also made the following recent announcements:

•~~Appointed Paul J. Diaz as President~~On September 13, 2021, we completed the sale of select operating assets and ~~Chief Executive Officer, effective August 13, 2020.~~intellectual property, including the Vectra® test, from the Myriad Autoimmune business unit (the "Autoimmune Business Transaction") to Laboratory Corporation of America Holdings for cash consideration of $150.0 million.

•~~The American College~~On July 1, 2021, we completed the sale of ~~Obstetricians and Gynecologists recently issued guidelines recommending prenatal testing~~Myriad RBM, Inc., a wholly owned subsidiary of the Company, to IQVIA RDS, Inc. for ~~average risk patients. These guidelines have led to new medical policy guidelines for payors covering average risk testing incorporating 24 million covered lives to date.~~cash consideration of $197.0 million.

•~~Received~~On August 2, 2021, we launched a ~~local coverage determination ("LCD") for Prolaris for unfavorable intermediate and high-risk patients from Palmetto GBA and CGS Administrators, LLC, two~~new version of the ~~administrative contractors~~myRisk Hereditary Cancer Test which allows women of all ancestries to receive a personalized polygenic breast cancer risk assessment for the ~~Centers for Medicare & Medicaid Services. The final LCD becomes effective December 6, 2020.~~first time.

•~~The final LCD for pharmacogenomic (PGx) testing became effective during~~On October 18, 2021, we announced the quarter, which expanded coverage for patients to all healthcare providers licensed and qualified to diagnose the condition and prescribe relevant medications (either independently or in an arrangement).

•Received coverage from the German Federal Joint Committee (G-BA) for the EndoPredict® breast cancer prognostic test. The positive decision means that EndoPredict® is now available to all patients with statutory health insurance in Germany without restrictionsappointment of Pamela Wong as ~~a benefit~~Chief Legal Officer of the ~~statutory health insurance scheme (GKV).~~Company.

~~Change in Fiscal Year~~

On October 9, 2020, our Board of Directors approved a change in our fiscal year from a fiscal year ending on the last day of June of each year to a calendar fiscal year ending on the last day of December of each year, effective January 1, 2021. Accordingly, we will be issuing financial statements for a six-month transition period ending as of December 31, 2020, and calendar year financial statements thereafter.

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Results of Operations for the Three Months Ended September 30, ~~2020~~2021 and ~~2019~~

~~Revenue~~

Three months ended September 30,
(In millions) 2020 2019 Change
Revenue $ 145.2 $ 186.3 $ (41.1)
2020

The ~~Company's revenues~~results of operations for the three months ended September 30, 2021 and 2020 ~~continued~~are discussed below. See Note 14 “Segment and Related Information” in the notes to ~~be impacted by factors related to~~our Condensed Consolidated Financial Statements for information regarding our operating segments.

Revenue


	Three months ended September 30,				Change		% of total revenue
(in millions)	2021		2020		2021		2021	2020
Molecular diagnostic revenues:
Hereditary Cancer	$	79.4	$	80.5	$	(1.1)	47%	55%
Tumor Profiling	32.9		17.0		15.9		20%	12%
Prenatal	23.6		16.6		7.0		14%	11%
Pharmacogenomics	24.1		11.9		12.2		14%	8%
Autoimmune	7.3		9.1		(1.8)		4%	6%
Other	—		0.6		(0.6)		—%	—%
Total molecular diagnostic revenue	167.3		135.7		31.6
Pharmaceutical and clinical services revenue	—		9.5		(9.5)		—%	7%
Total revenue	$	167.3	$	145.2	$	22.1	100%	100%

Molecular diagnostic revenues increased $31.6 million for the ~~COVID-19 pandemic, including patients incurring obstacles to access healthcare professionals, which resulted in testing volumes declining~~three months ended September 30, 2021 compared to the same period in the prior year across the majority of the products. In addition, the average expected reimbursement per test decreased due to a variety of factors such as negotiating new contracts with payors and the impact of a $2.2year. Tumor profiling revenues increased $15.9 million ~~reduction in revenues for estimated future refunds across the Company's products. Hereditary Cancer Testing revenues decreased $23.9~~ compared to the same period in the prior year due ~~primarily~~ to an ~~approximate 18% decrease~~$8.3 million increase in ~~volumes~~revenue from myChoice CDx internationally, including a $4.0 million one-time milestone payment, and ~~an approximate 6% decrease~~a $6.4 million increase in ~~average reimbursement per test. GeneSight revenues declined $10.8 compared~~revenue for Prolaris due to ~~the same period in the prior year due primarily to an approximate 28% decrease in volumes and an approximate 27% decrease in average reimbursement per test.~~expanded coverage. Prenatal revenues ~~declined~~increased $7.0 million compared to the same period in the prior year due primarily to a ~~decrease~~change in estimate for prior period revenues, a 13% increase in average reimbursement per test, ~~of approximately 34%. Pharmaceutical~~ and ~~clinical service revenue declined $4.8~~a 7% increase in volumes. Revenues from Pharmacogenomics increased $12.2 million compared to the same period in the prior year due primarily asto a ~~result of selling the Clinic~~71% increase in ~~February 2020.~~

~~The following table presents additional detail regarding the composition of our total revenue for the three months ended September 30, 2020 and 2019:~~

Three months ended September 30, $
Change % of Total Revenue
(In millions) 2020 2019 2020 2019
Molecular diagnostic revenues:
Hereditary Cancer Testing $ 80.6 $ 104.5 $ (23.9) 56 % 56 %
Prenatal 16.5 23.5 (7.0) 11 % 13 %
GeneSight 11.9 22.7 (10.8) 8 % 12 %
Vectra 9.1 11.0 (1.9) 6 % 6 %
myChoice CDx 7.8 1.3 6.5 5 % 1 %
Prolaris 6.4 6.5 (0.1) 4 % 3 %
EndoPredict 2.8 2.3 0.5 2 % 1 %
Other 0.6 0.2 0.4 — % — %
Total molecular diagnostic revenue 135.7 172.0 (36.3)
Pharmaceutical and clinical service revenue 9.5 14.3 (4.8) 7 % 8 %
Total revenue $ 145.2 $ 186.3 $ (41.1) 100 % 100 %

~~Cost of Sales~~

Three months ended September 30,
(In millions) 2020 2019 Change
Cost of molecular diagnostic testing $ 39.9 $ 41.2 $ (1.3)
Cost of molecular diagnostic testing as a % of revenue 29.4 % 24.0 %
Cost of pharmaceutical and clinical services $ 4.3 $ 8.5 $ (4.2)
Cost of pharmaceutical and clinical services as a % of revenue 45.3 % 59.4 %

~~The cost of molecular diagnostic testing as a percentage of revenue increased from 24.0% to 29.4% during the three months ended September 30, 2020~~volume. Hereditary Cancer revenues decreased $1.1 million compared to the same period in the prior ~~year. The~~year due to a slight decrease in reimbursement per test as the market for hereditary cancer products continues to become commoditized, which decrease was partially offset by a slight increase ~~was~~in volume. Autoimmune revenues decreased $1.8 million primarily ~~driven by the decline in revenue from lower test volumes during the period, attributable~~due to the ~~impact~~completion of ~~COVID-19 as lower revenues were generated to cover fixed costs of performing~~ the ~~tests. The cost of pharmaceutical~~Autoimmune Business Transaction on September 13, 2021.

Pharmaceutical and clinical services ~~as a percentage of revenue~~revenues decreased ~~from 59.4% to 45.3% during~~for the three months ended September 30, ~~2020~~2021 compared to the same period in the prior year due to the sale of Myriad RBM, Inc. on July 1, 2021. As a result of the ~~Clinic~~sale, there were no Pharmaceutical and clinical services revenues during the current period. Myriad RBM, Inc. generated $9.3 million in ~~February~~revenues during the prior period.

Cost of Sales


	Three months ended September 30,
(in millions)	2021			2020			Change
Cost of molecular diagnostic testing	$	47.8		$	39.9		$	7.9
Cost of molecular diagnostic testing as a % of revenue	28.6		%	29.4		%
Cost of pharmaceutical and clinical services	$	—		$	4.3		$	(4.3)
Cost of pharmaceutical and clinical services as a % of revenue	—		%	45.3		%

The Cost of molecular diagnostic testing as a percentage of revenue decreased from 29.4% to 28.6% during the three months ended September 30, 2021 compared to the same period in the prior year.

The Cost of pharmaceutical and clinical services as a percentage of revenue was 45.3% for the three months ended September 30, 2020. The sale of Myriad RBM, Inc. was completed on July 1, 2021, and as a result there were no corresponding costs during the current period.

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Research and Development ~~Expenses~~Expense

Three months ended September 30,
(In millions) 2020 2019 Change
R&D expense $ 17.6 $ 21.3 $ (3.7)
R&D expense as a % of sales 12.1 % 11.4 %


	Three months ended September 30,
(in millions)	2021			2020			Change
R&D expense	$	18.8		$	17.6		$	1.2
R&D expense as a % of total revenue	11.2		%	12.1		%

Research and development expense for the three months ended September 30, ~~2020 decreased~~2021 increased compared to the same period in the prior year primarily due to ~~decreased personnel~~an increase in general information technology-related costs, increases in costs incurred in the current period as part of the Company’s strategic transformation initiatives, and an increase in bonus expense due to improved performance of the Company, partially offset by a decrease in compensation related costs due to a lower headcount.

Selling, General and Administrative Expense


	Three months ended September 30,
(in millions)	2021			2020			Change
Selling, general and administrative expense	$	180.2		$	124.1		$	56.1
Selling, general and administrative expense as a % of total revenue	107.7		%	85.5		%

Selling, general and administrative expense increased for the three months ended September 30, 2021 compared to the same period in the prior year primarily due to a $48.0 million legal accrual related to the Crescendo Bioscience, Inc. qui tam lawsuit, as well as a $2.9 million increase in costs incurred in the current period as part of the Company's strategic transformation initiatives, a $2.2 million increase in stock-based compensation, a $2.1 million increase in marketing costs, a $2.1 million increase in legal expenses, ~~from~~and a $1.9 million increase in consulting fees, partially offset by a $3.7 million decrease in amortization expense and a $1.7 million decrease in commission expense due to a decrease in headcount ~~and decreased technology related expenses~~ from ~~synergies between our labs located in Salt Lake City and in San Francisco.~~the prior period.

Change in the Fair Value of Contingent Consideration

Three months ended September 30,
(In millions) 2020 2019 Change
Change in the fair value of contingent consideration $ (1.1) $ 0.7 $ (1.8)
Change in the fair value of contingent consideration as a % of sales (0.8) % 0.4


	Three months ended September 30,
(in millions)	2021			2020			Change
Change in the fair value of contingent consideration	$	0.4		$	(1.1)		$	1.5
Change in the fair value of contingent consideration as a % of total revenue	0.2		%	(0.8)		%

The fair value of contingent consideration for the three months ended September 30, ~~2020 decreased~~2021 increased compared to the same period in the prior year due to changes in timing of expected cash payments associated with the contingent consideration related to the Sividon ~~acquisition.~~

~~Selling, General and Administrative Expenses~~

Three months ended September 30,
(In millions) 2020 2019 Change
SG&A expense $ 124.1 $ 135.5 $ (11.4)
SG&A expense as a % of sales 85.5 % 72.7 %

~~Selling, general and administrative expense decreased for the three months ended September 30, 2020 compared to the same period~~Diagnostics GmbH acquisition in ~~the prior~~fiscal year primarily due to the Company implementing cost saving measures due to the decline in testing volumes as a result of the impacts of COVID-19 and due to a decline in expense from the sale of the Clinic in February 2020. The cost savings measures implemented by the Company have been partially offset by increased legal expenses and expenses related to our leadership transition in the current six-month transition period ending December 31, 2020.2016.

Other ~~Expense, net~~Income (Expense), Net

Three months ended September 30,
(In millions) 2020 2019 Change
Other expense, net $ (4.1) $ (1.4) $ (2.7)


	Three months ended September 30,
(in millions)	2021		2020		Change
Other income (expense), net	$	119.7	$	(4.1)	$	123.8

Other ~~expense,~~income (expense), net increased for the three months ended September 30, ~~2020~~2021 compared to the same period in the prior year due primarily to ~~increased~~the $121.0 million net gain recognized on the sale of Myriad RBM, Inc. in the current period, partially offset by expenses in the current period, including a $0.6 million loss recognized on the sale of the Myriad Autoimmune business unit. The prior year expense primarily relates to foreign exchange losses ~~and to decreased~~partially offset by interest ~~income.~~income in the prior period.

Income Tax ~~Benefit~~Expense (Benefit)

Three months ended September 30,
(In millions) 2020 2019 Change
Income tax benefit $ (28.5) $ (1.7) $ (26.8)
Effective tax rate 65.2 % 7.6 %


	Three months ended September 30,
(in millions)	2021			2020			Change
Income tax expense (benefit)	$	15.2		$	(28.5)		$	43.7
Effective tax rate	38.2		%	65.2		%

Our tax rate is the product of a blended U.S. federal effective rate of ~~21%~~21.0% and a blended state income tax rate of approximately 3%3.4%. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

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Income tax ~~benefit~~expense (benefit) for the three months ended September 30, ~~2020~~2021 was ~~$28.5,~~$15.2 million, and our effective tax rate was ~~65.2%~~38.2%. The ~~increase~~change in the effective tax rate for the three months ended September 30, ~~2020~~2021 as compared to the same period in the prior year is primarily due to ~~carrying back net~~the tax benefit recorded in the prior year related to the CARES Act, tax expenses recorded in the current year related to the differences between the book and tax basis of assets divested, disallowed executive compensation expenses, and stock compensation expenses.

Results of Operations for the Nine Months Ended September 30, 2021 and 2020

The results of operations for the nine months ended September 30, 2021 and 2020 are discussed below. See Note 14 “Segment and Related Information” in the notes to our Condensed Consolidated Financial Statements for information regarding our operating ~~losses~~segments.

Revenue


	Nine months ended September 30,				Change		% of total revenue
(in millions)	2021		2020		2021		2021	2020
Molecular diagnostic revenues:
Hereditary Cancer	$	241.5	$	205.6	$	35.9	46%	51%
Tumor Profiling	94.4		41.2		53.2		18%	10%
Prenatal	76.7		53.5		23.2		14%	13%
Pharmacogenomics	64.3		40.8		23.5		12%	10%
Autoimmune	28.2		26.8		1.4		5%	7%
Other	0.5		1.6		(1.1)		—%	—%
Total molecular diagnostic revenue	505.6		369.5		136.1
Pharmaceutical and clinical services revenue	24.2		32.9		(8.7)		5%	8%
Total revenue	$	529.8	$	402.4	$	127.4	100%	100%

Molecular diagnostic revenues for the nine months ended September 30, 2021 increased $136.1 million compared to the same period in the prior year. Revenue for the nine months ended September 30, 2020 was negatively impacted by the pandemic as patients faced significant obstacles to accessing health care professionals. Tumor Profiling revenues increased $53.2 million compared to the same period in the prior year due to a $27.4 million increase in revenue for Prolaris due to expanded coverage and the submission of claims for previously performed tests that were pending clarification of the coverage policy and a $21.1 million increase in revenues from myChoice CDx due to expansion in Japan and other areas. Hereditary Cancer revenues increased $35.9 million compared to the same period in the prior year due primarily to a 21% increase in volume. Revenues from Pharmacogenomics increased $23.5 million compared to the same period in the prior year due primarily to a 56% increase in volume. Prenatal revenues increased $23.2 million compared to the same period in the prior year due primarily to an increase of 15% in volume and an over 10% increase in the average reimbursement per test, as well as a change in estimate related to revenues from prior periods.

Pharmaceutical and clinical services revenues decreased for the nine months ended September 30, 2021 compared to the same period in the prior year due to decreased revenue attributable to the sale of Myriad RBM, Inc. on July 1, 2021, which generated $28.9 million in revenue during the prior period and the sale of the Clinic, an internal medicine emergency hospital, which was sold in February 2020 and generated $3.9 million in revenue during the prior period. The decrease was partially offset by $2.9 million generated from processing COVID-19 tests in the current period.

Cost of Sales


	Nine months ended September 30,
(in millions)	2021			2020			Change
Cost of molecular diagnostic testing	$	139.9		$	115.2		$	24.7
Cost of molecular diagnostic testing as a % of revenue	27.7		%	31.2		%
Cost of pharmaceutical and clinical services	$	11.9		$	15.8		$	(3.9)
Cost of pharmaceutical and clinical services as a % of revenue	49.2		%	48.0		%

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The Cost of molecular diagnostic testing as a percentage of revenue decreased from 31.2% to 27.7% during the nine months ended September 30, 2021 compared to the same period in the prior year. The decrease was primarily driven by the increase in revenue from higher test volumes during the period as the same period from the prior year was impacted by COVID-19; thus, costs decreased as a percentage of revenue as revenue from increases in test volumes outpaced personnel and materials costs to perform the tests.

The cost of pharmaceutical and clinical services decreased compared to the same period in the prior year due to the sale of Myriad RBM, Inc. that was completed on July 1, 2021.

Research and Development Expense


	Nine months ended September 30,
(in millions)	2021			2020			Change
R&D expense	$	61.4		$	54.7		$	6.7
R&D expense as a % of total revenue	11.6		%	13.6		%

Research and development expense for the nine months ended September 30, 2021 increased compared to the same period in the prior year primarily due to increases in costs incurred in the current period as part of the Company’s strategic transformation initiatives, increases in lab expenses, and increases in compensation costs as a result of employee bonus reductions in the prior period stemming from the significant impact of COVID-19 on the Company's financial results.

Selling, General and Administrative Expense


	Nine months ended September 30,
(in millions)	2021			2020			Change
Selling, general and administrative expense	$	460.5		$	364.4		$	96.1
Selling, general and administrative expense as a % of total revenue	86.9		%	90.6		%

Selling, general and administrative expense increased for the nine months ended September 30, 2021 compared to the same period in the prior year primarily due to a $48.0 million legal accrual related to the Crescendo Bioscience, Inc. qui tam lawsuit, a $14.4 million increase in costs incurred in the current period as part of the Company's strategic transformation initiative, and a $10.5 million increase in stock-based compensation due to lower stock-based compensation in the prior period as a result of adjustments to stock-based compensation related to the departure of our former Chief Executive Officer, as well as an $8.5 million increase in bonus expense as a result of employee bonus reductions in the prior year stemming from the significant impact of COVID-19 on the Company's financial results, a $5.6 million increase in legal expenses, a $3.4 million increase in commissions due to increases in sales, and a $2.9 million increase in consulting fees. Increases were partially offset by a $5.1 million decrease in amortization expense and a decrease in sales and marketing expenses of $2.6 million due primarily to fewer in-person sales and marketing events and travel-related expenses.

Change in the Fair Value of Contingent Consideration


	Nine months ended September 30,
(in millions)	2021			2020			Change
Change in the fair value of contingent consideration	$	1.7		$	(4.5)		$	6.2
Change in the fair value of contingent consideration as a % of total revenue	0.3		%	(1.1)		%

The fair value of contingent consideration for the nine months ended September 30, 2021 increased compared to the same period in the prior year due to changes in timing of expected cash payments associated with the contingent consideration related to the Sividon Diagnostics GmbH acquisition in fiscal year 2016.

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Goodwill and long-lived asset impairment charges


	Nine months ended September 30,
(in millions)	2021			2020			Change
Goodwill and long-lived asset impairment charges	$	1.8		$	98.4		$	(96.6)
Goodwill and long-lived asset impairment charges as a % of total revenue	0.3		%	24.5		%

Goodwill and long-lived asset impairment charges decreased for the nine months ended September 30, 2021 compared to the same period in the prior year primarily due to the Company recognizing goodwill impairment charges in the prior period related to the Myriad Autoimmune reporting unit, as well as additional charges related to the abandonment of an in-process research and development intangible asset during the prior period.

Other Income (Expense), Net


	Nine months ended September 30,
(in millions)	2021		2020		Change
Other income (expense), net	$	133.8	$	8.3	$	125.5

Other income (expense), net increased for the nine months ended September 30, 2021 compared to the same period in the prior year due primarily to the combined $152.2 million net gain recognized on the sales of Myriad RBM, Inc. and the Myriad myPath, LLC laboratory in the current period, partially offset by expenses or losses in the current period, including the $0.6 million net loss recognized on the sale of the Myriad Autoimmune business unit and losses of $5.2 million and $6.5 million for a non-cancelable purchase commitment and inventory, respectively, recognized in connection with the divestiture transactions. Increases were also partially offset by the receipt of $14.6 million in stimulus funds from the CARES ~~Act.~~Act in the prior period.

Income Tax Expense (Benefit)


	Nine months ended September 30,
(in millions)	2021			2020			Change
Income tax benefit	$	6.0		$	(47.4)		$	53.4
Effective tax rate	(44.1)		%	20.3		%

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 3.4%. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

Income tax expense for the nine months ended September 30, 2021 was $6.0 million, and our effective tax rate was (44.1)%. The change in the effective tax rate for the nine months ended September 30, 2021 as compared to the same period in the prior year is primarily due to the tax benefit recorded in the prior year related to the CARES Act, tax expense recorded in the prior year related to asset impairments, tax expense recorded in the current year related to the differences between the book and tax basis of assets divested, disallowed executive compensation expenses, the release of a valuation allowance, and stock compensation expense.

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Liquidity and Capital Resources

Our primary sources of liquidity are our cash, cash equivalents and marketable investment securities, our cash flows from operations, our cash flows from investing activities, and, in certain circumstances as discussed below, amounts available for borrowing under our Amended Facility. Our capital deployment strategy focuses on use of resources in the key areas of research and development and acquisitions. We believe that investing organically through research and development and acquisitively to support business strategy provides the best return on invested capital. During the three months ended September 30, 2021, our liquidity increased $346.6 million from the combined proceeds from the sales of Myriad RBM, Inc. and the Myriad Autoimmune business. The cash generated from these divestitures provides us with additional liquidity as we seek out strategic opportunities for capital deployment.

We believe that our existing capital resources ~~and the cash to be generated from future sales, taking into consideration the expected continuing impacts of COVID-19 on our operations,~~ will be sufficient to meet our current and projected operating requirements for the foreseeable future. In addition, our capital resources and ~~repay the outstanding~~cash on hand may be used for acquisitions or other strategic investments.

All remaining borrowings under our Amended Facility, which matures on July 31, 2023, ~~and which has no scheduled principal payments prior to that date.~~were repaid on July 30, 2021 using cash generated from our recent divestitures. Our available capital resources, however, may be consumed more rapidly than currently expected, and we may need or want to raise additional financing. We may not be able to secure such financing in a timely manner or on favorable terms, if at all. WeIn addition, we are subject to financial covenants as part of our outstanding Amended Facility. Based on the continued uncertainty regarding the impact of COVID-19 on our future operations, it is possible that we could be in violation of certain financial covenants contained in the Amended Facility within the Amendment Period, which runs through June 30, 2021. We may seek waivers or amendments from our lenders in order to avoid a future potential covenant violation, in addition to taking other potential actions. If we were unable to comply with the covenants in the future, that could ~~result in an increase in the rate of interest and limits on~~limit our ability to incur ~~certain~~ additional ~~indebtedness and could potentially cause the loan repayment to be accelerated.~~indebtedness. Without additional funds, we may be forced to delay, scale back or eliminate some of our sales and marketing efforts, research and development activities, or other operations, and potentially delay development of our diagnostic 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.

~~Additionally,~~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 used in connection with certain permitted acquisitions. Unrestricted cash, cash equivalents and marketable securities totaled $413.6 million as of September 30, 2021. Our revolving commitment amount is $250.0 million as of September 30, 2021. As the Company's total unrestricted cash, cash equivalents, and marketable securities exceeded $150.0 million as of September 30, 2021, we will be unable to make future borrowings unless related to a permitted acquisition. In addition, following the expiration of the waiver of the leverage ratio and interest coverage ratio covenants, which waiver is effective until March 31, 2022, our ability to borrow under the Amended Facility will be limited if we are unable to comply with those financial covenants.

From time to time, we enter into purchase commitments or other agreements that may materially impact our liquidity position in future periods. In April 2021, a non-cancelable operating lease for our new corporate headquarters in Salt Lake City, Utah, commenced with a lease term of 15 years and total future lease payments of approximately $67.0 million as of September 30, 2021. In addition, we have accrued $48.0 million for a potential settlement of the qui tam lawsuit against Crescendo Bioscience, Inc. and the Company, which is included in accrued liabilities in our Condensed Consolidated Balance Sheet.

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Due to the continuing evolving global situation from the COVID-19 pandemic, and resulting global disruptions have caused significant volatility in financial markets. This disruption can contribute to potential defaults in our accounts receivable, affect asset valuations resulting in impairment charges, and affectincluding the ~~availability of lease and financing credit as well as other segments~~emergence of the ~~credit markets. We utilize a range of financing methods to fund our operations~~more highly transmissible Delta coronavirus variant and ~~capital expenditures and expect to continue to maintain financing flexibility in~~its impact on the ~~current market conditions. However, due to~~ongoing recovery from the ~~continuing rapidly evolving global situation,~~COVID-19 pandemic, it is not possible to predict whether unanticipated consequences of the pandemic are reasonably likely to materially affect our liquidity and capital resources in the future.

~~Our capital deployment strategy focuses on use~~ Because of ~~resources~~the specialized scientific nature of our business, we are highly dependent upon our ability to attract and retain qualified management, scientific, and technical personnel. Competition and compensation for such personnel and other qualified personnel rose as employment vacancies surged during the nine months ended September 30, 2021, and job applicants are often seeking a more flexible work arrangement over the long term as a condition of employment. President Biden's administration is in the process of implementing a mandate requiring companies with 100 or more employees to require full COVID-19 vaccination or regular testing for COVID-19 as a condition of employment. The mandate could increase already elevated employment vacancies. In addition, any future federal or state regulations that could require us to mandate full COVID-19 vaccinations for our employees, or any future decision on our part to voluntarily require our employees to receive a COVID-19 vaccine, could impact our ability to hire and retain employees. Loss of the services of or failure to recruit additional key ~~areas of~~management, scientific and technical personnel and other qualified personnel who are necessary to operate our business would adversely affect our research and development ~~acquisitions, debt repayment,~~programs and molecular diagnostic business. Additionally, disruptions to our supply chain as a result of COVID-19 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, led by supply constraints, federal stimulus funding, increases to household savings, and the ~~repurchase~~sudden macroeconomic shift in activity levels arising from the loosening or removal of ~~our common stock. We believe that investing organically through research~~many government restrictions and ~~development or acquisitively~~the broader availability of COVID-19 vaccines, has had, and may continue to ~~support business strategy provides~~have, an impact on the ~~best return on invested capital.~~labor 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:


(In millions)		September 30, 2020		June 30, 2020		Change
(in millions)								(in millions)	September 30, 2021		December 31, 2020		Change
Cash and cash equivalents	Cash and cash equivalents	$	118.3	$	163.7	$	(45.4)	Cash and cash equivalents	$	295.2	$	117.0	$	178.2
Marketable investment securities	Marketable investment securities	42.1		54.1		(12.0)		Marketable investment securities	70.9		33.7		37.2
Long-term marketable investment securities	Long-term marketable investment securities	30.2		37.0		(6.8)		Long-term marketable investment securities	47.5		21.0		26.5
Cash, cash equivalents and marketable investment securities	Cash, cash equivalents and marketable investment securities	$	190.6	$	254.8	$	(64.2)	Cash, cash equivalents and marketable investment securities	$	413.6	$	171.7	$	241.9

The ~~decrease~~increase in cash, cash equivalents, and marketable investment securities was primarily driven by ~~$59.3~~$379.1 million in total cash consideration from the sale of Myriad RBM, Inc., select assets of the Myriad Autoimmune business unit, and the Myriad myPath, LLC laboratory, the receipt of an $89.6 million U.S. federal tax refund in the quarter ended March 31, 2021, and proceeds of $90.0 million from the exercise of stock options, partially offset by $226.4 million in repayments of the Company's revolving credit facility during the nine months ended September 30, 2021 and $10.5 million in transaction expenses related to the foregoing divestitures, as well as by cash used ~~by operations and the use~~in operating activities as part of ~~$3.8 for the proceeds from the issuance~~our normal course of ~~common stock, net of shares exchanged for withholding tax, offset by $18.6 in proceeds from maturities of marketable investments.~~

business.

The following table represents the ~~condensed consolidated cash flow statement:~~Condensed Consolidated Cash Flow Statement:


		Three months ended September 30,							Nine Months Ended September 30,
(In millions)		2020		2019		Change
(in millions)								(in millions)	2021		2020		Change
Cash flows from operating activities	Cash flows from operating activities	$	(59.3)	$	15.8	$	(75.1)	Cash flows from operating activities	$	28.1	$	(12.5)	$	40.6
Cash flows from investing activities	Cash flows from investing activities	17.1		(7.1)		24.2		Cash flows from investing activities	300.3		50.6		249.7
Cash flows from financing activities	Cash flows from financing activities	(3.9)		(12.3)		8.4		Cash flows from financing activities	(149.5)		(2.8)		(146.7)
Effect of foreign exchange rates on cash and cash equivalents	Effect of foreign exchange rates on cash and cash equivalents	0.7		0.3		0.4		Effect of foreign exchange rates on cash and cash equivalents	(0.7)		0.3		(1.0)
Net decrease in cash and cash equivalents		(45.4)		(3.3)		(42.1)
Change in cash and cash equivalents classified as held for sale								Change in cash and cash equivalents classified as held for sale	—		1.5		(1.5)
Net increase in cash and cash equivalents								Net increase in cash and cash equivalents	178.2		37.1		141.1
Cash and cash equivalents at the beginning of the period	Cash and cash equivalents at the beginning of the period	163.7		93.2		70.5		Cash and cash equivalents at the beginning of the period	117.0		81.2		35.8
Cash and cash equivalents at the end of the period	Cash and cash equivalents at the end of the period	$	118.3	$	89.9	$	28.4	Cash and cash equivalents at the end of the period	$	295.2	$	118.3	$	176.9

Cash Flows from Operating Activities

The ~~decrease~~increase in cash flows from operating activities for the ~~three~~nine months ended September 30, ~~2020,~~2021, compared to the same period in the prior year, was primarily due to the ~~$107.9~~ change in the balance of prepaid taxes ~~and~~due to the ~~$17.0~~receipt of an $89.6 million U.S. federal tax refund, partially offset by a decrease in cash flows from operating activities primarily driven by a $44.9 million change in ~~the balance of~~ trade accounts receivable ~~offset by an increase~~ in the ~~unrecognized tax benefit adjustment~~current period compared to the prior period due to the change in sales volumes and cash collections as a result of ~~$13.2 and an increase in~~ the ~~deferred income tax adjustment~~significant impact of ~~$48.4.~~COVID-19 on the Company's financial results during the prior period.

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Cash Flows from Investing Activities

~~For~~The increase in cash flows from investing activities for the ~~three~~nine months ended September 30, ~~2020,~~2021, compared to the same period in the prior year, was primarily due to incremental cash proceeds of $357.8 million from divestitures in the ~~change~~current period as compared to the prior period. This increase is partially offset by an increase of $85.2 million in ~~cash flows from investing activities was driven primarily by the purchase of approximately $23.1~~purchases of marketable investments securities in the current period as compared to the prior period, a decrease of $15.1 million in proceeds from marketable investment securities during the ~~same~~current period, and an increase of $7.8 million in capital expenditures in the ~~prior year that did not occur during the three months ended September 30, 2020.~~current period.

Cash Flows from Financing Activities

~~For~~The decrease in cash flows from financing activities for the ~~three~~nine months ended September 30, ~~2020,~~2021, compared to the same period in the prior year, ~~the decrease in cash flows from financing activities~~ was ~~driven~~ primarily bydue to the use of ~~$8.6~~$226.4 million in cash for ~~repayment~~repayments of the ~~credit facility~~Amended Facility during the nine months ended September 30, 2021. The decrease was partially offset by an increase of $83.1 million in proceeds from the exercise of stock options, net of shares exchanged for payroll withholding tax, for the nine months ended September 30, 2021 compared to the same period in the prior ~~year that did not occur during the three months ended September 30, 2020.~~year.

Effects of Inflation

We do not believe that inflation has had a material impact on our business, sales, or operating results during the periods presented. However, inflation, led by supply constraints, federal stimulus funding, increases to household savings, and the sudden macroeconomic shift in activity levels arising from the loosening or removal of many government restrictions and the broader availability of COVID-19 vaccines, 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 diagnostic testing results, and costs of lab supplies. Inflationary costs may impact our profitability and could adversely affect our business, financial condition and results of operations.

Share Repurchase Program

Our Board of Directors has previously authorized us to repurchase up to $200.0 million of our outstanding common stock. We may repurchase our common stock from time to time or on an accelerated basis through open market transactions or privately negotiated transactions as determined by our 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 September 30, ~~2020,~~2021, we are authorized to repurchase up to $110.7 million under our current share repurchase authorization. See ~~also~~ “Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds – Issuer Purchases of Equity Securities”. below.

Critical Accounting Policies

Critical accounting policies 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 policies, see our Transition Report on Form 10-K. No significant changes to our accounting policies took place during the ~~period. For a further discussion of our critical accounting policies, see our Annual Report on Form 10-K for the fiscal year~~nine months ended ~~June~~September 30, ~~2020.~~

2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk during the ~~three~~nine months ended September 30, ~~2020~~2021 compared to the disclosures in Part II, Item 7A of our ~~Annual~~Transition Report on Form 10-K ~~for the fiscal year ended June 30, 2020,~~, which isare incorporated by reference herein.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

~~Our principal executive officer and principal financial officer, after evaluating the effectiveness of our~~We maintain disclosure controls and procedures ~~(as defined in Exchange Act~~(“Disclosure Controls”) within the meaning of Rules 13a-15(e) and 15d-15(e)~~) as~~ of the ~~end~~Securities Exchange Act of 1934, as amended, or the ~~period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were effective~~Exchange Act. Our Disclosure Controls are designed to ensure that information required to be disclosed by us in the reports ~~that~~ 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 ~~principal executive~~Chief Executive Officer and ~~principal financial officers, or persons performing similar functions,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating our ~~disclosure controls and procedures, 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 ~~our~~ management necessarily ~~is required to apply~~applied its judgment in evaluating ~~the cost-benefit relationship of~~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 September 30, 2021, our Disclosure Controls are not effective.

Management has concluded that a material weakness in internal control over financial reporting exists related to our quarterly income tax provision process. Specifically, we did not provide adequate review and control with respect to the completeness and accuracy of inputs used in the gain/loss calculation related to a divestiture within the interim consolidated income tax provision and related accrual. While the control deficiency did not result in a misstatement of our previously issued consolidated financial statements, the control deficiency could have resulted in a misstatement of the income tax related accounts or disclosures that would have resulted in a material misstatement of our annual or interim consolidated financial statements that would not have been prevented or detected on a timely basis.

Plan to Remediate Material Weakness

Management is committed to the remediation of the material weakness described above, as well as the continued improvement of our internal control over financial reporting. Management has been implementing, and will continue to implement, measures designed to ensure that our controls are designed, implemented, and operating effectively.

For the material weakness described above, management will take steps that address the underlying causes, including enhancing review of the information underlying discrete transactions in the interim income tax provision. We intend to remediate this material weakness as soon as possible. We will continue to monitor the effectiveness of our controls and will make any further changes that management determines are appropriate.

Remediation of Previously Reported Material Weakness

The prior period material weakness identified in our internal control over financial reporting in connection with the preparation of our Consolidated Financial Statements as of and for the transition period ended December 31, 2020 has been remediated. The material weakness identified related to the accounting for intercompany transactions, foreign currency exchanges and foreign currency translation related to our international subsidiaries. Specifically, as part of our financial statement close process, certain of our control activities were not sufficiently designed or operating effectively to ensure all of our policies were in compliance with generally accepted accounting principles, consistent in their application, retained in appropriate documentation and communicated to relevant parties. As a result of the material weakness, we recorded certain immaterial corrections to intercompany accounts, as well as foreign currency exchange and translation gains and losses, in our Consolidated Financial Statements for the transition period ended December 31, 2020.

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We implemented control measures to improve our internal control over financial reporting and remediated the prior period material weakness. We took the following actions to remediate the prior period material weakness:

•We designed additional control and review procedures needed to provide more robust and comprehensive internal controls over financial reporting that address the risks of material misstatement related to the accounting for intercompany transactions, foreign currency exchanges and foreign currency translation within our business processes.

•We implemented additional application controls in our financial systems, implemented formal review procedures, and formally documented our newly designed processes for the identified areas.

•We subjected the additional controls implemented to testing and concluded that the controls are operating effectively.

Changes in Internal Controls

The Company ~~is in the midst of~~has completed a multi-year transformation project to achieve better analytics and process efficiencies through the use of Oracle Fusion Cloud Services ~~System. During the quarter ended September 30, 2020, the Company completed the implementation~~System ("Oracle Cloud"). As of ~~certain modules used in the financial statement close process and management reporting. Additional phases~~October 1, 2021, Oracle Cloud is now our primary accounting system. Emphasis will continue to be ~~implemented over the coming year. Emphasis has been~~placed on the maintenance of effective internal controls and assessment of the design and operating effectiveness of key control activities ~~throughout development and deployment of each phase.~~in the new system.

Other than as described above, there were no changes in our internal control over financial reporting that occurred during the three months ended September 30, ~~2020~~2021 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~~

~~Purported Securities Class Action Claims~~

On September 27, 2019, a purported class action complaint was filed in the United States District Court for the District of Utah, against the Company, its former President and Chief Executive Officer, Mark C. Capone, and its Executive Vice President and Chief Financial Officer, R. Bryan Riggsbee (“Defendants”). On February 21, 2020, the plaintiff filed an amended class action complaint, which added the Company’s 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 our 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. The Company intends to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

~~Other Legal Proceedings~~

On August 24, 2018, our wholly-owned subsidiary, Assurex Health, Inc. ("Assurex") was served with an Amended Complaint which had been filed in the Circuit Court of Cook County, Illinois, County Department, Law Division, Civil Action No. 2018 L 004972, by Pipe Trades Services MN Welfare Plan ("Pipe Trades"), as a qui tam relator, on behalf of the State of Illinois, Pipe Trades, and all others similarly situated, purportedly arising from Assurex's alleged violations of the Illinois Insurance Claims Fraud Prevention Act and other causes of action. Pipe Trades seeks certification of a putative class, certification as the purported class representative, and the payment of treble damages allegedly sustained by Pipe Trades and the purported class by reason of the allegations set forth in the amended complaint, plus statutory damages and penalties, plus interest, and legal and other costs and fees. The State of Illinois and Cook County, Illinois, have declined to intervene in the matter. On September 11, 2019, plaintiffs filed a second amended complaint, and on October 10, 2019, Assurex filed a Motion to Dismiss Plaintiff’s Second Amended Complaint for Lack of Personal Jurisdiction and Standing, requesting that the second amended complaint be dismissed in its entirety, with prejudice, for lack of personal jurisdiction and standing. On July 20, 2020, this motion was denied. The Company’s motion filed on August 12, 2020, for interlocutory appeal of the denial of the motion to dismiss, was denied in a hearing on October 30, 2020. The Company intends to continue to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

Proceedings.

Qui Tam Lawsuit

In June 2016, our ~~wholly-owned~~wholly owned subsidiary, Crescendo Bioscience, Inc. (“CBI”), received a subpoena from the Office of Inspector General of the Department of Health and Human Services requesting that CBI produce documents relating to entities that received payment from CBI for the collection and processing of blood specimens for testing, including a named unrelated company, healthcare providers and other third party entities. The Office of Inspector General subsequently requested additional documentation in December 2017. CBI provided to the Office of Inspector General the documents requested. On January 30, 2020, the United States District Court for the Northern District of California unsealed a qui tam complaint, filed on April 16, 2016 against CBI and the Company, alleging violations of the Federal and California False Claims Acts and the California Insurance Fraud Prevention Act. On January 22, 2020, after a multi-year investigation into CBI’s and the Company’s alleged conduct, the United States declined to intervene. On January 27, 2020, the State of California likewise filed its notice of declination. The Company was not aware of the complaint until after it was unsealed. On May 23, 2020, the court denied CBI and the Company’s motion to dismiss. ~~The~~We have accrued $48.0 million for a potential settlement of this qui tam lawsuit against CBI and the Company, ~~intends~~which is included in accrued liabilities in our Condensed Consolidated Balance Sheet. If no settlement is reached, we intend to continue to vigorously defend this case, but we cannot predict with any degree of certainty the ultimate resolution of this matter or determine whether, or to what extent, any loss with respect to this matter may exceed the amount that we have accrued.

Purported Securities Class Action

On September 27, 2019, a purported class action complaint was filed in the United States 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 our 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 United States District Court for the District of Utah denied the Company’s motion to dismiss. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

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 its 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 our 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. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

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On September 17, 2021, a second stockholder derivative complaint was filed in the United States District Court for 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. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

Other Legal Proceedings

On July 27, 2020, a lawsuit was filed against the Company in the Superior Court of Suffolk County, Massachusetts, by Heide Abelli and Victor Pricolo. The plaintiffs claim negligence, breach of contract and associated torts in connection with an alleged error in testing performed by the Company in 2004. The plaintiffs seek damages allegedly sustained by them by reason of the allegations set forth in their complaint, together with interest and costs. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any.

On August 24, 2018, our wholly owned subsidiary, Assurex Health, Inc. (“Assurex”), was served with an Amended Complaint which had been filed in the Circuit Court of Cook County, Illinois, County Department, Law Division, Civil Action No. 2018 L 004972, by Pipe Trades Services MN Welfare Plan (“Pipe Trades”), as a qui tam relator, on behalf of the State of Illinois, Pipe Trades, and all others similarly situated, purportedly arising from Assurex’s alleged violations of the Illinois Insurance Claims Fraud Prevention Act and other causes of action. Pipe Trades seeks certification of a putative class, certification as the purported class representative, and the payment of treble damages allegedly sustained by Pipe Trades and the purported class by reason of the allegations set forth in the amended complaint, plus statutory damages and penalties, plus interest, and legal and other costs and fees. The State of Illinois and Cook County, Illinois, have declined to intervene in the matter. On February 19, 2021, the court granted Assurex’s motion to dismiss the complaint, without prejudice and with leave for Pipe Trades to file an amended complaint, for failure to state a claim on which relief can be granted. On March 19, 2021, Pipe Trades filed an amended complaint. Assurex and Pipe Trades subsequently agreed to settle the case for $170,000, which settlement was approved by the State of Illinois and Cook County, Illinois on September 9, 2021. Accordingly, the court dismissed the case with prejudice on September 9, 2021.

Other than as set forth above, we are not a party to any legal proceedings that we believe will have a material impact on our business, financial position or results of operations.

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Item 1A. Risk ~~Factors~~Factors.

~~The following risk factor disclosure~~In addition to the other information set forth in this Quarterly Report, you should ~~be read in conjunction with~~carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in the ~~Annual~~Transition Report on Form 10-K, ~~for~~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 the ~~fiscal year ended June~~Transition Report on Form 10-K other than the updates to the risk factors set forth below. We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC.

We have identified a material weakness in our internal control over accounting related to our quarterly income tax provision process and such weakness led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of September 30, ~~2020.~~2021. Our inability to remediate the material weakness, our discovery of any additional weaknesses, or our inability to achieve and maintain effective disclosure controls and procedures and internal control over financial reporting could adversely affect our results of operations, our stock price and investor confidence in our company.

WeSection 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on the effectiveness of their internal control over financial reporting. In addition, we regularly engage our independent registered public accounting firm to report on its evaluation of those controls. As disclosed in more detail under Part I,Item 4, “Controls and Procedures” above, we have identified a material weakness as of September 30, 2021 in our internal control over accounting related to our quarterly income tax provision process. Specifically, we did not provide adequate review and control with respect to the completeness and accuracy of inputs used in the gain/loss calculation related to a divestiture within the interim consolidated income tax provision and related accrual. Due to the material weakness in our internal control over financial reporting, we have also concluded that our disclosure controls and procedures were not effective as of September 30, 2021.

Failure to have effective internal control over financial reporting and disclosure controls and procedures could impair our ability to produce accurate financial statements on a timely basis and could lead to a restatement of our financial statements. If, as a result of the ineffectiveness of our internal control over financial reporting and disclosure controls and procedures, we cannot provide reliable financial statements, our business decision processes may be adversely ~~impacted if~~affected, our business and results of operations could be harmed, investors could lose confidence in our reported financial information and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected. In addition, failure to maintain effective internal control over financial reporting could result in investigations or sanctions by regulatory authorities.

Our management will take steps to remediate the material weakness, including enhancing review of the information underlying discrete transactions in the interim income tax provision. We intend to remediate this material weakness as soon as possible, but we cannot be certain as to when remediation will be completed. Additional details regarding the remediation efforts are ~~unable~~disclosed under Part I, Item 4, “Controls and Procedures” above. In addition, we may in the future identify additional internal control deficiencies that could rise to ~~successfully implement new systems~~the level of a material weakness or ~~unable to adapt systems to our change~~uncover other errors in ~~fiscal year-end.~~

~~Information technology systems are an important part~~financial reporting. During the course of our ~~business operations. We are in the midst~~evaluation of ~~a multi-year transformation project~~this material weakness, we may identify areas requiring improvement and may be required to achieve better analytics and process efficiencies through the use of Oracle Fusion Cloud Services System ("Oracle Fusion"). This project is expected to improve the efficiency and effectiveness of certain financial and business transactiondesign additional enhanced processes and the underlying systems environment. During the quarter ended September 30, 2020, we completed the implementation of certain modules used in the financial statement close process and management reporting. Additional integrations are expectedcontrols to ~~take place over the next year. An implementation of~~address issues identified through this ~~nature is a major undertaking from a financial, management and personnel perspective. The implementation of Oracle Fusion may prove to be more difficult, costly, or time consuming than expected, and~~review. In addition, there can be no assurance that ~~this system~~such remediation efforts will be ~~beneficial~~successful, that our internal control over financial reporting will be effective as a result of these efforts or that any such future deficiencies identified may not be material weaknesses that would be required to be reported in future periods. In addition, we cannot assure you that our independent registered public accounting firm will be able to attest that such internal controls are effective when they are required to do so.

If we fail to remediate the material weakness and maintain effective disclosure controls and procedures or internal control over financial reporting, we may not be able to rely on the integrity of our financial results, which could result in inaccurate or late reporting of our financial results, as well as delays or the inability to meet our reporting obligations or to comply with SEC rules and regulations. Any of these could result in delisting actions by the Nasdaq Stock Market, investigation and sanctions by regulatory authorities, stockholder investigations and lawsuits, and could adversely affect our business and the trading price of our common stock.

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Our financial condition and results of operations could be further adversely affected by the ongoing coronavirus pandemic.

Any outbreaks of COVID-19 (including its variant strains, such as the highly transmissible Delta variant) or any other outbreak of contagious disease or adverse public health development, could have a further material and adverse effect on our business operations. For example, government public health officials may place additional restrictions to curb the spread of COVID-19, limiting patients' access to our services, and patients may elect to defer certain testing, each of which would impede our progress in returning to profitability and recovering from the earlier effects of the COVID-19 pandemic. Such adverse effects could also include diversion or prioritization of healthcare resources away from the conduct of genetic testing, disruptions or restrictions on the ability of laboratories to process our tests, and delays or difficulties in patients accessing our tests. In addition, failure to comply with current or future federal or state regulations requiring us to mandate full COVID-19 vaccination for our employees, with or without a regular testing alternative, could result in our losing access to government funding and being fined per violation.

As COVID-19 continues to affect individuals and businesses around the globe, we will likely experience further disruptions from time to time that could severely impact our business, including:

•decreased volume of testing as a result of disruptions to healthcare providers and limitations on the ability of providers to administer tests;

•disruptions or restrictions on the ability of our, our collaborators’, or our suppliers’ personnel to travel, and temporary closures of our facilities or the facilities of our collaborators or suppliers;

•limitations on employee resources that would otherwise be focused on the development of our products, processing our diagnostic tests, and the conduct of our clinical trials, including because of sickness of employees or their families or requirements imposed on employees to avoid contact with large groups of people; and

•delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or access.

In addition, the continued spread of COVID-19 globally could further adversely affect our manufacturing and supply chain. Parts of our direct and indirect supply chain are located overseas and both international and domestic components may continue to be subject to disruption as a result of COVID-19 and ongoing responses to it. If the supplies and components necessary to manufacture our products become unavailable or are disrupted as a result of COVID-19 and ongoing responses to it, then we may not be able to successfully perform our research or operate our business on a timely basis or at all. Additionally, our results of operations could be adversely affected to the extent ~~anticipated.~~that the continued spread of COVID-19 or any other public health emergency harms our business or the economy in general either domestically or in any other region in which we do business.

The extent to which COVID-19 continues to affect our operations and impede our recovery from the earlier effects of the COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration, spread and severity of COVID-19 outbreaks, the rate of vaccination and efficacy of approved vaccines against COVID-19 and its variant strains, actions taken to contain COVID-19 or treat its impact, new information that may emerge concerning the health effects of COVID-19, and how quickly and to what extent normal economic and operating conditions would resume if the pandemic subsided, any of which could have a further adverse effect on our business and financial condition.

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If we fail to retain our key personnel and hire, train and retain qualified employees and consultants, we may not be able to successfully continue our business.

Because of the specialized scientific nature of our business, we are highly dependent upon our ability to attract and retain qualified management, scientific and technical personnel. Competition and compensation for such personnel and other qualified personnel rose as employment vacancies surged during 2021, and job applicants are often seeking a more flexible work arrangement over the long term as a condition of employment. President Biden's administration is in the process of implementing a mandate requiring companies with 100 or more employees to require full COVID-19 vaccination or regular testing for COVID-19 as a condition of employment. The mandate could increase already elevated employment vacancies. In addition, ~~we have announced~~any future federal or state regulations that could require us to mandate full COVID-19 vaccinations for our employees, or any future decision on our part to voluntarily require our employees to receive a ~~change in~~COVID-19 vaccine, could impact our ~~fiscal year end from a fiscal year ending on~~ability to hire and retain employees. Loss of the ~~last day~~services of ~~June of each year~~or failure to ~~a calendar fiscal year ending on the last day of December each year, effective January 1, 2021, which will require certain modifications~~recruit additional key management, scientific and technical personnel and other qualified personnel who are necessary to operate our ~~systems used for accounting~~business would adversely affect our research and ~~management reporting. If the systems are not appropriately configured for the change in fiscal year-end it could~~development programs and molecular diagnostic business and may have a material adverse effect on our ~~results~~business as a whole. In addition, inflation arising from the recovery from the COVID-19 pandemic, led by supply constraints, federal stimulus funding, increases to household savings, and the sudden macroeconomic shift in activity levels arising from the loosening or removal of ~~operations~~many government restrictions and ~~financial condition.~~the broader availability of COVID-19 vaccines in the United States, has had, and may continue to have, an impact on the costs that we incur to attract and retain qualified personnel and may make it more difficult for us to attract and retain such personnel.

WeOur agreements with our employees generally provide for employment that can be terminated by either party without cause at any time, subject to specified notice requirements. Further, the non-competition provision that certain key employees are subject to ~~debt covenants that impose operating and financial restrictions on us and if we are~~may not ~~able to comply with them, it could have a material adverse impact on our operations and liquidity.~~

~~Covenants in the Amended Facility impose operating and financial restrictions on us. These restrictions may prohibit~~be enforceable under certain state or place limitations on, among other things, our ability to incur additional indebtedness, create certain types of liens, and complete mergers, consolidations, or change in control transactions. Under the Amended Facility, a change in control of the Company, which means that a shareholder or a group of shareholders is or becomes the beneficial owner, directly or indirectly, of more than 35% of the total voting power of the voting stock of the Company, would require mandatory prepayment of the outstanding debt. The Amended Facility may also prohibit or place limitations on our ability to sell assets, pay dividends or provide other distributions to shareholders. These restrictions could also limit our ability to take advantage of business opportunities.

We must maintain specified leverage and interest ratios measured as of the end of each applicable quarter as financial covenants in the Amended Facility. The Amended Facility, through Amendment No. 2 entered into on May 1, 2020, modified compliance with the leverage covenant and the interest coverage ratio covenant, which were waived through March 31, 2021, and added a minimum EBITDA covenant for the quarters ending December 31, 2020 and March 31, 2021. Based on the continued uncertainty regarding the impact of COVID-19 on our future operations, it is possible that we could be in violation of certain financial covenants contained in the Amended Facility within the modification period, which runs through June 30, 2021.

If we are unable to comply with the covenants and ratio in the Amended Facility, we may be in default under the agreement. A default would result in an increase in the rate of interest and limits on our ability to incur certain additional indebtedness and it could potentially cause the loan repayment to be accelerated, any of which could have a material adverse impact on our operations and liquidity.federal laws.

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 September 30, ~~2020.~~2021. 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. ~~The transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1.~~

No stock repurchases were made under our stock repurchase program during the three months ended September 30, ~~2020.~~2021.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

~~None.~~Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.


10.1			~~Executive Employment Agreement between the Registrant~~Amended and ~~Paul J. Diaz dated July 24, 2020.~~

10.2*			~~Performance-Based Restricted~~Restated 2012 Employee Stock ~~Unit Agreement between the Registrant~~ ~~and Paul J. Diaz dated~~ O c ~~tober 8, 2020.~~

~~10.3~~			~~Restricted Stock Unit Agreement between the~~ ~~Registrant and Paul J. Diaz dated August 13, 2020.~~

~~10.4~~			~~Performance-Based Non-Qualified Stock Option Agreement between the Registrant and Paul J. Diaz dated August 13, 2020.~~

~~10.5~~			~~Non-Qualified Stock Option Agreement between the Registrant and Paul J. Diaz dated August 13, 2020.~~

~~10.6~~			~~Form of Separation and Release~~ ~~Agreement between the Registrant and Paul J.~~ ~~Diaz.~~Purchase Plan+

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 September 30, ~~2020,~~2021 has been formatted in Inline XBRL.

			* The appendix to this exhibit has been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of the omitted appendix will be furnished to the SEC upon request.

(+) 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: November ~~9, 2020~~4, 2021	By:	/s/ Paul J. Diaz
		Paul J. Diaz
		President and Chief Executive Officer
		(Principal executive officer)



Date: November ~~9, 2020~~4, 2021	By:	/s/ R. Bryan Riggsbee
		R. Bryan Riggsbee
		~~Executive Vice President,~~ Chief Financial Officer
		(Principal financial and accounting officer)

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	Gross Carrying Amount		Accumulated Amortization		Net
At June 30, 2020:
Purchased licenses and technologies	$	815.6	$	(217.1)	$	598.5
Customer relationships	4.6		(4.2)		0.4
Trademarks	3.0		(1.4)		1.6
Total amortized intangible assets	823.2		(222.7)		600.5
In-process research and development	4.8		—		4.8
Total unamortized intangible assets	4.8		—		4.8
Total intangible assets	$	828.0	$	(222.7)	$	605.3


	Three months ended September 30,				$ Change		% of Total Revenue
(In millions)	2020		2019				2020		2019
Molecular diagnostic revenues:
Hereditary Cancer Testing	$	80.6	$	104.5	$	(23.9)	56	%	56	%
Prenatal	16.5		23.5		(7.0)		11	%	13	%
GeneSight	11.9		22.7		(10.8)		8	%	12	%
Vectra	9.1		11.0		(1.9)		6	%	6	%
myChoice CDx	7.8		1.3		6.5		5	%	1	%
Prolaris	6.4		6.5		(0.1)		4	%	3	%
EndoPredict	2.8		2.3		0.5		2	%	1	%
Other	0.6		0.2		0.4		—	%	—	%
Total molecular diagnostic revenue	135.7		172.0		(36.3)
Pharmaceutical and clinical service revenue	9.5		14.3		(4.8)		7	%	8	%
Total revenue	$	145.2	$	186.3	$	(41.1)	100	%	100	%