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MYGN Myriad Genetics

Participants
Scott Gleason Vice President-Investor Relations
Bryan Riggsbee Interim President and Chief Executive Officer
Westley Dupray SVB Leerink
Ivy Ma Bank of America
Call transcript
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Operator

Greetings, and welcome to the Myriad Genetics Third Quarter 2020 Financial Earnings Call.

During the presentation, all participants will be in a listen-only mode and afterwards, we will conduct a question-and-answer session. [Operator Instructions] This conference is being recorded today, Thursday, May 5, 2020.

And now, I would like to turn the conference over to Scott Gleason. Please go ahead.

Scott Gleason

Scott. Thanks, welcome Genetics and earnings quarter the call. to afternoon, third Myriad XXXX Good

we financial session. review today; the will During call, the we host after will results the question-and-answer which, released we

review If had can found our you’ve on earnings at a to be myriad.com. not website release, our chance it quarterly

and and will Scott Riggsbee, be I'm Relations Interim Senior Chief presenting and Chief President Vice Strategy Gleason, Officer Financial Bryan Officer. with Investor Executive of Corporate me today

at heard website. This will via live a call myriad.com Investors our recording archived at of be the in can be webcast Section

pertained In Section addition, there to which call is today’s website, our X-K. call a we Investors slide the Form following the presentation on on in filed earnings of

or financial results statements the materially current other events from or Please on of are actual performance future events forward-looking or may variety of presented note that, some projections the regarding future of Company. and reasons. the management’s information these based a differ These the expectations expectations statements for adversely contain today and may

identify XX-Q materially actual on X-K. and Form statements. the you important in Form forward-looking and cause those Form its Securities time our from could risk contained results These current time that to the from refer Company documents reports filed documents factors the We Commission, differ quarterly on its annual report with specifically reports XX-K, Company’s on Exchange the the to projections to or

to the turn over to Bryan. pleased call I’m that, With

Bryan Riggsbee

beginning to associated test our volumes $X.XX. earnings impact significant results portfolio across impacted Thank the $XXX quarter, in coronavirus has and per the approximately of million call. by $X.XX. share loss led the you Myriad reported were by the global million in by reduced for everyone our an with joining revenue negatively We of pandemic today’s XX% between XX% reductions which pandemic, These on total In and COVID-XX mid-March to saw $XX with third adjusted fiscal of top-line business

testing reductions greatest have in for the in seen saw demand testing deferred be impacted. can non-elective even oncology we volume, that Test negatively as but such areas

While on extremely steps our and dedication and ensure our has of maintaining the to I'm continuity. significant, our been appropriate of the the employees team are safety focused impact their business to proud business customers, our on we mission. while taking

third discuss see I we an prenatal were the organization, volumes for believe prior testing were as mid-March to steps is strong despite I highlight with Before growth important trending taken seasonality. have sequential GeneSight We typical pace and quarter exceptionally to to products on our well. it that Vectra,

X% quarter, XX through up volumes XX%. were Vectra of volumes and up first were the weeks volumes were the up sequentially impressive GeneSight prenatal an testing XX%

cancer business our the forecast short, hereditary prior the Additionally, to was well trending the In a crisis. exceptionally volume performing business above on was basis.

company actions the necessary respond safety our coronavirus to now customers, discuss to as information taken guide would vital employees like on a the which care. pandemic, the I while to of have to patient we deliver continuing are to and focused

including tools offices mid-March, virtual in selling text, personnel zoom, remotely from First, converted beginning sales and selling we in field physician to phone emails. all via

I and Beyond this the leading was created am physician many procedures. limitations Obviously, many teams of how sales patients interact the shelter-in-place marketing elective the resulted of to of our this further our to market the closure physicians, that changes, proud process in have by internal responded and orders offices to challenge. selling ability impact canceling in impacted significant but

post-pandemic continue implemented in of which have virtual mobile the we virtual of direct-to-patient programs, initiatives, shipments will number a new and meeting learning services. including world videos, some kit We phlebotomy

conditions. our substantial and sales when period teams demand normal healthcare to this to prepared training of advantage best patient return taken provider to more have also are undergo ensure We to respond

ensure to We guidelines. operations of The local compliance have also and lab laboratory policies CDC we continuity in our in implemented across implemented with have a number are product of lines. all initiatives

steps to apart, shield requiring of as shift who allowing facility site stay taken such are personnel the and work also X have protect implementing and and lab We face employees use home. risk additional to increase protective not personnel necessary large for feet isolation decontamination to to in cleaning scale exposure, mitigate on from

sufficient our ensure We also chains have to products. any of shortfalls reviewed not identified and supply all for have we laboratory potential any materials

cash navigate preserve our from cash. and we through taking period Finally, to perspective, a we our this steps ensure cost are burn we lower as

amendment cash amended our XXXX. equivalents. our have $XXX in we through $XXX year credit and million period and have cash facility million currently First, credit fiscal our drawn facility certain million the We running with on on covenants modify to $XXX facility

directly have expenses based on worked our a volume. to We reduction this tied minimize ways our crisis losses. during as policies lower on mileage marketing, mitigate as costs financial meaningful to commissions, We finding to diligently in travel expenses in anticipate and well sales changes

hours demand. furloughs areas operations, reduced employees a initiated for on have lab customer sample we and in lower and of as based Additionally, temporary service such billing, number

temporary for executives of and implemented senior Board we Furthermore, pay have the cuts Directors.

of matching XXX-K $XX reduce relative plans. of to sold We anticipated The our run impact rate. is under these all also by quarter the total have approximately including expenses, net to operating Company's our temporarily goods programs million, cost third contributions suspended

and and CLIA community, Finally, United Myriad our testing States. process broader labs is the at the for PCR-based FDA our authorization the viral validating of in to use emergency getting serology the testing for across COVID-XX part do from

demand to evaluate of costs an will distancing to reductions This comes consideration All was quick an mitigate social to the recovery. when as as future we a begin also financial ensure of losses, period changes end. allow to important Company our these normalize the sample recover but quickly trends

positive position within improved as developments of trends virtual number marketing our Additionally, and quarter, when for we models. call, to structural business the business will discuss Later longer-term the revenue healthcare profitability returns for which in direct-to-patient opportunities which efficiencies are evaluating changes normalized models, longer-term to testing and environment. could telemedicine, a such I in a lead delivery in us

for With quarter. to the turn to pleased Scott financial I'm our to call trends that, over the discuss

Scott Gleason

information pleased on I'm our Brian. more to trends and Thanks, outlook. financial provide

revenue $XXX.X cancer last the $XX.X quarter of year. in Hereditary million million in fiscal third quarter versus the was

at declined the a revenue by growth, XX% X% volumes of and test components basis. were on declined pricing year-over-year Looking

Prior of on we to pair the quarters, the were onset basis. coding a the to Pricing of social growing our single-digits quarter year-over-year a in in mid recently in year-over-year basis. the policies distancing negotiated test cancer attributable PAMA the impact contracts previous were hereditary changes, discussed volumes and on natural declines in March,

a hereditary impact as price. that an tied that adjustments negatively addition, large number internal claims average paid In payer us Part issues. to national cancer business of this have this selling attitude not due system quarter of the was we negative a significant on has for to

preauthorization The which payer is working the all claims, to have from diligently payer. of process the

to ageing we're amounts, into recognition forced actual the old revenue given However, until of move collection. cash

amounts will QX. As XXth, recognized we portion of in April have owed, a the which already be collected of

GeneSight last on versus million million fiscal to revenue year. third quarter XX.X quarter in was of the Moving XX.X the in

test Looking year-over-year. volumes by at of XX% declined the components growth,

volume test have volumes Importantly, track with quarter strongest mid-March. X% year fiscal GeneSight through sequentially up our we're to this on

increased favorable cash requirements collections. co-pay for for new subsequently resets by period year fiscal higher prices selling our out average to Healthcare was improved we continued year-over-year, educate and physicians started as that adjustments United and did GeneSight, preauthorization resulted payments. X% This of perspective, efforts pricing a and the offset From deductible we see on in have patient

year. impact impact of in despite revenue last distancing fiscal sequentially. flat in XX.X Pricing the to for policies quarter Impressively, from benefit quarter policies our on was grew programs, flat fiscal social basis prior quarter. our were of and continued million QX. XX% was XX.X in transition third late the were the directly due of a management Prenatal rectified in authorization the the to changes and third declined quarter million the ASP in billing that test these with laboratory volumes products compared XX% in quarter year-over-year largely the use

XX.X third on X% were distancing X% year-over-year and to prior million the implemented. quarter XX% volumes a in prior was by Vectra's but basis. last revenue Vectra growing declined pricing policies were being year-over-year Vectra in basis XX.X sequential a the quarter to same year. quarter declined on versus up million mid-March, social

the year-over-year; and however, X% X.X their million in was of increasingly million to increased primarily Prolaris patients. XX% more declined was the frequently quarter quarter revenue X.X by by compared volume pricing due using third last higher risk changes in test year. position mix Prolaris to

in fiscal quarter which international volume third both were X.X We million drove same year. in versus in test EndoPredict saw period X.X markets, revenue. U.S. and increases in and last the revenue increased the the revenues million

quarter third services clinical versus with the revenue million business of fiscal in with associated and XX.X XX.X XXXX. Lastly, million our pharmaceutical

to This quarter, X expense million we German and have did offsetting clinic. revenue approximately tied

also revenues expect the we reserve a hereditary have we reserve recorded GeneSight million predominantly related impact quarter. the and global the on the of X.X from pandemic on our in impacted impact as a of to ability This will unemployment accounts rate negative collect to patients. approximately This receivable, quarter, patient third cancer prenatal

third our volumes changes. impacts business and lower costs compared impacts to in of like Coronavirus XX.X% absorption cancer now quarter. the pricing the due impacted were margins quarter for from in period quarter. of year-over-year lower year. fixed Adjusted test the and would margins hereditary were gross The detrimentally last I gross our of Adjusted by the to to late XX.X% discuss financial out the metrics

to million for million share last quarter earnings $X.XX that loss expense third year. XXX.X and year. was XX.X the quarter research of last compared to third million this of compared exists fiscal Adjusted was quarter. in XX.X development were expense a million XXX.X SG&A Adjusted the Adjusted per

in ended cash outstanding and quarter, our with credit facility million equivalents. on cash This XXX XXX we and million

Our gross cash brought which $XX position in proceeds. clinics the sale in million of benefited from

us million to associated a with was million assets in-process reassess quarter pursue an no R&D and capitalization $XX.X write-down charge write-down $XX.X longer her market FDA associated was in the of of subsequent the we tied by of primarily goodwill decision resulted this charges. the acquisition, product. to our impairment of charge to value The of with which on intangible acquisition and given precipitated the Sividon Crescendo for the tied certain in required our impairment the Finally, recorded $XX.X approval the was to million. sheet reduction balance impairment a

guidance policies, financial XXXX year some remainder decided and provide for the fiscal we have the of duration business provide quarter now we potential in and to on social of wanted not XXXX. fiscal coronavirus the COVID-XX due year pandemic fiscal the uncertainty commentary fourth the to the of on the in and to our impact While distancing

in testing seeing we elective market. a impact a most distancing hereditary policies social to volume the due announced areas care significant from volume occurred preventative perspective, First, such are as testing test cancer in with the currently in impact

We have seen tests down volumes for elective cancer, XX%. XX% as GeneSight hereditary Vectra and approximately such our most to

and Physicians with Cancer EndoPredict down products to emergencies. is volume as testing only offices to closed. and tests typically clinically the and Prolaris, patients CDx currently taking gatekeepers are are MyChoice XX% for focused physician are our such prenatal our many XX% XX% They XX%. down medical

Additionally, impacted in volume the inability perform marketing physician has test clearly office to trends.

Bryan previously XXXX we of quarter rates virus $XX have cost help relative million will approximately As reductions, identified chronic in mitigate impact of that third expense the stated, the financial run to our pandemic. to

remain year extend whether costs distancing XXXX, policies in Some these of the reductions year. next fiscal depending social fiscal into could on prevalent

business. longer-term assessing business structural In make impacts of addition, the practices potential we our to changing our on changes to are ability

part help As anticipated payments fiscal non-refundable the government cash fourth claims. the anticipated mitigate received in CARES fiscal million the and quarter stimulus in have fourth the Medicare $XX in will $X Act, from future accelerated of cash for against our the Combined these we also in burn million quarter.

to distancing expect If in an the restrictions distancing fiscal current trends. is improve social of test quarter, would volume test have of are prior an are the XXXX. unknown extended to eased in social lead we period relaxed, revenue will What to associated recovery this is year see whether and guidelines the end When volumes. we

as distancing in effects the to anticipate the elective the social procedures some short-term. go lingering we afraid doctor for coronavirus may be Additionally, patients from following to

fully Consequently, normalize expect we some as recovery quietly to trend. time work, it may back to people to while the demand return take get

a a ultimately While our well-positioned scale due could pending that within profitability clearly industry our given personalized balance, event. impact pandemic, of seeing a strong is transient will to business improve profile. global drastic believe we're further We our be given on medicine, and the Myriad the this business catalysts number

highlights turn quarter. of With the to that, call I'll discuss over back Bryan the some from the key

Bryan Riggsbee

Scott. Thanks

quarter, the to business highlights like the discuss GeneSight. would some I key with our beginning in on Now of progress

the been a global believe been the LCDs, near-term has pandemic We GeneSight, delayed to continue issued LCD we of the but based process final upon Medicare. by to anticipate due in have the on which volume

new third based pre-pandemic the reminder, based our add our test existing In expansion million we with test upon volume, As of test sales reimbursed. into an team quarter, a for care plans of LCD incremental cases $X upon quarterly we volumes began in rates high our a higher initiating including in believe select plans would expansion GeneSight of direct-to-consumer primary approximately the revenue our this markets and percentage getting making reimbursement. channel,

surrounding conditions to the planned to of have elective dramatically lower return to have have slowed also the and them this GeneSight, in which programs, With more year market GeneSight, meta-analysis we testing, our plans begin such revenue published to X,XXX recently current and again exceptionally GeneSight patients. with covering fiscal our studies normalized pandemic for four studies Due major opportunity it a conditions level. optimistic on impact remain of ramp multiple we as when can demand once clinical positive XXXX. rollout these We

our payers combined clinical expressed part with expanding analysis this our as of and GeneSight interest precision Across GeneSight XX% of rates, with on datasets. recent by dossier were highly improvement care patients rates, and who medicine a publications improvement significant. average, in the have received supporting response XX% statistically symptoms XX% Many guided HAM-DX in reemission benefits the which data a the our in of when patient in of all populations, improvement clinical

saw therapy. and multimodality men, We increased can patients XXX saw will morbidity the predict with treatment. additional statistically of therapy to in advancements of the demonstrating intermediate metastasis to with In at when above which our significant in Prolaris were quarter this and data threshold, ASCO respond significant safely February, ability who the GU the patients presentation following Cancer high-risk some multimodality also Symposium of reduction the a which cancer study associated Prolaris avoid patients the risk receiving unfavorable

market. these and across Network updated their making standard ratio for even the Based datasets metastases in hazard risk expansive Prolaris guidelines Cancer as upon was patients into and any others, the was the the Comprehensive impact guidelines National professional on to Prolaris taking account after of significant, pathological major or all more this our predicting include for than highly features. categories statistically tests X.XX

will for be patients. Prolaris as We coverage a unfavorable intermediate believe high both of Medicare the NCCN evaluates recommendation in and influential revision risk

based new higher cancer in As rate the a Prolaris, reminder, risk upon run for revenue our mix for for coverage in expanded moved would result prognostic the to and Prolaris as has testing almost million and pre-pandemic test annual biomarkers prostate patients. for indications volume $XX Medicare incremental increasingly

advancements programs We this CDx also with companion saw progress diagnostic significant myChoice significant including quarter, with product. our our

our supplementary companion significant one cancer several these discussions, may PMA partners. of pharma myChoice with First, in believe line at a diagnostic we with are of a first probability CDx upon in the there's CDx discussions ovarian we in regarding currently receive submission status for least indication. the setting our FDA myChoice Based

meaningful patients increase recent cost testing believe that Coupled older the become potentially CDx that inhibitor line in for fourth for a of CDx criteria in may label with expands who FDA required are seeing a we myChoice the changed setting, patients myChoice the PARP be revenue. on my to we eligible versus to

first in approvals, run approval, growth of this $XX couldn't for for line have as and rate exceeded a number where quarter product. FDA future believe lead into cancer first time This ongoing including and and further such expansion a US the discussions additional myChoice basis regulatory international catalysts ovarian to and million recent CDx breasts cancer, we indications revenue we on cancer and pancreatic

This in quarter, quarter. FDA XX% indication. launch with volumes BRACAnalysis third by the we recent we conjunction upon this cancer launched fiscal pancreatic saw in our in sequentially CDx pancreatic cancer the Based in approval increased over

to CDx approval the companion could for FDA of data year the this fiscal to breast cancer Olympiad CDx in a continue prostate a Study being which in from the pathway in cancer. anticipate HERX-adjuvant We BRACAnalysis diagnostic expect provide and BRACAnalysis near-term, end by

would with patients States. cancer majority for testing the of indication opportunities This provide United breast the in

progress self-funded also continue contracting. with make to employer We

This brokerage coverage. on we notice discussions quarter, with pharmacy insurance initiated in began with major $XX X consulting discussions strategic employers firms negotiations lives GeneSight new million no benefit X engaged major We managers. with additional with and coverage under X

growth rates strong saw first with In strongest sequential acquisition. the testing quarter the branded prenatal plan for amplify In call in XX% of trends volumes array-based the have for to volume the we in marketing which X ability business, half growth begin X% the the unique sequential fiscal quarter, we 'XX, rate to year since technology, third Prequel in to X,XXX our up no fiscal in competitors. our of provides versus

of We prenatal non-invasive screening be believe technology will this point the competitive market. a significant differentiation within

Next our we accurate be for fiscal our will we utilizes will the from believe new hereditary launch Prequel we which in year, what cancer derive that experience technological technology, micro-deletion most testing. also technology

we pandemic, while strong our in emerge leadership precision the significant position as in company, a face challenge ready responded global conclusion, headwinds and medicine. from financial diagnostics coronavirus to In molecular will position we continue to a currently this and have in

pursuing on units, appropriate revenue across driving focused optimizing cash and growth our for maximizing reimbursement new products. remain collections We business our and

lead business XXXX. We fiscal potential have emerging, profitability to which revenue also improved into as transition of trends year could and catalyst a number we

call back Q&A to With over for Scott our that, I'm turn pleased to the session.

Scott Gleason

Thanks Brian.

non-GAAP and financial be call As A non-GAAP of certain Relations of the financial a results a to under the during reconciliation's our the website. Investor guidance section non-GAAP results financial financial of GAAP GAAP found measures. use today's reminder, reconciliation we and can

broad ready to Q&A Q&A Q&A ask follow-up. in to participants session, for portion are please only the begin the call. one In we're session. now one ensure to our asking and question we order participation we're Operator, Now, of

Operator

Thank from have SVB Puneet we Souda with ahead. you. [Operator a question go Please do Instructions] And Leerink.

Westley Dupray

Good that for coronavirus segments Hey, I afternoon. our This guys. Counsyl. the you here. other Thanks on here I to Puneet. as the business. of appreciate as actually want Westley taking questions is are bad experienced from for on start headwinds

provide the business wondering, expected of takes of for kind when the and itself on come? recovery does you and any the puts if the could that back Just bounce commentary

Bryan Riggsbee

in we guidance like. obviously Westley. Yes, terms the talking expect give forward to Sure. about we think, look recovery I Thanks, didn't what of

thing call as current in think of relative that that sequential well, at terms with the some extremely a business acquisition, volumes is noted would our commentary strongest we've highlight had our our last with flat terms the of I to growth was the being think Counsyl I the were and the the of challenges fact of on lot feel I that around made business billing we conversion. we I for with that in ASP of time seen progress like the quarter pleased the the the we've for QX, that the

think commentary more that business, terms seen I I we've think did good feel of less the about highlight have seen business prenatal from in that's the but really we've the that business. on fact we that's the I COVID that update elective think an than our overall, of So, for we business, the of some we an about on of impact would areas

Westley Dupray

some on And you know then capacity up. COVID. sticking testing I follow-up a is that just mentioned ramping as

have maybe any that on can any color provide wondering, that what inclinations and potential impact you of anthropology kind be testing if of on will molecular forward? volumes moving for Just both sort run that could

Bryan Riggsbee

relative guess and the of point, an would this to to part the anticipate we in volume. prepared at provide for last what I we terms of question, update Yes, what

getting on we're and we're in the focused or etcetera. perspective now understanding would think how at we validating lab, where would technology, a from right terms process just I is into which and the technology the of also that commercial we handle sample how in collection, very deploy

process. that's in we're think the -- we which I point So, the at are

US that I in terms to front. that the make the too a capacity, CLIA on early I think But call, as probably as we it said and day it's hard an characterization sincerely on believe the up have of a lab to every to obligation in testing support do. this we what that's the we're bring available working to and broader make effort

Operator

question America. of [Operator Derik we have Bruin from instructions] a And ahead. Bank Please De with do go

Ivy Ma

today. This is Ivy Ma for Derik

volume associated asymptomatic employment significant question beyond a just a visits with mentioned and during fewer So financial the so crisis, rates, the given COVID on declines lower you OB-GYN testing.

well how Thank flow So, the rates FYXX? through wonder what's your thought unemployment to you. on height

Bryan Riggsbee

an terms the well terms Yes, we've that seen procurement has I as of payment the services think as by of -- the patient. both of obviously in impact in where it the

then on in based respect we record the call said on higher current with might period for the impact reserve a we to did rate. in a demand. see earlier, an of expectation we As significantly terms on unemployment how, what And

forward in with I to respect COVID any think also sample rate, recovery do. point, any both at impact we're how this might demand, not but commentary, providing the might terms that of unemployment what from what

Scott Gleason

to thing defensive one grew add experience, had industry. the with the tend XXXX we sector, you broader be depression think company through, at of I and hardship looked XXXX, to volume, that going is if I its the financial extended pretty period, a through great period Myriad so the relative a would the last actually Yes, that just to

have And kind consumers industry. some so, demand with typically don't across of on seen you large changes see having you testing see, usually we financial increased while the patients, would impacts

Ivy Ma

follow-up GeneSight just directionally. to you one unemployment coming Do And less rate and related your just compared I color. or maybe on, Vectra business? the more risk for here oncology Thank not from know are expect specifically, at you. Thanks you

Bryan Riggsbee

any them mean, differently. Yes, I I would know don't I characterize that

some within portfolio made that tests elective. we respect are commentary with our that, more to think I

patient. of the to Vectra I in case fact respect and so, be tend an we've immunocompromised Vectra, dealing think elective. they is that more seen with you're what And GeneSight the to with just And

so characterize but an more I the But them I be obviously, to probably fact some and standpoint, to their think physicians. unemployment hesitancy from from they any elective. tend more would to don't there's go that see differently So

Yes.

out the I isolation across depression think the one seen country. also, folks a the of important significant results it's faces extended have many of that have pretty in to the point that, of unfortunate here that, increase of we rates period

roll a You out this tied thought significant morning depression. program CVS to

think back do more we're we get think a looking normalized ways is testing partner environment, that because important around we to as going And part very a the be at with of to do folks solution. I so, to GeneSight

look so, some I that when think trends And positive actually at you task recent relative conditions to could lead demand. to

Operator

[Operator Instructions]

Bryan Riggsbee

have Operator, questions? further do we any

Operator

I'll one Oh, the turn back to moment. call you.

Bryan Riggsbee

joining thank concludes This again. Well, A week. want our on for to via available replay our I will everybody today. for Thanks one website us earnings call. webcast be

Operator

call the concludes for We lines. ask you that participation and today. thank please you disconnect your your That for