Myriad Genetics, Inc. (MYGN) Earnings Call Transcript & Summary

My name is Mike Ryskin. I'm on the Bank of America Life Science Tools and Diagnostics team. And I'm excited to welcome our next speaker. We're joined by Sam Raha, Chief Operating Officer of Myriad Genetics, and we're going to have a quick presentation from Sam. Thanks so much.

All right. Maybe I have a dual mic here. Hello, everyone. Happy to have the opportunity to provide you with an update on Myriad Genetics, our recent Q1 results as well as what lies ahead. First, for your enjoyment, the customary safe harbor statements. Let me start with an overview of Myriad. We are a leading molecular diagnostics company and a precision medicine company focused on oncology, prenatal health and mental health. We are a pioneering company with history of over 30 years of breast cancer diagnostics. We're deeply rooted in science and medicine with over 1,000 publications accounting. Last year, we served over 1.4 million patients by working with over 50,000 care providers. Now we've also delivered multiple consecutive quarters of strong revenue growth, including Q1, I'll get into that in a moment, while having industry-leading gross margins as well as a healthy balance sheet. Let me dive into Q1. We're off to a good start. Thanks to all the contributions from colleagues across Myriad. We posted strong results and are looking forward to the full year. Revenue in the quarter, we delivered 12% revenue growth, including 2% contribution from ASP improvement. For the full quarter, EBITDA, positive EBITDA adjusted of $4 million along with EPS or I should say, a loss of $0.01 per share, both of which are material improvements from first quarter of 2023, just as planned. Now looking to deliver on our business and financial objectives. We are making good progress on our strategic priorities for the year including the integration of assets we acquired from Intermountain Precision Genomics, including optimizing our focus on EMR integrations on the reorganization of our international operations that we announced last year -- last week, pardon me. And I will also tell you that we're seeing early wins from our -- from the market competitive dislocation though we expect really the impact of that to be in the second half of this year going into 2025. We're also excited here on the last column of the slide to be working on and launching a stream of new products in the coming quarters, more on that in a moment. And you might have also heard that recently, the FDA announced its ruling on LDTs, and we believe that we're well positioned to operate within that new framework. Now in order to deliver on our mission of increasing health and well-being for all and our objectives of sustained double-digit profitable growth. We're focused on 4 pillars, if you will, science and innovation, always keeping that in the forefront, utilizing technology to improve the efficiency and productivity of our operations, scalability and operating excellence when it comes to commercial, lab operations, all our supporting functions. And always at the heart of it is elevated customer experience and doing that digitally and by other means. And all of this, our pillars are focused -- excuse me, are informed by our deep understanding of what health care providers are most interested in. And you can see it here on this slide, there is no substitute for clinical utility and validity, having the right breadth of products, which is something we've been continuing to improve on, including the Intermountain Precision Genomics recent acquisition, turnaround time supported by our labs of the future initiative, ease-of-use from learning about our products, ordering through getting testing reports. Now we're excited about serving these health care providers and actually the overall markets that we're participating in and based on a strong portfolio of products that we bring. The key takeaway from this slide is that we are playing in attractive sizable markets, which have good growth and we have an opportunity not only to grow with the market, but to really accelerate growth and grow into some of these spaces. I'll note that in 3 of these 8 segments, we are actually the market leader and another 3 were within top 3. And the opportunity for growth and our double-digit profitable growth is enabled by these attractive markets that we're serving. I want to take the next several slides and go just a little bit deeper on oncology. Now cornerstone of our portfolio hereditary cancer testing, in particular a product called myRisk. Now along with the volume growth that you see on this slide, we've had very strong revenue growth, multiple consecutive quarters and in fact, 16% revenue growth in the quarter for registry cancer testing. We attribute that to a combination of the reputation that we have in the market, being a leader along with the focus for our sales team getting ever better and delivering the messaging on our differentiation. We're also starting to see some early market dislocation, all of which present us with an opportunity for continued growth. I'll tell you that we believe hereditary cancer is the cornerstone and though it's a mature market. There's a lot of opportunity ahead for growth. What you see on this slide are the 2 subsegments forestry cancer testing on the left-hand side, the unaffected market, right hand the affected market. Just if you look at the unaffected side alone, there are more than 50 million women that qualify based on guidelines for hereditary cancer testing and there's a significant percentage of those women that are not getting tested today. We are seeking out through our analytics and better identifying who those women are and finding ways to serve those women. Part of how we're reaching this new subsegment, if you will, underserved segment is looking at where is imaging done today? And this includes a major imaging centers such as WellPoint and SimonMed. And these are partnerships that we've established to have better access and to serve patients where they are. The takeaway from the slide is this continues to be a market, where we see a robust growth opportunity for quarters and years to come. Now our myRisk test is differentiated in a number of ways. One thing I want to talk about is risk score. Core to our focus as a company is increasing access to genetic-based tests. Risk score is actually a polygenic risk score. It's the only one of its kind for breast cancer that was developed and validated to -- with multiple accessories in mind. And by leveraging this better diagnosis, prognosis and diagnosis of individuals who should be screened and should have follow-on, on treatments because based on their familiar history. This is both a competitive differentiator for us at Myriad as well as a way that we're really expanding access to genetic-based diagnostics for a broad set of population. I want to talk now about our excitement for a number of new products that are on the horizon. First, in oncology. Through the acquisition of Intermountain Precision Genomics as we are now offering a Precise Tumor. This is a comprehensive genomic filing assay that helps doctors in therapy selection based on more than 520 genes that are assay. This is something now fully within our control now. We've already improved the turnaround time for what was in more than 50% of the case more than 21 days down to 90% of the time within 14 days. Early next year, in the first half, we're looking to building on Precise Tumor and bringing Precise Liquid to market. This is a similar test in terms of content but starts with blood. And increasingly, as you know, there's a trend where oncologists are -- when tumor -- when tissue is not available and even in the instances where patients are better served, they're starting with blood in a more noninvasive way. This is becoming a popular path. We're excited about that. Then let me talk about Precise MRD. We're very excited about this -- the product that's under development. At the core of our product is a differentiation based on sensitivity. We use a whole genome sequence based approach for tumor selection and follow it up with a smaller subset of targets that we look at for the ongoing monitoring. The sensitivity of our assay is shown to be 10x more sensitive than many of the commonly available MRD tests that are on the market that are ahead of us. And this is important because for many cancers, they're low shedding. That means there's a very small amount of nucleic acids available in the circulating blood. You think about breast, you think about bladder, about prostate and other cancers. And we believe that there will be a medical need and medical opportunity to differentiate. We are making progress. We announced last year a number of collaborations with MD Anderson, with Memorial Sloan Kettering, recently, a large collaboration to work on a cohort of 1,000-plus patients throughout 12 cancers with a Japanese collaborator. We're looking forward to sharing some results coming up at ASCO in a few weeks and then starting pharma partnership work within this year. We will have an early product in the first phase available at the end of 2025, the broader commercial launch in 2026. Now transitioning to the right-hand side of the slide, we're also excited about women's health. Our expanded carrier screening product first -- foresight, pardon me. We are anticipating the ACOG guideline update. We're ready for that. And we have a product which will expand from 176 to more than 250 genes, which will address all the newly updated ACOG genes that are coming out. We're looking to launch that within the next quarter. First gene is going to be a novel and differentiated assay, which will bring together both NIPS, noninvasive prenatal screening with expanded care screening to really add value to the provider to the patient. In many cases, the father isn't available as well as improved economics for us to drive both access and better margin. Really quickly, again, the FDA announced just a couple of weeks ago, updated regulation, the new rule related to LDTs. What I'd tell you is we are very well positioned based on deep experience with the FDA. We have 2 on-market FDA-approved tests. We have a strong quality management system, experience with our regulatory and quality organizations. And every single test that we have on market is CAP/CLIA and New York State approved. And it's not without work that lies ahead, and it's early days. But we believe we're very well positioned to serve the market and differentiate it from many labs based on the experience and capabilities that we have here. A quick recap of first quarter. As you've heard me say, 12% revenue growth, while at the same time decreasing our operating expenses in a deliberate fashion by 4%. Based on the strong results in Q1, we have recently reiterated our guidance for year, as you can see, $820 to $850 million on the revenue side, which is 9% to 11% growth, while at the same time, in a very disciplined fashion, growing our operating expenses at half -- about half that rate for the full year, delivering adjusted positive EBITDA as well as adjusted positive EPS. To summarize, for Myriad Genetics, we are very excited about the road ahead. We feel like we're serving attractive markets that have a profile of growth as well as opportunity based on our products for us to serve. We have new products, which will allow us to not only participate but to take share, enter into new areas. And based on the combination of our experience, of our portfolio and our focus on disciplined execution. We look forward to our journey and being a $1 billion revenue company in 2026, while delivering adjusted profitability EBITDA and cash flow starting at the end of this year. Thank you very much.