Ladies and gentlemen, thank you for standing by. Welcome to the Myriad Genetics Third Quarter 2015 Financial Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, May 5, 2015. I would now like to turn the conference over to Scott Gleason, VP of Investor Relations. Please go ahead, sir.

Thanks, Jody. Good afternoon, everyone, and welcome to the Myriad Genetics third quarter earnings call. My name is Scott Gleason, I am VP of Investor Relations. During the call, we will review the financial results we released today after which, we will host a question-and-answer session. If you have not had chance to review the earnings release, it can be found in the Investor Relations section of our website at myriad.com. Presenting for Myriad today will be Pete Meldrum, President and Chief Executive Officer; Mark Capone, President, Myriad Genetics Laboratories; and Bryan Riggsbee, Chief Financial Officer. This call can be heard live via a webcast at myriad.com. The call is being recorded and will be archived in the Investor section of our website. Please note that some of the information presented today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual report on Form 10-K, it's quarterly report on Form 10-Q and its current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. With that, I'll now turn the call over to Pete.

Thank you, Scott. To begin the call, I'm pleased to provide highlights of our third quarter financial results. Total revenue for the third fiscal quarter was $180 million and was within our guidance range. Revenue in the quarter was impacted by severe weather on the East Coast which occurred for much of the months of January and February. Our adjusted earnings per share was $0.40 for the third quarter, which exceeded the first call consensus estimate. As we look to the remainder of the fiscal year, we are forecasting fiscal fourth quarter revenues of $187 million to $189 million and adjusted earnings per share of $0.40 to $0.42. We continue to execute on our 3 strategic initiatives of converting and expanding our core Hereditary Cancer market, diversifying our product portfolio and expanding our business internationally. Today, I will focus primarily on our international business and the rheumatoid arthritis business at Crescendo Bioscience. And then I will turn the call over to Mark to provide an update on our Hereditary Cancer business and our other pipeline products. Many of you have noticed that we have been carrying restricted cash on our balance sheet for the past 2 quarters. This restricted cash was associated with a pending strategic purchase of an asset in Germany that was completed during the third quarter thus removing the restricted cash from the balance sheet. The asset acquired was an MVZ clinic located near Munich approximately 15 miles from Myriad's main European laboratory. The primary reason for this acquisition is the clinic's status as an MVZ organization which will greatly facilitate reimbursement of our products and our penetration into the German market. Owning an MVZ is important to our marketing strategy in Germany since it will enable Myriad to have direct reimbursement negotiations with public and private…

Thanks, Pete. The entire Myriad team appreciates your outstanding leadership and vision over the past 2 decades, and we are committed to continue as the pioneer in personalized medicine. I am pleased to provide a more in-depth look at our operational performance in the third quarter. First, I would like to provide an update on our core Hereditary Cancer business followed by an update on our myRisk conversion progress. And finally, provide some additional detail around our pipeline opportunities. Total Hereditary Cancer revenue in the third quarter was $159 million, which was consistent with our expectations for the quarter. The third quarter typically faces headwinds from the reset of deductibles, which have become more pronounced since over 40% of patients have transitioned into high deductible plans. In addition, severe weather in the areas of the country that account for a large percentage of our revenue had a detrimental impact during the quarter which we estimate to be approximately $4 million. As expected, these headwinds differentially impact the preventive care segment which is a more elective market than the Oncology market. Based upon our in-depth analysis of ordering physicians, we saw no discernible sequential market losses during the quarter. Therefore, we believe that the Hereditary Cancer revenues this quarter reflecting underlying market performance. Importantly, our market share in the community physicians segment responsible for all of the market growth exceeds 95%. Additionally, the sample trends we saw in March and April point towards sequential growth in the fourth quarter in our Hereditary Cancer business, consistent with historical trends. This quarter, we were pleased to see a 3% sequential growth in our Oncology segment. This segment now includes the BRACAnalysis CDx product that was launched in January. We have seen significant interest by physicians who desired the highest quality FDA approved test…

Thanks, Mark. I am pleased to provide an overview of our financial results for the third quarter followed by a detailed look at our updated fiscal year 2015 financial guidance. Third quarter total revenue was $180 million compared to $182.9 million in the same period in the prior year, a decline of 1.6% year-over-year. This quarter, we also saw a significant impact from the sustained severe weather conditions experienced by much of the East Coast through the months of January and February. We estimate that the negative impact from weather this quarter was approximately $4 million from a revenue perspective and $0.03 on the bottom line. Gross margins for the quarter were 79.8% compared to 85.5% during the same quarter last year. On a sequential basis, we saw 30 basis points of gross margin improvement as we gain further operating efficiencies and executed upon our myRisk conversion strategy. Moving onto our operating expenses. Research and development expenses were $16.7 million in the fiscal third quarter, an increase of 25% relative to the third quarter of last year. Our third quarter R&D expense increased, resulted primarily from the full impact of the Crescendo acquisition and will continue to fluctuate on a quarter-to-quarter basis based upon the timing of clinical trials and receipt of research samples. GAAP SG&A expense this quarter was $91.3 million, an increase of 4.2% relative to last year. The increases in SG&A this quarter are attributable primarily to increased operating expenses resulting from the Crescendo acquisition as well as one-time executive transition cost incurred in the quarter. Adjusted net income was $29.3 million and adjusted earnings per share were $0.40 for the third quarter. The year-over-year decline in adjusted earnings per share is primarily due to dilution from the Crescendo acquisition, lower gross margins due to the transition…

Thanks, Bryan. As a reminder, during today's call, we use certain non-GAAP financial measures. A reconciliation of GAAP financial measures to non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial guidance can be found under the Investor section -- Relations section of our website. Now we are ready to begin the Q&A session. In order to ensure broad participation in today's Q&A session, we are asking participants to please ask only 1 question. Operator, we are now ready for the Q&A portion of our call.

[Operator Instructions] Our first question comes from the line of Amanda Murphy with William Blair. Amanda Murphy - William Blair & Company L.L.C., Research Division: I just had a question on the guidance. I think a guide down, to some degree, was anticipated given your comments on Prolaris. But I'm just curious, there's a lot obviously going on in the Hereditary Cancer business. And it seems like you know we're kind of looking now at a pure -- at that purely in the next quarter here and you had, I think, myRisk revenue maybe ticked down a bit despite the increase in penetration rate offset by your comments on the CDx product. I just want to get a sense a little bit more of what's going on. Can you talk a bit about the revenue on Myriad's side? What kind of gives you confidence that the Hereditary Cancer business is now stable? If not, sequentially up to your point going forward, just given that we've seen a few scattered [ph] reductions here.

Thank you, Amanda. Let me recap the guidance change, and then I'll ask Mark to talk a little bit more about myRisk. As we mentioned on the call, in addition to the weather impact we saw this quarter and a greater utilization of high deductible plans, we did decide to revise our guidance for the fiscal 2015 year based on a number of other factors, primarily, the delay in recognizing Prolaris revenue until the first quarter of next year and the slower ramp-up in international reimbursement for EndoPredict. But as we mentioned on the call, we are anticipating growth in the Hereditary Cancer market in the fourth quarter and that certainly includes growth in myRisk.

Yes, thanks, Pete, and maybe just some additional color on myRisk. You're right, Amanda, that myRisk revenues were down sequentially from Q2 to Q3. First, reflection that the quarter, as a whole, we saw revenues down for Hereditary Cancer going from Q2 to Q3. That's predominantly related to the preventive care business where we saw an impact from not only weather, but we typically see sequentially down in a preventive care market because of the reset of deductibles. Those dynamics affect the entire Hereditary Cancer portfolio, which includes myRisk. The second reason is that we were not doing any active additional conversion in myRisk in the third quarter as we were installing all of the final informatics systems. So in essence, you can think that we're changing out the operating system for the entire process and updating the operating system and we didn't want to pursue additional conversion at the same time that we were doing that massive informatics change. And so our strategy had always been, as you know, not to do any additional myRisk conversion in the third quarter. We were able to complete that change out early, and therefore, towards the end of the quarter, we did instruct our sales team to begin the next wave of conversion. And we're therefore able to exit the quarter at a 58% conversion rate where we had entered the quarter at a 53% conversion rate. But that was on incoming samples, which really didn't have an impact to revenue for the third quarter. And so myRisk really just followed the entire general pattern we saw in hereditary cancer, where we saw preventive care down sequentially. But, as I commented, we did see Oncology up sequentially, which was related to Hereditary Cancer and BRACAnalysis CDx. Last point I'd make is, as Pete mentioned, as I mentioned in my comments that we do anticipate Hereditary Cancer being up in the fourth quarter. This is consistent with what we have seen with historical patterns that we do see some sequential growth as we move from Q3 to Q4, which I think, again, underscores that our expectation for Hereditary Cancer revenues are going to be consistent with the overall market dynamics which is indicative of the fact that we are not seeing any market losses. And therefore, the overall market dynamics are translating directly into our Hereditary Cancer revenues.

Our next question comes from the line of Tycho Peterson with JPMorgan. Patrick Donnelly - JP Morgan Chase & Co, Research Division: This is actually Patrick Donnelly in for Tycho. I guess on the weather impact? I mean, obviously, you gave guidance kind of in the beginning of February. So I mean, how much of incremental weather happened after you gave guidance compared to, obviously, January, you kind of knew about at the time you provided guidance.

Yes, thanks. Obviously, there was a lot of severe weather through February and even in the beginnings of March that we could not have anticipated. There was severe weather in -- towards the end of January. I think in that case, we're always not certain at the time we gave guidance beginning of February, whether or not we might see some bounce back in the quarter from the impacts that we had seen in January. And we obviously can't predict that at the beginning of February either. So this really was all unanticipated when we gave our updated guidance in the beginning of February. Patrick Donnelly - JP Morgan Chase & Co, Research Division: Okay. And then just a quick one on myRisk pricing. I mean can you just confirm it's being reimbursed with the list price of around $4,000?

Yes. We've -- as we've discussed in the past, we -- given the competitive nature of the market, we don't discuss individual prices for our products, including myRisk. We -- the list price, we've never received list price for any of our products -- our legacy products or myRisk as all of those who follow the company for quite some time know that we have, as every company does, provide discounts off of our list prices. And so, you would not expect to receive list price, but we're not going to provide any additional granularity on pricing. I will come back to my comments that I made previously and that is that, we did not see any market losses Q2 to Q3 that we could discern nor are we anticipating any from Q3 to Q4. And therefore, we expect that what you'll see in myRisk performance is going to be consistent with the underlying market dynamics.

Our next question comes from the line of Jack Meehan with Barclays.

I just wanted to ask start with the Hereditary Cancer numbers and could you maybe just sort of quantify the contribution from BRACAnalysis CDx in the quarter? And then have you seen any changes in WIP in earning some of that back?

Yes, thanks, Jack. We haven't -- we're not planning to break out BRACAnalysis CDx separately at this point. It is contained in the Hereditary Cancer line item for Oncology, so that's where the BRACAnalysis CDx revenue would exist. As you know, ovarian cancer patients now have 2 possible indications, one of which would be for hereditary cancer, and the second would be as a companion diagnostic for PARP inhibitors. And because those indications overlap, we've left BRACAnalysis CDx in the revenue numbers for the Oncology segment. The only other comment I can underscore is that, in totality, we saw a 40% sequential increase in the number of ovarian cancer patients that we tested, which is obviously a significant growth. And that's really attributed to the benefit that we've seen by having BRACAnalysis CDx available and now having an additional reason for gynecological oncologists and medical oncologists to order testing for their ovarian cancer patients.

Got it. That's helpful. And then if I can just squeeze in one more, Mark. I mean, you're going to be in this position next quarter preparing to set guidance for the first time as CEO of the company. Could you remind us sort of what framework you intend to use when setting guidance for next year? There were a lot of unknown setting into this year and clearly, a lot of things that are going to be ramping next year, so sort of just what's the approach you're going to take when we come to August?

Yes, thanks, Jack. And you're right, this year, obviously, a lot of transitions and a lot of moving parts. One of the strategies of the company has been to transition the Hereditary Cancer market and diversify. But of course with that becomes a much more complex business with many more moving parts. I think as we reflect all of us collectively on this year, I think the one thing that's been a consistency, not only for Myriad but across the entire industry is that predicting new product reimbursement is inherently uncertain and incorporating that into guidance is, of course, risky. So I think one of the philosophies that we'll embrace as we look at fiscal year '16 guidance is first of all, to base guidance upon known reimbursement which, obviously, is something we can predict. And in our case, additional known reimbursement will include Prolaris reimbursement beginning in the first quarter of 2016. So I think that known reimbursement will not only impact our revenue guidance, it will also impact the guidance we provide for operating margins. We do know that as we obtain additional reimbursement, we are going to see leverage on the operating margin line. But again, we will base our guidance for operating margins on known reimbursements. What that will mean is, as we obtain additional reimbursement throughout the fiscal year, those then provide an opportunity for upside to guidance both on the revenue line and on the operating margin line. So I think those are things that you can anticipate as we approach guidance for fiscal '16. Obviously, we're not prepared to provide details around that guidance, that will come in August. But at least philosophically, you'll know what -- the lens we'll view guidance through as a team here in Myriad.

Our next question comes from the line of Isaac Ro with Goldman Sachs.

I just had a question about payer coverage as it relates to the competition. I'd be curious if you had a sense of maybe how many lives under coverage that you guys touched today in hereditary cancer? How many of them you might feel like you have relatively exclusive access to versus -- now versus a year ago? Because my checks have kind of suggested there's been a pretty decent uptick of coverage not only of yourselves but also for some of the new entrants. And it's hard to pin down how much would affect that having on the market share dynamics? So any color you could offer there will be very appreciated.

Yes, thanks, Isaac. Honestly, it would be difficult for me to speculate on what types of contracts and payer arrangements that other competitors may have in the hereditary cancer space. I can speak to our coverage. And as you know, with the exception of 1 payer, we have remained in network throughout all of this time period since 2 years ago the Supreme Court's decision. We know competitors are seeking to be included in network, and we know some of those competitors are in fact obtaining inclusion in network. But I think from our perspective, provided we remain in network like we have, we feel very good about our ability to compete for patients given the high quality of data that we provide, given the accurate interpretation we provide, our reliance on our database rather than public databases that we know have contained a number of errors as I outlined on the call and the service level that we can provide to our physicians, recognize that this is a very complicated science. And physicians really need the type of support that's required to determine which patients are appropriate, what to do with the information, when you receive the information, up-to-date information on any of the prevalence and penetrance data that we can provide, et cetera. So we've -- as long as we remain in network, we're very confident in our ability to compete for those patients and that's all we continue to see.

Our next question is from the line of Dan Leonard with Leerink.

I just want to talk a little bit further about your review for the ovarian cancer testing opportunities. So the 40% sequential growth you saw in volume, despite the weather, is that -- is your view that's a one-time step up following olaparib approval? Or do you expect there will be continued sequential acceleration here?

Yes, thanks, Dan. Good question. As you know, there is a -- there was a pent-up pool of patients -- survivor patients with ovarian cancer that had been anticipating the approval of olaparib and BRACAnalysis CDx as a companion diagnostic. And so we do know some of that pent-up bolus are patients that we are seeing in this quarter. We'll be able to provide some color on our fourth quarter call on what we've seen sequentially that will address your question more specifically. But we do know for certain there was some bolus of activity in this initial quarter. Now that being said, remember, overall, we had only penetrated about 25% of the ovarian cancer market in Q2. So while we saw a 40% sequential increase, there is still a substantial amount of the ovarian cancer market that remains unpenetrated. And so even with a bolus of patients in this first quarter, we still think there is ample opportunity to continue to grow and further penetrate the ovarian cancer market.

Our next question comes from the line of Derik De Bruin with Bank of America.

Two quick questions. The -- can you talk or tell us what you had embedded for Prolaris in your original guidance for the year versus sort of what's there, I'm just trying to figure out the Delta from the start of the year for what is now and to where we were? I'm really just trying to get to what the revenue impact was on the delays overall. And then just a quickie, what's the CDx ASP?

Yes, Thank you, Derik. Unfortunately, we haven't broken out guidance specifically by product line. So I really can't add a lot of color to you with regards to what we're anticipating for Prolaris. But I would like to note as Mark mentioned on the call that the delay that occurred at Medicare was not just Prolaris, all 7 of the draft coverage decisions had their public comment period extended through April 30. So I think that's not a reflection of anything negative toward the product. We are very confident about getting that decision by the first of next year and we'll certainly provide additional guidance next year in August. And then on the second question on ASP, Derik, the ASP for BRACAnalysis CDx is the same as it is for the BRACAnalysis product. Again, we aren't providing any more granularity on that, but there's -- at this point, no difference in ASP between those 2 products.

Our next question comes from the line of Bill Quirk with Piper Jaffray.

This is actually Alex Nowak on for Bill. Can you quantify the increase that you saw with Vectra DA volumes in April? And I guess, is this the kind of the early impact from reworking the sales force?

I think it definitely is a reflection of a number of initiatives and changes that the new President of Crescendo has implemented, and we were very pleased to see the increase in April. I think it's a little too early to determine the magnitude or the extent of that increase. Obviously, we feel very strongly about the potential of the product. We're very excited about Vectra DA, but we can't give you any additional color as to the magnitude of the increase, other than to say, we're very optimistic about the product potential and we definitely think some of the new initiatives that have been implemented are starting to take traction. And we hope to see that trend continue through May, June and into next year.

Okay, great. And then real quick, how many covered lives or contract lives do you have for myRisk now?

Yes, thanks, Alex. We haven't provided a specific status of where we are. What I can say is that repeat what I did on the last call, which if, in fact, we're successful in finding all of the Blue Cross Blue Shield affiliates as we've been able to negotiate a contract with the Blue Cross Blue Shield Association. And so if those affiliates were to adopt that contract, then we would add 75% of our Hereditary Cancer revenue under long-term contract. So we continue to make progress towards that goal. We also continue to work with the payers that were not in that 75% number, other payers that we may be able to secure for long-term contract. So I think we're making very nice progress in our long-term contracting strategy. As you know, payer discussions generally take some time. And so the progress is -- we're satisfied with that progress but we also know it's going to take months to continue to have those negotiations and to continue to finalize all of those additional contracts.

Our next question comes from the line of Eric Criscuolo with Mizuho.

This is filling in for Peter Lawson today. What kind of background level of BRACAnalysis and Prolaris sales that you expecting once your full conversion happens in September?

So let me take a stab at that, Eric. And if I haven't answered your question, please follow up. So our goal is to -- as we exit the third quarter, we're at 58% conversion. We have instructed the sales team to begin the next wave of conversion, which is going to continue in the fourth quarter, and then we'll continue that through the first quarter. Our expectation is, by the end of our first quarter and fiscal '16, that we will have fully converted all of our targeted customers. Now the reason we say that is that, we continue to get tests from a number of customers that are not necessarily targeted by our sales force. These are physicians that may test because of some of our direct activities -- direct to physician activities through Internet, marketing or through patient requests. And so as those tests come in from non-targeted customers, we will develop alternative approaches in order to convert that remaining marketplace because those are tests we wouldn't know that in advance and come from non-targeted customers. So that will be really the task for the remaining part of fiscal '16 is to convert some of that -- those non-targeted customer tests over to myRisk through the rest of the year.

Our next question comes from the line of Sung Ji Nam from Cantor. Sung Ji Nam - Cantor Fitzgerald & Co., Research Division: I was wondering for the 40% increase in ovarian cancer testing. Is that largely in the U.S. -- the increase from largely in the U.S.? Or is it including kind of international as well -- Europe as well?

Yes, Sung Ji, thanks for the question. That --yes, that largely is in the United States as we discussed on the call last time because AstraZeneca is still pursuing reimbursement for olaparib throughout Europe and is really yet to obtain reimbursement largely in Europe. The tumor BRACAnalysis product that we have prepared for launch in Europe will have to wait until we have the pricing completed for olaparib and AstraZeneca begins to promote in those markets. And so as a result, that increase was really largely focused here in United States with BRACAnalysis CDx, the germline version of the test. Sung Ji Nam - Cantor Fitzgerald & Co., Research Division: Okay. And then just quickly, I was wondering for the fourth quarter uptick in terms of Hereditary Cancer demand. Any residual impact from celebrity publicity there? I know that Angelina Jolie made another op ed given the situation there. So I was wondering if there was any kind of secondary impact from that as well.

Yes, we have obviously been closely monitoring what incoming sample trends look like associated with the time frame upon which there was additional celebrity publicity. We really haven't been able to discern any sort of impact from that publicity. Certainly, by now, we had seen some very strong signals. The last time we went through a similar event and we haven't been able to see that discernible change associated with this particular time. That's not unexpected on our part given the fact that this story had quite a bit of play the first time. This focus was more on ovarian cancer as opposed to breast cancer, which generally -- probably merits less attention from patients. And so we aren't anticipating any sort of publicity effect from this particular round.

Our next question comes from the line of Brandon Couillard with Jefferies.

This is actually Kate in for Brandon. Just a quick one on international. Given the timing shifts of revenue, would you continue to anticipate $50 million next year is still feasible?

We're going to be giving more clarity in terms of the guidance at our August earnings call. So I'd ask you to be patient with us and wait until there and we'll be able to, I think, give you a better feel for the international revenue.

Okay. And then just one last one on myRisk conversion. Should we anticipate the remaining conversion plays out evenly over the next few quarters? Is that a good way to understand it?

Yes, I think that's -- it would be a little granular for us to probably lay out exactly what will happen in Q4 and Q1. Obviously, we just turned the team loose and they are now starting to enroll physicians into that. So I would expect relatively even transition in these next 2 quarters, but it's a little early to know exactly what there is going to look like as we start to enroll physicians just in the last few weeks.

And there are no further questions at this time. Mr. Gleason, I'll now turn the call back to you.

Thank you, Jody. This concludes our earnings call. A replay will be available via webcast in our website for 1 week. Thank you again for joining us this afternoon.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.