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.

Thanks, Scott. Good afternoon, and welcome to the Myriad Genetics third quarter 2020 earnings call. During the call, we will review the financial results we released today; after which, we will host the question-and-answer session. If you’ve not had a chance to review our quarterly earnings release, it can be found on our website at myriad.com. I'm Scott Gleason, Senior Vice President of Investor Relations and Corporate Strategy and presenting with me today will be Bryan Riggsbee, Interim Chief Executive Officer and Chief Financial Officer. This call can be heard live via webcast at myriad.com at a recording will be archived in the Investors Section of our website. In addition, there is a slide presentation pertained to today’s earnings call on the Investors Section of our website, in which we filed following the call on Form 8-K. 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 the documents the Company filed from time to time with the Securities and Exchange Commission, specifically the Company’s annual report on Form 10-K, its quarterly reports 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’m pleased to turn the call over to Bryan.

Thank you everyone for joining today’s call. In the fiscal third quarter, Myriad reported total revenue of $164 million and an adjusted loss per share of $0.08. These results were negatively impacted by the COVID-19 pandemic by approximately $18 million on the top-line with earnings reduced by $0.13. We saw significant impact to our business beginning in mid-March associated with the global coronavirus pandemic, which has led to reductions in test volumes of between 20% and 75% across our portfolio Test that can be deferred saw the greatest reductions in volume, but we have even seen demand for non-elective testing in areas such as oncology testing negatively impacted. While the impact on our business has been significant, we are focused on taking the appropriate steps to ensure the safety of our employees and customers, while maintaining business continuity. I'm extremely proud of our team and their dedication to our mission. Before I discuss the steps we have taken as an organization, I believe it is important to highlight that prior to mid-March volumes for our products were trending exceptionally well. We were on pace to see strong sequential growth with GeneSight prenatal testing and Vectra, despite typical third quarter seasonality. GeneSight volumes were up 4% sequentially through the first 10 weeks of the quarter, prenatal testing volumes were up an impressive 12% and Vectra volumes were up 10%. Additionally, the hereditary cancer business was trending above our forecast on a volume basis. In short, the business was performing exceptionally well prior to the crisis. I would now like to discuss the actions we have taken as a company to respond to the coronavirus pandemic, which are focused on the safety of our employees and customers, while continuing to deliver vital information necessary to guide patient care. First, beginning in mid-March,…

Thanks, Brian. I'm pleased to provide more information on our financial trends and outlook. Hereditary cancer revenue in the quarter was $85.2 million versus $117.6 million in the fiscal third quarter of last year. Looking at the components of revenue growth, test volumes were declined 4% and pricing declined by 25% on a year-over-year basis. Prior to the onset of social distancing policies in March, test volumes were growing in the mid single-digits on a year-over-year basis. Pricing declines in the quarter were attributable to the hereditary cancer coding changes, we discussed in previous quarters, our recently negotiated natural pair contracts and the impact of PAMA on a year-over-year basis. In addition, this quarter we have negative attitude adjustments for the hereditary cancer business that negatively impact as an average selling price. Part of this was tied to a large national payer that has not paid us on a significant number of claims due to internal system issues. The payer is working diligently to process the claims, all of which have preauthorization from the payer. However, given the ageing of old amounts, we're forced to move into cash revenue recognition until actual collection. As of April 30th, we have already collected a portion of the amounts owed, which will be recognized in Q4. Moving on to GeneSight revenue in the quarter was 20.4 million versus 29.6 million in the fiscal third quarter of last year. Looking at the components of growth, test volumes declined by 33% year-over-year. Importantly, we're on track to have our strongest GeneSight volume quarter this fiscal year with test volumes up 4% sequentially through mid-March. From a pricing perspective, average selling prices increased 2% year-over-year, and we did see favorable out of period adjustments for GeneSight, as we continued our efforts to educate physicians on new…

Thanks Scott. Now I would like to discuss some of the key business highlights in the quarter, beginning with our progress on GeneSight. We continue to anticipate a final LCD in the near-term on GeneSight, but we believe the process has been delayed due to the global pandemic based upon the volume of LCDs, which have been issued by Medicare. As a reminder, based upon our pre-pandemic test volume, we believe this new LCD would add approximately $7 million in incremental quarterly revenue based upon a higher percentage of our existing test volumes getting reimbursed. In the third quarter, we began initiating our expansion plans into the primary care channel, including an expansion of our GeneSight sales team and making plans for direct-to-consumer test cases in select markets with high rates of reimbursement. Due to the current pandemic conditions which have dramatically lower demand for elective testing, such as GeneSight, we have slowed our planned rollout of these programs, with plans to begin to ramp them once again when market conditions return to a more normalized level. We remain exceptionally optimistic surrounding this opportunity and the positive impact it can have on GeneSight revenue in fiscal year 2021. With GeneSight, we also recently published our meta-analysis of multiple studies covering four major clinical studies and 1,556 patients. Across the patient populations, patients who received guided care with GeneSight by 10% improvement in symptoms on average, a 40% improvement in response rates, and a 49% improvement in reemission rates, all of which were highly statistically significant. Many payers have expressed interest in this data as part of our expanding clinical dossier supporting the clinical benefits of GeneSight when combined with the recent publications of our precision medicine analysis and our HAM-D6 datasets. We also saw some significant advancements with Prolaris this…

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

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

Hey, guys. Good afternoon. This is actually Westley on for Puneet. Thanks for taking our questions here. I want to start on Counsyl. I appreciate that the headwinds you experienced here from coronavirus are as bad as other segments of the business. Just wondering, if you could provide any commentary on the expected recovery for the business itself and kind of the puts and takes of the bounce back when that does come?

Sure. Thanks, Westley. Yes, I think, obviously we didn't give forward guidance in terms of talking about what we expect the recovery to look like. I think the thing I would highlight in terms of the Counsyl business for the current quarter is that we were extremely pleased with the with the sequential growth and volumes for that business being the strongest that we've seen at the time of the acquisition, as well, I think our commentary around the fact that our ASP was flat with Q2, I feel like we've made a lot of progress relative to some of the challenges that we had noted on our last call in terms of the billing conversion. So, I think I think overall, we feel really good about that business, we did highlight the fact that we've seen less of an impact on the prenatal business from COVID than we've seen on some of the more elective areas of our business, but I think that's about the that's the commentary we would have in terms of an update for that business.

And then just as a follow-up sticking on COVID. I know you mentioned some testing capacity that is ramping up. Just wondering, if you could provide any color on that maybe potential volumes that can be run for both molecular anthropology testing and any sort of inclinations on what kind of impact that will have moving forward?

Yes, I guess in terms of the last part of the question, and what we prepared at this point, to provide an update relative to what we would anticipate for volume. I think where we're at in the process right now is we're just very focused on validating and understanding which technology or how we would deploy the technology, and also how we would handle that from a commercial perspective in terms of sample collection, getting into the lab, etcetera. So, I think we're -- that's the point at which we are in the process. I think in terms of the capacity, it's probably too early to make a characterization on that front. But as I said on the call, we sincerely believe that as a CLIA lab in the US we have an obligation to bring up this testing and make it available to support the broader effort and that's what we're working hard every day to do.

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

This is Ivy Ma for Derik today. So just a question on employment rates, so beyond COVID given a significant volume declines during the financial crisis, you mentioned associated with lower OB-GYN visits and the fewer asymptomatic testing. So, wonder what's your thought on how well the height unemployment rates flow through to FY21? Thank you.

Yes, I think that where we've seen the -- it obviously has an impact in terms of both in terms of the procurement of services as well as the payment by the patient. As we said on the call earlier, we did record a reserve in the current period based on expectation for a significantly higher unemployment rate. And then with respect to how, what we might see in terms of an impact on demand. I think at this point, we're not providing any forward commentary, both with respect to what the unemployment rate, how that might impact sample demand, but also in terms of what any recovery from COVID might do.

Yes, and I think the one thing I would just add to that is if you looked at the last experience, that Myriad had going through, a period of extended financial hardship with the great depression through the 2008, 2009 period, company actually grew its volume, so we tend to be a pretty defensive sector, relative to the broader industry. And so, while you typically would see, some you have seen increased kind of consumers with patients, we don't see financial changes usually having large impacts on testing demand across the industry.

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

Yes, I mean, I don't know that I would characterize them any differently. I think that, we made some commentary with respect to tests within our portfolio that are more elective. And so, I think what we've seen with respect to GeneSight and Vectra is just the fact that they tend to be more elective. And in the case of Vectra, you're dealing with an immunocompromised patient. So there's obviously, probably some hesitancy to go to and see their physicians. But I don't think I would characterize them any differently from an unemployment standpoint, but more so from the fact that they tend to be more elective. Yes. I think also, it's important to point out that, one of the unfortunate results of the extended period of isolation here that, many folks have faces that we have seen a pretty significant increase in the rates of depression across the country. You thought CVS roll out a significant program this morning tied to depression. And so, I think as we do get back to a more normalized environment, we're looking at ways to partner with folks around GeneSight testing because we do think that is going to be a very important part of the solution. And so, I think actually when you look at that task recent conditions could lead to some positive trends relative to demand.

[Operator Instructions]

Operator, do we have any further questions?

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

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

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