Greetings and welcome to the Myriad Genetics First Quarter 2022 Financial Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded today Thursday, May 5 2022. I'd now like to turn the call over to Nathan Smith, Senior Vice President of Investor Relations. Please go ahead.

All right. Thank you Dave. Good afternoon and welcome to the Myriad Genetics first quarter 2022 earnings call. During the call, we will review the financial results we released today. And afterwards we will host a question-and-answer session. Our quarterly earnings release was issued this morning on Form 8-K and can be found on our website at investor.myriad.com. I'm Nathan Smith, Senior Vice President of Investor Relations and Treasury. On the call with me today are Paul Diaz, our President and Chief Executive Officer; Bryan Riggsbee, our Chief Financial Officer; and Nicole Lambert, our Chief Operating Officer. This call can be heard live via webcast at investor.myriad.com and a recording will be archived in the Investors section of our website. In addition, following the call, the slide presentation will be available on the Investors 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 the documents the company files from time to time with the Securities and Exchange Commission. Specifically, the company's annual transition report on Form 10-K, it's quarterly reports on Form 10-Q and it's 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 will now turn the time over to Paul.

Thanks Nathan. Good afternoon everyone and thank you for joining us. On today's call, we will discuss our Q1 results along with highlights from the quarter and updates on our strategic transformation and growth plan. As always, I want to thank all of our teammates for their hard work and dedication this quarter. I also want to thank our healthcare provider partners and their patients for their continued trust in us. 2022 will be an exciting year for Myriad Genetics as we continue to execute and advance our mission to improving the health and well-being of all. Last year we began laying the foundation for long-term sustainable growth, profitability and innovation with the ongoing implementation of our transformation and growth plan. Now plan is taking form and coupled with our long-standing scientific expertise and emerging technology commercial capabilities, we expect to accelerate growth into 2022 and beyond. We have an opportunity to reach more patients, create a more seamless user experience and combine data for millions of diagnostic results with other clinical data sets to help patient’s, health systems and payers to better manage care. Despite challenges presented by COVID-19 and its variants in the first six weeks of the year, our quarterly operating and financial results were strong during the first quarter of 2022. In the quarter revenues of $164.9 million increased 11% year-over-year and diagnostic test volumes of 241,000 increased 10% year-over-year, demonstrating strong continued growth in our core businesses. Average revenue per test in the quarter increased 1% compared to last year and last quarter, representing stable ASP growth for seven consecutive quarters. This stable growth in ASP is a reflection of investments made and in the execution of our revenue cycle management plan. The success of our revenue cycle management plan has been in part due…

Thank you Paul. It's my pleasure to review our core business unit performances starting with our mental health business unit. Mental illness continues to have a lasting effect on patients and their families in the US as those suffering fail to receive proper medical treatment for a variety of reasons. Trial and error are common when determining the most effective medications to treat depression anxiety, ADHD and other mental illnesses. Our research shows that more than half of those diagnosed with depression have tried four or more medications in their lifetimes in an effort to find the right one. Negative stigma surrounding mental illness also contribute to this problem. Our nationwide survey the GeneSight Mental Health Monitor recently revealed that more than half of surveyed women diagnosed with depression or anxiety delayed or never thought treatment because they did not want anyone to know that they were struggling. Our GeneSight Psychotropic test addresses this mental health crisis by helping physicians better understand how antidepressants and other drugs will affect their patients with a simple cheek swab that can be taken in the privacy of the patient's own home. Driven by GeneSight our Mental Health business unit reported $29.3 million in revenue for the first quarter of 2022, an increase of 66% year-over-year roughly 8,4000 tests processed in the quarter. The Mental Health business overcame industry-wide challenges presented in the first six weeks of 2022 to report one of its highest GeneSight volume levels ever. We are encouraged by this performance as we believe it demonstrates the effectiveness of our new commercial capabilities digital marketing strategies and customer-centric sales initiatives that we implemented over the past year. We recently launched GeneSight Psychotropic 4.1 featuring key updates to the GeneSight task based on feedback from ordering clinicians. The update includes improved clinical…

Thank you, Nicole. I would like to start by reviewing our financial highlights. We began the year with another strong quarter as we reported total revenue of $164.9 million up 11% year-over-year excluding revenue from divested assets. Our quarterly results were driven by stable diagnostic test volumes, which despite headwinds in the first six weeks of the quarter brought on by COVID-19 in experience increased 10% compared to last year after excluding divested assets. In addition, we continue to see improving average selling prices across our businesses. The stability in ASP and better-than-expected cash collections on orders from prior period was driven by our improved execution on revenue cycle management, which has been a major component of our transformation and growth plan. In the first quarter, we reported an adjusted loss per share of $0.03 improving $0.03 year-over-year. Adjusted gross margin was 71.1% and adjusted operating expenses were $120 million. We have experienced increased inflationary pressures increased labor costs due to staffing constraints and competition for talent as well as increased material cost due to global supply chain disruptions. The team has successfully managed operating expenses during this disruptive time to help mitigate those various cost increases. We did exit the quarter on pace to hit our operating expense targets that we laid out for 2022. During the first quarter revenue of $164.9 million benefited from $12 million of better-than-expected cash collections on tests ordered in prior periods. Overall, volumes for the quarter of $241,000 came in within our original projections and organic ASP was stable. Looking at product performance, total Q1 test volumes increased 10% compared to Q1 of last year and increased 2% sequentially from last quarter after excluding volumes from divested assets. Excluding revenue from divested businesses, total revenue in Q1 increased 11% year-over-year and 2% sequentially.…

Thanks Bryan. We're pleased with the progress we've made this quarter and another tough operating environment. Lastly, we would like to announce that we will be hosting an Investor Day on August 11th to give an update on the company's progress. We know our sector is facing significant market pressure and that some of our competitors are struggling to deploy a financially sustainable value proposition and growth model. While our transformation is still underway, I'd like to emphasize that our scientific, technological, and commercial platforms are built off of a sustainable and solid financial foundation. We are continuing to take concrete steps to make our platform scalable, including investments in technology, marketing capabilities, and remote selling and we are excited to bring new products to market like Precise liquid MRD on this platform over the next several years. We are confident that this sets Myriad apart from its peers and puts the company on a trajectory for innovation, growth, and shareholder value creation. Our focus remains on newly launched products and commercial initiatives with the goal of accelerating growth during the remainder of the year as we continue to invest in the future elevating our products to their full potential introducing new innovative offerings and more than ever we are exploring new ways to illuminate the path to better health through genetic insights. We look forward to a bright future ahead for Myriad Genetics, as we continue to work to better serve our patients, customers and deliver sustainable growth and profitability for our shareholders. Now I'll turn it back to Nathan for Q&A. Nathan?

Thanks, Paul. As a reminder during today's call, we use certain non-GAAP financial measures. A reconciliation of the GAAP financial results to the non-GAAP financial results and a reconciliation of GAAP to 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. [Operator Instructions] Operator, we are now ready for the Q&A portion of the call.

Thank you. [Operator Instructions] The first question comes from the line of Jack Meehan with Nephron Research. Your line is open.

Thank you and good afternoon. I wanted to talk about GeneSight, saw that you had applied for a PLA code for the test. I was wondering if you could just elaborate on the strategy behind that. And what do you think will happen to the Medicare pricing once that gets finalized this summer.

Yes, Jack, I saw your note on that. We believe it's absolutely the right strep to bring more clarity as we're trying to do across all our payer market strategy and our rev cycle process. So we think this brings more stability, not less to GeneSight and potentially along with the clinical evidence that we continue to build expansion of coverage for GeneSight. And so we don't see or expect the risk that you've identified in terms of Medicare pricing compression there. And in fact, I think it's a great step to solidifying gene set pricing as we've done with other codes that we've applied for. So we actually are quite confident in what we're doing here.

And just as a follow-up on that, how will it work moving forward? So starting in 2023 will your entire GeneSight book of business get reimbursed under this new code. Just how does it work today when you're not under contract with the payer, do you code stack? I guess just confirmation of how the billing will work once the PLA goes into effect?

That's a little granular for this call. So we're happy to take that off-line Jack. I want to give you a good answer and I'm not really in a position to do that. But I don't think there's any code stacking involved, but why don't we take that offline with anything? We're happy to try to give you a clear answer.

Okay. I appreciate it. Looking forward to the Analyst Day too. Thanks, Paul.

Great. Thank, Jack.

Our next question comes from the line of Dan Brennan with Cowen. Your line is open.

Hi. Good afternoon. This is Kyle on for Dan. Thanks for taking my question. I'd like to walk through how the quarter sort of played out versus your expectations when you gave the guidance back in back in February across our four product areas. Were there any notable areas of strength/weakness that you didn't anticipate it first that were better or worse than expected?

Well, look the first six weeks we were kind of holding our breath into the rest of it. But the team really rallied. I would say, the strength of our new digital platform for GeneSight was probably the biggest surprise because GeneSight held up even during that first six-week process. And again that's where we put more of the new commercial tools in place and we think the rest of the portfolio will benefit with that over time our inside salespeople and the other investments we've made there. No look it was just great execution on behalf of the coal and our operators. And I think you see up and down the P&L, we're growing managing our operating expenses investing in new products with high returns on invested capital. So just a lot of good blocking and tackling and most importantly, a team that was really responsive to our customer base during the quarter and their needs. And I think that's proving itself as we -- we're gaining new customers and winning back some old customers that we lost along the way. And it bodes well for the rest of the year.

That's great. And then one just on tumor profiling, so strong volume quarter revenue down a little bit year-over-year but still be consensus -- what are the key drivers for tumor profiling as it sits now there's not as much granularity anymore but what should we really be thinking about that segment?

I think what you would -- I'd have you focus on is precise oncology solutions and the platform of services that oncologists want, as we did the work for the transformation plan 82% of oncologists want a single source of information and an easy-to-use test. And so our whole transformation is built around being more responsive to patients and our provider partners. And tumor profiling was lacking. What we're really excited about is the attachment rate that we're getting, as oncologists are not only ordering the tumor profiling tests, but they're ordering myRisk and myChoice as well. And it's a very high level of attachment rate. And what they really appreciate is the fact that we're reconciling the test and we're giving them one report. And so it's really just about listening to the customers. And that's how I think we win.

Great. Thanks for taking my questions.

Sure. Thank you.

Our next question comes from the line of Matt Sykes with Goldman Sachs. Your line is open.

Hey Matt.

Hi. Good afternoon. This is Ivy on for Matt. On the previous earnings call you said you expected approximately 2% to 3% revenue contribution through 2024 from your oncology business, I assume that guidance did not include your expansion to liquid biopsy, but could you provide any color on mid-term growth rate expectations for this business going forward including the liquid biopsy?

Look, our guidance for 2022 is pretty clear. And what we have provided is long-term guidance of 9% to 12%. We're certainly at an 11% growth year-over-year this quarter showed and demonstrated that we can achieve that. I sort of hope that we can get to that 12% growth rate over the next two years. Liquid and MRD, as we said in the building block slide that we provided at the conference and is in our website, specifically said that it did not include contribution from liquid and MRD. So this is really based on the rest of the products in the portfolio today and getting them all to their full potential.

Great. Thank you.

Sure. Do you have a follow-up?

No.

Okay great. Thank you.

And there are no further questions pending at present time.

Thanks a lot.

Well, Okay. Well, I get things off and everybody with our script. Go ahead Nathan wrap-up.

All right. Thank you all for joining today. This concludes our earnings call. A replay will be available via Webcast on our website for one week. And thank you again for joining us this afternoon.

And all that will conclude the call for today. We thank you very much for your participation. You may now disconnect.