Okay. Good afternoon, and welcome to the Myriad Genetics' First Quarter 2023 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 afternoon on Form 8-K and can be found on our Web site at investor.myriad.com. I'm Matt Scalo, Senior Vice President of Investor Relations. And on the call with me today are Paul Diaz, our President and Chief Executive Officer; Bryan Riggsbee, our Chief Financial Officer; Nicole Lambert, our Chief Operating Officer; and Mark Verratti, our Chief Commercial 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 Web site along with this slide presentation. Please note that some of the information presented today contains 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 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 are forward-looking statements. With that, I will now turn the call over to Paul.

Good afternoon, everyone, and thank you for joining us. On today's call, we will discuss highlights from the first quarter and provide updates on the strategic initiatives that are driving our long-term growth plan. So many positive changes happening across our organization. I want to take a minute to thank our Myriad teammates and our provider partners for their continued commitment to advancing our mission and vision to make genetic testing and precision medicine more accessible, helping people take more control of their health and to enable providers to better treat and prevent disease. Turning to Slide 4. Myriad Genetics had another strong quarter as we kicked off 2023 ahead of expectations. Total revenue grew 10% year-over-year, driven by another strong quarter of double digit volume growth in both MyRisk hereditary cancer testing and GeneSight. Total volumes grew 21% year-over-year and 10% sequentially. Excluding SneakPeek, hereditary cancer testing volumes grew an impressive 24% year-over-year in Q1 after growing 16% year-over-year last quarter. For those who have may have doubted our ability to sustain GeneSight growth, we processed 110,000 tests in the first quarter, a company record, and saw approximately 4,000 new clinicians ordering GeneSight for the first time. We're also very excited about the progress we made in our prenatal business, which despite some interruptions in the state of California, improved test volumes 12% year-over-year in the quarter, excluding contributions from Gateway Genomics. This quarter gives us confidence in our ability to achieve our full year financial guidance as well as reach profitability and positive operating cash flow in the fourth quarter of this year. Additionally, we believe that our continued commercial execution, robust product pipeline and top tier talent will fuel our long-term growth even further. In the quarter, we announced several new exciting strategic partnerships, including an expanded…

Thanks, Paul. I'd like to start on Slide 8 and talk about our commercial team. We have made tremendous strides in our commercial execution over the past year, with changes made across the organization that have enabled our sales force to effectively target and penetrate both new and existing accounts. The results speak for themselves with robust volume growth over the past two quarters, but majority of which come from existing accounts. This gives us confidence in the changes that we have made in the commercial team, because growth in existing accounts means that tailwinds like market dislocation have to date not been the key drivers of our commercial performance. What is driving our continued volume growth is our skilled and focused sales force, with years of experience at Myriad working alongside providers and our patients, equipped with new digital tools and scientific insights that help them better serve our customers, while simultaneously attracting new accounts to the franchise. Our sales force is motivated by these new capabilities, because it makes the job easier, which is why we've seen turnover across our entire sales force drop down below 8%, something that we are incredibly proud of. I'll now turn to Slide 9 and talk about our core business units. Our oncology business delivered 77.6 million in revenue in the first quarter. Reported test volumes were roughly 50,000. Prolaris, our market leading prostate cancer test, continues to reach patients with diagnosed prostate cancer to provide them and their physicians with important information needed for better treatment decision. In the first quarter, Prolaris volumes grew 22% year-over-year after growing 17% year-over-year in the fourth quarter of 2022. Polaris is the only test with two validated thresholds at the time of diagnosis. One to identify which patients can safely go on active surveillance…

Thanks, Mark. I'd like to start on Slide 14 and speak about our products and priorities for 2023. While we have a full pipeline of new products in development, we want to make clear that our priority for 2023 is to maximize the full potential of our current products at MyRisk, GeneSight, Prequel, Foresight, MyChoice CDx, Precise Tumor and Prolaris. Our strong and consistent performance, particularly over the last six months, credits the success of these core products and our general organizational improvements made over the last two years have enabled us to focus on the markets where we have a right to win. Our core products are well supported by guidelines set by organizations such as NCCN and are widely viewed as standard of care. We are excited about ACMG supportive of expanding carrier screening and look forward to any further announcements in support from ACOG that may follow suit. Because they are our key drivers of growth, we continue to prioritize and invest in our core product. So while we are very excited about our new product launches, we believe that it is important to focus on areas where we can take action and win now given the low adoption rate and the competitive environment. On the next slide, I'll speak more about our operational initiatives. Myriad's operational initiatives aim at improving the customer experience and creating an environment of innovation. We talk a lot about making it easier to do business with Myriad Genetics. That means listening to our patients and providers and taking actions to address their concerns and adapt however we can. Recently, we added more genes to our primary MyRisk test and announced a partnership with ClinVar because our providers asked us to. Not only have providers responded positively to changes like these, but…

Thanks, Nicole. I'd like to start by reviewing product volume trends on Slide 20. We generated strong double digit growth in both hereditary cancer testing and GeneSight volumes in the first quarter. Prolaris saw an impressive 22% quarterly volume growth figure compared to Q1 of last year and prenatal volumes, excluding contributions from SneakPeek, grew 12% year-over-year. Total first quarter volumes grew organically 21% over last year. Overall, the quarter reflected really positive broad-based volume growth across the portfolio. During the first quarter, total revenue we generated 181.2 million in revenue or 10% growth over the year ago period, a second consecutive quarter of double digit growth in total revenue. This growth rate reflects strong volume growth, which is partially offset by product mix and a challenging year-over-year comparison related to out-of-period cash collections. Recall that first quarter 2022 benefited from approximately $12 million in positive out-of-period adjustment, which were immaterial in the first quarter of 2023. In addition, SneakPeek price point creates a significant product mix impact. Taking these factors into consideration, underlying ASPs were in line with our long-term forecasted range of negative 3% to 5%. Healthy growth across our business units reflect a number of comments Paul, Mark and Nicole have already mentioned, including improved execution by a strengthened and highly motivated commercial team, as well as investments in core infrastructure and improving customer experience. First quarter total adjusted operating expense of 144.5 million well above our prior commentary reflect higher than forecasted performance-based commissions and the timing of certain sales and marketing costs. We remain confident that these investments will continue to support our growth story and generate long-term shareholder value. We'll turn to Slide 21 now to review our financial guidance. We are updating our 2023 guidance to reflect the strong Q1 performance. We are…

Thanks, Bryan. As you've heard, we have a lot of exciting organizational change is happening but we remain focused and confident on reaching profitability in the fourth quarter of this year. Balancing growth and innovation while keeping an eye on profitability is an ongoing challenge and opportunity for one we are committed to. In closing, I'd like to offer what we believe are our strength and strategic advantage. First, we continue to grow volumes consistently every quarter across our businesses. And we know how to get paid for our tests. Second, pricing for our products remain stable, and we have visibility into pricing moving forward. Third, we have a discipline cost management structure as we expect to maintain our strong gross margins and manage our OpEx responsibly. Fourth, we are committed to effective capital deployment in key areas that will provide the customer experience, including new technology tools and capabilities, innovation, commercial strength, and our Labs of the Future to generate strong returns for our shareholders. Fifth and finally, our growth catalysts are clear as we continue to elevate our products to their full potential and opportunistically look for tuck-in acquisitions like Gateway Genomics transaction. All of this reinforcing our position as a trusted differentiated lab with specialized expertise, best-in-class quality, a strong scalable commercial engine underpinned by data, research and technology, with industry leading margins [indiscernible]. I also want to point out what a great job our teams have done in listening to our patients and providers. We have re-approached the way we engage with customers and they are starting to notice. A great example of this as Nicole spoke to, their open source data strategy with ClinVar which is something that the genetic counselor community has been quite vocal about. Keeping patients and providers at the center of everything we do is starting to pay dividends. And we are excited about finding new ways to make it easier to do business with us. Everything from increased price transparency and affordability for patients to the rollout of initiatives like EMR integrations with EPIC and our unified order portal, along with improvements that Myriad complete our customized suite of services and workflow solutions. With that, I'll turn it back to Matt for Q&A.

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

Thank you very much. [Operator Instructions]. Your first question will come from the line of Andrew Cooper with Raymond James. Your line is open.

Hi, guys. Congrats on a nice quarter here on the top line. And thanks for the questions. Maybe just first, you didn't really necessarily touch in much depth on it in the call, so just want to make sure in terms of timelines with some of the pipeline, what's working through, if everything's on track or if there's any update to the different pieces of Precise as well as FirstGene and the rollout of some of these additional tests?

Yes, Andrew, we continue to look at our product management across the portfolio, including the new product launches, to enhance the current product. We don't see any material changes in our timeline. We still expect to launch FirstGene softly in Q4. What exactly that looks like? We have some enhancements to Foresight that we want to do in anticipation of expanded ACOG guidelines. So we've really instituted a product management approach across our current portfolio and the new product launches. And so for example, we're learning and our new oncology team is working on the Precise rollout. And we want to make sure that we've improved upon that before we roll out Precise Liquid. And as we talked a little bit about, our biopharma business is really taking off and that bodes well for the interest that we've seen in Precise MRD on the research side. So again, I think enhancements to Foresight will improve the FirstGene launch, and it's foundational to that. But we don't have any material changes at all to kind of the pipeline or the timing that we're looking at this point.

Okay, great. That's super helpful. And then maybe secondly, maybe for Bryan or for Paul, whoever wants to answer it, but just a little bit more color on the OpEx increase? I think one of the questions investors have had has been on the ability to do some of these things without incrementally more spend. So just how much -- can you give us a little bit more color on what that is? And then how much of the sunsetting that was mentioned, and things like that, was already planned through the year versus things that are coming in, in an attempt to offset higher costs elsewhere? Just a little bit of kind of explanation or color around that would be super helpful.

Yes. Thanks, Andrew. I think first of all, as we said, Q1 had some incremental costs, especially as it relates to some of the selling functions, given the significantly -- the step up in volume from Q4 to Q1, there were some costs that went along with that. Obviously, we came in, as you noted, much higher on the revenue line. Our plan for the year had always sort of been for some of the projects and initiatives that we had earlier in the year to start to sunset as we move through the year. And so we continue to not only expect that, but to also expect some of the cost control programs that we've put in place to have an impact as we move through the year. And that's how we get to the update in our guidance.

Yes. Andrew, I just want to reiterate. We had sales and marketing expenses, commissions that helped drive a lot of the growth that will sunset, some of which was the way that commissions were budgeted, quite frankly. Given seasonality, we expect that volumes to be down, not up to the level they work. But more importantly to the other underlying question, the OpEx budget here reflects all of the investments that we anticipate that will be necessary to launch FirstGene, to advanced clinical validation work for MRD and to keep everything else on track that you asked about before. So investors should be confident that there won't be any surprises in the OpEx in terms of new product launches. In fact, it's all about scaling new products on the commercial infrastructure and leveraging that. So that's what investors should count on.

Great. New product or new comp is a high class problem you have to deal with. So I appreciate it. I'll stop there.

Thanks.

And your next question comes from the line of Dave Delahunt with Goldman Sachs. Your line is open.

Hi, guys. Congrats on the quarter. On the EPIC EMR integration, could you tell us a bit more about how you measure the productivity increase you expect there?

Yes, thanks for the question. Really we're looking at those accounts and to say -- some of them are existing accounts for us to see, okay, if we make the process that much easier, what's the lift that we should expect in each of those accounts. And we're seeing a fairly wide variability. In some clinics, the workflow just isn't all that established. And so the volume stays flat. But in a lot of these clinics, the clinical buy in is already there, the physician already believes in the product, it's just a matter of making it that much easier for the staff. And so we look -- in the early days, we looked at those, right? Like customers that we already have, what's the uplift that we can see? But I think the real power of that EPIC agreement is in those clinics where we didn't already have existing customers, we can get new customers based on the ease of which they can order and how we can just bring in a sales force to enforce the clinical utility and the value of our products. And then the uplift will be a lot faster in those clinics. So I would say we're measuring sort of new customers and speed to getting up to full potential, and then what's the lift in existing customers.

So just to add, what we have seen in the various EMR integrations, as Nicola spoke to, is about a 25% lift in volumes and wallet share. And I just want to reiterate that most of these solutions did not drive fourth quarter and Q1 results. Most of these solutions are coming into place now. So it really gives us a lot of confidence in our ability to grow. As we've stated over the last year, our ability to grow in '23 and going into '24. The other thing that's really an important enhancement here is getting paid, being able to pull medical necessity prior off out of EPIC or Cerner or the other EMRs that we're working on, just creates less friction with the payers as well. And that will enable us to reduce our no pay and get paid faster. So there's just a lot of benefits here, and obviously getting the reports back to the provider more quickly so they can treat the patient. So it's a winner across the board.

Great. Thanks.

Thank you.

And your next question comes from the line of Derik De Bruin with Bank of America. Your line is open.

Hi, Paul and team. This is John on for Derik. So congratulations first of all, strong double digit growth again this quarter. But I want to make sure -- I wanted to ask how much of that growth is off perhaps easier comps from prior year due to COVID versus incremental? Like were there any catch up payments perhaps from the new code going into effect or any one-time items?

No. As a matter of fact, as Bryan spoke to, we had to overcome the prior $12 million prior period collection, strong collections that we had in Q1 of last year. So clearly, the comps were easier to achieve given Omicron last year. What I would point you to is the quarter-over-quarter 10% growth that we had sequentially in what is typically a 4% or 5% down quarter. So the momentum across all our products, MyRisk hereditary cancer, prenatal that grew 12% off of low performance last year, really performance across the board. And most of that, as Mark spoke to, coming from wallet share of existing customers. We're not even seeing yet the flow through of new customers that are just being onboarded. So we're feeling pretty good about the momentum here.

I appreciate that. So that means you still expect GeneSight to grow upwards of 20% for the year. How do you see myChoice and Prolaris and the prenatal products contributing to that growth, if you're able to break down those segments?

Well, we don't break down the segment. But I think what we've tried to focus everyone's attention on is over the last year, and Nicole spoke to this, it is about mature products with known reimbursement in guidelines where our principal challenge was ease of use with providers, and you're seeing double digit growth across all the product lines and still pretty low adoption rates. So when you think about Prolaris, that area is only 25% penetrated, same number for hereditary cancer. So when people talk about hereditary cancer being commoditized or some melting ice cube on pricing, it's just not true. And we're demonstrating that. And particularly with the 34% growth in women's health for unaffected patients with a family history that meet guidelines, the majority of which are 25 to 45, there's just great opportunity for patients to access MyRisk with riskScore, which is by far the best hereditary cancer test in the marketplace.

Got you. I appreciate it.

And your next question will come from the line of Jack Meehan with Nephron Research. Your line is open.

Thanks. Good afternoon.

Hi, Jack.

Bryan, I wanted to ask you about the GeneSight ASP just how the coding change played down in the quarter? I'm calculating an ASP of about $290, so down 13% sequentially. Is my math -- under the Medicare rate came down 15%. It was my understanding that was only like 25%, 30% of the volume though. So can you just talk about what -- is my math right and what was the remaining driver of the sequential decline?

Yes. I think in total, and I look at it sequentially as well, I think that's the right math. What I would say is that over half of that sequential change was really driven by the normal seasonality that we see as well as a transitory billing issue that we didn't resolve until late in the quarter. And that will play out over the course of the next few quarters. So those two items were sort of over half of that change that you saw. We did see some -- as we said, some downward pressure as it relates to the PLA code. But we still expect that over time, long term, that's going to be a positive to have a code like that that's unique the GeneSight recognizes. It's transparent for folks as it starts to come in and be a covered service. But that was some portion of it, but the majority were the first two items that I mentioned.

Unless we forget the revenue growth quarter-over-quarter in GeneSight that at the end of the day is what we're being judged by here.

Sure. And then also wanted to ask just about the DSOs, I think accounts receivable increased 17.5 million sequentially. Last year, it was 10 million. The prior year, it was 5 million. Maybe this is related to the billing you were referencing, but just like the increase was bigger than in the past. Can you comment on that?

Yes, I think two things. One is, when you think about the year-over-year comparison that the revenue was up substantially year-over-year especially when you back out the out-of-period cash collections out of last year that obviously would not have had an end of period AR effect. And in March, typically the way the quarter falls is the biggest month of the quarter and there's not an opportunity to collect that. So I think it's the way we look at it. DSOs are right in the range that we would have expected. Really the increase in the AR balance is driven by the increase in revenue.

And we've seen that five day pop and worked it down every year as well. So it's sort of seasonally consistent.

Okay. Thank you, guys.

Thank you, Jack.

Thank you, Jack.

[Operator Instructions]. Your next question comes from the line of Puneet Souda with SVB. Your line is open.

Yes. Hi, Paul. Thanks for taking the question. So was there a research contribution on the MRD side in the quarter? And wondering what's the latest update there in terms of product launch? And how are you thinking about the market overall? There's some new entrants into the market that are launching the assays prior to reimbursement. And so obviously the number is growing in the market. So just wanted to get your latest as to how you're thinking about this market overall?

Yes, we're still incredibly excited about how we stack up in terms of the MRD assay that we're standing up operationally in our existing labs with the technology that we have with Prequel and myChoice. There were no MRD revenues in the quarter. As we talked about, that we believe will happen in the back half of the year. A lot of interest though and discussions advancing with pharma on research MRD. So we do expect to see some of that go through and I think that will, no pun intended, validate our assay. And importantly, in the quarter, we did see some nice growth in our biopharma research business, but it was not in MRD. But those relationships continue to expand. That's led to our companion diagnostic expansion. And again, as Nicole spoke to, we think the Illumina partnership will just open up more of those conversations. So we have a growing pharma, biopharma business, and are excited about the differentiation of our MRD assay. I would underscore that the differentiation is that when we come to market, a, we will generate revenues from research. So we're confident about that. And b, we can stand it up in our labs and commercialize it a lot quicker. And we'll be talking over the next couple of quarters hopefully about some of the clinical validation work that we're doing with some academic medical centers. And we hope to be talking about that here in the next several months.

Got it. And then on -- as you look for the rest of the year, you acquired SneakPeek later last year. Just wondering in terms of the focus, is it continuing to be on product launches? And once you have trimmed the portfolio that is it opportune time to start looking at more assets into this space? Obviously, valuations have come down. Just wanted to get your latest thoughts on M&A. Thank you.

Yes, I'll answer that question and just give an observation to this sector. And I'm only two and a half years into this. But the focus on new product launches as opposed to getting the full potential of profitability on products that are leading and that have margins and margin expansion, I scratched my head about it, quite frankly. So we have an exciting product portfolio. We've talked about that contributing to '24 and particularly '25. We're growing at 10% plus based on our existing portfolio, and we see growth on top of that. In terms of M&A, absolutely, we will continue to look for opportunistic tuck-ins in the areas where we think we can win. But yes, I'm just -- I don't know. If I have an investor hat on, I'm really thinking about the opportunity to drive profitability and growth in core mature products where adoption rates are still low, and the competitive environment has gotten a lot better. That's not to say we're not excited about FirstGene MRD expanding to Precise Liquid, but we're very focused right now on GeneSight, myChoice, Prolaris, MyRisk in particular. I guess I just underscore that from an investor's standpoint and return on invested capital.

Got it, makes sense, and congrats on a solid quarter. Thanks.

Thank you, Puneet.

Your next question comes from the line of Mason Carrico with Stephens. Your line is open.

This is Jacob Krahenbuhl for Mason. Thank you for taking our questions. So you guys have talked about the cross selling opportunity for a number of your tests across channels, whether it's selling GeneSight into the women's health channel, MyRisk into the urology channel. Could you just elaborate on where you've seen the most success so far with that and what you view as the most attractive opportunity on this front [indiscernible]?

Yes, Jason, this is Mark speaking. I think as Paul mentioned, we're really in the early innings of that. So I think what you're seeing now is you're seeing the fact that we do have commercial scale across those channels. So most importantly, they're all talking to one another, they're making sure that a provider does want to get GeneSight. But we made sure that the GeneSight or assets in the local area can certainly do that. I think what you're seeing is through our digital capabilities, and as Paul and Nicole talked about, we're now building unified ordering portals to where we're making it easier for providers to be able to do that. And that's starting within the women's health field where we've got MyRisk, we have a prenatal product. And very soon, we'll be able to expand to GeneSight and to our other product lines. So we're still in the early innings. But as you can imagine, we are seeing different providers from our different segments start to use all of our products across the portfolio.

And you can maybe just talk about UroSuite that we just launched that product there?

Yes. So when you think of UroSuite, right, we do have the ability and we're the only company to be able to provide solutions for that provider. And in that case, we already have the capabilities. So I think when you think of UroSuite, when you think of women's health, again, with MyRisk as well as prenatal products, we have those types of capabilities. And I think soon you're going to see capabilities to be able to think about GeneSight. The obvious choice that we've talked about previously is GeneSight going into women's health segment. And we'll talk more about that in future quarters.

Okay, thanks. That's helpful. And then so next on hereditary cancer, hereditary cancer volumes have been a bright spot recently. In terms of the organizational changes and commercial optimizations that you've made within this business, could you maybe speak to what commercial initiatives are still in front of you and what your key priorities are going forward to ensure that you continue to make these market share and wallet share gains we've been seeing more recently?

Yes, sure. So there's the basic blocking and tackling that I talked about last quarter, which is better targeting, better segmentation. I think just the other pieces that we've talked about around goal setting, commissions, training, right, those are all sort of the basics. But I think as we've talked about making this easier to work with. I think you've heard Nicole today as well as last quarter talk about many customers always liked the Myriad products. But for one reason or another, they decided to leave us. Now we're able to go back in there. We've got easier solutions. We've got better pricing. We've just got more options. And so I think as we look at the targeting across the space, there's driving depth within our existing count, which we talked about today. But there's also some of the new customers that we know exist, both large and small. And we'll start to give a little bit more color to that moving forward.

Okay, got it. Thanks, guys.

And they are no further questions. I'll turn the call back to Matt Scalo for closing remarks. Thank you.

Okay. Thanks, operator. This concludes our earnings call. A replay will be available via webcast on our website for one week. Thank you again for joining us this afternoon.

Thanks, everybody.