Thank you for standing by and welcome to Myriad Genetics' First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Matt Scalo. Please go ahead.

Thanks, Latif, and good afternoon and welcome to the Myriad Genetics First Quarter 2024 Earnings Call. During the call, we will review the financial results we released today, then 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 website 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; Scott Leffler, our Chief Financial Officer; Sam Raha, 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 website, 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 in 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. I will now turn the call over to Paul.

Thanks, Matt. Good afternoon, everyone, and thank you for joining us. On today's call, we will discuss highlights of our strong first quarter performance, provide an update on the progress that we continue to make accelerating profitable revenue growth. First, I want to thank my Myriad teammates and our provider partners for their continued support and commitment to advancing our mission and vision to make genetic testing and precision medicine more accessible and helping people take more control of their health. We now turn to Slide 4 to talk about our highlights for the quarter. We continue to deliver on our commitment to shareholders as we achieved double-digit revenue growth in the first quarter compared to last year, reflecting both volume growth and ASP improvements across the portfolio. Our focus on profitable growth continues into 2024 as we reported positive adjusted EBITDA and we're close to breakeven on an adjusted EPS basis in the first quarter. We're excited about the ongoing execution of our near-term strategic priorities that are driving growth and efficiency across the enterprise. We are seeing early wins in both Oncology and Women's Health, related to recent market dislocation, as we continue to reinforce our Oncology offering with Precise Tumor and soon, Liquid, currently being integrated into our new labs. This morning, we announced a reorganization of our international operations that I will provide more detail on as well, as well as the progress standing up our 2 Labs of the Future. We continue to accelerate investments in clinical validation studies and EMR integrations. A large part of our transformation journey has been addressing our clinical validation data deficit. In 2024, we will continue to go to ASCO and ACOG with more publications, abstracts and posters that we've seen in a long time. Mark and Sam will…

Thanks, Paul. I will begin on Slide 9 to talk about our commercial teams. We continue to invest in tools and analytics that enable our commercial teams to better segment their territories and identify clinicians that could benefit from Myriad's testing portfolio. We have seen positive results from the use of these analytic tools as the commercial teams continue to drive new and sustainable revenue growth. In the second half of 2023, we realigned our commercial sales force incentives from volume-based targets to revenue-based targets. Overall, the shift better aligns our commercial teams' goals with the company's focus on reducing no-pays. We believe that the 12% revenue growth and positive ASP trend in the first quarter in part reflect our investment in these analytical tools and the realignment of our commercial team incentives, and our ongoing focus on revenue cycle management, which Scott will talk about in more detail. Most importantly, these efforts position us well for continued positive momentum throughout 2024. Next slide. Myriad continues to lead with differentiated insights offered by our MyRisk RiskScore Hereditary Cancer Test. In the first quarter, hereditary cancer testing revenue grew 16% compared to last year, with volumes up 9% year-over-year. We believe this consistent growth reflects the combination of our reputation as a leader in this area, the commercial team doing a better job driving home our differentiated messaging, improving relationships with genetic counselors, along with early competitive dislocation. Looking forward, we are excited about the omnichannel opportunity to drive MyRisk growth across all of our businesses, and we continue to accelerate our investment in clinical validation studies and EMR integration to address recent market dislocation with the most recent -- with the most clinically differentiated hereditary cancer test on the market. Next slide. As mentioned, no part of our portfolio has…

Thanks, Mark. Let me start on Slide 18 and provide an update of our Labs of the Future program. A quick reminder that the overall objective of this program is to drive innovation and operational excellence to continue delivering high-quality testing results at scale that meet regulatory requirements while shortening turnaround time in support of our ongoing focus to improve patient provider experience, all of which continue to differentiate us from other labs. As you may recall, we completed construction of our new lab facilities in South San Francisco and Salt Lake City in 2023. Highlights from Q1 of this year include completing and passing clinical inspections at New York State in Salt Lake City, by the state of California and CLIA in South San Francisco. We also completed the validation of Prequel, our NIPS assay, in South San Francisco and completed the first stage of bringing up Precise MRD assay workflow in Salt Lake City. Our plan for South San Francisco remains to complete the move-in, workflow validation and full-scale Prenatal lab operations by the end of 2024. For our new Salt Lake City lab, we remain focused on completing the move-in process as well as the validation of sample processing for most of our Oncology assays by the end of 2024 and running those assays at scale by the end of Q3 in 2025. We are also in the process of integrating recently-acquired Precise Tumor, Precise Liquid tests into our new Salt Lake City facility. Let me talk more about that now on the next slide. You may recall that we completed the acquisition of select assets of Intermountain Precision Genomics last quarter, including lab instrumentation, workflows and Precise Tumor and Precise Liquid assays, which together, these 2 are genomic profiling tests for therapy selection that are part…

Thanks, Sam. I'll start on Slide 23. We delivered a strong overall performance in Q1, led by 12% revenue growth year-over-year. This growth was primarily driven by hereditary cancer testing, Prenatal testing and pharmacogenomics and speaks to internal initiatives such as an improving customer experience and continued execution by our commercial team. Mark provided commentary as to how the commercial team, with enhanced analytical tools, are addressing health care provider needs and more effectively generating revenue growth. We believe these activities, in addition to ongoing progress in revenue cycle management, were important drivers of our Q1 ASP improvement, up 2% over the year-ago period. Historically, ASPs in the first quarter tend to be soft due to resetting of deductibles and other adjustments at the beginning of each year. So the fact that we are starting off 2024 with such a strong ASP performance bodes well for the rest of the year. Next slide. On Slide 24, we revisit some of the revenue cycle initiatives discussed at our September 2023 investor event. We have made progress on multiple fronts, including ramping up EMR integration, improving prior auth [indiscernible], automating our billing process and expanding payer coverage. Myriad has seen a number of payers recently expand coverage of average risk populations that could benefit from our tests. First quarter revenue reflects approximately $3 million from a single payer who expanded coverage of these average risk patients, as well as other [ immaterial favorability ] from out-of-period adjustments. We are pleased with this continued progress against our long-term goal to reduce our no-pay rate, complementing the volume-generating potential of the business. Moving to Slide 25. I want to highlight our financial performance by quarter. First quarter adjusted gross margin of 58.5% improved 80 basis points compared to last year, overcoming headwinds associated with…

Thanks, Scott. We continue to build on the pillars of long-term growth and profitability that delivered our strong results in 2023 and the first quarter of this year. Our clinically differentiated products supported by technology, deliver value in real-world clinical settings and enable early detection and better treatment decisions for providers and their patients. Our modernized labs, commercial engine are examples where investments in automation and advanced technology are yielding improved workflows, faster turnaround times and reduced operating costs. All of this reinforcing our position as a trusted differentiated lab with specialized expertise, best-in-class quality, and a strong, scalable commercial entity underpinned by data, research and technology, with industry-leading margins and business management. We continue to energize the enterprise around our shared 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. I'd like to now turn it back over to Matt for your questions.

Thanks, Paul. As a reminder, during today's call, we use certain non-GAAP financial measures. The reconciliation of the GAAP to non-GAAP financial results and the reconciliation of GAAP to non-GAAP financial guidance can be found in our earnings release under the Investor Relations section of our website. Now, we're ready to begin our Q&A session. [Operator Instructions] Latif, we are now ready for the Q&A portion of the call.

[Operator Instructions] And our first question comes from the line of Matt Sykes of Goldman Sachs.

Congrats on the quarter. Maybe Paul or maybe Mark, just talk a little bit about the runway that you see for future market share gains in both hereditary cancer and Prenatal. You made some comments that it's sort of just at the beginning, so would love to know kind of where you see that runway and how long? And then how sticky are the new relationships that you're building? I'd assume if you get those relationships, it's probably easier to keep them over time, post winning them. I just want to get some color around that.

Yes, Matt. Well, look, first, it's the early phase of this, particularly for large accounts, these institutions take a while to make changes. I would say what's happened, and Mark will elaborate here, is that we're in the room now, certainly with 2 or 3 other competitors and people are revisiting their choices. And as I said earlier, we're really focused on the things that they tell us they care about, ease of use, clinically-differentiated products. And that's where EMR and the other point-of-care things really matter. But you're absolutely right that these relationships I think will be stickier. I mean you know I come from a large hospital system world. And once these institutions make changes without the disruptions that we're seeing now, it's very hard to kind of get in. Now that being said, genomic testing is not #1, 2, 3 or 10 on the list of a hospital system's priorities, but we're pretty excited. I think that expectations should be, though, that the business we hope to sign in the back half of the year certainly could give us a lot of momentum going into '25. But you really won't see the what I think is a big opportunity to fully come through until '25. But Mark, why don't you take it.

Yes, I would agree with that, and thanks for the question, Matt. I think, not to speak over Paul here, I think the benefit is we are at the table. Myriad is perceived as best-in-class. And so I think we are at the table. These providers, even though there is dislocation, they've got lots of other priorities. And so we think of it as it's going to take a couple of quarters for us to really accelerate. But as Paul mentioned and as I mentioned during my comments, for the MyRisk business with EMR integration and all the investments we are making, that really suits us well for the back half of the year and going into 2025.

Great. And then maybe just as my follow-up, a related question. Perhaps, again for you, Mark, just given the change in incentives for the commercial team to revenue from volume, does that help salespeople target the right customers? I'm sure in this market dislocation, there's a number of customers that might not be economically viable. And this change in incentive, does it focus your salespeople on attracting the right customers? And what has the reception been from your commercial team to this change in incentive?

Yes, Matt, you are spot on, right? I think when we make those changes, it -- it just allows our team to focus their attention. It isn't that we're excluding any particular patient or any particular provider. But from a point of focus and even to Scott's comments, just all of our efforts around revenue cycle management, making sure that the order, making sure that the provider knows what the guidelines, making sure the provider has an understanding that what the specific payer coverage is and making sure that at time of ordering, we're collecting as much information as we can, absolutely allows us to be able to pull through increased ASP. And that's something that I think in this space, Matt, just really was not -- teams just really didn't have that type of focus. So I would definitely agree with you there. And I would say the acceptance from the sales force has been 100% aligned. That's -- obviously, that's how they get paid. That's how they get compensated, but it's also about the way that they spend their time in the field, right, where they're not wasting time focusing in areas that aren't going to benefit the company and they're certainly not going to benefit them.

And we're perfectly -- I mean I've talked to sales teams about this. They understand now that maybe a point of volume is worth giving up to get 3 or 4 points of revenue. So we are just much better aligned now. And I think you started seeing that inflection and that change in the quarter because they are very much now aligned with the revenue cycle management initiative. And again, as Mark said, at our different national sales meetings and stuff, we have not got pushback because we really help them embrace this as part of change. So I think you'll see that net benefit play out over the course of the year and accelerate in '25.

Our next question comes from the line of Douglas Schenkel of Wolfe Research.

I want to start with a high-level one. Scott and Sam, it's now been a few months since you joined the company. I'm curious where you are in the process of essentially evaluating the firm, evaluating your teams. Essentially, what's better, what's worse? It just would be interesting to get an update on kind of your early learnings and kind of what -- where you think you are in essentially starting to play offense in your leadership roles at the new firm?

Sure. I'll start off and then hand it over to Sam. First of all, thanks very much for the question. I could not be more thrilled to be at Myriad, but also with everything that I've seen and learned, both about the company itself and the momentum that it has, but also in terms of the overall broader market opportunity that we see in front of us. I just feel privileged to have joined the company at what is a very special inflection point where so much great work and so much great investment has already been done. And I think you can see a lot of the fruits of that effort in our results from Q1 but also to now see the landscape in front of us in terms of the ability to accelerate growth throughout 2024 and going forward. So if there is any learning that I've had in the last 3 months at the company, is how extraordinary the progress that has been made but the momentum also that we have going forward [indiscernible] forward. Sam?

Yes. Thanks, Scott. Thanks for the question, Doug. I concur with what you said, Scott. I'll tell you that I have a vantage point of coming from some other larger companies that you're aware of. And I would put our team on par with any of them. It is a focus on, as Paul was mentioning, understanding the patient first, the science, but the operational execution to deliver timely results and quality results. I think all of those things are exactly what is needed for this next phase of our journey. And I also -- it's taken time, it's not as obvious, it wasn't to me coming from the outside, just the level of transformation on so many different fronts that this company has really executed on the last 2 years. And it's -- I think there's a lot of return yet to be seen from that. And of course, now Scott and I joining this great organization, we have an opportunity to help be part of taking us to the next level. So not only do I have no regrets, this is exactly what I wanted to see. I'm thrilled to be here.

And Doug, I'd only add that Dr. George Daneker has just been an incredible addition, an oncologist, physician who led a large health systems oncology business. I mean he has had such an impact just over the last couple of months and Dr. Dallas Reed on Women's Health side. So the company build, the team build, is happening at many different levels. And these 2 guys have just been great. They're freeing me up to do lots and lots of other things and we saw a little bit of that this quarter with some of the strategic stuff. So I couldn't be more pleased with our new partners here.

That's fantastic. And maybe I'll just try to sneak in one more on an unrelated front. Regarding the LDT final rule, I appreciate what you shared in your prepared remarks. For whatever it's worth, my take was this actually kind of turned out to potentially be a pretty big advantage for Myriad. I'm just wondering if you guys by and large agree. And as we look forward, recognizing this is going to take a few years to phase in, does this change anything as you think about how you develop assays, how you go to market, how you think about things competitively? Again, I think this increases barriers to entry for others. And this may even boost your position as a consolidator. So I'd love to get any comments on where you agree or disagree with my initial thoughts on this.

Yes, I'll start, Doug, and Sam can add. I agree, Doug. I mean I think that this is going to be very difficult for subscale operators. We have been preparing for this though for years, quite frankly. When we began to develop our plans for Labs of the Future, it was not just a real estate play. It was an automation strategy. It was to have a quality management system with full knowledge that this was coming. We feel lucky and that the investments we've made over the last decade in those quality management systems now can be leveraged both in our existing products, modifications to our existing products and future products. So clearly, we think this is going to be a competitive advantage. And the capital markets taken together with this, I think it's going to put a lot of pressure on folks, whether they're health system, up and coming lab operators or others. Sam's doing a great job of pulling the team together and he can talk a little bit about every single one of our products is going through product management with respect to these rules that we've been working at for a while.

Yes. I mean I concur with everything Paul said. I mean he really answered your question, Doug. But just to build on what Paul was saying, we have been preparing for, very diligently going through every single product we have on market and that we're preparing to launch, some the things that Mark talked about, with an eye to all those critical elements, right, not only quality management systems, but what are the studies that need to be done, what is the labeling approach and all doing that while we meet the most important thing, and you heard Paul and myself talk about over and over again, right? We have to make sure the quality standards are there, that the tests are relevant, the quality is there, that the turnaround time is there, and we make the tests accessible. So I think this is going to be, you know...

I don't know how folks that are outsourcing their lab operations can get to 70% gross margins and do it consistently, and meet these new requirements all at the same time. So I think it will be quite a challenge for some.

Our next question, which comes from the line of Dan Brennan of TD Cowen.

Congrats on a strong quarter. Maybe first one, obviously, you had a really solid start to the year. You maintained the full year guide. You talked about, I think, just prudence. But could you speak to -- it didn't sound like there were -- I think you called out $3 million maybe in prior period benefits, so most of the beat was all organic. So is there anything that would prevent you from seeing this strength continue? Just wondering why not kind of raise the guide now?

We agree, Dan. We're just putting one foot in front of the other here. It's a really strong start to the year, particularly on the ASP side, that we see run through the year. And we certainly can build on that, hopefully exceed guidance as we go through the rest of the year, but just didn't see clear to get ahead of ourselves at this point.

Got it. And then maybe on the hereditary cancer side, the Oncology side really beat our forecast. Women's Health was strong, but more in line. Just could you elaborate a bit more on kind of how much the benefit was from the share gains that you're seeing from the dislocation versus some of the ongoing initiatives that you have? And presumably, there's still a lot more share gains ahead given the size of that business that went bankrupt. So just a little more color on kind of what you saw this quarter, teasing it out and kind of what's assumed in the guidance going forward?

Yes, Dan, this is Mark. And I think we called it out, that in Q1, most of it was just our ongoing blocking and tackling. I think we're always winning share back and forth. So we would expect, as we mentioned earlier, that any incremental gains would happen in the back half of the year.

Our next question comes from the line of Puneet Souda of Leerink Partners.

I just want to clarify, in the European EndoPredict business, if there was anything for that in the guide? And just wondering, I know you have reiterated the guide, but just wanted to clarify that point. And then I have a follow-up.

Yes. No, I would say that both of the strategic transactions, we sort of are incorporating within the guide. And so and being able to reposition the portfolio with the additions of Precise Tumor and Precise Liquid, reorganize our European operations, become much more efficient in the way we were serving that market pretty extensively. And to put a little more cash back on the balance sheet. So these are both very capital-efficient transactions and whether it's on the revenue or the profitability side, within our guidance for '24 and accretive to earnings and cash flow in '25. So we are really excited at this market and we are picking and choosing our opportunities, and we think there'll be more in terms of bolt-ons and strategic acquisitions going forward. But those are the kind of stuff that we want to keep doing [indiscernible] or different philosophies around those kind of things.

Got it. Okay. And then just following up on that, I mean when you look at the portfolio optimizations that you have done, the focus on Precise Liquid and expansion into therapy management and also MRD, sort of, Paul, just walk us through how you think about further either trimming of the portfolio, or as you said, potential expansion, other strategic options that you might pursue, given sort of where the state of the market is right now in diagnostics.

Yes. When I pushed George and the physicians, and we're certainly going to ASCO with these questions, like what are the key precision benefit tools you need to treat a cancer patient, breast cancer patients, et cetera, hereditary cancer always comes up first, somatic second, Liquid third, and MRG, interesting new novel technology fourth. So we're just very excited over the next couple of years, we're going to have a place where you can get those primary key tools to treat and monitor the progression of patients in one place, in an EMR with consolidated reports. And I think that is going to be a big differentiator from others who are trying to string together this, and all of a sudden, hereditary cancer seems to be interesting. When I got here, everybody thought it was a dead bounce kind of thing. So we kind of like the portfolio position. That being said, Puneet, we are investing in innovation. We're investing in building more studies as we referred to on the call. That's a place where we have to play catch-up, going to ASCO and ACOG with more studies and more readouts than we've had in years. And we'll certainly be watching the marketplace for great client innovation that fits within our portfolio. But we're going to stay pretty disciplined on the indications that we're focusing on and the channels where we think we have leverage.

Our next question comes from the line of Andrew Cooper of Raymond James.

Thanks for the question. Maybe just first kind of sticking with the OUS transaction, can you maybe just give us a little bit more of the thinking on sort of circling the wagons here on the U.S. opportunity and what our takeaways from that should be? Is it, hey, we're just really excited about the opportunity here and don't need to worry about the European efforts in the same way we have before? Like what should our takeaway really be on that decision?

Yes. I would say that the thesis is generally the complexity is a killer of growth and accountability. And operating in Europe is both complicated and expensive. Every single country has its own requirements. We were going to be forced to set up satellite labs everywhere, to go through their regulatory IVDR process, and the juice just wasn't worth the squeeze. For the Eurobio folks, that's where they live, that's where they do business. They're great at kits. And so for us to continue to serve through distribution arrangements in our LDT operations in Salt Lake, to continue to expand in Japan, where we have a growing and very profitable business. And yes, resources, we have to be very efficient. So investing in studies, investing in EMR has higher returns on bringing in this new business, new opportunity we see in terms of consolidating the market, where Europe is a much longer term and a more complicated process. So that was really what went into the strategic decision making.

Okay. That's helpful. And then maybe just shifting to the P&L a little bit. Would love a little bit of flavor, I know you shared a little bit, but on some of the ASP dynamics maybe across some of the different areas of the portfolio. And then also just if we think about the ramp in OpEx through the year, can you give us a breakout of how much of that we should think about is true kind of new product growth that you're trying to drive and new efforts versus sort of maintaining the growing base that you have?

I'll take the second one and let Scott take the first one. So we're continuing to try to get productivity gains across all OpEx, whether it's commercial, [indiscernible], in the support center and trying to repatriate dollars to R&D, to clinical studies, and to IT, where we know we have very quick returns on investment. So we expect to stay within that 5% to 7% growth. And I'll just remind everybody, over the last couple of years, we've done exactly what we said we were going to do and we've done that again this quarter, and you're really starting to see the leverage of this operating model this quarter. And so we -- we maintain that we can manage within that 5% to 7%. But within that, we may push the 7% growth in OpEx, but a higher percentage of that, call it, 10% to 15% growth in the R&D and tech spend, while the other areas is really wages and benefit cost that are in the 4% to 5% range all in. So that's how I would think about that. No big investments beyond that 5% to 7% range in our OpEx. You'll see some ramp up over the course of the year and just a great job by the team starting this year in terms of actually beating budget in the first quarter. So you will see a little bit ramp each quarter as we invest getting ahead of the launches and the studies that we're ramping.

Yes. So I'll take that, your first question on ASP. And I'll just remind you that on the last earnings call, we did talk a little bit about the fact that looking back on 2023, our overall ASP performance for 2023, actually it was a little bit worse than we would typically expect. And so coming into the year, we already saw that there was an opportunity to really perform even better than we would typically hope for, just given the ability to recover some of what was lost last year, along with incremental organic improvement from the various initiatives that we've talked about. But really, I would say that it's just been an extraordinary success so far this year. And appears more or less across the board, in the individual product levels, you see outsized ASP gains. And when you look at the blended performance, where I think we called out a 2% contribution from ASPs. In some ways, a high significance, the ASP improvement has been at the individual product level, because you have a little bit of product mix that is impacting that blended number, but really what we're seeing almost across the board is much greater than that 2% improvement in ASP. And that's something that we believe certainly is sustainable and based on the number of initiatives we continue to have at play, something that we can build on moving forward.

Our next question comes from the line of Rachel Vatnsdal of JPMorgan.

So first, I just wanted to dig into seasonality and 2Q expectations. Last quarter, you provided guidance for 1Q on top and bottom, so I was wondering if you could do something along those lines for 2Q as well. So first up, how comfortable are you with the Street at around $200 million of revenues and roughly $0.01 of loss per share? And then given some of the moving pieces that you highlighted today, ranging from LDT to some of the product launches and competitive dynamics, how are you thinking about the various segments performing in 2Q?

So that was a lot and fast. So first, we did not give Q1 guidance and we're not giving Q2 guidance. I think directionally, the Street is a pretty good place in terms of where our estimates are for Q2, obviously building on our Q1 success. There's nothing that we're seeing in the estimates for Q2 that trouble us. I would encourage folks not to get ahead of us here. Again, since there's a lot of moving parts, with Labs of the Future and everything else going on. But on individual products, it continues to be a story of continuing to grow. Q2 is typically a stronger quarter for us in terms of volume. And as Scott just said, the ASP tailwinds that we had should continue in the year. So that does bode well for a strong year, even without big market share gains, as Mark said, which will probably happen later next year -- later this year, quite frankly creates real and strong momentum going into '25.

Great. And then just as my follow-up, around ACOG, you mentioned that ACOG guideline expansion would be upside later this year if we were to see it. So I guess, what's your latest assumption on when we could see an update from ACOG? I appreciate it's not embedded into guidance at this point. And then I just wanted to talk for a minute about market share regarding 22q. One of your peers out there has more of an opt-out strategy when it comes to 22q testing. I know you guys have focused more on the profitability side and have more of that opt-in type of strategy. So when ACOG eventually expands their guidelines, should we see that positive guideline inclusion? How do you see that playing out from a market share perspective, given that shift between opt-in and opt-out?

Yes. We just released a study on 22q, which was showed the power of Prequel, quite frankly, and differentiated from everything else in the market, quite frankly. And so if 22q is included in ACOG guidelines, we think that will give us just another reason to continue to win share and win share that's profitable. The thing that I just want to keep underscoring for everybody is profitable growth here. That's what we're focused on and that's what we delivered this quarter and that's what we're going to continue to deliver. But you're absolutely right. The expansion of ACOG guidelines, should they happen, we think both will broaden adoption as well as improve ASP. And the launch of Foresight Universal Plus will include those genes that we expect. So we're holding off until we see that and that kind of just goes to the product management discipline overall. We want to make sure that we are not launching products that are not in guidelines and that we don't -- that we have a path to payment, which is a thing that I think the industry is finally grappling with is launch is not just having your, your studies and going out and selling docs on your product, it is also having an eye toward getting paid and running it through your lab efficiently. And so that's the balance we're trying to bring to product management. But the expansion of guidelines would be a great tailwind for us going into next year. If they are adopted as we hope later this summer, and we're all kind of on standby there, and 22q would be also just great to have in that context.

Our next question comes from the line of Subbu Nambi of Guggenheim Securities.

On reproductive health, a couple of larger players have exited the market. And you clearly have made progress in capturing share, but how are you gaining share without compromising on going forward when the business model of [indiscernible] the market?

I'm not really sure if I followed, you didn't come through particularly clearly. I think the question was how are we gaining share profitably. I'm sorry, could you just restate the question, please?

Yes. Can you guys hear me now?

It's a little better. But yes, maybe just a little louder.

Okay. So on reproductive health, a couple of larger players have exited the market and you are clearly making progress in capturing share. But how are you gaining share without compromising margin, given the business model of those that exited the -- given the business model of those exited the margin -- market tend to really focus on the margins?

Yes. So good question. We absolutely are trying to be there for customers. As Mark said, we see patients. We don't see payer. But that doesn't mean that we are not focused on making sure that we are bringing on business with good margins, that we can do it effectively. So I think what you've seen over the last 2 years is our ability to grow and grow more profitability, and you saw it the last 2 quarters. So it is about profitable growth, maintaining those gross margins near 70%. That will fluctuate sometimes from quarter-to-quarter, depending on mix and other factors, but we've stayed in that 68% to 70%. And think we could probably do a little bit better as the year progresses here, but absolutely committed to not just bringing on business to win business, but to bring on business that is profitable and that generates cash flow. If you look at our cash flow conversion and you look at our 50 days and DSOs, we've got to convert billings into cash. And ultimately, I think that's what disciplined businesses need to do and we're trying to do here.

Super helpful. And one last one for me. On MRD, any updates on clinical data? How is the enrollment progressing? And are you still planning commercial launch the back half of next year?

Yes. So there'll be some additional studies at ASCO. And then we are expecting to get a readout on an -- our M.D. Anderson study this fall, late summer. And in addition, we will be running samples for pharma in July, I am told. So I think Q3, Q4, we will have a lot more to talk about, about the progress we're making with the study, but everything is progressing there. We have another patent we're expecting to get issued here shortly. So while we -- we wish we were making more progress, we are going to be investing in some additional studies. But so far, my understanding from Dale is that they're running through the labs really well. Sensitivity is high. Our partners are really pleased with what they are seeing in terms of the results and we'll be talking, as Mark said, more about this at ASCO, including with our partners at M.D. Anderson.

Our next question comes from the line of Mason Carrico of Stephens Inc.

This is Jacob on for Mason. Congrats on a strong start to the year. Most have already been covered, so I'll maybe just keep it to one here. But could you talk a bit about the early traction you're seeing within your Oncology portfolio after acquiring Intermountain? I realize launching Precise Liquid and your MRD offering will be big drivers of this opportunity, but have you maybe seen an increase in the number of docs ordering multiple tests within this segment yet?

Yes. I mean I think it's -- we're just still early, this stage here. I mean the first thing was to make sure that we integrated it. Sam and the team are doing a great job there. And we've seen a slight increase, but the real push will happen later this year once it's fully integrated and going into '25. It's not really envisioned to be a driver of our guide for this year. But we do see Precise Tumor numbers overall growing and not just in terms of the Intermountain deal. And now we control 100% of the P&L. So it's not just sort of the allocated part of the P&L. So that is starting to contribute. But I think what you'll see coming out of ASCO is a big push in terms of our Oncology team about preparing for hereditary cancer with Precise Tumor. And that really sets the stage for Liquid next year and MRD. So stay tuned. I think we'll have a lot to say at ASCO about how this portfolio comes together in terms of precision medicine tools for oncologists, particularly for breast cancer patients, but for other indications as well. And that's what we'll be highlighting at ASCO. We're pretty excited about the feedback we've gotten from oncologists in terms of that as we review the preparations.

Our next question comes from the line of Michael [ Riskin ] of BofA.

This is John on for Mike. I wanted to ask on GeneSight, it's great volume, ASP and did better than our models, so exceptionally well. Could you provide any update you've had in terms of improving the coverage, like what states and Blue plans are next for you? And what's in your guide versus what can be an upside?

It's as Scott said, it's just blocking and tackling right now. It's -- we haven't even really fully leveraged the biomarker pieces yet. We're -- probably don't want to call out individual states, but we are amping up a couple of states in the Attorney General's office and other places. But it's been a number of different wins, $1 billion here, $1 billion there. All of a sudden, you're talking about a nice lift in ASP and just gaining more traction on coverage writ large in terms of GeneSight and also improving prior auth requirements and working with CMS, Medicare Advantage plans with respect to prior auth requirements, along with other industry participants. And again, as Scott said, it's been an across-the-board effort, across all our products in terms of seeking out places where we didn't have coverage, even for MyRisk hereditary cancer, where we had certain Blues plans that were not covering. And as Scott said, last year was a really tough year from an ASP perspective, and we're seeing the results of that turnaround now, working through some of those coding changes and other things. And we think, again, that momentum will continue and we'll build on that throughout the year and going into '25.

Got you. Understood. And then on the flip side, if I could ask for the tumor profiling, any thoughts on -- any thoughts on how the volume and the ASP is going to go there?

Yes. The tumor profiling was impacted because we had a really big win in Q1 of last year with a couple of biopharma partners. So it was really the biopharma revenue that skews that performance. MyChoice has been a little down because it changed to average risk. But overall, that negative 17% was driven by the fact that we had a big win in Q1 of last year with 2 or 3 big biopharma partners. The biopharma business is very lumpy. So we're not really -- not really clear. We always get paid. It's always really good business, but sometimes it falls in Q1 and sometimes it falls in Q3. So we still are excited about the prospects of building that business and that's something Sam and [ Patrick ] are really partnering up on.

Thank you. I would now like to turn the conference back to Paul Diaz for closing remarks. Sir?

Thanks, everybody. I think everyone's heard enough from me today. So I appreciate you guys spending time on the call today. I just want to thank my teammates for all their hard work. It was actually a difficult operating quarter. We had a few issues in the lab we had to work through. The team rallied. And again, we're just really pleased with the start of the year. Appreciate all of you participating in the call today and your support. And again, I hope that you are starting to see, as Scott said, just the beginning of the process here of us really starting to grow Myriad Genetics. And I think you can expect and should expect more from us as the year progresses. So thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect.