MYRIAD GENETICS INC 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MYRIAD GENETICS, INC. Index to Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 66 Consolidated Balance Sheets as of December 31, 2021 and 2020 68 Consolidated Statements of Operations for the Year Ended D ecember 31, 2021, the Transition Period E nded December 31, 2020 , and for the Years Ended June 30, 2020 and 2019 69 Consolidated Statements of Comprehensive Income (Loss) for the Year Ended D ecember 31, 2021, the Transition Period E nded December 31, 2020 and for the Years Ended June 30, 2020 and 2019 70 Consolidated Statements of Stockholders' Equity for the Year Ended December 31, 2021, the Transition Period Ended December 31, 2020 and for the Years Ended June 30, 2020 and 2019 71 Consolidated Statements of Cash Flows for the Year Ended December 31, 2021, the Transition Period E nded December 31, 2020 and for the Year s Ended June 30, 2020 a nd 2019 72 Notes to Consolidated Financial Statements 73 65 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Myriad Genetics, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Myriad Genetics, Inc. and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for the year ended December 31, 2021, the six month period ended December 31, 2020 and each of the two years in the period ended June 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for the year ended December 31, 2021, the six month period ended December 31, 2020 and each of the two years in the period ended June 30, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2022 expressed an adverse opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Measurement of molecular diagnostic testing revenue Description of the Matter During the year ended December 31, 2021, the Company’s molecular diagnostic testing revenue was $666.4 million. As discussed in Note 1 of the consolidated financial statements, molecular diagnostic testing revenue is recognized when the performance obligation is complete. Auditing the measurement of the Company’s molecular diagnostic testing revenue was complex and judgmental due to the significant estimation required in estimating the amount that will be collected for each test. In particular, the estimate of revenue is affected by assumptions related to payors such as changes in payor mix, payor collections, current customer contractual requirements, and experience with ultimate collection from third-party payors. 66 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding and evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process. As part of our testing, we considered controls over management’s review of the significant assumptions above and inputs used in calculating the estimated amount that would be collected for each test and tested management’s controls to compare actual payments received to previously forecasted activity. We also tested controls used by management to compare the current and historical data used in making the estimates for completeness and accuracy. Our audit procedures over the Company’s molecular diagnostic testing revenue included, among others, assessing valuation methodologies and models and testing the significant assumptions above and the underlying data used by the Company in its analysis. We agreed transactions selected for testing back to the actual customer contract terms. We compared the significant assumptions above and inputs used by management to changes in the Company’s contracted rates, third-party payor collection trends, and other relevant factors. We assessed the historical accuracy of the cash collections used in the Company’s revenue models and assessed the completeness of adjustments to estimates of future cash collections as a result of significant contract amendments, changes in collection trends and changes in payor behavior. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2006. Salt Lake City, UT February 25, 2022 67 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in millions) December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 258.4 $ 117.0 Marketable investment securities 81.4 33.7 Trade accounts receivable 91.3 89.5 Inventory 15.3 27.1 Prepaid taxes 18.4 108.4 Prepaid expenses and other current assets 20.0 13.7 Total current assets 484.8 389.4 Operating lease right-of-use assets 81.8 59.7 Long-term marketable investment securities 59.0 21.0 Property, plant and equipment, net 43.5 40.7 Intangibles, net 404.1 576.5 Goodwill 239.2 329.2 Other assets 8.3 2.3 Total assets $ 1,320.7 $ 1,418.8 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 29.6 $ 20.5 Accrued liabilities 156.5 79.1 Current maturities of operating lease liabilities 13.0 13.6 Deferred revenue 5.2 32.7 Total current liabilities 204.3 145.9 Unrecognized tax benefits 27.9 30.5 Long-term deferred taxes 35.8 71.3 Long-term debt — 224.8 Noncurrent operating lease liabilities 79.3 50.6 Other long-term liabilities 5.6 14.7 Total liabilities 352.9 537.8 Commitments and contingencies Stockholders’ equity: Common stock, $ 0.01 par value, 80.0 and 75.4 shares outstanding at December 31, 2021 and 2020, respectively 0.8 0.8 Additional paid-in capital 1,226.3 1,109.5 Accumulated other comprehensive loss ( 5.1 ) ( 2.3 ) Accumulated deficit ( 254.2 ) ( 227.0 ) Total Myriad Genetics, Inc. stockholders' equity 967.8 881.0 Non-controlling interest — — Total stockholders' equity 967.8 881.0 Total liabilities and stockholders’ equity $ 1,320.7 $ 1,418.8 See accompanying notes to consolidated financial statements. 68 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (in millions, except per share amounts) Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, 2021 2020 2020 2019 Molecular diagnostic testing $ 666.4 $ 279.6 $ 586.9 $ 789.4 Pharmaceutical and clinical services 24.2 20.2 51.7 61.7 Total revenue 690.6 299.8 638.6 851.1 Costs and expenses: Cost of molecular diagnostic testing 185.7 82.6 157.5 168.2 Cost of pharmaceutical and clinical services 11.9 8.8 28.6 32.8 Research and development expense 81.9 35.8 77.2 85.9 Selling, general, and administrative expense 537.8 260.4 507.3 556.6 Legal charges pending settlement 62.0 — — — Goodwill and long-lived asset impairment charges 1.8 — 99.7 — Total costs and expenses 881.1 387.6 870.3 843.5 Operating income (loss) ( 190.5 ) ( 87.8 ) ( 231.7 ) 7.6 Other income (expense): Interest income 0.7 0.7 3.0 3.2 Interest expense ( 6.6 ) ( 5.8 ) ( 10.8 ) ( 12.0 ) Other 139.3 ( 1.2 ) 16.2 1.2 Total other income (expense) 133.4 ( 6.3 ) 8.4 ( 7.6 ) Income (loss) before income tax ( 57.1 ) ( 94.1 ) ( 223.3 ) — Income tax benefit ( 29.9 ) ( 41.0 ) ( 23.7 ) ( 4.4 ) Net income (loss) ( 27.2 ) ( 53.1 ) ( 199.6 ) 4.4 Net loss attributable to non-controlling interest — — ( 0.1 ) ( 0.2 ) Net income (loss) attributable to Myriad Genetics, Inc. stockholders $ ( 27.2 ) $ ( 53.1 ) $ ( 199.5 ) $ 4.6 Earnings (loss) per share: Basic $ ( 0.35 ) $ ( 0.71 ) $ ( 2.69 ) $ 0.06 Diluted $ ( 0.35 ) $ ( 0.71 ) $ ( 2.69 ) $ 0.06 Weighted average shares outstanding: Basic 78.0 75.0 74.3 73.5 Diluted 78.0 75.0 74.3 76.0 See accompanying notes to consolidated financial statements. 69 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) (in millions) Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, 2021 2020 2020 2019 Net income (loss) attributable to Myriad Genetics, Inc. stockholders $ ( 27.2 ) $ ( 53.1 ) $ ( 199.5 ) $ 4.6 Unrealized gain (loss) on available-for-sale securities, net of tax ( 1.0 ) ( 0.5 ) 0.7 1.2 Change in pension liability — — — 0.6 Change in foreign currency translation adjustment, net of tax ( 1.8 ) 3.4 ( 0.6 ) ( 3.1 ) Comprehensive income (loss) $ ( 30.0 ) $ ( 50.2 ) $ ( 199.4 ) $ 3.3 See accompanying notes to consolidated financial statements. 70 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity (in millions) Common stock Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings (accumulated deficit) Myriad Genetics, Inc. Stockholders’ equity BALANCES AT JUNE 30, 2018 $ 0.7 $ 915.4 $ ( 4.1 ) $ 54.1 $ 966.1 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — 136.0 — — 136.0 Stock-based payment expense — 33.5 — — 33.5 Repurchase and retirement of common stock — ( 16.9 ) — ( 33.1 ) ( 50.0 ) Net income — — — 4.6 4.6 Other comprehensive loss, net of tax — — ( 1.3 ) — ( 1.3 ) BALANCES AT JUNE 30, 2019 0.7 1,068.0 ( 5.4 ) 25.6 1,088.9 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — 3.4 — — 3.4 Stock-based payment expense — 25.2 — — 25.2 Net loss — — — ( 199.5 ) ( 199.5 ) Reclassification out of accumulated other comprehensive loss upon the deconsolidation of a subsidiary — — 0.1 — 0.1 Other comprehensive income, net of tax — — 0.1 — 0.1 BALANCES AT JUNE 30, 2020 0.7 1,096.6 ( 5.2 ) ( 173.9 ) 918.2 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax 0.1 ( 2.0 ) — — ( 1.9 ) Stock-based payment expense — 14.9 — — 14.9 Net loss — — — ( 53.1 ) ( 53.1 ) Other comprehensive income, net of tax — — 2.9 — 2.9 BALANCES AT DECEMBER 31, 2020 0.8 1,109.5 ( 2.3 ) ( 227.0 ) 881.0 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — 80.3 — — 80.3 Stock-based payment expense — 36.5 — — 36.5 Net loss — — — ( 27.2 ) ( 27.2 ) Other comprehensive loss, net of tax — — ( 2.8 ) — ( 2.8 ) BALANCES AT DECEMBER 31, 2021 $ 0.8 $ 1,226.3 $ ( 5.1 ) $ ( 254.2 ) $ 967.8 See accompanying notes to consolidated financial statements. 71 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in millions) Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, 2021 2020 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) attributable to Myriad Genetics, Inc. stockholders $ ( 27.2 ) $ ( 53.1 ) $ ( 199.5 ) $ 4.6 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 62.8 35.8 72.0 73.0 Non-cash interest expense 1.5 0.4 0.5 0.4 Non-cash lease expense 12.8 6.4 — — Stock-based compensation expense 36.3 14.9 25.2 33.5 Deferred income taxes ( 32.1 ) 44.2 ( 55.8 ) 18.6 Unrecognized tax benefits ( 2.6 ) 7.1 1.7 ( 5.5 ) Non-cash impact of foreign currency transactions — ( 1.0 ) — — Loss on inventory 6.5 — — — Impairment of goodwill and long-lived assets 1.8 — 99.7 — Gain on sale of businesses and assets ( 162.0 ) — ( 1.0 ) — Payment of contingent consideration — — — ( 1.5 ) Changes in assets and liabilities: Prepaid expenses and other current assets ( 6.6 ) 3.1 2.8 ( 3.9 ) Trade accounts receivable ( 8.8 ) ( 21.4 ) 64.0 ( 18.2 ) Inventory 1.6 2.2 1.6 8.0 Prepaid taxes 89.9 ( 108.4 ) 25.1 ( 25.1 ) Other assets ( 4.0 ) ( 2.3 ) — — Accounts payable 9.2 ( 1.2 ) ( 10.7 ) 1.1 Accrued liabilities 65.7 ( 0.2 ) 4.4 ( 0.8 ) Deferred revenue ( 26.6 ) ( 0.2 ) 30.7 ( 0.5 ) Net cash provided by (used in) operating activities 18.2 ( 73.7 ) 60.7 83.7 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 18.0 ) ( 7.9 ) ( 10.2 ) ( 8.6 ) Acquisitions, net of cash acquired — — — ( 278.5 ) Proceeds from sale of business and assets 379.1 — 21.3 — Purchases of marketable investment securities ( 147.8 ) — ( 60.8 ) ( 78.5 ) Proceeds from maturities and sales of marketable investment securities 61.1 35.9 69.0 79.2 Net cash provided by (used in) investing activities 274.4 28.0 19.3 ( 286.4 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from common stock issued under stock-based compensation plans 91.8 1.8 13.3 23.2 Payment of tax withheld for common stock issued under stock-based compensation plans ( 11.5 ) ( 3.8 ) ( 9.8 ) ( 14.5 ) Payment of contingent consideration recognized at acquisition ( 3.3 ) ( 0.1 ) ( 3.9 ) — Proceeds from revolving credit facility — — — 340.0 Fees associated with refinancing of revolving credit facility ( 1.2 ) — ( 1.0 ) ( 1.4 ) Repayment of revolving credit facility ( 226.4 ) — ( 8.6 ) ( 115.0 ) Repurchase and retirement of common stock — — — ( 50.0 ) Net cash provided by (used in) financing activities ( 150.6 ) ( 2.1 ) ( 10.0 ) 182.3 Effect of foreign exchange rates on cash and cash equivalents ( 0.6 ) 1.1 0.5 2.7 Net increase (decrease) in cash and cash equivalents 141.4 ( 46.7 ) 70.5 ( 17.7 ) Cash and cash equivalents at beginning of the period 117.0 163.7 93.2 110.9 Cash and cash equivalents at end of the period $ 258.4 $ 117.0 $ 163.7 $ 93.2 See accompanying notes to consolidated financial statements. 72 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in millions, except per share data) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Financial Statement Presentation Myriad Genetics, Inc. and subsidiaries (collectively, the "Company" or "Myriad") is a leading genetic testing and precision medicine company dedicated to advancing health and well-being for all. Myriad provides insights that help people take control of their health and enable healthcare providers to better detect, treat, and prevent disease. Myriad discovers and commercializes genetic tests that determine the risk of developing disease, assess the risk of disease progression, or guide treatment decisions across medical specialties. The Company generates revenue by performing molecular diagnostic tests and, prior to the sale of Myriad RBM, Inc. on July 1, 2021 as described in Note 16, by providing pharmaceutical and clinical services to the pharmaceutical and biotechnology industries and medical research institutions utilizing its multiplexed immunoassay technology. The Company’s corporate headquarters are located in Salt Lake City, Utah. The accompanying consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly all financial statements in accordance with GAAP. Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP requires Company management to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition estimates for the average expected reimbursement per test, valuation allowances for deferred income tax assets, certain accrued liabilities, stock-based compensation, and impairment analysis of goodwill and long-lived assets. Actual results could differ from those estimates. The full impact of the COVID-19 outbreak continues to evolve and its future impacts remain uncertain and unpredictable. The Omicron variant, which has become the most common form of the virus circulating throughout the world and appears to be more transmissible than other variants to date, is causing significant uncertainty. The impact of the Omicron variant and other variants that may emerge cannot be predicted at this time and could depend on numerous factors, including, but not limited to, vaccination rates among the population, the effectiveness of COVID-19 vaccinations against emerging variants, and any new measures that may be introduced by governments or other parties in response to an increase in COVID-19 cases. Management is actively monitoring the impact of the global situation on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for future periods. Reclassifications Certain prior period amounts have been reclassified to conform with the current period presentation. The reclassifications have no impact on the total assets, total liabilities, stockholders' equity, cash flows from operations, or net loss for the period. 73 Table of Contents Concentration of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Substantially all of the Company’s account receivable are with companies in the healthcare industry, U.S. and state governmental agencies, and individuals. The Company does not believe that receivables due from U.S. and state governmental agencies, such as Medicare, represent a credit risk since the related health care programs are funded by the U.S. and state governments. The Company only has one payor, Medicare, that represents greater than 10% of its revenues. Revenues received from Medicare represented approximately 17 %, 16 %, 15 % and 14 % of total revenue for the year ended December 31, 2021, the six-month transition period ended December 31, 2020 and the years ended June 30, 2020 and 2019, respectively. Concentrations of credit risk are mitigated due to the number of the Company’s customers as well as their dispersion across many geographic regions. No customer accounted for more than 10% of accounts receivable at December 31, 2021 or December 31, 2020. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents primarily consist of cash and money market deposits with financial institutions. Marketable Investment Securities The Company has classified its marketable investment securities, all of which are debt securities, as available-for-sale securities. These securities are carried at estimated fair value with unrealized holding gains and losses, net of the related tax effect, included in accumulated other comprehensive loss in stockholders’ equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned. The Company’s cash equivalents consist of short-term, highly liquid investments that are readily convertible to known amounts of cash. A decline in the market value of any available-for-sale security below cost that is deemed other than temporary results in a charge to earnings and establishes a new cost basis for the security. Losses are charged against Other income (expense) when a decline in fair value is determined to be other than temporary. The Company reviews several factors to determine whether a loss is other than temporary. These factors include but are not limited to: (i) the extent to which the fair value is less than cost and the cause for the fair value decline, (ii) the financial condition and near term prospects of the issuer, (iii) the length of time a security is in an unrealized loss position and (iv) the Company’s ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. There were no other-than-temporary impairments recognized during the year ended December 31, 2021, the transition period ended December 31, 2020 or during the years ended June 30, 2020 and 2019. Inventory Inventories consist of supplies such as reagents, plates and testing kits, which are consumed when providing test results, and therefore the Company does not maintain finished goods inventory. Inventories are stated at the lower of cost or market and costs are determined on a first-in, first-out basis. In order to assess the ultimate realization of inventories, the Company is required to make judgments as to future demand requirements compared to current or committed inventory levels. The Company evaluates its inventories for excess quantities and obsolescence. Inventories that are considered excess or obsolete are expensed. The valuation of inventories requires the use of estimates as to the amounts of current inventories that will be sold. These estimates are dependent on management’s assessment of current and expected orders from the Company’s customers. Trade Accounts Receivable Trade accounts receivable represents amounts billed to customers for revenue recognized related to molecular diagnostic tests and, prior to the sale of Myriad RBM, Inc. on July 1, 2021 as described in Note 16, pharmaceutical and clinical services. The Company does not have any off-balance-sheet credit exposure related to its customers and does not require collateral. 74 Table of Contents Property, Plant and Equipment Equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method based on the lesser of estimated useful lives of the related assets or lease terms. Equipment items have depreciable lives of five to seven years . Leasehold improvements are depreciated over the shorter of the estimated useful lives or the associated lease terms, which range from one to seven years . Repairs and maintenance costs are charged to expense as incurred. Intangible Assets and Other Long-Lived Assets Intangible and other long-lived assets are comprised of acquired licenses and technology and, prior to the sale of Myriad RBM, Inc. on July 1, 2021, intellectual property and purchased in-process research and development. Acquired intangible assets are recorded at fair value and amortized over the shorter of the contractual life or the estimated useful life. The classification of the Company’s acquired in-process research and development as an indefinite lived asset was deemed appropriate as the related research and development was not yet complete nor had it been abandoned. The Company capitalizes certain costs incurred to develop internal-use technology, including certain implementation costs incurred in cloud computing arrangements and hosting arrangements that include an internal-use software license. The Company's cloud computing arrangements or hosting arrangements are primarily service contracts related to information technology. Implementation and development costs for internal-use technology are capitalized as part of Other assets in the Consolidated Balance Sheets. After the implementation of the internal-use cloud computing software or other internal-use technology, the capitalized costs are amortized on a straight-line basis over the estimated useful life of the asset. Costs incurred during the post implementation stage of the project are expensed as incurred. As of December 31, 2021 and 2020, the Company had unamortized software costs of $ 6.7 million and $ 2.3 million, respectively. For the year ended December 31, 2021, amortization expense for capitalized software costs was $ 0.2 million. There was no capitalized software amortization expense for the remaining periods presented. The Company continually reviews and monitors long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Goodwill Goodwill is tested for impairment by reporting unit on an annual basis as of October 1 and in the interim if events and circumstances indicate that goodwill may be impaired. The events and circumstances that are considered include business climate and market conditions, legal factors, operating performance indicators and competition. Impairment of goodwill is first assessed using a qualitative approach. If the qualitative assessment suggests that impairment is more likely than not, a quantitative analysis is performed. The quantitative analysis involves a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. If an event occurs that would cause a revision to the estimates and assumptions used in analyzing the value of the goodwill, the revision could result in a non-cash impairment charge that could have a material impact on the financial results. Revenue Recognition Myriad primarily generates revenue by performing molecular diagnostic testing. Molecular diagnostic revenues are derived from the following categories of products: Hereditary Cancer (MyRisk, BRACAnalysis, BRACAnalysis CDx), Tumor Profiling (MyChoice CDx, Prolaris, and EndoPredict), Prenatal (Foresight and Prequel), Pharmacogenomics (GeneSight), Autoimmune (Vectra), and Other. The Company previously provided pharmaceutical services and clinical services prior to the sale of Myriad RBM, Inc. in July 2021 and Privatklinik Dr. Robert Schindlbeck GmbH & Co. KG (the "Clinic") in February 2020, respectively. Prior to the sale of the Myriad myPath, LLC laboratory in May 2021 and the Myriad Autoimmune business in September 2021, the associated revenue from such businesses was included within Molecular diagnostic revenues. See Note 16 for a discussion of these divestitures. Revenue is recorded at the estimated transaction price. The Company has determined that the communication of test results or the completion of clinical and pharmaceutical services indicates transfer of control for revenue recognition purposes. 75 Table of Contents The following table represents the Company’s revenue by type for the year ended December 31, 2021, the transition period ended December 31, 2020, and the years ended June 30, 2020 and 2019: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (In millions) 2021 2020 2020 2019 Molecular diagnostic revenues: Hereditary Cancer $ 316.3 $ 159.3 $ 347.4 $ 479.7 Tumor Profiling 120.9 33.9 48.3 43.0 Prenatal 106.8 37.6 76.7 104.9 Pharmacogenomics 93.7 29.8 74.1 112.6 Autoimmune 28.2 18.0 39.1 48.3 Other 0.5 1.0 1.3 0.9 Total molecular diagnostic revenue 666.4 279.6 586.9 789.4 Pharmaceutical and clinical service revenue 24.2 20.2 51.7 61.7 Total revenue $ 690.6 $ 299.8 $ 638.6 $ 851.1 In addition, the following tables reconcile revenue by geographical region, either U.S. or rest of world ("RoW"), to total revenue: Year Ended December 31, Six-month Transition Period Ended December 31, 2021 2020 (in millions) U.S. RoW Total U.S. RoW Total Molecular diagnostic revenues: Hereditary Cancer $ 271.0 $ 45.3 $ 316.3 $ 140.9 $ 18.4 $ 159.3 Tumor Profiling 80.4 40.5 120.9 28.2 5.7 33.9 Prenatal 106.2 0.6 106.8 37.4 0.2 37.6 Pharmacogenomics 93.7 — 93.7 29.8 — 29.8 Autoimmune 28.2 — 28.2 18.0 — 18.0 Other — 0.5 0.5 1.0 — 1.0 Total molecular diagnostic revenue 579.5 86.9 666.4 255.3 24.3 279.6 Pharmaceutical and clinical services revenue 24.2 — 24.2 20.1 0.1 20.2 Total revenue $ 603.7 $ 86.9 $ 690.6 $ 275.4 $ 24.4 $ 299.8 76 Table of Contents Year Ended June 30, 2020 2019 (in millions) U.S. RoW Total U.S. RoW Total Molecular diagnostic revenues: Hereditary Cancer $ 329.8 $ 17.6 $ 347.4 $ 466.7 $ 13.0 $ 479.7 Tumor Profiling 39.2 9.1 48.3 34.6 8.4 43.0 Prenatal 76.4 0.3 76.7 104.9 — 104.9 Pharmacogenomics 74.1 — 74.1 112.6 — 112.6 Autoimmune 39.1 — 39.1 48.3 — 48.3 Other 1.2 0.1 1.3 0.5 0.4 0.9 Total molecular diagnostic revenue 559.8 27.1 586.9 767.6 21.8 789.4 Pharmaceutical and clinical services revenue 36.4 15.3 51.7 37.8 23.9 61.7 Total revenue $ 596.2 $ 42.4 $ 638.6 $ 805.4 $ 45.7 $ 851.1 Under ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”), an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company performs its obligation under a contract with a customer by processing diagnostic tests and communicating the test results to customers, in exchange for consideration from the customer. The Company has the right to bill its customers upon the completion of performance obligations and thus does not record contract assets. Occasionally customers make payments prior to the Company's performance of its contractual obligations. When this occurs, the Company records a contract liability as deferred revenue. During the year ended June 30, 2020, the Company received approximat ely $ 29.7 million in a dvance Medicare payments to provide relief from the economic impacts of COVID-19 on the Company. The advanced Medicare payments began being applied against services performed in April 2021 and will continue until the funds previously received are fully earned. A reconciliation of the beginning and ending balances of deferred revenue is shown in the table below: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Deferred revenue - beginning balance $ 32.7 $ 32.8 $ 2.2 $ 2.6 Revenue recognized ( 40.5 ) ( 6.1 ) ( 7.2 ) ( 7.9 ) Prepayments 14.0 6.0 37.8 7.5 Divestitures ( 1.0 ) — — — Deferred revenue - ending balance $ 5.2 $ 32.7 $ 32.8 $ 2.2 In accordance with Topic 606, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year. Furthermore, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its agreements wherein the Company’s right to payment is in an amount that directly corresponds with the value of Company’s performance to date. 77 Table of Contents In determining the transaction price, Myriad includes an estimate of the expected amount of consideration as revenue. The Company applies this method consistently for similar contracts when estimating the effect of any uncertainty on an amount of variable consideration to which it will be entitled. An estimate of transaction price does not include any estimated amount of variable consideration that are constrained. In addition, the Company considers all the information (historical, current, and forecast) that is reasonably available to identify possible consideration amounts. In determining the expected value, the Company considers the probability of the variable consideration for each possible scenario. The Company also has significant experience with historical discount patterns and uses this experience to estimate transaction prices. The estimate of revenue is affected by assumptions in payor behavior such as changes in payor mix, payor collections, current customer contractual requirements, and experience with collections from third-party payors. When assessing the total consideration for insurance carriers and patients, revenues are further constrained for estimated refunds. The Company reserves certain amounts in Accrued liabilities in the Consolidated Balance Sheets in anticipation of request for refunds of payments made previously by insurance carriers, which are accounted for as reductions in revenues in the Consolidated Statements of Operations and Comprehensive Income (Loss). Cash collections for certain diagnostic tests delivered may differ from rates originally estimated, primarily driven by changes in the estimated transaction price due to contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met and settlements with third party payors. As a result of this new information, the Company updates its estimate of the amounts to be recognized for previously delivered tests. During the year ended December 31, 2021, the Company recognized $ 15.9 million in revenue which resulted in a $ 0.15 impact to earnings (loss) per share for tests in which the performance obligation of delivering the test results was met in prior periods. The changes were primarily driven by changes in the estimated transaction price. Additionally, during the year ended December 31, 2021, revenue of $ 6.8 million was recognized due to expanded coverage for Prolaris, for which revenue was fully constrained in a prior period. During the year ended June 30, 2020, the Company recognized a $ 9.9 million decrease in revenue, which resulted in a $( 0.10 ) impact to earnings (loss) per share for tests in which the performance obligation of delivering the tests results was met in prior periods. The changes were primarily driven by changes in the estimated transaction price due to contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met and settlements with third-party payors. In addition, during the year ended June 30, 2020, the Company identified an error related to prior periods for Medicare claims and reduced revenue and recorded an accrued liability for a total of $ 4.7 million that will be refunded to Medicare. The impact of correcting the error during that period and the impact to all prior periods was concluded to be immaterial. The correction of the error in the year ended June 30, 2020 resulted in an impact to earnings (loss) per share for the year ended June 30, 2020 of $( 0.05 ). During the transition period ended December 31, 2020, and year ended June 30, 2019, the impact to revenue and earnings (loss) per share for tests in which the performance obligation of delivering the test results was met in the prior period was immaterial. In accordance with Topic 606, the Company has elected to exclude from the measurement of transaction price, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for sales tax, value added tax, etc. The Company has elected to apply the practical expedient related to costs to obtain or fulfill a contract since the amortization period for such costs will be one year or less. Accordingly, no costs incurred to obtain or fulfill a contract have been capitalized. The Company has also elected to apply the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects very little cash from customers under payment terms and the vast majority of payments terms have a payback period of less than one year. 78 Table of Contents Stock-based Payment Expense We recognize the fair value compensation cost relating to stock-based payment transactions in accordance with Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized over the employee’s requisite service period, which is generally the vesting period. The fair value of restricted stock units (RSUs) and performance restricted stock units (PSUs) that do not have market conditions is based on the number of shares granted and the quoted price of the Company’s common stock on the grant date. The fair value of PSU awards that have market conditions is determined using the Monte Carlo Simulation model. For PSUs, t he Company estimates the likelihood of achievement of the performance conditions at the end of each period. Forfeitures are recognized as a reduction of compensation expense in earnings in the period in which they occur. The fair value of shares issued under the Employee Stock Purchase Plan is calculated using the Black-Scholes option-pricing model, based on assumptions including the risk-free interest rate, expected life, expected dividend yield and expected volatility. The average risk-free interest rate is determined using the U.S. Treasury rate. We determine the expected life based on the offering period of the Employee Stock Purchase Plan. The expected volatility is determined using the weighted average of daily historical volatility of our stock price. Other Income (Expense) The Company recognizes the gain or loss on its divestitures as Other income (expense). During the years ended December 31, 2021 and June 30, 2020, the Company recognized a net gain on divestitures of $ 162.0 million and $ 1.0 million, respectively. See Note 16 for additional information regarding these divestitures. In addition, during the year ended June 30, 2020, the Company received approximately $ 14.6 million, respectively, from the Provider Relief Fund under the CARES Act to reimburse the Company for health care related expenses or lost revenues that are attributable to COVID-19, which was recognized as a component of Other income (expense) in the Consolidated Statements of Operations. Income Taxes The Company recognizes income taxes under the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and any estimated valuation allowances deemed necessary to recognize deferred tax assets at an amount that is more likely than not to be realized. The Company’s filings, including the positions taken therein, are subject to audit by various taxing authorities. While the Company believes it has provided adequately for its income tax liabilities in the consolidated financial statements, adverse determinations by these taxing authorities could have a material adverse effect on the consolidated financial condition, results of operations or cash flows. Earnings Per Share Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed based on the weighted-average number of shares of common stock, including the dilutive effect of common stock equivalents, outstanding. The following is a reconciliation of the denominators of the basic and diluted earnings per share computations: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Denominator: Weighted-average shares outstanding used to compute basic EPS 78.0 75.0 74.3 73.5 Effect of dilutive stock options — — — 2.5 Weighted-average shares outstanding and dilutive securities used to compute diluted EPS 78.0 75.0 74.3 76.0 79 Table of Contents Certain outstanding options and RSUs were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. These potential dilutive common shares, which may be dilutive to future diluted earnings per share, are as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Anti-dilutive options and RSUs excluded from EPS computation 4.5 6.6 5.5 0.8 Foreign Currency The functional currency of the Company’s international subsidiaries is the local currency. For those subsidiaries, expenses denominated in the functional currency are translated into U.S. dollars using average exchange rates in effect during the period and assets and liabilities are translated using period-end exchange rates. The foreign currency translation adjustments are included in Accumulated other comprehensive income (loss) as a separate component of Stockholders’ equity. The following table shows the cumulative translation adjustments included in Accumulated other comprehensive income (loss) (in millions): Ending balance December 31, 2020 $ ( 3.1 ) Period translation adjustments ( 1.8 ) Ending balance December 31, 2021 $ ( 4.9 ) Recent Accounting Pronouncements Recently Adopted Standards In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASC 2019-12 is a new accounting standard to simplify accounting for income taxes and remove, modify, and add to the disclosure requirements of income taxes. The standard is effective for public companies with fiscal years beginning after December 15, 2020, with early adoption permitted. The guidance was adopted with no material impact to the Company's consolidated financial statements. 80 Table of Contents 2. MARKETABLE INVESTMENT SECURITIES The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value debt securities classified as available-for-sale securities by major security type and class of security at December 31, 2021 and December 31, 2020 were as follows: (in millions) Amortized cost Gross unrealized holding gains Gross unrealized holding losses Estimated fair value December 31, 2021: Cash and cash equivalents: Cash $ 195.2 $ — $ — $ 195.2 Cash equivalents 63.2 — — 63.2 Total cash and cash equivalents 258.4 — — 258.4 Available-for-sale: Corporate bonds and notes 105.7 0.1 ( 0.2 ) 105.6 Municipal bonds 16.1 — — 16.1 Federal agency issues 6.8 — — 6.8 US government securities 11.9 — — 11.9 Total $ 398.9 $ 0.1 $ ( 0.2 ) $ 398.8 (in millions) Amortized cost Gross unrealized holding gains Gross unrealized holding losses Estimated fair value December 31, 2020: Cash and cash equivalents: Cash $ 47.9 $ — $ — $ 47.9 Cash equivalents 69.1 — — 69.1 Total cash and cash equivalents 117.0 — — 117.0 Available-for-sale: Corporate bonds and notes 28.8 0.5 — 29.3 Municipal bonds 9.4 0.2 — 9.6 Federal agency issues 4.0 — — 4.0 US government securities 11.7 0.1 — 11.8 Total $ 170.9 $ 0.8 $ — $ 171.7 Cash, cash equivalents, and maturities of debt securities classified as available-for-sale are as follows at December 31, 2021: (in millions) Amortized cost Estimated fair value Cash 195.2 195.2 Cash equivalents 63.2 63.2 Available-for-sale: Due within one year 80.3 80.4 Due after one year through five years 60.2 60.0 Due after five years — — Total $ 398.9 $ 398.8 There were no debt securities classified as available-for-sale in a gross unrealized loss position as of December 31, 2021 or December 31, 2020. 81 Table of Contents Additional information relating to fair value of marketable investment securities can be found in Note 3. 3. FAIR VALUE MEASUREMENTS The fair value of the Company’s financial instruments reflects the amounts that the Company estimates to receive in connection with the sale of an asset or paid in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels: Level 1—quoted prices in active markets for identical assets and liabilities. Level 2— observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities. Level 3—unobservable inputs. All of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. For Level 2 securities, the Company uses a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. For Level 3 contingent consideration, the Company reassesses the fair value of expected contingent consideration and the corresponding liability each reporting period using the Monte Carlo Method, which is consistent with the initial measurement of the expected contingent consideration liability. This fair value measurement is considered a Level 3 measurement because the Company estimates projections during the contingent consideration period of approximately 13.5 years, utilizing various potential pay-out scenarios. Probabilities were applied to each potential scenario and the resulting values were discounted using a rate that considers weighted average cost of capital as well as a specific risk premium associated with the riskiness of the contingent consideration itself, the related projections, and the overall business. The contingent consideration liabilities are classified as a component of Accrued liabilities and Other long-term liabilities in the Company’s Consolidated Balance Sheets. Changes to the contingent consideration liabilities are reflected in Selling, general, and administrative expense in our Consolidated Statements of Operations. Changes to the unobservable inputs could have a material impact on the Company’s financial statements. The following tables set forth the fair value of the Company’s financial assets and liabilities that are re-measured on a regular basis: (in millions) Level 1 Level 2 Level 3 Total December 31, 2021 Money market funds (a) $ 63.2 $ — $ — $ 63.2 Corporate bonds and notes — 105.6 — 105.6 Municipal bonds — 16.1 — 16.1 Federal agency issues — 6.8 — 6.8 US government securities — 11.9 — 11.9 Contingent consideration — — ( 8.6 ) ( 8.6 ) Total $ 63.2 $ 140.4 $ ( 8.6 ) $ 195.0 (a) Money market funds are primarily comprised of exchange traded funds and accrued interest. 82 Table of Contents (in millions) Level 1 Level 2 Level 3 Total December 31, 2020 Money market funds (a) $ 69.1 $ — $ — $ 69.1 Corporate bonds and notes — 29.3 — 29.3 Municipal bonds — 9.6 — 9.6 Federal agency issues — 4.0 — 4.0 US government securities — 11.8 — 11.8 Contingent consideration — — ( 10.9 ) ( 10.9 ) Total $ 69.1 $ 54.7 $ ( 10.9 ) $ 112.9 (a) Money market funds are primarily comprised of exchange traded funds and accrued interest. The following table reconciles the change in the fair value of the contingent consideration during the periods presented: (in millions) Year Ended December 31, 2021 Transition Period Ended December 31, 2020 Year Ended June 30, 2020 Year Ended June 30, 2019 Carrying amount at beginning of period $ 10.9 $ 6.8 $ 13.8 $ 14.5 Payment of contingent consideration ( 3.3 ) ( 0.1 ) ( 3.9 ) — Change in fair value recognized in the statement of operations 1.8 3.5 ( 2.8 ) ( 1.1 ) Translation adjustments recognized in other comprehensive income (loss) ( 0.8 ) 0.7 ( 0.3 ) 0.4 Carrying amount at end of period $ 8.6 $ 10.9 $ 6.8 $ 13.8 4. PROPERTY, PLANT AND EQUIPMENT, NET December 31, (in millions) 2021 2020 Leasehold improvements 38.0 35.7 Equipment 112.4 117.9 Property, plant and equipment, gross 150.4 153.6 Less accumulated depreciation ( 106.9 ) ( 112.9 ) Property, plant and equipment, net $ 43.5 $ 40.7 During the year ended December 31, 2021, the Company completed the sales of Myriad RBM, Inc. and the Myriad Autoimmune business, which resulted in the disposition of $ 3.1 million of property, plant and equipment. See Note 16 for additional information regarding these divestitures. Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Depreciation expense $ 12.1 $ 5.0 $ 11.0 $ 13.7 83 Table of Contents 5. GOODWILL AND INTANGIBLE ASSETS Goodwill The changes in the carrying amount of goodwill for the year ended December 31, 2021 is as follows: (in millions) Year Ended December 31, 2021 Beginning balance $ 329.2 Divestitures ( 88.5 ) Translation adjustments ( 1.5 ) Carrying amount at end of period $ 239.2 The Company assessed goodwill for impairment as part of its annual goodwill testing in accordance with the appropriate guidance (see Note 1) and determined none of its reporting units were impaired as of the annual testing date. The Company did no t record an impairment of goodwill for the year ended December 31, 2021, the transition period ended December 31, 2020 or for the fiscal year ended June 30, 2019. During the year ended June 30, 2020, as a result of the effect of COVID-19 on expected future cash flows and a corresponding decline in market capitalization and enterprise value, the Company performed an interim quantitative impairment review of goodwill for the Myriad Mental Health, Myriad Autoimmune and Myriad International reporting units as of March 31, 2020. Based on this analysis, the Company recognized a goodwill impairment charge of $ 80.7 million related to the goodwill from the Myriad Autoimmune reporting unit. The goodwill impairment charge is reflected in Goodwill and long-lived asset impairment charges in the Consolidated Statements of Operations. On July 1, 2021, the Company completed the sale of Myriad RBM, Inc., and as a result the goodwill attributable to the Myriad RBM reporting unit is no longer held by the Company. In addition, on September 13, 2021, select operating assets and intellectual property, including the Vectra® test, from the Myriad Autoimmune business unit were sold. As a result of this divestiture, the goodwill attributable to the Myriad Autoimmune reporting unit is no longer held by the Company. During the year ended June 30, 2020, the Company also recognized a $ 1.3 million impairment charge for goodwill allocated to the Clinic asset group that is included in Goodwill and long-lived asset impairment charges in the Consolidated Statements of Operations. Intangible Assets Intangible assets have primarily consisted of amortizable assets of purchased licenses and technologies, customer relationships, and trade names as well as a non-amortizable intangible asset of in-process research and development. Due to the completion of the sales of Myriad RBM, Inc. and the Myriad Autoimmune business, the Company's intangible assets as of December 31, 2021 consist of only purchased licenses and technologies. In connection with these sales, the Company sold $ 199.1 million in purchased licenses and technologies, $ 4.8 million in-process research and development intangible assets, $ 4.7 million in customer relationships, and $ 3.0 million in trademarks, resulting in an aggregate decrease of intangible assets of $ 120.0 million, net of $ 91.6 million in accumulated amortization. See Note 16 for additional information on these divestitures. The Company’s purchased licenses and technologies have estimated remaining useful lives between 1 and 14 years. Prior to the sale of Myriad RBM, Inc., the estimated useful life of acquired in-process research and development was also evaluated in conjunction with the annual impairment analysis of intangible assets. The classification of the acquired in-process research and development as an indefinite lived asset was deemed appropriate during prior years as the related research and development was not yet complete nor had it been abandoned. During the year ended June 30, 2020, the Company decided to abandon the development of one of its in-process research and development intangible assets, and as a result the Company recognized a charge of $ 17.7 million, which is reflected in Goodwill and long-lived asset impairment charges in the Consolidated Statements of Operations. The Company concluded there was no impairment of long-lived assets for the year ended December 31, 2021, the transition period ended December 31, 2020, or for the year ended June 30, 2019. 84 Table of Contents The following tables summarize the amounts reported as intangible assets (in millions): At December 31, 2021: Gross Carrying Amount Accumulated Amortization Net Purchased licenses and technologies $ 616.6 $ ( 212.5 ) $ 404.1 Total intangible assets $ 616.6 $ ( 212.5 ) $ 404.1 At December 31, 2020: Gross Carrying Amount Accumulated Amortization Net Purchased licenses and technologies $ 818.2 $ ( 248.2 ) $ 570.0 Customer relationships 4.7 ( 4.5 ) 0.2 Trademarks 3.0 ( 1.5 ) 1.5 Total amortizable intangible assets 825.9 ( 254.2 ) 571.7 In-process research and development 4.8 — 4.8 Total unamortized intangible assets 4.8 — 4.8 Total intangible assets $ 830.7 $ ( 254.2 ) $ 576.5 As of December 31, 2021 the weighted average remaining amortization period for purchased licenses and technologies is approximately 10 years. The Company recorded amortization during the respective periods for these intangible assets as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Amortization of intangible assets $ 50.7 $ 30.8 $ 61.0 $ 59.3 Future amortization expense of intangible assets as of December 31, 2021 is estimated to be as follows (in millions): Years Ended December 31, Amortization Expense 2022 $ 40.8 2023 40.8 2024 40.8 2025 40.8 2026 40.8 Thereafter 200.1 Total $ 404.1 6. ACCRUED LIABILITIES December 31, (in millions) 2021 2020 Employee compensation and benefits $ 52.8 $ 48.9 Legal charges pending settlement 62.0 — Accrued taxes payable 4.0 4.3 Refunds payable and reserves 9.8 9.3 Short-term contingent consideration 3.2 3.4 Accrued royalties 5.4 3.8 Other accrued liabilities 19.3 9.4 Total accrued liabilities $ 156.5 $ 79.1 85 Table of Contents 7. LONG-TERM DEBT On December 23, 2016, the Company entered into a senior secured revolving credit facility (the “Facility”) as borrower, with the lenders from time to time party thereto. On July 31, 2018, the Company entered into Amendment No. 1 to the Facility, which effected an “amend and extend” transaction with respect to the Facility by which the maturity date thereof was extended to July 31, 2023 and the maximum aggregate principal commitment was increased from $ 300.0 million to $ 350.0 million. On May 1, 2020, the Company entered into Amendment No. 2 to the Amended Facility, which waived the Company’s compliance with certain covenants and modified the interest rate and other terms during the modification period from March 31, 2020 through June 30, 2021 (“Modification Period”). On February 22, 2021, the Company entered into Amendment No. 3 (the "Amended Facility"), which, among other things, decreased the maximum aggregate principal commitment from $ 350.0 million to $ 300.0 million, with a further reduction in the maximum aggregate principal commitment from $ 300.0 million to $ 250.0 million by September 30, 2021 (if not previously reduced to such amount in connection with certain specified asset sales), waived the Company's compliance with certain financial covenants through the quarter ended March 31, 2022, extended the Modification Period for an additional year through June 30, 2022, and revised certain negative covenants in connection with the extension. The amendments were accounted for as modifications pursuant to guidance in ASC 470-50, Debt. The Company's maximum aggregate principal commitment on its Amended Facility is $ 250.0 million as of December 31, 2021. The Amended Facility contains customary loan terms, interest rates, representations and warranties, affirmative and negative covenants, in each case, subject to customary limitations, exceptions and exclusions. The Amended Facility also contains certain customary events of default. Amendment No. 2 modified the Amended Facility to increase the interest rate to be fixed at a spread of LIBOR plus 350 basis points on drawn balances and the undrawn fee was increased to 50 basis points during the Modification Period. At the end of the Modification Period, interest rates return to the previous pricing based on a spread of LIBOR 150 - 250 basis points on drawn balances and an undrawn fee ranging from 25 to 45 basis points, in each case, based on the Company’s leverage ratio. The LIBOR floor was also increased to 1.0 % during the Modification Period. Covenants in the Amended Facility impose operating and financial restrictions on the Company. These restrictions may prohibit or place limitations on, among other things, the Company’s ability to incur additional indebtedness, create certain types of liens, and complete mergers, consolidations, or change in control transactions. The Amended Facility may also prohibit or place limitations on the Company’s ability to sell assets, pay dividends or provide other distributions to stockholders. Beginning with the quarter ended June 30, 2022, the Company must maintain specified leverage and interest ratios measured as of the end of each quarter as a financial covenant in the Amended Facility. Amendment No. 2 modified the Amended Facility's compliance with the leverage covenant and the interest coverage ratio covenant, which were waived through March 31, 2021. Amendment No. 2 also revised certain negative covenants of the Amended Facility during the Modification Period. Amendment No. 3 waived compliance with the leverage ratio and the interest coverage ratio covenants through the quarter ended March 31, 2022 and also lowered the minimum liquidity covenant, which was added by Amendment No. 2, to $ 150.0 million, and made it applicable through such quarter. Amendment No. 3 restricted the Company from borrowing under the Amended Facility if unrestricted cash and cash equivalents exceed $ 150.0 million, unless such borrowings are in connection with permitted acquisitions. The Company was in compliance with all applicable financial covenants at December 31, 2021. During the year ended December 31, 2021, the Company made principal repayments totaling $ 226.4 million on the Amended Facility, including a voluntary principal payment on July 30, 2021 of $ 106.4 million to pay off the remaining outstanding balances on the Amended Facility. As a result, the Company had no outstanding balances under the Amended Facility as of December 31, 2021. As of December 31, 2020, the Company had a long-term debt balance of $ 224.8 million. 8. OTHER LONG-TERM LIABILITIES December 31, (in millions) 2021 2020 Contingent consideration $ 5.4 $ 7.4 Other 0.2 7.3 Total other long-term liabilities $ 5.6 $ 14.7 The Company’s balance of other long-term liabilities as of December 31, 2021 consists primarily of the long-term portion of contingent consideration related to the Sividon acquisition. During the prior periods the Company's portion of social security taxes that had been deferred under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") that do not have to be deposited until December 2022 were also recorded as other long-term liabilities. As of December 31, 2021 that balance has been reclassified to a current liability as it will be deposited within the next year. 86 Table of Contents 9. PREFERRED AND COMMON STOCKHOLDERS' EQUITY The Company is authorized to issue up to 5.0 million shares of preferred stock, par value $ 0.01 per share. There were no preferred shares outstanding at December 31, 2021 and December 31, 2020. The Company is authorized to issue up to 150.0 million shares of common stock, par value $ 0.01 per share. There were 80.0 million and 75.4 million shares issued and outstanding at December 31, 2021 and 2020, respectively. Common shares issued and outstanding Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Beginning common stock issued and outstanding 75.4 74.7 73.5 70.6 Common stock issued upon exercise of options and employee stock plans 4.6 0.7 1.2 4.5 Repurchase and retirement of common stock — — — ( 1.6 ) Ending common stock issued and outstanding 80.0 75.4 74.7 73.5 Stock Repurchase Program In June 2016, the Company’s Board of Directors authorized a share repurchase program of $ 200.0 million of the Company’s outstanding common stock. The Company may repurchase its common stock from time to time or on an accelerated basis through open market transactions or privately negotiated transactions as determined by the Company’s management. The amount and timing of stock repurchases under the program will depend on business and market conditions, stock price, trading restrictions, acquisition activity and other factors. As of December 31, 2021, the Company has $ 110.7 million remaining on its current share repurchase authorization. The Company uses the par value method of accounting for its stock repurchases. As a result of the stock repurchases, the Company reduced common stock and additional paid-in capital and recorded charges to Retained earnings (accumulated deficit). During the year ended June 30, 2019, the Company used $ 50.0 million to repurchase shares of the Company’s common stock as part of an accelerated share repurchase. The shares retired, aggregate common stock and additional paid-in capital reductions, and related charges to Retained earnings (accumulated deficit) for the repurchases for periods ended December 31, 2021, December 31, 2020, June 30, 2020, and June 30, 2019 were as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Shares purchased and retired — — — 1.6 Common stock and additional paid-in-capital reductions $ — $ — $ — $ 16.9 Charges to retained earnings $ — $ — $ — $ 33.1 10. STOCK-BASED COMPENSATION On November 30, 2017, the Company’s stockholders approved the adoption of the 2017 Employee, Director and Consultant Equity Incentive Plan, as amended (the “2017 Plan”). The 2017 Plan allows the Company, under the direction of the Compensation and Human Capital Committee of the Board of Directors, to make grants of restricted and unrestricted stock and stock unit awards to employees, consultants and directors. Stockholders have approved amendments to the 2017 Plan increasing the shares available to grant under the 2017 Plan. The 2017 Plan allows for issuance of up to 4.6 million shares of common stock, with 3.6 million shares available for grant as of December 31, 2021. If an RSU awarded under the 2017 Plan is cancelled or forfeited without the issuance of shares of common stock, the unissued or reacquired shares that were subject to the RSU will again be available for issuance pursuant to the 2017 Plan. To the extent that awards outstanding under the Company's prior equity plans expire or are cancelled without delivery of shares of common stock, they will also be available for issuance pursuant to the 2017 Plan. 87 Table of Contents The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee thereof on an award-by-award basis. RSUs granted to employees generally vest ratably over four years either on the anniversary of the date on which the RSUs were granted or during the month in which the anniversary occurs. The number of RSUs awarded to certain employees may be increased or reduced based on certain additional performance metrics. Options and RSUs granted to our non-employee directors vest in full upon the earlier of the completion of one year of service following the date of the grant or the date of the next annual meeting of stockholders following such grant. Options generally vest ratably over service periods of four years . Options granted generally expire ten years from the date of grant. Options granted to the Company's President and Chief Executive Officer as an inducement to his employment expire seven years from the grant date. The number of RSUs awarded to certain executive officers and other senior positions that ultimately vest may be increased or reduced based on certain additional performance and market conditions. The performance and market conditions associated with awards granted during the year ended December 31, 2021 include vesting that is based 50 % on achieving certain levels of earnings per share targets, and 50 % based on achieving certain performance targets compared to the performance of the Nasdaq Health Care Index. The Company estimates the likelihood of achievement of performance conditions at the end of each period. During the transition period ended December 31, 2020, the Company granted stock-based awards to the Company's President and Chief Executive Officer as an inducement material to his commencement of employment and entry into an employment agreement with the Company. The inducement awards are included in the tables presented below. Stock Options A summary of option activity under the Company's equity plans, including the Company's inducement awards, is as follows for the year ended December 31, 2021: (number of shares in millions) Number of shares Weighted average exercise price Weighted average remaining contractual life (years) Options outstanding at beginning of period 5.2 $ 23.24 Options granted — — Less: Options exercised ( 3.7 ) 24.26 Options canceled or expired ( 0.1 ) 25.18 Options outstanding at end of period 1.4 20.36 3.08 Options exercisable at end of period 1.0 23.07 2.09 Options vested and expected to vest 1.4 20.36 3.08 There were no options granted during the years ended December 31, 2021, June 30, 2020, and June 30, 2019. During the transition period ended December 31, 2020, 0.7 million options were granted to the Company's President and Chief Executive Officer, with a weighted average grant fair value of $ 13.38 . The following table summarizes information about stock options outstanding at December 31, 2021 (number of shares in millions): Options outstanding Range of exercise prices Number outstanding at December 31, 2021 Weighted average remaining contractual life (years) Weighted average exercise price $ 13.38 0.7 5.62 $ 13.38 $ 23.98 0.1 0.18 23.98 $ 27.07 - 36.55 0.6 0.74 27.25 1.4 3.08 $ 20.38 88 Table of Contents Restricted Stock Units A summary of the RSU activity under the Company's equity plans, including the Company's inducement awards and RSU awards with performance metrics, is as follows for the year ended December 31, 2021: 2021 (number of shares in millions) Number of shares Weighted average grant date fair value RSUs unvested and outstanding at beginning of period 3.2 $ 20.56 RSUs granted 1.8 29.83 Less: RSUs vested ( 1.1 ) 21.32 RSUs canceled ( 0.8 ) 24.48 RSUs unvested and outstanding at end of period 3.1 $ 24.96 The weighted average grant-date fair value of restricted stock units granted during the year ended December 31, 2021, the transition period ended December 31, 2020, and the years ended June 30, 2020, and June 30, 2019 was $ 29.83 , $ 13.69 , $ 27.96 and $ 46.62 , respectively. The fair value of restricted stock units that vested during the year ended December 31, 2021, the transition period ended December 31, 2020, and the years ended June 30, 2020, and June 30, 2019 was $ 22.6 million, $ 29.1 million, $ 32.4 million and $ 27.6 million, respectively. Stock-based compensation expense recognized and included in the Consolidated Statements of Operations was allocated as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Cost of molecular diagnostic testing $ 1.5 $ 0.6 $ 1.2 $ 0.8 Cost of pharmaceutical and clinical services 0.1 0.1 0.3 0.2 Research and development expense 4.2 2.4 5.0 5.4 Selling, general, and administrative expense 30.5 11.8 18.7 27.1 Total stock-based compensation expense $ 36.3 $ 14.9 $ 25.2 $ 33.5 As of December 31, 2021, there was $ 61.7 million of total unrecognized stock-based compensation expense that will be recognized over a weighted-average period of 2.3 years. We expect all unvested awards to vest, and we recognize forfeitures as they occur. The aggregate intrinsic value of options outstanding, aggregate intrinsic value of options that are fully vested and aggregate intrinsic value of RSUs vested and expected to vest is as follows: (in millions) As of December 31, 2021 Aggregate intrinsic value of options outstanding $ 10.2 Aggregate intrinsic value of options fully vested 4.6 Aggregate intrinsic value of RSUs outstanding 86.3 89 Table of Contents The total intrinsic value of options exercised was as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Total intrinsic value of options exercised $ 29.2 $ 0.5 $ 8.8 $ 0.4 Employee Stock Purchase Plan The Company also has an Employee Stock Purchase Plan that was approved by stockholders in 2012 (the “2012 Purchase Plan”), under which 2.0 million shares of common stock have been authorized. On September 23, 2021, the Board of Directors of the Company approved an amended and restated 2012 Employee Stock Purchase Plan, which authorizes an additional 2.0 million shares of common stock and extends the term of the 2012 Purchase Plan to November 30, 2032, subject in each case to obtaining stockholder approval. The amended and restated 2012 Employee Stock Purchase Plan also amended certain provisions of the 2012 Purchase Plan effective upon approval by the Board of Directors, including expanding the definition of "offering period" to provide that the Board of Directors may determine the period in accordance with the terms of the plan, and capping the number of shares that may be purchased by any participant during an offering period at 5,000 shares. Shares are issued under the 2012 Purchase Plan twice yearly at the end of each offering period. At December 31, 2021, a total of approximately 2.0 million shares of common stock had been purchased under the 2012 Purchase Plan. Shares purchased under and compensation expense associated with the 2012 Purchase Plan for the years reported are as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Shares purchased under the plans 0.2 0.1 0.3 0.2 Plan compensation expense $ 1.5 $ 0.6 $ 1.7 $ 1.0 The fair value of shares issued under the Plan that was in effect for each period reported was calculated using the Black‑Scholes option-pricing model using the following weighted-average assumptions: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, 2021 2020 2020 2019 Risk-free interest rate 0.1 % 0.2 % 1.8 % 2.1 % Expected dividend yield — % — % — % — % Expected life (in years) 0.5 0.5 0.5 0.5 Expected volatility 60 % 94 % 99 % 55 % 90 Table of Contents 11. INCOME TAXES Income tax benefit consists of the following: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Current: Federal $ ( 1.9 ) $ ( 75.8 ) $ 26.6 $ ( 24.2 ) State 3.6 ( 0.6 ) 4.9 ( 0.1 ) Foreign 0.1 0.2 0.5 0.2 Total current 1.8 ( 76.2 ) 32.0 ( 24.1 ) Deferred: Federal ( 33.7 ) 39.1 ( 51.5 ) 17.8 State 5.1 ( 3.4 ) ( 4.1 ) 1.7 Foreign 0.1 ( 0.5 ) ( 3.6 ) 0.4 Change in valuation allowance ( 3.2 ) — 3.5 ( 0.2 ) Total deferred ( 31.7 ) 35.2 ( 55.7 ) 19.7 Total income tax benefit $ ( 29.9 ) $ ( 41.0 ) $ ( 23.7 ) $ ( 4.4 ) Income (loss) before income taxes consists of the following: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 United States $ ( 53.8 ) $ ( 101.8 ) $ ( 240.9 ) $ ( 0.6 ) Foreign ( 3.3 ) 7.7 17.6 0.6 Total $ ( 57.1 ) $ ( 94.1 ) $ ( 223.3 ) $ — 91 Table of Contents The differences between income taxes at the statutory federal income tax rate and income taxes reported in the Consolidated Statements of Operations were as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Federal income tax expense at the statutory rate $ ( 12.0 ) 21.0 % $ ( 19.8 ) 21.0 % $ ( 46.9 ) 21.0 % $ — 21.0 % State income taxes, net of federal benefit ( 1.8 ) 3.2 % ( 1.2 ) 1.3 % 4.0 ( 1.8 ) % 2.0 6,422.1 % Research and development credits 2.5 ( 4.4 ) % ( 1.3 ) 1.4 % ( 2.8 ) 1.3 % ( 3.7 ) ( 11,880.9 ) % Uncertain tax positions ( 3.0 ) 5.3 % 0.6 ( 0.7 ) % 1.5 ( 0.7 ) % ( 4.2 ) ( 13,486.4 ) % Incentive stock option and employee stock purchase plan expense 0.7 ( 1.2 ) % 2.5 ( 2.7 ) % ( 0.2 ) 0.1 % ( 3.1 ) ( 9,954.3 ) % Foreign rate differential 0.5 ( 0.9 ) % ( 2.1 ) 2.2 % 0.7 ( 0.3 ) % 0.8 2,568.8 % Change in valuation allowance ( 3.2 ) 5.6 % ( 0.3 ) 0.3 % 3.5 ( 1.7 ) % ( 0.2 ) ( 642.2 ) % CARES Act 2.7 ( 4.7 ) % ( 20.7 ) 22.0 % — — % — — % Non-deductible meals and entertainment 0.1 ( 0.2 ) % 0.5 ( 0.5 ) % 1.8 ( 0.8 ) % 1.3 4,174.4 % Non-deductible officer compensation 3.3 ( 5.8 ) % 0.1 ( 0.1 ) % 1.6 ( 0.7 ) % 0.6 1,926.6 % Asset impairment — — % — — % 12.6 ( 5.6 ) % — — % Non-deductible legal settlement 2.5 ( 4.5 ) % — — % — — % 1.9 6,101.0 % Acquisitions, Dispositions, and Contingent Consideration ( 23.0 ) 40.3 % 0.7 ( 0.7 ) % ( 0.3 ) 0.1 % 0.8 2,568.8 % Method changes or tax elections — — % — — % — — % ( 0.9 ) ( 2,890.0 ) % Other, net 0.8 ( 1.4 ) % — — % 0.8 ( 0.3 ) % 0.3 963.4 % Total income tax benefit $ ( 29.9 ) 52.3 % $ ( 41.0 ) 43.5 % $ ( 23.7 ) 10.6 % $ ( 4.4 ) - 14,107.7 % 92 Table of Contents The significant components of the Company’s deferred tax assets and liabilities were comprised of the following: December 31, (in millions) 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 67.2 $ 72.2 Deferred revenue 1.2 7.2 Stock compensation expense 4.5 11.5 Research and development credits 17.3 24.9 Lease right-of-use asset 22.4 15.2 Accrued expenses and liabilities 14.2 7.6 Other, net 4.5 6.4 Total gross deferred tax assets 131.3 145.0 Less valuation allowance ( 38.5 ) ( 42.0 ) Total deferred tax assets 92.8 103.0 Deferred tax liabilities: Intangible assets 104.9 144.0 Lease liability 20.2 14.6 Property, plant and equipment 3.5 15.7 Total deferred tax liabilities 128.6 174.3 Net deferred tax liability $ ( 35.8 ) $ ( 71.3 ) The CARES Act in 2020 made various tax law changes, including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest, (ii) enacted technical corrections so that qualified improvement property can be immediately expensed under IRC Section 168(k) and net operating losses arising in fiscal tax years beginning before January 1, 2018 and ending after December 31, 2017 can be carried back two years and carried forward twenty years without a taxable income limitation as opposed to carried forward indefinitely, and (iii) made modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years. As a result of the provision provided under the CARES Act, the Company was able to carry-back federal net operating losses to previous periods, resulting in a $ 20.7 million tax benefit in the year ended December 31, 2020 and $ 2.7 million tax expense in the year ended December 31, 2021. The Company recognized the sale of Myriad RBM, Inc., Myriad myPath, LLC, and select assets of Crescendo Biosciences, LLC (formerly known as Crescendo Biosciences, Inc. ("CBI") in the year ended December 31, 2021, which resulted in differences between book and tax treatments. This resulted in the recognition of a $ 187.0 million capital loss for the tax basis in the stock of Crescendo, which the Company utilized in the current year due to the $ 282.3 million overall capital gain from the three divestitures. Other consequences due to the dispositions were the removal of deferred tax assets and corresponding valuation allowances. The overall net tax benefit of the divestitures during the year ended December 31, 2021 was $ 23.4 million. As a result of the economic impact of COVID-19, the Company has incurred a cumulative three-year loss. Pursuant to ASC Topic 740, the negative evidence of a cumulative loss may be difficult to overcome. However, the Company will have significant future taxable income resulting from the reversal of taxable temporary differences. Primarily due to the availability of such expected future taxable income, the Company concluded that it is more likely than not that the benefits of the majority of its deferred income tax assets will be realized. However, for certain deferred tax assets a valuation allowance has been established, primarily due to limitations imposed by I.R.C. Section 382 and certain jurisdictional limitations. For the year ended December 31, 2021, the Company's valuation allowance decreased by $ 3.5 million, primarily due to the expiration of Utah research credits upon which a valuation allowance had been established. The Company will continue to evaluate the impact that the COVID-19 pandemic may have on its results of operations and its ability to realize its deferred tax assets. 93 Table of Contents At December 31, 2021, the Company had the following net operating loss and research credit carryforwards (tax effected), with their respective expiration periods. Certain carryforwards are subject to the limitations of Section 382 and 383 of the Internal Revenue Code as indicated (in millions): Carryforwards Amount Subject to sections 382, 383 Expires beginning in year Through Federal net operating loss $ 31.2 Yes 2036 2037 Federal capital loss 13.5 No 2026 2026 Utah net operating loss 2.4 No 2022 Indefinite California net operating loss 3.9 Yes 2027 2042 Other state net operating loss 7.4 Yes 2027 2041 Foreign net operating losses (various jurisdictions) 8.8 No Various Various Federal research credit 6.4 Yes 2027 2042 Utah research credit 6.9 No 2022 2036 California research credit 4.0 No Indefinite Indefinite Consistent with the indefinite reversal criteria of ASC 740, the Company intends to continue to invest undistributed earnings of its foreign subsidiaries indefinitely. However, due to the cumulative losses that have been incurred to date in such foreign operations, the changes of the Tax Cuts and Jobs Act and the aforementioned election to treat its foreign subsidiaries as disregarded entities, no deferred taxes related to the Company’s foreign operations have been recorded. For those foreign entities for which an election has been made to be treated as disregarded for U.S. tax purposes, the appropriate U.S. jurisdiction deferred tax assets and liabilities have been recorded. The Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement criteria as set forth in ASC 740. As of December 31, 2021, the Company had net unrecognized tax benefits of $ 32.1 million. The Company’s gross unrecognized tax benefits as of the year ended December 31, 2021, the transition period ended December 31, 2020 and the years ended June 30, 2020 and 2019, and the changes in those balances are as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Unrecognized tax benefits at the beginning of period $ 37.6 $ 23.5 $ 21.7 $ 24.9 Gross increases - current year tax positions 1.4 13.9 1.6 2.2 Gross increases - prior year tax positions 1.1 1.0 0.7 0.5 Gross increases - acquisitions — — — 2.3 Gross decreases - prior year tax positions ( 2.8 ) ( 0.1 ) — ( 0.1 ) Gross decreases - settlements ( 5.1 ) — — ( 2.7 ) Gross decreases - statute lapse ( 0.1 ) ( 0.7 ) ( 0.5 ) ( 5.4 ) Unrecognized tax benefits at end of year $ 32.1 $ 37.6 $ 23.5 $ 21.7 Interest and penalties in year-end balance $ 3.3 $ 2.2 $ 1.4 $ 0.8 Interest and penalties related to uncertain tax positions are included as a component of income tax expense and all other interest and penalties are included as a component of other income (expense). The Company files U.S. federal, foreign and state income tax returns in jurisdictions with various statutes of limitations. The Company is currently under audit by the state of California for years ended June 30, 2017 - 2018 ; the State of New Jersey for the years ended June 30, 2013 - 2017 ; and Switzerland for the years ended June 30, 2015 - 2016 . Annual tax provisions include amounts considered necessary to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued. 94 Table of Contents 12. COMMITMENTS AND CONTINGENCIES The Company is subject to various claims and legal proceedings covering matters that arise in the ordinary course of its business activities, including the matters described below. Estimates for resolution of legal and other contingencies are accrued when losses are probable and reasonable estimable in accordance with ASC 450, Contingencies . Qui Tam Lawsuit In June 2016, our wholly-owned subsidiary, CBI, received a subpoena from the Office of Inspector General of the Department of Health and Human Services requesting that CBI produce documents relating to entities that received payment from CBI for the collection and processing of blood specimens for testing, including a named unrelated company, healthcare providers and other third party entities. The Office of Inspector General subsequently requested additional documentation in December 2017. CBI provided to the Office of Inspector General the documents requested. On January 30, 2020, the United States District Court for the Northern District of California unsealed a qui tam complaint, filed on April 16, 2016 against CBI and the Company, alleging violations of the Federal and California False Claims Acts and the California Insurance Fraud Prevention Act. On January 22, 2020, after a multi-year investigation into CBI’s and the Company’s alleged conduct, the United States declined to intervene. On January 27, 2020, the State of California likewise filed its notice of declination. The Company was not aware of the complaint until after it was unsealed. On May 23, 2020, the court denied CBI and the Company’s motion to dismiss. We have accrued $ 48.0 million for a potential settlement of this qui tam lawsuit against CBI and the Company, which is included in Accrued liabilities in the Company's Consolidated Balance Sheet. If no settlement is reached, we intend to continue to vigorously defend against this case, but we cannot predict with any degree of certainty the ultimate resolution of this matter or determine whether, or to what extent, any loss with respect to this matter may exceed the amount that we have accrued. Securities Class Action On September 27, 2019, a class action complaint was filed in the United States District Court for the District of Utah, against the Company, our former President and Chief Executive Officer, Mark C. Capone, and our Chief Financial Officer, R. Bryan Riggsbee (“Defendants”). On February 21, 2020, the plaintiff filed an amended class action complaint, which added our former Executive Vice President of Clinical Development, Bryan M. Dechairo, as an additional Defendant. This action, captioned In re Myriad Genetics, Inc. Securities Litigation (No. 2:19-cv-00707-DBB), is premised upon allegations that the Defendants made false and misleading statements regarding our business, operations, and acquisitions. The lead plaintiff seeks the payment of damages allegedly sustained by it and the purported class by reason of the allegations set forth in the amended complaint, plus interest, and legal and other costs and fees. On March 16, 2021, the United States District Court for the District of Utah denied the Company's motion to dismiss. On December 1, 2021, the United States District Court for the District of Utah granted plaintiff's motion for class certification. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any. Stockholder Derivative Actions On August 9, 2021, a stockholder derivative complaint was filed in the Delaware Court of Chancery against our former President and Chief Executive Officer, Mark C. Capone, our Chief Financial Officer, R. Bryan Riggsbee, our former Executive Vice President of Clinical Development, Bryan M. Dechairo, and certain of our current and former directors, Lawrence C. Best, Walter Gilbert, John T. Henderson, Heiner Dreismann, Dennis Langer, Lee N. Newcomer, S. Louise Phanstiel, and Colleen F. Reitan (collectively, the "Individual Defendants"), and the Company, as nominal defendant. The complaint is premised upon similar allegations as set forth in the securities class action, including that the Individual Defendants made false and misleading statements regarding our business and operations. The plaintiff, Donna Hickock, asserts breach of fiduciary duty and unjust enrichment claims against the Individual Defendants and seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged breaches, or disgorgement or restitution, from each of the Individual Defendants, plus interest. Plaintiff Hickock also seeks legal and other costs and fees relating to this action. On November 19, 2021, this action was stayed by the Delaware Court of Chancery pending the resolution of the securities class action lawsuit. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any. 95 Table of Contents On September 17, 2021, a second stockholder derivative complaint was filed in the United States District Court in the District of Delaware against the Individual Defendants, and the Company, as nominal defendant. The action is premised upon similar allegations as set forth in the securities class action and Hickock stockholder derivative action. The plaintiff, Karen Marcey, asserts that the Individual Defendants violated U.S. securities laws and breached their fiduciary duties, and also asserts unjust enrichment, waste of corporate assets and insider trading claims against all or some of the Individual Defendants. Plaintiff Marcey seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged violations and restitution from the Individual Defendants, plus interest and, on behalf of herself, legal and other costs and fees relating to this action. On January 4, 2022, this action was stayed by the United States District Court for the District of Delaware pending the resolution of the securities class action lawsuit. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any. On January 18, 2022, a third stockholder derivative complaint was filed in the Delaware Court of Chancery against the Individual Defendants, and the Company, as nominal defendant. The action is premised upon similar allegations as set forth in the securities class action and the Hickock and Marcey stockholder derivative actions. The plaintiff, Esther Kogus, asserts that the Individual Defendants breached their fiduciary duties and also asserts unjust enrichment and aiding and abetting breaches of fiduciary duty claims against the Individual Defendants. Plaintiff Kogus seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged breaches and claims, and restitution from the Individual Defendants. On behalf of herself, plaintiff Kogus seeks legal and other costs and fees relating to this action. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any. Other Legal Proceedings On July 27, 2020, a lawsuit was filed against the Company in the Superior Court of Suffolk County, Massachusetts, by Heide Abelli and Victor Pricolo. The plaintiffs claimed negligence, breach of contract and associated torts in connection with an alleged error in testing performed by the Company in 2004. The plaintiffs sought damages allegedly sustained by them by reason of the allegations set forth in their complaint, together with interest and costs. As of December 31, 2021, we accrued $ 14.0 million for a potential settlement of this lawsuit, which is included in Accrued liabilities in the Company's Consolidated Balance Sheet as of December 31, 2021. On January 24, 2022, the Company entered into an agreement with the plaintiffs to settle the lawsuit. Pursuant to the terms of the settlement agreement, the Company agreed to pay $ 14.0 million to the plaintiffs. The settlement agreement also provides for a full release by the plaintiffs of all claims against the Company and contains no admission of liability, wrongdoing or responsibility on the part of the Company. On February 3, 2022, a purported class action lawsuit was filed against the Company in the United States District Court in the Northern District of California by Ashley Carroll. Plaintiff alleges, among other things, that the Company made false statements about the accuracy of its Prequel prenatal screening test. The complaint seeks unspecified monetary damages and injunctive relief. We intend to vigorously defend against this action. Due to the nature of this matter and inherent uncertainties, it is not possible to provide an evaluation of the likelihood of an unfavorable outcome or an estimate of the amount or range of potential loss, if any. As of December 31, 2021, the management of the Company believes any reasonably possible liability that may result from the resolution of any other matters will not have a material adverse effect on the Company’s consolidated financial position, operating results, or cash flows. However, it is possible that the ultimate resolution of other matters, if unfavorable, may be material to the results of operations or financial condition for a particular period. From time to time, the Company receives recoupment requests from third-party payors for alleged overpayments. The Company disagrees with the contentions of the pending requests or has recorded an estimated reserve for the alleged overpayments. 13. LEASES The Company leases certain office spaces and research and development laboratory facilities, vehicles, and office equipment with remaining lease terms ranging from one to fourteen years . These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options which allows the Company to, at its election, renew or extend the lease for a fixed or indefinite period of time. These optional periods have not been considered in the determination of the right-of-use-assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. 96 Table of Contents On July 1, 2019, the Company adopted ASU 2016-02 under the modified retrospective approach by initially applying ASU 2016-02 at the adoption date, rather than at the beginning of the earliest comparative period presented. Results for the year ended December 31, 2021, the six-month transition period ended December 31, 2020 and the year ended June 30, 2020 are presented under ASU 2016-02. Prior period amounts were not adjusted and continue to be reported under previous lease accounting guidance. As part of the adoption, the Company elected the package of practical expedients to avoid reassessing prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the practical expedient allowing the use of hindsight in determining the lease term and assessing impairment of right-of-use assets based on all facts and circumstances through the effective date of the new standard. The Company has elected the recognition exemption for short-term leases for all leases that qualify. Under this exemption, the Company will not recognize right-of-use assets or lease liabilities for those leases that qualify as a short-term lease (leases with lease terms of 12 months or less), which includes not recognizing right-of-use assets or lease liabilities for existing short-term leases in transition. The Company also has elected the practical expedient to avoid separating lease and non-lease components for any of its leases within its existing classes of assets. We recognize each new lease within right-of-use assets and lease liabilities once the lease commences. The Company performed evaluations of its contracts and determined each of its identified leases are operating leases. For the year ended December 31, 2021, the Company incurred $ 20.7 million in lease costs which are included in operating expenses in the Consolidated Statements of Operations in relation to these operating leases. Of such lease costs, $ 3.2 million was variable lease expense, which was not included in the measurement of the Company's operating right-of-use assets and lease liabilities. The variable rent expense is comprised primarily of the Company's proportionate share of operating expenses, property taxes, and insurance and is classified as lease expense due to the Company's election to not separate lease and non-lease components. For the transition period ended December 31, 2020, the Company incurred $ 9.9 million in lease costs which are included in operating expenses in the Consolidated Statements of Operations in relation to these operating leases. Of such lease costs, $ 1.8 million was variable lease expense and $ 0.1 million was short-term lease expense, neither of which were included in the measurement of the Company's operating right-of-use assets and lease liabilities. For the year ended June 30, 2020, the Company incurred $ 18.4 million in lease costs, of which $ 2.6 million was variable lease expense and $ 0.2 million was short-term lease expense. Prior to the adoption of the lease guidance in ASU 2016-02, the Company's total rent expense for the year ended June 30, 2019 was $ 19.7 million. In December 2021, the Company entered into a non-cancelable operating lease for approximately 63,000 square feet in South San Francisco, California, which will expire in 2033. The lease will commence in April 2023. As of December 31, 2021, the maturities of the Company’s operating lease liabilities were as follows (in millions): Year Ended: 2022 $ 17.4 2023 19.8 2024 22.4 2025 16.6 2026 14.7 Thereafter 88.1 Total future lease payments 179.0 Less: amounts representing interest ( 27.9 ) Present value of future lease payments 151.1 Less: leases not yet commenced ( 58.8 ) Less: current maturities of operating lease liabilities ( 13.0 ) Noncurrent operating lease liabilities $ 79.3 As of December 31, 2021, the weighted average remaining lease term is 8.7 years and the weighted average discount rate used to determine the operating lease liability was 5.10 %. As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. When calculating the Company’s incremental borrowing rates, the Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary. The lease term used may reflect any option to extend or terminate the lease when it is reasonably certain the Company will exercise such options. Lease expenses for the Company's operating leases are recognized on a straight-line basis over the lease term. 97 Table of Contents 14. EMPLOYEE DEFERRED SAVINGS PLAN The Company has a deferred savings plan which qualifies under Section 401(k) of the Internal Revenue Code. Substantially all of the Company’s U.S. employees are covered by the plan. The Company makes matching contributions of 50 % of each employee’s contribution with the employer’s contribution not to exceed 4 % of the employee’s compensation. The Company’s recorded contributions to the plan are as follows: Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Deferred savings plan contributions $ 8.4 $ 4.0 $ 7.1 $ 8.3 15. SEGMENT AND RELATED INFORMATION The Company’s business is aligned with how the chief operating decision maker ("CODM") reviews performance and makes decisions in managing the Company. On July 1, 2021, the Company completed the divestiture of Myriad RBM, Inc., and, as a result, now operates a single reporting segment. Prior to the sale, the Myriad RBM, Inc. operating segment was included in the Company’s previously reported other segment. The Company’s remaining operating segments have been aggregated into a single reporting segment, which primarily provides testing and collaborative development of testing that is designed to assess an individual’s risk for developing disease later in life, identify a patient’s likelihood of responding to drug therapy and guide a patient’s dosing to ensure optimal treatment, or assess a patient’s risk of disease progression, and includes corporate services such as finance, human resources, legal and information technology. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. The CODM evaluates segment performance based on operating income (loss). The following table reconciles assets by geographical region to total assets: December 31, (in millions) 2021 2020 Net equipment, leasehold improvements and property: United States $ 41.7 $ 38.4 Rest of world 1.9 2.3 Total $ 43.6 $ 40.7 Total assets: United States $ 870.8 $ 1,190.3 Rest of world 51.1 56.8 Total $ 921.9 $ 1,247.1 Cash, cash equivalents, and marketable investment securities 398.8 171.7 Total $ 1,320.7 $ 1,418.8 16. DIVESTITURES On May 28, 2021, the Company completed the sale of the Myriad myPath, LLC laboratory to Castle Biosciences, Inc. for cash consideration of $ 32.5 million. The transaction was accounted for as a sale of assets and the Company recognized a gain of $ 31.2 million, net of transaction costs of $ 1.3 million, in Other income (expense) on the Company’s Consolidated Statements of Operations. On July 1, 2021, the Company completed the sale of Myriad RBM, Inc., then a wholly owned subsidiary of the Company, to IQVIA RDS, Inc., for cash consideration of $ 197.0 million. The transaction was accounted for as a sale of a business and the Company recognized a gain of $ 121.0 million, net of transaction costs of $ 4.8 million, in Other income (expense) on the Company's Consolidated Statements of Operations. 98 Table of Contents On September 13, 2021, the Company completed the sale of select operating assets and intellectual property, including the Vectra® test, from the Myriad Autoimmune business unit to Laboratory Corporation of America Holdings for cash consideration of $ 150.0 million. The transaction was accounted for as a sale of a business and the Company recognized a loss of $ 0.6 million, net of transaction costs of $ 4.4 million, in Other income (expense) on the Company's Consolidated Statements of Operations. The operating results of these businesses do not qualify for reporting as discontinued operations. Inventory In connection with the divestiture transactions, the Company recognized losses of $ 5.2 million and $ 6.5 million for a non-cancelable inventory purchase commitment and inventory, respectively, during the year ended December 31, 2021, as t he Company no longer had use for the goods. Both of these losses are included in Other income (expense) in the Company's Consolidated Statements of Operations for the year ended December, 2021. The following table details the amounts recognized in Other income for the year ended December 31, 2021: (in millions) Year Ended December 31, 2021 Gain on sale of Myriad RBM, Inc. 121.0 Gain on sale of the Myriad myPath, LLC laboratory 31.2 Loss on inventory ( 11.7 ) Loss on sale of Myriad Autoimmune assets ( 0.6 ) Other ( 0.6 ) Total Other Income $ 139.3 17. BUSINESS ACQUISITIONS Counsyl On July 31, 2018, the Company completed the acquisition of Counsyl, Inc. (“Counsyl”), a leading provider of genetic testing and DNA analysis services, pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated May 25, 2018 for total consideration of $ 405.9 million. Pursuant to the terms of the Merger Agreement, Myriad Merger Sub, Inc., a newly created wholly-owned subsidiary of the Company, was merged with and into Counsyl, with Counsyl continuing as the surviving corporation and a wholly-owned subsidiary of Myriad. To complete the purchase transaction, the Company incurred approximately $ 6.8 million of acquisition costs, which are recorded as selling, general and administrative expenses in the period incurred. For the year ended June 30, 2019, Counsyl contributed revenue of approximately $ 104.9 million. For the year ended June 30, 2019, operating expenses related to Counsyl were approximately $ 67.6 million. 18. SUBSEQUENT EVENT In the first quarter of 2022, the Company entered into a non-cancelable operating lease for approximately 230,000 square feet in Salt Lake City, Utah, which will commence in 2022, with a lease term of 15 years and total future lease payments of approximately $ 77.8 million. 99 Table of Contents 19. SUPPLEMENTAL CASH FLOW INFORMATION Year Ended December 31, Six-month Transition Period Ended December 31, Years Ended June 30, (in millions) 2021 2020 2020 2019 Cash paid for income taxes $ 4.6 $ 1.8 $ 1.0 $ 6.5 Cash paid for interest 4.4 5.2 9.5 11.6 Cash received for income tax receivables 90.0 — — — Non-cash investing and financing activities: Establishment of operating lease right-of-use assets and lease liabilities Operating lease right-of-use assets $ 41.8 $ — $ 74.5 $ — Operating lease liabilities ( 48.1 ) — ( 78.8 ) — Accrued liabilities and other long-term liabilities — — 4.3 — 20. TRANSITION PERIOD COMPARATIVE DATA (UNAUDITED) (in millions) Year Ended Six-month Period Ended Consolidated Statement of Operations Data: December 31, 2020 December 31, 2019 Molecular diagnostic testing $ 513.5 $ 353.1 Pharmaceutical and clinical services 43.6 28.3 Total revenue 557.1 381.4 Costs and expenses: Cost of molecular diagnostic testing 157.9 82.2 Cost of pharmaceutical and clinical services 20.3 17.1 Research and development expense 73.3 40.1 Selling, general and administrative expense 496.9 270.4 Goodwill and long-lived asset impairment charges 98.4 1.3 Total costs and expenses 846.8 411.1 Operating loss ( 289.7 ) ( 29.7 ) Other income (expense): Interest income 2.0 1.7 Interest expense ( 11.2 ) ( 5.4 ) Other 15.3 ( 0.3 ) Total other income (expense) 6.1 ( 4.0 ) Loss before income taxes ( 283.6 ) ( 33.7 ) Income tax benefit ( 59.9 ) ( 4.8 ) Net loss ( 223.7 ) ( 28.9 ) Net loss attributable to non-controlling interest ( 0.1 ) — Net loss attributable to Myriad Genetics Inc. stockholders $ ( 223.6 ) $ ( 28.9 ) Loss per share: Basic $ ( 2.99 ) $ ( 0.39 ) Diluted $ ( 2.99 ) $ ( 0.39 ) Weighted average shares outstanding: Basic 74.8 74.1 Diluted 74.8 74.1 100 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.