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 ) 68 Consolidated Balance Sheets as of December 31, 2022 and 2021 70 Consolidated Statements of Operations for the Year s Ended December 31, 202 2 and 2021 , the Transition Period Ended December 31, 2020, and for the Year Ended June 30, 2020 71 Consolidated Statements of Comprehensive Loss for the Year s Ended December 31, 2022 and 2021, the Transition Period Ended December 31, 2020 and for the Year Ended June 30, 2020 72 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2022 and 2021 , the Transition Period Ended December 31, 2020 and for the Year Ended June 30, 2020 73 Consolidated Statements of Cash Flows for the Year s Ended December 31, 202 2 and 2021, the Transition Period Ended December 31, 2020 and for the Year Ended June 30, 2020 74 Notes to Consolidated Financial Statements 75 67 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, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for the years ended December 31, 2022 and 2021, the six month period ended December 31, 2020 and the year 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, 2022 and 2021, and the results of its operations and its cash flows for the years ended December 31, 2022 and 2021, the six month period ended December 31, 2020 and the year 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, 2022, 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 March 1, 2023 expressed an unqualified 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 audit 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 testing revenue Description of the Matter During the year ended December 31, 2022, the Company’s testing revenue was $678.4 million. As discussed in Note 1 of the consolidated financial statements, management estimates the expected amount of consideration to be received as testing revenue and revenue is recognized when the performance obligation is complete. Auditing the measurement of the Company’s testing revenue was complex and judgmental due to the significant estimation required in determining 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. 68 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process. For example, we tested 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 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 March 1, 2023 69 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in millions, except per share amounts) December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 56.9 $ 257.4 Marketable investment securities 58.0 81.4 Trade accounts receivable 101.6 91.3 Inventory 20.1 15.3 Prepaid taxes 17.6 18.4 Prepaid expenses and other current assets 20.4 21.0 Total current assets 274.6 484.8 Operating lease right-of-use assets 103.9 81.8 Long-term marketable investment securities 54.8 59.0 Property, plant and equipment, net 83.4 43.5 Intangibles, net 379.7 404.1 Goodwill 286.8 239.2 Other assets 15.5 8.3 Total assets $ 1,198.7 $ 1,320.7 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 28.8 $ 29.6 Accrued liabilities 94.3 161.7 Current maturities of operating lease liabilities 14.1 13.0 Total current liabilities 137.2 204.3 Unrecognized tax benefits 26.8 27.9 Long-term deferred taxes 3.5 35.8 Noncurrent operating lease liabilities 130.9 79.3 Other long-term liabilities 14.5 5.6 Total liabilities 312.9 352.9 Commitments and contingencies Stockholders’ equity: Common stock, $ 0.01 par value, 81.2 and 80.0 shares outstanding at December 31, 2022 and 2021, respectively 0.8 0.8 Additional paid-in capital 1,260.1 1,226.3 Accumulated other comprehensive loss ( 8.9 ) ( 5.1 ) Accumulated deficit ( 366.2 ) ( 254.2 ) Total Myriad Genetics, Inc. stockholders' equity 885.8 967.8 Non-controlling interest — — Total stockholders' equity 885.8 967.8 Total liabilities and stockholders’ equity $ 1,198.7 $ 1,320.7 See accompanying notes to consolidated financial statements. 70 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (in millions, except per share amounts) Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, 2022 2021 2020 2020 Testing revenue $ 678.4 $ 666.4 $ 279.6 $ 586.9 Other revenue — 24.2 20.2 51.7 Total revenue 678.4 690.6 299.8 638.6 Costs and expenses: Cost of testing revenue 202.0 185.7 82.6 157.5 Cost of other revenue — 11.9 8.8 28.6 Research and development expense 85.4 81.9 35.8 77.2 Selling, general, and administrative expense 514.7 537.8 260.4 507.3 Legal charges pending settlement — 62.0 — — Goodwill and long-lived asset impairment charges 16.9 1.8 — 99.7 Total costs and expenses 819.0 881.1 387.6 870.3 Operating loss ( 140.6 ) ( 190.5 ) ( 87.8 ) ( 231.7 ) Other income (expense): Interest income 2.6 0.7 0.7 3.0 Interest expense ( 3.2 ) ( 6.6 ) ( 5.8 ) ( 10.8 ) Other 0.6 139.3 ( 1.2 ) 16.2 Total other income (expense) — 133.4 ( 6.3 ) 8.4 Loss before income tax ( 140.6 ) ( 57.1 ) ( 94.1 ) ( 223.3 ) Income tax benefit ( 28.6 ) ( 29.9 ) ( 41.0 ) ( 23.7 ) Net loss ( 112.0 ) ( 27.2 ) ( 53.1 ) ( 199.6 ) Net loss attributable to non-controlling interest — — — ( 0.1 ) Net loss attributable to Myriad Genetics, Inc. stockholders $ ( 112.0 ) $ ( 27.2 ) $ ( 53.1 ) $ ( 199.5 ) Net loss per share: Basic and diluted $ ( 1.39 ) $ ( 0.35 ) $ ( 0.71 ) $ ( 2.69 ) Weighted average shares outstanding: Basic and diluted 80.6 78.0 75.0 74.3 See accompanying notes to consolidated financial statements. 71 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Loss (in millions) Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, 2022 2021 2020 2020 Net loss attributable to Myriad Genetics, Inc. stockholders $ ( 112.0 ) $ ( 27.2 ) $ ( 53.1 ) $ ( 199.5 ) Unrealized gain (loss) on available-for-sale securities, net of tax ( 2.5 ) ( 1.0 ) ( 0.5 ) 0.7 Change in foreign currency translation adjustment, net of tax ( 1.3 ) ( 1.8 ) 3.4 ( 0.6 ) Comprehensive loss $ ( 115.8 ) $ ( 30.0 ) $ ( 50.2 ) $ ( 199.4 ) See accompanying notes to consolidated financial statements. 72 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity (in millions) Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings (accumulated deficit) Myriad Genetics, Inc. Stockholders’ equity 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 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — ( 4.3 ) — — ( 4.3 ) Stock-based payment expense — 38.1 — — 38.1 Net loss — — — ( 112.0 ) ( 112.0 ) Other comprehensive loss, net of tax — — ( 3.8 ) — ( 3.8 ) BALANCES AT DECEMBER 31, 2022 $ 0.8 $ 1,260.1 $ ( 8.9 ) $ ( 366.2 ) $ 885.8 See accompanying notes to consolidated financial statements. 73 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in millions) Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, 2022 2021 2020 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss attributable to Myriad Genetics, Inc. stockholders $ ( 112.0 ) $ ( 27.2 ) $ ( 53.1 ) $ ( 199.5 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 52.7 62.8 35.8 72.0 Non-cash interest expense 1.7 1.5 0.4 0.5 Non-cash lease expense 11.7 12.8 6.4 — Tenant improvement allowance received 18.0 — — — Stock-based compensation expense 38.1 36.3 14.9 25.2 Deferred income taxes ( 30.8 ) ( 32.1 ) 44.2 ( 55.8 ) Unrecognized tax benefits ( 1.1 ) ( 2.6 ) 7.1 1.7 Non-cash impact of foreign currency transactions — — ( 1.0 ) — Loss on inventory — 6.5 — — Impairment of goodwill and long-lived assets 16.9 1.8 — 99.7 Gain on sale of businesses and assets — ( 162.0 ) — ( 1.0 ) Changes in assets and liabilities: Prepaid expenses and other current assets 1.6 ( 6.6 ) 3.1 2.8 Trade accounts receivable ( 10.3 ) ( 8.8 ) ( 21.4 ) 64.0 Inventory ( 2.9 ) 1.6 2.2 1.6 Prepaid taxes 0.7 89.9 ( 108.4 ) 25.1 Other assets ( 0.9 ) ( 3.6 ) ( 2.3 ) — Accounts payable ( 3.5 ) 9.2 ( 1.2 ) ( 10.7 ) Accrued liabilities ( 81.2 ) 65.7 ( 0.2 ) 4.4 Deferred revenue ( 5.0 ) ( 26.6 ) ( 0.2 ) 30.7 Net cash provided by (used in) operating activities ( 106.3 ) 18.6 ( 73.7 ) 60.7 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 45.3 ) ( 18.0 ) ( 7.9 ) ( 10.2 ) Acquisitions, net of cash acquired ( 57.2 ) — — — Proceeds from sale of business and assets — 379.1 — 21.3 Purchases of marketable investment securities ( 103.2 ) ( 147.8 ) — ( 60.8 ) Proceeds from maturities and sales of marketable investment securities 128.2 61.1 35.9 69.0 Net cash provided by (used in) investing activities ( 77.5 ) 274.4 28.0 19.3 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from common stock issued under stock-based compensation plans 6.3 91.8 1.8 13.3 Payment of tax withheld for common stock issued under stock-based compensation plans ( 10.6 ) ( 11.5 ) ( 3.8 ) ( 9.8 ) Payment of contingent consideration recognized at acquisition ( 3.0 ) ( 3.3 ) ( 0.1 ) ( 3.9 ) Fees associated with refinancing of revolving credit facility ( 0.7 ) ( 1.2 ) — ( 1.0 ) Repayment of revolving credit facility — ( 226.4 ) — ( 8.6 ) Net cash used in financing activities ( 8.0 ) ( 150.6 ) ( 2.1 ) ( 10.0 ) Effect of foreign exchange rates on cash, cash equivalents, and restricted cash ( 0.6 ) ( 0.6 ) 1.1 0.5 Net increase (decrease) in cash, cash equivalents, and restricted cash ( 192.4 ) 141.8 ( 46.7 ) 70.5 Cash, cash equivalents, and restricted cash at beginning of the period 258.8 117.0 163.7 93.2 Cash, cash equivalents, and restricted cash at end of the period $ 66.4 $ 258.8 $ 117.0 $ 163.7 See accompanying notes to consolidated financial statements. 74 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. (together with its subsidiaries, 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 develops and offers tests that help assess the risk of developing disease or disease progression and guide treatment decisions across medical specialties where genetic insights can significantly improve patient care and lower health care costs. The Company generates revenue by performing tests and, prior to the sale of Myriad RBM, Inc. on July 1, 2021 as described in Note 17, by providing pharmaceutical and clinical services to the pharmaceutical and biotechnology industries and medical research institutions utilizing its multiplexed immunoassay technology. The Company currently operates as a single reporting segment. The Company’s principal executive office is located in Salt Lake City, Utah. The accompanying consolidated financial statements for the Company have been prepared in accordance with United States ("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”). 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 management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting 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, purchase accounting, and impairment analysis of goodwill and long-lived assets. Actual results could differ from those estimates. 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, or cash flows from operations. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Substantially all of the Company’s accounts 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 14 %, 17 %, 16 %, and 15 % of total revenue for the years ended December 31, 2022 and 2021, the six-month transition period ended December 31, 2020, and the fiscal year ended June 30, 2020, 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 payor accounted for more than 10% of accounts receivable at December 31, 2022 or December 31, 2021. 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. 75 Table of Contents Restricted Cash In certain circumstances, the Company is required to maintain cash deposit with certain banks with respect to contractual or other legal obligations, and therefore the use of these cash deposits for general operational purposes is restricted. As of December 31, 2022, restricted cash was approximately $ 9.5 million, of which $ 2.0 million was recognized as a current asset and $ 7.5 million was recognized as a long-term asset. As of December 31, 2021, restricted cash was approximately $ 1.4 million, of which $ 1.0 million was recognized as a current asset and $ 0.4 million was recognized as a long-term asset. The restricted cash amounts are largely comprised of cash held in escrow related to the Company's acquisition of Gateway Genomics, LLC ("Gateway") during the year ended December 31, 2022 and certain divestitures during the year ended December 31, 2021. The current and long-term portions are included in Prepaid expenses and other current assets and Other assets, respectively, on the Consolidated Balance Sheets. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Consolidated Balance Sheets that agrees to the amounts included in the Consolidated Statement of Cash Flows. December 31, June 30, (in millions) 2022 2021 2020 2020 Cash and cash equivalents $ 56.9 $ 257.4 $ 117.0 $ 163.7 Restricted cash 9.5 1.4 — — Total cash, cash equivalents, and restricted cash $ 66.4 $ 258.8 $ 117.0 $ 163.7 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 years ended December 31, 2022 and 2021, the transition period ended December 31, 2020 or during the fiscal year ended June 30, 2020. 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. The Company evaluates its inventories for excess quantities and obsolescence. Inventories that are considered excess or obsolete are expensed. 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 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 estimated receivables from customers for revenue recognized related to genetic tests. The Company does not have any off-balance-sheet credit exposure related to its customers and does not require collateral. 76 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 fifteen years . Repairs and maintenance costs are charged to expense as incurred. Leases The Company acts as lessee in its lease agreements, which include operating leases for corporate offices, laboratory space, warehouse space, vehicles and certain laboratory and office equipment. The Company determines whether an arrangement is, or contains, a lease at inception. The Company records the present value of lease payments as right-of-use (“ROU”) assets and lease liabilities on the Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments based on the present value of lease payments over the lease term. Classification of lease liabilities as either current or non-current is based on the expected timing of payments due under the Company’s obligations. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also consists of any lease incentives received. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the lease term for up to 10 years. The Company has taken advantage of certain practical expedients offered to registrants at adoption of Accounting Standards Codification ("ASC") 842, Leases . Lease expense for leases with a term of twelve months or less is recognized on a straight-line basis and is not included in the recognized ROU assets and lease liabilities. Further, as a practical expedient, all lease contracts are accounted for as one single lease component, as opposed to separating lease and non-lease components to allocate the consideration within a single lease contract. Intangible Assets and Other Long-Lived Assets Intangible and other long-lived assets are comprised of acquired licenses and technology. Acquired intangible assets are recorded at fair value and amortized over the shorter of the contractual life or the estimated useful life. 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, 2022 and 2021, the Company had unamortized software costs of $ 7.1 million and $ 6.7 million, respectively. For the years ended December 31, 2022 and 2021, amortization expense for capitalized software costs was $ 1.2 million and $ 0.2 million, respectively. 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. 77 Table of Contents 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. Business Acquisitions The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The tangible and identifiable intangible assets acquired and liabilities assumed in a business combination are recorded based on their estimated fair values as of the business combination date, including identifiable intangible assets which either arise from a contractual or legal right or are separable from goodwill. The Company bases the estimated fair value of identifiable intangible assets acquired in a business combination on third-party valuations that use information and assumptions provided by the Company's management, which consider the Company's estimates of inputs and assumptions that a market participant would use. Any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed is recorded to goodwill. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, estimated cost savings, cash flows, discount rates, estimated useful lives and probabilities surrounding the achievement of contingent milestones could result in different purchase price allocations and amortization expense in current and future periods. In circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under ASC 480, Distinguishing Liabilities from Equity , the Company recognizes a liability equal to the fair value of the contingent payments expected to be made as of the acquisition date. This liability is remeasured each reporting period and the changes in the fair value are recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations. Transaction costs associated with acquisitions are expensed as incurred in Selling, general, and administrative expenses in the Consolidated Statements of Operations. Results of operations and cash flows of acquired companies are included in the operating results from the date of acquisition. Revenue Recognition The Company primarily generates revenue by performing genetic testing. Testing revenues are primarily derived from the following categories of products: Hereditary Cancer (MyRisk, BRACAnalysis, BRACAnalysis CDx), Tumor Profiling (MyChoice CDx, Prolaris, and EndoPredict), Prenatal (Foresight, Prequel, and SneakPeek), and Pharmacogenomics (GeneSight). 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 in February 2020. 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 Testing revenues. See Note 17 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 pharmaceutical and clinical services indicates transfer of control for revenue recognition purposes. 78 Table of Contents The following table presents detail regarding the composition of the Company’s total revenue by product type for the years ended December 31, 2022 and 2021, the transition period ended December 31, 2020, and the fiscal year ended June 30, 2020: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (In millions) 2022 2021 2020 2020 Testing revenues: Hereditary Cancer $ 305.5 $ 316.3 $ 159.3 $ 347.4 Tumor Profiling 128.6 120.9 33.9 48.3 Prenatal 116.4 106.8 37.6 76.7 Pharmacogenomics 127.6 93.7 29.8 74.1 Autoimmune 0.3 28.2 18.0 39.1 Other — 0.5 1.0 1.3 Total testing revenue 678.4 666.4 279.6 586.9 Other revenue — 24.2 20.2 51.7 Total revenue $ 678.4 $ 690.6 $ 299.8 $ 638.6 In addition, the following tables reconcile revenue by geographical region, either U.S. or rest of world ("RoW"), to total revenue: Years Ended December 31, 2022 2021 (in millions) U.S. RoW Total U.S. RoW Total Testing revenues: Hereditary Cancer $ 263.5 $ 42.0 $ 305.5 $ 271.0 $ 45.3 $ 316.3 Tumor Profiling 84.5 44.1 128.6 80.4 40.5 120.9 Prenatal 115.6 0.8 116.4 106.2 0.6 106.8 Pharmacogenomics 127.6 — 127.6 93.7 — 93.7 Autoimmune 0.3 — 0.3 28.2 — 28.2 Other — — — — 0.5 0.5 Total testing revenue 591.5 86.9 678.4 579.5 86.9 666.4 Other revenue — — — 24.2 — 24.2 Total revenue $ 591.5 $ 86.9 $ 678.4 $ 603.7 $ 86.9 $ 690.6 79 Table of Contents Six-month Transition Period Ended December 31, Year Ended June 30, 2020 2020 (in millions) U.S. RoW Total U.S. RoW Total Testing revenues: Hereditary Cancer $ 140.9 $ 18.4 $ 159.3 $ 329.8 $ 17.6 $ 347.4 Tumor Profiling 28.2 5.7 33.9 39.2 9.1 48.3 Prenatal 37.4 0.2 37.6 76.4 0.3 76.7 Pharmacogenomics 29.8 — 29.8 74.1 — 74.1 Autoimmune 18.0 — 18.0 39.1 — 39.1 Other 1.0 — 1.0 1.2 0.1 1.3 Total testing revenue 255.3 24.3 279.6 559.8 27.1 586.9 Other revenue 20.1 0.1 20.2 36.4 15.3 51.7 Total revenue $ 275.4 $ 24.4 $ 299.8 $ 596.2 $ 42.4 $ 638.6 Under ASC 606, Revenue from Contracts with Customers (“ASC 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 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 in the Consolidated Balance Sheets. During the fiscal 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 were applied against services performed beginning in April 2021 and continued until the funds previously received were fully earned, which occurred during the quarter ended March 31, 2022. A reconciliation of the beginning and ending balances of deferred revenue is shown in the table below: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Deferred revenue - beginning balance $ 5.2 $ 32.7 $ 32.8 $ 2.2 Revenue recognized ( 4.9 ) ( 40.5 ) ( 6.1 ) ( 7.2 ) Prepayments 0.3 14.0 6.0 37.8 Divestitures — ( 1.0 ) — — Deferred revenue - ending balance $ 0.6 $ 5.2 $ 32.7 $ 32.8 In accordance with ASC 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 the Company’s performance to date. In determining the transaction price, the Company 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 is 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. 80 Table of Contents 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 ultimate 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 requests for refunds of payments made previously by insurance carriers, which are accounted for as reductions in revenue in the Consolidated Statements of Operations and Comprehensive Loss. Cash collections for certain tests delivered may differ from rates 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, 2022, the Company recognized $ 22.1 million in revenue, which resulted in a $ 0.21 impact to 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. During the year ended December 31, 2021, the Company recognized $ 15.9 million in revenue which resulted in a $ 0.15 impact to 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 the Company's Prolaris test, for which revenue was fully constrained in a prior period. During the transition period ended December 31, 2020, the impact to revenue and loss per share for tests in which the performance obligation of delivering the test results was met in the prior period was immaterial. During the fiscal year ended June 30, 2020, the Company recognized a $ 9.9 million decrease in revenue, which resulted in a $( 0.10 ) impact to 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 fiscal 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 fiscal year ended June 30, 2020 resulted in an impact to loss per share for the fiscal year ended June 30, 2020 of $( 0.05 ). In accordance with ASC 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, and certain other taxes. The Company applies 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 also applies 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 payment terms have a payback period of less than one year. Stock-based Payment Expense We recognize the fair value compensation cost relating to stock-based payment transactions in accordance with 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 Method. 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 Company's 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 the price of the Company's common stock. 81 Table of Contents Other Income (Expense) The Company recognizes the gain or loss on its divestitures as Other income (expense) in the Consolidated Statement of Operations. During the year ended December 31, 2021, the Company recognized a net gain on divestitures of $ 162.0 million. See Note 17 for additional information regarding these divestitures. In addition, during the fiscal year ended June 30, 2020, the Company received approximately $ 14.6 million from the Provider Relief Fund under the CARES Act to reimburse the Company for health care related expenses or lost revenues that were 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, state, and foreign 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 Company's consolidated financial condition, results of operations or cash flows. Earnings Per Share Basic earnings per share (EPS) 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: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Denominator: Weighted-average shares outstanding used to compute basic EPS 80.6 78.0 75.0 74.3 Effect of dilutive stock options and RSUs — — — — Weighted-average shares outstanding and dilutive securities used to compute diluted EPS 80.6 78.0 75.0 74.3 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 shares of common stock, which may be dilutive to future diluted earnings per share, are as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Anti-dilutive options and RSUs excluded from EPS computation 4.4 4.5 6.6 5.5 82 Table of Contents 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 loss as a separate component of Stockholders’ equity. The following table shows the cumulative translation adjustments included in Accumulated other comprehensive loss (in millions): Ending balance December 31, 2021 $ ( 4.9 ) Period translation adjustments ( 1.3 ) Ending balance December 31, 2022 $ ( 6.2 ) Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. During the year ended December 31, 2022, there have been no new accounting pronouncements adopted by the Company or new accounting pronouncements issued by the FASB that have or are expected to have a material impact on the Company's consolidated financial statements. 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, 2022 and December 31, 2021 were as follows: (in millions) Amortized cost Gross unrealized holding gains Gross unrealized holding losses Estimated fair value December 31, 2022: Cash and cash equivalents: Cash $ 53.6 $ — $ — $ 53.6 Cash equivalents 3.3 — — 3.3 Total cash and cash equivalents 56.9 — — 56.9 Available-for-sale: Corporate bonds and notes 66.7 — ( 1.6 ) 65.1 Municipal bonds 16.3 — ( 0.3 ) 16.0 Federal agency issues 20.7 — ( 0.7 ) 20.0 U.S. government securities 11.8 — ( 0.1 ) 11.7 Total $ 172.4 $ — $ ( 2.7 ) $ 169.7 83 Table of Contents (in millions) Amortized cost Gross unrealized holding gains Gross unrealized holding losses Estimated fair value December 31, 2021: Cash and cash equivalents: Cash $ 194.2 $ — $ — $ 194.2 Cash equivalents 63.2 — — 63.2 Total cash and cash equivalents 257.4 — — 257.4 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 U.S. government securities 11.9 — — 11.9 Total $ 397.9 $ 0.1 $ ( 0.2 ) $ 397.8 Cash, cash equivalents, and maturities of debt securities classified as available-for-sale are as follows at December 31, 2022: (in millions) Amortized cost Estimated fair value Cash $ 53.6 $ 53.6 Cash equivalents 3.3 3.3 Available-for-sale: Due within one year 58.8 58.0 Due after one year through five years 56.7 54.8 Due after five years — — Total $ 172.4 $ 169.7 During the years ended December 31, 2022 and 2021, the transition period ended December 31, 2020, and the fiscal year ended June 30, 2020, the Company sold $ 28.4 million, $ 8.3 million, $ 1.6 million, and $ 3.4 million of investments, respectively. The amount of gross realized gains and realized losses upon sales of investments were insignificant in all periods presented. As of December 31, 2022, the Company had 118 available-for-sale debt securities in a gross unrealized loss position of $ 2.7 million, with a fair market value of $ 111.6 million. As of December 31, 2021, the Company had 100 available-for-sale debt securities in a gross unrealized loss position of $ 0.2 million, with a fair market value of $ 77.7 million. As of December 31, 2022 and December 31, 2021, the expected losses were determined to be immaterial and as such, the Company did not record an allowance for credit losses. The Company does not intend to sell these available-for-sale debt securities, and it is not more likely than not that it will be required to sell these securities prior to recovery of their amortized cost basis. 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 it will receive in connection with the sale of an asset or pay 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. 84 Table of Contents 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 related to the acquisitions of Sividon Diagnostics GmbH ("Sividon") and Gateway, the Company reassesses the fair value of each 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 expected measurement periods of approximately 12.5 and 2.3 years for Sividon and Gateway, respectively, 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 components of Accrued liabilities and Other long-term liabilities in the Consolidated Balance Sheets. Changes to contingent consideration liabilities are reflected in Selling, general, and administrative expense in the Consolidated Statements of Operations. Changes to the unobservable inputs could have a material impact on the Company’s financial statements. The following table sets forth the fair value of the financial assets and liabilities that the Company re-measures on a regular basis: (in millions) Level 1 Level 2 Level 3 Total December 31, 2022 Money market funds (a) $ 3.3 $ — $ — $ 3.3 Corporate bonds and notes — 65.1 — 65.1 Municipal bonds — 16.0 — 16.0 Federal agency issues — 20.0 — 20.0 U.S. government securities — 11.7 — 11.7 Contingent consideration — — ( 6.8 ) ( 6.8 ) Total $ 3.3 $ 112.8 $ ( 6.8 ) $ 109.3 (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 U.S. 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. 85 Table of Contents The following table reconciles the change in the fair value of the contingent consideration during the periods presented: (in millions) Years Ended December 31, Transition Period Ended December 31, Year Ended June 30, 2022 2021 2020 2020 Carrying amount at beginning of period $ 8.6 $ 10.9 $ 6.8 $ 13.8 Payment of contingent consideration ( 3.0 ) ( 3.3 ) ( 0.1 ) ( 3.9 ) Consideration recognized at acquisition 2.1 — — — Change in fair value recognized in the statement of operations ( 0.4 ) 1.8 3.5 ( 2.8 ) Translation adjustments recognized in other comprehensive income (loss) ( 0.5 ) ( 0.8 ) 0.7 ( 0.3 ) Carrying amount at end of period $ 6.8 $ 8.6 $ 10.9 $ 6.8 4. PROPERTY, PLANT AND EQUIPMENT, NET The property, plant and equipment at December 31, 2022 and December 31, 2021 were as follows: December 31, (in millions) 2022 2021 Leasehold improvements $ 67.9 $ 38.0 Equipment 124.7 112.4 Property, plant and equipment, gross 192.6 150.4 Less accumulated depreciation ( 109.2 ) ( 106.9 ) Property, plant and equipment, net $ 83.4 $ 43.5 During the year ended December 31, 2022, the Company ceased the use of certain leased Salt Lake City facilities and one of its South San Francisco facilities. As a result, the Company recognized a $ 3.9 million impairment on the property, plant and equipment associated with the leases, which consisted primarily of leasehold improvements. See Note 13 for further discussion. 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 17 for additional information regarding these divestitures. The Company recorded depreciation during the respective periods as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Depreciation expense $ 11.6 $ 12.1 $ 5.0 $ 11.0 86 Table of Contents 5. GOODWILL AND INTANGIBLE ASSETS Goodwill The changes in the carrying amount of goodwill for the year ended December 31, 2022 are as follows: (in millions) Year Ended December 31, 2022 Beginning balance $ 239.2 Goodwill acquired (see Note 16) 48.7 Translation adjustments ( 1.1 ) Carrying amount at end of period $ 286.8 On November 1, 2022, the Company acquired Gateway. In connection therewith, the Company recognized $ 48.7 million of goodwill. See Note 16 for additional information on this acquisition. 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 years ended December 31, 2022 and 2021, or the transition period ended December 31, 2020. During the fiscal year ended June 30, 2020, as a result of the effect of COVID-19 on expected future cash flows and a corresponding decline in the Company's 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 fiscal 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 developed technologies, customer relationships, and trademarks as well as a non-amortizable intangible asset of in-process research and development. On November 1, 2022, the Company acquired Gateway. As part of the acquisition, the Company acquired customer relationships, trademarks, and developed technologies of $ 1.6 million, $ 6.1 million, and $ 10.1 million, respectively. See Note 16 for additional information on this acquisition. The Company's developed technologies have estimated remaining useful lives of 8 and 13 years. The Company's trademarks and customer relationships acquired have an estimated remaining useful life of approximately 10 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 fiscal 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 intangible assets for the years ended December 31, 2022 and 2021 or the transition period ended December 31, 2020. 87 Table of Contents The following tables summarize the amounts reported as intangible assets (in millions): At December 31, 2022: Gross Carrying Amount Accumulated Amortization Net Weighted-Average Useful Life (in Years) Weighted-Average Remaining Useful Life (in Years) Developed technologies $ 625.0 $ ( 252.9 ) $ 372.1 14.4 9.1 Customer relationships 1.6 — 1.6 10.0 9.8 Trademarks 6.1 ( 0.1 ) 6.0 10.0 9.8 Total intangible assets $ 632.7 $ ( 253.0 ) $ 379.7 14.4 9.1 At December 31, 2021: Gross Carrying Amount Accumulated Amortization Net Weighted-Average Useful Life (in Years) Weighted-Average Remaining Useful Life (in Years) Developed technologies $ 616.6 $ ( 212.5 ) $ 404.1 14.6 10.2 Total intangible assets $ 616.6 $ ( 212.5 ) $ 404.1 14.6 10.2 The Company recorded amortization during the respective periods for these intangible assets as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Amortization of intangible assets $ 41.1 $ 50.7 $ 30.8 $ 61.0 Future amortization expense of intangible assets as of December 31, 2022 is estimated to be as follows (in millions): Years Ended December 31, Amortization Expense 2023 $ 42.8 2024 42.8 2025 42.8 2026 42.8 2027 42.8 Thereafter 165.7 Total $ 379.7 6. ACCRUED LIABILITIES The Company's accrued liabilities at December 31, 2022 and December 31, 2021 were as follows: December 31, (in millions) 2022 2021 Employee compensation and benefits $ 41.2 $ 52.8 Legal charges pending settlement — 62.0 Accrued taxes payable 4.8 4.0 Refunds payable and reserves 19.3 9.8 Short-term contingent consideration — 3.2 Deferred revenue 0.6 5.2 Accrued royalties 4.8 5.4 Other accrued liabilities 23.6 19.3 Total accrued liabilities $ 94.3 $ 161.7 88 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 (the "Maturity Date") 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 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 (as modified, the "Modification Period”). This amendment included a modification to the leverage covenant and the interest coverage ratio covenant, which were waived through March 31, 2021, as well as revisions to certain negative covenants of the Facility during the Modification Period. On February 22, 2021, the Company entered into Amendment No. 3 to the Facility, which 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 million, and made it applicable through such quarter. Amendment No. 3 also restricted the Company from borrowing under the Facility if unrestricted cash, cash equivalents and marketable investment securities exceed $ 150.0 million, unless such borrowings are in connection with permitted acquisitions, 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, 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 . On July 26, 2022, the Company entered into Amendment No. 4 to the Facility (the "Amended Facility"), which extended the Modification Period through the Maturity Date, decreased the maximum aggregate principal commitment from $ 250.0 million to $ 200.0 million, with a further reduction to $ 150.0 million as of December 31, 2022, waived compliance with the leverage ratio and interest coverage ratio covenants through the Maturity Date, and provided for monthly reporting of the Company's liquidity if the total revolving credit exposure is greater than $ 0 , without giving effect to the dollar amount of any letter of credit exposure not in excess of $ 5.0 million. 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 under the Amended Facility or otherwise, 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. The Amended Facility contains customary loan terms, interest rates, representations and warranties, and affirmative and negative covenants, subject to customary limitations, exceptions and exclusions. The Amended Facility also contains certain customary events of default. Amendment No. 2 modified the 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. Amendment No. 4 replaced the option to make Eurodollar borrowings, which bore interest by reference to the LIBOR rate, with term benchmark loans, which will bear interest by reference to the secured overnight financing rate ("SOFR"). Amendment No. 4 did not modify the applicable margins and undrawn fee amounts. The interest rate for term benchmark loans continues to be fixed at a spread of SOFR plus 350 basis points on drawn balances and undrawn fees continue to be 50 basis points. The SOFR floor was revised to 0.0 %. The Company was in compliance with all applicable financial covenants at December 31, 2022. During the year ended December 31, 2021, the Company made principal repayments totaling $ 226.4 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, 2022. 8. OTHER LONG-TERM LIABILITIES The Company's other long-term liabilities at December 31, 2022 and December 31, 2021 were as follows: December 31, (in millions) 2022 2021 Contingent consideration $ 6.8 $ 5.4 Other 7.7 0.2 Total other long-term liabilities $ 14.5 $ 5.6 89 Table of Contents The Company’s balance of other long-term liabilities as of December 31, 2022 and 2021 consisted primarily of the long-term portion of contingent consideration related to the acquisitions of Sividon and Gateway and restricted cash related to the acquisition of Gateway. See Note 16 for additional information on the Gateway acquisition. 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 shares of preferred stock outstanding at December 31, 2022 and December 31, 2021. The Company is authorized to issue up to 150.0 million shares of common stock, par value $ 0.01 per share. There were 81.2 million and 80.0 million shares of common stock issued and outstanding at December 31, 2022 and 2021, respectively. Shares of common stock issued and outstanding Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Beginning common stock issued and outstanding 80.0 75.4 74.7 73.5 Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plans 1.2 4.6 0.7 1.2 Common stock issued and outstanding at end of period 81.2 80.0 75.4 74.7 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, 2022, the Company had $ 110.7 million remaining on its current share repurchase authorization. No shares were repurchased during the years ended December 31, 2022 and 2021 under this authorization. 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. As of December 31, 2022, the Company had 1.9 million shares of common stock available for grant under the 2017 Plan. 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, the shares of common stock underlying these awards also will be available for issuance pursuant to the 2017 Plan. The number of shares, terms, and vesting periods are generally determined by the Company’s Board of Directors or a committee thereof on an award-by-award basis. RSUs granted to employees generally vest either ratably over four years or as a cliff vesting after three years either on the anniversary of the date on which the RSUs were granted or during the month in which such anniversary dates occur. The number of PSUs awarded to certain employees may be increased or may be reduced based on certain additional performance and market metrics. RSUs granted to 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 granted to the Company's President and Chief Executive Officer as an inducement to his employment expire seven years from the grant date. 90 Table of Contents The performance and market conditions associated with PSU awards granted during the year ended December 31, 2022 include vesting that is based on revenue targets ( 34 % weighting), adjusted earnings per share targets ( 33 % weighting), and relative total stockholder return ( 33 % weighting) measured against the Nasdaq Health Care Index (IXHC) using the 20-trading day averages at the beginning and end of the measurement period. The measurement period for these awards is January 1, 2022 through December 31, 2024. The Company estimates the likelihood of achievement of performance conditions at the end of each period. The portion of the awards pertaining to relative total stockholder return represent market conditions and, accordingly, the estimated fair value of such awards are recognized over the performance period. The Company has also assessed that as of December 31, 2022, the performance conditions for the remaining two performance targets (revenue and adjusted earnings per share) are considered probable of being achieved and, accordingly, these portions of the awards are also being expensed over the performance 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 the stock option activity under the Company's equity plans, and inducement awards for the year ended December 31, 2022 is as follows: (number of shares in millions) Number of shares Weighted average exercise price Weighted average remaining contractual life (years) Options outstanding at December 31, 2021 1.4 $ 20.38 Less: Options exercised — 26.22 Options canceled or expired ( 0.7 ) 26.99 Options outstanding at December 31, 2022 0.7 13.38 4.62 Options exercisable at December 31, 2022 0.4 13.38 4.62 Options vested and expected to vest 0.7 $ 13.38 4.62 There were no options granted during the years ended December 31, 2022 and 2021 and June 30, 2020. 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 and as of December 31, 2022, these were the only options outstanding. Restricted Stock Units A summary of the RSU awards activity under the Company's equity plans and inducement awards, including PSU awards for the year ended December 31, 2022, is as follows: 2022 (number of shares in millions) Number of shares Weighted average grant date fair value RSUs unvested and outstanding at December 31, 2021 3.1 $ 24.96 RSUs granted 2.3 25.78 Less: RSUs vested ( 1.2 ) 25.32 RSUs canceled ( 0.5 ) 26.83 RSUs unvested and outstanding at December 31, 2022 3.7 $ 25.08 The weighted average grant-date fair value of RSUs granted during the years ended December 31, 2022 and 2021, the transition period ended December 31, 2020, and the fiscal year ended June 30, 2020 was $ 25.78 , $ 29.83 , $ 13.69 and $ 27.96 , respectively. The fair value of RSUs that vested during the years ended December 31, 2022 and 2021, the transition period ended December 31, 2020, and the fiscal year ended June 30, 2020 was $ 31.0 million, $ 22.6 million, $ 29.1 million and $ 32.4 million, respectively. 91 Table of Contents Stock-based compensation expense recognized and included in the Consolidated Statements of Operations was allocated as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Cost of testing revenue $ 1.7 $ 1.5 $ 0.6 $ 1.2 Cost of other revenue — 0.1 0.1 0.3 Research and development expense 5.2 4.2 2.4 5.0 Selling, general, and administrative expense 31.2 30.5 11.8 18.7 Total stock-based compensation expense $ 38.1 $ 36.3 $ 14.9 $ 25.2 As of December 31, 2022, there was $ 64.3 million of total unrecognized stock-based compensation expense that will be recognized over a weighted-average period of 2.0 years. The Company recognizes 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, 2022 Aggregate intrinsic value of options outstanding $ 0.8 Aggregate intrinsic value of options fully vested 0.4 Aggregate intrinsic value of RSUs outstanding 54.0 The total intrinsic value of options exercised was as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Total intrinsic value of options exercised $ — $ 29.2 $ 0.5 $ 8.8 Employee Stock Purchase Plan The Company also has an Employee Stock Purchase Plan that was initially approved by stockholders in 2012 and was amended and approved by the Board of Directors of the Company on September 23, 2021 and the stockholders on June 2, 2022 (the “Amended and Restated 2012 Purchase Plan”), under which 4.0 million shares of common stock were authorized. Shares are issued under the Amended and Restated 2012 Purchase Plan twice yearly at the end of each offering period and the number of shares that may be purchased by any participant during an offering period is limited to 5,000 shares. As of December 31, 2022, 1.7 million shares of common stock were available for issuance under the Amended and Restated Purchase Plan. Shares purchased under, and compensation expense associated with, the Amended and Restated 2012 Purchase Plan for the periods reported are as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Shares purchased under the plans 0.3 0.2 0.1 0.3 Plan compensation expense $ 1.9 $ 1.5 $ 0.6 $ 1.7 92 Table of Contents The fair value of shares issued under the Amended and Restated 2012 Purchase Plan that was in effect for each period reported was calculated using the Black‑Scholes option-pricing model using the weighted-average assumptions below. Each of these inputs is subjective and its determination generally requires significant judgment. Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, 2022 2021 2020 2020 Risk-free interest rate 1.4 % 0.1 % 0.2 % 1.8 % Expected dividend yield — % — % — % — % Expected life (in years) 0.5 0.5 0.5 0.5 Expected volatility 53 % 60 % 94 % 99 % 11. INCOME TAXES Income tax benefit consists of the following: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Current: Federal $ ( 0.5 ) $ ( 1.9 ) $ ( 75.8 ) $ 26.6 State 1.9 3.6 ( 0.6 ) 4.9 Foreign 0.5 0.1 0.2 0.5 Total current 1.9 1.8 ( 76.2 ) 32.0 Deferred: Federal ( 25.8 ) ( 33.7 ) 39.1 ( 51.5 ) State ( 4.8 ) 5.1 ( 3.4 ) ( 4.1 ) Foreign ( 2.9 ) 0.1 ( 0.5 ) ( 3.6 ) Change in valuation allowance 3.0 ( 3.2 ) — 3.5 Total deferred ( 30.5 ) ( 31.7 ) 35.2 ( 55.7 ) Total income tax benefit $ ( 28.6 ) $ ( 29.9 ) $ ( 41.0 ) $ ( 23.7 ) Loss before income taxes consists of the following: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 United States $ ( 141.3 ) $ ( 53.8 ) $ ( 101.8 ) $ ( 240.9 ) Foreign 0.7 ( 3.3 ) 7.7 17.6 Total $ ( 140.6 ) $ ( 57.1 ) $ ( 94.1 ) $ ( 223.3 ) 93 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: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Federal income tax expense at the statutory rate $ ( 29.5 ) 21.0 % $ ( 12.0 ) 21.0 % $ ( 19.8 ) 21.0 % $ ( 46.9 ) 21.0 % State income taxes, net of federal benefit ( 3.3 ) 2.3 % ( 1.8 ) 3.2 % ( 1.2 ) 1.3 % 4.0 ( 1.8 ) % Research and development credits ( 3.5 ) 2.5 % 2.5 ( 4.4 ) % ( 1.3 ) 1.4 % ( 2.8 ) 1.3 % Uncertain tax positions 0.6 ( 0.4 ) % ( 3.0 ) 5.3 % 0.6 ( 0.7 ) % 1.5 ( 0.7 ) % Incentive stock option and employee stock purchase plan expense 2.5 ( 1.8 ) % 0.7 ( 1.2 ) % 2.5 ( 2.7 ) % ( 0.2 ) 0.1 % Foreign rate differential — — % 0.5 ( 0.9 ) % ( 2.1 ) 2.2 % 0.7 ( 0.3 ) % Change in valuation allowance 2.6 ( 1.8 ) % ( 3.2 ) 5.6 % ( 0.3 ) 0.3 % 3.5 ( 1.7 ) % 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 ) % Non-deductible officer compensation 3.5 ( 2.5 ) % 3.3 ( 5.8 ) % 0.1 ( 0.1 ) % 1.6 ( 0.7 ) % Asset impairment — — % — — % — — % 12.6 ( 5.6 ) % Non-deductible legal settlement — — % 2.5 ( 4.5 ) % — — % — — % Acquisitions, dispositions, and contingent consideration ( 0.1 ) 0.1 % ( 23.0 ) 40.3 % 0.7 ( 0.7 ) % ( 0.3 ) 0.1 % Other, net ( 1.4 ) 0.9 % 0.8 ( 1.4 ) % — — % 0.8 ( 0.3 ) % Total income tax benefit $ ( 28.6 ) 20.3 % $ ( 29.9 ) 52.3 % $ ( 41.0 ) 43.5 % $ ( 23.7 ) 10.6 % 94 Table of Contents The significant components of the Company’s deferred tax assets and liabilities were comprised of the following: December 31, (in millions) 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 66.6 $ 67.2 Deferred revenue 0.2 1.2 Stock compensation expense 3.6 4.5 Research and development credits 19.9 17.3 Lease liability 35.2 22.4 Section 174 capitalized costs 21.2 — Accrued expenses and liabilities 10.8 14.2 Other, net 3.4 4.5 Total gross deferred tax assets 160.9 131.3 Less valuation allowance ( 42.4 ) ( 38.5 ) Total deferred tax assets 118.5 92.8 Deferred tax liabilities: Intangible assets 93.8 104.9 Lease right-of-use assets 25.4 20.2 Property, plant and equipment 2.8 3.5 Total deferred tax liabilities 122.0 128.6 Net deferred tax liability $ ( 3.5 ) $ ( 35.8 ) The Tax Cuts and Jobs Act (TCJA), passed in 2017, amended Section 174 of the Internal Revenue Code to require that specific research and experimental (R&E) expenditures be capitalized and amortized over five years for U.S. R&E expenditures or 15 years for non-US R&E expenditures beginning in the Company’s fiscal year ended December 31, 2022. Although Congress has considered legislation that would defer, modify or repeal the capitalization and amortization requirement, there is no assurance that the provision will be deferred, repealed or otherwise modified. If the requirement is not modified, the Company may be required to utilize some of its federal and state tax attributes and there may be increases to state cash taxes or tax expense. The Company has incurred a cumulative three-year loss. Pursuant to ASC 740, Income Taxes , 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 Section 382 of the Internal Revenue Code and certain jurisdictional limitations. For the year ended December 31, 2022, the Company's valuation allowance increased by $ 3.9 million, primarily due to the anticipated inability to utilize deferred tax assets related to state attributes and credits. 95 Table of Contents At December 31, 2022, 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 $ 26.6 Yes 2033 Indefinite Federal capital loss 13.5 No 2026 2026 Utah net operating loss 2.8 No 2023 Indefinite California net operating loss 4.4 Yes 2029 2041 Other state net operating loss 7.7 Yes Various Various Foreign net operating losses (various jurisdictions) 11.6 No Various Various Federal research credit 8.7 Yes 2027 2042 Utah research credit 6.9 No 2023 2036 California research credit 4.4 No Indefinite Indefinite Due to the cumulative losses that have been incurred to date in foreign operations, the changes of the Tax Cuts and Jobs Act and the 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, 2022, the Company had net unrecognized tax benefits of $ 31.9 million. The Company’s gross unrecognized tax benefits as of the years ended December 31, 2022 and 2021, the transition period ended December 31, 2020 and the fiscal year ended June 30, 2020, and the changes in those balances are as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Unrecognized tax benefits at the beginning of period $ 32.1 $ 37.6 $ 23.5 $ 21.7 Gross increases - current year tax positions 0.9 1.4 13.9 1.6 Gross increases - prior year tax positions 1.6 1.1 1.0 0.7 Gross decreases - prior year tax positions ( 2.0 ) ( 2.8 ) ( 0.1 ) — Gross decreases - settlements ( 0.7 ) ( 5.1 ) — — Gross decreases - statute lapse — ( 0.1 ) ( 0.7 ) ( 0.5 ) Unrecognized tax benefits at end of year $ 31.9 $ 32.1 $ 37.6 $ 23.5 Interest and penalties in year-end balance $ 4.1 $ 3.3 $ 2.2 $ 1.4 Interest and penalties related to uncertain tax positions are included as a component of Income tax benefit and all other interest and penalties are included as a component of Other income (expense) in the Consolidated Statements of Operations. 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 and 2018. 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. 96 Table of Contents 12. COMMITMENTS AND CONTINGENCIES The Company is involved from time to time in various disputes, claims and legal actions, including class actions and other litigation, including the matters described below, arising in the ordinary course of business. Such actions may include allegations of negligence, product or professional liability or other legal claims, and could involve claims for substantial compensatory and punitive damages or claims for indeterminate amounts of damages. The Company is also involved, from time to time, in investigations by governmental agencies regarding its business which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of the government or private payors. The Company has received subpoenas from time to time related to billing or other practices based on the False Claims Act or other federal and state statutes, regulations or other laws. The Company intends to defend its current litigation matters, but cannot provide any assurance as to the ultimate outcome or that an adverse resolution would not have a material adverse effect on its financial condition, results of operations or cash flows. The Company assesses legal contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. When evaluating legal contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the proceedings may be in early stages, there may be uncertainty as to the outcome of pending appeals or motions, there may be significant factual issues to be resolved, and there may be complex or novel legal theories to be presented. In addition, damages may not be specified or the damage amounts claimed may be unsupported, exaggerated or unrelated to possible outcomes, and therefore, such amounts are not a reliable indicator of potential liability. As of December 31, 2022, the Company has not recorded any material accrual for loss contingencies associated with legal proceedings or other matters or determined that an unfavorable outcome is probable and reasonably estimable in accordance with ASC 450, Contingencies . However, it is possible that the ultimate resolution of legal proceedings or other matters, if unfavorable, may be material to the Company's results of operations, financial condition or cash flows. Further, in the event that damages from an unfavorable resolution of one or more of these proceedings exceed the aggregate amount of the coverage limits of the Company’s insurance, or if the Company’s insurance carriers disclaim coverage, the amounts payable by the Company could also have a material adverse impact on the Company’s results of operations, financial condition or cash flows. Securities Class Action On September 27, 2019, a class action complaint was filed in the U.S. District Court for the District of Utah, against the Company, its former President and Chief Executive Officer, Mark C. Capone, and its Chief Financial Officer, R. Bryan Riggsbee (Defendants). On February 21, 2020, the plaintiff filed an amended class action complaint, which added the Company's 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 the Company's 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 U.S. District Court for the District of Utah denied the Company's motion to dismiss. On December 1, 2021, the U.S. District Court for the District of Utah granted plaintiff's motion for class certification. The parties currently are engaged in discovery. Stockholder Derivative Actions On August 9, 2021, a stockholder derivative complaint was filed in the Delaware Court of Chancery against the Company's former President and Chief Executive Officer, Mark C. Capone, its Chief Financial Officer, R. Bryan Riggsbee, its former Executive Vice President of Clinical Development, Bryan M. Dechairo, and certain of the Company's 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 the Company's 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. 97 Table of Contents On January 18, 2022, a 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 stockholder derivative action. 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. On March 3, 2022, the Delaware Court of Chancery consolidated the Hickock and Kogus derivative actions and stayed the consolidated action. On September 17, 2021, a stockholder derivative complaint was filed in the U.S. 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 U.S. District Court for the District of Delaware pending the resolution of the securities class action lawsuit. Other Legal Proceedings On December 21, 2020, Ravgen, Inc. filed a lawsuit against the Company and its wholly owned subsidiary, Myriad Women's Health, Inc., in the U.S. District Court for the District of Delaware, alleging infringement of two Ravgen-owned patents. The lawsuit seeks monetary damages, enhancement of those damages for willfulness, injunctive relief, and recovery of attorney's fees and costs. Various third parties have filed challenges to the validity of the asserted patents with the U.S. Patent and Trademark Office, which challenges have been instituted for review. On March 14, 2022, the case was stayed pending the outcome of the first of these validity challenges. On February 13, 2022, the court lifted the stay and litigation of the case has resumed. On February 3, 2022, a purported class action lawsuit was filed against the Company in the U.S. 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. On April 1, 2022, the Company filed a motion to dismiss the lawsuit. On May 2, 2022, the plaintiff amended her complaint. On June 2, 2022, the Company filed a motion to dismiss the amended complaint. On July 26, 2022, the court granted and denied in part the Company's motion to dismiss the amended complaint. As part of the court's order, plaintiff was granted leave to file a second amended complaint. The plaintiff filed a second amended complaint on August 16, 2022. On September 6, 2022, the Company filed a motion to dismiss the second amended complaint. On November 9, 2022, the Court granted and denied in part the Company's motion to dismiss the second amended complaint. 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 fifteen 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 period of time. These optional periods have not been considered in the determination of the ROU assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. During the twelve months ended December 31, 2022, in an effort to reduce its real estate footprint, the Company ceased the use of certain of its leased Salt Lake City facilities and one of its South San Francisco facilities. As a result, the Company recorded an impairment charge on ROU assets of $ 13.0 million and an impairment charge of $ 3.9 million on the related property, plant and equipment, which consisted primarily of leasehold improvements. The total $ 16.9 million impairment is included in Goodwill and long-lived asset impairment charges in the Consolidated Statement of Operations. 98 Table of Contents The Company performed evaluations of its contracts and determined each of its identified leases are operating leases. For the year ended December 31, 2022, the Company incurred $ 22.1 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 ROU 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 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 ROU assets and lease liabilities. In the first quarter of 2022, the Company entered into a non-cancelable operating lease for approximately 230,000 square feet in west Salt Lake City, Utah. The lease has a term of 15 years, which, along with rent payments, are expected to commence in the third quarter of 2023. The Company will take possession of the leased facility in phases, which began in the three months ended June 30, 2022. As a result, the Company has recognized the related lease balances for the phase, or portion, of the leased facility that the Company has taken possession of, and will recognize the additional phases of the leased facility as possession occurs. As of December 31, 2022, the Company has recognized an approximately $ 13.9 million ROU asset and corresponding lease liability, net of tenant improvement allowance not yet received. Total future rent payments under the lease are approximately $ 78.0 million. The Company also took possession of a lease for approximately 63,000 square feet in South San Francisco, California with a term of 10 years, which, along with rent payments, are expected to commence in the third quarter of 2023. As a result, the Company recognized the related ROU asset and lease liability, net of tenant improvement allowance not yet received, of $ 30.7 million in the Consolidated Balance Sheets as of December 31, 2022. Total future rent payments under the lease are approximately $ 58.8 million. As of December 31, 2022, the maturities of the Company’s operating lease liabilities were as follows (in millions): Year Ended: 2023 $ 20.2 2024 23.8 2025 17.9 2026 16.3 2027 15.0 Thereafter 92.6 Total future lease payments 185.8 Less: amounts representing interest ( 18.9 ) Present value of future lease payments 166.9 Less: leases not yet commenced ( 21.9 ) Less: current maturities of operating lease liabilities ( 14.1 ) Noncurrent operating lease liabilities $ 130.9 As of December 31, 2022, the weighted average remaining lease term is 10.3 years and the weighted average discount rate used to determine the operating lease liability was 5.87 %. 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. 99 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: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Deferred savings plan contributions $ 9.0 $ 8.4 $ 4.0 $ 7.1 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 operations have been aggregated into a single reporting segment, which primarily provides testing that helps assess an individual’s risk for developing disease or disease progression and guides treatment decisions across medical specialties where genetic insights can significantly improve patient health care and lower health care costs, 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) 2022 2021 Net equipment, leasehold improvements and property: United States $ 81.9 $ 41.6 Rest of world 1.5 1.9 Total $ 83.4 $ 43.5 Total assets: United States $ 983.4 $ 870.8 Rest of world 45.6 51.1 Total $ 1,029.0 $ 921.9 Cash, cash equivalents, and marketable investment securities 169.7 398.8 Total $ 1,198.7 $ 1,320.7 16. BUSINESS ACQUISITION On November 1, 2022, the Company acquired all of the membership interests of Gateway, a San Diego-based personal genomics company and developer of consumer genetic tests that give families insight into their future children. The acquisition date fair value of the consideration transferred was $ 68.7 million. Cash consideration amounted to $ 66.6 million, of which $ 8.5 million was deposited for general representation and warranty and working capital adjustment purposes in an escrow account, legally owned by the Company. The remaining consideration included contingent cash consideration with a fair value of $ 2.1 million. The contingent consideration is classified as a liability and has a maximum value of up to $ 32.5 million based on the achievement of certain performance-based targets. The acquisition date fair value of the contingent consideration was based on the Monte Carlo Method, utilizing various pay-out scenarios that factor in forecasted revenue, earnings before interest, taxes, depreciation and amortization ("EBITDA"), and Prequel and FirstGene test volumes that directly result from the sale of the SneakPeek Gender DNA Test relative to targets for fiscal 2023 and 2024. 100 Table of Contents The acquisition is being accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations . The consideration transferred was allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date. Management estimated the fair value of tangible and intangible assets and liabilities in accordance with the applicable accounting guidance for business combinations and utilized the services of third-party valuation consultants. The significant assumptions used in the model to estimate the value of the intangible assets included projected cash flows, discount rates, net working capital and long-term growth rate. The initial allocation of the consideration transferred is based on a preliminary valuation and is subject to adjustments. Balances subject to adjustment primarily include the valuations of acquired assets (tangible and intangible), liabilities assumed, as well as tax-related matters. During the measurement period, the Company may record adjustments to the provisional amounts recognized. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $ 48.7 million was recorded. The goodwill recognized is primarily attributable to the expected synergies to be achieved from the business combination and is deductible for income tax purposes. The following table summarizes the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition. (in thousands) Estimated fair value Identifiable assets acquired Current assets $ 1,053 Inventory 1,900 Intangible assets Developed technology 10,100 Trademarks 6,100 Customer relationships 1,600 Total intangible assets 17,800 Other non-current assets 161 Total identifiable assets acquired 20,914 Liabilities assumed Accounts payable ( 246 ) Accrued liabilities ( 693 ) Total liabilities assumed ( 939 ) Net identifiable assets acquired 19,975 Goodwill 48,723 Total fair value of Purchase Price $ 68,698 Identifiable Intangible Assets The fair values of the identifiable intangible assets and related useful lives were determined using an income approach discounting expected future cash flows to present value at a discount rate of 15.5 %. The discount rate was based on the estimated internal rate of return for the acquisition and represents the rate that market participants might use to value the intangible assets. The Company will amortize the intangible assets on a straight-line basis over their estimated useful lives. The estimated useful life of the customer relationships and trademarks is 10 years and the estimated useful life of the developed technology is 8 years. Transactions Separate From the Business Acquisition In connection with the business acquisition, the Company also recognized certain transactions which were accounted for separately from the acquisition of assets and assumptions of liabilities in the business acquisition. Compensation expense of $ 1.9 million was paid at the closing of the transaction pursuant to a retention arrangement with Gateway employees that was negotiated in connection with their retention by the Company. Receipt of the additional amounts available under the retention arrangement is contingent upon future service from the employees and the achievement of certain performance-based targets related to revenue and EBITDA. The $ 1.9 million of compensation expense is recognized in Selling, general, and administrative expense in the Consolidated Statement of Operations for the year ended December 31, 2022. 101 Table of Contents The Company also incurred approximately $ 3.1 million of acquisition-related costs in connection with the acquisition of Gateway, which has been recognized as an expense in Selling, general, and administrative expense in the Consolidated Statement of Operations in the period incurred. Pro Forma Information (Unaudited) The unaudited pro forma results presented below include the effects of Gateway acquisition as if it had been consummated as of January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable to the acquisition, which includes adjustments related to the amortization of acquired intangible assets, interest income and expense, and depreciation. The unaudited pro forma results do not reflect any operating efficiency or potential cost savings that may result from the consolidation of Gateway with the Company. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operation of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations and are not necessarily indicative of results that might have been achieved had the acquisition been consummated as of January 1, 2021. The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma earnings. Years Ended December 31, (in thousands) 2022 2021 Revenue $ 695,632 $ 709,132 Net loss ( 112,185 ) ( 28,686 ) Revenue and net loss from Gateway included in the Company's Consolidated Statements of Operations since the acquisition date through December 31, 2022 is $ 3.3 million and $ 2.8 million, respectively. Of the $ 2.8 million net loss recognized, $ 1.9 million is the compensation expense paid at the closing of the transaction discussed above. 17. 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) in the 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) in the Consolidated Statements of Operations. 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) in the 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 Consolidated Statements of Operations for the year ended December, 2021. 102 Table of Contents The following table details the amounts recognized in Other income (expense) 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 (expense) $ 139.3 18. SUPPLEMENTAL CASH FLOW INFORMATION The Company's supplemental cash flow information for the respective periods are as follows: Years Ended December 31, Six-month Transition Period Ended December 31, Year Ended June 30, (in millions) 2022 2021 2020 2020 Cash paid for income taxes $ 1.8 $ 4.6 $ 1.8 $ 1.0 Cash paid for interest — 4.4 5.2 9.5 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 $ 46.9 $ 41.8 $ — $ 74.5 Operating lease liabilities ( 46.9 ) ( 48.1 ) — ( 78.8 ) Tenant improvement allowance not yet received 22.9 — — — Purchases of property, plant and equipment in accounts payable and accrued liabilities 10.0 — — — Accrued liabilities and other long-term liabilities — — — 4.3 103 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.