What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-28 compared with 2023-03-01 · 99 added, 119 removed, 168 unchanged (56% of the section changed)

1 unchanged sentence

This section of Management's Discussion and Analysis discusses year-to-year comparisons between the year ended December 31, 2023 and the year ended December 31, 2022.

Discussions of comparisons between the year ended December 31, 2021 and the year ended December 31, 2020 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022.

Discussions of comparisons between the year ended December 31, 2022 and the year ended December 31, 2021 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 1, 2023.

The following discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes thereto included elsewhere in this Annual Report on Form 10-K.

Unless otherwise noted, all of the financial information in this Annual Report on Form 10-K is consolidated financial information for the Company.

Unless otherwise noted, all of the financial information in this Annual Report on Form 10-K is consolidated financial information of the Company.

We are a leading genetic testing and precision medicine company dedicated to advancing health and well-being for all.

We develop and offer genetic 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.

Our mission is to advance health and well-being for all, empower individuals with vital insights and enable healthcare providers to better detect, treat and prevent disease.

Our genetic tests provide insights that help people take control of their health and enable healthcare providers to better detect, treat and prevent disease.

Personalized genetic data, digital, and virtual consumer trends are converging to change traditional models of care.

We believe significant growth opportunities exist to help patient populations with pressing health care needs through innovative solutions and services.

Our focus is on organic growth, deployment of capital, including through opportunistic acquisitions, and the launch of new products.

We are focusing our efforts in three key areas where we have specialized products, capabilities, and expertise:

Oncology, Women's Health, and Mental Health.

We believe our path to organic growth is driven by articulating our clinical differentiation, advancing a new commercial model in our Oncology and Women's Health businesses to reach a broader set of physicians and patients, raising awareness with patients who we believe would benefit from testing, and innovation that improves clinical outcomes, ease of use, and access.

By investing in tech-enabled commercial tools, new lab facilities, and advanced automation, we believe we will be able to reduce complexity and cost.

With a foundation of financial, commercial, operational and technological strength, we plan to launch new products and capabilities in 2023, such as our unified ordering portal, FirstGene, and, on a research use only basis, Precise MRD, which we expect will help accelerate our growth.

We believe significant growth opportunities exist to help patient populations with pressing health care needs through innovative genetic and precision medicine solutions and services.

Our focus is on innovation and growth in three key areas where we have specialized products, capabilities, and expertise:

Oncology, Women's Health, and Pharmacogenomics.

The pillars of our long-term growth strategy are founded on investments in science and innovation, technology-enabled operations, an elevated customer experience, strong commercial execution, and scalable operations.

We believe our path to continued growth is driven by articulating our clinical differentiation, raising awareness with patients who we believe would benefit from our testing products, and innovation that improves clinical outcomes, ease of use, and access.

By investing in tech-enabled commercial tools, new laboratory facilities, advanced automation, and standardized processes and technology, we believe we will be able to reduce complexity and cost while enhancing our ability to scale and grow.

We plan to expand some of our current products, such as our Foresight Universal Plus Test, which is an expanded carrier screening test that we anticipate launching in the second half of 2024.

We also plan to launch new products, such as FirstGene, Precise Liquid, and Precise minimal residual disease, which we expect will help accelerate our growth.

We intend to develop and enhance our products to support growth, improve patient and provider experience, and reach more patients of all backgrounds.

1 unchanged sentence

Our consolidated revenues consist primarily of sales of tests through our wholly-owned subsidiaries.

During the year ended December 31, 2022, we reported total revenues of $678.4 million, net loss attributable to Myriad Genetics, Inc.

stockholders of $112.0 million and basic and diluted loss per share of $1.39.

During the year ended December 31, 2023, we reported total revenues of $753.2 million, net loss attributable to our stockholders of $263.3 million and basic and diluted loss per share of $3.18.

Business Updates

During the year ended December 31, 2022, we took meaningful steps to fulfill our mission and execute our strategic transformation and growth plan.

These steps included the following:

• the acquisition of Gateway Genomics, LLC (Gateway), a personal genomics company and developer of consumer genetic tests that gives families insight into their future children;

• the launch of Precise Oncology Solutions, a comprehensive offering designed to help oncologists determine effective and personalized treatment plans for individual patients;

• the appointment of several new leaders to our management team, including a new Chief Commercial Officer, Chief Operating Officer, Chief Scientific Officer, and Chief Marketing Officer, as part of our ongoing enhancement of our executive leadership team;

• total revenue grew 6% year-over-year, excluding contributions from divested businesses.

Pharmacogenomics volume growth continued to lead our portfolio, reporting 35% volume growth year-over-year, and hereditary cancer test volumes rebounded in the second half of the year, generating 10% volume growth in the second half of the year ended December 31, 2022 as compared to the second half of the year ended December 31, 2021.

During the year ended December 31, 2023, our significant business updates and financial highlights include the following:

• Testing volumes grew 35% year-over-year and 18% year-over-year excluding the contribution from our SneakPeek Early Gender DNA Test, driven by 24% growth in Pharmacogenomics, 17% growth in Hereditary Cancer, 15% growth in Prenatal, excluding the contribution from SneakPeek, and 2% growth in Tumor Profiling.

• Revenue growth of 11% year-over-year.

• Completed an underwritten public offering of our common stock in November 2023 in which we sold 7,441,176 shares of our common stock at a price of $17.00 per share, with proceeds of $117.6 million, net of offering expenses of $1.3 million and underwriting discounts.

• Achieved additional improvements amongst our tests and offerings, including an enhancement to the GeneSight test to personalize mental health medication treatment decisions based on smoking status, the addition of Folate Receptor Alpha test to Precise Oncology Solutions to expand treatment options for women living with ovarian cancer, the inclusion of breast density to MyRisk with RiskScore breast cancer risk treatment, and advancements in prostate cancer care with the addition of absolute risk reduction to Prolaris.

• Ranked among Best Large Workplaces in Health Care by Fortune and achieved a Great Place to Work ® Certification for 2023.

• Entered into and announced partnerships and collaborations that we believe will provide additional value, insights, and opportunities, including (1) an expanded partnership with Illumina, Inc.

to broaden access to, and availability of, oncology HRD testing in the United States, (2) a collaboration with Memorial Sloan Kettering Cancer Center to study the use of minimal residual disease testing in breast cancer, (3) a research collaboration with the University of Texas MD Anderson Cancer Center related to our minimal residual disease testing platform, (4) a collaboration with SimonMed ® Imaging to launch a new hereditary cancer assessment program that combines diagnostic imaging, genetic risk assessment utilizing MyRisk with RiskScore and patient education, and (5) a partnership with Onsite Women's Health to help more women understand breast cancer risk.

We have historically experienced seasonality in our testing business.

The quarter ended December 31st is generally strong as we typically experience an increase in volumes from patients who have met their annual insurance deductible.

Conversely, in the quarter ended March 31st we typically experience a decrease in volumes due to the annual reset of patient deductibles.

Additionally, the volume of testing is negatively impacted by the summer season, which is generally reflected in the quarter ended September 30th.

In the quarter ended March 31 we typically experience a decrease in volumes due to the annual reset of patient deductibles.

Additionally, the volume of testing is typically negatively impacted by the summer season, which is generally reflected in the quarter ended September 30.

Conversely, the quarter ended December 31 is generally strong as we typically experience an increase in volumes from patients who have met their annual insurance deductible.

In the fiscal year ended December 31, 2023, we did not experience seasonality to the same extent we have in prior years.

For example, in the quarter ended September 30, 2023, we did not see the customary impact from the summer season as volumes decreased less than one percent in comparison to the quarter ended June 30, 2023.

Historical patterns of seasonality may not continue in future years.

Components of Consolidated Operations

Our tests are designed to analyze genes and their expression levels to assess an individual’s risk for developing disease, determine a patient’s likelihood of responding to a particular drug, assess a patient’s risk of disease progression, or identify factors which could lead to serious conditions in pregnancy.

Our tests are designed to analyze genes and their expression levels to assess an individual’s risk for developing disease, determine a patient’s likelihood of responding to a particular drug, assess a patient’s risk of disease progression, identify factors which could lead to serious conditions in pregnancy, or provide other prenatal insights.

Revenue is recognized when the communication of test results has occurred.

On July 1, 2021, we divested Myriad RBM, Inc., which provided pharmaceutical and clinical services.

On July 1, 2021, we divested Myriad RBM, Inc., which provided biomarker discovery, pharmaceutical and clinical services to the pharmaceutical, biotechnology, and medical research industries utilizing multiplexed immunoassay technology.

As a result, we ceased providing pharmaceutical and clinical services as of that date and no longer generate revenue from these services.

Through Myriad RBM, Inc., we provided biomarker discovery, pharmaceutical and clinical services to the pharmaceutical, biotechnology, and medical research industries utilizing our multiplexed immunoassay technology.

We also divested other clinical operations in February 2020.

Revenue for these services was recognized at the completion of the pharmaceutical and clinical services.

10 unchanged sentences

Selling, general, and administrative expenses consist primarily of personnel-related costs and third-party costs for sales, marketing, customer service, billing and collection, legal, finance and accounting, information technology, and human resources.

Legal Charges Pending Settlement.

Legal charges pending settlement includes accruals related to potential legal settlements.

Legal Settlements.

Legal settlements related to litigation.

For more information, see "Note 12–Commitments and Contingencies in the Notes to Consolidated Financial Statements."

Goodwill and Long-Lived Asset Impairment Charges.

13 unchanged sentences

Pharmacogenomics 138.5 127.6 10.9 18 % 18 %

Autoimmune 0.3 28.2 (27.9) — % 4 %

Other — 0.5 (0.5) — % — %

Total testing revenue 678.4 666.4 12.0

Other revenue — 24.2 (24.2) — % 4 %

— 0.3 (0.3) — % — %

Total revenue $ 753.2 $ 678.4 $ 74.8 100 % 100 %

Test revenues for the year ended December 31, 2022 increased $12.0 million compared to the prior year.

Revenue from Pharmacogenomics increased $33.9 million compared to the prior year due primarily to a 35% increase in volume.

Prenatal revenues increased $9.6 million due primarily to the acquisition of Gateway and an increase of 7% in average reimbursement per test excluding Gateway.

Tumor Profiling revenues increased due to volume increases in our Prolaris and MyChoice CDx products, partially offset by a decrease in international revenue due to changes in foreign exchange rates and a one-time milestone revenue earned in the prior year.

Autoimmune revenues decreased $27.9 million compared to the prior year due to the sale of the Myriad Autoimmune business on September 13, 2021.

Hereditary Cancer revenues decreased $10.8 million due primarily to changes in foreign exchange rates.

Other revenue for the year ended December 31, 2022 declined $24.2 million compared to the year ended December 31, 2021, due to the sale of Myriad RBM, Inc.

on July 1, 2021.

Test revenues for the year ended December 31, 2023 increased $74.8 million compared to the prior year due to an increase in testing volume across the majority of our products, partially offset by a decline in the average revenue per test.

For the year ended December 31, 2023, we recorded $7.2 million of revenue as a result of a change of estimate related to previously delivered tests, as compared to the year ended December 31, 2022, in which we recorded $22.1 million of revenue as a result of a change of estimate related to previously delivered tests.

Prenatal revenues increased $34.9 million due primarily to a 15% increase in volumes excluding SneakPeek, and additional revenue from SneakPeek of $17.8 million.

As the Gateway acquisition occurred on November 1, 2022, there were no corresponding SneakPeek revenues for the majority of the prior year.

Hereditary Cancer revenues increased $22.3 million due to a 17% increase in testing volume, partially offset by a 8% decrease in the average revenue per test.

Revenue from Pharmacogenomics increased $10.9 million compared to the prior year due primarily to a 24% increase in volume, partially offset by a 12% decrease in the average revenue per test.

Tumor Profiling revenues increased $7.0 million primarily due to an increase of $12.8 million in revenue for Prolaris, partially offset by a $7.3 million decrease in revenue from MyChoice CDx.

These changes were driven by an increase in testing volume of 11% and an increase in average revenue per test of 8% for Prolaris and a 19% decrease in volume for MyChoice CDx, respectively.

Cost of Sales

3 unchanged sentences

Cost of testing revenue as a % of revenue 31.4 % 29.8 %

Cost of other revenue $ — $ 11.9 $ (11.9)

Cost of other revenue as a % of revenue — % 49.2 %

Cost of testing revenue for the year ended December 31, 2023 increased $34.2 million compared to the prior year due primarily to an increase in volumes, with the most significant increases in Hereditary Cancer and Pharmacogenomics.

In addition, cost of testing revenue increased $10.2 million as compared to the prior year due to the acquisition of Gateway and the associated SneakPeek product.

The cost of testing revenue as a percentage of revenue increased from 29.8% to 31.4% during the year ended December 31, 2023 compared to the year ended December 31, 2022.

The increase was primarily driven by the shift in the product mix for the current period and an increase in compensation costs due to an increase in the number of employees and an increase in the average cost per employee during the 2022 period.

The cost of other revenue as a percentage of revenue was 49.2% for the year ended December 31, 2021.

The sale of Myriad RBM, Inc.

was completed on July 1, 2021, and as a result, there were no corresponding costs during the current period.

The increase was due in part to the decline in revenue per unit exceeding the decline in the cost per unit.

Research and Development Expense

3 unchanged sentences

Research and development expense as a % of total revenue 11.8 % 12.6 %

Research and development expense for the year ended December 31, 2022 increased by $3.5 million compared to the prior year primarily due to an increase in compensation expense and information technology related costs, partially offset by a decrease in clinical trial costs and costs incurred in the 2022 period related to our strategic transformation initiatives as compared to the prior year.

Research and development expense for the year ended December 31, 2023 increased by $3.3 million compared to the prior year primarily due to an increase in the average compensation expense per employee and clinical trial expenses, partially offset by a decrease in information technology related costs and certain laboratory expenses, such as a decrease in the consumption of reagents, as compared to the prior year.

Selling, General, and Administrative Expense

3 unchanged sentences

Selling, general, and administrative expense as a % of total revenue 76.1 % 75.9 %

Selling, general, and administrative expense decreased by $23.1 million for the year ended December 31, 2022 compared to the prior year due primarily to a $23.9 million decrease in legal expenses, which was driven in part by the receipt of insurance proceeds for certain legal matters of $12.0 million in 2022 and a decrease in litigation expenses during 2022.

Additionally, costs from our strategic transformation initiative decreased by $11.6 million in 2022 due to a decrease in retention and severance costs as well as related consulting costs.

The remaining decrease in selling, general, and administrative expenses in 2022 is due to a $9.7 million decrease in amortization expense due to intangible assets sold in the divestitures in the prior year and a $8.8 million decrease in bonus and commission expenses.

The decreases were partially offset by a $17.4 million increase in sales and marketing expenses due to more in-person sales and marketing events and travel-related expenses in 2022, a $7.6 million increase in wages and other compensation expenses, a $5.5 million increase in consulting expenses, and a $3.3 million increase in information and technology expenses.

Legal Charges Pending Settlement

Selling, general, and administrative expense increased by $58.2 million for the year ended December 31, 2023 compared to the prior year due primarily to a $38.8 million increase in compensation costs driven by increases in the average cost per employee, commission expense due to increases in testing volume, and bonus expense, a $16.2 million increase in general legal expenses due in part to the previous year's legal expenses being offset by the receipt of $12.0 million from insurers in the prior year to offset certain legal expenses, and a $5.7 million increase in facility costs, partially offset by a $16.4 million decrease in consulting costs in the current year.

In addition, in connection with the decision to cease the use of our previous corporate headquarters, we recognized a $7.7 million loss on termination of the lease and $5.7 million of accelerated depreciation for certain leasehold improvements and equipment.

Legal Settlements

Years Ended December 31, Change

(in millions) 2023 2022

Legal charges pending settlement $ — $ 62.0 $ (62.0)

Legal charges pending settlement as a % of total revenue — % 9.0 %

Legal charges pending settlement decreased for the year ended December 31, 2022 compared to the prior year due to $62.0 million of accruals related to potential legal settlements recorded in the prior year, including $48.0 million in connection with the qui tam lawsuit against Crescendo Bioscience, LLC and the Company and $14.0 million in connection with the Abelli lawsuit.

These amounts were subsequently paid in connection with the settlement of these cases in April 2022 and January 2022, respectively.

There were no corresponding legal charges pending settlement in the year ended December 31, 2022.

Legal settlements

$ 112.8 $ — $ 112.8

Legal settlements as a % of total revenue

Legal settlements increased for the year ended December 31, 2023 compared to the prior year due to $112.8 million accruals related to legal settlements, including $77.5 million related to the class action settlement and $34.0 million in connection with the Ravgen settlement.

For more information, see "Note 12–Commitments and Contingencies in the Notes to Consolidated Financial Statements." There were no corresponding legal settlement amounts incurred in the prior year.

Goodwill and Long-lived Asset Impairment Charges

3 unchanged sentences

Goodwill and long-lived asset impairment charges as a % of total revenue — % 2.5 %

Goodwill and long-lived asset impairment charges increased for the year ended December 31, 2022 compared to the prior year primarily due to the Company recognizing a $13.0 million impairment to ROU assets and a $3.9 million impairment to the related leasehold improvements in the current year as a result our decision to no longer use certain leased facilities in order to consolidate space.

During the prior period, the Company recognized a $1.8 million impairment to ROU assets as a result of the voluntary early termination of certain lease agreements.

Goodwill and long-lived asset impairment charges decreased for the year ended December 31, 2023 compared to the prior year primarily due to the Company recognizing a $13.0 million impairment to ROU assets and a $3.9 million impairment to the related leasehold improvements in the prior year as a result of our decision to no longer use certain leased facilities in order to consolidate space.

There were no corresponding impairment charges in the current year.

Other Income (Expense)

5 unchanged sentences

Other income (expense) $ (4.8) $ — $ (4.8)

Other income (expense) decreased for the year ended December 31, 2022 compared to the prior year due primarily to the $121.0 million net gain recognized on the sale of Myriad RBM, Inc.

and the $31.2 million net gain recognized on the sale of the Myriad myPath, LLC laboratory in the prior period, partially offset by charges in the prior period, including losses of $5.2 million and $6.5 million for a non-cancelable purchase commitment and inventory, respectively, recognized in connection with certain divestiture transactions, as well as a $3.4 million decrease in interest expense in the current period.

The interest expense in the prior period is related to the debt outstanding at that time, which was repaid in full on July 30, 2021.

There was no debt outstanding during the year ended December 31, 2022.

Income Tax Benefit

Other income (expense) decreased for the year ended December 31, 2023 compared to the prior year due primarily to a foreign currency loss of $3.4 million and a $1.5 million loss on the sale of investment securities in the current year.

Losses on foreign currency and sales of investment securities were insignificant in the prior year.

Income Tax Expense (Benefit)

Years Ended December 31, Change

(in millions) 2023 2022

Income tax benefit $ (28.6) $ (29.9) $ 1.3

Income tax expense (benefit)

$ 1.1 $ (28.6) $ 29.7

Effective tax rate 0.4 % (20.3) %

2 unchanged sentences

Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

Income tax benefit for the year ended December 31, 2022 was $(28.6) million, and our effective tax rate was (20.3)%.

Income tax expense for the year ended December 31, 2023 was $1.1 million, and our effective tax rate was 0.4%.

For the year ended December 31, 2023, our effective tax rate differs from the U.S.

federal statutory rate primarily due to disallowed executive compensation expenses, stock compensation, change in valuation allowance, and research and development credits.

federal statutory rate primarily due to the change in valuation allowance.

For the year ended December 31, 2022, our effective tax rate differs from the U.S.

federal statutory rate primarily due to disallowed executive compensation expenses, differences between the book and tax basis of assets divested, the tax impact of the CARES Act, stock compensation, and release of a valuation allowance.

federal statutory rate primarily due to disallowed executive compensation expenses, stock compensation, change in valuation allowance, and research and development credits.

Liquidity and Capital Resources

Our primary sources of liquidity are our cash, cash equivalents and marketable investment securities, our cash flows from operations, and, in certain circumstances as discussed below, amounts available for borrowing under our Amended Facility.

As of December 31, 2023, we had cash, cash equivalents and marketable investment securities of $140.9 million and availability under the ABL Facility was $40.7 million, subject to the minimum availability requirement under the ABL Facility.

In 2023, our sources of liquidity also included $117.6 million from an underwritten public offering of our common stock, as further discussed below.

Our capital deployment strategy focuses on use of resources in the key areas of research and development, technology and acquisitions.

We believe that investing organically through research and development and new product development or acquisitively to support our business strategy provides the best return on invested capita l.

We believe that our existing capital resources will be sufficient to meet our projected operating requirements for the foreseeable future.

In addition, our capital resources and cash on hand may be used for acquisitions or other strategic investments.

All previously outstanding borrowings under our Amended Facility, which matures on July 31, 2023, were repaid on July 30, 2021 using cash generated from divestitures and as such, we have no outstanding borrowings as of December 31, 2022.

Our ABL Facility has a total maximum principal commitment of $115.0 million.

The ABL Facility requires that we and our subsidiaries guaranteeing the indebtedness, on a consolidated basis, maintain minimum liquidity of $60.0 million and minimum availability of $25.0 million at all times before achieving a fixed charge coverage ratio of 1.0 to 1.0 and thereafter, to maintain a fixed charge coverage ratio of 1.0 to 1.0 until achieving availability under the ABL Facility of greater of (a) $10.6 million and (b) 12.5% of the lesser of the maximum commitment amount and the borrowing base for a period of 30 consecutive days.

As of December 31, 2023, we had $40.0 million outstanding under the ABL Facility and availability under the ABL Facility was $40.7 million, subject to the minimum availability requirement under the ABL Facility.

During November 2023, we completed an underwritten public offering of our common stock in which we sold 7,441,176 shares of our common stock at a price of $17.00 per share for proceeds of $117.6 million, net of offering expenses of $1.3 million and underwriting discounts.

The proceeds from the offering were utilized to pay the remaining $57.5 million of the securities class action settlement, with the remainder being used for working capital and general corporate purposes.

We believe that our existing capital resources will be sufficient to meet our projected operating requirements for at least the next 12 months.

Our available capital resources, however, may be consumed more rapidly than currently expected, or may be insufficient for our business needs for many reasons, including as a result of our operational cash needs, capital expenditures, and litigation related costs not covered by, or above the limits set forth in, our insurance.

As a result, we may need or want to raise additional financing.

We may not be able to secure such financing in a timely manner or on favorable terms, if at all.

The current rising interest rate environment, together with recessionary headwinds, could make any potential financing more difficult or expensive to obtain.

In addition, as of December 31, 2022, our borrowing limit under the Amended Facility has decreased to $150.0 million, and we remain subject to financial covenants under our Amended Facility, which could limit our ability to incur additional indebtedness under the Amended Facility or otherwise or impact our decision to pursue other financing.

Without additional funds, we may be forced to delay the build-out of our new laboratories, scale back or eliminate some of our sales and marketing efforts, research and development activities, or other operations, or delay development of our tests in an effort to provide sufficient funds to continue our operations.

In addition, we are subject to covenants under our ABL Facility which could limit our ability to incur additional indebtedness or impact our ability to pursue other financing.

If we do not generate sufficient cash from operations, if our capital resources are consumed more rapidly than expected, or if we no longer have access to additional funds under our ABL Facility and we are unable to secure additional funds on acceptable terms, or at all, we may be forced to delay, scale back or eliminate some of our sales and marketing efforts, research and development activities, or other operations;

or delay development of our tests in an effort to provide sufficient funds to continue our operations.

If any of these events occurs, our ability to achieve our development and commercialization goals could be adversely affected.

The Amended Facility restricts our ability to make future borrowings if unrestricted cash, cash equivalents and marketable securities exceed $150.0 million, unless such borrowings are in connection with certain permitted acquisitions.

Unrestricted cash, cash equivalents, and marketable securities totaled $169.7 million as of December 31, 2022.

Our revolving commitment amount under the Amended Facility is $150.0 million as of December 31, 2022.

As our total unrestricted cash, cash equivalents, and marketable securities exceeded $150.0 million as of December 31, 2022, we are currently unable to make borrowings under the Amended Facility unless related to a permitted acquisition.

In addition, we are subject to a minimum liquidity covenant, which requires us to maintain liquidity of $150.0 million.

Liquidity is defined under the Amended Facility as the sum of our unrestricted cash, cash equivalents and marketable investment securities plus the aggregate undrawn and available amount of the revolving commitments under the Amended Facility.

From time to time, we enter into purchase commitments or other agreements that may materially impact our liquidity position in future periods.

In February 2022, we 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, is expected to commence in the third quarter of 2023.

The lease has a term of 15 years, which commenced in the fourth quarter of 2023.

Total future rent payments under the lease are approximately $79.6 million.

We also entered into a non-cancelable operating lease for approximately 63,000 square feet of leased space in South San Francisco, California.

The lease has a term of 10 years and, along with rent payments, is expected to commence in the third quarter of 2023.

The lease has a term of 10 years and, along with rent payments, commenced in the second quarter of 2023.

Total future rent payments under the lease are approximately $56.7 million.

Because of the technical nature of our business and our focus on science, research, and development, we are highly dependent upon our ability to attract and retain highly qualified and experienced management, scientific, and technical personnel.

Competition and increased compensation for such personnel and other qualified personnel have increased the difficulty and cost of hiring and retaining qualified personnel.

Loss of the services of or failure to recruit additional key management, scientific, and technical personnel and other qualified personnel who are necessary to operate our business would adversely affect our business, and it may have a material adverse effect on our business as a whole.

Additionally, disruptions to our supply chain could cause shortages of critical materials required to conduct our business, which may have a material adverse effect on our business as a whole.

In addition, inflation has had, and we expect it will continue to have, an impact on the costs we incur to attract and retain qualified personnel, costs to generate sales and produce diagnostic testing results, and costs of lab supplies.

In addition, inflation has had, and may continue to have, an impact on the costs we incur to attract and retain qualified personnel, costs to generate sales and produce testing results, and costs of laboratory supplies.

The following table represents the balances of cash, cash equivalents, and marketable investment securities as of December 31, 2023 and 2022:

4 unchanged sentences

Cash, cash equivalents and marketable investment securities $ 140.9 $ 169.7

The decrease in cash, cash equivalents, and marketable investment securities as of December 31, 2022 compared to December 31, 2021 was primarily driven by $106.3 million in cash used by operations, which included legal settlement payments of $62.0 million, as well as $57.2 million in cash used for our acquisition of Gateway, $45.3 million in cash used for capital expenditures, and $4.3 million in cash used for the payment of withholding tax in connection with the issuance of common stock, net of proceeds from the issuance of common stock.

The Company also had restricted cash of $9.5 million and $1.4 million as of December 31, 2022 and 2021, respectively.

The decrease in cash, cash equivalents, and marketable investment securities as of December 31, 2023 compared to December 31, 2022 was primarily driven by $110.9 million in cash used by operations, which included legal settlement payments of $82.8 million, as well as $63.2 million in cash used for capital expenditures, and $2.8 million in cash used for the payment of withholding tax in connection with the issuance of common stock, net of proceeds from the issuance of common stock, which were partially offset by $117.6 million in proceeds from our underwritten public offering of common stock in November 2023, net of offering expenses, and proceeds from the ABL Facility of $38.3 million in the current year.

The decrease in marketable investment securities as of December 31, 2023 as compared to the prior year was primarily driven by sales of marketable investment securities to fund operations in the current year, with total proceeds from maturities and sales of marketable investment securities in the current year of $105.2 million.

The following table represents the condensed cash flow statement:

1 unchanged sentence

(in millions) 2023 2022

Cash flows provided by (used in) operating activities $ (106.3) $ 18.6

Cash flows used in operating activities

$ (110.9) $ (106.3)

Cash flows provided by (used in) investing activities 31.9 (77.5)

Cash flows used in financing activities (8.0) (150.6)

Cash flows provided by (used in) financing activities

Effect of foreign exchange rates on cash, cash equivalents, and restricted cash 0.6 (0.6)

3 unchanged sentences

Cash Flows from Operating Activities

In the year ended December 31, 2022, the decrease in cash flows from operating activities was primarily due to the change in the balance of prepaid taxes due to the receipt of an $89.0 million U.S.

federal tax refund in the prior year and an $81.2 million decrease in accrued liabilities during the current year, which was primarily driven by legal settlement payments of $62.0 million in 2022.

The amount of cash flows used in operating activities was largely consistent for the years ended December 31, 2023 and December 31, 2022.

For the year ended December 31, 2023, we paid approximately $32.8 million more in legal settlements compared to the prior year.

This change was largely offset by an improvement in core operations driven by an increase in revenues due to the growth in volumes and a decrease in expenses as a percentage of revenue when excluding the legal settlement costs.

Cash Flows from Investing Activities

In the year ended December 31, 2022, the decrease in cash flows provided by investing activities as compared to the prior year was primarily due to the receipt of $379.1 million in cash proceeds from divestitures in the prior year, with no corresponding proceeds in the current period and the acquisition of Gateway, net of cash acquired, for $57.2 million, partially offset by a $67.1 million increase in proceeds from marketable investment securities in the current period.

The increase in cash flows provided by investing activities for the year ended December 31, 2023 as compared to the prior year was primarily due to an $80.2 million increase in net proceeds from marketable investment securities in the current year and the acquisition of Gateway, net of cash acquired, for $57.2 million in the prior year, partially offset by a $28.0 million increase in capital expenditures and capitalization of internal-use software costs in the current period.

Cash Flows from Financing Activities

In the year ended December 31, 2022, the decrease in cash flows used in financing activities as compared to the prior year was primarily due to the use of $226.4 million in cash for repayments of the outstanding debt balances under the Amended Facility during the prior year, partially offset by a decrease of $84.6 million in proceeds from the exercise of stock options, net of shares exchanged for payroll withholding tax in the current year as compared to the prior year.

The increase in cash flows provided by financing activities as compared to the prior year was primarily due to proceeds from an underwritten public offering of common stock of $117.6 million, net of offering expenses and underwriting discounts, and net proceeds from the ABL Facility of $38.3 million in the current year.

Effects of Inflation

Inflation has had, and may continue to have, an impact on the labor costs we incur to attract and retain qualified personnel, costs to generate sales and produce testing results, and costs of laboratory supplies.

Inflationary costs have impacted our profitability and continue to adversely affect our business, financial condition and results of operations.

Inflationary costs have impacted our profitability and may continue to adversely affect our business, financial condition and results of operations.

In addition, increased inflation has had, and may continue to have, an effect on interest rates.

Increased interest rates may adversely affect our borrowing rate and our ability to obtain, or the terms under which we can obtain, additional funding.

Share Repurchase Program

Our Board of Directors has previously authorized us to repurchase up to $200.0 million of our outstanding common stock.

We may repurchase our common stock from time to time or on an accelerated basis through open market transactions or privately negotiated transactions as determined by our 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, we are authorized to repurchase up to $110.7 million under our current share repurchase authorization.

See “Part II, Item 5.

Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Issuer Purchases of Equity Securities” above.

Critical Accounting Estimates

2 unchanged sentences

• revenue recognition;

• purchase accounting;

• income taxes.

21 unchanged sentences

We reserve certain amounts in accrued liabilities in the Consolidated Balance Sheets in anticipation of request for refunds of payments made previously by insurance carriers, which are accounted for as reductions in revenues in the Consolidated Statements of Operations and Comprehensive 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, we update our estimate of the amounts to be recognized for previously delivered tests.

During the year ended December 31, 2023, we recognized $7.2 million in revenue, which resulted in a $0.07 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, 2022, we 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.

We test goodwill for impairment on an annual basis and in the interim by reporting unit if events and circumstances indicate that goodwill may be impaired.

5 unchanged sentences

In making these judgments, we evaluate the financial health of our business, including such factors as industry performance, market saturation and opportunity, changes in technology and operating cash flows, and other relevant entity-specific events.

Goodwill impairment testing requires us to make a number of assumptions and estimates concerning future levels of revenue growth, operating margins, and other financial assumptions, which are based upon our long-term plan.

The discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted average cost of capital includes both debt and equity, including a risk premium.

While we use the best available information to prepare our cash flows and discount rate assumptions, actual future cash flows and/or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.

While there are always changes in assumptions to reflect changing business and market conditions, our overall methodology used has remained unchanged.

Changes in our forecasts or decreases in the value of our common stock could cause book value of reporting units to exceed their fair values.

2 unchanged sentences

As of December 31, 2023, we have recorded goodwill of $287.4 million on our Consolidated Balance Sheets.

This goodwill is attributable to the Myriad Mental Health, Myriad International, Myriad Women's Health, and Gateway reporting units.

This goodwill is attributable to the Pharmacogenomics, Myriad International, Myriad Women's Health, and Gateway reporting units.

We qualitatively evaluated our reporting units for impairmen t.

2 unchanged sentences

We noted no indicators of impairment during the year ended December 31, 2023.

While there are always changes in assumptions to reflect changing business and market conditions, our overall methodology used has remained unchanged.

Purchase Accounting.

We account 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.

Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets.

We base the estimated fair value of identifiable intangible assets acquired in a business combination on third-party valuations that use information and assumptions provided by our management, which consider our 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 Accounting Standards Codification (ASC) 480 - Distinguishing Liabilities from Equity , a liability is recognized equal to the fair value of the contingent payments we expect to make as of the acquisition date.

This liability is remeasured each reporting period and changes in the fair value are recorded in change in fair value of contingent consideration in our Consolidated Statements of Operations.

Income Taxes .

6 unchanged sentences

Developing our provision for income taxes, including our effective tax rate and analysis of potential uncertain tax positions, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and any estimated valuation allowance we deem necessary to offset deferred tax assets.

If we do not maintain taxable income from operations in future periods, we may increase the valuation allowance for our deferred tax assets and record material adjustments to our income tax expense.

Our judgment and tax strategies are subject to audit by various taxing authorities.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis