What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-07 · 148 added, 179 removed, 510 unchanged (39% of the section changed)

4 unchanged sentences

(in millions)

September 30,

2024 December 31,

6 unchanged sentences

Prepaid expenses and other current assets 24.4 19.4

Assets held for sale

Total current assets 293.2 313.6

10 unchanged sentences

Current maturities of operating lease liabilities 13.5 16.2

Liabilities held for sale

Total current liabilities 154.3 155.9

6 unchanged sentences

Stockholders’ equity:

Common stock, 90.9 and 89.9 shares outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock, 91.0 and 89.9 shares outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,445.2 1,415.5

Accumulated other comprehensive loss

( 0.1 ) ( 3.7 )

Accumulated deficit ( 714.3 ) ( 629.5 )

7 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

Goodwill and long-lived asset impairment charges

11.6 — 11.6 —

Total costs and expenses 233.3 252.0 711.5 782.6

7 unchanged sentences

Loss before income tax ( 21.2 ) ( 61.2 ) ( 84.4 ) ( 229.9 )

Income tax (benefit) expense

Income tax expense

0.9 0.1 0.4 2.2

10 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

3 unchanged sentences

Reclassification adjustments for losses included in net loss, net of tax — 0.1 — 1.5

Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity, net of tax — 0.5 0.7 0.5

Reclassification of cumulative translation adjustment to income upon sale or liquidation of certain foreign entities, net of tax

4.4 ( 0.1 ) 5.1 0.4

Comprehensive loss $ ( 18.2 ) $ ( 61.1 ) $ ( 81.1 ) $ ( 227.0 )

12 unchanged sentences

Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — ( 4.9 ) — — ( 4.9 )

Stock-based payment expense — 7.5 — — 7.5

Stock-based compensation expense

— 7.5 — — 7.5

Net loss — — — ( 54.7 ) ( 54.7 )

2 unchanged sentences

Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — 2.9 — — 2.9

Stock-based payment expense — 11.2 — — 11.2

Stock-based compensation expense — 11.2 — — 11.2

Net loss — — — ( 116.1 ) ( 116.1 )

1 unchanged sentence

BALANCES AT JUNE 30, 2023 $ 0.8 $ 1,276.8 $ ( 5.4 ) $ ( 537.0 ) $ 735.2

Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — ( 2.2 ) — — ( 2.2 )

Stock-based compensation expense — 11.6 — — 11.6

Net loss — — — ( 61.3 ) ( 61.3 )

Other comprehensive income, net of tax — — 0.1 — 0.1

BALANCES AT SEPTEMBER 30, 2023 $ 0.8 $ 1,286.2 $ ( 5.3 ) $ ( 598.3 ) $ 683.4

BALANCES AT DECEMBER 31, 2023 $ 0.9 $ 1,415.5 $ ( 3.7 ) $ ( 629.5 ) $ 783.2

Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — ( 8.7 ) — — ( 8.7 )

Stock-based payment expense — 12.0 — — 12.0

Stock-based compensation expense — 12.0 — — 12.0

Net loss — — — ( 26.0 ) ( 26.0 )

3 unchanged sentences

Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — 2.5 — — 2.5

Stock-based payment expense — 14.5 — — 14.5

Stock-based compensation expense — 14.5 — — 14.5

Net loss — — — ( 36.7 ) ( 36.7 )

1 unchanged sentence

BALANCES AT JUNE 30, 2024 $ 0.9 $ 1,435.8 $ ( 4.0 ) $ ( 692.2 ) $ 740.5

Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — ( 3.0 ) — — ( 3.0 )

Stock-based compensation expense — 12.4 — — 12.4

Net loss — — — ( 22.1 ) ( 22.1 )

Other comprehensive income, net of tax

— — 3.9 — 3.9

BALANCES AT SEPTEMBER 30, 2024 $ 0.9 $ 1,445.2 $ ( 0.1 ) $ ( 714.3 ) $ 731.7

See accompanying notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

(in millions)

Six months ended

Nine months ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

25 unchanged sentences

Capitalization of internal-use software costs ( 8.4 ) ( 6.6 )

Proceeds from the sale of business, net cash sold

Proceeds from maturities and sales of marketable investment securities 9.0 103.7

Net cash (used in) provided by investing activities

( 13.5 ) 46.4

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

5 unchanged sentences

Payment on finance leases ( 0.3 ) ( 0.1 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Effect of foreign exchange rates on cash, cash equivalents, and restricted cash ( 0.3 ) ( 0.1 )

Change in cash and cash equivalents classified as held for sale

Net (decrease) increase in cash, cash equivalents, and restricted cash

7 unchanged sentences

(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.

Myriad provides insights that help people take control of their health and enable healthcare providers to better detect, treat, and prevent disease.

The Company currently operates as a single reporting segment.

3 unchanged sentences

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.

The Condensed Consolidated Financial Statements herein should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”).

The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”).

The preparation of 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 financial statements, as well as the reported amounts of revenue and expenses during the reporting period.

The Company has historically experienced seasonality in its business.

Due to the annual reset of patient deductibles at the beginning of the year, the Company has historically experienced a decrease in test volumes and reduction in the average revenue per test for the six months ended June 30.

For the six months ended June 30, 2024 and 2023, the Company did not experience this seasonality impact to the same extent as prior years.

Additionally, operating results for the three and six months ended June 30, 2024 may not necessarily be indicative of results to be expected for any other interim period or for the full year and historical patterns of seasonality may continue in future periods.

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

Assets and Liabilities Held for Sale Policy

Assets and liabilities held for sale ("Net Assets held for Sale") represent receivables, inventory, intangibles, and other assets and liabilities that have met the criteria of "held for sale" accounting, as specified by Accounting Standards Codification ("ASC") 360, Property, Plant, and Equipment, and are recorded at the lower of carrying value or fair value less costs to sell.

Fair value is based on the estimated proceeds from the sale of net assets and estimates of the costs to sell that include direct costs that are estimable and probable.

Assets and liabilities classified as held for sale are expected to be sold within twelve months following their initial classification as held for sale.

See Note 18 for additional information regarding assets and liabilities held for sale.

The quarters ending March 31 and September 30 are typically weaker due to the annual reset of patient deductibles in the beginning of each calendar year and vacation schedules in the summer.

The quarter ending December 31 is typically stronger due to increased demand as patients meet their deductibles throughout the year.

Seasonal patterns were disrupted in recent years as a result of the COVID pandemic and certain other factors, but the Company believes it has experienced the impacts of seasonality in the third quarter 2024.

Additionally, operating results for the three and nine months ended September 30, 2024 may not necessarily be indicative of results to be expected for any other interim period or for the full year.

Recent Accounting Pronouncements

1 unchanged sentence

Improvements to Reportable Segment Disclosures , which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements.

ASU 2023-07 is effective for the Company for annual reporting periods beginning after December 15, 2023 and for interim periods within fiscal years December 15, 2024.

ASU 2023-07 is effective for the Company for annual reporting periods beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

14 unchanged sentences

or rest of world (“RoW”):

Three months ended June 30,

Three months ended September 30,

(in millions) U.S.

6 unchanged sentences

Total revenue $ 196.0 $ 17.3 $ 213.3 $ 172.2 $ 19.7 $ 191.9

Six months ended June 30,

Nine months ended September 30,

(in millions) U.S.

6 unchanged sentences

Total revenue $ 574.0 $ 53.0 $ 627.0 $ 495.4 $ 61.2 $ 556.6

Under ASC 606:

Under Accounting Standards Codification ("ASC") 606:

Revenue from Contracts with Customers , 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.

4 unchanged sentences

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.

Furthermore, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts 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 to be received.

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.

3 unchanged sentences

The Company also has significant experience with historical discount patterns and uses this experience to estimate transaction prices.

The estimate of revenue is affected by assumptions in payor behavior such as changes in payor mix, payor collections, current customer contractual requirements, and experience with collections from third-party payors.

The estimate of revenue is affected by, among other factors, assumptions for changes in payor mix, payor collections, current customer contractual requirements, experience with collections from third-party payors, and changes in medical policies.

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 Company’s Condensed Consolidated Balance Sheets in anticipation of requests for refunds of payments made previously by insurance carriers, which are accounted for as reductions in revenues in the Condensed 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.

Cash collections for certain tests delivered may differ from rates estimated due to changes in the estimated transaction price for contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met, settlements with third-party payors, or as a result of third-party payors disputing our bills or denying payment for tests that we have performed, among other reasons.

As a result of this new information, the Company updates its estimate of the amounts to be recognized for previously delivered tests.

During the three months ended June 30, 2024 and the three and six months ended June 30, 2023, the impact of the amounts to be recognized for previously delivered tests was not material to the Company's Condensed Consolidated Statements of Operations.

During the six months ended June 30, 2024, the Company recognized $ 6.3 million in revenue, which resulted in a $ 0.07 impact to earnings per share for tests in which the performance obligation was met in prior periods, primarily driven by changes in the estimated transaction price.

Additionally, during the six months ended June 30, 2024, the Company recognized $ 3.0 million in revenue due to a retroactive coverage change by a payor for one of its prenatal products.

During the three and nine months ended September 30, 2024, the Company recognized $ 8.6 million and $ 17.3 million, respectively, which resulted in $ 0.09 and $ 0.19 impact to earnings per share, respectively, for testing in which the performance obligation was met in prior periods, primarily due to a changes in the estimated transaction price.

Additionally, during the nine months ended September 30, 2024, the Company recognized $ 3.0 million in revenue due to a retroactive coverage change by a payor for one of its prenatal products.

For the three and nine months ended September 30, 2023, the Company recognized $ 7.1 million and $ 6.2 million in revenue, respectively, which resulted in a $ 0.07 and $ 0.06 , respectively, impact to earnings per share for tests in which the performance obligation was met in prior periods, primarily driven by changes in the estimated transaction price.

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.

12 unchanged sentences

The Company only has one payor, Medicare, that represents greater than 10% of its revenues.

Revenues received from Medicare represented 11 % of total revenue for the three and six months ended June 30, 2024 and 12 % and 11 % of total revenue for the three and six months ended June 30, 2023, respectively.

Revenues received from Medicare represented 11 % of total revenue for both of the three and nine months ended September 30, 2024 and 12 % of total revenue for both of the three and nine months ended September 30, 2023.

Concentrations of credit risk are mitigated due to the number of the Company’s customers as well as their dispersion across many geographic regions.

The Company has only one payor that accounted for more than 10% of accounts receivable at June 30, 2024 and December 31, 2023.

The balance of accounts receivable from the payor represented 13 % and 12 % of the total accounts receivable balance as of June 30, 2024 and December 31, 2023, respectively.

The Company has one payor that accounted for more than 10% of accounts receivable at September 30, 2024 and December 31, 2023.

The balance of accounts receivable from this one payor represented 19 % and 12 % of the total accounts receivable balance as of September 30, 2024 and December 31, 2023, respectively.

The Company does not require collateral from its customers.

MARKETABLE INVESTMENT SECURITIES

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for debt securities classified as available-for-sale securities by major security type and class of security at June 30, 2024 and December 31, 2023 were as follows:

(in millions) Amortized

losses Estimated

June 30, 2024

Cash and cash equivalents:

Cash $ 88.3 $ — $ — $ 88.3

Cash equivalents 6.4 — — 6.4

Total cash and cash equivalents 94.7 — — 94.7

Reclassification to assets held for sale

( 2.3 ) — — ( 2.3 )

Total cash and cash equivalents

92.4 — — 92.4

Available-for-sale:

Corporate bonds and notes 4.3 — — 4.3

Municipal bonds 0.6 — — 0.6

Total $ 97.3 $ — $ — $ 97.3

At September 30, 2024, the Company had no investment securities outstanding.

(in millions) Amortized

9 unchanged sentences

Total $ 141.0 $ — $ ( 0.1 ) $ 140.9

Cash, cash equivalents, and maturities of debt securities classified as available-for-sale securities were as follows at June 30, 2024:

(in millions) Amortized

cost Estimated

Cash $ 88.3 $ 88.3

Cash equivalents 6.4 6.4

Available-for-sale:

Due within one year 4.9 4.9

Total 99.6 99.6

Reclassification to assets held for sale ( 2.3 ) ( 2.3 )

Total cash, cash equivalents, and maturities of debt securities classified as available-for-sale securities

$ 97.3 $ 97.3

The cost of a security sold, or amount reclassified out of Accumulated other comprehensive income or loss into Net loss, is determined based on the specific identification method.

The Company does not intend to sell these available-for-sale debt securities, and it is not more likely than not that the Company 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 4.

11 unchanged sentences

The fair value of the Company’s long-term debt, which it considers a Level 2 measurement, is estimated using discounted cash flow analyses based on the Company’s current estimated incremental borrowing rates for similar borrowing arrangements.

The fair value of the Company’s long-term debt is estimated to be $ 39.8 million at June 30, 2024.

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

June 30, 2024

Money market funds (a) $ 6.4 $ — $ — $ 6.4

Corporate bonds and notes 1.4 2.9 — 4.3

Municipal bonds — 0.6 — 0.6

Contingent consideration — — — —

Total $ 7.8 $ 3.5 $ — $ 11.3

(a) Money market funds are primarily comprised of exchange traded funds and accrued interest.

The fair value of the Company’s long-term debt is estimated to be $ 39.7 million at September 30, 2024.

At September 30, 2024, the Company did not have any financial assets requiring fair value re-measurement.

The following table sets forth the fair value of the financial assets and liabilities that the Company re-measures on a regular basis as of December 31, 2023:

(in millions) Level 1 Level 2 Level 3 Total

1 unchanged sentence

Money market funds (a)

$ 2.2 $ — $ — $ 2.2

Corporate bonds and notes — 8.3 — 8.3

2 unchanged sentences

Total $ 2.2 $ 8.8 $ ( 5.4 ) $ 5.6

(a) Money market funds are primarily comprised of exchange traded funds and accrued interest.

During the six months ended June 30, 2024, the Company signed a definitive agreement to sell its EndoPredict business to Eurobio Scientific and classified the associated assets and liabilities as held for sale.

The Company recognized a $ 10.2 million impairment based on the estimated net sale price of the EndoPredict business.

The fair value used in the analysis was considered a Level 2 measurement.

Money market funds are primarily comprised of exchange traded funds and accrued interest.

The following table reconciles the change in the fair value of the contingent consideration during the periods presented:

4 unchanged sentences

Translation adjustments recognized in Other comprehensive loss ( 0.1 )

Ending balance at June 30, 2024 $ —

For the Level 2 contingent consideration related to the acquisition of Gateway Genomics, LLC ("Gateway"), the Company reassesses the fair value of expected contingent consideration and the corresponding liability each reporting period using then current financial projections.

As of June 30, 2024, the Company has estimated a fair value of $ 0 related to the Gateway contingent consideration as the achievement of the contingent consideration targets is not considered probable.

Ending balance at September 30, 2024

As of September 30, 2024, the Company has estimated a fair value of $ 0 related to the Gateway contingent consideration as the achievement of the contingent consideration targets is not considered probable.

PROPERTY, PLANT, AND EQUIPMENT, NET

The property, plant and equipment at June 30, 2024 and December 31, 2023 were as follows:

(in millions) June 30,

The property, plant and equipment at September 30, 2024 and December 31, 2023 were as follows:

(in millions) September 30,

2024 December 31,

4 unchanged sentences

Property, plant and equipment, net $ 115.4 $ 119.0

Reclassification to assets held for sale

Property, plant and equipment, net

$ 116.3 $ 119.0

During the six months ended June 30, 2023, the Company incurred $ 5.7 million of accelerated depreciation of leasehold improvements and equipment in connection with the Company's decision to cease the use of its corporate headquarters in Salt Lake City, Utah, and transition corporate support operations to its new facility in west Salt Lake City.

The Company formally assigned the previous corporate headquarters lease to a third party as of December 31, 2023.

See Note 15 for further discussion.

The Company recorded depreciation during the respective periods as follows:

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023 2024 2023

Depreciation expense $ 4.8 $ 3.4 $ 14.5 $ 14.8

During the nine months ended September 30, 2023, the Company incurred $ 5.7 million of accelerated depreciation of leasehold improvements and equipment in connection with the Company's decision to cease the use of its former corporate headquarters in Salt Lake City, Utah, and transition corporate support operations to its new facility in west Salt Lake City.

The Company formally assigned the previous corporate headquarters lease to a third party as of December 31, 2023.

See Note 15 for further discussion.

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the six months ended June 30, 2024 are as follows:

The changes in the carrying amount of goodwill for the nine months ended September 30, 2024 were as follows:

(in millions) Total

3 unchanged sentences

Ending balance $ 286.3

The Company recognized a goodwill impairment charge of $ 0.8 million during the six months ended June 30, 2024 related to the goodwill allocated to assets held for sale in the Myriad International reporting unit.

The Company recognized a goodwill impairment charge of $ 0.8 million during the nine months ended September 30, 2024 related to the goodwill allocated to the Myriad International reporting unit.

The goodwill impairment charge is reflected in Goodwill and long-lived asset impairment charges in the Condensed Consolidated Statements of Operations.

See Note 18 for further discussion.

As of September 30, 2024, goodwill for the Pharmacogenomics reporting unit (formerly referred to as Mental Health) was approximately $ 121.0 million, which represents approximately 42.3 % of total recorded goodwill.

On November 1, 2024, UnitedHealthcare updated its medical policy for pharmacogenetic testing to no longer provide coverage for certain multi-gene panel pharmacogenetic tests, including the Company's GeneSight test, under its commercial and individual exchange benefit plans, effective January 1, 2025.

The Company is still assessing the full impact of this policy change on its long-term forecasts;

however, goodwill recorded in connection with this reporting unit may be at risk of impairment.

The reporting unit was last quantitatively tested for goodwill impairment as of October 1, 2020, at which time the fair value of the reporting unit was in excess of the carrying value by 12 %.

As more information becomes available about the impact of the coverage decision by UnitedHealthcare, or if other adverse events occur, the Company may be required to record a goodwill impairment charge, which could have a material impact on the financial statements.

Business Updates and Item 1A.

Risk Factors for additional information.

Intangible Assets

Intangible assets consist of amortizable assets of developed technologies, customer relationships, and trademarks.

Intangible assets consist of amortizable assets of developed technologies, internal-use software, customer relationships, and trademarks, as well as in-process internal-use software that is not yet being amortized.

During the nine months ended September 30, 2024, the Company completed the sale of its EndoPredict business, including certain developed technologies with a net book value of approximately $ 13.1 million.

See Note 18 for further discussion about the sale of the EndoPredict business.

The following summarizes the amounts reported as intangible assets:

2 unchanged sentences

Amortization Net

At June 30, 2024

At September 30, 2024

Developed technologies $ 603.3 $ ( 316.9 ) $ 286.4

5 unchanged sentences

631.4 $ ( 318.9 ) 312.5

Reclassification of assets held for sale

( 21.6 ) $ 8.5 ( 13.1 )

Total intangible assets $ 627.8 $ ( 308.3 ) $ 319.5

(in millions) Gross

11 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023 2024 2023

1 unchanged sentence

ACCRUED LIABILITIES

The Company's accrued liabilities at June 30, 2024 and December 31, 2023 were as follows:

(in millions) June 30,

The Company's accrued liabilities at September 30, 2024 and December 31, 2023 were as follows:

(in millions) September 30,

2024 December 31,

7 unchanged sentences

Other accrued liabilities 19.5 20.7

Reclassification to liabilities held for sale

Total accrued liabilities $ 111.2 $ 113.9

LONG-TERM DEBT

On June 30, 2023, the Company entered into an asset-based revolving credit facility (the “ABL Facility”) with an initial maximum principal amount of $ 90.0 million, with JPMorgan Chase Bank, N.A.

as administrative agent and issuing bank, the other lender parties thereto, and certain of the Company's domestic subsidiaries (the "Guarantors").

On June 30, 2023, the Company entered into an asset-based revolving credit facility (the “ABL Facility”) with an initial maximum principal amount of $ 90.0 million, with JPMorgan Chase Bank, N.A., as administrative agent and issuing bank, the other lender parties thereto, and certain of the Company's domestic subsidiaries (the "Guarantors").

On October 31, 2023, the Company entered into an amendment to the ABL Facility to increase the maximum principal amount of the available revolving line of credit by $ 25.0 million for a total maximum principal commitment of $ 115.0 million under the ABL Facility, which was effected through a new commitment provided by a new lender, Goldman Sachs Bank USA.

1 unchanged sentence

The obligations of the Company are guaranteed by the Guarantors and the ABL Facility is secured by substantially all of the assets of the Company and the Guarantors.

The Company had long-term debt of $ 40.0 million under the ABL Facility at June 30, 2024 and December 31, 2023, net of $ 1.2 million and $ 1.5 million of debt issuance costs, respectively.

The Company had long-term debt of $ 40.0 million under the ABL Facility at September 30, 2024 and December 31, 2023, net of $ 1.0 million and $ 1.5 million of debt issuance costs, respectively.

Proceeds from the ABL Facility were or will be used for the working capital needs and general corporate purposes of the Company and its subsidiaries.

Availability under the ABL Facility is subject to a borrowing base, which is the lesser of (a) 85 % of the Company's and the Guarantor's eligible accounts receivable plus certain cash held in a segregated and fully-blocked account with the administrative agent in an amount up to $ 20.0 million ("Eligible Cash") minus any reserves established by the administrative agent in accordance with the ABL Facility, and (b) the aggregate amount of cash collections from eligible accounts of the Company and the Guarantors for the 60 consecutive days most recently ended.

Availability under the ABL Facility is subject to a borrowing base, which is the lesser of (a) 85 % of the Company's and the Guarantors' eligible accounts receivable plus certain cash held in a segregated and fully-blocked account with the administrative agent in an amount up to $ 20.0 million ("Eligible Cash") minus any reserves established by the administrative agent in accordance with the ABL Facility, and (b) the aggregate amount of cash collections from eligible accounts of the Company and the Guarantors for the 60 consecutive days most recently ended.

Subject to certain conditions, the Company can freely withdraw cash from the Eligible Cash account, provided that any reduction in the Eligible Cash amount will have a corresponding reduction in the borrowing base under the ABL Facility.

Loans outstanding under the ABL Facility will bear interest at a rate per annum equal to, at the option of the Company, either (a) the greatest of (i) the daily Prime Rate, (ii) the daily NYFRB Rate plus 0.5 %, and (iii) the monthly Adjusted Term SOFR Rate (as defined below) plus 1.0 % (the “ABR”) plus an applicable margin ranging from 1.0 % to 1.5 % depending on the aggregate average unused availability under the ABL Facility during the prior quarter or (b) term SOFR for a tenor of one, three or six months (at the Company’s election) plus 0.1 % (the “Adjusted Term SOFR Rate”) plus an applicable margin ranging from 2.0 % to 2.5 % depending on the average unused availability under the ABL Facility during the prior quarter, with an ABR floor of 1.0 % and an Adjusted Term SOFR Rate floor of 0.0 %.

Loans outstanding under the ABL Facility will bear interest at a rate per annum equal to, at the option of the Company, either (a) the greatest of (i) the daily Prime Rate, (ii) the daily NYFRB Rate plus 0.5 %, and (iii) the monthly Adjusted Term SOFR Rate (as defined below) plus 1.0 % (the “ABR”) plus an applicable margin ranging from 1.0 % to 1.5 % depending on the aggregate average unused availability under the ABL Facility during the prior quarter or (b) term Secured Overnight Financing Rate ("SOFR") for a tenor of one, three or six months (at the Company’s election) plus 0.1 % (the “Adjusted Term SOFR Rate”) plus an applicable margin ranging from 2.0 % to 2.5 % depending on the average unused availability under the ABL Facility during the prior quarter, with an ABR floor of 1.0 % and an Adjusted Term SOFR Rate floor of 0.0 %.

Under the ABL Facility, the undrawn fee ranges from 37.5 to 50 basis points based on the daily amount of the available revolving commitment.

The weighted average interest rate for borrowings under the ABL Facility as of June 30, 2024 was 8.7 %.

The weighted average interest rate for borrowings under the ABL Facility as of September 30, 2024 was 8.4 %.

The Company may elect to prepay all or any portion of the amounts owed prior to the maturity date without premium or penalty.

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The ABL Facility requires the Company and the Guarantors, on a consolidated basis, to 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 than the 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 June 30, 2024, availability under the ABL Facility was $ 41.5 million.

As of September 30, 2024, availability under the ABL Facility was $ 48.8 million.

In addition, the ABL Facility includes a number of customary events of default.

3 unchanged sentences

OTHER LONG-TERM LIABILITIES

The Company's other long-term liabilities at June 30, 2024 and December 31, 2023 were as follows:

(in millions) June 30,

The Company's other long-term liabilities at September 30, 2024 and December 31, 2023 were as follows:

(in millions) September 30,

2024 December 31,

3 unchanged sentences

Other 2.8 7.5

Reclassification to liabilities held for sale

Total other long-term liabilities $ 34.3 $ 41.3

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and (5) $ 1.25 million on the fourth anniversary of the Contingent Payment Date.

Additionally, the Company agreed to pay Ravgen a minimum of $ 12.75 million in three installment payments of which $ 7.75 million is outstanding as of June 30, 2024.

Additionally, the Company agreed to pay Ravgen a minimum of $ 12.75 million in three installment payments of which $ 7.75 million is outstanding as of September 30, 2024.

The remaining payments will be made in two installments:

(1) $ 5.0 million on or before October 31, 2024 and (2) $ 2.75 million on or before October 31, 2025.

The Company has accrued $ 5.0 million in Accrued Liabilities and $ 24.0 million in Other long-term liabilities for these payments in the Company's Condensed Consolidated Balance Sheet as of June 30, 2024.

The Company has accrued $ 5.0 million in Accrued liabilities and $ 24.0 million in Other long-term liabilities for these payments in the Company's Condensed Consolidated Balance Sheet as of September 30, 2024.

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 June 30, 2024.

There were no shares of preferred stock outstanding at September 30, 2024.

The Company is authorized to issue up to 150.0 million shares of common stock, par value $ 0.01 per share.

There were 90.9 million shares of common stock issued and outstanding at June 30, 2024.

There were 91.0 million shares of common stock issued and outstanding at September 30, 2024.

Shares of common stock issued and outstanding

Six months ended

Nine months ended

September 30,

(in millions) 2024 2023

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023 2024 2023

5 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023 2024 2023

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Stockholders have subsequently approved amendments to the 2017 Plan increasing the shares available to grant thereunder, including most recently at the Company's annual meeting of stockholders held on June 1, 2023, when stockholders approved an amendment to the 2017 Plan to increase the aggregate number of shares of common stock available thereunder for the granting of awards by an additional 4.8 million shares.

As of June 30, 2024, the Company had 2.4 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.

As of September 30, 2024, the Company had 2.3 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 shares that were subject to the RSU will again 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 the CHCC on an award-by-award basis.

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Options granted to the Company's President and Chief Executive Officer as an inducement to his employment expire on August 13, 2027.

The performance and market conditions associated with PSU awards granted during the six months ended June 30, 2024 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 performance and market conditions associated with PSU awards granted during the nine months ended September 30, 2024 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 the relative total stockholder return metric is January 1, 2024 through December 31, 2026, and the revenue and adjusted earnings per share metrics will be measured based on fiscal year 2026 results.

3 unchanged sentences

Stock Options

A summary of the stock option activity for the six months ended June 30, 2024 is as follows:

A summary of the stock option activity for the nine months ended September 30, 2024 is as follows:

(number of shares in millions) Number

1 unchanged sentence

Options outstanding at December 31, 2023 0.7 $ 13.38

Options outstanding at June 30, 2024 0.7 $ 13.38

Options exercisable at June 30, 2024 0.5 $ 13.38

As of June 30, 2024, there was $ 0.1 million of total unrecognized stock-based compensation expense related to stock options that will be recognized over a weighted-average period of 0.2 years.

There were no options granted during the six months ended June 30, 2024.

Options outstanding at September 30, 2024 0.7 $ 13.38

Options exercisable at September 30, 2024 0.5 $ 13.38

As of September 30, 2024, there was no unrecognized stock-based compensation expense.

There were no options granted during the nine months ended September 30, 2024.

Restricted Stock Units

A summary of the RSU awards activity under the Company’s equity plan and inducement awards, including PSU awards, for the six months ended June 30, 2024 is as follows:

A summary of the RSU awards activity under the Company’s equity plan and inducement awards, including PSU awards, for the nine months ended September 30, 2024 is as follows:

(number of shares in millions) Number

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RSUs canceled ( 0.2 ) $ 23.62

RSUs unvested and outstanding at June 30, 2024 5.5 $ 23.29

RSUs unvested and outstanding at September 30, 2024 5.2 $ 23.63

Employee Stock Purchase Plan

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The second offering period of 2024 began on June 1, 2024 and will end on November 30, 2024.

As of June 30, 2024, 1.1 million shares of common stock were available for issuance under the Amended and Restated 2012 Purchase Plan.

Shares purchased under, and compensation expense associated with, the Amended and Restated 2012 Purchase Plan for the six months ended June 30, 2024 and 2023 are as follows:

As of September 30, 2024, 1.1 million shares of common stock were available for issuance under the Amended and Restated 2012 Purchase Plan.

Shares purchased under, and compensation expense associated with, the Amended and Restated 2012 Purchase Plan for the nine months ended September 30, 2024 and 2023 are as follows:

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023 2024 2023

Shares purchased under the plan

0.2 0.2 0.2 0.2

Plan compensation expense $ 0.5 $ 0.5 $ 1.6 $ 1.7

2 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023 2024 2023

3 unchanged sentences

Total stock-based compensation expense $ 12.4 $ 11.6 $ 38.9 $ 30.3

As of June 30, 2024, there was $ 92.6 million of total unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 2.3 years.

As of September 30, 2024, there was $ 81.7 million of total unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 2.2 years.

The Company recognizes forfeitures as they occur.

2 unchanged sentences

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

For the three months ended June 30, 2024, there was $ 0.5 million in income tax benefit, or approximately 1.3 % of pre-tax loss, compared to no income tax expense (benefit) in the prior period, or approximately 0.0 % of pre-tax loss, for the three months ended June 30, 2023.

Income tax benefit for the six months ended June 30, 2024 was $ 0.4 million, or approximately 0.6 % of pre-tax loss, compared to an income tax expense of $ 2.1 million, or approximately 1.2 % of pre-tax loss, for the six months ended June 30, 2023.

For the three and six months ended June 30, 2024 and 2023, the Company’s effective tax rate differs from the U.S.

federal statutory rate primarily due to the recognition of valuation allowances and uncertain tax positions.

For the three months ended September 30, 2024, there was $ 0.9 million in income tax expense, or approximately ( 4.2 )% of pre-tax loss, compared to $ 0.1 million income tax expense, or approximately ( 0.2 )% of pre-tax loss, for the three months ended September 30, 2023.

Income tax expense for the nine months ended September 30, 2024 was $ 0.4 million, or approximately ( 0.5 )% of pre-tax loss, compared to an income tax expense of $ 2.2 million, or approximately ( 1.0 )% of pre-tax loss, for the nine months ended September 30, 2023.

For the three and nine months ended September 30, 2024 and 2023, the Company’s effective tax rate differs from the U.S.

federal statutory rate primarily due to the recognition of valuation allowances.

Due to the Company's cumulative loss and the exhaustion of future taxable income from the reversal of taxable temporary differences, the Company's estimated annual effective tax rate for the current year includes a valuation allowance against the majority of the current year increase in deferred tax assets.

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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 June 30, 2024, except as noted below, 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.

As of September 30, 2024, except as noted below, 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.

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On August 6, 2024, the Delaware Court of Chancery held a hearing to consider the Settlement.

The parties expect a ruling shortly.

The Company has accrued $ 0.95 million for the settlement of the stockholder derivative actions, which is included in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheet as of June 30, 2024.

The parties expect a ruling on or about November 26, 2024.

Other Legal Proceedings

2 unchanged sentences

SUPPLEMENTAL CASH FLOW INFORMATION

The Company's supplemental cash flow information for the six months ended June 30, 2024 and 2023 are as follows:

The Company's supplemental cash flow information for the nine months ended September 30, 2024 and 2023 are as follows:

Nine Months Ended September 30,

(in millions) 2024 2023

5 unchanged sentences

Operating lease liabilities ( 3.1 ) 9.2

Non-cash adjustment to right-of-use assets and lease liabilities from lease modifications 3.1 —

Purchases of property, plant and equipment and capitalization of internal-use software in accounts payable and accrued liabilities 2.5 9.1

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Balance Sheets that agrees to the amounts included in the Condensed Consolidated Statements of Cash Flows.

September 30,

(in millions) 2024 2023

2 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 109.8 $ 85.0

The Company leases certain office spaces and research and development laboratory facilities, vehicles, and office equipment with remaining lease terms ranging from approximately one to fifteen years .

Operating leases are included in Operating lease right-of-use assets, Noncurrent operating lease liabilities, and Current maturities of operating lease liabilities in the Condensed Consolidated Balance Sheets.

1 unchanged sentence

Due to the increase in remote and hybrid work and the Company's need to ensure its facilities are designed to handle future growth, the Company has been executing on a multi-year strategy to reset its real estate footprint.

As part of that strategy, during the three months ended June 30, 2023, the Company took full possession of the remaining phases of the west Salt Lake City, Utah facility and recognized an additional $ 5.9 million right-of-use asset and corresponding lease liability, net of tenant improvement allowance not yet received.

Also during the three months ended June 30, 2023, the Company decided to cease the use of its corporate headquarters in Salt Lake City and transition corporate support operations to its new facility in west Salt Lake City, and as of December 31, 2023, the Company had formally assigned the lease for its previous corporate headquarters in Salt Lake City to a third party.

During the six months ended June 30, 2024, the Company terminated the lease for one of its Salt Lake City, Utah facilities.

As part of that strategy, during the nine months ended September 30, 2023, the Company took full possession of the remaining phases of the west Salt Lake City, Utah facility and recognized an additional $ 5.9 million right-of-use asset and corresponding lease liability, net of tenant improvement allowance not yet received.

Also during the nine months ended September 30, 2023, the Company decided to cease the use of its former corporate headquarters in Salt Lake City and transition corporate support operations to its new facility in west Salt Lake City, and as of December 31, 2023, the Company had formally assigned the lease for its previous corporate headquarters in Salt Lake City to a third party.

During the nine months ended September 30, 2024, the Company terminated the lease for one of its Salt Lake City, Utah facilities.

As a result of the termination, the short-term lease liability of $ 3.1 million associated with the lease was removed from the Company's Condensed Consolidated Balance Sheets.

The total net gain recognized associated with the termination of the lease was $ 1.2 million, which is included in Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.

During the six months ended June 30, 2024, the Company amended the lease for its west Salt Lake City, Utah headquarters to include approximately 63,000 additional square feet in anticipation of future operating needs.

The total net gain recognized in connection with the termination of the lease was $ 1.2 million, which is included in Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.

During the nine months ended September 30, 2024, the Company also amended the lease for its west Salt Lake City, Utah headquarters to include approximately 63,000 additional square feet in anticipation of future operating needs.

The lease has a term of 12 years, which is expected to commence in fiscal year 2026.

Total future rent payments for the additional space are approximately $ 18.2 million.

As of June 30, 2024, except as noted above, the Company expects to continue to occupy its existing facilities until the expiration of the leases.

ACCUMULATED OTHER COMPREHENSIVE LOSS

2 unchanged sentences

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 foreign currenc y 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):

1 unchanged sentence

Period translation adjustments ( 1.5 )

Reclassification of cumulative translation adjustment to income upon liquidation of an investment in a foreign entity 0.7

Ending balance June 30, 2024

Reclassification of cumulative translation adjustment to income upon sale or liquidation of certain foreign entities

Ending balance September 30, 2024

On February 1, 2024, the Company acquired from Intermountain Health select assets from its Intermountain Precision Genomics ("IPG") laboratory business, including the Precise Tumor Test, the Precise Liquid Test, and IPG's CLIA-certified laboratory in St.

1 unchanged sentence

In connection with the Precise acquisition, the Company recognized a gain of $ 2.2 million, which is included in Other income in the Company's Condensed Consolidated Statements of Operations.

ASSETS AND LIABILITIES HELD FOR SALE

On May 7, 2024, the Company signed a definitive agreement to sell its EndoPredict business to Eurobio Scientific ("Eurobio") for $ 10.0 million, subject to customary closing adjustments, plus contingent consideration subject to certain earn-out conditions.

As part of the transaction, the Company will license the rights to continue to produce and sell EndoPredict as a laboratory developed test outside of the European Union and will license to Eurobio the right to sell Prolaris in vitro diagnostic kits outside the U.S.

The sale of the EndoPredict business closed on August 1, 2024.

The Company measured the Endopredict business at the lower of its carrying value less costs to sell and recognized an impairment on held for sale assets of $ 10.2 million during the quarter ended June 30, 2024.

The impairment expense is recorded in Goodwill and long-lived asset impairment charges in the Condensed Consolidated Statements of Operations.

The operating results of the EndoPredict business do not qualify for reporting as discontinued operations.

The operations of the EndoPredict business are included in the Company's testing revenue.

The following table presents information related to the assets and liabilities classified as held for sale at June 30, 2024:

(in millions) Total

Accounts Receivable

Inventory 1.6

Intangibles, net 13.1

Other assets 1.6

Total assets held for sale $ 20.2

Less valuation allowance

Total assets held for sale

Other liabilities $ 4.0

Total liabilities held for sale $ 4.0

Total net assets held for sale $ 6.4

On August 1, 2024, the Company completed the sale of its EndoPredict business to Eurobio Scientific ("Eurobio") for net cash consideration of $ 10.0 million, subject to customary closing adjustments, plus contingent consideration subject to certain earn-out conditions.

The transaction was accounted for as a sale of business.

The Company recognized a total net loss, including transaction expenses, of $ 12.4 million during the nine months ended September 30, 2024 in connection with this sale.

The loss is included in Goodwill and long-lived asset impairment charges on the Company’s Condensed Consolidated Statements of Operations.

The recognized loss included the release of $ 4.4 million of foreign currency translation adjustments previously included in Accumulated other comprehensive income (loss).

As part of the transaction, the Company licensed the rights from Eurobio to continue to sell EndoPredict as a laboratory developed test outside of the European Union and licensed to Eurobio the right to sell Prolaris in vitro diagnostic kits outside the U.S.

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-Q

Item 1. Financial Statements