MYRIAD GENETICS INC 10-Q

Item 1. Financial Statements. MYRIAD GENETICS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited) (in millions) September 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 99.9 $ 132.1 Marketable investment securities — 8.8 Trade accounts receivable 125.7 114.3 Inventory 26.2 22.0 Prepaid taxes 17.0 17.0 Prepaid expenses and other current assets 24.4 19.4 Total current assets 293.2 313.6 Operating lease right-of-use assets 57.4 61.6 Property, plant, and equipment, net 115.4 119.0 Intangibles, net 312.5 349.5 Goodwill 286.3 287.4 Other assets 16.5 15.4 Total assets $ 1,081.3 $ 1,146.5 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 29.6 $ 25.8 Accrued liabilities 111.2 113.9 Current maturities of operating lease liabilities 13.5 16.2 Total current liabilities 154.3 155.9 Unrecognized tax benefits 31.4 30.2 Long-term debt 39.0 38.5 Noncurrent operating lease liabilities 90.6 97.4 Other long-term liabilities 34.3 41.3 Total liabilities 349.6 363.3 Commitments and contingencies Stockholders’ equity: Common stock, 91.0 and 89.9 shares outstanding at September 30, 2024 and December 31, 2023, respectively 0.9 0.9 Additional paid-in capital 1,445.2 1,415.5 Accumulated other comprehensive loss ( 0.1 ) ( 3.7 ) Accumulated deficit ( 714.3 ) ( 629.5 ) Total stockholders' equity 731.7 783.2 Total liabilities and stockholders’ equity $ 1,081.3 $ 1,146.5 See accompanying notes to Condensed Consolidated Financial Statements. 4 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited) (in millions, except per share amounts) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Testing revenue $ 213.3 $ 191.9 $ 627.0 $ 556.6 Costs and expenses: Cost of testing revenue 63.5 57.6 192.5 174.6 Research and development expense 28.5 24.0 81.2 67.7 Selling, general, and administrative expense 139.1 136.1 424.0 428.5 Legal settlements — 34.3 — 111.8 Goodwill and long-lived asset impairment charges 2.2 — 13.8 — Total costs and expenses 233.3 252.0 711.5 782.6 Operating loss ( 20.0 ) ( 60.1 ) ( 84.5 ) ( 226.0 ) Other income (expense): Interest income 0.4 0.6 1.4 1.8 Interest expense ( 0.8 ) ( 1.0 ) ( 2.1 ) ( 2.0 ) Other ( 0.8 ) ( 0.7 ) 0.8 ( 3.7 ) Total other income (expense), net ( 1.2 ) ( 1.1 ) 0.1 ( 3.9 ) Loss before income tax ( 21.2 ) ( 61.2 ) ( 84.4 ) ( 229.9 ) Income tax expense 0.9 0.1 0.4 2.2 Net loss $ ( 22.1 ) $ ( 61.3 ) $ ( 84.8 ) $ ( 232.1 ) Net loss per share: Basic and diluted $ ( 0.24 ) $ ( 0.75 ) $ ( 0.94 ) $ ( 2.84 ) Weighted average shares outstanding: Basic and diluted 90.9 81.9 90.5 81.6 See accompanying notes to Condensed Consolidated Financial Statements. 5 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Loss (unaudited) (in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Net loss $ ( 22.1 ) $ ( 61.3 ) $ ( 84.8 ) $ ( 232.1 ) Change in unrealized loss on available-for-sale debt securities, net of tax — 0.3 0.1 2.5 Change in foreign currency translation adjustment, net of tax ( 0.5 ) ( 0.1 ) ( 1.5 ) 0.7 Reclassification adjustments for losses included in net loss, net of tax — 0.1 — 1.5 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 ) See accompanying notes to Condensed Consolidated Financial Statements. 6 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Stockholders’ Equity (unaudited) (in millions) Common stock Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Myriad Genetics, Inc. Stockholders’ equity BALANCES AT DECEMBER 31, 2022 $ 0.8 $ 1,260.1 $ ( 8.9 ) $ ( 366.2 ) $ 885.8 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — ( 4.9 ) — — ( 4.9 ) Stock-based compensation expense — 7.5 — — 7.5 Net loss — — — ( 54.7 ) ( 54.7 ) Other comprehensive income, net of tax — — 1.5 — 1.5 BALANCES AT MARCH 31, 2023 $ 0.8 $ 1,262.7 $ ( 7.4 ) $ ( 420.9 ) $ 835.2 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — 2.9 — — 2.9 Stock-based compensation expense — 11.2 — — 11.2 Net loss — — — ( 116.1 ) ( 116.1 ) Other comprehensive income, net of tax — — 2.0 — 2.0 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 compensation expense — 12.0 — — 12.0 Net loss — — — ( 26.0 ) ( 26.0 ) Other comprehensive loss, net of tax — — ( 0.5 ) — ( 0.5 ) BALANCES AT MARCH 31, 2024 $ 0.9 $ 1,418.8 $ ( 4.2 ) $ ( 655.5 ) $ 760.0 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — 2.5 — — 2.5 Stock-based compensation expense — 14.5 — — 14.5 Net loss — — — ( 36.7 ) ( 36.7 ) Other comprehensive income, net of tax — — 0.2 — 0.2 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. 7 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) (in millions) Nine months ended September 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 84.8 ) $ ( 232.1 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 46.4 46.8 Non-cash lease expense 6.7 8.6 Stock-based compensation expense 38.9 30.3 Deferred income taxes ( 3.0 ) ( 1.7 ) Unrecognized tax benefits 1.2 2.8 Bad debt expense ( 0.8 ) — Net realized losses on marketable investment securities — 1.5 Impairment of goodwill and long-lived assets 13.6 — Gain on termination of lease ( 3.1 ) — Gain on acquisition ( 2.2 ) — Other non-cash adjustments 2.0 3.0 Changes in assets and liabilities: Prepaid expenses and other current assets ( 4.6 ) ( 1.8 ) Trade accounts receivable ( 12.7 ) ( 13.7 ) Inventory ( 4.9 ) ( 5.0 ) Prepaid taxes ( 0.1 ) 0.2 Other assets ( 0.2 ) ( 0.2 ) Tenant improvement allowance received — 16.3 Accounts payable 5.8 2.2 Accrued liabilities ( 13.5 ) 86.6 Net cash used in operating activities ( 15.3 ) ( 56.2 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 15.4 ) ( 53.2 ) Capitalization of internal-use software costs ( 8.4 ) ( 6.6 ) Proceeds from the sale of business, net cash sold 8.8 — Proceeds from maturities and sales of marketable investment securities 9.0 103.7 Net cash provided by (used in) investing activities ( 6.0 ) 43.9 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from common stock issued under stock-based compensation plans 3.0 — Payment of tax withheld for common stock issued under stock-based compensation plans ( 12.2 ) ( 7.3 ) Proceeds from revolving credit facility 100.0 40.0 Repayment of revolving credit facility ( 100.0 ) — Fees associated with issuance and refinancing of revolving credit facility — ( 1.6 ) Payment on finance leases ( 0.3 ) ( 0.1 ) Net cash provided by (used in) financing activities ( 9.5 ) 31.0 Effect of foreign exchange rates on cash, cash equivalents, and restricted cash ( 0.3 ) ( 0.1 ) Net (decrease) increase in cash, cash equivalents, and restricted cash ( 31.1 ) 18.6 Cash, cash equivalents, and restricted cash at beginning of the period 140.9 66.4 Cash, cash equivalents, and restricted cash at end of the period $ 109.8 $ 85.0 See accompanying notes to Condensed Consolidated Financial Statements. 8 Table of Contents NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION Myriad Genetics, Inc. (together with its subsidiaries, the “Company” or “Myriad”) is a leading genetic testing and precision medicine company dedicated to advancing health and well-being for all. Myriad 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. The Company’s principal executive office is located in Salt Lake City, Utah. The accompanying Condensed Consolidated Financial Statements for the Company have been prepared in accordance with United States ("U.S.") generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly all financial statements in accordance with GAAP. 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. 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 In November 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update ("ASU") 2023-07, S egment Reporting (Topic 280): 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 beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its segment disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires enhanced income tax disclosures, including disaggregation of information on the rate reconciliation table and disaggregated information related to income taxes paid. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures. Reclassifications Certain prior period amounts have been reclassified to conform with the current period presentation. The reclassifications have no impact on the Company's total assets, total liabilities, stockholders' equity, or cash flows from operations. 9 Table of Contents 2. REVENUE The Company primarily generates revenue by performing genetic testing. Testing revenues are primarily derived from the following categories of products: Hereditary Cancer (MyRisk, BRACAnalysis, BRACAnalysis CDx), Tumor Profiling (MyChoice CDx, Prolaris, Precise Tumor, and EndoPredict), Prenatal (Foresight, Prequel, and SneakPeek), and Pharmacogenomics (GeneSight). Revenue is recorded at the estimated transaction price. The Company has determined that the communication of test results indicates transfer of control for revenue recognition purposes. The following table presents detail regarding the composition of the Company’s total revenue by product type and by geographical region, either U.S. or rest of world (“RoW”): Three months ended September 30, 2024 2023 (in millions) U.S. RoW Total U.S. RoW Total Testing revenues: Hereditary Cancer $ 78.4 $ 12.1 $ 90.5 $ 75.1 $ 11.4 $ 86.5 Tumor Profiling 26.5 5.1 31.6 22.0 8.2 30.2 Prenatal 43.4 0.1 43.5 39.4 0.1 39.5 Pharmacogenomics 47.7 — 47.7 35.7 — 35.7 Total revenue $ 196.0 $ 17.3 $ 213.3 $ 172.2 $ 19.7 $ 191.9 Nine months ended September 30, 2024 2023 (in millions) U.S. RoW Total U.S. RoW Total Testing revenues: Hereditary Cancer $ 235.6 $ 34.5 $ 270.1 $ 203.6 $ 35.3 $ 238.9 Tumor Profiling 77.1 18.0 95.1 78.1 25.4 103.5 Prenatal 131.7 0.5 132.2 110.8 0.5 111.3 Pharmacogenomics 129.6 — 129.6 102.9 — 102.9 Total revenue $ 574.0 $ 53.0 $ 627.0 $ 495.4 $ 61.2 $ 556.6 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. The Company performs its obligation under a contract with a customer by processing tests and communicating the test results to customers in exchange for consideration from the customer. The Company has the right to bill its customers upon the completion of performance obligations and thus does not record contract assets. Occasionally, customers make payments prior to the Company’s performance of its contractual obligations. When this occurs, the Company records a contract liability as Deferred revenue, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets. 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 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. An estimate of transaction price does not include any estimated amount of variable consideration that is constrained. In addition, the Company considers all the information (historical, current, and forecast) that is reasonably available to identify possible consideration amounts. In determining the expected value, the Company considers the probability of the variable consideration for each possible scenario. The Company also has significant experience with historical discount patterns and uses this experience to estimate transaction prices. 10 Table of Contents 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 Income/Loss. 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 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. Accordingly, no costs incurred to obtain or fulfill a contract have been capitalized. The Company also applies the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects very little cash from customers under payment terms and the vast majority of payment terms have a payback period of less than one year. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company limits its exposure to loss by placing its cash in financial institutions with high credit ratings. The Company's cash may consist of deposits held with banks that may at times exceed federally insured limits of $250,000 per customer. Substantially all of the Company’s accounts receivable are with companies in the healthcare industry, U.S. and state governmental agencies, and individuals. The Company does not believe that receivables due from U.S. and state governmental agencies, such as Medicare, represent a credit risk since the related healthcare programs are funded by the U.S. and state governments. The Company only has one payor, Medicare, that represents greater than 10% of its revenues. Revenues received from Medicare represented 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 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. 11 Table of Contents 3. MARKETABLE INVESTMENT SECURITIES At September 30, 2024, the Company had no investment securities outstanding. 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 December 31, 2023 were as follows: (in millions) Amortized cost Gross unrealized holding gains Gross unrealized holding losses Estimated fair value December 31, 2023 Cash and cash equivalents: Cash $ 129.9 $ — $ — $ 129.9 Cash equivalents 2.2 — — 2.2 Total cash and cash equivalents 132.1 — — 132.1 Available-for-sale: Corporate bonds and notes 8.4 — ( 0.1 ) 8.3 Municipal bonds 0.5 — — 0.5 Total $ 141.0 $ — $ ( 0.1 ) $ 140.9 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. Additional information relating to fair value of marketable investment securities can be found in Note 4. 4. FAIR VALUE MEASUREMENTS The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels: Level 1—quoted prices in active markets for identical assets and liabilities. Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities. Level 3—unobservable inputs. All of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. For Level 2 securities, the Company uses a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application, and corroborative information. 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 $ 39.7 million at September 30, 2024. 12 Table of Contents 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 December 31, 2023 Money market funds (a) $ 2.2 $ — $ — $ 2.2 Corporate bonds and notes — 8.3 — 8.3 Municipal bonds — 0.5 — 0.5 Contingent consideration — — ( 5.4 ) ( 5.4 ) Total $ 2.2 $ 8.8 $ ( 5.4 ) $ 5.6 (a) Money market funds are primarily comprised of exchange traded funds and accrued interest. The following table reconciles the change in the fair value of the contingent consideration during the periods presented: (in millions) Carrying Amount Balance at December 31, 2023 $ 5.4 Change in fair value recognized in the Statements of Operations 0.5 Payment of contingent consideration ( 5.8 ) Translation adjustments recognized in Other comprehensive loss ( 0.1 ) Ending balance at September 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 current financial or operating projections. 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. 5. PROPERTY, PLANT, AND EQUIPMENT, NET The property, plant and equipment at September 30, 2024 and December 31, 2023 were as follows: (in millions) September 30, 2024 December 31, 2023 Leasehold improvements $ 78.2 $ 91.3 Equipment 154.5 147.6 Property, plant and equipment, gross 232.7 238.9 Less accumulated depreciation ( 117.3 ) ( 119.9 ) Property, plant and equipment, net $ 115.4 $ 119.0 The Company recorded depreciation during the respective periods as follows: Three 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. 13 Table of Contents 6. GOODWILL AND INTANGIBLE ASSETS Goodwill The changes in the carrying amount of goodwill for the nine months ended September 30, 2024 were as follows: (in millions) Total Beginning balance $ 287.4 Goodwill impairment ( 0.8 ) Translation adjustments ( 0.3 ) Ending balance $ 286.3 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. See Item 2. Business Updates and Item 1A. Risk Factors for additional information. Intangible Assets 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: (in millions) Gross Carrying Amount Accumulated Amortization Net At September 30, 2024 Developed technologies $ 603.3 $ ( 316.9 ) $ 286.4 Internal-use software 1.6 ( 0.5 ) 1.1 Internal-use software (in-process) 18.8 — 18.8 Customer relationships 1.6 ( 0.3 ) 1.3 Trademarks 6.1 ( 1.2 ) 4.9 Total intangible assets 631.4 $ ( 318.9 ) 312.5 14 Table of Contents (in millions) Gross Carrying Amount Accumulated Amortization Net At December 31, 2023 Developed technologies $ 626.1 $ ( 295.3 ) $ 330.8 Internal-use software 0.8 ( 0.1 ) 0.7 Internal-use software (in-process) 11.2 — 11.2 Customer relationships 1.6 ( 0.2 ) 1.4 Trademarks 6.1 ( 0.7 ) 5.4 Total intangible assets $ 645.8 $ ( 296.3 ) $ 349.5 The Company recorded amortization expense during the respective periods for these intangible assets as follows: Three months ended September 30, Nine months ended September 30, (in millions) 2024 2023 2024 2023 Amortization of intangible assets $ 10.5 $ 10.7 $ 31.9 $ 32.0 7. ACCRUED LIABILITIES The Company's accrued liabilities at September 30, 2024 and December 31, 2023 were as follows: (in millions) September 30, 2024 December 31, 2023 Employee compensation and benefits $ 51.4 $ 49.7 Accrued taxes payable 4.2 4.6 Refunds payable and reserves 19.2 20.1 Short-term contingent consideration — 3.1 Accrued royalties 6.6 5.3 Legal settlements 6.0 6.0 Lease termination accrual 4.3 4.4 Other accrued liabilities 19.5 20.7 Total accrued liabilities $ 111.2 $ 113.9 8. 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 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. The ABL Facility matures on June 30, 2026. 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 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 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. 15 Table of Contents 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 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. The ABL Facility is also subject to customary mandatory prepayments with the proceeds of unpermitted indebtedness and upon the occurrence of an over-advance. Voluntary and mandatory prepayments and all other payments of the ABL Facility must be accompanied by payment of accrued interest on the principal amount repaid or prepaid. The ABL Facility contains customary loan terms, interest rates, representations and warranties and affirmative and negative covenants, in each case, subject to customary limitations, exceptions and exclusions. Covenants under the ABL Facility limit or restrict the Company and its subsidiaries' ability to incur liens, incur indebtedness, dispose of assets, make investments, make certain restricted payments, merge or consolidate, and enter into certain speculative hedging arrangements. 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 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. If any event of default occurs (subject, in certain instances, to specified grace periods), the principal, premium, if any, interest, and any other monetary obligations on all the then-outstanding amounts under the ABL Facility may become due and payable immediately. Under the terms of the ABL Facility, if (i) an event of default has occurred and is continuing or (ii) availability under the ABL Facility is less than the greater of (a) $ 12.5 million and (b) 15 % of the lesser of the maximum commitment amount and the borrowing base, the Company will become subject to cash dominion, upon which the administrative agent will apply funds credited to a collection account to first prepay any outstanding protective advances, second to prepay any revolving loans and third, to cash collateralize any outstanding letter of credit exposure. Such cash dominion period will end when availability has remained in excess of the greater of (i) $ 12.5 million and (ii) 15 % of the lesser of the maximum commitment amount and the borrowing base for a period of 45 consecutive days and no event of default is continuing. 9. OTHER LONG-TERM LIABILITIES 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, 2023 Contingent consideration $ — $ 2.3 Escrow liability 7.5 7.5 Legal settlements 24.0 24.0 Other 2.8 7.5 Total other long-term liabilities $ 34.3 $ 41.3 16 Table of Contents On October 23, 2023 (the "Effective Date"), the Company and Ravgen, Inc. ("Ravgen") entered into a settlement agreement pursuant to which the parties agreed to settle a pending lawsuit. Subject to the terms of the settlement agreement, the Company agreed to pay Ravgen a contingent payment of $ 21.25 million payable in five annual installments, with (1) the first installment of $ 5.0 million payable on the later of (a) 30 days after notification in writing by Ravgen of the successful conclusion in favor of Ravgen of all of Ravgen's litigations and patent reexaminations pending as of the Effective Date and (b) January 1, 2026 (the "Contingent Payment Date"); (2) the second installment of $ 5.0 million on the first anniversary of the Contingent Payment Date; (3) the third installment of $ 5.0 million on the second anniversary of the Contingent Payment Date; (4) the fourth installment of $ 5.0 million on the third anniversary of the Contingent Payment Date; 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 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 September 30, 2024. 10. 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 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 91.0 million shares of common stock issued and outstanding at September 30, 2024. Shares of common stock issued and outstanding Nine months ended September 30, (in millions) 2024 2023 Beginning common stock issued and outstanding 89.9 81.2 Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plan 1.1 0.9 Common stock issued and outstanding at end of period 91.0 82.1 Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed based on the weighted-average number of shares of common stock, including the dilutive effect of common stock equivalents, outstanding. In periods when the Company has a net loss, stock awards are excluded from the calculation of diluted net loss per share as their inclusion would have an antidilutive effect. The following is a reconciliation of the denominators of the basic and diluted earnings per share (“EPS”) computations: Three months ended September 30, Nine months ended September 30, (in millions) 2024 2023 2024 2023 Denominator: Weighted-average shares outstanding used to compute basic EPS 90.9 81.9 90.5 81.6 Effect of dilutive shares — — — — Weighted-average shares outstanding and dilutive securities used to compute diluted EPS 90.9 81.9 90.5 81.6 Certain outstanding options and restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. These potential dilutive shares of common stock, which may be dilutive to future diluted earnings per share, are as follows: Three months ended September 30, Nine months ended September 30, (in millions) 2024 2023 2024 2023 Anti-dilutive options and RSUs excluded from EPS computation 5.9 5.3 5.9 5.3 17 Table of Contents 11. STOCK-BASED COMPENSATION On November 30, 2017, the Company’s stockholders approved the adoption of the 2017 Employee, Director and Consultant Equity Incentive Plan (as amended, the “2017 Plan”). The 2017 Plan allows the Company, under the direction of the Compensation and Human Capital Committee (the "CHCC") of the Board of Directors, to make grants of restricted stock and restricted stock unit awards to employees, consultants, and directors. 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 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. RSUs granted to employees generally vest either ratably over three or four years or as cliff vesting after three years either on the anniversary of the date on which the RSUs were granted or during the month in which such anniversary dates occur. The number of performance-based RSUs ("PSUs") awarded to certain employees may be increased or reduced based on certain additional performance and market metrics. RSUs granted to non-employee directors generally vest in full upon the earlier of the completion of one year of service following the date of the grant or the date of the next annual meeting of stockholders following such grant. Options granted to the Company's President and Chief Executive Officer as an inducement to his employment expire on August 13, 2027. 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. The Company estimates the likelihood of achievement of performance conditions for all PSU awards at the end of each period. To the extent those awards or portions thereof are considered probable of being achieved, such awards or portions thereof are expensed over the performance period. The portion of the awards pertaining to relative total stockholder return represent market conditions and, accordingly, the estimated fair value of such awards is recognized over the performance period. Stock Options A summary of the stock option activity for the nine months ended September 30, 2024 is as follows: (number of shares in millions) Number of Shares Weighted Average Exercise Price Options outstanding at December 31, 2023 0.7 $ 13.38 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. 18 Table of Contents Restricted Stock Units 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 of Shares Weighted Average Grant Date Fair Value RSUs unvested and outstanding at December 31, 2023 4.4 $ 24.37 RSUs granted 2.5 $ 22.46 Less: RSUs vested ( 1.5 ) $ 23.77 RSUs canceled ( 0.2 ) $ 23.62 RSUs unvested and outstanding at September 30, 2024 5.2 $ 23.63 Employee Stock Purchase Plan The Company also has an Employee Stock Purchase Plan that was initially approved by stockholders in 2012 and was amended and approved by the Board of Directors of the Company on September 23, 2021 and the stockholders on June 2, 2022 (the "Amended and Restated 2012 Purchase Plan"), under which 4.0 million shares of common stock were authorized for issuance under the Amended and Restated 2012 Purchase Plan. Shares are issued under the Amended and Restated 2012 Purchase Plan twice yearly at the end of each offering period and the number of shares that may be purchased by any participant during an offering period is limited to 5,000 shares. The first offering period of 2024 started on December 1, 2023 and ended on May 31, 2024. The second offering period of 2024 began on June 1, 2024 and will end on November 30, 2024. 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 September 30, Nine months ended September 30, (in millions) 2024 2023 2024 2023 Shares purchased under the plan — — 0.2 0.2 Plan compensation expense $ 0.5 $ 0.5 $ 1.6 $ 1.7 Stock-Based Compensation Expense Stock-based compensation expense recognized and included in the Condensed Consolidated Statements of Operations and Comprehensive Loss was allocated as follows: Three months ended September 30, Nine months ended September 30, (in millions) 2024 2023 2024 2023 Cost of testing revenue $ 0.3 $ 0.4 $ 1.0 $ 1.1 Research and development expense 1.6 1.2 4.4 2.9 Selling, general, and administrative expense 10.5 10.0 33.5 26.3 Total stock-based compensation expense $ 12.4 $ 11.6 $ 38.9 $ 30.3 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. In the event that a PSU is determined to be improbable of vesting, the Company records an adjustment to reverse all previously recognized expense associated with the equity award in the current period. 19 Table of Contents 12. INCOME TAXES In order to determine the Company’s quarterly provision for income taxes, the Company used an estimated annual effective tax rate that is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. 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 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. 13. COMMITMENTS AND CONTINGENCIES The Company is involved from time to time in various disputes, claims and legal actions, including class actions and other litigation, including the matters described below, arising in the ordinary course of business. Such actions may include allegations of negligence, product or professional liability or other legal claims, and could involve claims for substantial compensatory and punitive damages or claims for indeterminate amounts of damages. The Company is also involved, from time to time, in investigations by governmental agencies regarding its business which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of the government or private payors. The Company has received subpoenas from time to time related to billing or other practices based on the False Claims Act or other federal and state statutes, regulations or other laws. The Company intends to defend its current litigation matters, but cannot provide any assurance as to the ultimate outcome or that an adverse resolution would not have a material adverse effect on its financial condition, results of operations or cash flows. The Company assesses legal contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. When evaluating legal contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the proceedings may be in early stages, there may be uncertainty as to the outcome of pending appeals or motions, there may be significant factual issues to be resolved, and there may be complex or novel legal theories to be presented. In addition, damages may not be specified or the damage amounts claimed may be unsupported, exaggerated or unrelated to possible outcomes, and therefore, such amounts are not a reliable indicator of potential liability. As of 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. Further, in the event that damages from an unfavorable resolution of one or more of these proceedings exceed the aggregate amount of the coverage limits of the Company’s insurance, or if the Company’s insurance carriers disclaim coverage, the amounts payable by the Company could also have a material adverse impact on the Company’s results of operations, financial condition or cash flows. 20 Table of Contents Stockholder Derivative Actions On August 9, 2021, a stockholder derivative complaint was filed in the Delaware Court of Chancery against the Company's former President and Chief Executive Officer, Mark C. Capone, its former Chief Financial Officer, R. Bryan Riggsbee, its former Executive Vice President of Clinical Development, Bryan M. Dechairo, and certain of the Company's current and former directors, Lawrence C. Best, Walter Gilbert, John T. Henderson, Heiner Dreismann, Dennis Langer, Lee N. Newcomer, S. Louise Phanstiel, and Colleen F. Reitan (collectively, the "Individual Defendants"), and the Company, as nominal defendant. The complaint is premised upon similar allegations that were set forth in the securities class action lawsuit that was settled and then dismissed by the U.S. District Court for the District of Utah in December 2023 (the "Securities Class Action"), including that the Individual Defendants made false and misleading statements regarding the Company's business and operations. The plaintiff, Donna Hickock, asserts breach of fiduciary duty and unjust enrichment claims against the Individual Defendants and seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged breaches, or disgorgement or restitution, from each of the Individual Defendants, plus interest. Plaintiff Hickock also seeks legal and other costs and fees relating to this action. On November 19, 2021, this action was stayed by the Delaware Court of Chancery pending the resolution of the Securities Class Action. On January 18, 2022, a stockholder derivative complaint was filed in the Delaware Court of Chancery against the Individual Defendants and the Company, as nominal defendant. The action is premised upon similar allegations as set forth in the Securities Class Action and the Hickock stockholder derivative action. The plaintiff, Esther Kogus, asserts that the Individual Defendants breached their fiduciary duties and also asserts unjust enrichment and aiding and abetting breaches of fiduciary duty claims against the Individual Defendants. Plaintiff Kogus seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged breaches and claims, and restitution from the Individual Defendants. On behalf of herself, plaintiff Kogus seeks legal and other costs and fees relating to this action. On March 3, 2022, the Delaware Court of Chancery consolidated the Hickock and Kogus derivative actions and stayed the consolidated action. On April 19, 2024, the Court of Chancery ordered that Leo Shumacher be substituted for Ms. Kogus as a plaintiff in this consolidated action. On September 17, 2021, a stockholder derivative complaint was filed in the U.S. District Court in the District of Delaware against the Individual Defendants and the Company, as nominal defendant. The action is premised upon similar allegations as set forth in the Securities Class Action and Hickock stockholder derivative action. The plaintiff, Karen Marcey, asserts that the Individual Defendants violated U.S. securities laws and breached their fiduciary duties, and also asserts unjust enrichment, waste of corporate assets and insider trading claims against all or some of the Individual Defendants. Plaintiff Marcey seeks, on behalf of the Company, damages allegedly sustained by the Company as a result of the alleged violations and restitution from the Individual Defendants, plus interest and, on behalf of herself, legal and other costs and fees relating to this action. On January 4, 2022, this action was stayed by the U.S. District Court for the District of Delaware pending the resolution of the Securities Class Action. On April 30, 2024, the parties across all of the foregoing stockholder derivative actions entered into a global stipulation of settlement to resolve the actions (the "Settlement"). On May 3, 2024, the parties submitted the Settlement to the Delaware Court of Chancery for approval. As part of the Settlement, (i) the Company agreed to adopt or implement certain corporate governance reforms; and (ii) the parties agreed that plaintiffs' counsel will apply to the court for an award of attorneys' fees and expenses not to exceed $ 0.95 million to be paid by the Company, and that the Individual Defendants and the Company will not oppose or object to the requested fee award. The Settlement contains no admission of liability, wrongdoing or responsibility by any of the parties. On August 6, 2024, the Delaware Court of Chancery held a hearing to consider the Settlement. The parties expect a ruling on or about November 26, 2024. 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 September 30, 2024. Other Legal Proceedings From time to time, the Company receives recoupment requests from third-party payors for alleged overpayments. The Company disagrees with the contentions of the pending requests or has recorded an estimated reserve for the alleged overpayments. 21 Table of Contents 14. SUPPLEMENTAL CASH FLOW INFORMATION 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 Cash paid for income taxes $ 1.8 $ 1.3 Cash paid for interest 1.3 0.8 Non-cash investing and financing activities: Change in operating lease right-of-use assets and lease liabilities Operating lease right-of-use assets $ ( 0.3 ) $ 8.7 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 Cash and cash equivalents $ 99.9 $ 76.0 Restricted cash 9.9 9.0 Total cash, cash equivalents, and restricted cash $ 109.8 $ 85.0 15. LEASES 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 fourteen 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. Finance leases are included in Other assets, Accrued liabilities, and Other long-term liabilities in the Condensed Consolidated Balance Sheets. 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 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 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. 22 Table of Contents 16. ACCUMULATED OTHER COMPREHENSIVE LOSS The functional currency of the Company’s international subsidiaries is the local currency. For those subsidiaries, expenses denominated in the functional currency are translated into U.S. dollars using average exchange rates in effect during the period and assets and liabilities are translated using period-end exchange rates. The foreign 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): Ending balance December 31, 2023 $ ( 3.7 ) Period translation adjustments ( 1.5 ) Reclassification of cumulative translation adjustment to income upon sale or liquidation of certain foreign entities 5.1 Ending balance September 30, 2024 $ ( 0.1 ) 17. ACQUISITION 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. George, Utah for an immaterial amount (the "Precise acquisition"). 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. 18. DIVESTITURE 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. 23 Table of Contents