MYRIAD GENETICS INC 10-Q

Item 1. Financial Statements. MYRIAD GENETICS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited) (in millions) March 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 91.8 $ 102.4 Trade accounts receivable 120.4 121.2 Inventory 28.3 27.5 Prepaid taxes 14.3 16.4 Prepaid expenses and other current assets 32.4 30.5 Total current assets 287.2 298.0 Operating lease right-of-use assets 53.4 55.0 Property, plant, and equipment, net 114.0 117.4 Intangibles, net 257.5 262.4 Goodwill 286.3 286.3 Other assets 7.7 8.5 Total assets $ 1,006.1 $ 1,027.6 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 28.1 $ 32.3 Accrued liabilities 112.1 119.0 Current maturities of operating lease liabilities 10.9 12.8 Total current liabilities 151.1 164.1 Unrecognized tax benefits 1.4 32.7 Long-term debt 59.3 39.6 Noncurrent operating lease liabilities 87.4 87.9 Other long-term liabilities 2.0 2.2 Total liabilities 301.2 326.5 Commitments and contingencies Stockholders’ equity: Common stock, 92.2 and 91.3 shares outstanding at March 31, 2025 and December 31, 2024, respectively 0.9 0.9 Additional paid-in capital 1,461.5 1,457.8 Accumulated other comprehensive loss ( 0.6 ) ( 0.8 ) Accumulated deficit ( 756.9 ) ( 756.8 ) Total stockholders' equity 704.9 701.1 Total liabilities and stockholders’ equity $ 1,006.1 $ 1,027.6 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 March 31, 2025 2024 Revenue $ 195.9 $ 202.2 Cost of revenue 61.7 64.6 Gross profit 134.2 137.6 Costs and expenses: Research and development expense 27.5 24.9 Sales and marketing expense 69.2 69.4 General and administrative expense 66.5 71.2 Total operating expenses 163.2 165.5 Operating loss ( 29.0 ) ( 27.9 ) Other income (expense): Interest income 0.3 0.6 Interest expense ( 0.8 ) ( 0.5 ) Other 0.1 1.9 Total other income (expense), net ( 0.4 ) 2.0 Loss before income tax ( 29.4 ) ( 25.9 ) Income tax (benefit) expense ( 29.3 ) 0.1 Net loss $ ( 0.1 ) $ ( 26.0 ) Net loss per share: Basic and Diluted $ — $ ( 0.29 ) Weighted average shares outstanding: Basic and Diluted 91.4 89.9 See accompanying notes to Condensed Consolidated Financial Statements. 5 Table of Contents MYRIAD GENETICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) (in millions) Three months ended March 31, 2025 2024 Net loss $ ( 0.1 ) $ ( 26.0 ) Change in unrealized loss on available-for-sale debt securities, net of tax — 0.1 Change in foreign currency translation adjustment, net of tax 0.2 ( 1.3 ) Reclassification of cumulative translation adjustment to income upon sale or liquidation of certain foreign entities, net of tax — 0.7 Comprehensive income (loss) $ 0.1 $ ( 26.5 ) 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, 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 BALANCES AT DECEMBER 31, 2024 $ 0.9 $ 1,457.8 $ ( 0.8 ) $ ( 756.8 ) $ 701.1 Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax — ( 5.8 ) — — ( 5.8 ) Stock-based compensation expense — 9.5 — — 9.5 Net loss — — — ( 0.1 ) ( 0.1 ) Other comprehensive income, net of tax — — 0.2 — 0.2 BALANCES AT MARCH 31, 2025 $ 0.9 $ 1,461.5 $ ( 0.6 ) $ ( 756.9 ) $ 704.9 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) Three months ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 0.1 ) $ ( 26.0 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 14.4 15.7 Non-cash lease expense 2.8 2.3 Stock-based compensation expense 9.5 12.0 Unrecognized tax benefits ( 31.3 ) 0.6 Gain on termination of lease — ( 3.1 ) Gain on acquisition — ( 2.2 ) Other non-cash adjustments 0.5 2.7 Changes in assets and liabilities: Prepaid expenses and other current assets ( 2.2 ) ( 5.2 ) Trade accounts receivable 0.8 ( 3.9 ) Inventory ( 0.9 ) ( 1.8 ) Prepaid taxes 2.1 ( 1.4 ) Other assets 0.5 0.2 Accounts payable — 6.1 Accrued liabilities ( 12.4 ) ( 14.6 ) Net cash used in operating activities ( 16.3 ) ( 18.6 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 5.3 ) ( 6.7 ) Capitalization of intangible assets ( 3.0 ) ( 1.9 ) Proceeds from maturities and sales of marketable investment securities — 1.5 Net cash used in investing activities ( 8.3 ) ( 7.1 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payment of tax withheld for common stock issued under stock-based compensation plans ( 5.8 ) ( 8.7 ) Proceeds from revolving credit facility 40.0 60.0 Repayment of revolving credit facility ( 20.5 ) ( 60.0 ) Payment on finance leases ( 0.1 ) ( 0.1 ) Net cash provided by (used in) financing activities 13.6 ( 8.8 ) Effect of foreign exchange rates on cash, cash equivalents, and restricted cash 0.1 ( 0.8 ) Net decrease in cash, cash equivalents, and restricted cash ( 10.9 ) ( 35.3 ) Cash, cash equivalents, and restricted cash at beginning of the period 111.9 140.9 Cash, cash equivalents, and restricted cash at end of the period $ 101.0 $ 105.6 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 molecular diagnostic testing and precision medicine company dedicated to advancing health and well-being for all. Myriad develops and offers molecular tests that help assess the risk of developing disease or disease progression and guide treatment decisions across medical specialties where molecular 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’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, 2024 (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. Additionally, operating results for the three months ended March 31, 2025 may not necessarily be indicative of results to be expected for any other quarterly period or for the full year. Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update ("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. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. 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, net loss, or cash flows from operations. 2. REVENUE The Company primarily generates revenue by performing molecular diagnostic testing. Revenue is recorded at the estimated transaction price. Control is transferred, and revenue is recognized, once test results are released to the healthcare provider and/or patient. 9 Table of Contents 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 March 31, 2025 2024 (in millions) U.S. RoW Total U.S. RoW Total Hereditary Cancer $ 75.4 $ 10.9 $ 86.3 $ 76.3 $ 11.8 $ 88.1 Tumor Profiling 26.0 3.3 29.3 23.9 7.0 30.9 Prenatal 49.2 0.1 49.3 44.1 0.2 44.3 Pharmacogenomics 31.0 — 31.0 38.9 — 38.9 Total revenue $ 181.6 $ 14.3 $ 195.9 $ 183.2 $ 19.0 $ 202.2 In determining the transaction price, the Company includes an estimate of the expected amount of consideration to be received. 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, revenue is further constrained for estimated refunds. The Company reserves certain amounts in Accrued liabilities in the Condensed Consolidated Balance Sheets in anticipation of requests for refunds of payments made previously by insurance carriers, which are accounted for as reductions in revenue in the 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 bills or denying payment for tests that the Company has 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 March 31, 2025, the impact of the amounts to be recognized for tests in which the performance obligation was met in a prior period was not material to the Condensed Consolidated Statements of Operations. During the quarter ended March 31, 2024, the Company recognized $ 7.0 million in revenue for tests in which the performance obligation was met in a prior period, including $ 3.0 million in revenue due to a retroactive coverage change by a payor for one of its prenatal products. 3. FAIR VALUE MEASUREMENTS The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels: Level 1—quoted prices in active markets for identical assets and liabilities. Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities. Level 3—unobservable inputs. The fair value of the Company’s long-term debt, which it considers a Level 2 measurement, is estimated using a discounted cash flow analysis 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 $ 59.7 million at March 31, 2025. 10 Table of Contents 4. PROPERTY, PLANT, AND EQUIPMENT, NET The property, plant, and equipment at March 31, 2025 and December 31, 2024 were as follows: (in millions) March 31, 2025 December 31, 2024 Leasehold improvements $ 78.8 $ 78.5 Equipment 118.7 148.5 Property, plant, and equipment, gross 197.5 227.0 Less accumulated depreciation ( 83.5 ) ( 109.6 ) Property, plant, and equipment, net $ 114.0 $ 117.4 The Company recorded depreciation during the respective periods as follows: Three months ended March 31, (in millions) 2025 2024 Depreciation expense $ 5.1 $ 4.9 5. GOODWILL AND INTANGIBLE ASSETS Goodwill As of March 31, 2025, there were no changes in the carrying amount of goodwill and no impairment losses were recognized during the period. Intangible Assets The following tables summarize the amounts reported as intangible assets: (in millions) Gross Carrying Amount Accumulated Amortization Net At March 31, 2025 Developed technologies $ 559.4 $ ( 335.5 ) $ 223.9 Internal-use software 2.8 ( 0.9 ) 1.9 Customer relationships 1.6 ( 0.4 ) 1.2 Trademarks 6.1 ( 1.5 ) 4.6 Licensed technologies 2.8 ( 0.1 ) 2.7 Internal-use software (in-process) 23.2 — 23.2 Total intangible assets $ 595.9 $ ( 338.4 ) $ 257.5 (in millions) Gross Carrying Amount Accumulated Amortization Net At December 31, 2024 Developed technologies $ 560.1 $ ( 326.5 ) $ 233.6 Internal-use software 1.8 ( 0.7 ) $ 1.1 Customer relationships 1.6 ( 0.3 ) 1.3 Trademarks 6.1 ( 1.3 ) 4.8 Internal-use software (in-process) 21.6 — $ 21.6 Total intangible assets $ 591.2 $ ( 328.8 ) $ 262.4 11 Table of Contents The Company recorded amortization expense during the respective periods for these intangible assets as follows: Three months ended March 31, (in millions) 2025 2024 Amortization of intangible assets $ 9.4 $ 10.8 6. ACCRUED LIABILITIES The Company's accrued liabilities at March 31, 2025 and December 31, 2024 were as follows: (in millions) March 31, 2025 December 31, 2024 Employee compensation and benefits $ 43.0 $ 57.4 Accrued taxes payable 9.0 5.1 Refunds payable and reserves 18.9 19.9 Accrued royalties 6.0 6.5 Escrow Liability 7.5 7.5 Other accrued liabilities 27.7 22.6 Total accrued liabilities $ 112.1 $ 119.0 7. 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 $ 59.3 million and $ 39.6 million under the ABL Facility at March 31, 2025 and December 31, 2024, respectively, net of $ 0.7 million and $ 0.9 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. 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 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 March 31, 2025 was 7.4 %. The interest rate for borrowings under the ABL Facility as of December 31, 2024 was 7.8 %. 12 Table of Contents 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's ability to incur liens, incur indebtedness, dispose of assets, make investments, make certain restricted payments (including dividends), 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 a fixed charge coverage ratio of at least 1.0 to 1.0 if availability under the ABL Facility is less than the greater of (a) $ 10.6 million and (b) 12.5 % of the lesser of the maximum commitment amount and the borrowing base. As of March 31, 2025, availability under the ABL Facility was $ 41.9 million. For the three months ended March 31, 2025, the Company was compliant with all such financial covenants. 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. 8. 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 March 31, 2025. The Company is authorized to issue up to 150.0 million shares of common stock, par value $ 0.01 per share. There were 92.2 million shares of common stock issued and outstanding at March 31, 2025. Shares of common stock issued and outstanding Three months ended March 31, (in millions) 2025 2024 Beginning common stock issued and outstanding 91.3 89.9 Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plan 0.9 0.6 Common stock issued and outstanding at end of period 92.2 90.5 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 March 31, (in millions) 2025 2024 Denominator: Weighted-average shares outstanding used to compute basic EPS 91.4 89.9 Effect of dilutive shares — — Weighted-average shares outstanding and dilutive securities used to compute diluted EPS 91.4 89.9 13 Table of Contents 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 March 31, (in millions) 2025 2024 Anti-dilutive options and RSUs excluded from EPS computation 5.8 6.3 9. 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 of the Company, to make grants of restricted and unrestricted stock and 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 March 31, 2025, the Company had 0.9 million shares of common stock available for grant under the 2017 Plan. If an RSU awarded under the 2017 Plan is cancelled or forfeited without the issuance of shares of common stock, the unissued 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 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. Stock Options A summary of the stock option activity for the three months ended March 31, 2025 is as follows: (number of shares in millions) Number of Shares Weighted Average Exercise Price Options outstanding at December 31, 2024 0.7 $ 13.38 Options outstanding at March 31, 2025 0.7 $ 13.38 Options exercisable at March 31, 2025 0.5 $ 13.38 As of March 31, 2025, there was no unrecognized stock-based compensation expense. There were no options granted during the three months ended March 31, 2025. 14 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 three months ended March 31, 2025 is as follows: (number of shares in millions) Number of Shares Weighted Average Grant Date Fair Value RSUs unvested and outstanding at December 31, 2024 5.3 $ 23.66 RSUs granted 1.6 $ 9.72 Less: RSUs vested ( 1.5 ) $ 25.46 RSUs canceled ( 0.3 ) $ 22.80 RSUs unvested and outstanding at March 31, 2025 5.1 $ 16.80 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 on September 23, 2021 and the stockholders of the Company on June 2, 2022 (the "Amended and Restated 2012 Purchase Plan"), under which 4.0 million shares of common stock were authorized for issuance. 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 2025 started on December 1, 2024 and will end on May 31, 2025. The second offering period of 2025 will begin on June 1, 2025 and will end on November 30, 2025. As of March 31, 2025, 0.9 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 three months ended March 31, 2025 and 2024 are as follows: Three months ended March 31, (in millions) 2025 2024 Shares purchased under the plan — — Plan compensation expense $ 0.5 $ 0.5 Stock-Based Compensation Expense Stock-based compensation expense recognized and included in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) was allocated as follows: Three months ended March 31, (in millions) 2025 2024 Cost of revenue $ 0.3 $ 0.3 Research and development expense 2.1 1.2 Sales and marketing expense 1.5 1.9 General and administrative expense 5.6 8.6 Total stock-based compensation expense $ 9.5 $ 12.0 As of March 31, 2025, there was $ 64.0 million of total unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 2.1 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. 15 Table of Contents 10. 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 March 31, 2025, there was $ 29.3 million in income tax benefit, or approximately 99.7 % of pre-tax loss, compared to $ 0.1 million income tax expense, or approximately ( 0.4 )% of pre-tax loss, for the three months ended March 31, 2024. For the three months ended March 31, 2025, the Company’s effective tax rate differs from the U.S. federal statutory rate primarily due to the release of unrecognized tax benefits and the recognition of valuation allowances. The unrecognized tax benefits released were primarily related to tax refund claims following the Coronavirus Aid, Relief, and Economic Security Act (referred to as the CARES Act) that allowed the carryback of losses related to tax years ended June 30, 2017 through June 30, 2020. During the three months ended March 31, 2025, the Company was notified by the Joint Committee on Taxation that it had concluded its review of these tax refund claims. The Company remeasured or released the unrecognized benefits resulting in a discrete tax benefit of $ 29.6 million. For the three months ended March 31, 2024, 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. 11. 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. During 2024, the Company amended the lease for its west Salt Lake City facility to include approximately 63,000 square feet of additional laboratory space in anticipation of future operating needs. The lease has a term of 12 years and ends coterminous with the rest of the lease. The amendment is expected to commence in fiscal year 2026 with future rent payments totaling $ 18.2 million. 12. COMMITMENTS AND CONTINGENCIES The Company is involved from time to time in various disputes, claims, and legal actions, including class actions and other litigation, including the matters described below, arising in the ordinary course of business. Such actions may include allegations of negligence, product or professional liability or other legal claims, and could involve claims for substantial compensatory and punitive damages or claims for indeterminate amounts of damages. The Company is also involved, from time to time, in investigations by governmental agencies regarding its business which may result in adverse judgments, settlements, fines, penalties, injunctions, or other relief. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of the government or private payors. The Company has received subpoenas from time to time related to billing or other practices based on the False Claims Act or other federal and state statutes, regulations, or other laws. The Company intends to defend its current litigation matters but cannot provide any assurance as to the ultimate outcome or that an adverse resolution would not have a material adverse effect on its financial condition, results of operations or cash flows. The Company assesses legal contingencies to determine the degree of probability and range of possible loss for potential accrual and disclosure 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. 16 Table of Contents 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 March 31, 2025, 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 Accounting Standards Codification 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. 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. Qui Tam Lawsuit In June 2023, the Company received a civil investigative demand pursuant to the False Claims Act from the United States Department of Justice concerning whether the Company offered or paid remuneration to physicians at Carolina Urology Partners, PLLC, in exchange for referrals. The Department of Justice subsequently requested additional documentation and information during its investigation. The Company cooperated with the Department of Justice investigation, providing the documents and information requested. On January 22, 2025, the U.S. District Court for the Western District of North Carolina unsealed a qui tam complaint, filed on November 3, 2022, against Carolina Urology Partners, PLLC, and certain of its current or former physician partners, and the Company and certain of its former employees, alleging violations of the False Claims Act. The government declined to intervene in the case. The Company was not aware of the complaint until after it was unsealed. On April 16, 2025, the Company was served with the complaint. 13. SEGMENT REPORTING AND RELATED INFORMATION The Company has identified the President and Chief Executive Officer as the Chief Operating Decision Maker (the "CODM") . The CODM regularly reviews consolidated financial information for the purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods. Accordingly, the Company has determined that it operates as a single operating segment. The Company has identified consolidated net income (loss) as the measure of segment profitability. The significant expenses and other segment expenses presented to the CODM are at the same level as presented in Consolidated Statement Operations in these financial statements. 14. SUPPLEMENTAL CASH FLOW INFORMATION The Company's supplemental cash flow information for the three months ended March 31, 2025 and 2024 are as follows: Three Months Ended March 31, (in millions) 2025 2024 Cash paid for income taxes $ 0.3 $ — Cash paid for interest 0.5 0.2 Non-cash investing and financing activities: Change in operating lease right-of-use assets and lease liabilities Operating lease right-of-use assets $ 1.2 $ ( 0.3 ) Operating lease liabilities ( 1.2 ) ( 3.1 ) Purchases of property, plant, and equipment and capitalization of internal-use software in accounts payable and accrued liabilities 4.2 4.5 17 Table of Contents 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. March 31, (in millions) 2025 2024 Cash and cash equivalents $ 91.8 $ 96.9 Restricted cash 9.2 8.7 Total cash, cash equivalents, and restricted cash $ 101.0 $ 105.6 15. 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, 2024 $ 0.8 Period translation adjustments ( 0.2 ) Ending balance March 31, 2025 $ 0.6 18 Table of Contents