Myriad Genetics Battles Headwinds in Q1, But Innovation Offers a Silver Lining

Myriad Genetics (NASDAQ: MYGN) reported its first-quarter 2025 financial results, revealing a company navigating a challenging landscape of declining revenue in key segments while clinging to growth opportunities in emerging areas like prenatal testing and oncology. The results underscore the dual-edged sword of innovation: while new products like its Prequel® Early Gestational Age test are gaining traction, external headwinds—such as payer coverage cuts and strategic divestitures—are pressuring near-term profitability.

The quarter’s top-line performance was mixed. Total revenue fell 3% to $196 million, driven by a 20% collapse in pharmacogenomics (PGx) revenue to $31 million, as UnitedHealthcare’s decision to discontinue coverage for its GeneSight® test took a bite. Meanwhile, hereditary cancer testing in the affected population grew 11% in volume, though flat revenue ($86.3 million) reflected pricing pressures. The bright spot was prenatal testing, which surged 11% to $49.3 million, fueled by new product adoption.

The company’s updated 2025 guidance reflects the uneven momentum. Full-year revenue is now projected to range between $807 million and $823 million—$35 million below its prior outlook—while adjusted EPS is now expected to be breakeven to a penny per share, down sharply from earlier expectations of $0.07–$0.11. Gross margin, however, held steady at 68.5%–69.5%, aided by lab efficiency gains.

The key question for investors is whether Myriad can offset its PGx and tumor profiling headwinds with strategic investments in high-growth areas. The company is betting on its pipeline, including an AI-driven prostate cancer test (in partnership with PATHOMIQ) slated for a late-2025 launch and new clinical data for its Precise® MRD test, which targets minimal residual disease in cancer patients. CEO Sam Raha emphasized these initiatives in his comments, stating, “We’re re-accelerating testing volumes while reducing expenditures.”

Financially, the path forward remains fraught with risks. Myriad ended Q1 with $92 million in cash and access to a $42 million credit facility, but its cash flow used in operations rose to $16.3 million—up $1.1 million year-over-year. The company also faces pressure to comply with financial covenants tied to its credit facility, particularly a fixed-charge coverage ratio and a $20 million cash reserve requirement.

Investors should also monitor reimbursement trends. The UnitedHealthcare coverage cut for GeneSight® was a major blow, and similar decisions by other payers could further strain PGx results. Meanwhile, Myriad’s prenatal business—its fastest-growing segment—faces competition as rivals like Illumina and Invitae expand into non-invasive prenatal testing (NIPT).

On the positive side, the company’s cost discipline is tangible: adjusted operating expenses for 2025 are now projected to fall to $555 million–$565 million, down from a prior $575 million–$595 million range. This reflects a focus on cutting non-essential spending while protecting R&D.

Conclusion
Myriad Genetics’ Q1 results paint a picture of a company in transition. While near-term challenges—including reimbursement losses and strategic divestitures—are weighing on its financials, its investments in innovation could position it for long-term growth. The 11% revenue growth in prenatal testing and the potential of the AI-driven prostate cancer test suggest that Myriad retains a path to recovery. However, investors must weigh these opportunities against execution risks and the need to maintain liquidity.

The stock’s performance over the past year has been volatile, reflecting this tension. As of May 2025, MYGN trades at roughly 1.5x its 2025 revenue guidance midpoint ($815 million), a valuation that may compress further if the company continues to revise its outlook downward. Yet, if Myriad can reaccelerate growth in its core segments and deliver on its pipeline, it could emerge as a leader in precision diagnostics—a market projected to hit $30 billion by 2027. For now, the balance sheet and execution will be the key metrics to watch.

In short, Myriad’s story is one of resilience amid disruption. The question is whether its bet on innovation outweighs the headwinds it’s currently facing. The answer may hinge on whether the market can forgive the short-term pain for the sake of long-term gains.