Myriad Genetics Faces Securities Fraud Probe: Investors Reeling After Revenue Plunge and Stock Collapse

The biotechnology firm Myriad Genetics (NASDAQ: MYGN) is under scrutiny following a securities fraud investigation announced in May 2025 by The Law Offices of Frank R. Cruz. The probe, which alleges violations of federal securities laws, centers on the company’s May 6, 2025, disclosure of weak first-quarter financial results and revised guidance, which triggered a dramatic 41.3% stock selloff the following day. The investigation raises critical questions about whether Myriad misrepresented its financial health and business risks to investors ahead of the announcement.

Financial Decline Triggers Legal Action
The investigation stems from Myriad’s Q1 2025 earnings report, which revealed a 3% year-over-year revenue decline to $196 million. A major contributor to this slump was a 20% drop in pharmacogenomics revenue, driven by UnitedHealthcare’s decision to reduce coverage of Myriad’s GeneSight® test, a key product for personalized mental health treatment. The company also slashed its full-year 2025 financial guidance, citing the weak start and an uncertain outlook. These revelations cast doubt on Myriad’s ability to sustain its growth trajectory, particularly in its high-margin pharmacogenomics division.

Stock Plummets Amid Investor Fallout
The May 6 announcement sent shockwaves through the market. By the close of May 7, MYGN shares had plummeted to $4.27—a $3.00 drop—orbiting a 41.3% single-day loss. This marked one of the most severe declines in the company’s history, erasing billions in investor value. The stock’s collapse underscores the severity of the financial missteps and the market’s skepticism about Myriad’s long-term prospects.

Analysts note that the stock’s post-announcement price remains near historic lows, reflecting investor disillusionment. The GeneSight® coverage reduction by UnitedHealthcare, a major payer, has further raised concerns about reimbursement challenges in the mental health diagnostics space, a core part of Myriad’s portfolio.

Legal Allegations and Investor Claims
The Law Offices of Frank R. Cruz’s investigation hinges on the premise that Myriad made “materially false or misleading statements” to investors prior to the May 6 disclosures. If proven, this could indicate that executives downplayed risks such as declining demand for GeneSight® or the impact of payer decisions on revenue. The firm is now seeking investors who purchased shares before the announcement to explore potential class-action litigation aimed at recovering losses.

Investors are urged to contact the law firm to provide details such as their mailing address, phone number, and number of shares purchased. The firm’s notice emphasizes compliance with attorney advertising rules in certain jurisdictions, a standard caveat in such cases.

Conclusion: A Crossroads for Myriad and Its Investors
Myriad’s situation highlights the risks of overreliance on a single product (GeneSight®) and the vulnerability of biotech firms to payer decisions. The 41.3% stock collapse on May 7—a loss of $3.00 per share—illustrates the immediate financial harm to investors. With pharmacogenomics revenue down 20% year-over-year and guidance slashed, the company faces mounting pressure to stabilize its core business.

Historically, similar securities fraud cases have resulted in settlements that return a fraction of losses to investors. For instance, the average securities class-action settlement over the past decade has recovered about 10-15% of claimed losses. If Myriad’s case follows this pattern, affected investors might see limited recoveries unless the company’s liabilities are substantial.

Meanwhile, the investigation underscores broader trends in biotech litigation, where companies are increasingly held accountable for transparency around reimbursement risks and product performance. As Myriad navigates this legal challenge, its ability to pivot toward new revenue streams—or regain payer support—will be critical to its survival. For now, shareholders are left grappling with a stock at near-record lows and a cloud of regulatory uncertainty.