Myriad Genetics’ GeneSight Study Offers Hope for Mental Health Care and Investors

Myriad Genetics (NASDAQ: MYGN) has long been a pioneer in precision medicine, but its recent study on the GeneSight Psychotropic Test—a pharmacogenomic tool for optimizing antidepressant use—has reignited investor interest. The study, published in the Journal of Clinical Psychopharmacology, highlights a 39% relative reduction in psychiatric hospitalizations among patients with major depressive disorder (MDD) after using the test. This breakthrough could reshape mental health treatment, but how does it translate to the company’s financial outlook?

The Clinical Breakthrough

The study analyzed data from 21,000 MDD patients who underwent GeneSight testing. Key findings include:
- Hospitalizations: Psychiatric hospitalizations dropped by 39%, and all-cause hospitalizations fell by 29% post-testing.
- Prescription Optimization: Medications with significant gene-drug interactions dropped from 26.1% to 15.9%, while prescriptions with no interactions rose from 27.5% to 47%.

The test evaluates 60+ medications for MDD and other psychiatric conditions, using an algorithm to assess genetic influences on drug metabolism. While the study lacked a control group, it builds on prior trials like the GUIDED trial, which showed a 28% higher remission rate when GeneSight guided treatment.

Financial Challenges and Near-Term Pressures

Despite the clinical promise, Myriad’s stock has struggled. In April 2025, shares fell to $11.83, a 14.2% decline from earlier highs, driven by two key factors:
1. UnitedHealthcare’s Coverage Withdrawal: The insurer, which covers 45 million Americans, stopped covering GeneSight in early 2025, slashing annual revenue by $45 million.
2. Mixed Earnings: Fourth-quarter 2024 revenue hit $210.6 million, slightly below estimates, with adjusted EBITDA at $11 million (vs. expectations of $11.5 million).

Analysts remain divided. JPMorgan maintained an “Underweight” rating due to concerns over volume growth and operational disruptions, while Piper Sandler upgraded the stock to “Overweight”, citing leadership changes and the GeneSight study’s validation.

Market Potential and Long-Term Growth

The study underscores GeneSight’s value in reducing healthcare costs—a critical selling point for insurers and employers. 39% fewer hospitalizations could save insurers millions annually, incentivizing broader coverage. Myriad’s strategy to partner with Epic Systems (integrating GeneSight into its EHR platform) and secure inclusions in networks like UnitedHealthcare’s Preferred Laboratory Network (despite the recent withdrawal) positions it for growth.

Financially, GeneSight revenue grew 22% year-over-year in Q2 2024 to $43 million, driven by legislative wins in 15 U.S. states mandating coverage. With 12% long-term revenue growth targets and 69.6% gross margins, the company is well-positioned to recover if it can retain payer relationships and expand into new markets.

Risks and Uncertainties

• Payer Pushback: UnitedHealth’s decision highlights risks of insurer resistance to genetic testing, despite its clinical benefits.
• Study Limitations: The lack of a control group leaves causality unproven, potentially delaying Medicare/Medicaid coverage approvals.
• Competitor Threats: Rivals like Qiagen and Thermo Fisher are advancing pharmacogenomics tools, intensifying competition.

Conclusion: A Compelling but Risky Opportunity

Myriad’s GeneSight study is a significant clinical milestone, offering a pathway to personalized mental health care and reduced healthcare costs. With a 39% reduction in psychiatric hospitalizations, the test’s value proposition is clear. However, investors must weigh this potential against near-term headwinds like UnitedHealth’s withdrawal and mixed earnings.

The company’s $835–$845 million revenue guidance for 2024 and 12% long-term growth targets suggest management’s confidence in GeneSight’s trajectory. If Myriad can secure new payer agreements and leverage its 2024 R&D advancements (e.g., tumor-informed MRD assays), it could stabilize its stock and capitalize on a $20+ billion global pharmacogenomics market.

For now, the stock trades at 12.3x forward EV/EBITDA, offering a margin of safety for long-term investors. The study’s results are a win for patients—and could be a turning point for shareholders—if Myriad can execute its strategy amid payer pushback and operational challenges.

Final thought: GeneSight’s promise is undeniable, but investors must monitor payer negotiations and margin trends closely.