Myriad Genetics Navigates Headwinds with Strategic Innovation Amid Mixed Q1 Results

Myriad Genetics (MYGN) reported its Q1 2025 earnings, revealing a company navigating significant headwinds while positioning itself for long-term growth through innovation. The quarter’s results underscored both the challenges of payer policy shifts and operational hurdles, alongside promising advancements in prenatal testing and oncology diagnostics. Below is an in-depth analysis of the financials, strategic moves, and investment implications.

Financial Snapshot: Revenue Decline Masks Underlying Strength

Total revenue fell 3% year-over-year to $196 million, driven by three primary factors: UnitedHealthcare’s coverage cuts for multi-gene pharmacogenomics tests, the divestiture of its international EndoPredict business, and prior-period comparatives. However, when excluding these impacts, revenue grew 5% year-over-year, signaling improving fundamentals. Gross margins expanded to 59% (up 50 basis points), reflecting lab efficiency gains—a positive sign of cost discipline.

Despite these operational improvements, the company’s liquidity remains a concern. Adjusted operating cash flow fell $1.1 million year-over-year to -$10.4 million, and MYGN ended Q1 with $92 million in cash. While it has access to an additional $42 million credit facility, maintaining compliance with covenants—such as keeping a $20 million controlled cash account—will be critical to avoid further strain.

Segment Performance: Prenatal Growth vs. Pharmacogenomics Slump

The Prenatal Testing segment shone, rising 11% year-over-year. The launch of the Prequel® Early Gestational Age test and expanded carrier screening offerings fueled this growth. Meanwhile, Women’s Health revenue increased 4% to $87.2 million, though hereditary cancer testing faced setbacks. Slower-than-expected EMR integration progress led to a 4% decline in average revenue per test, as providers struggled to adopt digital family history tools.

The Pharmacogenomics segment, however, suffered a 20% revenue drop to $31 million. UnitedHealthcare’s decision to discontinue coverage for multi-gene panels like GeneSight® reduced Q1 revenue by $10 million—a hit expected to recur throughout 2025. This segment’s struggles highlight the vulnerability of MYGN’s portfolio to payer policies.

In Oncology, MyRisk® testing volumes rose 11% in the “affected population” (e.g., cancer patients), but Tumor Profiling revenue fell 5% due to the EndoPredict divestiture. The segment’s performance was uneven but still contributed $77.7 million.

Strategic Initiatives: Betting on AI and Pipeline Launches

Myriad’s Q1 update emphasized its pipeline, which could redefine its growth trajectory:
1. AI-Driven Prolaris Test: A partnership with PATHOMIQ aims to launch an AI-enhanced prostate cancer test by late 2025, targeting better decision-making at biopsy.
2. Combined Carrier/NIPS Assay: Expected to launch in July 2025, this test could streamline prenatal care by integrating carrier screening with non-invasive prenatal testing (NIPT), potentially boosting volumes.
3. PRECISE MRD: Clinical data presented at AACR and ASCO 2025 highlighted its ability to detect ultra-low levels of circulating tumor DNA (ctDNA) in cancers like breast and ovarian—a breakthrough that could position MYGN as a leader in minimal residual disease (MRD) testing.

CEO Sam Raha framed these launches as critical to reversing recent revenue declines, particularly in hereditary cancer testing. The company also prioritized cost management, reducing adjusted operating expenses by $10 million to a projected $555–565 million for 2025.

Risks and Challenges: EMR Delays and Reimbursement Uncertainty

The delayed EMR integration with Epic remains a key hurdle. Without seamless digital tools for providers, unaffected hereditary cancer testing volumes—critical to MYGN’s core business—will lag. The company’s Q&A session acknowledged this, with COO Mark Verratti stating that prioritizing Epic integration is “mission-critical” to restore growth.

Additionally, the GeneSight® reimbursement issue looms large. While management believes other payers will not follow UnitedHealthcare’s lead, any further coverage cuts could amplify revenue pressures. The pharmacogenomics segment’s 20% decline in Q1 underscores the fragility of this part of the business.

Updated Financial Guidance: A More Cautious Outlook

Myriad revised its 2025 guidance downward, reflecting the GeneSight and hereditary cancer headwinds:
- Revenue: $807–823 million (prior: $840–860 million)
- Adjusted EBITDA: $19–27 million (prior: $25–35 million)
- Adjusted EPS: -$0.02 to $0.02 (prior: $0.07–$0.11)

The adjusted EPS swing to breakeven highlights the margin pressures from lower revenue and rising interest expenses. Investors should monitor whether the company can achieve its cost-cutting targets and whether new launches like the combined carrier/NIPS assay can offset the GeneSight drag.

Conclusion: A Company at a Crossroads

Myriad Genetics faces near-term challenges but has positioned itself for long-term resilience through innovation. The 5% organic revenue growth (excluding headwinds) and gross margin improvements suggest operational discipline is intact. The oncology and prenatal segments—driven by MyRisk, Prolaris, and the upcoming combined test—are growth engines worth watching.

However, the liquidity position and execution risks cannot be ignored. If the company fails to accelerate EMR integration or secure broader reimbursement for GeneSight, the revised guidance may prove optimistic. Conversely, successful launches of the AI-powered Prolaris and the combined prenatal test could reignite revenue growth.

Investors should weigh MYGN’s pipeline potential against its liquidity constraints and payer risks. With $92 million in cash and a $42 million credit facility, the company has a runway but little room for error. For now, the stock’s valuation—trading at roughly 10x forward sales—suggests the market is skeptical. Only sustained execution on strategic priorities will determine whether Myriad can turn the corner.

In the end, Myriad’s story is one of innovation amid turbulence. The coming quarters will test whether its bets on AI, oncology, and prenatal diagnostics can overcome current headwinds—and whether the lab’s efficiency gains can sustain margins through the storm.