Myriad Genetics' Q1 2025 Results: Balancing Innovation with Near-Term Challenges

Myriad Genetics (NASDAQ: MYGN) reported its Q1 2025 earnings, revealing a mixed performance amid strategic shifts and external headwinds. While the company highlighted strong growth in prenatal testing and oncology segments, revenue declined 3% year-over-year to $196 million, falling short of Wall Street’s expectations. The results underscore the delicate balancing act Myriad faces between investing in long-term innovation and addressing near-term operational and market access challenges.

Key Financials: A Story of Contrasts

The quarter’s results were uneven across segments:
- Prenatal Testing: Delivered an 11% revenue increase, driven by the successful launch of its Prequel® Early Gestational Age test, which allows screening at eight weeks of pregnancy. This segment is now a critical growth engine, accounting for nearly a quarter of total revenue.
- Oncology: MyRisk testing for cancer patients grew 11% in volume, but hereditary cancer testing (for unaffected individuals) lagged due to delays in integrating electronic medical record (EMR) systems.
- GeneSight: Suffered a 20% revenue drop after UnitedHealthcare restricted coverage for multi-gene pharmacogenetic testing.

Despite these challenges, gross margin expanded by 50 basis points to 59%, reflecting improved lab efficiency. However, the stock price plummeted 14.7% in after-hours trading to $6.20—a new 52-week low—highlighting investor skepticism about the company’s ability to stabilize revenue.

Strategic Shifts and Risks

Myriad’s management emphasized a strategic pivot to oncology, with CEO Sam Raha declaring, “We are absolutely resolute on oncology”. This includes prioritizing:
1. AI-Driven Diagnostics: A new AI-enhanced Prolaris test for prostate cancer, set to launch by year-end, and an integrated carrier screening and non-invasive prenatal test (FirstGene).
2. MRD Technology: PreciseMRD, a molecular residual disease test with 2-5 parts-per-million sensitivity, aims to detect minimal residual disease in cancers like breast and ovarian.

However, risks loom large:
- EMR Integration Delays: Slow adoption of EMR tools across Epic, Athena, and Flatiron systems has stalled growth in hereditary cancer testing. Management acknowledged the need to tackle these account-by-account.
- Payer Pushback: UnitedHealthcare’s policy change alone cost $10 million in Q1 revenue, and broader payer resistance to genetic testing coverage could persist.
- Competitive Pressure: Rivals like Invitae (NVTA) and Illumina (ILMN) are intensifying competition in prenatal and oncology testing.

Updated Guidance: A Pragmatic Outlook

Myriad revised its full-year 2025 guidance to:
- Revenue: $807–$823 million (down from $840–$860 million)
- Adjusted EBITDA: $19–$27 million (vs. prior $35–$45 million)
- Adjusted EPS: A narrow range of -$0.02 to +$0.02, reflecting margin pressures.

The company also plans to cut operating expenses by $25 million through headcount reductions and discretionary spending cuts, while doubling down on R&D and commercialization.

Conclusion: A Long Road to Recovery, but Innovations Offer Hope

Myriad’s Q1 results paint a company at a crossroads. While its near-term struggles—EMR delays, payer policy shifts, and competitive pressures—are significant, its pipeline of AI-driven and MRD technologies positions it to capture long-term value in precision oncology.

The 11% growth in prenatal testing and 11% volume rise in MyRisk for cancer patients demonstrate underlying demand for its products. However, execution will be key: EMR integration timelines and payer negotiations could make or break its 2025 targets.

Investors should weigh Myriad’s $92 million cash balance and $42 million credit facility against its valuation—trading at just 1.5x 2025 revenue estimates—which hints at a discounted price for risk. While the stock’s 12-month decline of 42% (as of May 2025) reflects pessimism, the company’s oncology focus and AI initiatives could justify a rebound if they deliver on their potential.

For now, the path to profitability remains narrow, but Myriad’s bets on transformative diagnostics could redefine its trajectory in the coming years—if it can navigate the present storm.