Hi everyone. My name is Yuko Oko, and I'm on the Life Science Tools and Diagnostics team here at Morgan Stanley. Before we begin, for important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep. With that, it's my pleasure to host Myriad Genetics. Speaking on behalf of the company, we have President and CEO Sam Raha and recently appointed CFO Ben Wheeler. Thank you for joining us today. Thanks for having us. Thank you. To set the stage here, you've been working on providing an updated strategy for the next chapter of Myriad Genetics since taking on the CEO role. We got a glimpse of that updated strategy on the last earnings call. To kick things off, could you provide us what you learned during the review process? What are Myriad Genetics' strengths that could be leveraged further to unlock shareholder value? What are the areas that you feel the company could do better? Good morning, Yuko, and thank you very much for the question. It has been an invaluable process working with the team here over the last several months to really dig deep. It both revealed new insights for us as well as reaffirmed some of the things that, as management, we had held to be true. For example, it reaffirmed that many of the markets that we're participating in are very attractive, high growth. It reaffirmed also some of our strengths and our right to participate and win, particularly around cancer. It also reaffirmed that the level of resourcing and investment that will be required to really be successful in our intended segments. In terms of strengths that we believe we're going to be able to leverage going forward, it's absolutely true that we're a company based on science and our reputation for high-quality tests. The confidence that we have from our customer base is very strong. We have a broad reach, particularly in our targeted markets in terms of our commercial capabilities. Operationally, we built truly a world-class sample processing all the way from taking the order through returning the report, which also harnesses our ability to continue driving industry-leading gross margins. Together with the cornerstone that we have in hereditary cancer testing, we believe we can build much further into what we're calling the cancer care continuum. There are opportunities for us to improve in terms of areas for development. One of which is, though we focus a lot on user experience, we can continue to do better there and continue to expand our EMR integrations and the digital experience for our customers. I think just fundamentally too, you'll hear me, I'm a framework guy talking about three things, talking about the right strategy, the right team, the right execution. As it relates to execution, I think we have an opportunity to be better in planning and really getting things done. Thanks. Let's start with the hereditary cancer market. What is the market penetration within affected and unaffected today? Which of these markets do you see the greatest opportunities, especially following Tempus, Embry, LabCorp, and Invitae transaction? Yeah, so again, you know, Myriad Genetics was founded in many ways that we're still thought of just as the BRCA1, BRCA2 company. We're more than that. We often speak about the hereditary cancer market as two subsegments, as much just to help drive our commercial channels and help investors understand. The affected market, as we call it, meaning those that have already been diagnosed with cancer, they're in the process of being treated. We see that market as about a $2 billion market. It's highly penetrated, more than two-thirds. It's going in the mid-single digits. We have shown for multiple quarters in a row that we're going above that. We've had good strength there. The unaffected market is approaching $5 billion. It's still well less than 50% penetrated. It's a market that's going somewhere between high single digit to low double digit growth. This is a place where, traditionally, we have been the leaders. We've had a little bit of a challenge, particularly related to some EMR integration. I think we called out a couple of quarters ago. We're starting to address that. In terms of opportunity, we are really optimistic about both subsegments, if you will, of hereditary cancer testing. For the affected part of it, cancer continues to be something where the incidence grows. Both the tailwinds of the ongoing new guidelines from ASCO, NCCN, that's a driver. We're excited about launching our new updated myRisk gold standard panel in Q4 of this year, just coming up. The unaffected market also, it's the one that takes more activating, but it's one that has a lot of size and we have the right to win in. Some of the programs, and I think I can share more about those, like the breast cancer risk assessment program, partnerships are really going to help us unlock that market. Yeah, could we dig a little bit more into the breast cancer risk assessment program, given that it is an opportunity to increase awareness around hereditary cancer testing? Could you give us a little brief overview and then how you've recently expanded the scope of that initiative? Yeah, sure. I'll start by saying that the breast cancer risk assessment program is really targeted around the OB-GYN providers and healthcare sites, if you will. Often these docs are seeing more than 20 patients in a day. They're also not as certain about how to deal with genetics because we're completely focused on childbirth and other, you know, the earlier stage in a woman's life. We also have a lot of these patients who are focused on, again, around children, and they're not just as conversant or competent around cancer. The opportunity of the breast cancer risk assessment program, you could think about it as a turnkey solution that we are enabling our targeted or partnering OB-GYN offices with. What that is, is all the way with the tools to really drive awareness, to help reach their patient population, help identify them, and once they come in, to support them with patient education as the testing is done, the results are available to help them with genetic counseling or other support to understand and interpret. We've started to see some good traction from that, and it's one of the ways that we're starting to help drive the market opportunity. Nice. The partnership with JScreen is another effort you have underway to increase awareness of hereditary cancer screening. Can you provide color around the traction you're seeing through that partnership? Do you have discussions underway to partner with other consumer-initiated programs like JScreen? Yeah, great question. We are delighted with the partnership that we have with JScreen. JScreen is a company that's focused on driving education and access for genetic-based testing for certain high-risk populations. We have the best-in-class tests for hereditary cancer testing. We also have a partnership there with them for prenatal testing. The way we think about it is it's two great companies coming together, and for us, they serve as a channel, right? For activating, they have access to many of the patients that could benefit, and that gives us that reach. Yes, we are very deliberately looking for other meaningful partnerships like that, which would expand our reach into the market opportunity for hereditary cancer testing. Nice. I want to shift over to women's health. Prequel and Foresight volume declined 7% year over year due to challenges in implementing order management system. Could you provide more color around what happened there? Although it seems like the issue is addressed, how do we get confident that it shouldn't lead to further disruptions? As we shared in our last earnings call in the quarter, last quarter in Q2, as we were implementing, as you noted, a new order management system, unfortunately, we found that our customer service folks and folks from the labs, the full information that we needed to process an order, it was just stuck in the system. We have addressed it. I've personally been all over this along with our Head of Tech, our COO, and other folks. All the samples are flowing through now, and there is no more issue. It's been resolved even before we left the quarter. In this market, usually, healthcare providers have a number, at least a handful, one or two different lab providers that they work with. The samples couldn't wait. There's a timeliness, if you will. We definitely lost an opportunity there. We're starting to see pickup, and what we've disclosed is that we expect that by the time the volumes return to, at or above market where we've been performing for both Prequel and Foresight, our NIPS and expanded carrier screen test, it's going to take a number of quarters. You'll see a gradual return. We expect better results this quarter than we had last. It'll take a number of quarters to get back to where we were prior to this disruption. Okay, understood. You also called out incremental positive payer coverage for expanded carrier screening ahead of ACOG guidelines update, which is largely consistent with what I've been hearing from others in the space. Tell me, why do you think there's been change in commercial reimbursement landscape with expanded carrier screening? What's the latest you're hearing with respect to ACOG guidelines? This is such a juicy question. I'm going to ask Ben to weigh in. We've been really pleased to see payers move to cover ECS ahead of ACOG guidelines. We've seen a handful of payers make that move, and the fact that they've moved indicates that they've seen value for their insured patients to receive that benefit. The fact that they've moved ahead of ACOG guidelines is an indication with the speed that ACOG is moving. Trying to predict when ACOG is going to make that move has proved to be very difficult, so we're not going to try and make that prediction here. We will tell you that Myriad Genetics is ready when that move is made, both on the ECS side and the NIPS side. Okay, great. FirstGene is available via early access since June, with commercial launch expected next year. What has been the early feedback so far, and what proportion of your current NIPS volume concurrently order carrier screening? Tell us how you see this product expanding the overall addressable market for Myriad Genetics. Yeah, thank you for the question. FirstGene, for those that aren't aware, is our combined screening product from one blood draw, able to do both NIPS as well as carrier screening. We are happy so far with the early access that's going on. We've had the targeted customers, if you will, providers that are ordering. They're happy with the results. We're finding efficiency in our labs. The yields are high. Turnaround times are very good. It's still early days, but we're optimistic about the reimbursement side of things, which is also part of the design of the early access to learn all these things. Interestingly enough, the crossover between NIPS testing and carrier screening isn't as high as one might think. There's a number of reasons for that. Not a small proportion of pregnancies are actually unplanned, for example. Often, the father is not available. It could be different insurance that they have. It could be just availability of access to the father and so forth. We really see this as an opportunity to expand the market. Just like with an updated NIPS test that we launched at the end of last year, the combination of that at eight-week gestational age and NIPS Prequel test and this FirstGene, we see this as opportunities to help us really grow at or above market going forward for the next couple of two to three years. Great. The Prequel NIPS launch in 4Q can be performed for eight weeks of gestational age, which is a key differentiating feature. Could you describe the traction you've seen for that product so far? Yeah, this is what I was mentioning. Conventionally, the NIPS tests out there, including ours in the past for NIPS, was done somewhere in the 10-week range. Eight weeks is the more natural cycle when the mother is coming in for a battery of other blood tests. It just works into the workflow, if you will, for the physician. That practicality, we're seeing that resonate in the market. It is growing to be a bigger% of our NIPS testing today. I wouldn't exactly characterize the numbers for you, but it's becoming material. We see that as opening up opportunities for conversations, particularly where, you know, we haven't been. New opportunities, new business, and we're excited again for that to be one of the drivers for continued growth. Great. Shifting over to oncology here, you're targeting 2026 to commence early access for Precise MRD and expect reimbursement towards year-end 2026. What are the key goals during the early access? Yeah, we have a number of goals. First and foremost, it's to get our assay that's going to be in breast cancer out there to be used with actual patients for real-world evidence around clinical samples. It's to start engaging key opinion leaders and really building their confidence, their endorsement. It's also to start building the base of customers from which we will really drive volume going into 2027. It will be a year where we're going to, in a very deliberate way, bring the assay to market. Given the high sensitivity with Precise MRD, you intend to focus on low ctDNA shedding tumors like breast. Could you provide an overview of the clinical data generated thus far in breast cancer and the trials underway to support your MOLDIX submission? Yeah, so just some background again. Overall, you're right. Our approach, when we think about the MRD opportunity, though it's many years now in which MRD has been on the market, we continue to see it as a real opportunity for us. First of all, MRD, we can debate how big it is, but it is a sizable multibillion dollar market with a lot of growth, unlike most markets we've seen in diagnostics ever. We have an ultra-low shedding or ultra-sensitive, pardon me, assay, and particularly this is able to detect less than 10 parts per million in blood, the targeted molecule. This is particularly important for low shedding tumors like breast, ovarian, prostate, renal, and so forth. The reason we believe that we can really engage and have a place in this market is we will target those cancers. Many of those cancers happen to be the very places where we have established reach and reputation. We know that through primary and secondary research, that an increasing number of healthcare providers and healthcare systems, what they're looking for is to work with a limited set of lab companies such as ours to really get all the needed cancer diagnostic information. Since we have the gold standard position both with hereditary cancer with our myRisk test and also for HRD, which is around PARP inhibitors, with our myChoice test, combine that with our MRD test, we believe we can add meaningful value. In terms of the second part of your question, we now have more than 20 clinical studies that are underway, many of which are breast. We've started to share some of that data at AACR, at ASCO, which gives confidence to the performance. In fact, we had a publication, I think, just Friday with MD Anderson, which further talked about the real-world performance of the assay. Between patients that have been enrolled and in the process of being enrolled, there'll be more than 4,000 patients, 30,000 data points. All of which, and we will have publications ready to support in Q1 filing with MOLDEX. We expect reimbursement usually around, we're leaving about 12 months, so the end of the year, early next, early 2027. We're not going to wait for that. We are choosing strategically to enter the market for the three objectives that I shared with you. Right. As you highlighted, the MRD market is a very large, attractive space. We're seeing a lot of emerging competitors coming in. How do you intend to penetrate that market with strong competitors already in the space? Yeah, it's a great question. I'll just talk again to summarize the things I talked about. We have an established reputation, a very strong one in breast, prostate, and a number of these other cancers. We have the reach reputation. We have the systems that are used in the EMR sense to really serve these customers. We believe we can put this all together with the other leading tests. Also, the way we can generate a report that makes it easier to interpret and make decisions when time is of the essence. Though we're a little later than we'd like to be into the market, we think that the market's going to be served by multiple companies, and we absolutely feel that we have the right to be one of those companies. You're also planning on launching first AI-enabled Prolaris tests with partner PathomIQ by year-end. Tell us how this version of Prolaris is intended to deliver incremental value over the current version. As we think longer term, how should we think about the next version enabled by the partnership that will open up the post-radical prostatectomy opportunities? Thank you for the question. We are excited about the partnership with PathomIQ. In fact, it is an example of something that we've defined in our updated strategy as part of the cancer care continuum that we will leverage to be even more timely to market partnerships that really complement the capabilities and strengths of Myriad Genetics. This is a case for that. The first test that we'll bring into market, and by the way, we may deliberately choose to bring this out in market in Q1 because part of execution excellence that we're going to get better on is being very thoughtful about how we drive the awareness and go to market of tests. Since in Q4, we have myRisk, our first update to that test in some time coming out, which we're really excited about, we're probably going to target Q1 for this combined test with PathomIQ. What it does is essentially bring the power of our leading molecular-based prostate cancer test together with the AI capability, which starts from the scan slide, looking at the morphology. The value to providers that use this is a higher level of confidence at the time of biopsy to determine if you should actively survey or you should move into some sort of different measure, surgery and so forth. This is the beginning. We are excited about down the line too is to introduce a test which will allow us now through the combination with the AI capability to participate in post-radical prostatectomy or post-radiation. For us, that's a blue ocean. That's not a space that we've participated in in the past. We are excited about that. By the way, this is our first start with AI, but we see AI as something that will become part of our portfolio across other cancer types as well. Last quarter, you also mentioned that you'll no longer be launching Precise MRD assay on your own, but partner to pursue the liquid CGP opportunity. Could you elaborate on the rationale to partner versus do it alone? Yeah, absolutely. We had acquired some assets about a year and a half ago from the Intermountain Precision Genomics, which is the basis of our Precise Tumor Test today, our CGP test for solid tumor. While we're excited about that test, and that's a part of our portfolio, as we really evaluated the work that needs to be done and also the attractiveness of the test, this is part of the new discipline of the company and the way we're going to discipline going forward. We just determined the amount of time that we would have to spend developing this, there are other things that are better served, such as doubling down on MRD and working on the other tests, the updates, the myRisk. We can come to market faster by having a partnership around Liquid. Yes, as you mentioned, we are evaluating some different options of partnerships that allow us to fill that part of our portfolio with a Liquid CGP test that complements our continuum cancer care test. Right. Shifting over to GeneSight, you're planning on submitting three additional publications as part of United's typical review cycle in the fall. Could you remind us the incremental data that will be provided to United? You recently highlighted a new meta-analysis that demonstrates access to GeneSight can significantly improve response and remission rates for patients with this version. Could you provide highlights from that study as well? Sure. Right. Coming into the year, we had shared that our plan was to share three different pieces of updated information, scientific data with United Health. We're right on plan for that. We had done the first submission at the beginning of the year. As you noted, we published a paper. In fact, we did the press release, I think, just last week, which showed that, you know, based across more than 3,500 patients, which comes from six different studies, the meta-analysis showed for those that have depression that there's a significant, statistically meaningful improvement in both response and remission. I think that the strong data set really helps drive the value of the market-leading GeneSight test for mental disorders. We have a third publication, more scientific information planned for submission to United Health in a couple of months. I also just want to be clear. We continue to be excited about the GeneSight franchise, the actions we've taken, its return to, you know, a good level of mid-single digit growth. Our expectations are that we're not sure that there's going to be any change from United Health. If it happens, it'll be a positive upside. It's not in our LRP and anything of that sort. I will tell you that we are excited that we have lost no other payers since the United Health decision. In fact, we've added a number of payers already this year. These sort of publications both help us with potentially in the engagement with United Health, but also to bring on other new payers, if you will. Right. You've also recently undergone reorganization of the pharmacogenomics commercial organization. Tell us the size of the organization now and why you believe mid-single digit growth in the franchise is sustainable despite sizing down of the pharmacogenomics commercial organization. Ben, you want to take this one? Sure. Sam touched on the reorganization just lightly a moment ago. We made the difficult decision to make adjustments to that organization during Q1, and that impacted both people and resources. As the dust settled in Q2, we saw them return to mid-single digit growth. We were really pleased with the speed with which they returned to that growth. We anticipated that they would achieve that growth. They just did a little bit faster than we anticipated, and we were really pleased to see that. I don't have the numbers in front of me relative to the size of that commercial team, but I'd point you to some of the data that we've shared in prior and yesterday slides that do give information regarding our commercial teams. You have been dealing with some EMR integration-related challenges, which affected your volume and hereditary unaffected business. Could you describe the specific challenges you encountered and what you're doing to address those issues? With your call commentary indicating it would take several quarters, when do you think those headwinds would be solely behind you? Yeah, we talked about hereditary cancer unaffected at the beginning of this Q&A session, and we remain very, very excited about that opportunity. The EMR challenges we had, it's more around the workflow, if you will, to enable customers. For example, when you look at the workflow for the unaffected, again, those that don't have cancer, one very important part of it is to help actually use a questionnaire to even identify who qualifies based on familial history for testing. As it turns out, whereas we automated so much of the overall experience for providers and patients, the EMR work, we hadn't integrated that upfront questionnaire. We're excited. We're about ready to launch that in a partnership with Epic. There are other things about sample collection kits that weren't automatically being triggered and so forth. As I disclosed on the last quarterly earnings call, here too, a little bit like Ben was saying around GeneSight, I'm pleased that we're executing a little faster and a little bit better than we had anticipated. To return to the level of volume to go at or above market, and we intend to go above market here, I think it's going to take a number of quarters. We already saw an improvement in Q2, and I think you're going to continue seeing that as the quarters come in the coming quarters. With investments into your labs of the future essentially complete, help us understand where you are in terms of ramping sample volume on NovoCDEX. Can you provide an update on how the transition has been progressing and walk us through the incremental benefit on margin as a result? Yeah, we're very pleased with the major labs of the future initiative that we had undertaken for a number of years. As a reminder, this is a combination of moving into new facilities that are modern and the right places for us to be processing samples. It's about upgrading to the right instrumentation, such as updated sequencers that are appropriate for the tests that we have. It's about optimizing workflows and a number of things. Overall, we're starting to see the benefits already. This year, we're seeing the productivity increase in terms of the number of individuals in our labs that have to touch a sample; that's decreased per sample. It's helping support our industry-leading gross margins. I think for the year, Ben, we've provided an updated guidance somewhere in the 69.5% to 70% range for gross margins. That's strong. We see the opportunity for the work that we've done there and continue to do to support continued reduction in cost per test, particularly for our high volume tests that we have. We think the work that we have done will continue to be a source of goodness and value for us on a cost standpoint, enabling us to be more competitive and have better ASPs, excuse me, and have better gross margins in the coming years. You recently updated your long-term revenue growth target to high single digit to low double digit range. Can you lay out your underlying assumption for the increase in HCT versus women's health oncology and GeneSight? Any color around ASD and volume trends? Yeah, sure. We're going to provide more detail. I think I've said that in the coming months, probably as we get closer to January. What I can tell you now is, as we did our deep analysis, part of our strategic review, we looked again at every market. When we look at the, I'll start with the prenatal market. The prenatal market is growing somewhere in the mid-single digit range. We believe that based on, as I was mentioning earlier, the traction we're seeing for updated Prequel NIPS tests, the opportunity we have for market expansion with FirstGene, this is a combined screen test. These are the drivers that allow us to grow at or above market. That's in the mid-single digit, at least a range with the prenatal products. For GeneSight, which is the mental health market, we believe that's a market that's growing in the mid-single digits. We are the market leader with a very strong level of market share. We continue to see growth there. There, it's about execution, about being at the right accounts, focusing on those accounts where we believe that we have a better chance of getting paid. It's about the new coverage we continue to get. We've announced several even this year. That's in mental health. You look at oncology, we've talked a lot about unaffected and affected. In both the combination of the market leading tests that we have, along with the new tests that we're bringing out, which include an update to myRisk, which includes the new MRD tests we've talked a little about, and other partnering tests we're going to bring in, we believe we're going to be able to grow this at, you know, at least at high single digits to low double digits for oncology. You put that together, I'm not being precise yet. Like I said, I will be leaning into January. It gives us a lot of conviction that that, along with the stability that we're seeing in the AST, with a lot of great work that's being done by our rev cycle and peer markets teams to engage as it relates to policy, the work we're doing related to prior authorization, the work that we're doing related to actually working on denials and claims, it gives us confidence that we'll be able to grow at least in the high single digit to low double digit range and more detail to come. You've taken down the OpEx guide for the year. Given the strategic review, where do you see areas of continued investment? Where are the areas there could be pullback in the sense? Yeah. Our resource allocation strategy aligns with our growth strategy. We'll focus resources on the cancer care continuum while still focusing on growing prenatal and mental health at or above market. I'll just remind you, as Sam has shared, in the prenatal space, last year we had our expanded Foresight panel, our expanded carrier screening panel. We also launched Prequel at eight weeks, and we recently launched FirstGene. Commercial execution in those areas is what we believe will allow us to grow at or above market in prenatal. Just the commercial execution on the GeneSight front is what we believe will allow us to grow at or above market in mental health. You just strengthened your balance sheet with the $200 million OrbiMed transaction. Do you feel that you are sufficiently capitalized to invest for growth? Yeah, we believe that we've got the capital that we need, at least with the strength of the balance sheet, and that we have what we need to execute on our growth strategy. How are you thinking about top priorities when it comes to capital deployment, including M&A opportunities? Are there any specific areas that you're focused on where you think an organic route would make the most sense? Sam has talked about partnerships in the areas in the cancer care continuum where we are focused relative to opportunities for CGP. We want to compete across the cancer care continuum. We believe that there are things that we can bring to market that are in our pipeline, and there are other areas that we believe we'll be able to compete more quickly and more readily through partnership. We have an opportunity to execute on those things that we've talked about in our pipeline, and that's what we're going to do. Maybe in the last couple of minutes here to wrap up, what about Myriad Genetics' story is least well understood and appreciated by investors in your view? Yeah, sure. I think that I've summarized, though I've touched on a number of these things throughout the session here this morning. We are in attractive markets, and we have an intention to also participate both through what we're doing in MRD and other partnerships in other high growth attractive markets. We have market leading reputation and reach, which we're going to be able to leverage, particularly across the cancer care continuum. The fact is we came into this year with a really difficult set of circumstances. We've been able to weather that. Despite all that, we're on track to have a year where we're going to have positive adjusted EBITDA. It shows the strength of the company and the fundamentals of the core business. You put that together with the excitement we have for the new products that we intend to launch. Now you'll start seeing a stream of new products over the next two, three years, starting next quarter with the myRisk panel expanded panel, if you will. Together with the team, I'm feeling really excited. It's all about who you have, the right team that really understands the market and can execute. Pleased to have Ben in the role. Ben has been with the company 14 years. He's our right CFO right now. We have a new Chief Commercial Officer, Brian Donnelly, who joined us from Ancestry. As part of, we work together at Lumina. You put that together with the stepped up rigor, discipline, and urgency that we are running the company. I feel absolutely confident the best days ahead for Myriad Genetics, for our patients, for our providers, and for our investors. Great. With that, thank you so much. Thank you for your time.