Myriad Genetics, Inc.

Thank you for standing by. Your conference call will begin in approximately two minutes. Thank you. Greetings and welcome to the Myriad Genetics second quarter 2021 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Tuesday, August 3rd, 2021. I would now like to turn the conference over to Nathan Smith. Senior Vice President of Investor Relations and Treasury. Please go ahead.

Thank you. Good afternoon and welcome to the Myriad Genetics second quarter 2021 earnings conference call. During the call, we will review the financial results we have released today, after which we will host a question and answer session. If you have not had a chance to review our quarterly earnings release, it can be found on our investor relations website at investor.myriad.com. I'm Nathan Smith, the Senior Vice President of Investor Relations and Treasury. On the call with me today are Paul Diaz, our President and Chief Executive Officer, and Brian Rigsby, our Chief Financial Officer. This call can be heard live via webcast at investor.myriad.com, and a recording will be archived in the Investor section of our website. In addition, there is a slide presentation pertaining to today's earnings call on the website. Please note that some of the information presented today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's transition report on Form 10-K its quarterly reports on Form 10Q, and its current reports on Form 8K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. With that, I will now turn the call over to Paul.

Thanks, Nathan. Good afternoon, everyone, and thank you for joining us. On today's call, we will walk through our Q2 results, business highlights, and the significant progress we've made on our strategic growth and transformation plan since we last spoke at our investor day in May. First, I want to thank the entire MIRA genetics team for their hard work and the work they continued to put in to fulfill our mission to improve the health and well-being of all of our patients and the extraordinary effort that has gone into accelerating the execution of our transformation plan. Together, we are delivering on our commitment to empower every individual with the genetic insights they need to take control of their health and wellness. We are dedicated to improving access to the power of genetic testing and precision medicine, and we remain committed to helping healthcare providers better detect, treat, and prevent disease. This quarter, marked an important milestone in advancing our mission and executing on our strategy as we return to non-GAAP profitability two quarters ahead of our prior expectations. An important step towards our goal of delivering long-term, sustainable growth, profitability, and value for all of our stakeholders. We are pleased with our second quarter results, especially on the heels of a solid first quarter. enabling us to deliver stronger results than anticipated in the first half of the year. This quarter, revenues of $189.4 million increased 103% year over year, and we delivered 9% sequential growth. Diagnostic test volumes of 273,000 were up 8% sequentially, largely due to the strength in hereditary cancer, prenatal products, and our gene site tests and mental health. Average revenue per test was up 2% sequentially as rates continued to stabilize. Total operating expenses were $156.5 million and adjusted total operating expenses decreased $3.9 million sequentially to $123.1 million. Our gap operating loss in the quarter was $20.8 million with adjusted operating income of $13.5 million. We returned to non-gap profitability with adjusted earnings per share of $0.12, which improved $0.18 sequentially, two quarters ahead of our expectations. While progress towards long-term profitability will not be linear, as we enter the next phase of our transformation journey, we are confident we can deliver more consistent growth while maintaining our focus on our cost structure to deliver more sustainable profitability and cash flow generations. As communicated to our investor day, we remain focused on four strategic priorities. First, we are working hard to develop best-in-class quality, service, and accessibility for our products to accelerate growth and reach more patients of all backgrounds. Second, we are enhancing our enterprise capabilities to improve the patient and physician experience, rev cycle management, commercial capabilities, and innovation. We are expanding access to our genetic insights through new digital tools and leveraging our data to elevate and expand our core products. And finally, we are committed to disciplined execution on a key set of initiatives to fulfill our mission and drive long-term growth and profitability. Over the past year, and especially the last six months, we have made significant progress in our transformation plan to better deliver on these four priorities. Phase one and two are now largely completed. And as we begin to move into phase three, we will continue to work to build a culture focused on service excellence and operational execution, improving patient and provider experience, and elevating all of our products to their full potential. We're also working to fulfill our ESG commitments with a focus on prioritizing diversity, equity, and inclusion. We are quickly ramping up phase three of the journey, where we aim to further advance our commercial strategy, accelerate growth, and begin to increase our investments in R&D, new products, and M&A. As part of our commercial transformation, we have reduced our product, R&D, and technology projects by half and right-sized a number of territories and outside sales reps, which enabled us to reduce our cross-structure. portion of these cost savings were allocated towards increasing compensation for our best performing sales teams to minimize turnover and improve engagement. Over the next several months, we will continue to roll out our enterprise commercial and product brand initiatives, emphasizing the three pillars of our brand proposition. Improving patient outcomes and experience, delivering a frictionless experience for providers, and improving access and equity care for all. We are continuing to invest in new products and expand our reach. Yesterday, we announced MyRisk with Risk Score for All Ancestries, a major proof point on our mission to expand access and reduce the racial and ethnic disparities in our healthcare system. We are accelerating EMR integrations with external support. and a plan to double the number of integrations in 2022 to improve the customer experience. And we're improving lab processes from test order to delivery so we can deliver even faster results more efficiently. At the same time, we are implementing customer segmentation, revised KPIs, and improved processes in our commercial teams. We are launching a new unified portal by the end of the year so healthcare providers can automatically order multiple tests simultaneously with a single process. With the MyRisk and RiskCore launch, we are taking an important step to increase access to genetic testing. Now women of all ancestries will have equal access to a lifetime breast cancer risk assessment score and receive the answers they deserve about their breast cancer risk. In addition, We're increasing accessibility of our prenatal offerings with a cash price offering. And finally, Prequel and Amplify will offer women of all BMI classes and indices equal quality of care and high test performance. This work aligns directly with our mission, and our teams have been working diligently to ensure smooth execution as we look for additional ways to unlock opportunities for our patients and accelerate growth. This year, our commercial transformation is focused on implementing the first phase of our new commercial model while stabilizing our operations. And while we successfully reset our base of operations in the first half of the year, this has not been without some bumps in the road as territories were reorganized. That said, our teams are settling in and we've seen less disruption than we actually expected. Our teams are winning again, signing new customers, and earning back some customers that we had previously lost. Now, with the learnings from the mental health business unit, we're moving to optimize our commercial model across the rest of the enterprise and roll out our new product brand strategy. This journey started with Genesight and our efforts to reset mental health with a new sales model and digital tools. We are excited to see continued momentum in this business, which rolled out these programs roughly two quarters ahead of the other business units. Our sales team is focused on a tighter list of higher-value target clinicians, and our medical teams are driving depth with our highest potential users. This resulted in 2,700 new ordering healthcare practitioners and a 12% increase in ordering clinicians in the quarter, representing our highest number of ordering healthcare practitioners for GeneSight in two years, and we're doing it with a third fewer outside sales reps. The success with mental health gives us the confidence in the roadmap for the transformation that is now underway in oncology and women's health. Now let me wrap up with a few exciting developments that we think will be catalysts for continued growth. In mental health, GeneSight delivered double-digit growth for the fourth quarter in a row, and our reintroduction of ADHG Genetic marker and medication testing is bringing back lost providers with results exceeding our expectations. Our improved commercial approach and sales structure has allowed us to enhance our digital presence and drive growth with lower customer acquisition costs. As a result, we're able to increase our investment in data collection, medical record integrations, R&D, and technologies. In women's health, we continue to benefit from increasing support for genetic testing during pregnancy across the medical community, most recently with the American College of Medical Genetics and Genomics, which advised that genetic testing of carriers for 110 genetic disorders be offered to all people who are pregnant or considering a pregnancy. This expands from the prior recommendation for more limited carrier screening and only for certain ancestries. While recognizing that it will take time for some payers and providers to embrace the new guidelines, we expect both demand and coverage to increase over the next 12 months. We see the potential to further penetrate the general prenatal carrier screening market as well as better coverage and reimbursement extend. Prenatal momentum was solid with the business outperforming expectations driven by both ASP and volume increases. as a result of the continued success with Amplify, which further increases the performance of prequel for non-invasive prenatal screening tests. We're excited that Melissa Gonzalez, our new women's health leader, brings significant industry and commercial experience with a strong background of success to the business unit. We expect continued benefits from improved focus and execution of our commercial transformation in women's health in the coming quarters. Yesterday, the launch of MyRisk with Risk Score provides a breast cancer risk assessment for all women not previously diagnosed with breast cancer. Risk Score offers a breast cancer risk assessment score designed to improve patient outcomes and help minimize healthcare disparities. And lastly, we are on track to launch the next generation prenatal test combining prequel and foresight in 2022. In oncology, hereditary cancer benefited from stronger than anticipated volumes, as well as strong cash collections on orders reported prior to Q2. Hereditary cancer volumes grew 7% sequentially, despite considerable alignment changes to most of our territories and a significant reduction in our field sales force in April. We had our best quarter ever with tumor profiling volume growing 13% sequentially, which is above our expectations, driven by My Choice CDX and Polaris. We also continue to make progress in the evolution of our offerings and have had a positive response to our new branding and strong interest in our new product that combines germline and tumor profiling into one powerful solution. We are making steady progress across all of our business units, and our financial results are starting to show and provide us the momentum going into the second half of the year. I'll turn it over to Brian now, who will cover the second quarter financial results in detail.