General



We are a leading precision medicine company acting as a trusted advisor to
transform patient lives through pioneering molecular diagnostics. Through our
proprietary technologies, we believe we are positioned to identify important
disease genes, the proteins they produce, and the biological pathways in which
such genes and proteins are involved to better understand the genetic basis of
certain human diseases. We believe that identifying these biomarkers (i.e., DNA,
RNA and proteins) will enable us to develop novel molecular diagnostic tests
that can provide important information to solve unmet medical needs. During the
three months ended December 31, 2019, we reported total revenues of $195.1
million and net loss of $8.3 million that included income tax benefit of $(3.1)
million resulting in $(0.11) diluted earnings per share. During the six months
ended December 31, 2019, we reported total revenues of $381.4 million and net
loss of $28.9 million that included income tax benefit of $(4.8) million
resulting in $(0.39) diluted earnings per share.

Our business units have been aligned with how the Chief Operating Decision Maker
reviews performance and makes decisions in managing the Company. The business
units have been aggregated into two reportable segments: (i) diagnostics and
(ii) other. The diagnostics segment provides testing and collaborative
development of testing that is designed to assess an individual's risk for
developing disease later in life, identify a patient's likelihood of responding
to drug therapy and guide a patient's dosing to ensure optimal treatment, or
assess a patient's risk of disease progression and disease recurrence. The other
segment provides testing products and services to the pharmaceutical,
biotechnology and medical research industries, research and development, and
clinical services for patients, and includes corporate services such as finance,
human resources, legal and information technology.

Business Highlights





During the quarter ended December 31, 2019, Myriad grew hereditary cancer
revenue at a single-digit rate on a year-over-year basis. Additionally, the
Company presented data at the San Antonio Breast Cancer Symposium on the ability
of its riskScore test to modify cancer risk assessments for women with breast
cancer who test positive for a genetic mutation.



With GeneSight, the Company announced coverage decisions from additional
self-funded insurance plans bringing the total to six. The Company also
published the precision medicine analysis of the GUIDED study in the Journal of
Clinical Psychiatry. The study evaluated 787 patients at baseline who were on
medications with known gene drug interactions. The analysis showed that patients
who had their treatment guided by GeneSight saw a 70 percent improvement in
remission, 42 percent improvement in response, and a 23 percent improvement in
symptoms, all of which were statistically significant. Additionally, the Company
published a new analysis of the GUIDED clinical trial using the 6-item Hamilton
Depression Rating Scale (HAM-D6) in BMC Psychiatry. The key finding of the study
was that there was a statistically significant improvement in all three clinical
endpoints of remission, response and symptoms between GeneSight®-guided care and
treatment-as-usual at Week 8 using the HAM-D6 scale.



Myriad published two new studies with its Prequel non-invasive prenatal
screening test. The first study was published in Prenatal Diagnosis
demonstrating that Prequel® is the only non-invasive prenatal screening (NIPS)
test that outperforms traditional measures of aneuploidy detection across all
classes of obesity. The second study was a 58,000 patient study published in
Ultrasound in Obstetrics and Gynecology showing Prequel is more sensitive than
other technologies in low fetal fraction samples with an industry leading 1 in
1,000 no call rate.


Myriad's Prolaris test received a positive coverage decision from Wellmark Blue Cross and Blue Shield.





Myriad achieved several milestones with its companion diagnostic products.
First, the Company submitted an application to the U.S. Food and Drug
Administration (FDA) to authorize BRACAnalysis® CDx as a companion diagnostic
test for Lynparza® in metastatic, castrate-resistant, prostate cancer patients
with germline BRCA mutations. Secondly, the Company received FDA approval for
BRACAnalysis CDx as a companion diagnostic test for patients with metastatic
pancreatic cancer seeking treatment with Lynparza®. With myChoice HRD, the
Company received FDA approval as a companion diagnostic in ovarian cancer
patients being considered for niraparib PARP inhibitor therapy in accordance
with the approved label and received application for Advanced Diagnostic
Laboratory Test status for myChoice CDx with an initial price of $4,040.
Finally, the Company received regulatory approval from Japan's Ministry of
Health, Labour and Welfare for the BRACAnalysis® Diagnostic System to help
physicians determine which women with breast cancer have Hereditary Breast and
Ovarian Cancer (HBOC) syndrome and qualify for additional medical management.

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Results of Operations for the Three Months Ended December 31, 2019 and 2018



Revenue



                  Three months ended
                     December 31,
(In millions)      2019          2018       Change
Revenue         $    195.1      $ 216.8     $ (21.7 )




The decrease in revenue was primarily due to a reduction of $9.0 million in
Hereditary Cancer Testing revenue due to reduced reimbursement and a reduction
of $14.8 million in Prenatal revenue due to reduced reimbursement, including
changes in estimates for tests in which the performance obligation of delivering
the test results was met in prior periods.

The following table presents additional detail regarding the composition of our total revenue for the three months ended December 31, 2019 and 2018:





                                         Three months ended
                                            December 31,              $            % of Total Revenue
(In millions)                            2019           2018        Change        2019            2018
Molecular diagnostic revenues:
Hereditary Cancer Testing             $    117.7      $  126.7     $   (9.0 )          60 %            59 %
GeneSight                                   22.5          24.0         (1.5 )          12 %            11 %
Prenatal                                    16.4          31.2        (14.8 )           8 %            14 %
Vectra                                      10.3          11.8         (1.5 )           5 %             6 %
Prolaris                                     6.8           6.1          0.7             4 %             3 %
EndoPredict                                  2.6           2.2          0.4             1 %             1 %
Other                                        4.8           1.0          3.8             3 %             0 %
Total molecular diagnostic revenue         181.1         203.0        (21.9 )
Pharmaceutical and clinical service
revenue                                     14.0          13.8          0.2             7 %             6 %
Total revenue                         $    195.1      $  216.8     $  (21.7 )         100 %           100 %




Cost of Sales



                                  Three months ended
                                     December 31,
(In millions)                     2019           2018       Change
Cost of sales                   $    49.6       $  52.1     $  (2.5 )

Cost of sales as a % of sales 25.4 % 24.0 %

Cost of sales as a percentage of revenue increased from 24.0% to 25.4% during the three months ended December 31, 2019 compared to the same period in the prior year. The increase was primarily driven by reduction of reimbursement related to Hereditary Cancer and Prenatal, partially offset by the implementation of efficiency programs in our DNA, RNA, and protein based laboratories.

Research and Development Expenses





                                Three months ended
                                   December 31,
(In millions)                   2019           2018       Change
R&D expense                   $    18.8       $  22.4     $  (3.6 )
R&D expense as a % of sales         9.6 %        10.3 %




Research and development expense for the three months ended December 31, 2019
decreased compared to the same period in the prior year primarily related to
synergies recognized as part of the integration of the Counsyl business.

Change in the Fair Value of Contingent Consideration


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                                                      Three months ended
                                                         December 31,
(In millions)                                      2019               2018  

Change


Change in the fair value of contingent
consideration                                   $      (0.1 )      $       1.0     $      (1.1 )
Change in the fair value of contingent
consideration as a % of sales                          (0.1 )%             

0.5 %




The fair value of contingent consideration for the three months ended December
31, 2019 decreased compared to the same period in the prior year due to changes
in timing of expected cash payments associated with the contingent consideration
related to the Sividon acquisition.

Selling, General and Administrative Expenses





                                 Three months ended
                                    December 31,
(In millions)                     2019          2018        Change
SG&A expense                   $    135.6      $ 135.2     $    0.4
SG&A expense as a % of sales         69.5 %       62.4 %




Selling, general and administrative expense increased slightly for the three
months ended December 31, 2019 compared to the same period in the prior year
primarily related to increased legal fees and impairment of goodwill. These were
partially offset by reduction in costs related to synergies recognized relating
to the integration of the Counsyl business.

Other Income (Expense)



                           Three months ended
                              December 31,
(In millions)              2019           2018       Change
Other income (expense)   $    (2.6 )     $  (2.5 )   $  (0.1 )

Other income expense remained flat for the three months ended December 31, 2019 compared to the same period in the prior year, due to increased unrealized losses in the current quarter offset by decreased interest expense.



Income Tax Expense



                                 Three months ended
                                    December 31,
(In millions)                    2019           2018       Change

Income tax expense (benefit) $ (3.1 ) $ 1.0 $ (4.1 ) Effective tax rate

                  27.2 %        27.8 %




Our tax rate is the product of a blended U.S. federal effective rate of 21% and
a blended state income tax rate of approximately 3%. Certain significant or
unusual items are separately recognized during the period in which they occur
and can be a source of variability in the effective tax rates from period to
period.

Income tax benefit for the three months ended December 31, 2019 is $(3.1)
million, and our effective tax rate was 27.2%. The decrease in the effective
rate for the three months ended December 31, 2019 as compared to the same period
in prior year is due to state income taxes, foreign income taxes, and the
differences related to the tax effect of equity compensation expense and the
deduction  realized when exercised, released or sold.

Results of Operations for the six months ended December 31, 2019 and 2018







                  Six months ended
                    December 31,
(In millions)     2019         2018       Change
Revenue         $   381.4     $ 419.1     $ (37.7 )




The decrease in revenue was primarily due to a reduction of $20.9 million in
Hereditary Cancer Testing revenue due to reduced reimbursement, including
changes in estimates for tests in which the performance obligation of delivering
the test results was met in

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prior periods, a reduction of $9.4 million in Prenatal revenue due to reduction
in average selling price, including changes in estimates for tests in which the
performance obligation of delivering the test results was met in prior periods
and a reduction of $8.0 million in GeneSight revenue due to reduced volumes.

The following table presents additional detail regarding the composition of our total revenue for the six months ended December 31, 2019 and 2018:





                                         Six months ended
                                           December 31,             $            % of Total Revenue
(In millions)                           2019          2018        Change        2019            2018
Molecular diagnostic revenues:
Hereditary Cancer Testing             $   222.2     $  243.1     $  (20.9 )          58 %            58 %
GeneSight                                  45.2         53.2         (8.0 )          12 %            13 %
Prenatal                                   39.9         49.3         (9.4 )          10 %            12 %
Vectra                                     21.4         24.8         (3.4 )           6 %             6 %
Prolaris                                   13.3         12.3          1.0             4 %             3 %
EndoPredict                                 4.8          4.6          0.2             1 %             1 %
Other                                       6.3          4.7          1.6             2 %             1 %
Total molecular diagnostic revenue        353.1        392.0        (38.9 )
Pharmaceutical and clinical service
revenue                                    28.3         27.1          1.2             7 %             6 %
Total revenue                         $   381.4     $  419.1     $  (37.7 )         100 %           100 %




Cost of Sales

                                  Six months ended
                                    December 31,
(In millions)                     2019         2018       Change
Cost of sales                   $   99.3      $ 101.8     $  (2.5 )

Cost of sales as a % of sales 26.0 % 24.3 %




Cost of sales as a percentage of revenue increased from 24.3% to 26.0% during
the six months ended December 31, 2019 compared to the same period in the prior
year. The increase was primarily driven by lower gross margins associated with
the Counsyl business and reduction of reimbursement related to Hereditary Cancer
and Prenatal, partially offset by the implementation of efficiency programs in
our DNA, RNA, and protein based laboratories.

Research and Development Expenses



                                Six months ended
                                  December 31,
(In millions)                   2019          2018      Change
R&D expense                   $    40.1      $ 43.5     $  (3.4 )
R&D expense as a % of sales        10.5 %      10.4 %



Research and development expense for the six months ended December 31, 2019 decreased compared to the same period in the prior year due to synergies recognized as part of the integration of the Counsyl business partially offset by an additional month of Counsyl business expenses included in the current year.

Change in the Fair Value of Contingent Consideration





                                                       Six months ended
                                                         December 31,
(In millions)                                       2019              2018           Change
Change in the fair value of contingent
consideration                                    $       0.6       $       1.4     $      (0.8 )
Change in the fair value of contingent
consideration as a % of sales                            0.2 %             0.3 %


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The fair value of contingent consideration for the six months ended December 31,
2019 decreased compared to the same period in the prior year due to changes in
timing of expected cash payments associated with the contingent consideration
related to the Sividon acquisition.

Selling, General and Administrative Expenses



                                 Six months ended
                                   December 31,
(In millions)                    2019         2018        Change
SG&A expense                   $   271.1     $ 265.1     $    6.0
SG&A expense as a % of sales        71.1 %      63.3 %




Selling, general and administrative expense increased for the six months ended
December 31, 2019 compared to the same period in the prior year primarily
related to Counsyl being included for a full six months during the six months
ended December 31, 2019 compared to only a portion the six months ended December
31, 2019, as well as increased legal fees and impairment of goodwill in the
current year. These increases were partially offset by reduction in costs
related to synergies recognized relating to the integration of the Counsyl
business.

Other Income (Expense)

                           Six months ended
                             December 31,
(In millions)              2019          2018      Change
Other income (expense)   $    (4.0 )    $ (2.9 )   $  (1.1 )




For the six months ended December 31, 2019 compared to the same period in the
prior year, the change in other income expense was primarily driven by a lower
gains on dispositions and higher unrealized losses in the current year.

Income Tax Expense

                                 Six months ended
                                   December 31,
(In millions)                    2019          2018      Change
Income tax expense (benefit)   $    (4.8 )    $  2.6     $  (7.4 )
Effective tax rate                  14.2 %      59.1 %




Our tax rate is the product of a blended U.S. federal effective rate of 21% and
a blended state income tax rate of approximately 3%. Certain significant or
unusual items are separately recognized during the period in which they occur
and can be a source of variability in the effective tax rates from period to
period.

Income tax benefit for the six months ended December 31, 2019 is $(4.8) million
and our effective tax rate was 14.2%. The decrease in the effective rate for the
six months ended December 31, 2019 as compared to the same period in prior year
is due to state income taxes, foreign income taxes, and the differences related
to the tax effect of equity compensation expense and the deduction realized when
exercised, released or sold.


Liquidity and Capital Resources



We believe that our existing capital resources and the cash to be generated from
future sales will be sufficient to meet our projected operating requirements,
including contingent consideration and repayment of the outstanding Facility,
which matures on July 31, 2023, for the foreseeable future. There are no
scheduled principal payments of the Facility prior to its maturity date;
however, our available capital resources may be consumed more rapidly than
currently expected and we may need or want to raise additional financing. We may
not be able to secure such financing in a timely manner or on favorable terms,
if at all. Without additional funds, we may be forced to delay, scale back or
eliminate some of our sales and marketing efforts, research and development
activities, or other operations and potentially delay development of our
diagnostic tests in an effort to provide sufficient funds to continue our
operations. If any of these events occurs, our ability to achieve our
development and commercialization goals would be adversely affected.

Our capital deployment strategy focuses on use of resources in three key areas:
research and development, acquisitions and the repurchase of our common
stock. We believe that research and development provides the best return on
invested capital. We also allocate capital for acquisitions that support our
business strategy and share repurchases based on business and market conditions.

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The following table represents the balances of cash, cash equivalents and marketable investment securities:





                                                   December 31,       June 30,
(In millions)                                          2019             2019           Change
Cash and cash equivalents                          $        81.2     $      93.2     $    (12.0 )
Marketable investment securities                            60.4            43.7           16.7
Long-term marketable investment securities                  47.6            54.9           (7.3 )

Cash, cash equivalents and marketable investment


  securities                                       $       189.2     $     191.8     $     (2.6 )




The decrease in cash and cash equivalents was primarily driven by the repayment
of principle on the Amended Facility of $8.6 million, and the payment of
contingent consideration of $3.9 million related to Sividon. This is partially
offset by $13.9 million in cash provided by operations.

The following table represents the condensed consolidated cash flow statement:

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