Myriad(MYGN) - 2025 Q2 - Quarterly Report

PART I - Financial Information Item 1. Financial Statements This section presents Myriad Genetics, Inc.'s unaudited condensed consolidated financial statements and accompanying notes, detailing accounting policies, revenue, assets, debt, equity, and cash flows Condensed Consolidated Balance Sheets | (in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | ASSETS | | | | Total current assets | $284.3 | $298.0 | | Operating lease right-of-use assets | 51.2 | 55.0 | | Property, plant, and equipment, net | 113.0 | 117.4 | | Intangibles, net | 170.1 | 262.4 | | Goodwill | 51.6 | 286.3 | | Other assets | 7.1 | 8.5 | | Total assets | $677.3 | $1,027.6 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $199.9 | $164.1 | | Unrecognized tax benefits | 1.2 | 32.7 | | Long-term debt | — | 39.6 | | Noncurrent operating lease liabilities | 86.2 | 87.9 | | Other long-term liabilities | 1.9 | 2.2 | | Total liabilities | $289.2 | $326.5 | | Total stockholders' equity | $388.1 | $701.1 | | Total liabilities and stockholders' equity | $677.3 | $1,027.6 | - Total assets decreased by $350.3 million from December 31, 2024, to June 30, 2025, primarily due to significant reductions in goodwill and intangible assets[11] - Total stockholders' equity decreased by $313.0 million, largely driven by an increase in accumulated deficit from $(756.8) million to $(1,087.4) million[11] Condensed Consolidated Statements of Operations | (in millions, except per share amounts) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $213.1 | $211.5 | $409.0 | $413.7 | | Cost of revenue | 61.3 | 64.4 | 123.0 | 128.9 | | Gross profit | 151.8 | 147.1 | 286.0 | 284.8 | | Research and development expense | 25.6 | 27.1 | 53.1 | 52.7 | | Sales and marketing expense | 71.9 | 72.8 | 141.1 | 142.2 | | General and administrative expense | 66.8 | 72.1 | 133.3 | 142.7 | | Goodwill and long-lived asset impairment charges | 316.7 | 11.6 | 316.7 | 11.6 | | Total operating expenses | 481.0 | 183.6 | 644.2 | 349.2 | | Operating loss | (329.2) | (36.5) | (358.2) | (64.4) | | Net loss | $(330.5) | $(36.7) | $(330.6) | $(62.7) | | Net loss per share: Basic and Diluted | $(3.57) | $(0.41) | $(3.59) | $(0.69) | - The Company reported a significant increase in net loss for both the three and six months ended June 30, 2025, primarily driven by $316.7 million in goodwill and long-lived asset impairment charges[14] Condensed Consolidated Statements of Comprehensive Loss | (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(330.5) | $(36.7) | $(330.6) | $(62.7) | | Change in unrealized loss on available-for-sale debt securities, net of tax | — | 0.1 | — | 0.1 | | Change in foreign currency translation adjustment, net of tax | 0.5 | 0.1 | 0.7 | (1.0) | | Reclassification of cumulative translation adjustment to income upon sale or liquidation of certain foreign entities, net of tax | — | — | — | 0.7 | | Comprehensive loss | $(330.0) | $(36.5) | $(329.9) | $(62.9) | - Comprehensive loss for the six months ended June 30, 2025, was $(329.9) million, largely mirroring the net loss, with a positive foreign currency translation adjustment of $0.7 million[16] Condensed Consolidated Statements of Stockholders' Equity | (in millions) | Common stock | Additional paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Myriad Genetics, Inc. Stockholders' equity | | :-------------- | :----------- | :------------------------- | :--------------------------------- | :------------------ | :--------------------------------------- | | BALANCES AT DECEMBER 31, 2024 | $0.9 | $1,457.8 | $(0.8) | $(756.8) | $701.1 | | Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax | — | (5.8) | — | — | (5.8) | | Stock-based compensation expense | — | 9.5 | — | — | 9.5 | | Net loss | — | — | — | (0.1) | (0.1) | | Other comprehensive income, net of tax | — | — | 0.2 | — | 0.2 | | BALANCES AT MARCH 31, 2025 | $0.9 | $1,461.5 | $(0.6) | $(756.9) | $704.9 | | Issuance of common stock under stock-based compensation plans, net of shares exchanged for withholding tax | — | 2.5 | — | — | 2.5 | | Stock-based compensation expense | — | 10.7 | — | — | 10.7 | | Net loss | — | — | — | (330.5) | (330.5) | | Other comprehensive income, net of tax | — | — | 0.5 | — | 0.5 | | BALANCES AT JUNE 30, 2025 | $0.9 | $1,474.7 | $(0.1) | $(1,087.4) | $388.1 | - Total stockholders' equity significantly decreased from $701.1 million at December 31, 2024, to $388.1 million at June 30, 2025, primarily due to the net loss of $(330.5) million incurred during the period[19] Condensed Consolidated Statements of Cash Flows | (in millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------- | :----------------------------- | :----------------------------- | | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | Net loss | $(330.6) | $(62.7) | | Impairment of goodwill and long-lived assets | 316.7 | 12.8 | | Net cash used in operating activities | $(29.9) | $(16.0) | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | Capital expenditures | $(8.1) | $(11.9) | | Capitalization of intangible assets | $(7.1) | $(5.6) | | Net cash used in investing activities | $(15.2) | $(13.5) | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | Proceeds from revolving credit facility | 40.0 | 80.0 | | Repayment of revolving credit facility | (20.5) | (80.0) | | Net cash provided by (used in) financing activities | $16.2 | $(6.4) | | Net decrease in cash, cash equivalents, and restricted cash | $(28.2) | $(39.7) | | Cash, cash equivalents, and restricted cash at end of the period | $83.7 | $101.2 | - Net cash used in operating activities increased to $(29.9) million for the six months ended June 30, 2025, from $(16.0) million in the prior year, despite a large non-cash impairment charge[22] - Financing activities provided $16.2 million in cash in 2025, a significant improvement from cash used in 2024, primarily due to net proceeds from the revolving credit facility[22] Notes to Condensed Consolidated Financial Statements - The notes provide critical context for the financial statements, detailing the Company's business, accounting policies, and significant events impacting financial performance[23][24][25] 1. BASIS OF PRESENTATION - Myriad Genetics, Inc. is a molecular diagnostic testing and precision company, with financial statements prepared in accordance with U.S. GAAP for interim reporting[23][24] - The Company's business experiences seasonality, with the quarters ending March 31 and September 30 typically weaker due to annual patient deductible resets and summer vacation schedules[26] 2. REVENUE - Revenue is primarily generated from molecular diagnostic testing and recognized when test results are released to healthcare providers or patients[30] | (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Hereditary Cancer | $96.3 | $91.5 | $182.6 | $179.6 | | Tumor Profiling | 31.4 | 32.6 | 60.7 | 63.5 | | Prenatal | 47.6 | 44.4 | 96.9 | 88.7 | | Pharmacogenomics | 37.8 | 43.0 | 68.8 | 81.9 | | Total revenue | $213.1 | $211.5 | $409.0 | $413.7 | 3. FAIR VALUE MEASUREMENTS - The Company classifies fair value measurements into a three-level hierarchy, with long-term debt considered a Level 2 measurement[33][34][35] - The fair value of the Company's current debt was estimated at $59.7 million as of June 30, 2025[35] 4. PROPERTY, PLANT, AND EQUIPMENT, NET | (in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Leasehold improvements | $79.2 | $78.5 | | Equipment | 113.2 | 148.5 | | Property, plant, and equipment, gross | 192.4 | 227.0 | | Less accumulated depreciation | (79.4) | (109.6) | | Property, plant, and equipment, net | $113.0 | $117.4 | | (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Depreciation expense | $4.9 | $4.6 | $10.0 | $9.7 | 5. GOODWILL AND INTANGIBLE ASSETS - The Company recognized a goodwill impairment charge of $234.7 million during the quarter ended June 30, 2025, due to a sustained decline in market capitalization and downward revisions to forecasts[37][39] | (in millions) | Total | | :-------------- | :---- | | Beginning balance | $286.3 | | Goodwill impairment | (234.7) | | Ending balance | $51.6 | - Intangible asset impairment charges totaled $82.0 million for the Pharmacogenomics ($71.8 million) and Gateway ($10.2 million) asset groups during the period ended June 30, 2025[41][42][43] 6. ACCRUED LIABILITIES | (in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Employee compensation and benefits | $40.5 | $57.4 | | Accrued taxes payable | 5.1 | 5.1 | | Refunds payable and reserves | 18.0 | 19.9 | | Accrued royalties | 5.7 | 6.5 | | Escrow Liability | 7.5 | 7.5 | | Other accrued liabilities | 23.8 | 22.6 | | Total accrued liabilities | $100.6 | $119.0 | - Total accrued liabilities decreased by $18.4 million from December 31, 2024, to June 30, 2025, primarily due to a reduction in employee compensation and benefits[45] 7. DEBT - As of June 30, 2025, the Company had $59.4 million in current debt under the ABL Facility, which was fully repaid subsequent to quarter-end with proceeds from a new term loan facility[46][50] - The weighted average interest rate for borrowings under the ABL Facility was 6.7% as of June 30, 2025, down from 7.8% at December 31, 2024[48] 8. PREFERRED AND COMMON STOCKHOLDERS' EQUITY - As of June 30, 2025, there were 93.1 million shares of common stock issued and outstanding, an increase from 91.3 million at December 31, 2024[52][53] | (in millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------- | :----------------------------- | :----------------------------- | | Beginning common stock issued and outstanding | 91.3 | 89.9 | | Common stock issued upon exercise of options, vesting of restricted stock units, and purchases under employee stock purchase plan | 1.8 | 1.0 | | Common stock issued and outstanding at end of period | 93.1 | 90.9 | - 8.3 million anti-dilutive options and RSUs were excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2025[54] 9. STOCK-BASED COMPENSATION - Stockholders approved an amendment to the 2017 Plan in June 2025, increasing available shares for awards by 6.5 million, with 5.3 million shares remaining available for grant as of June 30, 2025[55] | (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $0.3 | $0.4 | $0.6 | $0.7 | | Research and development expense | 2.0 | 1.6 | 4.1 | 2.8 | | Sales and marketing expense | 2.0 | 2.6 | 3.5 | 4.5 | | General and administrative expense | 6.4 | 9.9 | 12.0 | 18.5 | | Total stock-based compensation expense | $10.7 | $14.5 | $20.2 | $26.5 | - As of June 30, 2025, there was $66.2 million of total unrecognized stock-based compensation expense related to RSUs, expected to be recognized over a weighted-average period of 2.1 years[62] 10. INCOME TAXES | (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax benefit | $(0.1) | $(0.5) | $(29.4) | $(0.4) | | Effective tax rate | 0.0% | 1.3% | 8.2% | 0.6% | - For the six months ended June 30, 2025, the income tax benefit was $29.4 million, significantly higher than the prior year, primarily due to a $29.6 million discrete tax benefit from the release of unrecognized tax benefits related to CARES Act tax refund claims[63][64] 11. LEASES - The Company leases various assets including office spaces, R&D facilities, vehicles, and office equipment, with remaining lease terms ranging from one to fourteen years[66] - An amendment in 2024 to the west Salt Lake City facility lease added approximately 63,000 square feet of laboratory space, with future rent payments totaling $18.2 million commencing in fiscal year 2026[67] 12. COMMITMENTS AND CONTINGENCIES - The Company is involved in various legal disputes, claims, and investigations, including a qui tam lawsuit filed in November 2022 alleging False Claims Act violations related to physician remuneration[68][74] - As of June 30, 2025, no material accrual for loss contingencies associated with legal proceedings has been recorded, but an unfavorable outcome could be material to the Company's financial results[72] 13. SEGMENT REPORTING AND RELATED INFORMATION - The Company operates as a single operating segment, with the President and Chief Executive Officer identified as the Chief Operating Decision Maker[75] 14. SUPPLEMENTAL CASH FLOW INFORMATION | (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :----------------------------- | :----------------------------- | | Cash paid for income taxes | $0.3 | $1.3 | | Cash paid for interest | 1.7 | 0.7 | | (in millions) | June 30, 2025 | June 30, 2024 | | :-------------- | :------------ | :------------ | | Cash and cash equivalents | $74.4 | $92.4 | | Restricted cash | 9.3 | 8.8 | | Total cash, cash equivalents, and restricted cash | $83.7 | $101.2 | 15. ACCUMULATED OTHER COMPREHENSIVE LOSS - Foreign currency translation adjustments are included in Accumulated other comprehensive loss as a separate component of Stockholders' equity[79] | (in millions) | | | :-------------- | :---- | | Ending balance December 31, 2024 | $(0.8) | | Period translation adjustments | 0.7 | | Ending balance June 30, 2025 | $(0.1) | 16. SUBSEQUENT EVENTS - On July 31, 2025, the Company entered into a new $200 million term loan credit facility with OrbiMed, with an initial $125 million funded, used to repay the existing ABL Facility ($60.2 million)[81] - The new Credit Facility matures on July 31, 2030, bears interest at one-month SOFR Rate (min 2.50%) plus a 6.50% margin, and includes a minimum trailing twelve-month revenue test starting at $615.0 million in December 2025[82][85] - The 'One Big Beautiful Bill Act,' signed into law on July 4, 2025, is not expected to have a material impact on the Company's current or net deferred tax balances[86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Company's financial performance and condition for the three and six months ended June 30, 2025, covering revenue, operating expenses, significant impairment charges, liquidity, and critical accounting estimates General - Myriad is a leading molecular diagnostic testing and precision company focused on advancing health through molecular tests that assess disease risk and guide treatment decisions[93] - The Company's strategy is built on three pillars: driving accelerated growth and profitability in the Cancer Care Continuum market, growing Prenatal Health and Mental Health revenues, and delivering sustained, profitable growth through financial discipline[94] Business Updates - In July 2025, the Company closed a $125 million secured term debt financing with OrbiMed, with an option for an additional $75 million[98] - The Company launched early access of FirstGene Multiple Prenatal Screen in June 2025 through a large, multi-site study called CONNECTOR[98] - MRD data from the MONSTAR-SCREEN-3 study, presented in May 2025, demonstrated successful pan-cancer implementation of WGS-based personalized ctDNA detection, highlighting the potential of the Precise MRD test[98] Results of Operations for the Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, total revenue increased slightly by $1.6 million, but significant goodwill and long-lived asset impairment charges of $316.7 million led to a substantial operating and net loss Revenue | (in millions) | 2025 | 2024 | Change | % of Total Revenue 2025 | % of Total Revenue 2024 | | :-------------- | :--- | :--- | :----- | :---------------------- | :---------------------- | | Hereditary Cancer | $96.3 | $91.5 | $4.8 | 45% | 44% | | Tumor Profiling | 31.4 | 32.6 | (1.2) | 15% | 15% | | Prenatal | 47.6 | 44.4 | 3.2 | 22% | 21% | | Pharmacogenomics | 37.8 | 43.0 | (5.2) | 18% | 20% | | Total revenue | $213.1 | $211.5 | $1.6 | 100% | 100% | | (in thousands) | 2025 | 2024 | % Change | | :-------------- | :--- | :--- | :------- | | Hereditary Cancer | 78 | 73 | 7% | | Tumor Profiling | 12 | 14 | (14)% | | Prenatal | 159 | 173 | (8)% | | Pharmacogenomics | 135 | 129 | 5% | | Total | 384 | 389 | (1)% | - Pharmacogenomics revenue decreased by $5.2 million due to a 16% decrease in average revenue per test, negatively impacted by UnitedHealthcare's change in GeneSight test coverage[97] Cost of Revenue | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Cost of revenue | $61.3 | $64.4 | $(3.1) | (5)% | | Cost of revenue as a % of total revenue | 28.8% | 30.4% | | | - Cost of revenue decreased by $3.1 million, primarily due to a reduction in the cost per test driven by lower costs of laboratory reagents and supplies[99] Research and Development Expense | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Research and development expense | $25.6 | $27.1 | $(1.5) | (6)% | | Research and development expense as a % of total revenue | 12.0% | 12.8% | | | - Research and development expenses remained relatively consistent year-over-year, reflecting stable operating activities and disciplined cost management[100] Sales and Marketing Expense | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Sales and marketing expense | $71.9 | $72.8 | $(0.9) | (1)% | | Sales and marketing expense as a % of total revenue | 33.7% | 34.4% | | | - Sales and marketing expenses were relatively consistent with the prior year, indicating stable operating activities[101] General and Administrative Expense | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | General and administrative expense | $66.8 | $72.1 | $(5.3) | (7)% | | General and administrative expense as a % of total revenue | 31.3% | 34.1% | | | - General and administrative expense decreased by $5.3 million, primarily due to lower consulting fees, reduced amortization for previously impaired intangible assets, and decreased compensation expenses[102] Goodwill and Long-lived Asset Impairment Charges | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Goodwill and long-lived asset impairment charges | $316.7 | $11.6 | $305.1 | 2,630% | | Goodwill and long-lived asset impairment charges as a % of total revenue | 148.6% | 5.5% | | | - The significant increase in impairment charges in 2025 includes $234.7 million for goodwill and $82.0 million for intangible assets related to the Women's Health and Pharmacogenomics reporting units[103] Other Income (Expense), Net | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Other income (expense), net | $(1.4) | $(0.7) | $(0.7) | 100.0% | - Other income (expense), net decreased by $0.7 million due to an increase in interest expense[104] Income Tax Benefit | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Income tax benefit | $(0.1) | $(0.5) | $0.4 | (80.0)% | | Effective tax rate | 0.0% | 1.3% | | | - The effective tax rate for the three months ended June 30, 2025, was 0.0%, differing from the U.S. federal statutory rate primarily due to valuation allowances and uncertain tax positions, including a valuation allowance against tax-deductible loss from impairment charges[106] Results of Operations for the Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, total revenue decreased by $4.7 million, primarily due to declines in Pharmacogenomics and Tumor Profiling, while significant impairment charges of $316.7 million resulted in a substantial net loss Revenue | (in millions) | 2025 | 2024 | Change | % of Total Revenue 2025 | % of Total Revenue 2024 | | :-------------- | :--- | :--- | :----- | :---------------------- | :---------------------- | | Hereditary Cancer | $182.6 | $179.6 | $3.0 | 44% | 44% | | Tumor Profiling | 60.7 | 63.5 | (2.8) | 15% | 15% | | Prenatal | 96.9 | 88.7 | 8.2 | 24% | 21% | | Pharmacogenomics | 68.8 | 81.9 | (13.1) | 17% | 20% | | Total revenue | $409.0 | $413.7 | $(4.7) | 100% | 100% | | (in thousands) | 2025 | 2024 | % Change | | :-------------- | :--- | :--- | :------- | | Hereditary Cancer | 151 | 144 | 5% | | Tumor Profiling | 24 | 28 | (14)% | | Prenatal | 332 | 345 | (4)% | | Pharmacogenomics | 262 | 253 | 4% | | Total | 769 | 770 | —% | - Pharmacogenomics revenue decreased by $13.1 million due to a 19% decrease in average revenue per test, significantly impacted by UnitedHealthcare's coverage changes for the GeneSight test[110] Cost of Revenue | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Cost of revenue | $123.0 | $128.9 | $(5.9) | (5)% | | Cost of revenue as a % of total revenue | 30.1% | 31.2% | | | - Cost of revenue decreased by $5.9 million, primarily due to a reduction in the cost per test driven by lower costs of laboratory reagents and supplies[111] Research and Development Expense | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Research and development expense | $53.1 | $52.7 | $0.4 | 1% | | Research and development expense as a % of total revenue | 13.0% | 12.7% | | | - Research and development expenses remained relatively consistent year-over-year, reflecting stable operating activities[112] Sales and Marketing Expense | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Sales and marketing expense | $141.1 | $142.2 | $(1.1) | (1)% | | Sales and marketing expense as a % of total revenue | 34.5% | 34.4% | | | - Sales and marketing expenses were relatively consistent with the prior year[113] General and Administrative Expense | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | General and administrative expense | $133.3 | $142.7 | $(9.4) | (7)% | | General and administrative expense as a % of total revenue | 32.6% | 34.5% | | | - General and administrative expense decreased by $9.4 million, primarily due to lower consulting fees ($4.1 million), reduced amortization for previously impaired intangible assets ($3.4 million), and decreased compensation and benefits ($3.2 million)[114] Goodwill and Long-lived Asset Impairment Charges | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Goodwill and long-lived asset impairment charges | $316.7 | $11.6 | $305.1 | 2,630% | | Goodwill and long-lived asset impairment charges as a % of total revenue | 77.4% | 2.8% | | | - The significant increase in impairment charges in 2025 includes $234.7 million for goodwill and $82.0 million for intangible assets related to the Women's Health and Pharmacogenomics reporting units[115] Other Income (Expense), Net | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Other income (expense), net | $(1.8) | $1.3 | $(3.1) | (238)% | - Other income (expense), net changed from a gain in 2024 to a loss in 2025, primarily due to an increase in interest expense in 2025 and a $2.2 million gain recognized on the Precise Tumor acquisition in 2024[116] Income Tax Benefit | (in millions) | 2025 | 2024 | Change | % Change | | :-------------- | :--- | :--- | :----- | :------- | | Income tax benefit | $(29.4) | $(0.4) | $(29.0) | 7,250% | | Effective tax rate | 8.2% | 0.6% | | | - The significant increase in income tax benefit for the six months ended June 30, 2025, was primarily due to a $29.6 million discrete tax benefit from the release of unrecognized tax benefits related to CARES Act tax refund claims[118] Liquidity and Capital Resources - The Company's primary sources of liquidity are cash and cash equivalents, expected cash flows from operations, and amounts available under its new debt financing with OrbiMed[119] - On July 31, 2025, the Company entered into a new $200 million term loan credit facility with OrbiMed, with an initial $125 million draw used to refinance existing indebtedness, including the ABL Facility[120] - The new Credit Facility imposes operating and financial restrictions, including a minimum trailing twelve-month revenue test, and is secured by substantially all of the Company's assets[124] | (in millions) | June 30, 2025 | December 31, 2024 | Change | | :-------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $74.4 | $102.4 | $(28.0) | - UnitedHealthcare's updated medical policy for pharmacogenetic testing (GeneSight) is expected to continue negatively impacting the Company's revenue, profitability, and cash flow in 2025 and beyond[128] Effects of Inflation - Inflation has impacted and may continue to impact labor costs, costs to generate sales and produce testing results, and costs of laboratory supplies, potentially affecting profitability[134] - Increased inflation has also affected interest rates, which could adversely impact the Company's borrowing rate and ability to obtain additional funding[134] Critical Accounting Estimates - During the second quarter of 2025, an impairment triggering event occurred due to a sustained decline in market capitalization and downward revisions to forecasts, necessitating quantitative impairment testing of goodwill and intangible assets[135] - Based on these assessments, the Company recognized total goodwill and asset impairment charges of $316.7 million[136] Goodwill - A total goodwill impairment charge of $234.7 million was recognized in Q2 2025, with $143.5 million attributable to the Women's Health reporting unit and $91.2 million to the Pharmacogenomics reporting unit[138] - The fair value of the Pharmacogenomics and Women's Health reporting units was measured using market and discounted cash flow approaches, with discount rates of 17.0% and 16.0%, respectively[139] Intangible Assets - Intangible asset impairment charges totaled $82.0 million in Q2 2025, including $71.8 million for Pharmacogenomics developed technology and $10.2 million for Gateway intangible assets[144][145] - Fair values were determined using discounted cash flow and relief from royalty models, with discount rates of 17% for Pharmacogenomics and 16% for Gateway asset groups[144][145] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the Company's exposure to market risks, primarily related to interest rates and foreign currency exchange rates, and their potential impact on financial performance Interest Rate Risk - The Company is exposed to interest rate risk through its credit facilities, with a variable interest rate based on SOFR for the new Credit Facility[149] - A hypothetical 100 basis point change in the borrowing rate would increase or decrease annual interest expense by $1.3 million based on the initial $125.0 million draw on the new Credit Facility[149] Foreign Currency Exchange Risk - Approximately 7% of the Company's revenue for the three and six months ended June 30, 2025, was denominated in other currencies, primarily Japanese yen[148] - A hypothetical 10% change in the value of the Japanese yen relative to the U.S. dollar would result in a 1% change in the Company's revenue[148] - The Company does not currently utilize hedging strategies to mitigate foreign currency risk[148] Item 4. Controls and Procedures This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures - As of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective to provide reasonable assurance for timely and accurate reporting[151] Changes in Internal Controls - There were no material changes in the Company's internal control over financial reporting during the three months ended June 30, 2025[152] PART II - Other Information Item 1. Legal Proceedings This section refers to Note 12 of the financial statements for detailed information regarding current legal proceedings, including a qui tam lawsuit - Information regarding certain current legal proceedings, including a qui tam lawsuit, is provided in Note 12 to the Condensed Consolidated Financial Statements[153] Item 1A. Risk Factors This section updates key risk factors that could materially affect the Company's business, financial condition, or future results, including those related to liquidity, debt covenants, and changes in insurance coverage - The Company faces risks related to generating sufficient cash flow from operations and securing additional funding, as available capital resources may be consumed more rapidly than expected[155][157] - The new Credit Facility imposes operating and financial restrictions, including a minimum trailing twelve-month revenue test, and non-compliance could have a material adverse impact on operations and liquidity[161] - UnitedHealthcare's updated medical policy for pharmacogenetic testing (GeneSight) is anticipated to continue negatively impacting the Company's revenue, profitability, and cash flow in 2025 and beyond[160] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities and no repurchases of equity securities during the quarter ended June 30, 2025 - There were no unregistered sales of equity securities during the quarter ended June 30, 2025[163] - The Company did not repurchase any of its equity securities during the quarter ended June 30, 2025[164] Item 3. Defaults Upon Senior Securities This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities were reported[165] Item 4. Mine Safety Disclosures This section states that Mine Safety Disclosures are not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[166] Item 5. Other Information This section provides information regarding Rule 10b5-1 trading plans - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[168] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including the new Credit Agreement, Pledge and Security Agreement, equity incentive plan amendments, and various certifications - Key exhibits include the Credit Agreement and Pledge and Security Agreement dated July 31, 2025, related to the new term loan facility[169] - Other exhibits include amendments to the 2017 Employee, Director and Consultant Equity Incentive Plan and certifications by the CEO and CFO[169] Signatures This section contains the required signatures of the Company's principal executive, financial, and accounting officers, certifying the filing of the report - The report is signed by Samraat S. Raha (President and CEO), Scott J. Leffler (CFO), and Natalie Munk (Chief Accounting Officer) on August 6, 2025[174]