MYRIAD GENETICS Q2 FY26 earnings call MYGN

Myriad experienced significant payer-initiated revenue cycle friction in Q2 FY26, leading to an 11% year-over-year total revenue decline and a 9% decrease in average revenue per test. This impact included an $11 million headwind from lower prior period collections and a $4 million write-off of aged receivables. The pressure, primarily from a limited number of payers, stems from aggressive prior authorization requirements, increased medical record requests, and higher denial rates, rather than changes in medical policy. In response, the company is optimizing its end-to-end revenue cycle process, deploying AI-enabled workflows for claim resolution, and actively engaging payers to align medical policy with clinical practices, aiming to reduce administrative burden and improve timely reimbursement. Management expects reimbursement friction to remain a headwind through the balance of 2026, though not at the same magnitude as Q2.

To address current challenges and drive long-term value, Myriad has launched several key initiatives. The 'ASCEND' program, supported by a leading professional services firm, aims to increase organizational efficiency, productivity, and scalability, with expected meaningful benefits to adjusted EBITDA from 2027 and beyond. Concurrently, a rigorous portfolio review is underway to optimize capital allocation and maximize shareholder value. These initiatives, combined with efforts to strengthen reimbursement performance, are designed to create a more focused and profitable company with strengthened growth rates and predictability in 2027 and beyond. Due to the uncertainty surrounding the timing and financial impact of these initiatives, the company suspended its adjusted EBITDA guidance for FY26.

The cancer care continuum segment demonstrated solid underlying demand, with test volume growing 6% year-over-year, despite an 11% revenue decline due to ARPT pressure. MyRisk hereditary cancer test volume grew 10% year-over-year, achieving the strongest quarterly performance in unaffected hereditary cancer testing in three years. Key pipeline milestones included the Q2 launch of Prolaris plus AI, an AI-enhanced prostate cancer test, which has received positive early feedback. Precise MRD clinical testing availability was expanded to colorectal and renal cancers, and a submission for breast cancer coverage determination was made to Moldex, with full commercial launch anticipated in 2027.

The prenatal health business faced continued softness, with revenue down 16% and volume down 9% year-over-year, attributed to salesforce expansion timing and competitive dynamics. However, the new dedicated prenatal health sales team is now fully staffed, and the recent commercial launch of Firstgene, a comprehensive prenatal screen offering industry-leading gestational age and turnaround time, is expected to drive improved performance. In mental health, GeneSight revenue declined 3% year-over-year, but volume grew 4%, reaching a record high of over 40,000 ordering clinicians. Underlying reimbursement trends for GeneSight are improving, despite the Q2 AR write-off.

Myriad lowered its full-year 2026 revenue guidance to a range of $770 million to $790 million, representing a $90 million reduction at the midpoint from its prior outlook. Gross margin guidance was also reduced to 66-67%. This revised outlook incorporates Q2 results, lower prenatal volumes, and continued hereditary cancer reimbursement pressure. The company adopted a conservative approach, assuming second-half revenue will be approximately in line with the first half and no immediate contribution from new commercial teams or recent product launches in FY26. Q3 revenue is expected to be flat to slightly higher than Q2, with improvement moving into Q4.