Greetings, and welcome to the Myriad Genetics December 2020 Earnings Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question-and-answer session [Operator Instructions]. As a remainder, this conference is being recorded today, Tuesday, February 23, 2021.

I would now like to turn the conference over to Scott Gleason, VP Investor Relations. Please go ahead..

Thank you, Mellisa. Good afternoon. Welcome to the Myriad Genetics December quarter 2020 earnings call. During the call, we will review the financial results that we have released today. After which we will host a question-and-answer session.

If you’ve not had a chance to review our quarterly earnings release, it can be found on our Web site at myriad.com. I’m Scott Gleason, the Senior Vice President of Investor Relations and Corporate Strategy. And on the call with me today will be Paul Diaz, our President and Chief Executive Officer; and Bryan Riggsbee, our Chief Financial Officer.

This call can be heard live via webcast at myriad.com, and a recording will be archived in the Investors section of our Web site. In addition, there’s a slide presentation pertaining to today’s earnings call on the Investors section of our Web site, and which will be filed following the call on Form 8-K.

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 Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K.

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'd like to please now turn the call to Paul..

Thanks, Scott. I’m excited to speak with you today about our quarterly results and business highlights, and the progress we've made advancing our transformation and growth plans.

I want to thank our leadership team and all my Myriad Genetics teammates for all they're doing to fulfill our mission, while also executing on our strategic transformation plan.

We continue to pursue our mission to advance the health and well being of our patients by empowering them and our provider and payer partners with life changing genetic insights.

Seeing this commitment over the last six months has been incredibly motivating for me, and I know it's what drives our 2,700 teammates, as together we work to create a stronger Myriad Genetics and extend our reach to more patients who will benefit from our genetic insights.

This quarter, we delivered 6% sequential revenue growth and 7% sequential improvement in test volumes with stable pricing. These results came at a time when the COVID-19 pandemic has created the most challenging markets any of us have ever seen.

We also mitigated our cash burn substantially while strengthening our balance sheet and improving our liquidity. Today, we also announced a new in network agreement with the majority of the affiliated commercial health plans on the Anthem Blue Cross Blue Shield, the second largest commercial payers in the country for all of our product offerings.

We continue to focus and execute on our four point strategy roadmap by putting patients and customers first and building new technology enabled commercial capabilities, so we can elevate our core products to their full potential and create new avenues for growth.

Over the last year, we've made great progress resetting our base of operations while reducing complexity and costs, and accelerating growth as we as we advanced new commercial models. At the same time, we continue to work to improve teammate engagement, diversity, equity inclusion and a culture focus on performance, accountability and innovation.

We are now focused on meeting the needs of our patients and healthcare providers in three core markets where we have the highest growth potential and capability, women's health, oncology and Mental Health.

I'm excited by several strategic initiatives and business catalyst to enhance our competitive position and accelerate growth in these core markets.

These include improving prenatal economics and digital marketing in women's health, expanding capabilities like tumor testing and companion diagnostics in oncology, and intensifying engagement with frontline primary care providers in Mental Health.

We also pleased to have recently announced the promotion and addition to our team of a diverse group of executives that will strengthen our organization and help drive our strategic transformation plan.

Kevin Haas has been promoted to Chief Technology Officer, responsible for engineering, data and analytics, genetic laboratory software and improving the customer experience. Faith Zaslavsky has been promoted to President of Myriad Oncology, overseeing key products, including Myriad myRisk, Hereditary Cancer, myChoice CDx and EndoPredict.

To drive process discipline and accelerate our growth initiatives, we have formed an enterprise transformation office under the leadership of Maggie Ancona. Maggie brings deep experience leading large scale transformation initiatives at Hewlett Packard and Dell.

Joining Maggie is David Hammer, who comes to us from RGP Healthcare, to lead our revenue cycle management initiatives. Jackie Zou to support our business development efforts. And Chris Williamson has joined lead Information Systems and Security, coming from Data2Logistics.

Ed Gala now leads enterprise marketing communications, having served in global leadership roles across brands, PR, marketing at Xerox and Phillips. And Karen Renner joined to lead our digital marketing strategy, having served in several similar roles in digital and e-commerce at Nestle Purina.

Finally, Justin Hunter joined our corporate legal team after serving as a Corporate Senior Counsel at Parsley Energy where his responsibilities included SEC reporting, compliance, acquisitions and divestitures.

It's exciting to see the enthusiasm these highly qualified individuals who share our passion for our mission and recognize Myriad Genetics as a leader in genetic testing and precision medicine, and is also gratifying to see Myriad rated among the top places to work.

And now, I'll turn it over to Bryan who will cover our financial results and share our business updates, and how we are elevating our products across our three core businesses..

Thanks, Paul. I am pleased to provide more information on our quarterly results and business highlights. This quarter, we reported total revenue of $154.6 million, which increased 6% sequentially. Total test volumes declined 5% year-over-year but increased 7% sequentially with all major products growing on a volume basis from last quarter.

Importantly, our test pricing only declined 1% sequentially, which was entirely mix driven with strong prenatal growth. We saw sequential improvements in rate for both of our GeneSight mental health and prenatal tests in the quarter attributable to our focus on improved revenue cycle management and reducing zero pay tests.

We did see increased expense this quarter as we returned to a more normalized operating environment with employee furloughs ending higher benefit costs and increased commercial activity. This mitigated some of the operational leverage, we would normally expect to see associated with the increased revenues.

But importantly, our cash burn declined 66% sequentially to $20.4 million. We remain focused on driving profitable growth and expect increased commercial leverage as we transition through fiscal year 2021. I would now like to discuss the revenue for our products, starting with Hereditary Cancer.

Hereditary Cancer revenue in the quarter was $78.7 million versus $117.7 million in the December quarter of last year. Looking at the components of the change, total test volumes declined 23% and average selling price declined 13%.

During the quarter, revenue was impacted by $5.3 million due to changes associated with an increase in our payer reserve, predominantly associated with Hereditary Cancer. The company also had immaterial net positive adjustments to revenues related to prior periods.

Excluding this payer reserve change, Hereditary Cancer tests average selling price was flat sequentially, and test volumes increased 6% sequentially.

We continue to expect the year-over-year comparisons in Hereditary Cancer pricing headwinds to improve as we transition to next fiscal year and lap UnitedHealth and PAMA related headwinds starting next quarter. In Mental Health, GeneSight revenue in the quarter was $18 million versus $22.5 million in the December quarter last year.

Looking at the components of the change, test volumes declined by 19% year-over-year and average selling price declined by 2% year-over-year. From a volume perspective, we saw total GeneSight test orders increase 13% sequentially.

In women's health, prenatal screening revenue in the quarter was $21.1 million compared to $16.4 million in the same period last year. Test volumes in the quarter increased 15% year-over-year and average selling prices increased 12% year-over-year. Test volumes for prenatal also increased 7% sequentially.

We believe we could see additional ASP improvement next year given several recent reimbursement catalysts, strong momentum with our proprietary AMPLIFY technology launch and additional commercial initiatives we will discuss soon.

In urology, Prolaris prostate cancer testing revenue in the quarter was $8.4 million versus $6.8 million in the December quarter last year. Prolaris test volumes declined by 3% year-over-year, but increased by 16% sequentially.

Test pricing increased 26% year-over-year, which was partially attributable to the new Medicare LCD, which took effect December 6, but also due to improved commercial coverage for the test. I would now like to discuss our financial metrics for the quarter.

Adjusted gross margins were 70.1% and increased 30 basis points sequentially based upon better fixed cost absorption and stable pricing.

Test mix did negatively impact our gross margin in the quarter with increased contribution from lower gross margin prenatal revenue, and we are in the process of looking for ways to further improve efficiency in the current ongoing NovaSeq transition for our hereditary cancer and prenatal test, which will lower cost of goods sold when fully implemented.

Total adjusted operating expenses in the quarter were $119.6 million compared to $127.5 million in the December quarter of last year, a decline of $7.9 million.

On a sequential basis, total adjusted expenses increased by $6.2 million, which was attributable to the elimination of temporary COVID-19 cost reductions and higher benefit costs, which we typically see in the fourth quarter. We are currently evaluating our research and tech programs, and overall, we continue to seek ways to operate more efficiently.

We'll provide more detail on the impact of these programs going forward. Adjusted earnings per share were a net loss of $0.12 per share for the quarter. We ended the quarter with $225 million outstanding on our $300 million credit facility and $172 million in cash and cash equivalents.

In February, we received an approximately $89 million cash refund from the IRS. This amount was included in prepaid taxes as of December 31. We also expect significant cash from the asset sales in the first half of fiscal year 2021, which we will likely use in the near-term to pay down the drawn balance on our credit facility.

This quarter, we amended our revolving credit facility, which provides increased financial flexibility going forward by waiving certain financial covenants through the June 30, 2022 quarter.

Due to the continued uncertainty associated with the coronavirus pandemic, our business transformation and the timing of asset sales, we are not providing guidance for fiscal year 2021 or the March quarter.

However, we would remind investors that the first month of the current quarter was impacted by coronavirus activity, and we have seen some impact recently from severe weather in many parts of the United States. In addition, we typically experience negative seasonality in the March quarter with the reset of patient deductibles.

From an expense standpoint, we typically see higher personnel related costs and we'll see higher costs related to our technology, customer experience and tumor profiling product investments discussed previously. Consequently, investors should account for these factors and their impact on our sequential revenue and earnings trends.

We also continue to make progress with the planned divestitures of Myriad RBM, Myriad autoimmune and Myriad dermatology. We have received significant interest in these assets, and we'll provide an update on our progress when appropriate.

We continue to believe the divestiture of these assets will likely be completed and all transactions closed by the end of the September quarter. Now I would like to discuss some of the recent business catalysts, including examples of how we are executing against our strategy to elevate our products to full potential.

I'll start with women's health, where we made some important enhancements to our prenatal test this quarter. This quarter, we published the Validation study for our proprietary AMPLIFY technology, which increases the fetal fraction within a maternal blood sample, an average of 4 times.

This is important because it essentially eliminates the possibility of a no call result, which occurs in about one in 20 tests with our competitors, but also increases the accuracy of the test in patients such as obese women, which are prone to lower fetal fraction.

AMPLIFY also enhances the accuracy of our test for microdeletions, which tests for the five common microdeletions, including 22q or DiGeorge syndrome. In our published Validation, our accuracy for detecting the five common microdeletions was 97.2% sensitivity with 99.8% specificity, which was meaningfully better than our competition.

Given these conditions occur at rates similar to other commonly screened genetic conditions, such as down syndrome, cystic fibrosis and spinal muscular atrophy, we will be lobbying ACOG for inclusion of them in professional guidelines.

With our Foresight Carrier Screen, we launched an improvement this quarter, which increased detection rates for alpha thalassemia, an inherited blood condition, to greater than 99% versus prior detection rates of greater than 90%.

In certain populations, such as people of Hispanic origin, alpha thalassemia can occur at rates 200 times greater than cystic fibrosis and historically accounted for the majority of false negative calls for Foresight. This change reflects our mandate of expanding equal access to care for underserved populations within our healthcare system.

Moving on to our oncology business. We made significant progress with our companion diagnostics test that help to predict response to PARP inhibitors, as well as the Prolaris prostate cancer test and our EndoPredict breast cancer prognostic tests.

With our companion diagnostic test, we continue to see significant growth in the Japanese market with revenue up 167% year-over-year.

Beginning January 1st, we will begin receiving reimbursement for our myChoice CDx test in Japan, providing another catalyst for business in the country, along with the recent approval of BRACAnalysis CDx as a companion diagnostic in pancreatic and ovarian cancer.

We also announced our collaboration with Illumina to create a kit based version of myChoice CDx in key international markets, which will further increase access to our proprietary technology on a global basis. With Prolaris, our new Medicare LTV for unfavorable intermediate and high risk patients, took effect December 6.

We also had two important studies published this quarter, showing the ability of Prolaris to predict metastasis in men following radical prostatectomy and the ability of Prolaris to predict which men will benefit from multi modality therapy.

Finally, with EndoPredict, we received public reimbursement in Germany, which will take effect in the June quarter this year. Currently, about half of our European EndoPredict volume is in Germany, making it the most important country for coverage.

In mental health, we continue to be impacted by the COVID-19 pandemic but saw 13% sequential growth in test volume. Part of this is attributable to our primary care launch where we saw over 2,000 new ordering physicians for GeneSight this quarter. We recently had two important clinical utility publications on GeneSight.

The first study, which was published in psychiatry research compared GeneSight to single gene testing, utilizing the CPIC guideline. While both methods predicted patient drug blood levels, only GeneSight predicted variations in patient outcomes and a statistically significant prediction of remission response and system improvement.

The second study was a meta analysis of 1,556 patients based upon four prospective controlled clinical trials and published in pharmacogenomics. The meta analysis demonstrated statistically significant improvements in remission, response and symptom improvement in patients treated with GeneSight guided care.

Myriad is actively in discussions with commercial payers based upon these positive data sets. With that, I would now like to turn the call back over to Paul for closing remarks..

Thanks, Bryan. While we're in the early stages of our transformation journey, we have made progress on many elements of our strategic roadmap, and expect to continue to make steady progress, improving our financial performance through disciplined execution over the course of the year.

This year, we will also expect to set the foundation for long term growth by building stronger tech enabled commercial capabilities, improving rev cycle management, strengthening our branding and marketing efforts and executing on a number of initiatives to make it easier for customers to do business with us.

In May, we will mark the 30th anniversary of the founding of Myriad Genetics with a renewed commitment to our mission that will lead us into the future and broaden access to the power of genetic testing and precision medicine to more patients, including those in underserved communities, together with our provider and payer partners.

We look forward to sharing more information with you on the execution of our strategic transformation and growth initiatives at our Investor Day on May 4th. We thank you today for your participation. I'll now turn it back over to Scott for questions..

Thanks, Paul. As a reminder, during today's call, we use certain non-GAAP financial measures. A reconciliation of the GAAP financial results to non-GAAP financial results and a reconciliation of GAAP to non-GAAP financial guidance can be found on the Investor Relations section of our Web site. Now we're ready to begin the Q&A session.

To ensure broad participation in today’s Q&A session, we’re asking participants to please ask only one question and one follow. Operator, we're now ready for the Q&A portion of the call..

[Operator Instructions] Our first phone question is from Doug Schenkel with Cowen..

And I'll just ask the two of them upfront and then just listen to your responses. So the first is on reproductive testing, it's encouraging to see some improvement there as well as in some other categories. But given since the acquisition, this is at point, it's been a little bit of a slog. It is really encouraging to see some improvement.

I'm just wondering as we sit here today, how much of this you think is market improvement versus improved operation and improved focus and execution? And if it's more of the latter than the market, how we should be thinking about that as we update our models for calendar 2021? And then the second topic I want to talk about kind of building off of that is right now The Street is modeling.

It seems like mid-teens growth for 2021 at the top line. That would be the most robust we've seen in years, but it's obviously impacted by a combination of improved execution, improved focus and unfortunately, very favorable comps because of things that were largely out of your control.

I'm just wondering if you'd say you're comfortable with that or maybe cutting it a different way. The last couple of quarters, if we average them, revenues bracketed about $150 million, that's calendar Q3, calendar Q4.

Would you say that you're comfortable with, at least, an expectation for an annualized number using that basis and maybe a little bit better than that? Thank you..

Let me tackle the operational question first, which I think might be more satisfying than my answer to the second question. So we are pleased with the steady progress we're making. But in fact the good news, in my view, is that we're finding more opportunities to improve execution and operations, particularly in women's health.

And so we're clearly benefiting from the overall market improvement along with our competitors. But I would say, particularly in women's health and particularly on the heredity or cancer side of women's health, Nicole has become the interim President there. We've made some changes.

We've just found some challenging operational and lack of focus and discipline there. So I'm encouraged how the team is coming together and that we have an opportunity to build on what you saw in the last couple of quarters this year.

We're not giving guidance, and I'd like to be more helpful in terms of the model, maybe you and Scott can talk offline a little bit. But it's just early for us to kind of get out there and be more responsive to the specific numbers.

But I will tell you that we are seeing improvement and we're finding more opportunities as we built the budget this year, and are looking at really all aspects of the organization to execute better. You've also seen Bryan's team improve our revenue cycle. Those were some of the issues that we had in prenatal before, so we're executing better there.

In addition to taking more conservative approach to revenue recognition and those things. So I think, as we've promised, we want to deliver steady growth that everyone can count on and build sort of the operational capabilities for long term sustainable growth and profitability. And we're six months into kind of rebuilding that.

So I hope that's responsive..

And our next question is from the line of Tycho Peterson with JP Morgan..

I'll start with hereditary. Just even backing out the $5.3 million change in payer reserves and net recoupments, I think pricing was still down about 8% year-over-year. I know you said it just stabilized next quarter with the lapping of PAMA.

So I'm curious, is that still the view? And how material is the new Anthem agreement that should potentially help with hereditary pricing I would assume going forward?.

Yes, I think if you look back at last year, the impact of the United contract, we gave an order of magnitude for how big that was as well as for PAMA, how much those impacts are. So I think getting past the March quarter will be important to lap those comparables.

In terms of Anthem, I think the biggest thing that we see there is there's not a significant pricing benefit. I mean in terms of in network versus out of network, I think there the thing I would point more to is just the fact that it will make it easier for customers and physicians, patients to do business with us.

So that's probably the most important aspect of getting back in network with Anthem..

And I would just add that it is about patient access and along with our internal projects like Galileo, we just see the opportunity to grow volumes there by improving the patient experience, converting more people coming into our funnel and to our Web site.

The Anthem contract just further energizes those efforts to broaden our reach and with what we think is stabilizing pricing there. But no doubt, we continue to have some pricing pressure there..

And then the follow-up, just thinking a little bit about the strategy to reignite growth. I know that's more kind of Phase 3 in 2022. But are there particular things you've got your eye on now? And along those lines, I'm wondering if you could kind of size the microdeletion opportunity for Prequel, too.

I assume that's all kind of incremental to the plan..

I'll take the first part and let Scott tackle the second part. No doubt that as we have launched a transformation office and the initiatives within it, there are near term opportunities that we're going after as quickly as possible. And we certainly hope by the back half of the year, you'll see more of those in our run rate going into '22.

So we don't want to suggest that we're not trying to accelerate growth, particularly in the back half of this year. The first half of this year, we're going to be implementing a lot of changes. There are a lot of moving parts. We have the divestitures, those kinds of things.

Nonetheless, I think you've seen over the last couple of quarters, just more focus on day to day blocking and tackling and execution. But we do think across all the products, we're just increasing the accountability, the efficiency of the sales force, arming them with more digital tools.

Some of those investments are happening in the quarter, some more will happen this quarter. And we're feeling excited about it, Tycho. So we do think that we can build a lot of momentum going into next year.

And mainly on just better execution within these three core areas and having the noncore assets out of our product mix, I think, is going to help quite a bit..

Tycho, on your microdeletion question, we offer a very accurate microdeletion test. Currently consistent with the guidelines that are out there, we don't make it mandatory, we have physicians opt-in for the test. And so we only have a portion of our total tests where we run the microdeletion panel consistent with the physicians' desires on that.

And obviously, if guidelines change, we could reconsider that. But that's kind of currently where we stand..

Our next question is from Sung Ji Nam with BTIG..

Just a couple of quick ones, hopefully. So on Prolaris, obviously, you guys are making a lot of progress there. But if you're looking at the commercial channel for that, slightly different from what you're targeting for your entire oncology business.

So just kind of curious, how should we think about the synergy in terms of commercial channels for that business with the rest of your oncology portfolio? And obviously, there's also competition there.

So how should we think about Myriad's competitive positioning?.

I think in the near term, we're just trying to take advantage of the core channel and the opportunities that we have with the recent LCD. But clearly, we're trying to pursue the cross selling opportunities.

What I found and what we found in prenatal, quite frankly, is if folks are too focused on too many different products that we're not executing well. So the sales team need to be supported, trained, aligned with their incentive comp on the things that create the most value for us.

And so for example, in prenatal, we haven't been focusing on our myRisk test quite as much as we should and we've been underperforming there. Even though in oncology, we're overperforming there. But I think Polaris, we've got so many strong tailwinds. We want that team to continue to focus on that and to deliver on the unit economics better.

And I would say that's one thing that we brought more discipline across all of the products is making sure everyone understands as far down as to pretax, what the product economics are, so everyone is focusing on those things that can create the most value..

Sung Ji, one thing also just to think about with the urology sales forces -- the fastest growing area of hereditary cancer is actually in men with prostate cancer. And so having access to that channel is helpful in terms of the synergies that Paul talked about..

And then just on myChoice CDx, could you remind me again, is that a next gen sequencing based test that you guys offered before your partnership with Illumina? And then will the kit based test develop, will that be a next gen sequencing based? I'm just kind of curious if you're going to offer both the Illumina kit based as well as the LDT that you currently provide in your laboratories? Thank you..

So in the United States, we will offer the LDT based version of myChoice. Outside the US in select countries, we'll offer the kit based version. In certain countries like Japan where we have a lot of growth occurring, we'll continue to offer the LDT version as well..

And our next question is from Puneet Souda with SVB Leerink..

So first one is a high level question for Paul and then maybe for Bryan and Scott on the details of the business. So first one, maybe Paul, you obviously made a number of key initiatives here, progress is being made on number of fronts.

A number of folks who were hired into the positions, some that are promoted and it's clearly the transformation is taking place.

But at this point in time, what would you say is this still somewhat of a low hanging fruit in your view and what are the ones that are a little bit challenging and going to take a little bit of a long term initiative?.

Yes. It's a great question, and thanks for recognizing the progress that's been made. We're six months into this journey. And I am thrilled by the caliber of people that I've gotten to know here at the company.

There's just a lot of talent here and equally excited about the talent we've been able to recruit in areas like revenue cycle, and Maggie to help run our transformation office and improve, create some business development capabilities, and really in all the areas identified.

So what I would say is the low hanging fruit continues to be on the rev cycle side and in a more focused execution on the sales side. Again, we've got great people. But one of the things we've tried to do is when you look at the numbers, our top performing salespeople are our top performing salespeople. The top 25% are really outpacing everyone else.

And so we've taken some steps to make sure that they are receiving the support and consideration that that productivity deserves. So again, there's a lot of blocking and tackling right now. The refreshed branding and marketing strategy, I have a call right after this call to talk about that and how we advance that this quarter.

I think you'll have an opportunity on May 4th at our Investor Day, where we can really showcase in a lot deeper level our different strategic initiatives and more importantly, what they can mean and over what period of time. I know that's what everybody is kind of hungry for.

But as promised when I got here it was going to take us a while, and I think nine months is a pretty good time frame to roll those things out. But I would say we have low hanging fruit and still some of the things we talked about, better execution in women's health. We're seeing traction in GeneSight. We've got better clinical evidence there.

We're taking advantage of that to get better coverage. We've got opportunity in rev cycle to reduce no pay. We've seen some progress there. And most importantly, I'm just really proud of the team about how everybody has kind of come together and embrace change.

And lastly, you'll see over the next several quarters how focus on high priority projects, reducing complexity and reducing associated costs, will start benefiting the P&L as well. And I think you'll start to see that more in Q3 and Q4..

And on GeneSight, you pointed out the sequential growth here in the orders, which is encouraging.

Just wanted to get a sense of were there some commercial force sales force changes there? Just trying to parse out how much of this is just recovery from COVID? And how much of it is this is your own efforts and maybe some transformation being driven in that organization?.

Yes, I'd say it's a little good and a little luck. I mean, I think Mark and the team are more focused and executing well. And again, we engaged 2,000 new primary care physicians that have ordered GeneSight for the first time. So that's less of recovery from COVID than the work of the sales team and the sales force.

Nonetheless, across the board, we are doing a 360 of what are the people, process and programs that work the best and making sure that across the board, we're executing on those.

So again, that commercial strategy will take more time to refine, along with the marketing branding enhancements that I think we can make and rolling out some of the digital tools. Again, the team is embracing change, embracing this notion of focus and reducing complexity and as a byproduct, reducing cost.

And again, I think you'll see more of that in the back half of this year..

Our next question is from Derik De Bruin with Bank of America..

A couple of quick questions. So on GeneSight, can you talk a little bit about the ASP and just is it covered with the Anthem, Blue Cross Blue Shield? Is there any preauthorizations required? Who can prescribe it? Just a little bit color on that one. And then I have one follow-up..

So we said that we're in network for all products. That doesn't necessarily mean that you have positive medical policy around the different tests. And so I think that's an important distinction between in network and positive medical policy for the test.

I think when you think about the ASP side and the positive changes that we've seen is there's been a lot of focus on reducing no pays. When we look at the Medicare LCD, better execution on that and getting more of those tests paid for, there's been changes that progress there.

And that's really what led to kind of the sequential improvement in pricing..

And that's what we talked about last quarter that the importance of the LCD, and what we have not done a particularly good job over the last several years, was executing and making sure that the processes are in place to support our sales team to grow but also get paid for.

And I think that's what you started to see in the quarter with stable pricing even as some were suggesting that we'd have big drops in ASP and GeneSight.

So that was all about good execution by Mark and the team in terms of that transition and particularly lowering no pays on Medicare, and now turning our attention to reducing no pay on Medicaid, which is a big opportunity for GeneSight..

And can you just give us a little bit of color on the potential impact to the income statement as you think about removal of myPath melanoma and Vectra out of the model? And just sort of if you compare 2019 levels and what those business contributed and to earnings, and you think about going forward.

Just some way for us to sort of get a sense of what the impact of these divestitures could be? I mean, obviously, realizing you're going to get some cash for the transactions..

I think what we've said, Derik, thanks for the question, is myPath, first of all, is very, I would say, insignificant relative to the income statement, and certainly from a revenue perspective. RBM is pretty transparent and that shows up in the pharma line. So in terms of what the magnitude of that revenue number is.

And I think from a bottom line perspective, I think what we've said historically is just that when you look at it on a fully allocated basis, these are roughly sort of breakeven type proposition..

And I'll just add. And that is, again, I just want to underscore the ability to pro forma the company out, we're excited to do as much as you're excited to get in terms of those numbers.

But I would just underscore the divestitures will be accretive to our P&L once we are able to execute on all the direct and indirect costs associated with those businesses.

And secondly, that is before the redeployment of that capital, whether it's paying down the revolver or more importantly, focusing on new growth initiatives and new investments and M&A. So we're entering into those processes. They're moving quickly.

I know some folks have asked about why we haven't closed some of these yet, but these processes are moving as fast as anything I've seen. There's great interest and we're going to be selling them at multiples that exceed what we trade at.

So they are accretive on a number of different levels and we're very excited to put that cash back to work as we think about growth opportunities in '22 and '23. So hard stuff with respect to the teammates and we're trying to find good homes for these assets and they're good products, they didn't fit within our strategic framework.

But the industrial logic for us is incredibly sound and we feel even better about it today than we did when we announced the deals..

Our next question is from Jack Meehan with Nephron Research..

I wanted to dig in a little bit more on hereditary cancer testing. Based on the commentary, I'm getting volumes down around 15% year-over-year. Is that right? And maybe just talk about when I look at some of the national labs that reported, I think core volumes were kind of down high singles in the fourth quarter.

Can you just talk about the shape of the recovery you're seeing in hereditary cancer testing? Why it might be lagging? And do you think there's been any changes in the competitive environment amidst COVID?.

I'll start, and maybe Scott can provide some additional commentary. I think it's really hard when you look at the national labs just because of their broad test portfolio, it's hard to look at that and compare it with hereditary cancer.

I think what we've seen is within our business, it's sort of a tale of two cities with the oncology market having recovered fairly nicely. In women's health market when you think about the preventive care, somewhat discretionary OB/GYN visit being more severely impacted.

So we've seen a negative on the side in the preventive care channel, women's health channel and then oncology has returned fairly well. But I think it's just difficult to look at that in comparison with the national labs. We feel really good about where we're at in the recovery.

And again, when we look at our September quarter versus December quarter, we're happy with the growth that we saw sequentially..

And we have a number of different levers, Jack. Again, I'm not sure those are fair comparisons. But we're pretty pleased about where we are and where we're going and the opportunities, as I said, to fix some of the operational issues in women's health and the upside from here that we have there and the leverage in our P&L as we grow that again.

So anyway, hopefully, that's responsive..

And Paul, as a follow up. As you underwent the portfolio review over the last six months. Can you talk about how you decided where you would draw the line around assets that you'd like to keep versus divest? And in terms of the proceeds, do you think for Vectra and for RBM, you'll be able to recoup what Myriad initially invested.

Do you think based on the interest that's a good floor to think about?.

I don't think that's really relevant, quite frankly, in terms of how we're looking at this and as I said earlier, underscore the accretive nature of both the deals and the opportunities for use of proceeds. And so I think we're moving pretty quickly, and we've executed pretty quickly on a number of things over the last six months.

And I think over the next six months, you'll see the rest of the implementation and we'll be able to highlight those at our Investor Day. And again, it's been a thorough portfolio review in terms of where we sit today and where we think we compete.

It's an ongoing review and will be a yearly review, quite frankly, because I think all companies, and you know this from my prior history. We should always be ruthlessly objective about our market position, where we compete, how we deploy capital and be thoughtful about that.

So the strategic reviews were as much about figuring out where we're underperforming and executing as where they were about divestitures. And so still a lot of learnings, even in the last 48 hours that I've been meeting with the team on a couple of different things, opportunities that we're finding in different business units and stuff.

So it's still early innings. But quite frankly, I'm pleased, we're further ahead than I would have thought at this point in terms of the discovery and the ability to execute on new things..

And there are no further questions on the phone lines. I'll turn it back over to Mr. Gleason for any closing remarks..

Thank you. This concludes our earnings call. A replay will be available via webcast on our Web site for one week. Thanks again for joining us this afternoon..

Thank you, ladies and gentlemen, that does conclude today's call. We thank you for your participation, and ask that you please disconnect your lines..