SEC Filing | Myriad Genetics, Inc.

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mygn-10q_20191231.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-26642

MYRIAD GENETICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	87-0494517
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

320 Wakara Way, Salt Lake City, UT	84108
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (801) 584-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Public Common Stock, $0.01 par value

MYGN

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 31, 2020 the registrant had 74,550,111 shares of $0.01 par value common stock outstanding.

MYRIAD GENETICS, INC.

INDEX TO FORM 10-Q


		Page
	PART I - Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (Unaudited) as of December 31, 2019 and June 30, 2019	3

	Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended December 31, 2019 and 2018	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended December 31, 2019 and 2018	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the six months ended December 31, 2019 and 2018	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended December 31, 2019 and 2018	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

	PART II - Other Information

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	33

Signatures		35

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(In millions)

	December 31,			June 30,
ASSETS	2019			2019
Current assets:
Cash and cash equivalents	$	81.2		$	93.2
Marketable investment securities		60.4			43.7
Prepaid expenses		16.2			16.6
Inventory		28.1			31.4
Trade accounts receivable		118.3			133.9
Prepaid taxes		24.7			25.1
Other receivables		3.5			4.7
Assets held for sale		32.9			—
Total current assets		365.3			348.6
Property, plant and equipment, net		36.5			57.3
Operating lease right-of-use assets		67.3			—
Long-term marketable investment securities		47.6			54.9
Intangibles, net		653.5			684.7
Goodwill		408.1			417.2
Total assets	$	1,578.3		$	1,562.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	21.0		$	33.3
Accrued liabilities		61.1			78.9
Current maturities of operating lease liabilities		12.8			—
Short-term contingent consideration		3.4			3.4
Deferred revenue		3.6			2.2
Liabilities held for sale		10.5			—
Total current liabilities		112.4			117.8
Unrecognized tax benefits		22.4			21.7
Noncurrent operating lease liabilities		58.7			—
Other long-term liabilities		—			7.8
Contingent consideration		6.9			10.4
Long-term debt		225.1			233.5
Long-term deferred taxes		75.5			82.6
Total liabilities		501.0			473.8
Commitments and contingencies
Stockholders’ equity:
Common stock, 74.5 and 73.5 shares outstanding at December 31, 2019 and June 30, 2019 respectively		0.7			0.7
Additional paid-in capital		1,085.1			1,068.0
Accumulated other comprehensive loss		(5.3	)		(5.4	)
Retained earnings (deficit)		(3.3	)		25.6
Total Myriad Genetics, Inc. stockholders’ equity		1,077.2			1,088.9
Non-Controlling Interest		0.1			—
Total stockholders' equity		1,077.3			1,088.9
Total liabilities and stockholders’ equity	$	1,578.3		$	1,562.7

See accompanying notes to condensed consolidated financial statements.

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)

	Three months ended						Six months ended
	December 31,						December 31,
	2019			2018			2019			2018
Molecular diagnostic testing	$	181.1		$	203.0		$	353.1		$	392.0
Pharmaceutical and clinical services		14.0			13.8			28.3			27.1
Total revenue		195.1			216.8			381.4			419.1
Costs and expenses:
Cost of molecular diagnostic testing		41.0			44.0			82.2			86.3
Cost of pharmaceutical and clinical services		8.6			8.1			17.1			15.5
Research and development expense		18.8			22.4			40.1			43.5
Change in the fair value of contingent consideration		(0.1	)		1.0			0.6			1.4
Selling, general, and administrative expense		135.6			135.2			271.1			265.1
Total costs and expenses		203.9			210.7			411.1			411.8
Operating income (loss)		(8.8	)		6.1			(29.7	)		7.3
Other income (expense):
Interest income		0.8			0.9			1.7			1.6
Interest expense		(2.5	)		(3.4	)		(5.4	)		(5.6	)
Other		(0.9	)		—			(0.3	)		1.1
Total other expense:		(2.6	)		(2.5	)		(4.0	)		(2.9	)
Income (loss) before income tax		(11.4	)		3.6			(33.7	)		4.4
Income tax provision (benefit)		(3.1	)		1.0			(4.8	)		2.6
Net income (loss)	$	(8.3	)	$	2.6		$	(28.9	)	$	1.8
Net loss attributable to non-controlling interest		—			—			—			(0.1	)
Net income (loss) attributable to Myriad Genetics, Inc. stockholders	$	(8.3	)	$	2.6		$	(28.9	)	$	1.9
Earnings (loss) per share:
Basic	$	(0.11	)	$	0.04		$	(0.39	)	$	0.03
Diluted	$	(0.11	)	$	0.03		$	(0.39	)	$	0.02
Weighted average shares outstanding:
Basic		74.4			74.2			74.1			73.6
Diluted		74.4			76.5			74.1			76.9

See accompanying notes to condensed consolidated financial statements.

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)

	Three months ended						Six months ended
	December 31,						December 31,
	2019			2018			2019			2018
Net income (loss) attributable to Myriad Genetics, Inc. stockholders	$	(8.3	)	$	2.6		$	(28.9	)	$	1.9
Unrealized loss on available-for-sale securities, net of tax		—			(0.2	)		—		$	(0.4	)
Change in foreign currency translation adjustment, net of tax		2.2			0.9			0.1			1.3
Comprehensive income (loss)		(6.1	)		3.3			(28.8	)		2.8
Comprehensive income attributable to non-controlling interest		—			—			—			—
Comprehensive income (loss) attributable to Myriad Genetics, Inc. shareholders	$	(6.1	)	$	3.3		$	(28.8	)	$	2.8

See accompanying notes to condensed consolidated financial statements.

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In millions)

						Accumulated			Retained					Myriad
			Additional			other			earnings			Non-		Genetics, Inc.
	Common		paid-in			comprehensive			(accumulated			Controlling		Stockholders’
	stock		capital			loss			deficit)			Interest		equity
BALANCES AT JUNE 30, 2018	$	0.7	$	915.4		$	(4.1	)	$	54.1		$	—	$	966.1
Issuance of common stock under share-based compensation plans		—		1.9			—			—			—		1.9
Issuance of common stock for acquisition		—		127.4			—			—			—		127.4
Share-based payment expense		—		7.7			—			—			—		7.7
Net loss		—		—			—			(0.7	)		—		(0.7	)
Other comprehensive loss, net of tax		—		—			(0.2	)		—			—		(0.2	)
BALANCES AT SEPTEMBER 30, 2018	$	0.7	$	1,052.4		$	(4.3	)	$	53.4		$	—	$	1,102.2
Issuance of common stock under share-based compensation plans		—		2.6			—			—			—		2.6
Share-based payment expense		—		7.5			—			—			—		7.5
Repurchase and retirement of common stock		—		(16.9	)		—			(33.1	)		—		(50.0	)
Net income		—		—			—			2.6			—		2.6
Other comprehensive loss, net of tax		—		—			(0.7	)		—			—		(0.7	)
BALANCES AT DECEMBER 31, 2018	$	0.7	$	1,045.6		$	(5.0	)	$	22.9		$	—	$	1,064.2

BALANCES AT JUNE 30, 2019	$	0.7	$	1,068.0		$	(5.4	)	$	25.6		$	—	$	1,088.9
Issuance of common stock under share-based compensation plans		—		(0.5	)		—			—			—		(0.5	)
Share-based payment expense		—		8.8			—			—			—		8.8
Net loss		—		—			—			(20.6	)		—		(20.6	)
Other comprehensive loss, net of tax		—		—			(2.1	)		—			—		(2.1	)
BALANCES AT SEPTEMBER 30, 2019	$	0.7	$	1,076.3		$	(7.5	)	$	5.0		$	—	$	1,074.5
Issuance of common stock under share-based compensation plans		—		1.8			—			—			—		1.8
Share-based payment expense		—		7.0			—			—			—		7.0
Non-controlling interest		—		—			—			—			0.1		0.1
Net loss		—		—			—			(8.3	)		—		(8.3	)
Other comprehensive income, net of tax		—		—			2.2			—			—		2.2
BALANCES AT DECEMBER 31, 2019	$	0.7	$	1,085.1		$	(5.3	)	$	(3.3	)	$	0.1	$	1,077.3

See accompanying notes to consolidated financial statements.

MYRIAD GENETICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

	Six months ended
	December 31,
	2019	2018
CASH FLOWS FROM OPERATING ACTIVITIES: