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Myriad Genetics to Settle Shareholder Lawsuit for $77.5M; Q2 Revenues Grow 2 Percent

A previous version of this story contained an incorrect reference to the lawsuit that was settled.

NEW YORK – Myriad Genetics said Thursday after market close that it has agreed to pay $77.5 million to settle a longstanding class-action shareholder lawsuit. The total will include at least $20 million in cash, with as much as $57.5 million payable in company stock.

Filed in 2019, the suit alleged that Myriad made "false and misleading statements" to the public regarding a regulatory review of its GeneSight pharmacogenomics test as part of heightened US Food and Drug Administration oversight of PGx tests that year. 

Salt Lake City-based Myriad said that it expects a federal judge in Utah to give preliminary approval to the settlement before the end of the third quarter and that the firm will complete payment in the first quarter of 2024.

"We expect the ultimate payment to be more weighted toward cash rather than stock," CFO Bryan Riggsbee said during an after-market call with investors.

On the same call, CEO Paul Diaz said that the settlement agreement allows Myriad to "move forward without this distraction."

Myriad also said Thursday that Q2 revenues grew 2 percent year-over-year to $183.5 million from $179.3 million in the same period in 2022, falling short of the Wall Street consensus estimate of $187.1 million.

The molecular diagnostics firm saw revenue growth in every segment of its business except hereditary cancer testing, which fell to $76.7 million, 3 percent less than the $79.4 million booked in Q2 2022.

In the recently completed quarter, tumor profiling revenue increased 7 percent to $36.0 million from $33.5 million a year earlier. Revenues for prenatal testing also grew 7 percent year on year to $35.6 million from $33.3 million, while pharmacogenomics sales ticked up 6 percent to $35.2 percent from 33.1 percent.

Still, hereditary cancer testing volume increased 20 percent in Q2, with particular strength in women's health, the company said. Excluding contributions from the SneakPeek Early Gender DNA Test, prenatal testing volume grew 12 percent year over year. Overall testing volume, meanwhile, grew by 38 percent to 358,325.

Myriad bought SneakPeek when it acquired consumer genetics company Gateway Genomics late last year for $67.5 million. Diaz said Thursday that the firm would continue to look "opportunistically" for future acquisitions.

R&D spending at the company rose 4 percent year-over-year to $21.2 million from $20.3 million in Q2 2022, while SG&A expenses grew 11 percent to $140.7 million from $127.1 million a year earlier.

The company's net loss increased to $116.1 million, or $1.42 per share, from $14.1 million, or $.18 per share, in the same quarter a year ago. For the most recent quarter, Myriad reported an adjusted net loss per share of $.08, in line with analysts' expectations.

During the quarter, Myriad closed on a $90 million asset-based credit facility from JPMorgan Chase Bank, Wells Fargo Bank, and Bank of America from which it has already drawn $40 million. The firm has the option to increase the facility to a total of $115 million.

Myriad had $102.8 million in cash and cash equivalents as of June 30.

The firm reaffirmed its previous 2023 revenue guidance range of $730 million to $750 million and full-year adjusted EPS guidance to a loss of between $.36 and $.24 per share. Diaz said that the company still expects to return to profitability by Q4.

COO Nicole Lambert said that the firm has begun transitioning to its "labs of the future" in Salt Lake City and in South San Francisco, California. Myriad will open the latter facility Sept. 19 when it hosts its annual investor day there.

Myriad shares were down about 8 percent to $19.07 in Friday morning trading on the Nasdaq.