NEW YORK – Despite strong provider demand and improving payor coverage driven by biomarker testing laws being passed around the US, a recent decision by UnitedHealthcare to drop coverage of multi-gene pharmacogenomics testing has cast uncertainty on Myriad Genetics' future revenue projections.
UnitedHealthcare accounts for approximately one quarter of the revenue from the GeneSight pharmacogenetic assay, and the insurer's decision, made earlier this week, sent the Salt Lake City-based genetic testing company's stock tumbling. The decision was also the main focus of investor questions in an earnings call after the close of the market on Thursday.
During the call, Myriad President and CEO Paul Diaz struck a note of cautious optimism, saying that although the decision caught the company "out of the blue" and appears not to take all available data into consideration, Myriad "has a great working relationship with United" and is engaging with the insurer to resolve the issue before the policy is set to go into effect in January of next year.
Diaz said that at the moment the company has little insight into what drove United's decision, particularly as no study is known to have been published that would have cast the assay's clinical utility and validity into question.
"We're really scratching our heads about this, but we'll know more in the weeks to come once we sit down with them," he said.
In its decision, United had cited a lack of evidence for the utility of PGx tests to guide the treatment of psychiatric and behavioral health conditions and cardiovascular disease, and it called the evidence for PGx multi-gene testing in general "insufficient at this time."
Although Diaz said that he believes that the existing body of evidence already supports GeneSight's clinical utility and validity, the company is prepared to provide further evidence to UnitedHealthcare.
Diaz emphasized that United's decision does not affect the firm's United Medicare Advantage or its managed Medicaid businesses. "Nor do we have any reason to believe that other payors are likely to adjust their medical policies, especially as biomarker laws in a growing number of states require state-regulated plans to expand coverage of PGx testing pursuant to national and local coverage determinations," he said.
While the loss of UnitedHealthcare's coverage of GeneSight represents a potential $40 million revenue hit, tailwinds, including rising provider demand and payor coverage, provided an approximately 34 percent year-over-year revenue boost to Myriad's pharmacogenomics testing revenues, rising to $47.7 million in Q3 2024 compared to $35.7 million in the same quarter last year.
Combined with 5 percent year-over-year rises in both hereditary cancer testing and tumor profiling, and a 10 percent year-over-year increase in prenatal testing sales, Myriad saw an overall 11 percent growth in revenue for the third quarter compared to Q3 2023. It reported $213.3 million in total revenues for the three months ended Sept. 30 compared to $191.9 million for the same quarter in 2023. This top-line result beat analysts' average estimate of $210.7 million.
Revenue for the company's hereditary cancer testing rose to $90.5 million from $86.5 million, while tumor profiling test revenue rose to $31.6 million from $30.2 million, and prenatal test sales reached $43.5 million this quarter versus $39.5 million for the comparable quarter of last year.
Total testing volume in Q3 was up 6 percent year over year to 376,000.
Chief Operating Officer Sam Raha said on the call that Myriad plans to launch its first commercial minimal residual disease test for breast cancer in the first half of 2026. This test comes from a cross-licensing agreement the firm reached with Personalis earlier this year. Myriad is currently engaged in five separate research collaborations to study the use of MRD testing in breast cancer.
"We look forward to sharing data from our ongoing studies in the first half of 2025 and submitting data to MolDx the second half of 2025 for reimbursement," Raha said.
Myriad's Q3 net loss was $22.1 million, or $.24 per share, compared to a net loss of $61.3 million, or $.75 per share, in Q3 last year. On an adjusted basis, the firm had EPS of $.06, beating the consensus Wall Street estimate of $.02 per share.
Myriad's R&D spending in Q3 2024 rose approximately 19 percent to $28.5 million from $24 million in the same quarter last year, while its SG&A expenses rose around 2 percent to $139.1 million compared to $136.1 million in Q3 of 2023.
Myriad ended the quarter with $99.9 million in cash and cash equivalents.
Myriad also narrowed its full-year 2024 revenue guidance to between $837 million and $843 million from a previous range of $835 million to $845 million. It expects its adjusted EPS to be between $.12 and $.14 for the year.