Myriad Genetics (MYGN) Q3 2026 earnings review
Myriad sells its prenatal unit, but its outlook points down
Myriad Genetics, a maker of genetic tests for cancer, mental health and pregnancy, is selling its shrinking prenatal unit while its remaining businesses barely grow. Total sales edged down 1% from a year ago to $203 million as average prices for cancer tests bounced back from last quarter's drop, beating the company's own floor. Chief executive Sam Raha lifted the middle of the full-year sales outlook by $5 million, but by our math the plan points to revenue falling 9% in the fourth quarter.
| Cancer and mental health revenue | $163.4M +1.4% from a year ago |
|---|---|
| Total revenue | $202.7M -1.5% from a year ago |
| EBITDA, excluding one-offs | -$5.3M +$10.3M a year ago |
| Full-year revenue outlook | Raised $5M middle of the range: $785M (-4.8%) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the $210 million cash sale of the prenatal unit to Labcorp fixes the balance sheet, while the core cancer business still faces billing pressure and rising costs. The cash inflow will top Myriad's $121 million debt and shed a product line whose volume fell 11%. The bad news: passing only part of the third-quarter beat into the annual plan leaves fourth-quarter sales and gross margin stepping down, and higher sales spending pushed operating profit excluding one-offs into a loss.
The question now is whether third-quarter price gains mark a real fix in insurer billing or just a pause before fourth-quarter sales drop. Either insurers have started paying hereditary cancer claims more reliably and the fourth-quarter outlook is cautious, or billing friction and high sales costs will eat up the cash from the Labcorp deal. Fourth-quarter cancer revenue per test and the 2027 profit plan will settle it.
🐂 Bull Case
Selling Prenatal Health Brings $210 Million
Myriad Genetics agreed to sell its Prenatal Health business, which runs genetic screens for pregnant women, to Labcorp for $210 million in cash plus inventory. Chief executive Sam Raha said the sale happens "to support our strategic intent to increase profitable growth by focusing on the Cancer Care Continuum", its suite of tests that screen and monitor cancer.
- Prenatal Health third-quarter revenue: $39.3 million, down 12% from a year ago on 11% lower volume
- Remaining cancer and mental health revenue: $163.4 million, up 1.4% on 3.5% higher volume
- Balance sheet before the deal: $107.1 million in cash against $121.1 million in long-term debt
The deal solves two problems at once when it closes in early 2027. It removes a business that has shrunk for seven straight quarters, and the cash proceeds exceed the company's entire debt balance, easing pressure from a loan agreement that requires minimum yearly sales.
What to watch: regulatory approval and closing by early 2027, along with how much laboratory and overhead cost stays behind after Prenatal Health leaves. A clean exit that pays off the loan would remove the balance sheet risk.
Cancer Test Prices Bounced Back From Q2
"Our third quarter 2026 financial results exceeded our expectations, led by our on-going focus on the Cancer Care Continuum (CCC)," Raha said. Last quarter, insurance denials and a write-down of older bills cut average revenue per cancer test by 15% from a year earlier and forced Myriad to lower its annual plan.
In the third quarter, the genetic testing company collected $1,264 per cancer test by our math, up 5.3% from the second quarter. Revenue per test for hereditary cancer rose 9% from last quarter, which Raha credited to "early progress with payer engagement and revenue cycle management initiatives". Cancer test volume also grew 4% from a year ago to 98,000 tests, lifting total sales to $202.7 million.
What to watch: Note 2 of the third-quarter Form 10-Q filing, which discloses adjustments for bills from earlier periods. That footnote will show whether better collections came from fewer insurance denials on new tests or simply the absence of last quarter's $11 million write-down.
🐻 Bear Case
The Outlook Points to a Fourth-Quarter Drop
Raha said the company is raising the middle of its full-year revenue outlook because of the third-quarter performance and current trends. Third-quarter sales beat the second-quarter floor by $12 million, so a matching raise would have lifted the annual target by at least that amount.
Instead, Myriad raised the bottom of its full-year range by $10 million and left the top unchanged, lifting the middle of the range by only $5 million to $785 million. By our math, that leaves $191.2 million of revenue for the fourth quarter, down 5.7% from the third quarter and down 8.9% from a year ago. For the cancer and mental health businesses that Myriad is keeping, the outlook implies fourth-quarter sales of $152.2 million by our math, down 7.7% from a year ago.
This matters because beating a low third-quarter bar proves the prior forecast was cautious, not that insurance reimbursement friction has ended. Hereditary cancer sales still fell 1% from a year ago because lower insurer payments outweighed a 6% volume gain.
What to watch: fourth-quarter revenue per cancer test and initial 2027 revenue targets early next year. Another drop in price per test would show that insurers are still denying claims.
Higher Sales Spending Pushed Results Into Loss
Myriad has launched three efficiency programmes in two years, including a project called Ascend last quarter, to fund its commercial expansion and improve profit. Yet operating costs excluding one-offs rose $9.9 million from a year ago to $149.9 million, which the diagnostics maker attributed to its "multi-year investment in key strategic areas".
- Sales and marketing expense: $83.9 million, up 6.9 percentage points of revenue to 41.4% by our math
- Cost of making and running tests: $65.0 million, up 2.0 percentage points of revenue, cutting gross margin to 67.9%
- Strategic realignment charges: $12.6 million this quarter, with $10.2 million paid in cash for severance and consultants
- Earnings before interest, tax, depreciation and amortisation (EBITDA), excluding one-offs: a $5.3 million loss, down from a $10.3 million profit a year ago
Because the company hired over 100 sales representatives before fixing insurance billing, operating cash flow before adjustments turned negative at $6.5 million. Myriad has still given no savings target or timeline for Ascend.
What to watch: operating expenses excluding one-offs in the fourth quarter and any concrete savings target for Ascend. Until spending falls as a share of sales, new test volumes will not produce profit.
Risks This Quarter Didn't Answer
Several standing risks around new product reimbursement, billing write-downs and legal exposure received no new numbers in the earnings release.
- Medicare coverage for Precise MRD, a blood test that checks if cancer has returned: Myriad is still engaging administrator Palmetto GBA "to establish Medicare coverage of its Precise MRD test for breast cancer patients", which gates 2027 sales.
- Prior-period billing write-downs and insurer denial rates: not in the release; the third-quarter Form 10-Q filing will show whether old bill write-downs repeated.
- Whistleblower False Claims Act lawsuit: survived a motion to dismiss in July with no loss reserve recorded; the Form 10-Q legal footnote will carry any update.
- Execution by a newly hired leadership team: the chief executive, finance chief, commercial chief and technology chief all joined within the past two years and now must close the Labcorp deal while restructuring costs.
👓 Other Themes
New Data Build the Cancer Pipeline
Myriad presented new clinical data in October from the MONSTAR-SCREEN-3 study supporting its Precise MRD blood test in colorectal and pancreatic cancers after surgery. The company also partnered with SOPHiA GENETICS to test a prostate cancer genomic score in clinical trials with AstraZeneca. Neither project adds revenue in 2026, because commercial sales depend on future insurer coverage and trial results.
💲 Other KPIs
Mental Health sales, which come from the GeneSight test that helps doctors choose antidepressant medications, rose 2.1% from a year ago. Volume grew 2.9% to 141,000 tests, while average price per test dipped 1%. That beats last quarter's 2.6% sales decline, which suffered from a write-off of old bills, though volume growth has slowed over the past two quarters.
Uncollected customer bills on the balance sheet fell 8.5% by our math from $115.3 million at the end of 2025, and dropped from $109.5 million in the second quarter. Lower receivables reflect both the second-quarter write-down of older hereditary cancer and mental health bills and slightly faster cash collection in the third quarter.
The number of shares used to calculate per-share loss rose 2.8% from 93.1 million a year ago and crept up from 94.8 million in the second quarter. Myriad does not buy back stock, so employee stock compensation steadily adds about 2.5 million shares a year.
🔮 Guidance
Raised. Myriad lifted the bottom of its annual sales plan by $10 million, raising the middle of the range by $5 million to $785 million, down 4.8% from last year by our math. For the first time, it split the target between the cancer and mental health businesses it is keeping ($620–630 million) and Prenatal Health (~$160 million). By our math, that leaves $191.2 million for the fourth quarter, down 8.9% from a year ago.
Unchanged. The company kept its full-year gross margin target at 66% to 67%, excluding non-cash and restructuring costs, after cutting it from 68%–69% last quarter. Because the metric stood at 68.0% across the first nine months and 68.2% in the third quarter, the middle of the annual plan implies a drop to 61.9% in the fourth quarter by our math, reflecting "lower overall test volumes and incremental investments in laboratory personnel".
❓ Key Questions
Why does the outlook point to a fourth-quarter drop?
Third-quarter sales beat the second-quarter level by $12 million, but the annual outlook rose by only $5 million at the middle of the range. What causes the implied $11.5 million sequential revenue drop and 6-point gross margin drop in the fourth quarter?
How much overhead cost stays after Prenatal Health leaves?
Prenatal Health brings in about $160 million a year, or a fifth of total revenue. When Labcorp buys the unit in early 2027, how much laboratory and administrative expense goes with it, and will Myriad pay off its $121.1 million loan?
What was the prior-period billing adjustment in the third quarter?
Last quarter, a $11 million write-down of older bills drove the price drop, a figure disclosed only in the Form 10-Q filing. What was that adjustment in the third quarter, and what is the current insurer denial rate on hereditary cancer tests?
When will the Ascend programme show a savings target?
Myriad recorded $12.6 million in restructuring charges this quarter while sales and marketing costs rose 18% from a year ago. What is the total cost of the Ascend consulting programme, and how many dollars will it cut from annual operating expenses?