Ladies and gentlemen, thank you for standing by. Welcome to the Myriad Genetics First Quarter 2019 Financial Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. As a reminder, this conference is being recorded, Tuesday, November 6, 2018. I would now like to turn the conference over to Scott Gleason, VP, Investor Relations for Myriad Genetic Laboratories. Please go ahead.

Thanks, Tina. Good afternoon, and welcome to the Myriad Genetics fiscal first quarter 2019 earnings call. My name is Scott Gleason, and I'm the SVP of Investor Relations and Corporate Strategy. During the call, we will review the financial results we've released today, after which we'll host a question-and-answer session. If you've not had a chance to review the earnings release, it can be found in the Investor Relations section of our website at myriad.com. Presenting for Myriad today will be Mark Capone, President and Chief Executive Officer; and Bryan Riggsbee, Chief Financial Officer. This call can be heard live via webcast at myriad.com. The call is being recorded and will be archived in the Investors section of our website. In addition, there's a slide presentation pertaining to today's earnings call on the Investors section of our website 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 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'm pleased to turn the call over to Mark.

Thanks, Scott. I would like to start today's call by providing an overview of our business highlights from the first quarter, after which Bryan Riggsbee will provide details regarding our financial results and guidance, and I will finish the call by providing a more detailed look at key accomplishments during the quarter. Revenue in the first quarter met our expectations at $202.3 million and adjusted earnings per share significantly exceeded expectations at $0.43 per share. This represents revenue growth of 13% on a year-over-year basis and earnings growth of 48%. On an organic basis, excluding the Counsyl acquisition, revenue grew 2% and earnings were $0.52 per share, which represents a 79% increase over last year. As Bryan will discuss in the financial section of the call, late in the quarter we identified two issues that impacted revenue for GeneSight and prenatal testing, and as a result we have revised revenue guidance for fiscal 2019 to $855 million to $865 million. We view these issues as transitory, and given the progress on profitability, earnings guidance for the fiscal year remains unchanged. We continue to believe there are multiple potential upside drivers to this revised guidance as we realize synergies from the Counsyl acquisition, continue to grow new product volumes, and secure additional new product coverage decisions. For the quarterly summary, I want to highlight progress on our critical success factors starting with our objective to maintain a strong hereditary cancer foundation. This quarter hereditary cancer revenue is relatively flat on a year-over-year basis, which exceeded our expectations given the unfavorable pricing comparable. As a reminder, the pricing reductions in our long-term contracts were fully implemented in the second quarter of fiscal 2018. Therefore, given the strong hereditary cancer performance in the first quarter and with stable year-over-year pricing, we are well-positioned…

Thanks, Mark. I would like to start by providing a more in-depth overview of our fiscal first quarter financial results. First quarter total revenues of $202.3 million were up 13%, compared to the $178.8 million we reported in the same period in the prior year. As a reminder, our financial results for fiscal year 2018 have been adjusted to reflect the impact of ASC 606 accounting on our historical revenues. Hereditary cancer revenue in the quarter of $116.3 million was relatively flat, compared to $117 million in the first quarter of fiscal year 2018. Notably, pricing has been stable on a sequential basis for four consecutive quarters and volume has grown on a year-over-year basis for seven consecutive quarters. GeneSight revenue in the quarter was $29.3 million and grew 2% year over year. Volume in the quarter was strong and was up 28% year over year and down only 2% sequentially in our seasonally weakest quarter. Once again, this quarter we saw record ordering physicians continuing the strong trends that we experienced following the presentation of the GUIDED data at the American Psychiatric Association Meeting last May. Despite the strong volume growth, revenue growth lagged in the quarter predominantly due to a change in Medicare documentation requirements. Late in August, we implemented changes requested by Medicare to obtain additional documentation and physician attestation related to DSM-5 criteria on the test request form. Importantly, there were no changes to the LCD itself, but merely the documentation supporting the indications for use. While we are actively working with physicians to meet these new requirements, we are assuming it would take a few quarters to achieve compliance. Until then, samples without this documentation will not be submitted for reimbursement. Additionally, we have seen some reduction in average selling price as our volume mix…

Thanks, Bryan. Now I would like to provide additional details on key accomplishments in the first quarter. In the hereditary cancer business, we recently published a study in obstetrics and gynecology that evaluated almost 4,000 women presenting at OB/GYN offices in 15 practices across 2 states. Patients were evaluated using NCCN Guidelines to determine if they met criteria for hereditary cancer testing. Importantly, 24% of the patients who provided family history information met criteria for hereditary cancer testing. Applying this to the U.S. population would establish a preventive care market of $70 billion, over 3 times the size of previous market estimates. Given the robustness of the study, it is likely that previous estimates regarding market size have seriously underestimated the true population. What is encouraging is that the criteria used in this study are already in NCCN Guidelines and in payer coverage policies. So our opportunity is to drive additional penetration into what now appears to be a much larger market. Additionally, we added our 2019 to myRisk with the addition of HOXB13. This gene plays an important role in hereditary prostate cancer and conveys up to a 52% lifetime risk for the disease. From a medical management perspective, men who test positive for a variant in the HOXB13 gene should receive more frequent in the earlier PSA screening relative to the general population. Finally, as we continue to differentiate our testing methodology from other laboratories, we had an important study published in The Journal of the American Medical Association. The study assessed Myriad's Variant Classification Program by evaluating over 1.45 million patients who were tested over a 10-year period. The study found that approximately 25% of all variants of unknown significance were definitively classified in this timeframe and the results were provided to patients on amended reports. Overall,…

Thanks, Mark. As a reminder, during today's call we use certain non-GAAP financial measures. A reconciliation of the GAAP financial results to the non-GAAP financial results and reconciliation of GAAP to non-GAAP financial guidance can be found under the Investor Relations section of our website. Now we're ready to begin the Q&A session. In order to ensure broad participation in today's Q&A session, we ask participants to please ask only one question and one follow-up. Tina, we're now ready for the Q&A portion of the call.

Thank you. Our first question comes from the line of Puneet Souda with Leerink Partners. Please go ahead.

Yeah. Hi, Mark. Thanks for taking the question. So, first one obviously on the LCD and in terms of the Medicare pricing, I'm just trying to understand sort of what – on GeneSight, what triggered this in the first place and why did Medicare had to sort of review this documentation? What are the steps you're taking on blocking and tackling and with the physician practices to address this in the near term? And just trying to understand, does this change any further discussions with commercial payers? And should we think about Medicare pricing of $2,000 as being reviewed longer term or addressed longer term here? Thanks.

Okay. So I hopefully captured all of those, Puneet. So let me jump into a couple of those. First, from the standpoint of the LCD, as noted by Bryan, it's important to note that there was actually nothing changed in the LCD. The LCD has always laid out a series of criteria that are required in order for a sample to be reimbursed. We've had – in the past we provided documentation to support that indication for use. Medicare decided that they would like some additional documentation consistent with the current criteria. Now that's not totally unexpected, I suppose, in that – excuse me – if you're looking to make that test available in the primary care market, this is the type of data that you would like to collect from primary care physicians that are ordering the test. And so it's probably a good step to take that now so that when we launch into the primary care setting, that we will not have to retrain all of those physicians to provide that additional documentation. So from an implementation standpoint, of course, one of the things that we have is an electronic portal that captures a lot of this documentation and information from physicians. So we are updating that portal so that physicians can use that to supply the information electronically. Obviously we have to go into these practices which we visit frequently and remind them that there is this additional documentation that has to be provided. That just takes frequency in order to ensure that we have high levels of compliance. So between sales force visits, electronic portals, calls from customer service, all of those things are things that we're doing just to ensure we continue to increase compliance. From a commercial standpoint, we don't see this having really any impact on – as we secure coverage decisions, if commercial payers have some level of documentation they might require, we think it would be pretty much in-line with what Medicare has asked for. And so again we think all the processes we're putting in place and the updates we're making to that will serve us well for any commercial coverage decisions. And then from a pricing standpoint for Medicare, none of this changes any of that pricing. That's consistent with the target price that we've talked about the $2,000 ASP. I think it's also important as a reminder that we also have contracts signed with 25% of covered lives in the United States with commercial payers, and all of those contracts are also at that targeted ASP. And so none of that would, of course, be affected by any documentation that's required to support the coverage decision. So hopefully that touches on all of your questions, Puneet.

Yeah, absolutely. Thanks. And then just one briefly on GeneSight publication requirement. Does that change the quality or maybe the impact factor of the journal that you were pursuing in the first place versus what's being pursued now, and sort of what confidence do you have that the journal will not require another disclosure or some form of disclosure of GeneSight algorithm? Thanks.

Yeah, thanks, Puneet. The second journal we submitted to is still a very high-quality journal. So we feel very good about the journal selection that the authors have made. I think from the perspective of Myriad and the company perspective, really the only requirement is that we just get this published in a peer-reviewed journal article. That's really all the tech assessment committees are interested in is that they need to be able to have a citation. They evaluate the data on its own merits and they have people well capable of doing so. And so we just need to get it published in any peer-reviewed journal, and that's, of course, what we're working towards. Obviously, we didn't expect that last-minute request from the first journal, so you can never be certain that there might not be something else requested like that, but we have experience with this journal. And so our belief is that a request such as that from this journal would be highly unlikely. It's also highly unlikely for that request to be made for any of our tests. It has happened before with other tests, but it's really highly, highly unusual. So our belief is – and we're not expecting a similar request to be made in this particular case.

Okay. Thank you. That's helpful. Thanks, Mark.

Our next question comes from the line of Bill Quirk with Piper Jaffray. Please go ahead. William R. Quirk - Piper Jaffray & Co.: Great. Thanks. Good afternoon, everybody. Mark, just staying on the GeneSight topic, you mentioned in both the release and in your prepared comments that you expect to have the article accepted in the second quarter. Should we then assume that we would see publication in the third or the fourth quarter, just recognizing that we're not working with perfect calendar here, but just trying to get a sense or a little tighter sense, I guess, as to when we might see the publication itself?

Yeah. Thanks, Bill. So, two different timelines for publication, the first is when it goes online and then the second is, of course, in print. Online generally happens relatively quickly. It depends a little bit on each journal. Oftentimes print then is delayed by weeks beyond the online. So, online typically is pretty quick. The reason we focused on accepted is because we have secured agreements from commercial payers and from Medicare that they don't want to wait for publication, be it online or in print. They want the journal or the article immediately upon acceptance. And so that's why we focused on that because that's really what people have asked for is to deliver that immediately. And so that becomes, I think, the critical timeline for us upon acceptance then the clock will start for tech assessment bodies, as well as Medicare because as I mentioned, same day, they are going to get the entire dossier with that accepted manuscript. William R. Quirk - Piper Jaffray & Co.: Okay. That's a helpful clarification. Thank you. And then shifting gears, two more questions. Hereditary cancer continues to show some nice resurgence here. Can you help quantify for us kind of how riskScore is kind of changing that whole competitive dynamic? And then secondly, just on getting back in network with Counsyl for United, I recognize you took it out of your guidance but you have a pretty longstanding relationship with that organization. So I was just hoping for some additional color around those negotiations, any sort of timetable, et cetera? Thanks, Mark.

Hi. Thanks, Bill. Yeah, riskScore is obviously a very important differentiator. Instead of 10% of women walking out of an OB-GYN's office with definitive understanding of her risks, with that, 100% of women can walk out with a clear understanding of risks. That's a really important differentiator relative to what anybody else can offer in this space. One of the reasons that's so important is the preventive care market, as you know, Bill, is a very large market with the most recent study. It actually looks a lot larger than previous estimates. But one of the things that has prevented deeper penetration into that preventive care market is the fact that women don't always walk out with a definitive answer. And as a result, physicians have historically leaned towards patients with much higher risk profiles before they'll go through the process of ordering the test. We've seen that begin to change with riskScore. As we noted, a 60% of the eligible population actually has relatively low family history levels but they only represented about 10% of the testing. Again, showing that doctors have historically leaned towards patients with much higher family histories, that's beginning to change and we saw very nice double-digit growth in those patients with those lower levels of family history. So we think we're still in the early days of that. We continue to work to get that published. That validation study is still working its way through the manuscript process, so we think there's still a lot of room to continue to differentiate that. From the standpoint of Counsyl or the prenatal test and United, you're right, we do have a very long-standing relationship with UnitedHealthcare for many decades. That's been a very productive relationship. The decision to move to out of network status was, of course, made by management that's no longer had at the company. And so we're in positive discussions with UnitedHealthcare right now about how we could potentially add the tests to our current agreement with United so that we can make sure their members continue to have the benefit of these tests as an in-network's benefit because particularly you want to combine that now with the hereditary cancer testing and have that all in one place. So members very much would like that, and so that's why we're in those discussions with United and we're having positive discussions with them. William R. Quirk - Piper Jaffray & Co.: Great. Thank you very much.

Our next question comes from the line of Steve Beuchaw with Morgan Stanley. Please go ahead. Steve Beuchaw - Morgan Stanley & Co. LLC: Hi. Good afternoon, and thanks for the time here. First, one more actually coming back to the GeneSight point. I just want to be really specific. In the commentary where you're talking about rolling out software and talking about the timelines here, are you suggesting that the change here, as it relates to documentation, should have no impact on the volume of tests ordered? Said another way, if you were to look retrospectively, do you think that this change on documentation would have any impact on the percentage of tests that are billable and it's exclusively just an administrative change, or is there something about this documentation change that might change the way that docs think about ordering the test?

Yeah. Thanks, Steve. A good question and important clarification. As we noted, we really didn't see impact from a volume perspective in the first quarter. We're up 28% year over year. So we continue to see very nice volume. And this doesn't change the patients that physicians would typically order the product for. And so we don't really see any impact from that. It really is just a function of providing the documentation to support that. And unless that documentation is there, we can't submit the sample to Medicare for reimbursement. So it hasn't really affected utilization. It hasn't affected the patients that the test is ordered for. It's just this transitory issue on what we can submit based on having a full complement of documentation. Steve Beuchaw - Morgan Stanley & Co. LLC: Okay. Perfect. And then I want to follow-up on your prepared remarks, Mark, about the communication last week from the FDA to consumers about pharmacogenomics. I wonder if you've had any chance to dialogue with the FDA since that time. And if you have any view on how and if there might be some path to clarification from the FDA with regard to their intent in that statement? Thanks.

Yeah. Thanks, Steve. Obviously, we've seen this once before with the last approval from 23andMe with hereditary cancer, testing for BRCA, the three Ashkenazi Jewish mutations. And so we have some perspective on what led to that, and this is in a consistent vein relative to what we've seen historically. I think what the FDA is trying to do is make sure that there is a path for consumers that want to pursue that more consumer-type testing, that there is a path for consumers to pursue that. At the same time, they were very clear the last time and this time that those consumer tests are not clinical tests and they should not be used for clinical decision-making. And so that's consistent this time and last time. And so that's I think the perspective that we have on this as we've had communications with the FDA a number of times over the years about that. I think the other thing – the color I can add, of course, is we've had a chance to interact with physicians since then to get any perspective from them on questions they may have. A couple of things I would note. First, the awareness generally was relatively low about this. Second, we really haven't seen any impact in their utilization of the tests since then. In fact, we had a record week last week for GeneSight orders. Third, the ones that were aware of this, were confused about what exactly the 23andMe clearance meant. And I would say the confusion was similar to what we saw with the BRCA testing that the language from the FDA regarding its use was confusing to practitioners. The last thing I would note though is that they were well-aware that there's a pretty significant difference between GeneSight, which…

Our next question comes from the line of Dan Leonard with Deutsche Bank. Please go ahead.

Thank you. First question, I was hoping you could bridge the change in revenue guidance between how much was GeneSight and how much was Counsyl?

Yeah. Thanks, Dan. I think that as we look at the $25 million, so we didn't break out and provide product specific guidance. But I would say it was somewhere around half and half in terms of the breakdown.

Okay. And, Bryan, one final clarification on GeneSight, the $29 million interest dollars in the quarter, does that represent the revenue run rate or is the revenue run rate actually lower since the Medicare documentation requirements didn't come until late in the quarter? How would you view the current revenue run rate of GeneSight?

Yeah. I would say you're correct in terms of as it came on through the quarter you would expect to see some additional impact going forward that's part of how we got to the lower revenue guide for the year.

Okay.

I think the two things that are happening, remember, is you've got two things that obviously the impact will be for the full second quarter, but at the same time we're, of course, increasing compliance rates as physicians start to provide the additional documentation. So there's some offsets to those Dan as we think about this. Obviously there is an impact to the year but I think you're going to obviously expect that we're going to continue to increase compliance throughout the year.

Noted. Thank you.

And our next question comes from the line of Sung Ji Nam with BTIG. Please go ahead.

Hi. Thanks for taking the question. I just have one question, Mark. On GeneSight, you are starting to see some large hospitals health networks offering or even talking about offering genetic testing more broadly including pharmacogenomics. And so I was curious as to how do you see that trend, I guess, going forward? And then also how would Myriad's GeneSight fit in that environment? Thank you.

Yeah. Thanks, Sung Ji. We've really had very productive conversations particularly with self-funded employer groups, like Myriad, for example, is self-funded from a health insurance standpoint. One of the reasons is because the productivity gains that they are able to realize are significant. For most self-funded employers, mental health issues are extraordinarily expensive from a productivity perspective. And so if you can offer a tool that's been demonstrated to provide better patient outcomes, they're very interested. We noted in previous discussions that with Kroger we had made some progress with Vectra and that they're covering that. And we're in discussions with a number of additional self-funded companies on GeneSight, and there's a very significant interest in that. So you should look for additional success in that approach as we continue throughout the year.

Sung Ji, are you still there?

Sung Ji Nam, your line is open, maybe you're on mute.

Oh, sorry about that. I'm all set. Thank you.

So is there another question?

And there are no more questions at this time.

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