Myriad sells prenatal unit to Labcorp for $210M; lender's revenue floor looms

Myriad sells genetic and molecular tests in three lines: Cancer Care Continuum, which includes hereditary cancer risk tests; Mental Health, built on the GeneSight test; and Prenatal Health. In the second quarter of 2026 those lines brought in $114.1 million, $36.8 million and $39.8 million of revenue.¹ For all of 2025 Myriad reported $824.5 million of revenue and a $365.9 million net loss, and most of that loss was $316.7 million of non-cash write-downs in the second quarter of 2025. Its annual report says it has not run the business at a profit in recent years.² Insurers pay for most lab tests, and Myriad says they are limiting coverage and cutting payment rates. In cancer testing it competes with Natera, Foundation Medicine, Caris and Tempus.³

The unit for sale holds four tests: the Foresight carrier screen, which checks parents for up to 274 genes; the Prequel prenatal screen; the FirstGene 4-in-1 screen; and the SneakPeek early gender test. Myriad says more than 600,000 patients used these tests over the last twelve months, and the unit brought in $186.3 million of revenue in 2025.¹ This year it shrank. Prenatal revenue fell 15% in the first quarter, which Myriad tied to disruption from a new order system it installed in the second quarter of 2025. In the second quarter of 2026 it fell another $7.8 million, on 9% fewer tests and 8% lower revenue per test.²

On its July 30, 2026 earnings call, Myriad cut its 2026 revenue goal to $770 million to $790 million and suspended its adjusted EBITDA goal, which had been $37 million to $49 million. It blamed lower prenatal volumes and more cautious assumptions about revenue per test, and said it was weighing its whole product portfolio to decide where to put capital.¹ A law firm investigating possible securities claims said the stock fell 47% to $2.86 on July 31, 2026, implying a prior close of about $5.37. Several firms announced such investigations; that one said no lawsuit had been filed.²

Myriad and Labcorp signed a confidentiality letter on October 20, 2025, a year before the deal. In September 2026 chief commercial officer Brian Donnelly left on September 21, Vishal Sikri was promoted to run sales, and Myriad reaffirmed its July guidance. Donnelly's exit agreement pays him $1,322,294 in cash.¹ The buyer, Labcorp, calls itself a global leader in laboratory services. Myriad's largest reported holders are passive funds: BlackRock reports 10.4%, Vestal Point 6.1% and State Street 5.3%, while Glenview reported owning no shares as of June 30, 2026.²

Labcorp gets the four tests, their inventory and the business that runs them, including leased labs in South San Francisco and San Diego. It will offer jobs on comparable terms to certain unit employees. The two sides also signed a patent license that starts at closing, and will sign a transition services agreement at closing.¹ Myriad, for its part, promises not to compete in prenatal genetic screening tests or fetal gender tests, and to fund a retention program for offered employees in an amount both sides agree. Until closing it may not shop the unit to anyone else, though a sale of Myriad as a whole is outside that ban.²

Myriad gets $210,000,000 plus an estimate of closing inventory, paid on the closing date. Labcorp prepares a final inventory statement within 90 days after closing, and the price is trued up from it. Myriad keeps its cash and the accounts receivable from before closing, so money insurers owe on earlier prenatal tests stays with Myriad.

The deal needs the federal antitrust waiting period to end, approvals under state health care laws (which include a California notice law for health deals), certain third-party consents, and no material harm to the unit's results. A drop in test sales and changes in insurer payment rules do not by themselves count as material harm.¹ Labcorp says it has the cash on hand to pay in full, so there is no financing condition. Neither side must sell or license other assets to win antitrust approval.² The antitrust filing is due within 10 business days of signing. Either side may walk away if the deal has not closed by February 19, 2027, a date that moves automatically to October 19, 2027 if regulatory clearances are still missing. If the deal ends because those clearances fail, Labcorp may owe Myriad a $10.5 million fee, about 5% of the price, and once paid it is Myriad's sole remedy.³

After closing, Myriad's exposure is limited. Labcorp bought insurance on Myriad's ordinary promises about the business, and that policy is Labcorp's only source of recovery for them. Myriad's total liability is capped at the final price, apart from fraud, and its core fundamental promises survive until the sixth anniversary of closing.

At $210 million, the price works out to about $2.20 for each Myriad share, against a $3.975 close on October 16 before the news. It is about 1.2 times the unit's revenue over the year to June, roughly $171.1 million by our math, and about 1.3 times the $160 million Labcorp expects the unit to add in its first year.¹ Labcorp expects the deal to add slightly to its adjusted earnings in year one and to reach its average diagnostics margins only by the end of year two. That suggests the unit earns less than Labcorp's typical business today.²

Myriad loses money on every profitability measure it reports below gross profit, which is still positive: gross margin was 66.6% in the second quarter.¹ In the second quarter it posted a $38.9 million operating loss and a $43.2 million net loss. For the first half the operating loss was $69.6 million, which included a $5.4 million write-down and $13.7 million of stock-based pay, both non-cash.² Myriad's adjusted EBITDA, which adds back write-downs, stock pay and one-time costs, was still negative $4.5 million in the first quarter. Second-quarter revenue also carried an $11.0 million cut for tests delivered in earlier periods, after Myriad lowered its estimates of what it would collect. Lab revenue is an estimate of future payments, and those estimates have been falling.³

Cash fell from $149.6 million at the end of 2025 to $115.2 million at June 30. Operating activities used $24.0 million in the first half, even with an $11.7 million tax refund in the first quarter. After $7.5 million of capital spending and $2.2 million of capitalized intangibles, free cash flow was about negative $33.7 million.¹ Adjusted free cash flow was negative $10.9 million in the second quarter alone. Management said in July that its capital would last at least the next 12 months.²

The debt is one $125 million term loan, with OrbiMed as agent, at 10.1% at June 30, or about $12.6 million of interest a year. It is secured by substantially all of Myriad's assets and matures July 31, 2030, with quarterly principal payments of 2.5% starting September 30, 2029.¹ Myriad can draw another $75 million until June 30, 2027, and it met all its covenants at June 30.² A January 2026 amendment to the loan also caps what Myriad may keep in Wells Fargo deposit accounts at $1 million in the aggregate at any time, apart from money reserved for payroll and payables, and requires those accounts to be Controlled Accounts, so the lender already polices the company's cash.³ If the sale closes, $210 million plus June cash would be about $325.2 million against $125 million of debt, or about $200.2 million of net cash, before taxes, fees, the inventory payment and months of cash burn. At June 30, debt was $9.8 million more than cash.⁴

Ratios of debt to earnings do not work here, because Myriad's own adjusted EBITDA was negative in the first quarter and its operating loss does not cover interest. The test that matters is a revenue floor in the loan. Revenue over the trailing year must be at least $615.0 million from December 2025, and the floor steps up to $974.0 million by the end of 2029.¹ Myriad's trailing-year revenue at June 30 was about $806.6 million. Take out the prenatal unit's roughly $171.1 million and about $635.5 million is left, only $20.5 million above the starting floor, and the floor keeps stepping up.² What remains is also under pressure. Cancer Care Continuum revenue fell 11% in the second quarter as revenue per test dropped 15% on lower reimbursement and estimate changes, while Mental Health revenue grew 9% in the first half.³ The sold assets must be released from any liens securing debt by closing, and paying the loan off early carries a premium plus an exit fee.⁴

Myriad had 95.6 million shares at June 30, plus 10.8 million unvested restricted stock units and 0.5 million options with an average strike price of $13.38, far above the stock price. That is about 106.9 million shares fully diluted, and there is no preferred stock. The secured lender is paid ahead of shareholders.¹ Recent insider filings show shares withheld for taxes by the chief financial officer and a 257,731-share grant to Sikri.²

Myriad's own case, which is a goal and not a result, is that the sale lifts its revenue growth and profitability, strengthens the balance sheet and funds its cancer care business. Labcorp's case is that the unit adds about $160 million of revenue in year one.¹ Myriad reaffirmed its 2026 revenue goal of $770 million to $790 million in September. It will say more about the deal and other related organizational changes on its November 4 call.²

The market liked the deal. MYGN rose 45.3%, from $3.975 at the October 16 close to $5.775 at 11:19 ET on October 20, while the S&P 500 fund rose 0.8%. Labcorp moved from $317.85 to $323.19 over the same span.¹ At $5.775, Myriad's market value is about $552 million, about $172 million more than before the news. That gain is less than the $210 million price, so the market is not giving full credit for the cash.² Our price file starts in mid-September, and its closes before the news ran from $3.84 to $4.58, so we cannot confirm a high or low for the past year from it.³

The bull case: Myriad turns a unit whose first-half sales fell 16% into $210 million of cash, more than half its pre-news market value. The buyer has the money, and falling test sales or payer rule changes do not by themselves let it walk.¹ That cash could repay the $125 million loan and its 10.1% interest, leaving a smaller company focused on cancer testing, where test volume grew 6% in the second quarter.²

The bear case, ranked. First, the company that remains is thinner, with trailing-year revenue only about $20.5 million over the loan's starting floor, and the floor keeps stepping up. Second, its biggest line is losing revenue per test to lower reimbursement, and free cash flow was about negative $33.7 million in the first half.¹ Third, legal risk remains: a whistleblower suit over alleged payments to Carolina Urology Partners doctors survived most of Myriad's motion to dismiss on July 9, 2026, and the case is ongoing. Fourth, closing could slip to October 19, 2027, and the $10.5 million fee is small next to the price.²

Dates to watch: the antitrust filing within 10 business days of signing; third-quarter results and more on the deal on November 4; the February 19, 2027 end date; the end of the $75 million draw window on June 30, 2027; and the October 19, 2027 outer deadline.¹ The bull case is wrong if the November 4 call shows the remaining business shrinking toward the loan's revenue floor with no plan for the loan, or if regulators hold the deal past early 2027.²

Our call, set out below, is that MYGN closes above $4.50 on December 31, 2026, about where it traded late on the morning of October 5, before the news.¹ The cash is worth about $2.20 a share and Labcorp has the money, but neither reaches Myriad before the expected early 2027 closing, and this stock fell 47% in a single session when it missed estimates on July 30, so a repeat on the November 4 call could push it back below $4.50 even if the deal holds; we still say yes, because $5.775 leaves a 28% cushion above the $4.50 line that a signed agreement with a cash-ready buyer underpins.²

Neither company gave the unit's profit or loss, so we cannot say how much of Myriad's loss leaves with it. Myriad says only that the sale will add to its growth and profitability.

Myriad says the money will support investment in its cancer care business and that it will fund an employee retention program, but it has not said what it will net after taxes and fees, or how much, if any, goes to the loan.

The filings do not say whether Myriad will repay the loan, which carries a premium and exit fee if paid early, or ask the lender to reset the revenue floor once the unit is gone.

The floor started at $615.0 million and steps up to $974.0 million by the end of 2029, but the filings do not give the steps in between, so today's level is not known.

The price adds the value of the unit's inventory at closing, but neither company has said what that inventory is worth.

Myriad mentions other related organizational changes it will discuss on its November 4 call, but does not describe them.