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Organization and Summary of Significant Accounting Policies | 12 Months Ended
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Jun. 30, 2019
Accounting Policies [Abstract] |
Organization and Summary of Significant Accounting Policies |
1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation Myriad Genetics, Inc. and subsidiaries (collectively, the Company) is a leading personalized precision medicine company acting as a trusted advisor to transform patient lives through pioneering molecular diagnostics. The Company employs a number of proprietary technologies, including DNA, RNA and protein analysis, that help it to understand the genetic basis of human disease and the role that genes and their related proteins may play in the onset and progression of disease. The Company uses this information to guide the development of new molecular diagnostic and companion diagnostic tests that are designed to assess an individual’s risk for developing disease later in life (predictive medicine), identify a patient’s likelihood of responding to drug therapy and guide a patient’s dosing to ensure optimal treatment (personalized medicine), or assess a patient’s risk of disease progression and disease recurrence (prognostic medicine). The Company generates revenue by performing molecular diagnostic tests as well as by providing pharmaceutical and clinical services to the pharmaceutical and biotechnology industries and medical research institutions utilizing its multiplexed immunoassay technology. The Company’s corporate headquarters are located in Salt Lake City, Utah. The accompanying consolidated financial statements have been prepared by Myriad Genetics, Inc. (the “Company” or “Myriad”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly all financial statements in accordance with U.S. GAAP. Marketable Investment Securities The Company has classified its marketable investment securities, all of which are debt securities, as available-for-sale securities. These securities are carried at estimated fair value with unrealized holding gains and losses, net of the related tax effect, included in accumulated other comprehensive loss in stockholders’ equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned. The Company’s cash equivalents consist of short-term, highly liquid investments that are readily convertible to known amounts of cash. A decline in the market value of any available-for-sale security below cost that is deemed other than temporary results in a charge to earnings and establishes a new cost basis for the security. Losses are charged against “Other income” when a decline in fair value is determined to be other than temporary. The Company reviews several factors to determine whether a loss is other than temporary. These factors include but are not limited to: (i) the extent to which the fair value is less than cost and the cause for the fair value decline, (ii) the financial condition and near term prospects of the issuer, (iii) the length of time a security is in an unrealized loss position and (iv) the Company’s ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. There were no other-than-temporary impairments recognized during the fiscal years ended June 30, 2019, 2018 and 2017. Inventory Inventories consist of reagents, plates and testing kits. Inventories are stated at the lower of cost or market on a first-in, first-out basis. In order to assess the ultimate realization of inventories, the Company is required to make judgments as to future demand requirements compared to current or committed inventory levels. The Company evaluates its inventories for excess quantities and obsolescence. Inventories that are considered obsolete are expensed. The valuation of inventories requires the use of estimates as to the amounts of current inventories that will be sold. These estimates are dependent on management’s assessment of current and expected orders from the Company’s customers. Trade Accounts Receivable Trade accounts receivable represents amounts billed to customers for revenue recognized related to molecular diagnostic tests and pharmaceutical and clinical services. The Company does not have any off-balance-sheet credit exposure related to its customers and does not require collateral. Property, Plant and Equipment Equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method based on the lesser of estimated useful lives of the related assets or lease terms. Equipment items have depreciable lives of five to seven years. Leasehold improvements are depreciated over the shorter of the estimated useful lives or the associated lease terms, which range from three to ten years. Repairs and maintenance costs are charged to expense as incurred. Intangible Assets and Other Long-Lived Assets Intangible and other long-lived assets are comprised of acquired licenses, technology and intellectual property and purchased in-process research and development. Acquired intangible assets are recorded at fair value and amortized over the shorter of the contractual life or the estimated useful life. The estimated useful life of acquired in-process research and development was also evaluated in conjunction with the annual impairment analysis of intangible assets. The classification of the acquired in-process research and development as an indefinite lived asset was deemed appropriate as the related research and development was not yet complete nor had it been abandoned. The Company continually reviews and monitors long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Goodwill Goodwill is tested for impairment on an annual basis as of April 1 and in the interim by reporting unit if events and circumstances indicate that goodwill may be impaired. The events and circumstances that are considered include business climate and market conditions, legal factors, operating performance indicators and competition. Impairment of goodwill was first assessed using a qualitative approach. If the qualitative assessment suggests that impairment is more likely than not, a two-step impairment analysis is performed. The first step involves a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, the second step of the process involves a comparison of the fair value and the carrying amount of the goodwill of that reporting unit. If the carrying amount of the goodwill of the reporting unit exceeds the fair value of that goodwill, an impairment loss would be recognized in an amount equal to the excess of carrying value over fair value. If an event occurs that would cause a revision to the estimates and assumptions used in analyzing the value of the goodwill, the revision could result in a non-cash impairment charge that could have a material impact on the financial results. Revenue Recognition In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014‑09, Revenue from Contracts with Customers (“Topic 606”). Under Topic 606, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted this standard as of July 1, 2018, utilizing the full retrospective method of adoption allowed by the standard, in order to provide for comparative results in all periods presented. The Company performs its obligation under a contract with a customer by processing diagnostic tests and communicating the test results to customers, in exchange for consideration from the customer. The Company has the right to bill its customers upon the completion of performance obligations and thus does not record contract assets. Occasionally customers make payments prior to the Company's performance of its contractual obligations. When this occurs, the Company records a contract liability as deferred revenue. A reconciliation of the beginning and ending balances of deferred revenue is shown in the table below:
|  | Years Ended June 30, |
|  | 2019 |  |  | 2018 |
Deferred revenue - beginning balance |  | $ | 2.6 |  |  | $ | 2.6 |
Revenue recognized |  |  | (7.9 | ) |  |  | (14.0 | )
Prepayments |  |  | 7.5 |  |  |  | 14.0 |
Deferred revenue - ending balance |  | $ | 2.2 |  |  | $ | 2.6 |
Myriad generates revenue by performing molecular diagnostic testing and pharmaceutical and clinical services. Revenue from the sale of molecular diagnostic tests and pharmaceutical and clinical services is recorded at the estimated transaction price. The Company has determined that the communication of test results or the completion of clinical and pharmaceutical services indicates transfer of control for revenue recognition purposes. In accordance with ASU 2014-09, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year. Furthermore, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its agreements wherein the Company’s right to payment is in an amount that directly corresponds with the value of Company’s performance to date. However, periodically the Company enters into arrangements with customers to provide diagnostic testing and/or pharmaceutical and clinical services that may have terms longer than one year and include multiple performance obligations. As of June 30, 2019, the aggregate amount of the transaction price of such contracts that is allocated to the remaining performance obligations is $3.2. Significant judgments are required in determining the transaction price and satisfying performance obligations under the new revenue standard. The Company provides discounts such as financial assistance programs and volume discounts to their patients. In determining the transaction price, Myriad includes an estimate of the expected amount of consideration as revenue. The Company applies this method consistently for similar contracts when estimating the effect of any uncertainty on an amount of variable consideration to which it will be entitled. The estimate of revenue is affected by assumptions in payor behavior such as changes in payor mix, payor collections, current customer contractual requirements, and experience with ultimate collection from third-party payors. An estimate of transaction price does not include any estimated amount of variable consideration that are constrained. The Company applies the expected value method for sales where the Company has a large number of contracts with similar characteristics. In addition, the Company considers all the information (historical, current, and forecast) that is reasonably available to identify possible consideration amounts. In determining the expected value under the new standard, the Company considers the probability of the variable consideration for each possible scenario. The Company also has significant experience with historical discount patterns and uses this experience to estimate transaction prices. In accordance with Accounting Standards Update No. 2016-02, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), the Company has elected to exclude from the measurement of transaction price, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for e.g. sales tax, value added tax etc. During the three and twelve months ended June 30, 2019, the Company recognized a $7.6 decrease and $2.6 increase respectively, in revenue for tests in which the performance obligation of delivering the tests results was met in prior periods. The changes were primarily driven by changes in the estimated transaction price due to contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met and settlements with third party payors. The Company has elected to apply the practical expedient related to costs to obtain or fulfill a contract since the amortization period for such costs will be one year or less. Accordingly, no costs incurred to obtain or fulfill a contract have been capitalized. The Company has also elected to apply the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects very little cash from customers under payment terms and vast majority of payments terms have a payback period of less than one year. The adoption of Topic 606 affected the Company’s consolidated balance sheets and statements of comprehensive income, due to fact that amounts that have historically been classified as bad debt expense are now reflected as a reduction of the transaction price and, therefore, a reduction in revenue. See “Recently Adopted Standards” for additional information on the impact of the adoption on prior periods presented. The following table represents the Company’s revenue by type for the years ended June 30, 2019, 2018 and 2017 (in thousands):
|  | Years Ended June 30, |
(In millions) |  | 2019 |  |  | 2018 (a) |  |  | 2017 (a) |
Molecular diagnostic revenues: |  |  |  |  |  |  |  |  |  |  |  |
Hereditary Cancer Testing |  | $ | 479.7 |  |  | $ | 471.4 |  |  | $ | 525.5 |
GeneSight |  |  | 112.6 |  |  |  | 124.9 |  |  |  | 78.4 |
Prenatal |  |  | 104.9 |  |  |  | — |  |  |  | — |
Vectra |  |  | 48.3 |  |  |  | 55.2 |  |  |  | 45.2 |
Prolaris |  |  | 25.5 |  |  |  | 21.5 |  |  |  | 11.1 |
EndoPredict |  |  | 10.4 |  |  |  | 8.8 |  |  |  | 7.7 |
Other |  |  | 8.0 |  |  |  | 8.6 |  |  |  | 11.5 |
Total molecular diagnostic revenue |  |  | 789.4 |  |  |  | 690.4 |  |  |  | 679.4 |
Pharmaceutical and clinical service revenue |  |  | 61.7 |  |  |  | 53.3 |  |  |  | 49.3 |
Total revenue |  | $ | 851.1 |  |  | $ | 743.7 |  |  | $ | 728.7 |
| (a) | Amounts adjusted due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606)
Income Taxes The Company recognizes income taxes under the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and any estimated valuation allowances deemed necessary to recognize deferred tax assets at an amount that is more likely than not to be realized. The Company’s filings, including the positions taken therein, are subject to audit by various taxing authorities. While the Company believes it has provided adequately for its income tax liabilities in the consolidated financial statements, adverse determinations by these taxing authorities could have a material adverse effect on the consolidated financial condition, results of operations or cash flows. Earnings Per Share Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed based on the weighted-average number of shares of common stock, including the dilutive effect of common stock equivalents, outstanding. The following is a reconciliation of the denominators of the basic and diluted earnings per share computations:
|  | Years Ended June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Denominator: |  |  |  |  |  |  |  |  |  |  |  |
Weighted-average shares outstanding used to compute basic EPS |  |  | 73.5 |  |  |  | 69.4 |  |  |  | 68.3 |
Effect of dilutive stock options |  |  | 2.5 |  |  |  | 2.6 |  |  |  | 0.5 |
Weighted-average shares outstanding and dilutive securities used to compute diluted EPS |  |  | 76.0 |  |  |  | 72.0 |  |  |  | 68.8 |
Certain outstanding options and RSUs were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. These potential dilutive common shares, which may be dilutive to future diluted earnings per share, are as follows:
|  | Years Ended June 30, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Anti-dilutive options and RSUs excluded from EPS computation |  |  | 0.8 |  |  |  | — |  |  |  | 7.0 |
Foreign Currency The functional currency of the Company’s international subsidiaries is the local currency. For those subsidiaries, expenses denominated in the functional currency are translated into U.S. dollars using average exchange rates in effect during the period and assets and liabilities are translated using period-end exchange rates. The foreign currency translation adjustments are included in accumulated other comprehensive loss as a separate component of stockholders’ equity/(deficit). The following table shows the cumulative translation adjustments included in accumulated other comprehensive income/(loss):
Ending balance June 30, 2018 |  | $ | (4.1 | )
Period translation adjustments |  |  | (3.1 | )
Ending balance June 30, 2019 |  |  | (7.2 | )
Use of Estimates The preparation of the consolidated financial statements in accordance with U.S. GAAP requires Company management to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the carrying amount of fixed assets, valuation allowances for receivables and deferred income tax assets, certain accrued liabilities, share-based compensation, valuation of intangible assets from acquisitions and impairment analysis of goodwill and intangible assets. Actual results could differ from those estimates. Recent Accounting Pronouncements Standards Effective in Future Years and Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. For trade receivables, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The guidance is effective for fiscal years beginning after December 31, 2019, including interim periods within those years. Early application of the guidance is permitted for all entities for fiscal years beginning after December 15, 2018, including the interim periods within those fiscal years. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the impact of this update on the consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard also requires entities to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. ASU 2016-02 will be effective for the Company beginning in the first quarter of fiscal 2020. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). Under ASU 2018-11, entities have the option of initially applying Topic 842 at the adoption date, rather than at the beginning of the earliest comparative period presented and recognizing the cumulative effect of applying the new standard as an adjustment to beginning retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. The Company has elected this transition method and will use July 1, 2019 as the date of initial application of ASU 2018-11. The new standard provides a number of optional practical expedients in transition. The Company has elected the package of practical expedients to not reassess prior conclusions about lease identification under the new standard, to not reassess lease classification, and to not reassess initial direct costs. The Company has also elected the practical expedient allowing the use of hindsight in determining the lease term and assessing impairment of right-of-use (“ROU”) assets based on all facts and circumstances through the effective date of the new standard. The new standard also provides practical expedients for ongoing lease accounting. The Company has elected the recognition exemption for short-term leases for all leases that qualify. Under this exemption, the Company will not recognize ROU assets or lease liabilities for those leases that qualify as a short-term lease (leases with lease terms of 12 months or less), which includes not recognizing ROU assets or lease liabilities for existing short-term leases in transition. The Company also has elected the practical expedient to not separate lease and non-lease components for any of its leases within its existing classes of assets with the exception of its vehicle leases. The Company expects that this standard will have a material effect on the financial statements. While it continues to assess all of the effects of adoption, the most significant effects will relate to (a) the recognition of ROU assets on the balance sheet ranging from $68 to $75 million and lease liabilities on the balance sheet ranging from $73 to $79 million in relation to existing operating lease agreements; and (b) providing significant new disclosures about leasing activities. Recently Adopted Standards The Company adopted Topic 606 as of July 1, 2018, utilizing the full retrospective method of adoption allowed by the standard, in order to provide for comparative results in all periods presented. The adoption of Topic 606 affected the Company’s consolidated balance sheets and statements of comprehensive income, due to fact that amounts that have historically been classified as bad debt expense are now reflected as a reduction of the transaction price and, therefore, a reduction in revenue. The Company has elected to apply the practical expedient related to costs to obtain or fulfill a contract since the amortization period for such costs will be one year or less. Accordingly, no costs incurred to obtain or fulfill a contract have been capitalized. The Company has also elected to apply the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects very little cash from customers under payment terms and vast majority of payments terms have a payback period of less than one year. Impact of Recently Adopted Standards The Company recast certain prior period amounts to conform with the adoption of Topic 606, as shown in the table below (in thousands):
|  | FY2018 |  |  | FY2017 |
|  | As Reported |  |  | Adjusted for ASC 606 |  |  | As Adjusted |  |  | As Reported |  |  | Adjusted for ASC 606 |  |  | As Adjusted |
Total revenue |  | $ | 772.6 |  |  | $ | (28.9 | ) |  | $ | 743.7 |  |  | $ | 769.9 |  |  | $ | (41.2 | ) |  | $ | 728.7 |
Selling, general, and administrative expense |  |  | 467.1 |  |  | $ | (32.1 | ) |  |  | 435.0 |  |  |  | 476.4 |  |  | $ | (36.5 | ) |  |  | 439.9 |
Income tax provision |  |  | (14.0 | ) |  | $ | 1.0 |  |  |  | (13.0 | ) |  |  | 20.6 |  |  | $ | (1.6 | ) |  |  | 19.0 |
Net income attributable to Myriad Genetics, Inc. stockholders |  |  | 131.1 |  |  | $ | 2.2 |  |  |  | 133.3 |  |  |  | 20.5 |  |  | $ | (3.1 | ) |  |  | 17.4 |
Earnings per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 1.89 |  |  | $ | 0.03 |  |  | $ | 1.92 |  |  | $ | 0.30 |  |  | $ | (0.05 | ) |  | $ | 0.25 |
Diluted |  | $ | 1.82 |  |  | $ | 0.03 |  |  | $ | 1.85 |  |  | $ | 0.30 |  |  | $ | (0.05 | ) |  | $ | 0.25 |
|  | FY2018 |  |  | FY2017 |
|  | As Reported |  |  | Adjusted for ASC 606 |  |  | As Adjusted |  |  | As Reported |  |  | Adjusted for ASC 606 |  |  | As Adjusted |
Trade accounts receivable |  | $ | 98.3 |  |  | $ | 1.2 |  |  | $ | 99.5 |  |  | $ | 90.2 |  |  | $ | (1.0 | ) |  | $ | 89.2 |
Retained earnings |  |  | 52.9 |  |  |  | 1.2 |  |  |  | 54.1 |  |  |  | (78.2 | ) |  |  | (1.0 | ) |  |  | (79.2 | )

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- Definition The entire disclosure for the general note to the financial statements for the reporting entity which may include, descriptions of the basis of presentation, business description, significant accounting policies, consolidations, reclassifications, new pronouncements not yet adopted and changes in accounting principles. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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