Myriad Genetics stock surges as Labcorp buys prenatal testing business for $210m

Myriad Genetics, Inc. has agreed to sell its Prenatal Health testing business to Labcorp for $210 million in cash plus the value of inventory at closing, triggering a roughly 30% surge in $MYGN shares as investors welcomed a major portfolio simplification and substantial infusion of liquidity. The transaction includes the Prequel, Foresight, SneakPeek and FirstGene testing products and transfers a portfolio that Labcorp expects to generate approximately $160 million of revenue during its first year of ownership. For Myriad Genetics, the disposal removes a business whose second-quarter revenue declined 16% year over year and allows management to concentrate investment more heavily on its Cancer Care Continuum strategy. The deal is expected to close by early 2027, subject to regulatory clearance and customary conditions.

The sale price is particularly meaningful relative to Myriad Genetics’ current financial scale. MYGN entered Tuesday with a market capitalization of only about $403 million based on Monday’s closing price, meaning the $210 million cash consideration alone represents more than half of the company’s pre-announcement equity value. Myriad also held $115.2 million in cash at the end of the second quarter, so the gross sale proceeds could dramatically increase its liquidity before accounting for taxes, transaction costs, working-capital movements and future spending. Investors appear to view that financial flexibility as more valuable than retaining a prenatal business that has recently struggled to grow.

Why Myriad Genetics is willing to sell a business generating roughly $160 million of annual revenue

The decision initially appears counterintuitive because Prenatal Health is not a tiny discontinued product line. The business generated $39.8 million of second-quarter revenue and accounted for roughly one-fifth of Myriad Genetics’ $190.7 million quarterly total. Labcorp expects the acquired operation to contribute approximately $160 million in revenue during its first full year, confirming that the transaction removes a meaningful portion of Myriad’s current sales base.

The problem is the direction of those sales. Prenatal Health revenue fell 16% year over year in the second quarter from $47.6 million, while testing volume declined 9% to 144,000 tests. For the first half of 2026, prenatal revenue fell to $81.7 million from $96.9 million, also a 16% decline, while volume dropped 11%. That weakness was one of the reasons Myriad reduced its 2026 guidance and launched a wider strategic review focused on improving growth, profitability and liquidity.

Myriad’s broader results have also been under pressure. Second-quarter total revenue declined 11% to $190.7 million, average revenue per test fell 9%, gross margin declined to 66.6% and the company reported an operating loss of $38.9 million. Adjusted free cash flow was negative $10.9 million for the quarter. Management therefore entered the strategic review with a clear incentive to identify businesses that consumed management attention and capital without contributing enough to near-term growth and profitability.

The prenatal sale directly addresses that issue. Chief Executive Officer Sam Raha said the transaction should be accretive to Myriad’s future revenue growth and profitability even though reported revenue will initially decline after the divestiture. That argument relies on mix: selling a declining business can improve the remaining company’s growth rate if the retained businesses expand faster and carry stronger long-term economics.

For investors, the November 4 third-quarter earnings call will therefore become unusually important. Myriad has said it will provide further details on the transaction and related organizational changes during that presentation. Shareholders will want updated guidance showing what revenue, margins and expenses look like after removing Prenatal Health from the consolidated business.

The $210 million proceeds could dramatically strengthen Myriad Genetics’ balance sheet

Myriad ended June with $115.2 million in cash and cash equivalents after using $8.3 million of cash in operations during the second quarter. Adding $210 million of gross sale proceeds would theoretically lift available cash resources above $325 million if the existing cash balance remained unchanged, although actual post-closing liquidity will be lower or higher depending on operating cash flow, transaction expenses, taxes and other uses of capital before the transaction closes.

That additional liquidity provides several strategic options. Myriad can invest more heavily in oncology products, absorb near-term operating losses without immediately relying on equity financing, fund restructuring costs and potentially strengthen its overall capital structure. Management specifically said the transaction would support continued investment around its Cancer Care Continuum, which has become the centerpiece of the company’s long-term strategy.

Cancer Care Continuum generated $114.1 million of second-quarter revenue, making it Myriad’s largest product category by a substantial margin. Test volume increased 6% year over year even though revenue declined 11% because of reimbursement pressure and unfavorable revenue adjustments. The business includes hereditary cancer testing, companion diagnostics, prostate cancer testing and molecular residual disease products, giving Myriad several potential growth avenues if reimbursement economics improve.

The sale therefore does not eliminate Myriad’s operational challenges. Hereditary cancer testing has faced payer pressure, companywide revenue has been declining and operating expenses remain high relative to sales. What the transaction changes is the amount of financial breathing room management has to address those issues.

The valuation also helps explain the positive investor response. Labcorp is paying roughly 1.3 times the $160 million of revenue it expects the Prenatal Health portfolio to generate during year one. Myriad receives that value immediately in cash rather than continuing to operate a business whose second-quarter revenue and testing volumes were both falling at double-digit rates.

Labcorp sees reproductive genetics as another specialty diagnostics growth opportunity

The transaction serves a very different purpose for Labcorp. With expected 2026 enterprise revenue above $14.7 billion, adding approximately $160 million of annual prenatal-testing revenue is not transformational for the company as a whole. Instead, the acquisition strengthens Labcorp’s specialty testing and women’s health offerings while allowing the acquired Myriad products to use Labcorp’s much larger laboratory and patient-service infrastructure.

Labcorp expects the acquisition to be slightly accretive to adjusted earnings during the first year following completion. Management also expects the acquired operation to reach the average margin of its Diagnostics Laboratories segment by the end of the second year once integration is substantially complete. Those targets suggest Labcorp believes it can improve the economics of the Myriad portfolio through scale, laboratory utilization and distribution rather than simply acquiring revenue.

That potential scale advantage is substantial. Labcorp employs nearly 71,000 people, operates globally and performed more than 750 million patient tests worldwide during the period cited in its latest announcement. Myriad’s Prenatal Health portfolio was used by more than 600,000 patients over the last 12 months, giving Labcorp a sizable established testing operation that can be integrated into an infrastructure that is many times larger.

Labcorp itself has been producing solid financial growth. Second-quarter revenue increased 5.8% to $3.73 billion, diluted earnings per share rose 28.5% to $3.64 and adjusted EPS increased 14.9% to $4.99. Management raised full-year revenue and adjusted earnings guidance after the quarter, while free cash flow totaled approximately $314 million during Q2.

The Myriad deal also follows another significant diagnostics transaction announced only days earlier. On October 15, Labcorp agreed to acquire selected BioReference Health assets from OPKO Health for $722 million in cash, with up to another $150 million tied to future revenue performance. Together, those agreements show Labcorp using acquisitions aggressively to consolidate specialty testing capabilities and expand its laboratory network.

$MYGN stock surges more than 30% as investors endorse the portfolio reset

The strongest evidence that investors support the transaction is Tuesday’s share-price reaction. MYGN was trading around $5.50 during the session, up approximately 30.5% from Monday’s $4.21 close and having reached an intraday high near $5.94. The rally pushes the company’s equity valuation to roughly $525 million based on its approximately 95.7 million outstanding shares, although the stock remains below its 52-week high of $8.50.

The magnitude of the rally suggests shareholders are assigning substantial value to the combination of cash proceeds, reduced exposure to the struggling prenatal operation and sharper strategic focus. Myriad shares had already lost significant value over the prior year, with the company’s market capitalization down more than 40% before the transaction announcement as investors reacted to declining revenue and continuing losses.

The deal does not automatically solve those problems. Myriad will lose roughly $160 million of annualized revenue and will still need to improve reimbursement, operating efficiency and profitability across the retained portfolio. Cancer Care Continuum revenue itself declined during the second quarter despite volume growth, showing that payer economics remain a significant issue.

What changes is the risk profile. Myriad is exchanging an underperforming operating business for a cash amount equivalent to more than half its pre-announcement market capitalization. If management uses that liquidity to narrow losses and accelerate higher-growth cancer diagnostics, shareholders could benefit from both a stronger balance sheet and a better revenue mix.

If those improvements fail to materialize, however, the company will simply become smaller after selling a substantial source of revenue. Investors will therefore need to look beyond Tuesday’s stock rally and assess whether the remaining businesses can generate sustainable growth and whether management meaningfully reduces expenses following the divestiture.

$LH gains as Labcorp continues building a larger specialty diagnostics portfolio

Labcorp shares were also higher Tuesday, trading around $322.77, up approximately 1.2% from Monday’s $318.83 close. The more restrained reaction reflects the difference in scale: a $210 million transaction is highly significant to Myriad but relatively modest for a company generating almost $15 billion of annual revenue.

For Labcorp shareholders, the most relevant issue is execution across multiple acquisitions. The company ended the second quarter with approximately $141.8 million of cash and $5.86 billion of total debt while forecasting $1.24 billion to $1.36 billion of full-year free cash flow. Its size and cash generation provide substantial acquisition capacity, but the BioReference and Myriad agreements together represent more than $930 million of announced upfront cash consideration before any contingent BioReference payments.

Successful integration could strengthen Labcorp’s position across reproductive genetics, women’s health and broader specialty testing. Poor integration or weaker-than-expected margins could instead reduce the return on the capital being deployed. Management’s forecast that the Myriad portfolio will reach average Diagnostics margins by the end of year two provides investors with a useful benchmark against which to measure performance.

Labcorp reports third-quarter results on October 28, just eight days after the Myriad announcement. Investors will likely seek more detail on acquisition funding, BioReference integration planning and whether the latest transactions alter capital-allocation priorities alongside the company’s existing $1.4 billion share-repurchase authorization.

For Myriad, the decisive update comes one week later on November 4. That call should reveal how dramatically management intends to reshape expenses, financial guidance and strategic priorities after selling one of its three major testing categories.

The immediate market verdict is unmistakably positive. Myriad is giving up meaningful revenue, but shareholders appear to prefer $210 million of cash and a more concentrated oncology strategy over continued ownership of a prenatal-testing business whose recent sales and volumes were moving in the wrong direction.

Key takeaways on Myriad Genetics’ $210 million sale to Labcorp

• Myriad Genetics agreed to sell its Prenatal Health testing business to Labcorp for $210 million in cash plus inventory value at closing.
• The transaction includes Prequel, Foresight, SneakPeek and FirstGene and is expected to close by early 2027.
• Labcorp expects the acquired portfolio to generate approximately $160 million of revenue during its first year.
• Myriad’s Prenatal Health revenue fell 16% to $39.8 million in the second quarter while testing volume declined 9%.
• The $210 million sale price represents more than half of Myriad’s roughly $403 million market capitalization immediately before the announcement.
• Myriad ended the second quarter with $115.2 million in cash, meaning the sale could materially strengthen liquidity and investment capacity.
• Management intends to concentrate more resources on its Cancer Care Continuum after completing the strategic review.
• $MYGN surged roughly 30% on October 20 while $LH gained about 1%, reflecting the much greater financial significance of the transaction for Myriad.
• Investors should watch Myriad’s November 4 earnings call for revised guidance, cost reductions and details on the post-sale business structure.