We are a leading molecular diagnostic company dedicated to making a difference in patient's lives through the discovery and commercialization of transformative tests which assess a person's risk of developing disease, guide treatment decisions and assess risk of disease progression and recurrence. We believe in improving healthcare for patients by providing physicians with critical information to solve unmet medical needs. By understanding the underlying genetic basis of disease, we believe that individuals who have a greater risk of developing disease can be identified and physicians may be able to use this information to improve patient outcomes and better manage patient healthcare. In addition, by understanding the RNA expression levels of certain genes, we believe that we can improve patient healthcare by providing information on the aggressiveness of their disease. Further, we believe that the analysis of the expression of groups of proteins may provide a physician with life-saving information to guide treatment decisions for their patients with cancer and other major diseases.

Our goal is to provide physicians with critical information that may guide the healthcare management of their patients to prevent disease, diagnose the disease at an earlier stage, determine the most appropriate therapy, or assess the aggressiveness of their disease. We employ a number of proprietary technologies, including DNA, RNA and protein analysis, that help us 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. We use this information to guide the development of new molecular 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).

Our business strategy for future growth is focused on three key initiatives. First, we are working to grow and expand our existing products and markets. Second, we are developing our business internationally and have recently established operations in Europe. Finally, we intend to launch new transformative products across a diverse set of disease indications, complementing our current businesses in oncology, women's health and urology.

Products and Services

We offer nine primary commercial molecular diagnostic tests, including six predictive medicine tests, two personalized medicine tests, and one prognostic medicine test. We market these tests through our own sales force of approximately 390 people in the United States. We have also established offices in France, Spain and Italy; laboratory operations and a sales and administrative office in Germany; and international headquarters in Switzerland. We market our BRACAnalysis®, COLARIS®, and COLARIS AP®products through our own European sales force, and as of December 31, 2012, we have entered into distributor agreements with organizations in select Latin American, European, Asian and African countries.

Our primary commercial molecular diagnostic tests include:

• BRACAnalysis®, our predictive medicine test for hereditary breast and ovarian cancer;

• COLARIS®, our predictive medicine test for hereditary colorectal and uterine cancer;

• COLARIS AP®, our predictive medicine test for hereditary colorectal cancer;

• MELARIS®, our predictive medicine test for hereditary melanoma;

• PANEXIA™, our predictive medicine test for pancreatic cancer;

• PREZEON®, our personalized medicine test to assess PTEN status for disease progression and drug response;

• Prolaris®, our prognostic medicine test for prostate cancer

• Theraguide®5-FU, our personalized medicine test for chemotherapy toxicity to 5-FU; and

• BRACAnalysis Large Rearrangement Technology, or BART, our predictive medicine test that provides a way to detect additional large genomic rearrangements in both the BRCA1 and BRCA2 genes. Based upon newly established clinical practice guidelines by NCCN, the National Comprehensive Cancer Network, that recommends BART for all hereditary breast and ovarian cancer patients, we have received increased testing requests from physicians and affected patients.

In December 2012, we made the decision to discontinue the offering of the OnDose product. In September 2008, we acquired a license to technology that assisted in the development of OnDose, a personalized medicine product that measured a patient's exposure to 5-fluorouracil chemotherapy. We determined that the investment required to further commercialize OnDose would be difficult to justify and that it would be more appropriate to employ our resources on the other product candidates in our pipeline.

Through our wholly owned subsidiary, Myriad RBM, Inc., we provide biomarker discovery and companion diagnostic services to the pharmaceutical, biotechnology, and medical research industries utilizing our multiplexed immunoassay technology. Our technology enables us to efficiently screen large sets of clinical samples from both diseased and non-diseased populations against our extensive menu of biomarkers. By analyzing the data generated from these tests, we attempt to discover biomarker patterns that indicate a particular disease or disorder with a high degree of accuracy or may be used to identify patients who would likely respond to a particular therapy. During the three months ended December 31, 2012 and 2011, we recognized companion diagnostic service revenue of $8.5 million and $5.2 million, respectively. During the six months ended December 31, 2012 and 2011, we recognized companion diagnostic service revenue of $14.7 million and $11.7 million, respectively. In addition to the companion diagnostic research revenue fees received from analyzing these samples, we also use this information to create and validate new biomarkers that can aid us in the development of novel molecular diagnostic tests that could aid a physician in making diagnostic and treatment decisions.

Use of Resources

During the three and six months ended December 31, 2012, we devoted substantially all of our resources to supporting our molecular diagnostic and companion diagnostic businesses, as well as to the research and development of future molecular and companion diagnostic opportunities. We also pursued in-licensing opportunities where we acquire rights to new products and technologies from third parties. We have three reportable operating segments-research, molecular diagnostics and companion diagnostics. See Note 6 "Segment and Related Information" in the notes to our condensed consolidated financial statements (unaudited) for information regarding these operating segments.

For the three and six months ended December 31, 2012, we had net income of $35.0 million and $65.2 million and diluted earnings per share of $0.42 and $0.78, compared to $28.3 million and $53.4 million and $0.33 and $0.62 per share in the same periods in the prior year. Net income and earnings per share results for the three and six months ended December 31, 2012 included income tax expense of $21.9 million and $41.6 million compared to $18.5 million and $35.2 million for the same periods in the prior year. As of December 31, 2012, we had an accumulated deficit of $4.3 million.

Recent Developments

Between May 2010 and January 2013, we repurchased $500 million of our outstanding common stock. In February 2013, we announced that our board of directors authorized us to repurchase an additional $200 million of our outstanding common stock. In connection with this fifth stock repurchase authorization; we have been authorized to repurchase shares through open market transactions, in each case to be executed at management's discretion based on market conditions. See also "Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - Issuer Purchases of Equity Securities."

Critical Accounting Policies

Critical accounting policies are those policies which are both important to the presentation of a company's financial condition and results and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. No significant changes to our accounting policies took place during the period. For a further discussion of our critical accounting policies, see our Annual Report on Form 10-K for the fiscal year ended June 30, 2012.

Results of Operations for the Three Months Ended December 31, 2012 and 2011

Revenue

Revenue is comprised of sales of our molecular diagnostic tests and our companion diagnostic services. Total revenue for the three months ended December 31, 2012 was $149.1 million, compared to $122.8 million for the same three months in 2011. This 21% increase in revenue is primarily due to increased molecular diagnostic testing volume for our BRACAnalysis, Colaris and Colaris AP and other tests, a significant increase in BART testing, as well as a significant increase in companion diagnostic services due to increased research collaborations, as disclosed in the table below. We believe that our increased sales, marketing, and education efforts resulted in wider acceptance of our molecular diagnostic tests by the medical community and increased patient testing volumes. However, there can be no assurance that our revenue will continue to increase or remain at current levels.

Total revenue of our molecular diagnostic tests and companion diagnostic services as well as revenue by product as a percent of total revenue for the three months ended December 31, 2012 and 2011 were as follows:

                                          Three months ended
                                             December 31,                                  % of Total Revenue
(In thousands)                           2012            2011          % Change           2012             2011
Molecular diagnostic testing
revenues:
BRACAnalysis                           $ 110,267       $ 101,410               9 %            74 %            83 %
COLARIS & COLARIS AP                      12,063          10,923              10 %             8 %             9 %
BART                                      15,781           2,913             442 %            11 %             2 %
Other                                      2,540           2,364               7 %             2 %             2 %

Total molecular diagnostic testing
revenues                                 140,651         117,610              20 %


Companion diagnostic service
revenues                                   8,489           5,201              63 %             5 %             4 %


Total revenues                         $ 149,140       $ 122,811              21 %           100 %           100 %

Our molecular diagnostic sales force is focused on two major markets, oncology and women's health. Oncology and women's health revenues were 65% and 35% of total molecular diagnostic testing revenues, respectively, during the three months ended December 31, 2012. Sales of molecular diagnostic tests in each market for the three months ended December 31, 2012 and 2011 were as follows:

                                                  Three months ended
                                                     December 31,
  (In thousands)                                  2012          2011         % Change
  Molecular diagnostic testing revenues:
  Oncology                                      $  90,857     $  78,422             16 %
  Women's health                                   49,794        39,188             27 %

  Total molecular diagnostic testing revenues   $ 140,651     $ 117,610             20 %

Certain prior period reclassifications to oncology and women's health revenue have been made to conform to current period presentation.

Costs and Expenses

Cost of revenue is comprised primarily of salaries and related personnel costs, laboratory supplies, royalty payments, equipment costs and facilities expense. Cost of molecular diagnostic testing revenue for the three months ended December 31, 2012 was $15.6 million, compared to $12.8 million for the same three months in 2011. This increase of 21% in molecular diagnostic testing cost of revenue is due to an increase in testing volumes. Our costs of companion diagnostic services include similar items. Cost of companion diagnostic services for the three months ended December 31, 2012 was $4.3 million, compared to $3.3 million for the same three months in 2011. This 30% increase in companion diagnostic testing cost of revenue is primarily due to an increase in testing services. Many of the costs associated with the performance of our companion diagnostic services are fixed; consequently, gross margins will vary as we experience fluctuations in our companion diagnostic service revenue.

Our cost of revenue may also fluctuate from quarter to quarter based on the introduction of new molecular diagnostic tests, testing volumes, changes in companion diagnostic services, price changes of existing tests and services, changes in our costs associated with such tests and services, the adoption of new technologies and operating systems in our molecular diagnostic laboratories and costs associated with operating additional laboratories outside the United States. There can be no assurance that gross profit margins will remain at current levels.

Our research and development expenses include costs incurred in maintaining and improving our current molecular diagnostic tests and costs incurred for the discovery, validation and development of our pipeline of molecular and companion diagnostic test candidates. Research and development expenses are comprised primarily of salaries and related personnel costs, laboratory supplies, clinical trial costs, equipment, and facilities costs. Research and development expenses incurred during the three months ended December 31, 2012 were $14.1 million compared to $10.2 million for same three months in 2011. This increase of 38% was primarily due to the following:

• an increase of approximately $1.5 million due to the impairment of an intangible asset related to the OnDose product;

• an increase of approximately $1.4 million in internal development activities and clinical studies to support our existing molecular diagnostic testing products;

• an increase of approximately $0.6 million due to the internal development of future molecular diagnostic product candidates; and

• an increase of approximately $0.4 million in internal development activities to support our companion diagnostic services business.

We expect that our research and development expenses will increase over the next several years as we continue to develop our pipeline and expand our offerings of molecular diagnostic tests and companion diagnostic services.

Our sales, general and administrative expenses include costs associated with building our molecular diagnostic and companion diagnostic businesses domestically and internationally. Selling, general and administrative expenses consist primarily of salaries, commissions and related personnel costs for sales, marketing, customer service, billing and collection, executive, legal, finance and accounting, information technology, human resources, and allocated facilities expenses. Selling, general and administrative expenses for the three months ended December 31, 2012 were $59.6 million, compared to $51.0 million for the same three months in 2011. The increase in selling, general and administrative expense of 17% was due primarily to support the 21% increase in revenue and include:

• an increase in sales and marketing expense of approximately $4.7 million due to various marketing initiatives, added headcount and increased sales commissions;

• an increase of approximately $1.5 million in international administrative costs from our European operations;

• an increase of approximately $1.1 million in bad debt expense;

• an increase of approximately $0.9 million in other general administrative expenses;

• an increase in share-based compensation expense of approximately $0.3 million; and

• an increase of $0.1 million of Myriad RBM administrative costs.

We expect that our selling, general and administrative expenses will continue to fluctuate from quarter to quarter and that such increases may be substantial, depending on the number and scope of any new molecular diagnostic and companion diagnostic launches, our efforts in support of our existing molecular diagnostic tests and companion diagnostic services as well as our continued international expansion efforts.

Other Income (Expense)

Interest income was $1.4 million for both the three months ended December 31, 2012 and December 31, 2011. Interest income consists primarily of interest income recorded from the note receivable from Crescendo Bioscience, Inc., or Crescendo.

Income Tax Provision

Income tax expense for the three months ended December 31, 2012 was $21.9 million, for an effective income tax rate of approximately 39%, compared to income tax expense of $18.5 million or a 40% effective income tax rate in the same period in 2011. Income tax expense for the three months ended December 31, 2012 is based on our estimated annual effective tax rate for the full fiscal year ending June 30, 2013 adjusted by discrete items recognized during the period. Our annual effective tax rate is a product of the U.S. federal statutory rate of 35%, a blended state income tax rate of 3% and a 1% impact from recognition of permanent differences. The effective rate is primarily impacted by timing differences related to the recognition of permanent differences due to the tax effect of equity compensation expense from incentive stock options and the deduction realized if those options are disqualified upon exercise. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Results of Operations for the Six Months Ended December 31, 2012 and 2011

Revenue

Total revenue for the six months ended December 31, 2012 was $282.6 million, compared to $233.3 million for the same six months in 2011. This 21% increase is primarily due to increased molecular diagnostic testing volume for our BRACAnalysis, Colaris and Colaris AP, BART and other tests, as well as an increase in companion diagnostic testing revenues as a result of increased research collaborations, as disclosed in the table below.

Total revenue of our molecular diagnostic tests and companion diagnostic services for the six months ended December 31, 2012 and 2011 were as follows:

                                                   Six months ended                             % of Total
                                                     December 31,                                 Revenue
(In thousands)                                   2012           2011         % Change        2012        2011
Molecular diagnostic testing revenues:
BRACAnalysis                                   $ 215,239      $ 190,895             13 %        76 %        82 %
COLARIS & COLARIS AP                              24,143         20,547             18 %         9 %         9 %
BART                                              23,404          5,557            321 %         8 %         2 %
Other                                              5,133          4,580             12 %         2 %         2 %

Total molecular diagnostic testing revenues      267,919        221,579             21 %

Companion diagnostic service revenues             14,658         11,684             25 %         5 %         5 %

Total revenues                                 $ 282,577      $ 233,263             21 %       100 %       100 %

Oncology and women's health revenues were 65% and 35% of total molecular diagnostic testing revenues, respectively, during the six months ended December 31, 2012. Sales of molecular diagnostic tests in each market for the six months ended December 31, 2012 and 2011 were as follows:

                                                   Six months ended
  (In thousands)                                     December 31,
                                                  2012          2011         % Change
  Molecular diagnostic testing revenues:
  Oncology                                      $ 174,232     $ 151,716             15 %
  Women's health                                   93,687        69,863             34 %

  Total molecular diagnostic testing revenues   $ 267,919     $ 221,579             21 %

Certain prior period reclassifications to oncology and women's health revenue have been made to conform to current period presentation.

Costs and Expenses

Cost of molecular diagnostic testing revenue for the six months ended December 31, 2012 was $29.5 million, compared to $24.1 million for the same six months in 2011. This increase of 22% in molecular diagnostic testing cost of revenue is primarily due to an increase in testing volumes. Cost of companion diagnostic services was $7.7 million for the six months ended December 31, 2012, compared to $6.4 for the same six months in 2011. This 21% increase in companion diagnostic services cost of revenue is primarily due to an increase in testing services.

Research and development expenses are comprised primarily of salaries and related personnel costs, laboratory supplies, clinical trial costs, equipment, and facilities costs. Research and development expenses incurred during the six months ended December 31, 2012 were $25.5 million compared to $18.7 million for same six months in 2011. This increase of 36% was primarily due to the following:

• an increase of approximately $1.7 million due to the internal development of future molecular diagnostic product candidates;

• an increase of approximately $1.7 million in internal development activities and clinical studies to support our existing molecular diagnostic testing products;

• an increase of approximately $1.1 million in internal development activities to support our companion diagnostic services business: and

• an increase of approximately $0.8 million for the acquisition of new products and licenses.

Selling, general and administrative expenses consist primarily of salaries, commissions and related personnel costs for sales, marketing, customer service, billing and collection, executive, legal, finance and accounting, information technology, human resources, and allocated facilities expenses. Selling, general and administrative expenses for the six months ended December 31, 2012 were $115.7 million, compared to $97.1 million for the same six months in 2011. The increase in selling, general and administrative expense of 19% was due primarily to support the 21% increase in revenue and include:

• an increase in sales and marketing expense of approximately $12.7 million due to various marketing initiatives, added headcount and increased sales commissions;

• an increase of approximately $4.0 million in bad debt expense;

• an increase of approximately $2.1 million in international administrative costs from our European operations;

• an increase in share-based compensation expense of approximately $0.5 million;

• a decrease of $0.5 million in other general administrative cost; and

• a decrease of $0.2 million of Myriad RBM administrative costs.

Other Income (Expense)

Interest income for the six months ended December 31, 2012 was $2.8 million, compared to $1.9 million for the same six months in 2011, an increase of 48%. The increase was due primarily to interest income recorded from the note receivable from Crescendo.

Income Tax Provision

Income tax expense for the six months ended December 31, 2012 was $41.6 million, for an effective income tax rate of approximately 39%, compared to income tax expense of $35.2 million or a 40% effective income tax rate in the same period in 2011. Income tax expense for the six months ended December 31, 2012 is based on our estimated annual effective tax rate for the full fiscal year ending June 30, 2013 adjusted by discrete items recognized during the period. Our annual effective tax rate is a product of the U.S. federal statutory rate of 35%, a blended state income tax rate of 3% and a 1% impact from recognition of permanent differences. The effective rate is primarily impacted by timing differences related to the recognition of permanent differences due to the tax effect of equity compensation expense from incentive stock options and the deduction realized if those options are disqualified upon exercise. Certain significant or unusual items are separately recognized during the period in which they occur and can be a source of variability in the effective tax rates from period to period.

Liquidity and Capital Resources

Cash, cash equivalents, and marketable investment securities increased $14.0 million, or 3%, to $468.2 million at December 31, 2012 from $454.2 million at June 30, 2012. This increase was attributable to increased collections from higher sales, partially offset by operating expenses and purchasing $79.9 million of our common stock under our share repurchase program.

Net cash provided by operating activities was $73.5 million during the six months ended December 31, 2012, compared to $59.4 million during the same six months in 2011. Our net income was reduced by non-cash charges in the form of share-based compensation, intangible asset impairment and depreciation and amortization, which totaled $13.7 million and $4.5 million, respectively, during the six months ended December 31, 2012. In addition, operating cash was reduced by an increase of $29.9 million in trade accounts receivable due to an increase in sales as well as an increase in day's sales outstanding due to certain contract negotiations.

Our investing activities used cash of $39.0 million during the six months ended December 31, 2012 and provided cash of $13.1 million during the same six months in 2011. Investing activities were comprised primarily of purchases and sales and maturities of marketable investment securities. Capital expenditures for equipment and facilities for the six months ended December 31, 2012 were $7.0 million.

Financing activities used cash of $52.4 million during the six months ended December 31, 2012 and used cash of $16.3 million in the same six months in 2011. Cash utilized in financing activities during the six months ended December 31, 2012 was primarily due to the purchase of $79.9 million of our common stock through our share repurchase programs, partially offset by $23.9 million from cash provided primarily by the exercise of stock options. . . .