Thursday, October 22, 2026

Speeding Up Digital Pathology: Great Lessons from Adoption of Da Vinci Robotic Surgery

 We often hear that adoption of digital pathology (since, for example, the $100M acquisition of Bioimagene by Roche almost twenty years ago)...is so slow due to microeconomics.

Let's look at another transformation.  Robotic surgery aka da Vinci blew into the markets like a tornado.  There were four possible drivers -

  1. Better clinical outcomes
  2. Better economics (faster-cheaper)
  3. Urologist preference and excitement 
  4. Hospital-to-hospital market competition
Especially early on, there was little evidence for #1 or #2.  That leaves factors #3 and #4.

What are the lessons for digital pathology?!

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Find the white paper report in the cloud... HERE.



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On a personal note, I dictated the prompt for this report in an Uber, and the 13-page report was ready a few minutes later when I got out.

Dictated.. Use a agentic research skills and write a detailed white paper style report about the adoption of da Vinci robotic surgery in the United States. I believe we can take for granted that prostate was the index application. Why? How much was adoption driven by clinical superiority or efficiency and speed versus either the surgeons interest in using the most advanced technology and enjoying it, like being an airplane pilot, or the competitive need for hospitals to install state-of-the-art robotic surgery to compete with other hospitals. I believe there is minimal economic or outcome data for the first years, but it option was rapid, so it was being driven by other factors, such as hospital hospital, competition or neurologic surgeons, wanting to be on a fascinating and exciting cutting edge of technology. After reviewing the data and summarizing your findings, compared to the adoption of digital pathology, which also has relatively little clinical outcome or economic data, but if it was done correctly, I have a hypothesis pathologists would love it.

Wednesday, October 21, 2026

Cologuard 2.0 - Pricing on Earnings Call - Screen Shots from CMS

On the October 21, 2026, Abbott earnings call, there were some remarks on the pricing of Cologuard 2.0 in 2027 and forward.

I'll  show the dialog, from Motley Fool transcript, and then some screen shots of the CMS pricing data and its sources.

##

https://www.fool.com/earnings/call-transcripts/2026/10/21/abbott-abt-q3-2026-earnings-call-transcript/

....Our next question will come from Vijay Kumar from Evercore ISI. Your line is open.

  • Vijay Kumar: Hi, Robert. Good morning, and thank you for taking my question. I have 2 questions. Maybe I'll ask both of them upfront. One, a follow-up on this Exact. Did Cologuard 2.0, the next-gen Cologuard, did the reimbursement get cut, Robert? And what's the ASP for this blood test? It feels like Exact should accelerate. My second question was FY 2027. Thanks for the color on top line, but should we still be aiming for double-digit EPS growth? Thank you.
  • Robert Ford: Yeah, sure. Let's talk about your first question regarding Cologuard Plus and getting a reimbursement cut. Listen, Cologuard Plus is a new test, so the process for setting CMS reimbursement is a little bit different versus tests that have been on the market for a while. We've been in active discussions with CMS. Conversations have been very productive. 
  • I'll just say the following. I find it very hard to imagine that when the process is done, that the reimbursement rate for Cologuard Plus would go down, and I'm just going to leave it at that. It is an interesting process, very different, I would say, from NCDs and some of the MedTech kind of process.
  • So it's a little bit of a new process for us. But like I said, I'd be very surprised if that were to happen. [next topic]  I think you [also]  asked about the price of our blood test. Yeah, I'm not going to divulge that because for obvious competitive reasons. There's somewhat of a price that's been set by the market right now
###
Cologuard Plus (aka "2") is PLA code 0464U, dating from July 1, 2024.   It was FDA approved in October 2024.

In the summer of 2024, CMS initially proposed to crosswalk the 0464U price to that of older Cologuard 81528.  But public comment followed, and in the final rates of November 2024, effective January 2025, the Cologuard price was set at $592 by crosswalk of 81327 x 3 (plus 82274).  That's 81327 x 3 or $192 x 3.  

PAMA currently surveyed paid prices in 1H2025, as reported to CMS in June-July 2026.  0464U was one of the codes that had NO reported PAMA pricing.   You can see this on the master spreadsheet of PAMA results, because 0464U has its current price and no further data... no PAMA survey data.

click to enlarge

Since 0464U has no PAMA survey data to set the 2027 2028 2029 price, CMS had to crosswalk it or gapfill it.   Since it had previously been crosswalked at 3 x 81327, CMS repeats that.   You can see the currently proposed 2027 price - a crosswalk x 3 - in the next screen shot.

click to enlarge

You can see in the "recommendations" box, a lot of other crosswalks were suggested along the journey, besides 81327 x 3.  Like 0433U, 0005U, 0399U, 81528, and gapfill.

The Fly in the Ointment

So far, you see that 0464U was crosswalked [mostly] to 81327 in Fall 2024, and lacking any other PAMA price, CMS is happy to repeat that for 2027.  (In fact, they are retrieving and reusing over a hundred old crosswalks in this way).

The problem is, as shown in the next screenshot, PAMA has dutifully deflated the price of code 81327 from $192 down to $126 (when fully worked in).
click to enlarge


81327 Deep Dive

This is the distribution of 81327 PAMA data.   Per CMS,  12 TINS reported. There were 66 events at 39 price levels from $33 to $461.  No payments aggregated at the CMS rate of $192.  Most specific prices occured only once or twice in the 66 events.

click to enlarge

ADLT
As far as I know, as a sole source FDA test Cologuard Plus could be converted to ADLT pricing, which would kick off at the lowest list price on the first date it was marketed to the public.  

##
Median = 34th event of 66 events




Using AI to Search Pub Med

We often hear the first step in learning to use AI, is using it as a big powerful kind of Google.

I find AI can often work as a "big powerful PubMed," going beyond the use of keywords in Pubmed and using instructions that AI can interpret and understand.  Also, since the domain is PubMed to start with, the risk of (hallucinations) should go from tiny to zero.

Here's an example from my work this afternoon:

##

Prompt (Chat GPT 6)

Use PubMed etc. to find four or five major comprehensive reviews or how-to articles about  external control groups (ECG).   If there is an FDA white paper or guide on this topic add that too.   Please provide each in bibliographic references including hot link and PMID.   They don't all have to be open access, but, at least 2 should be.

##

[30 seconds]

[Response]

These five papers make a strong reading set: broad methodological reviews, a practical step-by-step article, and an FDA-authored oncology review. Three have open-access full text in PubMed Central, linked below. The literature commonly uses external control arms (ECA) as well as external control groups (ECG).

  1. Seeger JD, Davis KJ, Iannacone MR, et al. Methods for external control groups for single arm trials or long-term uncontrolled extensions to randomized clinical trials. Pharmacoepidemiology and Drug Safety. 2020;29(11):1382–1392. doi: 10.1002/pds.5141.
    PMID: 32964514 · Open-access full text
    Best broad methodological starting point. Covers selection of suitable external data, differences between trial participants and external populations, threats to valid comparisons, and design and analytical approaches to mitigate bias. Directly addresses both single-arm trials and long-term extensions. PubMed

  2. Burcu M, Dreyer NA, Franklin JM, et al. Real-world evidence to support regulatory decision-making for medicines: Considerations for external control arms. Pharmacoepidemiology and Drug Safety. 2020;29(10):1228–1235. doi: 10.1002/pds.4975.
    PMID: 32162381 · Open-access full text
    Best bridge between methods and regulatory use. Explains how the regulatory question should determine the data source, study design, and analysis, with attention to data fitness, confounding, and credible evidence generation. PubMed

  3. Schmidli H, Häring DA, Thomas M, Cassidy A, Weber S, Bretz F. Beyond randomized clinical trials: Use of external controls. Clinical Pharmacology & Therapeutics. 2020;107(4):806–816. doi: 10.1002/cpt.1723.
    PMID: 31725899 · Publisher/DOI link
    Best statistical overview of two distinct uses: constructing an external comparator for a single-arm trial and supplementing a randomized trial with external evidence. Includes worked case studies involving propensity-score matching and Bayesian borrowing. PubMed

  4. Lambert J, Lengliné E, Porcher R, Thiébaut R, Zohar S, Chevret S. Enriching single-arm clinical trials with external controls: Possibilities and pitfalls. Blood Advances. 2023;7(19):5680–5690. doi: 10.1182/bloodadvances.2022009167.
    PMID: 36534147 · Open-access full text
    Best explicit “how-to” article. Organizes the work into three steps: define the treatment effect and population of interest, select appropriate external controls, and choose the corresponding statistical approach. Uses a multiple-myeloma example but offers broadly applicable guidance for conducting or critically appraising these studies. PubMed

  5. Mishra-Kalyani PS, Amiri Kordestani L, Rivera DR, et al. External control arms in oncology: Current use and future directions. Annals of Oncology. 2022;33(4):376–383. doi: 10.1016/j.annonc.2021.12.015.
    PMID: 35026413 · Publisher/full-text link — PubMed labels this a free article.
    Best FDA-perspective review. Written by FDA investigators, it combines an introduction to external controls, study-design considerations, and case studies from marketing applications submitted to FDA. Especially useful for understanding how methodological issues affect regulatory interpretation. PubMed

  • FDA guidance to add

U.S. Food and Drug Administration. Considerations for the Design and Conduct of Externally Controlled Trials for Drug and Biological Products: Draft Guidance for Industry. February 2023. CDER, CBER, and Oncology Center of Excellence.
FDA guidance page · Free PDF · PMID: Not applicable—FDA guidance document.

This is the directly relevant FDA document, and FDA currently still labels it draft, not final. It addresses population comparability, treatment differences, alignment of “time zero,” outcome measurement, missing data, analysis, and FDA access to supporting records. Its scope is patient-level external controls drawn from other trials or real-world data; it does not cover external-data supplementation of an existing randomized control arm. FDA


###

Write a 250 word summary or recent priorities, emphases, and/or newer ideas, based on your reading of the above.  Use headers or subheaders for clarity.

###

From Convenient Comparators to Planned Studies

Across these reviews and FDA’s draft guidance, the central emphasis is that an external control group should be designed as part of the study’s evidentiary strategy. Credibility depends on specifying the clinical question, eligibility criteria, outcomes, and analysis before examining comparative results. Finding an available database is only the beginning. pmc.ncbi.nlm.nih.gov

Comparability Extends Beyond Patient Matching

Matching age, diagnosis, and disease severity is insufficient. Investigators must also align treatment eras, background care, outcome definitions, assessment schedules, and the start of follow-up (“time zero”). Differences in these features can create apparent treatment benefits even when baseline characteristics look balanced. Missing data and inconsistent measurement deserve particular attention. pmc.ncbi.nlm.nih.gov

Define the Effect Before Choosing the Method

A prominent methodological emphasis is defining the estimand: precisely which treatment effect, in which population, the study seeks to estimate. That choice should guide comparator selection and statistical analysis. Propensity-score methods can address measured differences; they cannot automatically eliminate unmeasured confounding. Sensitivity analyses therefore help assess how robust conclusions are to remaining uncertainty. pubmed.ncbi.nlm.nih.gov

External Evidence Has Multiple Roles

External data can supply the entire comparator for a single-arm trial or supplement an existing randomized control arm. Bayesian borrowing offers an approach to the latter, making assumptions about compatibility between historical and current evidence especially consequential. These applications require different methodological and regulatory considerations. pubmed.ncbi.nlm.nih.gov

Regulatory Credibility Requires Transparency

The overarching priority is demonstrable fitness for purpose: appropriate data, prespecified methods, explicit limitations, and accessible supporting records. Early FDA discussion helps establish whether the proposed comparison can support the intended regulatory decision. www.fda.gov

##

##

Is there overlap between the field of expertise of 'external control arms' and the rising field called "target trial emulation?"  Up to 150 words (if needed).

##

Yes—substantial overlap in both expertise and methods. Both draw on causal inference, epidemiology, biostatistics, and careful management of confounding and selection bias.

The distinction is that an external control arm describes where the comparator comes from, while target trial emulation describes a framework for designing the comparison: specify the hypothetical randomized trial, then align eligibility, treatment strategies, “time zero,” follow-up, outcomes, and analysis with that protocol.

TTE can therefore guide construction of an external control arm for a single-arm trial. It can also compare treatments entirely within observational data, without an actual clinical trial. External-control studies add challenges because trial and routine-care data may be collected differently. frontiersin.org

A directly relevant paper is Arnold et al. (2024), “Application of the target trial emulation framework to external comparator studies” (PMID 40979394). (Open text.)  Neither approach, by itself, eliminates unmeasured confounding. 7pp

##

Note to self - see also PMID 40827506.

An Early View: Stakeholders Respond to FDA's Concept Paper on LLM-SAMD

One brick at a time, FDA has been advancing LLM-based SAMD.  See the approval of draft-report software for ultraound and see the breakthrough status for radiology CXR draft-report software and see FDA's $1.3M contract for accelerating the regulatory science for radiology diagnostic reporting with AI.

There's also the "big story"- in August FDA released a major concept paper for SAMD in an increasingly LLM world.  

By October 19, some 540 comments were submitted.  Up to yesterday, FDA had released 129 of the comments.  I had Chat GPT filter them for "most important ten comments" on which this preliminary article is based.

See e.g. the AMA's press release on its own comment to the FDA - here.


#

See a seven-page white paper PDF in the cloud - here.



###

AI Corner Chat GPT

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FDA Generative AI Medical Device Consultation

What the early comments reveal

ChatGPT 6 • October 20, 2026

FDA’s discussion paper on generative AI medical devices asks how to evaluate software that can produce open-ended clinical responses, change over time, and increasingly take actions. The early comments suggest substantial agreement on the need for a flexible framework, but a significant disagreement about what flexibility should mean. The central question is whether stronger supervision and monitoring can justify less evidence before deployment—and what would demonstrate that those safeguards actually protect patients.

What FDA proposed

Released in August, FDA’s paper outlines a possible approach to generative AI-enabled medical devices and poses 26 questions to stakeholders. It is an exploratory discussion paper, not a new rule or guidance. Its scope extends beyond text-based chatbots to multimodal systems, including applications that interpret images and agents that use tools or execute clinical tasks. [1]

The paper begins with two dimensions of risk: what a device does, including how directly it influences or initiates action, and the consequences of an erroneous output. A general explanation of a disease differs from a patient-specific recommendation, which in turn differs from a system that places an order. But the distinctions are not always clean. An apparently informational response can influence treatment, and a conversation can move from education into urgent medical advice.

For evaluation, FDA proposes competency-oriented benchmarking followed by clinical confirmation. Benchmarks would test capabilities such as clinical knowledge, information gathering, communication, recognition of uncertainty, escalation, and staying within scope. Clinical confirmation would then examine whether those capabilities translate into acceptable performance in the intended setting. The paper contemplates evidence proportionate to risk, rather than requiring the same clinical study for every application.

After deployment, monitoring and change control would address evolving models, shifting populations, and failures that initial testing could not fully anticipate. FDA also asks about independent evaluators, synthetic data, foundation-model information sharing, and the additional risks of autonomous agents.

Two of the 26 questions expose the most consequential choices. Question 18 asks whether stronger postmarket monitoring could justify accepting greater premarket uncertainty. Question 15 asks whether performance should sometimes be compared with the care actually available without the device, including delayed care or no intervention. These questions connect regulatory flexibility to patient access, while raising concerns about who bears the risk of getting that balance wrong.

An early but substantial response

This assessment draws on a selection of substantive early letters, largely from September, together with major October responses from the American Medical Association, American Hospital Association, neurosurgical societies, Personalized Medicine Coalition, and U.S. Chamber of Commerce. It also considers University of California Health’s publicly summarized recommendations. The public docket snapshot showed 541 submissions received but only 129 published, with the available docket export extending through September 30. The findings are therefore an interim reading of significant arguments, not a measure of opinion across the completed consultation. [2]

The device and its workflow matter more than the model label

A recurring response is that risk depends on a particular clinical function and its surroundings. How quickly could harm occur? Can an action be reversed? Can a clinician check the original evidence? Does the user have the necessary expertise? FDA already raises many of these considerations; commenters are pressing for clearer ways to translate them into evidence requirements.

The American College of Allergy, Asthma and Immunology offers a concrete example. Advice about anaphylaxis operates under very different time constraints from advice about long-term asthma management. A similar-sounding recommendation can carry a very different risk when there is little time to recognize and correct an error. Newton’s Tree argues that FDA needs an explicit analysis of hazards, controls, and remaining risk more than it needs additional axes on a diagram. [3, 4]

UltraAI contributes a useful distinction between presenting an existing clinical claim and generating a new one. A system that faithfully summarizes a physician’s report is doing something different from one that infers a diagnosis from an image. Even a summary becomes clinically generative when it changes “cannot exclude” into “is present,” or combines findings into a diagnosis that the source never made. Attaching a citation does not establish that the cited material supports the claim. [5]

These arguments favor evaluation at the level of the clinical function. They also challenge the idea that cautious wording or a disclaimer can determine risk. The Chamber adds a separate qualification: a useful risk framework should not silently become a new legal classification system or automatically determine the regulatory pathway. [6]

Supervision is a clinical capability that must be tested

The AMA’s October 16 letter makes one of the strongest arguments in the consultation: meaningful physician supervision requires more than placing a human at the end of an automated process. The reviewer needs relevant information, expertise, time, cognitive capacity, and authority to reject or stop the system. Supervision also consumes resources. A physician working under ordinary clinical pressure cannot be assumed to perform like a specially trained research reviewer with unlimited time. [7]

University of California Health’s summarized recommendations similarly emphasize the deployed combination of model, prompts, information retrieval, safeguards, and workflow. S. Joseph Sirintrapun, writing in a personal capacity from his experience in pathology and informatics, stresses the practical ability to identify consequential errors. The implication is that supervision itself belongs in the validation study. [8, 9]

RADIN and Total Medical Imaging propose a particularly specific radiology application. They ask FDA to exercise narrowly bounded premarket enforcement discretion for AI-generated drafts that remain private to the interpreting radiologist until affirmative specialist sign-off. The radiologist would have the source images, could edit or reject the text, and would control whether anything enters the clinical record. The proposal excludes automatic finalization and independent ordering or triage. This is a requested policy for a defined workflow, not permission already granted by the discussion paper. [10]

The tension with the AMA is productive. RADIN asks how much regulatory credit a tightly controlled specialist workflow should receive; the AMA asks what evidence establishes that the reviewer can provide the assumed protection. A persuasive answer would measure the performance of the human–AI team: errors introduced, errors caught, omissions corrected, review time, and effects on downstream care.

For radiology and pathology, that is a pivotal research question. A draft can improve performance by directing attention to an overlooked finding, or impair it by anchoring the specialist to a plausible error. Interface design and review burden help determine which effect predominates. Measuring the model alone will miss much of the clinical value—and risk.

Industry does not speak with one voice on premarket flexibility

The most important disagreement concerns the trade between evidence before deployment and surveillance afterward. It does not divide neatly into developers seeking flexibility and physicians demanding caution.

Commenter

Position on the trade

AMA

Necessary premarket assurance should not be reduced on the assumption that later monitoring will compensate.

UltraAI

Monitoring generally complements premarket evidence; substitution would require reliable detection and mitigation before harm.

Clearstep

Supports greater premarket uncertainty in exchange for robust, prespecified monitoring and architectural safeguards.

Personalized Medicine Coalition

Supports conditional flexibility when errors are detectable, reversible, and subject to prompt intervention.

American Hospital Association

Supports streamlined pathways and lifecycle monitoring, with developer responsibility and adequate implementation resources.

 

These positions, set out in the respective submissions, identify the real decision facing FDA. [5, 7, 11–13] It is not simply how much monitoring a sponsor promises. It is whether that monitoring can detect the relevant failure early enough for intervention to matter. A readily reversible error differs from a missed diagnosis discovered months later or an autonomous action that cannot be undone.

UltraAI’s caution is especially noteworthy because it comes from a developer. The company argues that reducing premarket evidence can transfer the discovery of uncertainty to patients while giving the sponsor the benefit of earlier entry. Clearstep, by contrast, argues from its experience with hybrid clinical logic and ongoing clinician review that a stronger postmarket program can support greater flexibility. Their differences reflect competing theories of how safety can be demonstrated, not merely different attitudes toward innovation.

The economic question is just as important. The AMA objects to shifting surveillance work and unresolved product risks onto physicians. AHA emphasizes the burden on hospitals, particularly those with limited resources. A framework that depends on continuous clinical review needs a credible answer about who supplies the labor, data access, and funding.

Better benchmarks require better clinical measurement

The comments generally support structured evaluation, but warn against equating examination performance with clinical reliability. Newton’s Tree offers a useful three-part formulation: establish task competency, confirm clinical performance in the intended environment, and maintain assurance during operation. Each answers a different question. [4]

UltraAI proposes scoring the clinical claims within a report against a reference standard. Different wording can express the same correct finding; elegant wording can conceal a false one. For higher-risk uses, the company also urges developers to constrain the range of inputs and outputs where feasible, rather than assume every application needs unrestricted generation. [5]

The ARPA-H ADVOCATE and Johns Hopkins Applied Physics Laboratory team response adds statistical and operational discipline. Repeated answers to the same case are not independent patients. A large synthetic dataset should not overwhelm evidence of weak performance on real cases. And deployment scale matters: a seemingly modest error rate can become a substantial burden when repeated across a large population. [14]

Several submissions also envision shared evaluation infrastructure. UC Health’s summary proposes refreshed, sequestered benchmarks distributed across health systems; AHA favors multiple qualified evaluators rather than a costly bottleneck. Such arrangements could reduce duplication and improve comparability, but would require sustained governance and funding. The consultation is beginning to identify a market for trusted evaluation services as well as a regulatory need for them.

The less obvious failures deserve attention

Some of the most useful comments broaden the discussion beyond hallucination. Nina Vasan’s Stanford Brainstorm letter draws on evaluations of consumer and youth-facing AI to emphasize omissions, harmful affirmation, and risks that build over repeated interactions. An answer can be factually defensible while reinforcing unhealthy behavior or failing to ask the question that would reveal an urgent problem. These examples inform potential medical-device failure modes rather than establish performance rates for regulated devices. [15]

Escalation provides another example. A system can recognize the need for help and still fail if its alert arrives late, reaches nobody, or sends the patient to the wrong service. Newton’s Tree and Stanford therefore emphasize the completed handoff, not merely the generated warning. This turns an apparently linguistic capability into an operational outcome that can be measured. [4, 15]

Luma’s focused response to FDA’s no-device comparator question raises a different concern: in assistive communication, a system may generate apparent patient speech when no meaningful input was supplied. In that situation, silence can be safer than a fluent fabrication. The AMA approaches the comparator issue from an equity perspective, warning against using limited access to care to justify a lower safety standard for underserved populations. Together, these arguments show why access benefits and minimum safety requirements need separate consideration. [7, 16]

Stanford also raises a rarely discussed lifecycle problem: what happens when a patient has come to depend on a service and the product disappears? For longitudinal applications, advance notice, access to records, referral, and transition support can be clinically important. The relationship between patient and product may outlast the business offering it.

Updates and agents make accountability harder

A medical AI application can change without an obvious change to its interface. The underlying model may be replaced, a prompt revised, a retrieval source updated, or a tool given new permissions. Any of these can alter clinical behavior. UC Health’s summarized call for users to know when the AI changes is particularly important: a model that improves on average can still degrade a previously validated use. [8]

This makes upstream information and control essential. Stanford seeks enforceable rights to version information, change notice, incident disclosure, and support for investigations. Newton’s Tree sees voluntary foundation-model master files as potentially useful, but insufficient to demonstrate the safety of a finished device. Accountability is difficult to exercise when a manufacturer cannot identify or control a dependency on which its product relies. [4, 15]

Agents add the ability to act. A system that schedules, orders, or writes to records must be evaluated across the sequence of decisions and tool uses, including its permissions and ability to stop or recover. The ADVOCATE/JHU APL response and Newton’s Tree emphasize these system-level tests. Individual commenters, including C. D. Rowsell Jr. and Tanisha Tejada Thoreau, add proposals for revalidating authority during execution, audit trails, and runtime stopping controls. These are candidates for development and validation, not established FDA requirements. [4, 14, 17]

An AI supervisor introduces a further dependency. A second model may share the first model’s blind spots rather than independently detect them. The monitoring system therefore needs its own evidence of reliability—a point that connects directly with FDA’s radiology research activity.

The overlapping radiology research contract

FDA’s approximately $1.3 million, 18-month research contract with Cognita Imaging illustrates the related evaluation problem. Announced by Cognita Imaging/Radiology Partners in September, the project uses multiple LLM evaluators and radiologist adjudication of important disagreements to study radiology-report assessment across approximately one million examinations. Its aims include scalable evaluation methods, cohort-size requirements, and practical guidance relevant to premarket and postmarket assessment. [18]

The overlap with the consultation is clear: can automated evaluation make clinical assessment more scalable while retaining trustworthy clinical judgment? There is no established formal linkage between the contract and this docket. They nevertheless occupy overlapping parts of FDA’s research agenda—benchmark validity, AI-assisted supervision, and reliable assessment of generated clinical content. The contract is an investment in evaluation methods, not a regulatory authorization or an answer to the broader debate.

What FDA is getting for its effort

The consultation is producing something more useful than a tally of support and opposition. It is identifying the conditions under which a flexible approach might be credible, and the evidence needed to distinguish effective safeguards from reassuring descriptions.

Its most valuable contribution may be to make broad terms testable. “Human oversight” becomes performance under realistic workload. “Escalation” becomes a completed, timely handoff. “Continuous monitoring” becomes a specified ability to detect a failure before harm accumulates. “Change control” becomes the ability to identify, evaluate, and, when necessary, reverse a clinically consequential modification.

FDA is also learning where implementation could fail for reasons beyond model accuracy. Responsibility, information, operational control, and funding may sit with different organizations. A manufacturer may remain accountable while depending on a foundation-model supplier for change information and a hospital for the data needed to detect problems. Resolving those relationships is part of making lifecycle regulation work.

The comments do not yet prove that the proposed methods are sufficiently reliable or affordable. Nor does conditional support establish consensus about how much premarket uncertainty is acceptable. But the submissions are sharpening that disagreement into questions FDA can investigate: which failures are detectable, how quickly, by whom, and with what effective response?

As more October submissions become available, the most valuable additions will be evidence about those questions—comparative workflow studies, measured supervision performance, monitoring costs, and experience from patients and health systems. The initial record has already moved the debate toward the practical terms on which generative AI could earn a place in clinical care. FDA’s next challenge is to turn those terms into proportionate, reproducible evidence requirements.

Selected sources

1. FDA, Considerations for the Regulation of Generative AI-Enabled Medical Devices, August 2026, especially Appendix B’s 26 questions. https://www.fda.gov/media/194242/download

2. Regulations.gov, docket FDA-2026-N-7874, public-comment snapshot reviewed for this assessment. https://www.regulations.gov/docket/FDA-2026-N-7874

3. American College of Allergy, Asthma and Immunology, September 25 comments.

4. Newton’s Tree, response to FDA’s generative AI discussion paper.

5. UltraAI, September 28 comments, especially the summary on pages 3–6.

6. U.S. Chamber of Commerce, October 19 comments.

7. American Medical Association, October 16 comments.

8. Karandeep Singh, public summary of University of California Health’s October 19 response.

9. S. Joseph Sirintrapun, personal-capacity comments, September 8.

10. Total Medical Imaging and RADIN, joint comments on radiologist-supervised report predrafting, September 25.

11. Clearstep, response to FDA’s generative AI discussion paper.

12. Personalized Medicine Coalition, October 19 comments.

13. American Hospital Association, October 19 comments.

14. ARPA-H ADVOCATE and Johns Hopkins Applied Physics Laboratory team response.

15. Nina Vasan, Brainstorm at Stanford, August 19 comments.

16. Christman/Luma, response to Question 15 on counterfactual comparators.

17. C. D. Rowsell Jr. and Tanisha Tejada Thoreau, separate comments on runtime controls and agent governance.

18. Radiology Partners/Cognita Imaging, announcement of FDA report-evaluation research contract, September 16. https://www.radpartners.com/2026/09/cognita-imaging-receives-fda-contract-to-test-new-approach-to-evaluating-generative-ai-in-radiology/


Tuesday, October 20, 2026

National Kidney Plan, 10/2026: Key Sightlines into CMS Innovation Frames

A new national kidney care plan was a major effort in the Trump-1 administration (2019 here).  One of the leaders, Abe Sutton, now heads CMMI.   

In October 2026, HHS announces an updated Kidney Plan.  Worth tracking. It gives important sightlines into how this CMS views healthcare innovation.

  • A Google-AI summary is here.
  • The new Kidney Care National Plan, KCNP, home page is here.
  • See the 17-page white paper here.
  • See the press release here.


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AI CORNER    

See the six page white paper PDF  here.



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HHS’s Kidney Care Plan: A Window into How CMS Thinks About Innovation

DaVita’s response exposes a central policy debate: how should government reward innovation while ensuring that established providers face meaningful competition?

HHS’s Kidney Care National Plan offers a revealing look at how federal officials think innovation happens and why it sometimes stalls. For readers following CMS policy, the significance extends beyond dialysis. The plan connects prevention, payment incentives, competition, and regulatory reform. DaVita’s response exposes the central tension: government sees entrenched structures that may impede progress, while a major provider argues that its scale helps deliver it. The next challenge is turning those positions into policy.

A Kidney Strategy with Broader Policy Implications

On October 20, 2026, HHS released its Kidney Care National Plan, outlining an agenda for earlier intervention, better dialysis options, and expanded transplantation. For readers following CMS innovation policy, the document deserves attention well beyond kidney care. It offers an unusually explicit argument about how government payment, regulation, and market concentration can shape—or suppress—innovation.

The HHS announcement describes a department-wide effort spanning payment policy, research, product regulation, and oversight. Its ambitions are broad: prevent kidney failure, expand patient choice, and improve transplantation. The accompanying plan goes considerably further in diagnosing why progress has been inadequate.

Its central contention is that disappointing outcomes reflect the incentives and institutions government helped create. Medicare is consequently both the payer confronting the consequences and a policymaker with considerable responsibility for changing them. The full argument appears in the supplied plan, especially its discussion of competition and prevention on printed pages 4–12.

DaVita’s response supports many of the goals while challenging that diagnosis. The exchange is a useful case study in what “innovation” means to an agency, a payer, and a major provider.

Looking at the Market Government Helped Build

The plan argues that dialysis facility requirements can impose substantial upfront costs on new entrants, including providers pursuing home-based approaches for which conventional facility infrastructure may be less necessary. It also questions whether established payment arrangements offer a durable business case for adopting better technologies.

This is a broader policy inquiry than deciding whether to increase a reimbursement rate. HHS is asking whether the conditions for receiving payment favor particular organizations, facilities, and delivery methods.

For an innovation company, those conditions can matter as much as the quality of its product. A technology may work clinically yet struggle commercially if providers cannot finance its adoption or prospective customers have little incentive to change.

The plan is also unusually confrontational about incumbent behavior. It discusses physician financial relationships, contracting restrictions, bargaining power with insurers, and third-party premium assistance. These are HHS’s concerns and policy arguments; the document should not be read as an adjudication that any particular company has violated the law. Nevertheless, their prominence signals that HHS sees competition policy as part of health innovation policy.

Prevention’s Problem: Who Pays, and Who Benefits?

The most interesting payment problem concerns who benefits from prevention. An insurer or employer may pay today for earlier detection and treatment, while Medicare receives much of the eventual financial benefit if kidney failure is delayed or avoided. Patients can change coverage before those benefits emerge. Providers likewise may have no practical way to capture the value of preventing an expensive event years later.

The plan therefore identifies a mismatch between the party making the investment and the party receiving the return.

That is a consequential diagnosis for CMS. Encouraging prevention through education alone does not solve it. Nor does an additional payment for a screening encounter necessarily create sustained incentives for treatment and follow-up.

The document proposes exploring accountability across the course of disease, earlier intervention, sustainable financing for new technologies, and coordination among payers. Its recommendation to consider a multi-payer summit acknowledges that Medicare cannot fully solve a problem created by patients moving among coverage arrangements simply by changing one Medicare payment.

The difficult implementation questions remain: Who pays upfront? Who receives credit for avoided kidney failure? How long must a model run? How should it distinguish a treatment effect from differences in the patients who enroll?

The plan identifies the economic problem more clearly than it specifies the contractual solution.

CMS Experiments: Better Outcomes Can Still Cost More

DaVita invokes the Kidney Care Choices model as evidence that value-based kidney care can meaningfully improve patients’ lives. CMS’s evaluation supports important parts of that argument—but adds a financial complication.

According to CMS, the model’s second performance year produced improvements in home dialysis, optimal starts to dialysis, and preemptive and living-donor transplantation. Yet it also produced an estimated $304 million net loss to Medicare in performance year 2023. CMS has continued the model through 2027 while changing its financial methodology and participation options.

Those findings deserve to be presented together. Better care is valuable. Better care does not automatically establish that a particular payment model saves money.

The HHS plan also acknowledges the termination of the separate ESRD Treatment Choices model after it failed to achieve its intended results or anticipated savings. The policy lesson is that a plausible incentive mechanism remains an experiment. Participation, enthusiasm, and improved intermediate measures are insufficient substitutes for evaluating the full result.

The proposed direction is to move intervention earlier. The plan points to CMS’s ACCESS model, which tests recurring payments for technology-supported chronic care, with full payment tied to measurable outcomes. Its covered conditions include stage 3a and 3b chronic kidney disease.

The plan indicates that HHS wants CMS to make preserving health a more dependable business proposition. That requires defining an outcome worth purchasing, establishing credible measures, and offering a payment structure under which organizations can deliver it.

DaVita’s Rebuttal: Scale Can Support Innovation

DaVita’s statement contains a particularly direct sentence:

“Where we differ is the suggestion that kidney care has lacked innovation or that scale stands in its way.”

The company describes investments in coordinated care, transplant navigation, proprietary technology, and a clinical innovation being deployed across its centers. It argues that organizational scale supplies the expertise and capital needed to develop improvements and spread them widely.

That is a substantive response. HHS emphasizes the possibility that concentration protects established practices and discourages entry. DaVita emphasizes the possibility that size enables investment and rapid adoption.

Both mechanisms can operate in the same market. A large provider can introduce a meaningful improvement while also benefiting from conditions that make competing delivery models difficult to establish. Evidence of innovation by an incumbent does not, by itself, settle whether the market produces enough innovation or gives patients sufficient choice.

Conversely, identifying concentration does not establish that smaller organizations would necessarily deliver better care. HHS will need evidence that particular changes in entry requirements, contracting, or payment actually improve access, quality, and costs.

DaVita also makes a clinically important distinction: preventing future kidney failure and treating people who already have it are simultaneous obligations. A prevention strategy must preserve effective care for patients whose need for dialysis cannot be eliminated by earlier intervention today.

Transplantation: Innovation Includes Institutional Reform

DaVita emphasizes the shortage of viable organs. HHS also examines the institutions governing organ procurement, allocation, and transplantation: regional monopolies, payment incentives, contractor arrangements, transparency, and accountability.

The difference in emphasis matters. An organ shortage can coexist with avoidable failures to identify donors, support living donation, recover organs, or complete transplantation. The plan treats those organizational processes as legitimate targets for innovation.

The press release connects this agenda to living-donor assistance, transplant system oversight, and a proposed national expansion strategy.

This also reveals a tension within the administration’s approach. The plan favors reducing barriers and limiting unnecessary regulation, while calling for stronger accountability and enforcement in selected areas. In practice, its proposed federal role is highly active: redesign payment, reconsider entry requirements, scrutinize market behavior, modernize procurement, and enforce performance expectations.

What Happens Next Matters More Than the Announcement

Many recommendations say HHS “should consider” an action or “could” explore a model. The plan itself does not establish a new nationwide prevention benefit, finalize a payment methodology, or complete the proposed regulatory reforms.

For CMS observers, the useful next questions are concrete:

  • Does a new model reach patients early enough to change disease progression?

  • Can new providers participate without reproducing the infrastructure of incumbent organizations?

  • Are outcomes measured over a credible period?

  • Do payments reward improvements that would otherwise not occur?

  • Are patients already dependent on dialysis protected as incentives change?

The document’s larger significance is its willingness to examine the relationship between public policy and private business models. HHS is arguing that innovation depends on what the healthcare system makes financially possible, attractive, and scalable. DaVita is arguing that established organizations already possess important capabilities for delivering that progress.

Effective policy will require CMS to preserve those capabilities while making room for approaches that the existing system has little reason to adopt.

Key Takeaways and Surprises

  1. HHS is questioning the market structure its own rules helped create. Facility requirements and payment arrangements are being examined as possible barriers to innovation and entry.

  2. Prevention faces a financial coordination problem. The organization paying for early intervention may never receive the savings. The proposed multi-payer discussion acknowledges that changing Medicare alone may be insufficient.

  3. A model can improve care while increasing Medicare spending. Kidney Care Choices illustrates why clinical gains and financial performance must be evaluated separately.

  4. DaVita and HHS disagree about the role of scale. HHS emphasizes protection from competition; DaVita emphasizes investment capacity and the ability to spread improvements. Both claims require evidence.

  5. “Less regulation” comes with an active federal agenda. The plan combines easier market entry with stronger oversight, scrutiny of business practices, and accountability for transplant organizations.

  6. Innovation includes changing institutions. Procurement arrangements, donor support, referral processes, and payment incentives can influence outcomes alongside new drugs and devices.

  7. The plan’s diagnosis is more definite than its implementation. Its criticism of existing structures is forceful, but many remedies remain proposals to consider. The decisive developments will be specific model designs, payment terms, and regulatory actions


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What's the logic of Da vita's rapid disagreement ???
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Yes—DaVita is explicitly putting its disagreement on the record. But it has chosen a fairly careful form of disagreement: support the administration’s goals, challenge its characterization of the industry, and offer continued cooperation. Whether responding within roughly four hours was smart depends partly on what HHS said publicly beyond the written plan; the exact interval hasn’t been verified here.

Your concern is reasonable. The sentence “Where we differ…” is conspicuous. It ensures that the response cannot be mistaken for an uncomplicated endorsement.

There are several reasons that might nevertheless be a calculated choice:

  • The criticism threatens DaVita’s legitimacy, not just a payment rate. HHS is suggesting that established market structures impede progress. Silence could allow the narrative to harden that large dialysis companies are obstacles to better care.
  • The audience includes investors, employees, physicians, and patients. A plausible purpose of the rapid response is to reassure those groups that the company has an answer and intends to defend its role.
  • DaVita needs to remain a potential implementation partner. Its emphasis on existing capabilities makes the argument that HHS can achieve some of its goals by working with the company.

The statement is diplomatically constructed. It begins with shared urgency, credits the plan with reflecting DaVita’s priorities, identifies a narrow disagreement, and closes with cooperation. It avoids naming or criticizing individual officials. That is controlled pushback, rather than a declaration of war.

But there is a strategic weakness: DaVita partly answers a broader structural criticism with examples of its own innovation. HHS could readily respond: “We did not say you have never introduced anything useful. We said the market could deliver more innovation with stronger competition.” Similarly, saying that scale finances innovation does not resolve whether particular contracting arrangements inhibit competitors.

The paragraph insisting that prevention must not be conflated with lifesaving dialysis is also pointed. It could be read as a necessary defense of current patients—or as suggesting that HHS does not understand an elementary clinical distinction. That is where the tone risks becoming irritating to officials.

On balance, a public response was defensible; the speed and explicit disagreement were optional. A softer formulation could have preserved the substance: “Achieving these goals will require both new entrants and the investment and clinical capabilities of established providers.”

The more revealing question is whether DaVita privately briefed HHS before issuing the statement. Advance notice could make this routine stakeholder positioning. A surprise rebuttal, hours after a flagship announcement, carries more relationship risk. The public statement alone does not tell us which occurred.

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One more time...why Da Vita says "something" today instead of "nothing" ???

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Silence was a perfectly reasonable option. The earlier answer overstated the risk that silence would be interpreted as agreement.

The argument against silence is that HHS had publicly challenged the industry’s structure and incentives. DaVita might want investors, employees, and physician partners to hear promptly that it disputes the implication that its size obstructs innovation. That is a reason to respond—but it does not require an immediate public rebuttal.

Silence would have offered several advantages:

  • Let HHS have its announcement without creating a second story about industry disagreement.
  • Allow private conversations to clarify which criticisms might become actual policy.
  • Preserve the opportunity to respond later with evidence and specific proposals.
  • Avoid defending the existing system before knowing precisely what changes HHS intends.

A company does not concede a policy argument by declining to contest it on announcement day. It could also issue a short statement welcoming prevention and patient choice, leaving its objections for private meetings or subsequent comments.

The strongest reason for an immediate rebuttal would be a concrete need to reassure stakeholders—for example, substantial investor concern or damaging public allegations. We have not established that such a need required this particular response.

So your instinct is sound: given a potentially sensitive agency and an exploratory plan, public restraint combined with vigorous private engagement could have been the smarter opening. DaVita’s statement was measured, but measured disagreement can still be unnecessary disagreement at that moment.

Four Transcripts and a Sale: LabCorp Adopts Myriad "Prenatal Health" Assets

Just days after LabCorp agrees to acquire BioReference from OPKO, LabCorp agrees to buy Myriad Prenatal Health assets for $210M.

Here, we let Chat GPT write the full case, including the assets, their origins, and how Myriad's public discussion of the business evolved over four quarters.

As always with these reports, they are AI generated reported and not ground truth.  However they service as examples of current AI capabilities to understand requests, research, organize, and write.



Find the 11-page PDF report   HERE.
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Summary.  Myriad’s $210 million prenatal divestiture marks a strategic retreat from a business assembled through acquisitions and expanded through internal innovation. Labcorp gains four products, an established customer base, and FirstGene, launched only three months earlier. Across four earnings calls, management’s narrative shifted from recovery after ordering disruptions to persistent commercial weakness and portfolio review. The evidence does not establish that software problems caused the sale. A stronger interpretation combines disappointing recovery, competitive pressure, reimbursement friction, and oncology investment priorities. For Labcorp, the transaction offers consolidation and integration opportunities; for Myriad, it exchanges uncertain future growth for cash and strategic focus.

Myriad’s Prenatal Exit:
What Four Earnings Calls Reveal
 About the Labcorp Transaction
Analysis as of October 20, 2026

The transaction. Myriad has agreed to sell its Prenatal Health testing business to Labcorp for $210 million in cash, plus inventory at closing. Labcorp projects approximately $160 million of first-year revenue, slight first-year adjusted earnings accretion, and profitability reaching its average Diagnostics segment margins by the end of year two. Closing is expected by early 2027, subject to regulatory clearance and other conditions. These are announced expectations, not completed results. The joint announcement is available here. Labcorp

The SEC filing adds useful substance. This is an asset transaction involving specified assets and liabilities, employee offers, a patent license agreement, and transition services. It is therefore more than a transfer of four trademarks, but it is not an acquisition of Myriad itself. The contractual initial outside date is February 19, 2027, with a potential regulatory extension to October 19, 2027. Certain regulatory termination circumstances could require Labcorp to pay a $10.5 million fee. sec.gov

What “Prenatal Health” means at Myriad. The company’s dedicated prenatal screening webpage describes a portfolio spanning reproductive carrier assessment, fetal chromosome screening, fetal single-gene risk assessment, and early fetal-sex prediction. The four products have distinct purposes:

ProductPrincipal purposePlace in the portfolio
ForesightIdentifies carriers of inherited conditions that could be transmitted to offspringRelevant before pregnancy as well as during pregnancy
PrequelUses maternal blood to screen for fetal chromosomal conditionsMyriad’s established noninvasive prenatal screening product
SneakPeekPredicts fetal sex from early pregnancyA consumer-facing offering, including at-home access
FirstGeneCombines patient carrier status, fetal single-gene risk, fetal chromosome screening, and fetal RhD assessmentAn integrated prenatal assay with one maternal blood draw

Myriad markets FirstGene for use beginning at eight weeks, without requiring a reproductive-partner sample. Its four components should not be confused with four separate acquisitions. Nor should its carrier component be assumed to reproduce the full breadth of every Foresight panel. Myriad Genetics

An important boundary: Myriad is selling prenatal testing, not all testing sold through women’s-health practices. Historically, its Women’s Health business included both prenatal products and hereditary cancer testing for unaffected patients. MyRisk remains in the Cancer Care Continuum category. Thus, the transaction does not imply abandoning OB/GYN relationships or hereditary breast and ovarian cancer assessment. investor.myriad.com

Where the assets came from—and what Myriad paid. The portfolio combines two acquisitions with subsequent development.

OriginDateFinancial termsPrincipal contribution
Counsyl acquisitionAnnounced May 28, 2018; completed July 31, 2018$375 million announced; subsequent SEC reporting recorded $405.9 million of total considerationForesight and the prenatal screening business then branded Prelude, subsequently Prequel
Gateway Genomics acquisitionNovember 1, 2022$67.5 million upfront, with up to $32.5 million contingent considerationSneakPeek and its consumer distribution capabilities
Myriad product developmentSubsequent years; FirstGene commercially launched July 21, 2026No separate FirstGene acquisition price identifiedIntegration and extension of prenatal technologies into FirstGene

The Counsyl announcement and closing release establish the 2018 chronology. The Prelude-to-Prequel lineage is also documented in the scientific literature. investor.myriad.com

The $375 million versus $405.9 million distinction deserves attention. The SEC acquisition note reports $278.5 million in cash and approximately three million Myriad shares valued at $127.4 million. Those shares were valued at the closing-date market price. The widely cited announcement price therefore differs from the subsequently recorded consideration. sec.gov

Gateway should not casually be described as a $100 million acquisition: that was the maximum upfront-plus-contingent opportunity. Myriad’s 2024 annual report valued the remaining Gateway contingent consideration at zero because achievement of the targets was not considered probable. myriad.gcs-web.com

Using Counsyl’s announced price plus Gateway’s upfront payment produces $442.5 million. Substituting Counsyl’s subsequently reported consideration produces $473.4 million. Both substantially exceed today’s $210 million headline sale price.

That comparison is striking, but it is not an investment-return calculation or an accounting loss estimate. The purchases and sale have different asset and liability boundaries; Myriad operated the businesses for years; cash flows occurred in the meantime; and additional development spending created products that did not exist at acquisition.

The original strategy was broader than prenatal testing. In 2018, Myriad envisioned combining Counsyl’s reproductive products with hereditary cancer testing to increase physician reach and provide a comprehensive women’s-health offering. In 2022, Gateway added an earlier consumer entry point: families buying SneakPeek could become aware of Myriad’s other genetic tests. investor.myriad.com

One interpretation is that the 2026 sale reverses that organizing principle. The earlier strategy emphasized a shared customer and life-stage relationship. The emerging strategy emphasizes disease-specific investment, particularly cancer. A common ordering physician does not necessarily make two businesses equally attractive destinations for capital.

The Four Call Record

The four-call record. The relevant window is Q3 2025, Q4 2025, Q1 2026, and Q2 2026. Myriad’s next quarterly call is November 4, after this announcement.

The reported prenatal figures provide an anchor for interpreting management’s language:

Reported quarterPrenatal revenueRevenue change, year over yearVolume change, year over year
Q3 2025$44.5 million+2%−3%
Q4 2025$44.9 millionFlat−6%
Q1 2026$41.9 million−15%−12%
Q2 2026$39.8 million−16%−9%

These are the prenatal product-category figures, not total Women’s Health revenue. The Q2 call rounded revenue to $40 million; the financial table reports $39.8 million. investor.myriad.com

November 3, 2025: recovery remained the working assumption. On the Q3 call, management described improvement after the second-quarter ordering disruption. Legacy Prequel and Foresight volumes were approximately flat year over year. The broader category’s 3% volume decline reflected lower SneakPeek demand, an important distinction between the clinical-testing narrative and the aggregate figures. Roic AI

Analysts Puneet Souda and David Westenberg pressed on competitive share shifts and why the ordering-system effects persisted. Management’s explanation was that large customers already used multiple laboratories and had shifted volume away during the disruption. Fixing the operational problem did not automatically restore their orders.

FirstGene remained a prospective growth catalyst. Nevertheless, oncology was already the first strategic priority, while prenatal and mental health were expected to grow within disciplined resource allocations. The emerging hierarchy preceded the sale: prenatal remained strategically useful, but oncology had first claim on incremental investment. Roic AI

February 23, 2026: the recovery timetable became more qualified. On the Q4 call, management described renewed prenatal volume softness and warned of a difficult first-quarter comparison. It still anticipated recovery from Q2 onward, supported by a more focused sales effort and FirstGene.

Analysts asked whether competition was contributing and how widespread the remaining customer problem was. Brian Donnelly said accounts unaffected by the ordering issue were growing at or above market. Sam Raha described the original implementation as a “self-induced error” and said the company had reviewed its other ordering systems.

FirstGene remained scientifically encouraging, but the CFO said guidance did not assume a sizable direct contribution from it. The product could also reopen conversations about the existing portfolio.

The important change was a more conditional recovery thesis: customer reactivation, commercial execution, and a new-product conversation all needed to work. The Motley Fool

May 5, 2026: analysts challenged the recovery premise directly. On the Q1 call, Brandon Couillard questioned whether annual prenatal volume growth remained realistic, given weak year-over-year results and only modest sequential improvement.

Management pointed to a dedicated prenatal sales team and FirstGene. Crucially, Raha said the order-to-report operational problems had been absent for several quarters. The remaining challenge was commercial execution.

The call also clarified FirstGene’s economic thesis: Myriad intended to launch using existing billing codes, expected higher average revenue per test, and believed that would more than offset somewhat higher processing costs. A dedicated code was a possible later development.

This was still an investment-and-recovery story. But it was explicitly no longer a story about waiting for broken software to be repaired. The unresolved question was whether restored operations and differentiated science would translate into renewed ordering and attractive economics. investing.com

July 30, 2026: disappointing execution became a portfolio question. On the Q2 call, management acknowledged less progress than expected in prenatal, citing sales-force expansion timing and competitive dynamics. It reported declines in both volume and average revenue per test. FirstGene had launched the previous week, and some customers were returning to trial it.

At the corporate level, management described a rigorous portfolio evaluation. The accompanying release connected the strategic review to growth, profitability, and liquidity. Myriad reduced its annual revenue outlook and suspended adjusted EBITDA guidance while assessing its operational initiative, Ascend.

The question had changed from how quickly prenatal would recover to where Myriad should allocate capital. That is the clearest public bridge to the October transaction. It does not establish when negotiations began or that management had already decided to sell during the July call. investing.com

Could a software problem really explain the divestiture? Your skepticism is warranted. The evidence supports a narrower causal chain:

  • Management attributed an initial loss of customer volume to the ordering rollout.
  • Management repeatedly distinguished fixing operations from recovering customer orders.
  • Subsequent disclosures broadened the problem to commercial execution, competition, and reimbursement.
  • The eventual sale was presented as the outcome of a strategic review.

The plausible mechanism is persistent customer displacement after a temporary disruption. A practice that already sends specimens to several laboratories can redirect orders quickly. Once another laboratory becomes the established workflow, the original provider must win those orders back.

But plausibility is not proof of magnitude. Public disclosures do not quantify how much lost revenue was attributable to the implementation, identify the affected accounts, or isolate the effects of competitor offerings and payer behavior. They certainly do not demonstrate that the software episode was the decisive reason for selling.

The stronger interpretation is that prenatal’s recovery disappointed while other businesses competed for management attention and investment. The incident may have contributed to that situation; the transaction reflects a broader judgment about ownership and capital allocation.

What the price and revenue tell us. The $210 million headline price represents approximately 1.31 times Labcorp’s projected first-year revenue. Myriad’s latest four reported prenatal quarters total approximately $171.1 million; annualizing Q2’s $39.8 million produces $159.2 million. Labcorp’s $160 million forecast is therefore close to the latest quarterly revenue pace. These are calculations from the disclosed figures, not company-provided valuation multiples. Labcorp

That alignment suggests a transaction underwritten around the current business, with potential improvement to follow. It does not demonstrate that Labcorp assigned FirstGene little value: the companies have not disclosed a product-level valuation or revenue bridge.

Nor does Myriad’s claim of growth accretion mean selling the business increases total revenue dollars. Removing a slower-growing or declining business can improve the remaining company’s percentage growth rate while reducing its size. Profitability improvement depends on the earnings contribution sold, expenses eliminated, and overhead left behind.

Myriad ended Q2 with $115.2 million in cash and reported $30.8 million of first-half adjusted free-cash outflow. Against that background, $210 million of gross proceeds is financially consequential, although it cannot simply be added to June cash to forecast the closing balance. sec.gov

Why Labcorp can see opportunity in a business Myriad is exiting. Labcorp already offers MaterniT prenatal screening and Inheritest carrier screening. Its MaterniT lineage includes the 2016 Sequenom acquisition. It also markets a combined prenatal collection kit designed to simplify ordering and specimen handling. This acquisition expands an established reproductive genetics business. International Distributors

The potential benefits are therefore partly operational: serving additional accounts through existing infrastructure, spreading costs across greater volume, coordinating collection and ordering, and choosing how to position overlapping and differentiated assays.

Those are analytical possibilities, not disclosed integration commitments. The announcement does not specify which brands, laboratories, platforms, or commercial arrangements Labcorp will ultimately retain. Its two-year margin target indicates that integration matters; the buyer is not promising immediate achievement of mature segment profitability.

For Myriad, selling can be rational even if FirstGene is promising. The relevant comparison is between the risk-adjusted value of continuing to fund prenatal and the value of cash, reduced complexity, and investment capacity elsewhere. For Labcorp, an existing operating platform may change that calculation.

The BioReference connection. The two announcements occurred five days apart. On October 15, Labcorp agreed to acquire selected BioReference assets for $722 million upfront, subject to adjustment, plus a possible $150 million 4Kscore earnout. Labcorp projected approximately $250 million in first-year revenue from that transaction. Both transactions remain subject to closing conditions. Labcorp

Announced acquisitionHeadline upfront priceProjected first-year revenueSimple price/revenue ratio
Selected BioReference assets$722 millionApproximately $250 million2.89×
Myriad Prenatal Health$210 million, plus inventoryApproximately $160 million1.31×

These ratios are descriptive, not directly comparable valuation judgments. They omit differences in margins, growth, liabilities, intellectual property, earnouts, and integration requirements.

The shared strategic pattern is more instructive: sellers are narrowing their focus while Labcorp is expanding the range and scale of diagnostic services it can operate. The same laboratory business can represent organizational complexity to one owner and an attractive addition to another.

Details to watch in the November discussion. The purchase agreement specifies that Myriad retains pre-closing accounts receivable. Selling the operating business therefore does not transfer every legacy collection issue to Labcorp. It also distinguishes purchased assets from shared systems and other retained assets, reinforcing that separation itself requires work. sec.gov

The most useful additional disclosures would be the business’s earnings contribution, stranded overhead, expected separation costs, net proceeds, and commitments to FirstGene development. Without those, it is premature to describe either an obvious bargain for Labcorp or a fully quantified financial improvement for Myriad.

The five most surprising features

  1. Counsyl’s familiar $375 million price understates the subsequently reported consideration. The SEC recorded $405.9 million. Adding Gateway’s $67.5 million upfront payment makes the historical acquisition spending substantially larger than the current sale price—even before subsequent development investment. That is a revealing capital-allocation comparison, although not a measure of realized loss. sec.gov

  2. FirstGene was commercially launched only 91 days before the sale announcement. Labcorp is acquiring a newly introduced platform alongside established products. The public record offers too little commercial history to treat the sale as a verdict on FirstGene’s market success or failure. globenewswire.com

  3. The old women’s-health bundling strategy is being unwound selectively. Myriad retains hereditary cancer testing, including testing delivered through women’s-health practices. What is being separated is the reproductive portfolio that earlier acquisitions were intended to combine with it. investor.myriad.com

  4. Labcorp’s first-year forecast almost exactly matches the latest quarterly revenue pace. Annualized Q2 prenatal revenue is $159.2 million versus Labcorp’s approximately $160 million forecast. The announced economics appear grounded in the existing business rather than requiring an immediate dramatic rebound. sec.gov

  5. Labcorp is buying into a field where it is already a substantial participant. Existing MaterniT and Inheritest capabilities make this a consolidation and integration opportunity, with FirstGene adding a distinct product proposition. The central strategic wager is that the portfolio will be worth more within Labcorp’s operating system than as an investment priority within Myriad. That final proposition is the deal’s economic hypothesis—not yet its demonstrated outcome. International Distributors



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