Q1 2020 Earnings Call
Maybe some gentlemen, today's conference scheduled to begin shortly please continue to standby. Thank you for your picture.
[music].
Well <unk>.
He came first quarter 2020 financial results conference call. At this time all participants are enormous normally mode. After the speakers presentation, we won't be a question and answer session to ask a question. During this session nor make this style one on the telephone if you require any concerns systems expressed.
<unk> <unk>, well for P. or speaker to say well at the end to know how different the stimulations. Thank you. Please go ahead.
Thank you operator, and good afternoon, everyone. Thank you for joining us for first quarter 2020 earnings Com joining us today are shine George Arsenio, Shelley Guy or R.C.S.L., we've been lucky or C.O.L., Bob next on our Chief commercial officer in Catherine's joint or cheap commercial office.
And you listened to today's conference call. We encourage you to have our press release available, which includes our financial results as well as metrics and commentary on the cleanser.
Before we begin I'd like to remind you that variants remarks that we make on this call that are not historical including knows about our feature financial in operating results are plans in prospects the focus ever business strategies and plans to integrate and manage businesses, we acquire market opportunities future products services are.
Products tightly pipeline and the timing there is demand for in reimbursement of our services or investment in our infrastructure and operations and finally, the outcome of ongoing conversations with her auditors regarding the accounting associated with acquisition.
These statements constitute forward looking statements within the meeting of the Safe Harbor provisions of the private Securities litigation Reformat It.
It is difficult to accurately predict demand for services, and therefore or actual results could differ materially from are slated outlook. The statements on our future company performance sound. Among other things that we don't conclude any additional business acquisitions investments restructuring or legal settlements.
For for each word 10 k. for the year ended December 31, 2019 in particular to the section titled Risk factors for additional information on factors that could cause actual results to defer materially from our current expectations. These forward looking statements speak only as a date here at.
To supplement a consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States or gap, we monitor and consider several nine gap measures and this period. These nine got measures include Costa revenue gross profit operating expense, including research.
Retuned development selling in marketing and general administrative as well as net loss and net loss per share <unk> <unk>.
We encourage you to review our gap to nine gap reconciliations, which are available in the press release, and then slides 10, and 13 of the earning stuck with that I will turn the call over shine.
Thank you Lord and thank you all again for joining us on the car.
We continue in our mission to transform the genetic testing industry from one word genetic information is used sparingly on a test by test indication by indication basis served by high margin niche market business models to one where genetic information is use broadly.
As a medical utility to improve outcomes and lower the health care costs for billions of individuals around the globe.
The year started off in dramatic fashion with an exceedingly strong Q1 right up until mid March when volume so around 50 per cent.
Prompting us to suspend our guidance, while we understand better near term in back to the coven 19 endemic.
Do you think it's worth noting that the trajectory we were on for the first 10 weeks of the year.
Let us well on the path to exceed around 850000 samples for the year and handily beat our revenue expectations. More importantly, we don't see any structural systematic changes in the demand for genetic information.
And are getting a general sense that perhaps when all the sudden done the importance of diagnostic information may actually appreciate faster.
And in fact, each week in April of two including this we can may we see steady daily average volume increases while early and really only happening on a regional level. We've you. This is evidence supporting our scenario outlook of the covered recovery period and more importantly, the essential nature of genetics in mainstream medicine.
What are we are seeing in the near term is it now more than ever the way people access health care is changing and V.T. has been investing for some time on this front end is uniquely positioned to help clinicians deliver care to their <unk> to their patients through this pandemic.
Our production facilities are fully operational and we continue to add to our enhanced capabilities and tell them medicine and at home solutions as well as supporting our clinicians with professional education when transitioning to tell the health.
R.G.H. I thought recently integrated from the clear genetics are clear genetics acquisition last fall has played a key role in scaling these capabilities and our direct channel development is timely given the number of couples trying to conceive are currently pregnant at this time.
This week, we will be launching a marketing campaign educating consumers about this capability and just how easy it is to access genetic information for healthy Marlon baby from the comfort of their own home.
We are all adjusting to a new reality and we believe this new normal shouldn't be one where all of our customers have access to the genetic information they need.
But even more accessible and delivered a new more efficient and safer ways.
<unk> is better poison anyone to be this effort.
Altering the call over to show it to highlight a quarterly financial results.
Thank you Sean just a quick comment before I begin.
No didn't today's release that interest another expense nap and that lots of preliminary and subject to changes we finalized acquisition related adjustments. These adjustments will be incorporated envy taste farm 10, q. to be filed with D.F.C.C. on or before May 11th we don't expect the impact of any change or reclassification to be material.
Importantly, any reclassification would not impact revenues volume or cash balances for this or prior periods.
Volume remains a metric, which best reflects the health of our business and is Sean mentioned, we had a very strong quarter of growth, we reported nearly 64% growth and volume over the previous year, especially more than 154000 samples in the first quarter of 2020 weeks session more this quarter than the full year.
2017.
Billable tests are important given that we've crew our revenue based on the number of double reports and a period.
Quarter, we reported billable volume with more than 151000, which represents a 74% increase over the first quarter of 2019.
Volume growth with strong across all segments with higher growth and reproductive tests and buy a farmer programs.
<unk> International volume was strong now running at 11% of our billable volume.
Call that we experienced seasonality in our volumes. The first quarter has traditionally been our lowest and we believe the record volume this quarter. Despite the last two weeks being affected by the pandemic along with the early signs of recovery are indicators of continued in future growth potential.
We generated $64.2 million of revenue this quarter of 58% increase from the first quarter of 2019.
In the first quarter over 68% of our revenue came from third party pairs and just over 30% from both institutions, including foreign partners and patients.
Continued high percentage from third party pairs is largely due to higher Medicare payments. Despite the known 10% Tamra reduction on certain cancer tough effective January 1st.
Additionally, we continue to see steady improvement in commercial third party payer performance.
Consistent with our discussion of A.S.P. trends last quarter, we watch an A.S.P. a $418 this quarter down from $443 and the fourth quarter of 2019.
Decrease was primarily driven by pair and product mix changes, which will continue to impact A.S.P. going forward.
Because most line items on the piano are affected by acquisition related charges from amortization of acquired intangible assets an acquisition related stock based compensation. We've provided a detailed reconciliation to non gap in tables included both at the end of today's press release and on this slide and slide 13 of the step.
Are gap financials for the first quarter are provided in the table on the slide as well as in our press release and regulatory filings and we're average cost per sample of 262 gross profit of 23.8 million gross margin of 37% and operating expense of 121.6 million.
Throughout the remainder of the discussion of the quarterly results, we will refer to non gap numbers, which we believe are more relevant depiction of the business dynamics and the decisions. We are making going forward. We also provide casper, which is a non gap measure investors are encouraged to review the non gap reconciliation.
Our cost of revenue per sample was $245. This quarter 10 per cent increase from the first quarter of 2000 in 19.
The increased in cost of revenue per sample was driven by the higher incurred costs of newer content offerings and mix changes.
Offset by investment in cost reductions and the growing impact of scale on our costs structure.
Well the path forward to pre coded volumes is unknown, we do expect to see higher costs per sample through the second quarter and a trend back towards 50% gross margins by the end of the year.
The key measure of our long term financial success is the ability to generate sustained positive operating cash flows in the near term gross profit growth is a reasonable substitute indicator gross profit was 26.5 million an increase of 35% over the comparable number a year ago the gross.
And for the quarter was 41%.
The S.P. declines from product compare mix chefs, the increasing cards per sample due to product mix along with the increase in accession to billable volume gap due to seasonality impacted our gross margin.
We provided reconciliation this slide to show the adjustments to get from the cash flows and our financial statements to the non gap numbers investors are accustomed to us presenting.
Moving to operating expenses, we exited 2019 and began 2020 and investment mode and the early months you're exhibited very strong growth. We continued to invest in our business and operating expenses for the first quarter were 101.9 million.
Our first quarter stand fell into several areas first sales to increase head count.
Facilitate product launches and volume expansion and marketing to support our direct channel.
Second research and development I'll see head count increases to facilitate scaling our business content expansion, improving the customer experience and reducing cards and third gentle administrators to support the growth of the business.
With the changes brought on by covert and as we highlighted in our last public <unk>, we significantly scaled back our expenditure starting at the end of March and into the second quarter by pulling back on investments in future projects instituting a reduction force and other personnel expense reduction measures.
The company is continuing to closely monitor the impact of the pandemic contesting volume, which is highly very based on clinical area geography, English clinician type and we will continue our efforts to calibrate our spend as appropriate.
Cash burn excluding acquisition related expenses would have been $66.2 million.
Moving to our cash position at March 31st 2020, cash cash equivalents restrictive cash and marketable securities total $301 million.
Several important events occurred at the beginning of April which affected our cash position with closed on our farmer Cogent Elmex acquisitions, you script and channel X. using around $25 million cash we completed a public offering of common stock yielding $173 million in net proceeds and these events combined.
With our cash on hand at March 31st meant that we started the second quarter with a round $450 million on the balance sheet.
With the cost reduction moves mentioned above which we have made given our current scenario outlook. We are targeting a total cash burn of less than $200 million for 2020, and an exit burden rate of less than $30 million a quarter, we have more than enough capital to withstand a variety of downside covered scenarios and emerge.
Out of the coming quarters, even stronger for it.
Well now turn the call over to Bob most nussbaum to highlight some of our recent data.
Thank you show VK is committed to contributing research to the medical community to better health care for all of our patients.
Among them <unk> data at the World Congress Cardiology virtual meeting, we presented a study showing that 96% of individuals genetically positive for a cardio my apathy would be falsely reassured by a negative result provided by limited.
Testing strategies, commonly available in direct to consumer services in contrast comprehensive Jack testing.
Suffice actionable variance in a substantial portion of Carter my up at the end. They give me a patient that may confer eligibility for gene specific precision therapies and guide implementation of established management recommendation.
Among invitation 13 abstracts at the American College of medical Genetics <unk> annual virtual meeting just last week, we presented research for me and <unk> detecting prostate cancer program.
Found that one in seven patients have a positive genetic result, independent whether examination of tumor tissue showed there was intermediate high risk or very high risk disease present.
In addition, half with patience with actionable findings had no family history of busy.
Indicates that overly narrow testing criteria based on the degree of severity of other things or on whether there was a positive family history of prostate breast coolmore bearing cancer. He pride nearly half all patients who could benefit from testing from having their testing performed and covered by insurance.
Our research collaboration by showing increase deal from broadening testing criteria identify more patience with acceptable findings with clinical implications such as qualification who approved therapies or clinical trials.
Whose data also highlight that simple partners are coming on board to be apart it would be to protect programs to provide no charge genetic testing conditions in which testing is under utilized.
But can improve diagnosis and treatment Gus highlighting the importance of a veto is growing network of bio pharma partners.
The first quarter, along we added well no well farmer partnerships, bringing the total number of partners to more than 90.
These sponsors testing programs are also important for patients who have recently lost insurance coverage or cannot afford the cost of genetic testing.
Well now turn the call back over to Sean.
As I mentioned are growing network has a huge contributed to our ability to bring genetics in the mainstream medicine and across the board or diversified products services technologies channels customers and geography is mean that we are well equipped to support clinicians around the world through these trying times in which we aim to be a service. However, we can.
To our customers.
We're certain are aggressive investment in ways to access the platform position us better than anyone to support clinicians and patients using the clinic from afar model.
We have had total health options in place for sometime now and our past investments in acquisitions in our customer workflows haven't have enabled the transition to tell them medicine that has been rather seamless.
Over the many years, we've developed Andrew required new content.
<unk>, just now starting to contribute to the business leading to their brought us menu available, which is making it easier and easier for a network partners health systems and governments around the globe to look to one place for all of the genetic information needs.
And even as we respond to present challenges by pulling back on some of our future investments. We continue in the relentless pursuit of our mission to better deliver genetic information to billions of patients worldwide and the conditions that serve them.
Even in times like these there are cancer patients people with cardiovascular diseases and families afflicted by other genetic disorders that need this information.
For the women that are trying to conceive are pregnant they need access to genetic information from the comfort of their home from conception through the pediatric when you're checking.
The importance of genetic information and diagnostics in general and their impact on population health is only growing faster.
Unmet need is immense.
The challenges surrounding this pandemic will subside and we continue to position envy day as a runaway winner in one of the most exciting dynamic sectors of health care when he does.
Altering the call over to the operator for <unk>.
To ask a question. Please press star one on your telephone keypad. The first question is from neat.
Please go ahead you line is open.
Hi, Shaun Thanks, So my first question.
On on meeting is driven market share growth and captured market share or time.
With disruption ongoing a number of costs effort cost reduction efforts that you're doing across organization. How are you thinking about sort of emerging from this and how are you looking at the broader landscape of you know the peer group Germline testing companies how do you.
I think.
Say berges out of that because traditionally you invested into menu expansion and reducing the cost and obviously the lover, you can pull eras, reducing the cost more aggressively so just help us understand how do you position into that at some of these.
Tasks that are you know.
Obviously elective on a certain time scale, though.
Expectation he as you emerge from this crisis and you know second house.
Yeah, So so I think.
As we mentioned, we we do see.
Some over the last few weeks I'm recovery in daily.
Daily average volumes.
It definitely is.
Hyper regional.
And is a little over the map. So we're calling an early early too early to really call anything.
In terms of emerging out on the other side of the code that covered impact scenario.
<unk>, what we've done is essentially you know pulled back on a lot of future investments and alter the mix of investment.
You know the short of it is to favor near term gross profit generation, which I think is no surprise to anybody that's that's a natural move you would make.
So we've we've made the object smooth.
Stopped hiring we've you've let some people go so we've done all of the basics of housekeeping and on the investment front, we've really been focusing on Cogs improvements.
Product improvements that allow us to kind of you take immediate share where we see immediate share opportunity sure capture opportunity.
Focusing on those product improvements.
Any of the the front line, you know kind of customer facing both clinician impatient portal capabilities that ease you know remove friction from the work flow naval a lot of the legwork to be done for clinical genetics upfront and out of the office were were Practising those efforts.
And other investments in systems and helpless scale, the business with with better operating leverage men. So I think.
It's really not that different from the balance of our kind of you know if you consider a portfolio management of the of R. and D. investments if you will over time.
Be it with the challenges on the top line from this Kobe period.
Opic's moves we've made and will continue to make those investments are being targeted more towards near term gross profit generation.
And that's you know I think that.
Well so so we'll continue.
Oh I'm surfing clients for the period customers are the period and I think things come back again will will emerge with.
The broadest menu.
The the capabilities allow us to serve those customers with the least amount of friction.
Domestically and around the globe.
Okay.
Shelley if I could ask on burden.
Reduction here.
You look at the number of acquisitions that you have done over the last year and recently in deployed in your script and gentle likes.
How much of that reduction as sort of did she could lay out for us, but order priorities in terms of cost reduction, whereas the majority of this coming from and where do you stand currently on the total sales reps and you know.
Shouldn't be expected reduction in those.
Positions that you had done or is it going to be more if the core business reduction or the reduction in the core business forehead, the tree and others, where you out in Boston before.
Yeah, So I think.
Highlighted we had been on investment mode and that was a lot of additional r. and D. heads and others to do some of the things that Sean talked about as well as some in the sales force et cetera, and in G.N.A. to help us to scale the business. So across the board we cut back we did not focus on cutting back on any of the recent new acquisitions I think.
That would be short sighted our goal is to integrate those quite quickly. If we can get some savings from that that would be great. But that is not an area of focus for us in terms of cash reduction in cost reduction I think more important is to integrate those really rapidly and as you recall clear genetics had a small number of people.
As did jungle and deployed so it is not like there are a lot of heads and a lot of extra burn that comes from that but again on those three.
Critical getting those integrated into be able to increase the sales level and have.
The top line, improving and enabling that customer service side and access to the tasks and so all of those our priorities for us not in terms of production of costs, but in terms of growing on the top line and being able to offer.
Enhanced products and services.
And then I'll, let Catherine talk about specifically sales force.
So we ended up the first quarter with approximately 300 people.
In the field, though to U.S. and internationally and while on April we did tighten up that came out of that.
I would say that heinous really been dominantly focus dish on mentioned on being of service to our customers today and really being good partner for genetic counselors, who are trying to navigate how to provide care.
Being able to to do it to the normal course of duty Hell that team is Super focus I would say I'm, making sure that we're paying service to our customer base.
Utilizing hand deploying to yeah to be able to make sure that accounts are getting set up with that service.
Because we know that that provides access for per patient.
Lessens, the and we know that that's going to be a terrorist that provides.
You know an important lever in terms of re order rates moving forward.
And if I could ask last one on on G.N. <unk> I expected. It can you quantify.
How much of the business currently is coming from <unk> traditional.
Collins and other methods from genetic counselors in longer term I'm Shaun how do you think about genetic counselors moving to tell a healthy even more aggressively after this sort of the <unk> Renaissance it'd be have seen them across healthcare.
And how do you smooth in that process when it comes to reimbursement and especially situations where genetic counselors are maybe licensed by the state and can consult outside their state. So you know how do you work through those and what's your expectation here for genetic counselors using to to <unk>.
Good term and bribing business too.
Yeah, Let me, let me start and then I'll answer the kind of the impact Katherine kind of go through some way latest developments of genetic counselors in in the I'd say in our infrastructure and then I think leekin address the reimbursement side. So really quickly on that to answer the first question that.
The impact of G. is a is a difficult one to quantify specifically to stand out we have invested for some period of time now with our patient portal our clinician portal.
And have always been adding features that make it easier and easier and easier to do that.
With a wrap in the clinic walking the clinician through it or pulling charts are filling out information and having to do it in the clinic. So so that's been in development for some time.
Gee it has definitely accelerated that but I, it's hard to say.
If the majority of our orders are through our online portal how much of that now is caught you know uplift from G. versus you know it's difficult to say, but I would say kind of like we can definitely see even the very early days. It is having a positive impact in the ability to drive more volume, how clinicians get greater throughput for through their clinics eliminate a lot of.
A lot of activity that otherwise would take time in person. So we're pretty pleased with how it's going.
And then Katherine I think you had a question specific about how genetic counselors are are.
Using it in in the building so catharine can can speak today.
The D.C. part you know, it's really interesting is.
We thought she was going to be most supportive and clinics that did not have A.G.C. on tight and certainly amongst obese and cancer centers person since the introduction of.
She is capabilities.
Just about a month ago, where thing as strong demand in terms of.
People interested in getting set up.
Jeez actually because.
The pandemic have been really interested in figuring out how to how to work with Ti in order to ensure that moving forward. They can be as efficient as possible one of the things that we now.
Genetic counselors have long struggled with our weightless and.
So gee it can be as service in terms of trying to really help identify which patients are in the most dire need to feed genetic counselors center.
That's really have genetic counselors are are saying, yeah as being.
Oh.
Their clinical care.
So overall I would say, it's it's a really interesting development just given the the current situation in terms of.
Restricted access to clinicians.
She is saying how paul across the all three of those customer segments.
And couldn't eat this is correct.
Go ahead.
Well I just wanted to add one on the reimbursement.
Anthony I think on the written US about reimbursement question I think it's a pretty interesting and important development.
So this is leon on the reimbursement side I think.
G tools like G. or that we have been working on.
Help and a number of ways. The first thing they do is they.
Make it more likely that our customers will order via the portal and.
Keeping in mind that the Holy Grail for reimbursed by having a record to bill.
No errors and all the information that the pay or require so we have much lower error rates.
Our customers order via the portal than when they do the.
Via paper racks, and we have much less missing information, obviously when people use the portal.
So that's that's one difference the second difference is that we have found that where we have the opportunity to interact directly with the patient.
Which facilitates we can get information quicker and it's more accurate so for missing.
Formation, we can reach out to the patient were likely to get that information and we're likely that have the right information.
So so those are those are the primary.
Reasons, why Gee helps.
And as an aside because.
Because it drives more towards the portal.
It helps reduce operating expenses because the the paper racks are more manually are more head count.
They require more headcount.
And sorry about I think I cut you off.
Yeah.
No no. It is fine I just wanted to add that.
This issue of the relationship between G.S. counseling, we're in the press preparing a manuscript of the experience of G.O.G.O. for over 37000 patients in clinic like mammography screening routine Cohen, Oscar Prescreening or annual well visits to obese <unk>, where there is no genetic counselor.
The vast majority those practices don't have accounts will they were at all in G. was able to identify a quarter of those healthy individuals.
Shoot have kinetic testing.
It is having a major impact not just around the genetic counseling world, but it's extending way beyond what we generally think of as being the world of genetic counseling.
Okay.
Doug <unk> of current income. Please please go ahead.
[noise] Hey, good afternoon, everybody, let me, let me start with volume question, So I guess in multiple parts.
Is it fair to assume that cancer testing has initially but more resilience than reproductive testing.
One thing is you said volume was down 50 per cent at the end of March I believe that's what you said was that year over year versus trend versus queue for.
And then the third part is it sounds like you saw consistent improvement week to week since the end of March So would would you be willing to give us something in terms of how you actually the April maybe framing at the same way you framed your comments on the on the March.
Mm.
Sure. So that's let's see it first to clarify the in fact in the early.
As soon as we saw a daily average volume falling off in the first early to first week or two in fact, it was reproductive across the board that held up the best getting hit somewhere you know in the 20 years plus percent range.
And it was a lot of the other disease areas that got hit the most.
So from cancer included in there.
Anywhere between 30 and 50% the detail on that is where it gets interesting that there were clearly some accounts acute ketney alard cancer care centres acute cancer care centers late stage that did not getting back at all.
And then on their hand, there are others that did.
And this is where the regional aspect to this really started to become apparent early on.
But nonetheless.
Generally the high level reproductive got hit the least other disease areas did get hit more with some kind of acute care, obviously still continuing and then in terms of the 50 per cent that is versus trend thinks that's a key key clarification, when we say down 50%. We mean from the prior weeks daily volume Daily average.
Volume so that was kind of like we are on a path and then overnight we saw that 50% reduction off of the past not not compared to last the last the same time period last year last quarter.
And then on that.
Last part you know kind of related.
In terms of the recovery, it's kind of similar answer as as the as the initial impact.
Covering again this is just a few weeks.
And it's looking a daily average volume with John which is pretty sarcastic and it's the same kind of thing where depending on the client.
And almost really down to the ZIP code now and certainly globally country that country.
It's it's still a bit back and forth. So I just think it's really too soon it's really too soon to call a trend.
You know for it for that.
For the foreseeable future we would expect.
What is going to be impacted the volumes are going to be impacted.
From the from the Covin the code period, there's there's that no matter no matter. How quickly. This comes back on current trend lines Q.T. will be impacted both by way the volume and then of course that flows through primarily on the on the Cogs side of things, but then you know after that it's really it's really too early to tell.
Okay. So, but that's that's helpful and I I guess as I think about Q2 inches building up for what you just said Sean.
You know it at the end of Q1 relative to trends. Yeah. You you were down about 50 per cent.
It sounds like things are moving in the right direction.
But I I really don't have any idea how to even with a wide band a possibility model Q2, because yeah. We have those facts that you shared on the flip side Q2 is usually stronger then Q1 and again you talked about week to week.
Is there anything more you can share to maybe help us model allowed a range of different outcomes here as we're updating our forecasts.
Yeah, I mean, I I think that a little unfortunately, not a lot more but I think a little bit more we you're you're definitely right.
You know to choose typically bigger than Q1 again.
You know, it's a new year, we've got new customer types, you know it it's it's getting harder for us to kind of look to pass you know with all the new product areas in the new customer types that little bit more difficult to look back to historical seasonality Nonetheless.
Yeah, I think you know we don't expect you know if depending how long the impact goes you can kind of color, 50% reduction off a trend that would slightly improve I think that's kind of how we would be you it and slightly we do mean flight you know.
Encouraging thing is that we are seeing recovery.
Not a continued.
Trough at 50% reduction and no further degradation.
But just to clarify this by slight improvement we do means like the fact is one by one by one accounts are opening up and coming back so.
Think if we had to summarize a cue to outlook. It would be you know call. It what we probably we're on track to do minus.
A little less than 50%.
And then flow through the flow through the according Cogs and you'll get kind of the same impact on the on the bottom side and the gross margin side.
And it's beyond that it's really hard to really hard to say anything else you know we are.
Are the scenario outlook that we're kind of dealing with here anticipate something around that.
Some kind of recovery later in the year again or details on that ours hazy as you might you might imagine so can't offer really a whole lot there, but I think a cue to outlook. That's that's roughly where we were kind of think and Q2 is going to play out.
And that's again the moves we've made our to accommodate that because you know by the time, you'll comedy account for the top line hit the Cogs, resulting that burn is going to be higher right as we flow through all of the expenses and charges with with the Opic's moves we've made.
Then you know some between recovery.
Cost savings.
<unk>.
That burned will go down toward the end of the year that is the only thing we're sure of.
The extent to which in the pace of which in the past exactly how to get there is still pretty pretty it's pretty uncertain.
Okay understood last one for me to start anew script and general X.
You know I believe one or the key strategic rationales for these acquisitions was you know not just to add pharmacogenomics, but to have an important offering that would appeal, especially to closed health care systems and allow you to you know basically use that as a way to more forcefully getting in the door and potentially be.
The vendor choice for all your solutions.
If I'm thinking about that right you know on on one hand, I could see where that just completely stalls in the early got like given what's going on on the other hand, I could see where maybe there's some instances where demand for pharmacogenomic casting actually increased is given.
There is some association between pharmacogenomics and some of the early treatment options for covert 19. So yeah. I guess the question is is it too early to say that this is working given what's going on or are there some signs that even even in the that's the pandemic you're making progress.
You know I think it's a ladder and I want to give credit where credit you write we've we've been stewards of that capability for all of two weeks now.
Right.
You know that the teams.
Yeah, Christine and christened the teams.
<unk>.
I've been doing a lot of a lot of prep work ahead of time and so.
You know the short answer is it's the ladder.
Will more color on that.
Is you know we had mentioned.
Answer a question there is an aspect of adding pharmacogenomics, which is simply when we stayed as our mission to aggregate other worlds genetic information, we need all the world's genetics information and Pgx is genetic information. Therefore, we added it now that's that's kind of a throwaway comment the timing and the and the rationale kind of came as we observed.
As I take Pgx enthusiasts for the last 15 years as we observed for the inbound demand of last year and a half it did become clear that in particular integrated systems.
It was.
Payers, you know anybody anybody footing the costs of polypharmacy in adverse gene drug events were all of a set in the last year. So we saw demand and inquiry inventing Korea that increase.
So we noticed our customers asking a lot more about this.
And the teams that.
In general, it's we're we're actually making pretty good headway.
Marching toward getting reimbursement, having defined broader panels for broader sets of genetic information clinical decision support for not just Jean drug that gene drug drug polypharmacy.
And in fact.
Really days, we've we are now sign in health systems that large for that probably form polypharmacy. In addition to the rest of our menu.
Seeing interests of integrating it into a comprehensive reproductive arc productive genetics arc comprehensive reproductive caught a comprehensive cancer care.
Package and we're pretty we're we like what we see there by virtue of those those those same yeah. Those types of those types of customers being very interested this integrating it widely.
As well as pairs.
And governments and so yeah, I think you know while it's a it's it's a relatively rough time to kind of get all that integration going we're liking liking what we've seen so far.
And.
Again, we'll we'll we'll see we'll see what we can we'll see what we can do in pharmacogenomics going forward.
Okay. Thanks again.
Yep.
Yeah.
Hi.
Peterson J.P. Morgan just go ahead.
I got this is Casey onto Tyco first question is can you talk about what the cumulative revenue contribution was the quarter from the junk.
Weird genetics and send you a bio deal.
Short answers.
Well, we can say thing of the bio answered on we're not going to we're not that capability, we have coming out sometime next year.
And then again jungling clear clear, it's very difficult to break out what additional revenue the volume or I mean.
Although again as Cathy mentioned, we do see pick up a new customer accounts and new account types without counselling, but we don't we don't break that out as a kind of sub section of our of our our business.
Angela while while we can say anecdotally he deals with these one as a result of having.
Capabilities the jungle team.
Again.
It's difficult to say amongst the broader feature set what how how to allocate revenue.
Okay that, albeit we can say as we mentioned before it does it does save us.
Especially where buses in the casing labor to call vectors end report on them and say this about 40%.
80% of the of the time, which translates directly to cost.
So those are the there was looking answers that we can't attached to those three acquisitions again, we view them really much more educated integrated into platforms. They continue to allow us to take more share and reading reduce costs to have a definitive last in cost advantage for for an ever increasing menu of genetic information.
Okay Gotcha.
Carnation, we actually have been able to integrate the juglar technology to re if she reports for some of those that we had historically.
I'll be able to call some of those.
Well he was that technology.
So.
Great is that.
And.
You can't see that we've won.
Killer client or another.
I'm a little bit about how that is working and how that's received from the market.
Oh, okay.
And then by my other question was how is the coded 19 pandemic affected the fanatic launched time on if at all.
Yeah. So you know we mentioned pull back on future investments.
It would be one of them.
I'd say and maybe we can just categorized.
Future investments.
We're.
As we entered the year, we were in Hypergrowth mode.
A fair amount of what we are investing it on a developer.
Side of things are actually things that we we don't really discuss probably just early enough where it's not not something to talk about.
There's no real value in talking about it so there's a lot of that that was pulled back.
Already.
Type of development investment, but indeed, we did shifting resources to near term gross profit generation. We did we have slowed down for example, it's a matter of development.
And some others that in a week.
We've talked about working on and.
Again, that's just a balance there to kind of see.
Which side of our code that scenario outlook, we're going to end up on.
With any you know with any sports in here and that come in months.
Will be on the earlier side of it when you get back at it at full speed.
We think we'll have a you know you think we can do in genetic testing exactly what we've done in inherited genetic testing for cancer, but right now we're just being really conscious kind of shall we pointed out really calibrating the operation.
The the top line.
Gotcha. Thank you got.
Next question from a cabinet Picky Eater Oppenheimer. Please go ahead.
Guys out thanks to take my question I I guess, good news comment about you relative appetite for for business throughout me I get it where it would definitely at a cost constraints, but you know you had sort of various parts to.
Looking at you know large transactions here they wouldn't wouldn't move they need all from an operation perspective, and if one wanted to think about that in the context of you know getting to greater scale more quickly you know was that.
Strategically more palatable in light of some of the difficult decisions you've had to make are around 12, it or is it just operationally you know more difficult to foresee how <unk> yeah, <unk> would implement you know I transaction that create a more kind of structural change traps.
Okay business file.
You know.
Yeah, it's a really intriguing question.
As we've talked about M.A. being a key part of the grow strategy and the types of emanate, we would do.
We you know we've we've.
We we definitely.
In the in the current uncertainty in our scenario outlook for coven impact and I'm, certainly as we kind of experience altogether the economic ramifications.
Yeah, I think acquisitions that add to our platform, albeit generate cash flows in the distant future are probably.
You know things it will put off or delay.
Acquisitions, which purely by us market share.
I think are still are still things that we are careful about not sure. That's the best use of shareholder.
To buy what we have so far demonstrated we can take.
With that said you know I think I think you know the idea that there are acquisitions or opportunities out, particularly in the next probably a year a year and a half that could actually in a very short period of time lead to both greater operating leverage a better top line.
Improve gross profit generation.
I mean, those are absolutely things that we use it in.
Because I think you know if any.
Really starting to experience.
In our P. and L. dynamic the benefits of scale the benefits of diversity.
In the benefits of a wide.
Abroad product offering and you know I think that's that's it kind of that that silhouette that you identified is definitely something that we're still considering because we just thinking.
Advantageous on all fronts.
Perfect.
Better get back and Q. and you just comment about trends for the international market schedule, 11% volume in the corridor are you, saying you know similar general magnitude you know decline in recovery are there different trends, we should consider when modeling out that portion of revenue.
You know I think it's international is growing slightly better than the rest of our entire domestic business. We have as we mention we have invested in that.
A little more seriously in recent months.
We're not pulling back on that investment as much and just because we think there's so much unmet need there.
Without said kind of on a country back country basis. It really is a pretty it's a diverse diverse set of impacts and recoveries that we're seeing.
And so I think on the whole it basically is going to look like everything else, even though on a country that country basis, it's wildly different I'd say the difference between countries is much more dramatic than for example, the difference between states and ZIP codes and the domestic side.
But when you average it all out is basically the same.
Turn off like segment questions.
Sure thing.
Question is from again.
So please go ahead, you line or something.
Oh, hi, and thanks for taking the questions Bob had previously spoken about.
Congress cardiology.
The paper I was presented in a wondered if you could talk a little more about party on suspicion quarter mile up three which you know she she morning patients from which you could talk producer walkers through what your expect near a cardiologist version, you know future studies, and our competition with G.T.C. and potentially huh payers and how they may sit in.
On guidelines now in in the future.
Yeah sure sure.
Yep.
Sure.
<unk>, so first the credit them out to be arrhythmia T. Tech program has allowed us to.
Oh.
Thousands of patients, who probably would not have been tested.
Come into M.D.T. to have comprehensive testing done, we're finding approximately 20% to 25% to those patients have a clear passage inexplicably pathogenic mutation.
Barely in hypertrophic Karmapa, P. jeans, and some dilated kind of apathy cheap.
I think what's what's what's there's a couple of things driving this first is.
The availability of treatment for cardiac amyloid.
Is driving the need to make a not only a specific diagnose was pretty genotypic diagnosis to know that is it a mute homeless TTR is that while type T.T.R.
What is it tests being responsible because there's different medications cities.
Applications. The other is.
That.
Allergist's I think after many years.
Of not really wanting to.
<unk> genetic from the point of view of dealing with a family.
They really just wanted to take care of the patient forensic then that is changing there's a growing number of genetic counselors. We're focused on cardiology, what I'd say there were six or seven musical there maybe a handful now there's a bunch is a whole cardiology interest group that meets at the heart Rhythm Society and meets at T.
American Heart Association meetings et cetera.
That is growing in the recognition that your patient is a member of a family and that too is important.
Permission not only finding other people in the family who might be at risk also being able to tell other people in the family that they're not at risk for a problem, such as A.B.C. or or or or hypertrophic kind of my office. So I think <unk> cardiology is.
Oh, probably somewhere around 10 to 15 years behind on college you <unk>.
And it's adoption of cancer of of of drug testing.
Part of those driven by the fact that there has been less precision medicine available in cardiology, but that is that is now changing.
And part of is just a difference in.
Perception, the impact of where detect breast and ovarian cancer on awareness.
Of hereditary cancer has been enormous and is now spread into pancreatic prostate.
Colon.
And that.
Awareness is now just starting to infantry cardiology, So I think the.
The opportunities enormous in terms of D.T.C., it's very clear you know when you when you use a g. and saving platform to pick a few comment variance that are found in a couple of the genes.
Mmm essentially 96% of the time.
Patients that we diagnose and if he tick is having a pathogenic likely pathogenic dictation.
<unk>.
96% of them would have been missed if they had simply taken the T.T.C. test.
The D.T.C. test why not just in in in quite a mouth, but also in familial hypercholesterolemia in the right of other other areas are just really grossly insensitive and are not really doing.
During the people who are taking those test.
A medical or clinical service.
Yeah.
Summing up on numbers, you know call. It around 420 million cases of cardiovascular diseases in the global markets we serve.
30% of them have a direct link to genetics, and so kind as as as Bob is laid out that picture you know if you think about it even though cardiovascular testing is a really nice and growing segment of our business.
It's basically not even started yet.
So it's very big that's when we point to that opportunity adjusting cardiovascular let alone the other diseases, we definitely see a lot of potential there.
Friday, Okay, then certainly from your she could talk about the you have some <unk> can you talk about <unk>, perhaps.
<unk> forms which could be transitioned all show for home.
That include saliva and or blood collection at home.
Sorry, so our teams and highly focused on transitioning all of our wondering client and their paste overarching saliva.
And so that's been really important to check that I think is how best maintain the volume during this period.
I spend the the main focus in addition to the deployment at.
Early April.
There's two I've heard really are.
What's driving the.
Continuity of care during that time, and what we think is going to help us.
You know throughout the that the future at this pandemic.
Or that that people still have access to genetic testing.
You know I think it's encouraging now that cancer centers are starting to open again regionally well the ball to to see more volume coming from from those areas as well at home testing through our through our direct hand, all we've seen.
A study.
Nation of that particularly for women, who are trying to conceive or who are pregnant.
The carrier testing and that channel has been really the focus.
Marking a a campaign that last week to consumers educating them about the ability to order testing and have it delivered to their home.
Specifically for for that carrier segment, so more to come on that as being lost that campaign.
Perfect.
Thanks for taking the questions.
Yeah.
Jackson.
Please go ahead.
Hi, good afternoon, Thank you for taking that questions.
You mentioned that there is some regional patterns in terms of the the ordering and I was wondering if it you could give us some color on the how you classify those regions is it the a stay at home orders is at the restrictions on elective procedures or is there something else that differentiates the different regions.
Yeah.
Again, I think it's it's pretty hard to Peel away, but in general it's the.
If you think it on and the nation in your country level, X.U.S. or call it state or or even kind of metropolitan area at local level that domestic county level domestic.
It really does it does seem there there is some correlation to stay at home orders relative degree of kind of severity of impact and news cycle.
But you so that's generally it but I would say I would just caution everybody. You know we have also seen in the same counties too similar kind of equipped size and your medical institutions, one, which barely dropped volume at all on which which one which almost dropped 100% of the volume and.
Then we've seen some ZIP codes are states, where we've seen stayed home orders lifted or ignored and.
A lot of volume comes back and others, where that has happened and still nobody is heading into the clinic. So.
There's there's there's definitely it's a very very complex equation as to what leads to people coming back and and.
It's clear when we look account by account and I think that's why it's also I think is we're all looking at it but we would advise people is.
Pegging volume a revenue recovery to stay at home order is being lifted is what we do know in the weeks last three or four weeks that is not the exact equation, but as we as we see more and kind of get a better tremain. We will we will be we will of course be letting people know but.
Right now, it's it's pretty difficult to tell what is the equation for volume coming back.
On an account account basis.
Okay that that's awful and then follow up question on the home collection Kids is this is becoming a bigger part of the mix as as the testifying comes out of the the covered 19 trough and.
Can you tell us a little bit about do you have is there any sort of.
<unk> advantage to having dot com collection kids versus the the standard collection.
Yeah.
Short actually the last part is not really kind of all else being equal, it's it's kind of a similar cogs stack.
When you can do the shipping the logistics the kick off and all that it's it's about the same.
However, the more of that we moved to online stuck I think as we leave with Lee pointed out the more of that that goes on line, we do get better opic's leverage better customer service leverage <unk> sales sell support.
Follow up and our billing is cleaner, which translates to better building performance with the pairs, which of course as you know 70% of our business little lesson, 30% of a business is is it gets a good thing so.
You know the costs themselves are not that much better, but everything else is better when it's done online on the full when all the information can be gathered electronically.
And again I think you know.
We certainly experienced we had accounts that had been I would say maybe you know reluctant either by you know for specific reasons or just habit.
To do this kind of thing.
In the forest environment actually are enjoying shorter wait times shorter shorter shorter wait list to get into the office higher higher account throughput or clinic throughput patients. They can serve and then in you know everything else is easier. We've take you know we've invested in the ability to take a lot of their leg work on a patient my vision basis awful.
Their shoulders, they don't get paid for it anyway.
And I think you know that could be a silver lining and all this is that we might see a structural ship coming out of this to more online at home remote.
I think I think we're we're guessing that's where it's going to come out and it's a little early to say, but I think that probably will be the short answer. The long answer. Your question is it's the same costs improves operating leverage and we think is probably going to be a trend that is different coming out of covert than going into it.
Okay. Some corrections it could just add one <unk> so that I've done about six webinars over the last five six weeks with genetic counselors around the country, probably constituting a couple of 100.
Cold in.
It is very clear that the home genetic counseling and the ability to get testing done at home.
Extremely attractive to patients.
Patients feel like they're slick slick, we've come back in time to when doctors made how schools.
And so our ability to support.
Counseling and testing from home I think is going to be a.
An ongoing benefit and plus even after the stay at home business starts to go away.
That's great. Thank you very much.
Thank you.
There are no further questions at this time I will try Mccall Sacco for the first time for closing remarks.
Thank you for joining today's conference call. We look forward to speaking with you with upcoming conferences.
This concludes today's conference call. Thank you for your participation you may not just kidding.
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