Q1 2020 Earnings Call

[music].

Good afternoon, ladies and gentlemen, welcome to Vermillions first quarter 2020 conference call.

My name is Robin I won't be or coordinator for the call today.

At this time all participants are in listen only mode. Following management's prepared remarks, we will open the call for your questions.

As a reminder, this conference is being recorded today.

Leading the call today, our Valerie Palmieri, President and Chief Executive Officer, Bob Beachy, Chief Financial Officer, and Chris Goulart, Senior Vice President of commercial operations.

After their prepared remarks, well open the call for the acuity.

Before we begin I'd like to remind everyone that some statements made during the prepared remarks, and acumen recession, including statements related to Vermilions expected future performance future business prospects for future events or plans are forward looking statements as defined under the private Securities Litigation Reform Act up 1990.

Yes.

Although the company believes that the expectations reflected in such forward looking statements are based upon the reasonable assumptions actual outcomes have results are subject to risks and uncertainties could differ materially from those anticipated due the to the impact of many factors beyond their control Vermillion.

The company assumes no obligation to update or supplement any forward looking statements, whether as a result of new information future events or otherwise.

Participants are directed to the cautionary note in today's press release as well as the risk factors set forth in Vermilions annual report on form 10-K filed with the FCC factors that could cause actual results excuse me to differ materially from those anticipated in the forward looking statements.

At this time I'd like to turn the call over to Valerie Palmieri, President and Chief Executive Officer Valerie.

Thank you operator, good afternoon, everyone and thank you for joining us today.

This afternoon, we will review, our first quarter 2020 accomplishments and financial performance.

I'll also provide an update on our strategy to manage near term Cobiz 19 disruption as well as our longer term plans to emerge stronger when this pandemic is behind us.

We firmly believe that our strategy is the right one and that our technology in pipeline will be vital to lowering the overall health care burden and reducing inefficiencies in the care pathway.

It's all about getting the right patient to the right Doctor in finding the cancer at its early stage. This mission is the core of our company.

I will first focus on the Pandemics impact on a company, including the trajectory the business prior to the crisis and what we've seen so far this second quarter.

We have a four part strategy to deal with the pandemic.

Number one to ensure employee safety in business continuity all office these employees nationwide as well as our sales force continue to work remotely.

Well, keeping their health and safety Paramount our sales team will be able to enter the field in the short term on a state by state basis in accordance with local guidelines.

In fact.

I don't have started this past week in Texas, Tennessee and Georgia.

We expect limitations on the number of face to face calls for a period of time its specific geography.

We have also developed protocols and training for the instances, where physical visits are allowed to ensure both employee customer and patient safety.

Moving on to our lab operations, our lab operations require onsite essential in place as previously disclosed we have stratified the lab operations team such that if an infection occurred.

I would be localized and not impact the entire workforce.

We believe we have taken the proper precautions, so that our lab could continue to operate in the event any isolating the sex and what impact a portion of the workforce.

In addition, we had at least three to six month supply every agency and stock depending on the volume of tests performed and we're working with the manufacturer to ensure a consistent supply over the next six month timeframe as well.

Moving on to number two cash preservation of liquidity management.

We continue our efforts to reduce costs, such as travel entertainment and discretionary spend we are also deferring investments where possible as an offset to expected reductions in revenue.

In addition, we're maintaining our commitment to critical product development, while reducing spending at higher risk research.

With respect to capital management, Bob will review, our overall strategy as well actions regarding available government support.

Now moving onto the third part of our plan, which is maximizing productive use of employee time and emerging from the crisis even stronger.

First our commercial team is focused on maintaining close relationships with existing customers remotely. So that we can resume our trajectory upon return to normalcy.

We have developed a virtual territory manager process using a number of tools.

These tools include virtual sales reps visits digital marketing, social media and a provider patient watering portal.

Regarding tele health, we are developing a process for the genetics offering which will allow patients to access genetic testing directly Chris will discuss this in greater detail.

Or new prospects, we have launched remote learning sessions to continue to expand our new customer base. During this pandemic.

For our collections billing collections team, we're refining their scripts and spending more time on collections or they are in appeals of denied claims with a focus on maximizing collection efforts and lastly, we are proactively managing the employee base with on play checking calls on a frequent basis.

We're very focused on taking care of both the physical aspects of the business. In addition to the wellbeing of arc team members.

The last part of our plan is continuing to work on our product development pipeline in planning the recovery.

Starting with recovery planning with the foundation of our CLIA Laboratory, we're looking at offering coded antibody antigen testing in two ways.

First Aspira labs will be offering cobot antigen antibody testing. This testing will be part of our current comprehensive pre surgical risk assessment touched offering for Gi Lan providers, which includes proteins enginetics.

We will be commencing with the antibody test validation in Q2, and we'll be offering the Roche Alexis anti Sars Cobi dashed two assets. This actually has 99.81% sensitivity and 100% specificity.

Second we are looking to support the overall testing need in the Connecticut area, which is endemic we're currently evaluating that's what the state of Connecticut to have testing performed in our Connecticut based laboratory.

Moving onto our pipeline, we're capitalizing on this time to focus on all innovation efforts on the development of open next and Endo check. These studies will compare our new products versus the current standard of care and we're continuing all activities to get these studies completed.

I am now moving on to commercial.

We're very pleased with the growth in units as well as the addition of new customers in the first quarter through through the first two weeks of March.

We then experienced some volume reductions as physicians offices began closing the week of March 16th.

Our volume then leveled off and varied in a range of approximately 40% to 50% of our pre coded volume up until the third week in April.

Since then our volume has increased each week over week, ranging 19% to 24% increase from the prior week.

The March volume decrease was driven by two major factors number one most hospital facilities eliminated elective surgeries and then the cases suspected late stage ovarian cancer.

Biopsies confirmed malignancy and chemotherapy wasn't administered without surgery. This allows to faring primary surgery to reduce disease to later safer time.

Second major factor impacting volume was deferral of annual visits.

Relative to the scarcity of limited operating room capacity available. Our test is valuable in treating patients that need surgery immediately or can postpone surgery regarding doctors' visits we are seeing an uptake in volume and the last week of April 1st week of May, which we attribute to the gradual opening of doctors offices in women resuming doctors' visits.

Specific geography.

Chris will cover Vermillions commercial momentum in detail, but I just want to summarize the overall impact of our investment in commercialization.

We have had five consecutive quarters of strong gross.

From Q1 2019 to Q1 of 2020 are over one plus quarterly volume grew year over year at rates of 27%, 66% and 82% respectively.

In Q4, we recorded year over year growth of 93% and in Q1, we recorded year on year over year growth of 58%.

This was driven by cobot 19, but we're actually running at 80% year over year in January and February prior to co that an accelerating.

Also it should be noted that we commenced commercialization of over one plus in the first quarter of 2000 2019, so year over year growth will be impacted by tougher compares but still compounding as itself Salesforce matures.

We believe this growth curve is mainly driven by the adoption of our second generation technology OVARA as part of over one plus to increase specificity. We believe solving the specificity gap for the first generation test is a key to changing the standard of care in the U.S.

At this point I'd like to turn the call over to credits to share our commercialization results in the first quarter and our strategies to adjust to the changes in the market due to the pandemic as wells provide an update on our innovation pipeline Chris.

Thank you Valerie I'm pleased to provide an update on our commercial efforts. We continue to believe our strategy to penetrate large guardians and it'll be Julian Super groups through the de centralized platform channel will ultimately pay off in the accelerated overall adoption of our products.

These centralized arrangement should help our product integrate into the care pathway of the respective institutions and super groups.

These large deals have a significant lead time and the coded 19 pandemic may slow down our efforts to finalize the deal.

However, our partners continue to engage and we are excited about the prospect of internalization of our technology.

We will continue to work in this model as we seek to drive wider adoption of over one block in our expanded product portfolio.

Moving onto our direct sales channel, our Salesforce answered the first quarter with momentum to further in trench in their respective territories.

Our to Cobiz 19 over one o'clock with continuing to gain traction in the marketplace.

We have also created a guy for.

We plan to release this summer the dynamic reporting will include over one plot.

Fire genetic new protein encoded analysis, which is under development.

This newly created tool will help clinicians better itself the risk of malignancy prior to surgery.

This tool will also better triano high risk, yes, low risk using the powerful wants losses negative predictive value in times of constrained health care resources.

Given the resource demand health system with Cobot 90, it is our belief that have one clock.

Even stronger diagnostic tool for colon engine.

We also believe the combination reporting of each plc in over one block.

I'll give clinician both answers in one consolidated report.

As each state opens for business Vermilion is ready with our direct sales channel to continue to educate clinicians on the value above one o'clock in the ever changing.

In terms of ordering physician 2533 positions ordered over one Clos in the first quarter.

Growth of 47% year over year.

The volume was also impacted by coded 90 with regard to new physician I'm pleased to report that we have continued to see growth you position. In addition.

During Q1, Twentytwenty, we had 514 new position compared to 433 during the same period in 2019.

An increase of 19%, which was impacted by significant slowdown in March due to cope with 90.

Despite the despite the significant slowdown.

The number of new position was only 2% lower than in Q4 2019.

We will be focused on maintaining these customers through the pandemic and believe we will reduce the growth trajectory and accelerate it with new product introduction.

Valerie mentioned, we have developed a strategy for virtual engagement of existing and prospective customers.

We have deployed training inexperience, except the conducting remote lunch and learns types of activity as well as virtual cards that such as a COO.

We are closely tracking engagement of existing customers in each territory.

As well as awareness outreach to prospective customers.

As states reopened in accordance with local guidelines in our representatives are allowed to physically reactor that deal. We have trained the team inappropriate safety protocols.

Our strategy is to adapt our approach to reengagement each physician office at the appropriate pace, but not a step Uh huh.

We plan to resume ordering patterns with each customer as they reopen.

I would like to provide an update on our upcoming products and it gets done.

Based on our target patient cohorts, we have model N C. A range of one to two quarters away invested lease optimistic scenario.

Briefly touching our most significant studies.

I would like to update every one or a third generation ovarian cancer risk adjustment.

Which is now branded as opened up.

We have developed an RV approved studied the clinically validated insensitivity infested this city over now in a watch and wait cohort.

As discussed on prior calls over Docs is designed to address the watch and wait population, which is monitored two to four times per year per patient.

We believe that this test will help clinicians and patients to better understand the risk of malignancy and its surgery can be delayed.

We currently expect the product will be ready for launch by late 2021.

Josh early 2022.

Next.

We are focused on ethnic disparity.

Plans to expand our published evidence to support driving a change in the standard of care December 2090, we initiated the study with I signed medical center, the largest independent academic medical center in Philadelphia.

The goal of this study is to review the disparity in testing sensitivity African American women as well as other ethnicities.

Based on our published data over one is 2.3 times more sensitive detecting ovarian cancer in African American women and see a 120 thought.

Sure.

79.2% burst, 33.3% sensitivity using the 2007 eight called call.

We also discussed on prior calls our future got which is an eight in the detection of endometriosis.

The brand name it Endo Chuck.

This is a large unmet need in the obese you weigh in community as endometriosis is treated based on symptoms and is unable to attack be detected without a surgical biopsy.

And do a Chuck will address this patient population with a total addressable market in the U.S. of roughly six to 7 million.

We anticipate working in collaboration with the strategic partner and we'll communicate timelines for the study upon consummation of final plans.

Lastly, we have another passed in the pipeline, which is now branded Oh the inherent.

It is based on our seven protein Biomarkers interrogated buying new machine learning algorithms to monitor those who are genetically predisposed with GE such as rocket one brackets too.

Over inherit well have an algorithm train for the asymptomatic high risk population.

Currently clinicians can order see 125 in conjunction with ultra sound to assess risk.

We believe that our algorithms will outperform the current standard of care and provide better early detection.

Despite what we believe will be modest delays in or studies due to covert 19, we anticipate making progress on our portfolio development.

And we are very excited about the formal rollout of our product pipeline.

Or new products will impact the entire patient lifecycle from the Egypt puberty with Endo, Jack to watch and wait with over that so high rescreening with over in Europe to surgical risk assessment with over one block.

At this time I would like to turn the call over to Bob four hour for review of our financial results Bob.

Thank you Chris.

Well, we have described the continued volume growth in the fourth quarter two girls each one of the or do you want to comment on our cash preservation and liquidity strategy as well those are NASDAQ listing status.

Booked revenue increased 55% to 1.2 million in the first quarter 2020, compared to 779 sells into the same period in 2019.

The increase is due to an increasing number were chose performs the increase is primarily driven by the launch of over one flaws and the expansion of our commercial team during 2019.

Our average unit pledged for anyone was $324 for the first quarter versus 337 in the fourth quarter 2019.

The main driver of the sequential decline in average unit price was our payer mix with a substantial increase in patient direct out of pocket payment in specific geographies, we've only seen a slight deterioration in patient pay collections to date, we expect to see a deterioration due to the rising unemployment rate.

Okay, great economic uncertainty with estimated collections associated with our Q1 cells.

We've made progress on our contract would Sigma.

We commenced mission of claims as a basically first and a real wasn't reimbursement contracted rate. We're also driving insurance submissions first of all wing patients pay out of pocket. In addition, CMS recently extended or clinical diagnostic laboratory touch panel price update.

From 2021 to 2022 for the $897 <unk> Medicare approach.

The maximum downward adjustment allowed is 10%. So we have limited downside to that might element of our pricing I don't have extended the current price by one year.

Gross profit on over one product revenue was bought 20044% profit margin for the first quarter 2020 compared to 263000 for the same period in 2019, 34% profit margin.

Cash balance at March 31st 2000 28.1 million.

Okay. That's utilization for the first quarter was three point Sixmillion.

This was harder than the preceding quarter utilization of 2.9 billion due to nonrecurring legal expenses of approximately 100000 in support of strategic cooperation agreements as well as one time transition costs up 70000 to bring a billing function in house. She is associated with a previous billing arrangement.

What percentage of revenue and we expect the internalization of billing function before treat for when taking into account or expected group were licensing the billing platform technology and have already executed the transition successfully.

We also had timing issues, where you make payments were made to fall in the first quarter, including 2019 bonus payments at 461000, NASDAQ listing fees of 77000 national sales meeting deposits at 30000.

As we previously announced we successfully amended the terms of our stated Connecticut's financing with respect to talk unemployment levels in the state.

Vars employment milestones are such that we anticipate the treating them in the second quarter. We will also granted a loan pursuant to the payroll protection program, which was established onto the cares act, which will be used to one payroll in the amount of approximately $1 million.

We expect to use the proceeds of alone in a manner that qualifies for complete forgiveness of the world under the terms of the characters and the payroll protection program.

Lastly, we have the potential to receive proceeds of warrants and the amount of approximately 5 million worst Stockbridge maintains levels above its already won through journey first there's no assurance that we'll be able to exercise warrants given market conditions beyond the control over a million.

Therefore have totaled 8.1 billion a cash at the end of Q1, we've added $1 billion from the PPP, we have the potential for $2 million from the state of Connecticut, and the potential for $5 million and proceeds from warrants warrant exercise.

Total of $16 billion prior to any cash utilization in Q2.

Regarding cost control one cash preservation measures, we were taking their a number of areas natural savings such as travel and entertainment coping 19 environment.

In addition, we've curtailed the use of contractors and consultants and have reviewed our entire vendor spend for opportunities to make reductions.

Regarding our NASDAQ listing status as we previously announced we were notified by NASDAQ that we cure the bid price do listen deficiency, when our closing stock price exceeded one dollar for 10 consecutive trading days I'll turn it back to Valerie.

Thank you Bob before we open up the cough acumen I, let me restate our optimism for building the company for sustainable growth for the near term and the long term, we are adhering to government guidance to flatten the occurred on the spread of Cobot 19 and are hopeful this will come to us Swift conclusion as soon as possible.

We're striving to strengthen our position during the restrictions, which we are all experiencing in order to come out of this even stronger in the end.

In parallel we are executing quickly on our larger mission to serve the 20 million women in the U.S., starting with ovarian cancer risk assessment serial pelvic mass monitoring.

And eventually tackling the largest disease endometriosis.

Keep in mind, the hereditary ovarian cancer monitoring test over in here. It is incremental to this market and this product will be for both women with and without a mass.

Well there in cancer accounts for more deaths than any other cancer of the female reproductive system and is the only gender specific cancer with greater than a 50% mortality rate.

Our work in products are at the forefront of changing the standards of care and detection of ovarian malignancies. We believe there helping close the gap detection and more importantly survival for women.

In the near term, we believe over one plus coupled with our disparity differentiation and genetics testing will become the standard of care and pelvic mass risk assessment for ovarian cancer.

Our long term. We're also moving forward on our planned launches of Overindexed, which is our watch and wait product.

Endo track for endometriosis, and lastly over inherit for high risk genetic predisposition monitoring.

Our end in mine is the incorporation of our technology with precision base modalities to allow for noninvasive early detection of gynecologic disease over the entire patient lifecycle.

In time, our goal is to become the liquid biopsy standard for all of these diseases inclusive of all ages stages and most of all all ethnicities.

We also believe in this new cobot era that health care disparities and the importance of diagnostic information might actually be further elevated to reduce disparate care and ensure that all women of every cells economic background, we see the best possible care.

We are now happy to open up the call for Q1 day and answer any of your questions operator.

Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Confirmation, telling when they get your line is in the question Q you May press Star too if you like to remove your question from the Q.

For participants using speaker equipment, and maybe necessary to pick up your handset before pressing the star cheese, one moment. Please why we polling for questions.

Well the first question comes from.

Brian Weinstein with William Blair. Please proceed with your question.

Hi, Brian Good afternoon, Hi, I'm going in.

I know you kinda he did a little bit in the prepared remarks, but I'm curious you know how you view your business and in kind of a close covert 19 World you know what what what structural changes do you think are out there for or how you run your business. How you interact with a website with a their condition that's why you're targeting.

And I'm, just kind of them for a broad picture how do you think the world changes Vermillion.

Well I think a couple of things I think that first off is.

We are seeing you know with this with elective surgeries being delayed the thought was you know our volume could have gone down quite a bit and.

We're actually seeing you know nice bounce back what we're anticipating is happening is that.

Doctors are really utilizing the test for its treehouse capabilities in terms of understanding who is at high risk in who should go to surgery. First so number one is I think there's an opportunity with the rationing of a lars that there could be an opportunity where over one plus can actually have greater utility number one number two is because.

It's not a nice city, it's necessity I do think that the test will get so in terms of reps visits we are seeing virtual visits happening. We are seeing virtual lunch is happening I think the GE lions are getting pretty clever.

In terms of trying to conduct as best they can't in terms of practice of medicine, a with this new domain, but I do think that it will be more virtual I think it will it might be more efficient honestly in the end, but I think it's it's you know it's really having the tools in place so that you can.

Work in the new World 'cause I highly doubt things are going to go back to the old world for a really long time if ever so.

Then answers your question.

Yeah I know in caustic you are so much and then is there any uptick that we should be expecting on anything that you're doing with payers or third party payers here and any discussions that are going on because the a situation with Cowen 19 delay any of those discussions or are you expecting anything later this year.

Yeah. So no I think that's that's still continues on surprisingly because I would think that you know we weren't getting the calls or the meeting scheduled so I would say that there's a Q where the <unk>. The third party payers take a look at new technology, which is you know Q1 in Q2.

But I would say that the discussions are ongoing I think landing Cigna and also getting cigna.

Priced that that makes a huge difference in terms of pushing the other payers because they're competing against each other and say markets. So Ah I would say that that its ongoing I don't see cobot cobot as slowing that I see you know in terms of the I played front end discussions happening like the bad.

Again, I mean, there could be you know I don't know in terms of the billing process in terms of then paying if that's your question or if it's just a front end, but certainly the front end, it's still happening on the backend I think that you know we are anticipating as I pointed out some slower return on you know because of patients being unemployed and things like that we factored that into Q1.

Okay, and then as part of true on your cash conservation that you were talking about up you mentioned this or or if it's just not relevant but were there any changes to kind of salesforce or or anything like that that any furrows already or anything going on that so we we should be aware of obviously I'm going to P.P.. There's some restrictions there, but I just wanted to make sure I knew.

Kind of what the Salesforce size wise as we kind of come out of this.

Yes, so we're at 20 and there's no change there's no change whatsoever. So it's on remained as isn't and as I said with the volume picking up nicely work at work our plans to come out strong.

Okay, great. Thank you guys.

Thank you Brian.

Our next question comes from Jeb Terry with Aberdeen Investment management. Please proceed with your question.

[laughter] Hey, Tom Good afternoon [laughter]. Good afternoon. So the the 90% I think you said 90 per cent per week.

Dramatic recovery or so has have you kind of filled in the valley. This war.

Yea end.

The answer that question I would say that you know last week was rather strong weak because we only had limited sales team members out there as mentioned the three states. So I would say that.

We were we were surprised to see you know the uptick happening on it on a weekly basis and it also.

Again, we're we're still at the date as early so I'm you know, we're still not where we want to be but I would say that you know with only three states opening and where the volume is its it seems to be recovering nicely.

And so.

So with only three states you recover nicely then presumably if we get.

There's a big states, yet, Texas, California wherever.

Sounds so it sounds promising there was something on the.

In the in the press release that seems interesting that was like your your GNS expenses for up because of the clock legal for collaboration to me yes.

Yes. So we we have several collaboration agreements on that are you know I would say wrapping up and so these are things that are.

The size and Ah that's why we called it out in terms of dollars. So it definitely is one time and these are things that we've been working on as I said for for a while so we wanted to put it out there as as one of the variance items for the year over year.

Okay, Yes, a wrap it all Oh hi, Bob.

Okay. Thanks for joining Ah I would say.

<unk> casualty collaborations won the product so I did not on a self distribution.

Okay.

And.

So there's more than one it sounds like so you said plural so by wrapping up that that presumes that either going away or they're good going forward, but they seem to be come into some point of conclusion said.

Well look at that.

Yes, that's correct.

Good well [laughter] world pins and needles [laughter] [laughter]. So oh are you going to be reimbursed from a koby tariff telx how's that work.

Yes, so there's a there's CPT codes that are in the works right now reimbursement you know there they're actually trying to fast track both the antibody in the Inogen reimbursement. So so yes, there will be codes and we afflicted attached with very high sensitivity and specificity as we stated.

If I sat back and waited till you know that's because there's a lot of tests out there it's different flavors.

So we really and this test is is currently runs on our existing platform. So there was no incremental capital.

For running it so it's really a win win for us.

So really since the Roche test so so.

I understand so Roche is going to get paid something you're going to get paid something.

That's correct right so he's oh by the reagent by the reagents.

Yeah, you run the patience specimen and then you you Bill you Bill for it.

The Coke and there's a large deficit of the antibody testing and antigen testing in the U.S. and we really looking at it not just as from that viewpoint, but as a pre surgical risk assessment. It is something that we as you know in terms of speaking with their customers as a need in terms of in assessing a those patients prior.

Surgery.

So that might be a permanent part of the landscape going forward I guess Uh huh.

[noise] it could be it could be I mean, I I think that doesn't mean the jury is out in terms of how long cobot is around here, but I think that it's important. That's a is that we are part of that pre surgical risk assessment, we're offering a comprehensive offering the doctors want to understand not only the overall.

And proteins genetics as well as the Covidien engine antibody assessment as well so it's part of the overall package and how we're offering it to the physicians.

Is there any range expectation on how much CPT code would be.

Yeah.

I think it's I think some of the data is not out yet, Jeff, but that's something that will be in public domain. So it's sort of I want to say that depends on the CPT codes is a couple new ones getting approved but but it will be in public domain in terms of the range of that and it's it's fairly profitable as well, it's a very a simple 10.

Just.

And I do think that no again, it's something again in terms of efficiency and personnel labor in capital we already have that in place.

Okay.

So it's it's not it's not guns are Nichols, it's it's maybe maybe 100, maybe they'd be a three digit milberger instead of a t. doesn't number [laughter]. They don't know yeah. So yes, I, what I would follow up I mean, it's definitely you know, it's just to give you kind of a ZIP code for it.

So the antibody test isn't that what to say.

You know 50 to $75 range and the antigen test is somewhere in that I'd say, it's 130 to 140 range just to give you that goes on it okay.

[laughter], that's that's very helpful well, thanks very much.

You're welcome.

Our next question comes from called Nixon with Cantor Fitzgerald. Please proceed with your question.

Hi, guys. My second question Hi, good afternoon.

I was wondering if you could tell us what has been driving the recent strengthen the product gross margin is this 4% level, a new run rate and how maybe taking a coverage helped the margin into Q onward. Thanks.

Sure, Yes, so in terms of the improvement in gross margins really it to leveraging of our fixed costs. So we have the capacity to really do a thousand test today and so we had as you know the technical labor to manage that so as you had volume our gross margins go up substantially higher and then the second question is in terms of.

Yes. So we started billing signal the April 1st Cigna is a <unk> you know it a certain percentage of our volume and prior to that that was being build out at a patient price. So we now convert that to the Cigna price and we're looking for to let this is something we've been working on for awhile. So this is a big deal for us in terms of getting signal.

Contract and then getting Cigna priced.

Okay. Thanks, I'm excited skin color KCI, Bobby Jindal soda, meaning it's actually going on yet or the the one thing I'd suggest you think about <unk> cost structure is a very bones religious the region, that's relatively modest pretty fast it's like you know.

20, Dollarsish and then we ever pretty wide range of blood draw fees.

Ranging from zero to.

You know slightly north of $50, but our labor is really watch fixed in the short term. So there's there's a fairly well it would go up in a step function, but we don't see that happening.

In the foreseeable future in terms of significant labor additions or.

Capital expenditures, we've got enough capacity to you know probably triple our current volumes from what they were before any covert impact.

Okay, Yeah that makes sense I appreciate all that called it.

Wanted to I'm, just talking about and patient as well. So you know high in Q1 that makes sense. What indications have you seen in April and May be early may that patient and maybe a little bit higher than your Ralph like last year or you know, maybe it's you know lower compared to a deeper level or March level I'm sure. There will be helpful. Thank you.

I do want to take that.

We're we're little on certain I mean to be honest with you in the month of March we saw a really good spike.

Haitian.

Payment I think unfortunately, I think a lot of people were home and.

Caught up on their bills willing worried about the tail and that's built up an intuitive issue of you know where what these bills fall for people in their ranger priorities, if they're out of work we're worried about their future. So.

As I mentioned the brick prepared comments, we haven't.

I had a big.

The other thing that's relevant is you know as people as we get further once a year or less about April.

Individual starts to make their deductibles.

No pay pay off and get a higher percentage of insurance so.

We're trying to guide a piece, but the main issue about this patient pay is about half of the population we have insurance coverage. So our policy is if a if a patient you know it's it's in marketing program more geared for the physician to assure them, they're not going to get their pace.

So I wanted you got surprise bills, but frequently what happens is a doctor will tell what patient they're eligible for the patient pay price and even if they have insurance they push for paying the you know we basically price at a one night you saw it weve if they don't have insurance, but sometimes that people have Dr.

Bowls, they want to pay the 195 as opposed to.

Making the claim so we try and push them to make the insurance claim but as the year goes on that becomes the natural course of business they submit decline.

It's less about thing here. Thanks.

We work through.

Okay got it and obviously that's going to dilute the ASP I'm excited okay. Thank you very much for that and then.

Lastly, I heard about the PDP on this can you hear you guys received and then but was there any other payments eroded Cures Act that you had received I know there were certain funds received by yeah, that's bidding Medicare provider or something where you apart of that and just come in but I was wondering was yeah. We we received and we just closed 10-Q.

I didn't pick a warrant did the press release, but we received 89000 and stimulus.

Payment in April.

That came from the health and human services Department, So it's not material but.

It's fully disclosed in the 10-Q.

Perfect. Our that's very helpful. Thank you as much hasn't hidden questions.

Oh.

We have reached the end of the question answer session. At this time I like to turn it over to Valerie Palmieri for closing comments.

Thank you everyone. Thank you for joining us today.

As you can see we've made quite a bit of progress over the last quarter and continued to.

Make progress with our technology and with our pipeline.

With our commercial footprint, our guideline indoors and differentiate test a differentiated portfolio test within the same call point in a substantial payer coverage. We believe we're in a position to support continued growth and profitability.

Our end goal is to serve the large global pelvic mass population in overall women's health market with the platform coupled with the pie trees science and data tools, which will drive better health and wellbeing to each patient we serve thank you for joining us today and we appreciate your support and interest in Vermilions.

This concludes todays conference you may disconnect your lines at this time and we thank you for your participation.