Q1 2021 Fulgent Genetics Inc Earnings Call
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Good day and welcome to the first quarter 2021 Fulgent genetics earnings call at this time I would like to turn the conference over to Nicole Porsche with Investor Relations. Please go ahead.
Great. Thanks, and good afternoon, and welcome to the Fulgent genetics first quarter, 2020, one and financial results conference call on the call today are Ming Shea Chief Executive Officer, Paul Kim Chief Financial Officer, and Brendan Perfused, Chief Commercial officer, the company's press release discussing its financial results is available and the Investor Relations section of the company's website fulgent.
And that X dot com, an audio replay of this call will be available shortly after the call concludes.
And at the Investor Relations section of the company's website to access the audio replay manner.
Management's prepared remarks and answers to your questions on today's call will contain forward looking statements. These forward looking statements represent managements estimates based on current views and assumptions, which may prove to be incorrect. As a result matters discussed and any forward looking statements are subject to risks uncertainties and changes in circumstances that may cause actual results to differ from those.
As described in the forward looking statements.
Company assumes no obligation to update any other forward looking statements. It may make today to reflect actual results or changes and expectations for listeners should not rely on any forward looking statements as predictions of future events and should listen to management's remarks today with the understanding that actual events, including the company's actual future results may be materially different and what is described.
And our implied by these forward looking statements.
Please review the more detailed discussions related to these forward looking statements, including discussions of some of the risk factors that may cause results to differ from those described and these forward looking statements contained in the company's filings with the SEC, including our previously filed 10-K for the year ended December 31, 2020, which is available on the company's IR.
Website management's prepared remarks, including discussions of earnings and earnings per share contain financial measures not prepared in accordance with accounting principles generally accepted in the United States or GAAP management has presented these non-GAAP financial measures because it believes and it'd be useful to investors for various reasons, but they should not be viewed as a substitute for or superior to the.
Company's financial results prepared in accordance with GAAP. Please see the company's press release discussing its financial statements for the first quarter 2020 one for more information, including the description of how the company calculates non-GAAP income and earnings per share and a reconciliation of these financial measures to income and income per share. The most directly comparable GAAP financial measures with that.
I'd now like to turn the call over to me.
Thank you Nicole.
Good afternoon and.
And thank you for joining our call today to discuss our first quarter 2000 <unk> results.
I will provide some I'll briefly remarks before accounting for over two.
Sure.
Commercial officer, Brendan and protocols to provide the update on our commercial success.
And finally, Paul will discuss our financial results and the other.
Other look in detail.
The first quarter.
Mark to the meaningful milestone.
Our fight against COVID-19.
It has been.
Over a year ago since the Lockdown began and our globe worthy swab you many way by the pandemic.
It appears that the waxy crude oil and progressing and life slowly reaching to the steel for non merci.
Thoughts remain with those who have been impacted by this pandemic.
Our team has worked tirelessly over the last 12 months to provide a personal solutions to customers across the country.
And while our COVID-19 testing business has been and sustain.
You bet.
We are turning our focus on how we can.
The reported recovery from the worries going forward and a driver of growth across for our core and <unk> business.
And <unk>.
Europe, either from these areas of focus momentum and a moment.
Whether we will first touch on the highlights from the first quarter.
We had a record record record.
For the year with Q1 revenue totaling $359 million.
More than 46 times over the revenue in Q1 last year.
And the increase of almost 22% compared to fourth quarter.
We TV and were approximately $3 8 million tests in the quarter and increased roughly 19% compared to fourth quarter and almost 290 times the volume.
Over the Q1 last year.
And what's the most exciting is the growth with events in our Ngls revenue.
Which exceeded our expectations and the growth 115 per.
For Cindy year over year in the first quarter.
We will continue to Troy will sustain substantial leverage generating more than $6 59 per.
For sure in the non-GAAP income in the first quarter.
And that's almost a $222 million in free cash flow.
Our team has continued to fire on all cylinders with a brief execution from our laboratory operations to our sales organization.
Growth week Congress in the last year with and have been a possible result, our support and the dedication.
And we're looking forward to growth our team and expanding our momentum and a year ahead.
We have we will build a genetic testing businesses on a strong technology foundation and that is scalable into new areas with minimal overhead and investment.
And we believe this positions us extremely well for substantial growth and allow us to become a leader in the very broad genomic.
Diagnostic market.
And that note one of the recent development and.
And most excited about is announcements of a doctor and lighter ways.
As our new Chief Medical Officer.
Star Wars has.
Extensive background and expertise in pathology and.
And <unk> signings.
And it has a successful track record in field team healthcare businesses.
For Sofia and beauty and the scale.
Why is joining us from the Neogenomics, where he oversaw campaigns for the medical and the R&D teams and the harvest.
Expand their businesses during his tenure.
We are very excited about the doctor Weiss commitment to forging and and look for work to expand our presence in the molecular diagnosis market and there is excellent.
And <unk>.
We see and number for opportunities in oncology testing, which we have just began to fresh for surface.
And we believe that.
With our scalable technology platform and a track record for execution.
And are extremely well positioned to capitalize on the large opportunities in this area.
Moving on our COVID-19 testing business.
While our RT PCR based testing for COVID-19, and has continued to drive sustainable tests and volume and the cash flow for our business, we are focused and less leveraging our success in RT PCR testing into other areas for COVID-19, and the research.
And in particular, we have been working on whereas large scale opportunities for Ngls based testing for COVID-19.
Evidence of both the large contract we announced with the CPUC in March forging the day.
<unk> and the success in this contract. It is clear we were one over the top sweetener by award the value and the contract duration.
Compared to other labs and data were also selected by the CDC for this contract.
Brendan will elaborate on this win in more detail.
Although we believe these contracted work represents.
Accumulations of our efforts in both Ngls healthy and the COVID-19 expertise, we've seen and additional opportunity.
This nature that we ERP and consider.
And for an ongoing basis.
We also have continued to support a wax and rollout with our vaccine management platform as well as come and his sulfur platform.
As we look ahead, we expect to continue to invest in our technology platform, our team and our testing offering to expand our reach into new markets and the geographic area in.
In particular, we intend to expand our investment in our China JV in the coming months, we have had a presence in China.
Through our JV venture in 2000.
17 in the genetics rear disease market and then we see a cyclic and.
Opportunity with additional investment to meaningfully grow our presence in this large and growing genetic test diagnose the market.
Our operations on.
On the growth in China, leveraging our same technology pro from X.
Extensive test menu and the essentially is alive and management system.
Our infrastructure in U S.
We are also continue to evaluate M&A opportunities that will be.
And natural expansion for our existing businesses to fuel our expansion.
And we remain wary of Mrs.
Our future opportunities in and.
<unk> testing and the other areas now that we are just getting our feet wet.
We have proved our ability to rapidly scale up our business with our COVID-19 testing initiatives and we see opportunities that will underpin our momentum more broadly going forward.
We look forward to discuss our progress in the coming quarters ahead.
Is that I would like to turn over the call to Brendan to dive even more on the customer dynamics, we saw in this quarter Brendan.
Brendan.
We are proud of what we accomplished and the first quarter setting numerous new financial records for our company and we are equally proud of our company's efforts to fight the pandemic and the first quarter, we processed over 3 million RT PCR test. This is roughly 284 times. The total volume we process the same.
Time same quarter of last year.
Since the first signs of the virus testing has been one of the best tools and the fight against Sars COVID-19 two with a number of new cases down we'd like to thank the fortunate lab team's relentless efforts to scale meet turnaround time and deliver quality results played a small but meaningful role and our country's improvement.
And that said cases appear to have plateaued at a high level and some states are still dealing with surges and we continue to deploy our testing and resources across the United States.
And while we demonstrated very strong performance and COVID-19 testing and the first quarter. We also saw a record in terms of our next generation sequencing business.
Our NGL volume grew 185% year over year from 13000 to 38000 test representing sales of $16 7 million compared to $7 $8 million and the first quarter of last year and increase of 115%.
This growth was driven by our clients beginning to return to a more normal run rate continued traction and our biopharma business and our and new strategic partnerships with commercial organizations the <unk>.
And as we made in R&D to launch new tests, and new diseases and market has continued to create opportunities for our company, meaning most of the growth has been outside our traditional pediatric rare disease menu and includes adult neuro genetics hereditary cancer hereditary cardiovascular genetics reproductive health and sequencing as a service.
Yeah.
With a number of new COVID-19 cases, decreasing we are seeing a bit of a paradigm shift as people begin to return to the office travel attend events et cetera, we are seeing testing shift to return to normalcy testing, we believe our history of delivering gold standard RT PCR testing at <unk>.
Kale with rapid turnaround time for this positions us perfectly to address this demand.
Many other screening programs are not allowing less sensitive antigen test or rapid molecular tests to be used as the evidence shows sensitivity and asymptomatic populations to be less than RT Pcr.
Several of our larger testing operations now include schools and employers we have talked about New York City schools and Las Vegas calls on previous calls we continue to screen students there and have been successful and detecting many positives, enabling effective isolation to minimize spread.
We have also seen our picture at home test play a meaningful role as we are able to send families kit to their home for continued test monitoring.
Regarding New York City, specifically, we are now processing thousands of students per day across many hundreds of schools and plans call for even more testing and the future and additional students return to in person and learning and.
In mid March it was announced as part of President by and National strategy for the COVID-19 response, and pandemic preparedness and the U S Department of health and Human services, we will invest $10 billion from the American rescue plan to ramp up testing to help schools reopen it is estimated that over 1 million tests per.
<unk> day will be needed with this new program at this time, we are actively onboarding, new schools and have additional schools and our sales pipeline as we await to hear how the new HHS National School testing program will be rolled out.
During our fourth quarter earnings call. We mentioned next generation sequencing entering and the spotlight of this pandemic due to its ability to identify strains and mutations and screen for potential new mutations and that we hit a perfect intersection of Folgers and core competencies and we were primed and ready to take on massive NGF testing.
<unk>.
Along these lines and the first quarter, we had the privilege to announce a monumental new contract with the CDC for COVID-19, genomic studies to track and identify new variants.
The awarded up to $47 million and CDC funding to support the National COVID-19 surveillance program for Sars COVID-19 two such large scale viral genomic surveys have played an important role to provide a central baseline information for national and state level surveillance.
Defining important changes and transmission identifying unusual or emerging variance and ultimately.
Improving public health responses and decision, making with better laboratory data.
Before the award and early February we had already initiated a pilot surveillance program partnering with public health laboratories, and California important discoveries such as the two emerging west coast variance be dot one dot 46 and be dot one dot for two nine we're also confirmed and our pilot studies.
These two variance were quickly identified as variance of concerns by the CDC are pilot study set a good baseline for the surveillance on the West Coast and help the public health laboratories overcome issues with the complexity of sequencing and bioinformatics workflows and limited access to timely remnant samples for sequencing and analysis.
With the CDC partnership we have successfully identified the first be dot one dot 315, and Santa Clara the first P dot one and San Bernardino the outbreak of PD, one and Colorado and many more.
The genomic data has proven its value to prioritize contact tracing efforts. So that effective measures are deployed to control transmission. Moreover, this enables the epidemiology.
Sources of exposure either through travel workplace or other community transmission.
At this point, we are sequencing thousands of positives per week from our lab and collaborator labs across the United States.
And in mid April It was announced that the bite administration will be dedicating $1 $7 billion and funding for the American rescue plan to fight COVID-19 variance.
Helping the CDC and governors monitor track and defeat emerging variants we.
We look forward to fulfilling our part of the existing contract with the CDC and any additional opportunities we can help with.
Turning to capacity, we continue to increase our testing capacity with very little investment at this point by continuing to improve workflows and efficiencies between our two laboratory locations. We can handle north of a quarter of a million tests per day, considering the size of some of the return to normalcy opportunities such as the.
And national K through eight program, we think our capacity turnaround time mobile applications will allow us will allow for <unk> to compete at a high level for these contracts.
During the first quarter Fulgent obtained authorization from the state of California to aid and the distribution of vaccines.
And in March we deployed our mobile vaccination fleet and have since serviced 40, plus locations, primarily and underrepresented communities and have administered tens of thousands of doses and partnership with Los Angeles County.
We are using the newly launched Fulgent vaccine management platform to allow patients to find a location schedule their appointment receive reminders and tractor vaccination. This platform is fully integrated with our test management system, allowing existing clients to expand their present operations and new clients to take advantage of the full suite of service.
And at program outset.
Bind with a rapid deploy ability of our mobile fleet fulgent.
Manage vaccination efforts, usually see a turnaround of one week from site requests to execution.
While we continue to run one of the largest COVID-19 operations and the United States. We also continue to invest in new areas of genomics as Ming mentioned, we are very excited to have Dr. Larry Weiss joined Fulgent team Dr. White as of right now and pathologist and will help lead our oncology product development and strategy, including strategic partnerships, we believe combining.
<unk> and Dr. <unk> expertise with our capabilities and technology platform, we can make significant progress in areas such as liquid biopsy minimal residual disease companion diagnostics and traditional cancer testing such as fish flow cytometry and immunohistochemistry.
Over the last couple of years before us and test menu has exploded to include over 18000 genetic test.
All of which had been germline testing.
With Doctor Weiss onboard and we intend to expand our somatic test menu and do so quickly.
A question, we often receive is California plan to invest and the business going forward. It's a fairly straightforward answer we are believers and our market and we believe we can continue to be a disruptive force with our scale cost structure test menu and underlying technology platform. We believe we can continue to launch new services.
And new markets at record pace investing and continued organic growth.
Since our founding and this company we have built everything organically the hard way, we like to say Baidu.
By doing so we've been able to build a lab with systems that are seamlessly integrated and not a series of acquired platforms stitched together or even more inefficient relying on third parties for technology.
With our operational capabilities.
We believe we can be a consolidator in this market and we continue to actively look for acquisitions and other strategic opportunities. In addition, as we expand our go to market capabilities. We believe we can recruit elite sales talent to build out a national sales force something we have not done to date.
It continues to be a dynamic time at Fulgent as we navigate this hyper growth path.
We believe we are and a strong position to continue to execute on our growth strategy and scale, our business and we look forward to keeping our investors updated as we make additional progress with that I would like to turn the call over to our Chief Financial Officer, Paul Kim Paul.
Thanks Brandon.
And we again achieved record results and the first quarter with revenues totaling 359 million and increase of more than for 500% compared to the first quarter of 2020.
Billable tests and a quarter totaled almost $3 $8 million growing almost 290 times. The volume of Q1 last year. The vast majority of this volume was from our business related to COVID-19, as the country began to reopen and people have begun returning to a more regular way of life, we have pain and ongoing momentum and our.
For additional genetic testing business, our <unk> revenues in Q1 was up 115% year over year and 39% sequentially from Q4.
Overall, we're very pleased with our Q1 results with our ongoing momentum with RT PCR testing for COVID-19, complemented by our Ngls testing for both COVID-19, and our core genetic testing business.
Our ASP and the first quarter was $95 slightly higher than the 93, we stand for fourth quarter, while our ASP has largely remained stable over the last few quarters.
The modest.
Moving mix of Ngls path, we saw and this quarter cost per test and the quarter was $20 slightly.
Higher to even versus the fourth quarter also data for increased mix of MTS testing gross.
Gross margin for comparable.
And what the fourth quarter at 79, 4%.
Turning over to operating expenses total GAAP operating expenses were $18 4 million and the first quarter up from $17 3 million.
And the fourth quarter non-GAAP operating expenses totaled $16 1 million up from $14 8 million last quarter.
Non-GAAP operating margin declined 252 basis points from the fourth quarter to 75, 1% as Meg discussed we continue to invest and our business, particularly and head count as we look to position ourselves for sustainable growth and.
Adjusted EBITDA and the first quarter was $271 9 million compared to a negative 506000, and the first quarter of 2020 on a non-GAAP basis, and excluding equity based compensation income and the quarter was $203 9 million or $6 59 per share based on 38 million weighted average diluted.
Shares outstanding this takes into accounts attacks tax effect for tax for stock based compensation and the quarter.
Turning over to the balance sheet. We ended our first quarter was $697 million 4 million and cash cash equivalents and marketable securities.
We generated over $233 million of cash from operations and the quarter fueling our cash balance we do not take any action on our equity echelon and programs and placed in the quarter to minimize dilution to our shareholder base.
And on the other side of the balance sheet contract liability stood at $14 million.
Now moving onto the outlook, we remain very excited about our positioning and we see and ongoing opportunity to extend our leadership and COVID-19 testing, while our traditional genetic testing business should continue to expand that.
And our revenue guidance for the two primary buckets RT PCR testing for COVID-19, and Ngls testing.
Which includes NGF testing for COVID-19, plus our core genetic testing business that we feel confident and our ability.
And more share and <unk>.
And our market for cognizant of the impact of the changing landscape and RT PCR buyback thing and administration asymptomatic versus symptomatic testing and timing and size.
Catholic policies by various organizations with reopening on the flip side, we see tremendous growth and RF.
And that capability for the fall demonstrated by our diverse menu operating experience and traction with reimbursement reputation with customers and quality of service to name a few we see durability and our NGL business and we see additional opportunities for further growth as such we're raising our revenue guidance from Ngls.
Testing from $70 million previously to over $100 million in 2021.
This represents organic growth of over 200% and our NGL business are more than triple compared to the pre COVID-19 levels are $32 2 million and revenues in 2019 and growth of over 170% compared to our 2000 20-F.
Okay.
Based on our raised outlook for Ngls revenues for raising our full year revenue guidance to $830 million from $800 million previously.
And we expect our test volume for 2021 to be between eight five and $9 million, representing a growth of 93% year over year.
And the second quarter of 2021, we expect revenues to be approximately $200 million.
From a profitability standpoint, we continue to expect to show ongoing leverage and our business, which dropped down to the bottom line and drive cash flow generation. We continue to rely on our foundational technology from operating our business, which is producing gross margin of about 80% and operating margin above 70%.
Even with the aggressive hiring and investments, we're making and our business, we anticipate growth and operating margin will remain extremely strong.
Such for full year, 2021, and utilizing our 27% tax rate and a share count of $31 million. We expect net income of approximately $380 million or $12 50 per share for our shareholders excluding stock based compensation.
And looking at the balance sheet. This quarter has once again curve and the viability of our business model and the power of our technology platform, given our ability to drive hundreds of millions of dollars of cash flow and a single quarter.
And we remain well on our path of having a $1 billion of cash cash equivalents in marketable securities on our balance sheet, excluding any potential M&A transactions, which we continue to evaluate on a regular basis.
Thank you for joining our call today, operator, you can now open it up for questions.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if youre using a speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Again press Star one to ask a question and we'll pause for just a moment to allow everyone an opportunity to signal.
And our first question comes from Steven Mah. Please go ahead.
Okay.
Congrats on the quarter.
Thank you and sphere.
Okay. So first question on the on the <unk> business, how much of how much was from the core genetic testing business and how much was from COVID-19 surveillance.
And then on the new on the New revenue guide and and Jeff could you help us bridge.
The 70 72, the 100 million New guide on the <unk> side.
Sure.
So Steven.
Very little came from.
And CDC and GFS less and $1 million.
Grants are combined to date, which was I think a real sign of faith and <unk> abilities and capabilities.
And so far we've performed.
Very high level for the CDC, we've been doing this for a few weeks now.
The collaboration with the CDC has been fantastic, we're turning out results quickly a lot of NDS results.
Making new discoveries and so I think the working relationship couldn't be stronger so hopefully that bodes well for fulgent and the future as these new programs get rolled out and hopefully we can continue to be included in them.
And as Stephen just one one other thing.
The <unk> revenues for Q1, there was a little less and $16 million and less and a $1 million of that came from the CDC.
Okay got it and then the balance of some of the core genetics traditional genetic testing.
And that actually surpassed our expectations from what we thought that we can achieve when we initially laid out our $70 million guidance, which gives us even more confidence and our ability to achieve more than $100 million.
This early on and the year.
Okay got it and then maybe a follow up on the core genetic testing business.
And what drove the strength I know you guys mentioned.
Increasing.
Increasing our menu and and increasing adoption, but has there been any progress on moving into network was the large payers.
Hey, Brandon again.
And not measurably, Steven we're having those conversations we are now quite visible to those payers, they're seeing the claims from our COVID-19 claims. So we're having this conversation.
More so than ever but no no meaningful.
New contracts so to speak national contracts right. So we havent become in network with United or Cigna for something like that had we've done that we certainly would have updated the investment community. So the growth is not coming from penetrating and direct pay market and its coming from execution on our traditional business, taking advantage of our industry leading <unk>.
Cost structure.
And being more aggressive on our pricing.
Some return to normalcy right no doubt about that and <unk>.
Some of these partnerships we have established that have done well for us and we continue to onboard clients, who are taking advantage of our expanded test menu and again at these discounted pricing capitalizing on our cost structure, we actually see that we actually see that as upside Steven meaning that shall be land, even one of those contracts will probably.
You have to adjust our NGL guidance again and at the same thing for the COVID-19 as well so and you know since around the topic of guidance I'd like to make a few commentaries about how we established the guidance the original $800 million the assumptions that went into it and the reason on why we're operating our guidance for our base business now after the first quarter.
So when we initially from the guidance, we did take into account and number of things.
Including aggressive vaccination timeline, which is happening a drop off and positivity rates, we didn't think that it would be they are slow and California.
<unk> shift from symptomatic to asymptomatic testing all of those things and that we incorporated what force conservative when we initially laid out the guidance half.
Taken hold and we're experiencing it today a lot changing our guidance for the COVID-19 because we have plenty of conservatism built in there we continue to capture market share and shipping.
Land somebody as big opportunities that brand and has mentioned that is coming from the administration, particularly for the schools.
The COVID-19 revenues and the RT PCR revenues might have more longevity and upside to it now and turning to the <unk> portion of the business. We've made a lot of comments and the previous quarters about how the strength of the company and the volumes that we're doing our quality and our reputation with as our base business and Thats exactly.
And what's happening I mean, we've experienced throughout.
Throughout the course of 2020 as well as and the early.
The early part of the share expanded capabilities homing in on operational protocol validation validation from the CDC.
Lower Cogs per test.
And the cost per test and our cost structure is probably one of the lowest and the industry, whether youre looking at the RT Pcr or the traditional and Geos. So how we're going to be taken the company in terms of our approach for investment as we're going to get more aggressive share, particularly in the areas of R&D as well as sales and mark.
<unk> and we're going to get more aggressive in terms of our price because we believe that the cost structure that we have for this company is unlike the other companies and the diagnostic space.
Okay, great. Thanks, and maybe one last quick one how much vaccination revenue from the software as a service business was in Q1 and how much of vaccine revenues and the new guide. Thank you.
Yeah. So.
If we turn the call over a year ago, we probably would have called that out but because the numbers are just getting so large at the company.
Immaterial amount, but it's not an insignificant amount, meaning that we continue to require those revenues.
And.
And it is a driver for our business not in a meaningful kind of away but.
As they get more traction we might have called those numbers out separately.
Okay. Thank you.
Thank you. Our next question comes from Kevin <unk>. Please go ahead.
Hi, This is Stephen and calling in for Kevin Makita and.
And I ask for your questions.
It's no secret we follow your California testing volume and we've noticed a change and a competitive landscape can.
Can you comment on market share trends that youre seeing and what other competitors might be offering and it makes them more attractive and then a couple other questions.
And certainly Susan.
So we look at the California market for full James It was largely driven by drive thru operations and <unk>.
Lot of the patients there.
And they think they may have the virus and its no secret that California has done a good job decreasing the amount of cases on the west coast. So as the number of cases come down.
The number of drive through tests that we were doing is coming down. So what we're seeing is as the number of.
Cases come down there and.
And you sort of an inverse reaction, which is more back to work back to school and for whatever reason were just particularly strong and those areas outside California. So that's not to say, we're not focused on driving more return to normalcy type opportunities on the west coast, and just kind of the nature of our business and sort of where our business fell in place. So we're.
Seeing a lot of these I've mentioned is a paradigm shift for I really see more return to normal day type testing and.
And we just have a large presence and that type of testing across the United States. It's not.
And so centered in the west coast as our drive through testing business was.
Okay great.
Glad that I was not totally off so my follow up then.
Yeah.
I understand, California, and drive through testing, where and the U S. D C kind of your market share and growing and this back to normal and testing New States like New York, and just kind of getting at.
Geography.
I think at this point, we do business in every single state, including Alaska, and Hawaii, Alaska and for sure. So, we're comping, where national and where we've had to show that for some of these large contracts that we've been on they want to see someone who can handle a national business and national customer base. So we're in every single state.
It's hard to single out states, but New York has been incredibly important for us not only from a revenue perspective, but from a credibility perspective, the largest school district, and the United States partnered with bold and to run their testing up there and we've done so and a beautiful way I mean, we've just done a spectacular job together their efforts our efforts have been really really successful and New York.
Midwest Southeast South I mean, we have large customers and in many states and theres not a lot of sort of geographical concentration outside of New York and that's probably one of our larger geographies.
Just one more question so.
D C contract for and gets Israeli Bank do you guys expect.
Get any other surveilling and surveillance and gas type contracts, mainly in China, or I guess private companies like United Research.
For the <unk>.
This pandemic is global Stephanie we are getting calls from all replace and to see whether we can.
Play a role in some of those.
All the bricks.
We are working on the worse for the opportunities and the world.
To you and the strength that one so we learned.
Correct.
And just any kind of piggyback and just thinking the real quick on your on your last question and I'll have to say some of the some of the surveillance programs we've implemented.
Some of these large employers we have some very large biotech companies and large school district, and we we've detected hundreds and hundreds of positives right that were otherwise coming to work or going to school, either mildly ill or perhaps asymptomatic. So we're seeing these programs work, we're able to identify and these hundreds of <unk>.
People.
Get them isolated get them home testing, while they're home and when they are back and bring them back into the work force or bring them back in a school and.
We think the isolation of these positives asymptomatic.
Or early symptomatic is going to be really powerful and controlling the spread.
Okay. Thank you so much and Thats all I have.
From travel and other organizations.
They're going to need to test two and enable a safe and successful return to full normalcy.
Hey, David This is Paul.
You talked about the cadence and like I indicated.
And then the commentary about the guidance when we initially laid out our guidance, we took into account pretty conservative assumptions about at the impact for the vaccine and the positivity rates. So if you take a look at what we have incorporated into our business plan as well as all day analyst models that are out there.
I think everyone has are covered and the RT PCR revenues going down so that's fully been baked and I think if you take a look at our business the diversification of our customers and the strength.
Where the RT PCR revenues are coming from.
We have less customer concentration and then we've had ever I mean, and La County, as one customer that continues to keep popping up but as Brendan mentioned and New York, Colorado.
Hi, Al a Florida, Wisconsin, I mean, all of these are big customers. So based on our positioning because we do have a conservative assumptions built into the RT Pcr.
Should.
And the level of testing pick up for various different reasons, and we think that those assumptions might have to be reevaluated, but.
Way things set right now we feel comfortable with the estimates that are out there for our COVID-19, RT PCR for the balance of the year.
Okay got it that's helpful and then maybe on.
The sales force commentary that you and.
And you had mentioned.
And what does the timing look like for building that out and what exactly are and how exactly do you expect that to play out.
How is that.
Yeah.
Thanks.
Yes.
It's happening in real time.
And to build a national sales force it doesn't happen overnight right.
And we don't have a hard deadline and we want to have the position filled but it is happening in real time, a bit opportunistic now so to speak as we were getting a lot of talent interested in joining <unk>.
And we're really happy to have Dr. Wise on board and he has an amazing talent.
And you'll be helpful and and building out the commercial side too right. So it is happening in real time.
We think we've positioned our company our capabilities and our go to market strategy and a way, where we will be able to recruit elite salespeople internationally and I think we're going to focus.
And primarily on the United States initially.
So internationally, but I think.
From the international growth perspective, we do have some more strategic type opportunities and international markets that may allow us to penetrate those markets and little bit faster than just building organic sales teams internationally.
Yeah, Katy is not that we don't have a sales force we have we're very effective sales force and.
And we're not satisfied.
And we're not stopping there for continue adding the talent and the sales process to broaden our coverage and access for the when we introduced new tests and new new platform.
Okay got it that's helpful. Thank you.
Thanks Katie.
Thank you and we have no additional questions at this time.
Alright, great. Thanks, everyone for joining us on our call today.
Thank you bye bye.
And this concludes today's call. Thank you all for your participation you may now disconnect.
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