Q2 2021 Myriad Genetics Inc Earnings Call
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Greetings and welcome to the myriad genetics second quarter 2021 earnings call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the 1 followed by the for on your telephone if at any time during the conference you need to reach an operator.
Please press Star zero.
As a reminder of this conference is being recorded Tuesday August 3rd 2021 I would now like to turn the conference over the nascent Smith Senior Vice President of Investor Relations and Treasury. Please go ahead.
Thank you good afternoon, and welcome to the myriad genetics second quarter 2021 earnings conference call. During the call. We will review the financial results. We released today after which we will host a question and answer session.
If you've not had a chance to review our quarterly earnings release. It can be found on our Investor Relations website at Investor day at myriad Dot com.
I'm Nathan Smith, the senior Vice President of Investor Relations in charge of Treasury.
On the call with me today are Paul <unk>, our President and Chief Executive Officer, and Bryan Riggsbee, Our Chief Financial Officer. This call can be heard live via webcast at Investor day at myriad of Dot Com and a recording will be archived in the investors section of our website.
In addition, there is a slide presentation pertaining to today's earnings call on the website.
Please note that some of the information presented today may contain projections or other forward looking statements regarding future events for the future financial performance of the company. These statements are based on management's current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons.
We refer you to the documents the company files from time to time with the Securities and Exchange Commission specifically the company's transition report on form 10-K, its quarterly reports on form 10-Q, and its current reports on form 8-K.
These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward looking statements.
With that I will now turn the call over to Paul.
Thanks, Nathan and good afternoon, everyone and thank you for joining us on today's call. We will walk through our Q2 results business highlights and the significant progress we've made on our strategic growth and transformation plan. Since we last spoke at our Investor day in May.
First I want to thank the entire myriad genetics team for their hard work and.
And the work they continue to put in to fulfill our mission to improve the health and wellbeing of all of our patients and the extraordinary effort that has gone into accelerating the execution of our transformation plan.
Together, we are delivering on our commitment to empower every individual with the genetics insights they need to take control of their health and wellness.
We are dedicated to improving access to the power of genetic testing and precision medicine and.
And we remain committed to helping healthcare providers better detect treat and prevent disease.
This quarter marked an important milestone in advancing our mission and executing on our strategy as we return for non-GAAP profitability 2 quarters ahead of our prior expectations.
Unimportant step towards our goal of delivering long term sustainable growth profitability and value for all of our stakeholders.
We are pleased with our second quarter results, especially on the heels of the solid first quarter.
Enabling us to deliver stronger results than anticipated in the first half of the year.
This quarter revenues of $189.4 million increase of 103% year over year.
And we delivered 9% sequential growth.
Diagnostic test volumes of 273000 were up 8% sequentially largely due to the strength of hereditary cancer prenatal products and our gene site testing mental health.
Average revenue per test was up 2% sequentially as rates continued to stabilize.
Total operating expenses were $156.5 million and adjusted total operating expenses decreased $3.9 million sequentially to $123.1 million.
Our GAAP operating loss in the quarter was $20.8 million with adjusted operating income of $13.5 billion.
We returned to non-GAAP profitability with adjusted earnings per share of <unk> 12 cents with improved 18 sequentially 2 quarters ahead of our expectations.
While the progress towards long term profitability will not be linear.
And for the next phase of our transformation journey. We are confident we can deliver more consistent growth, while maintaining our focus on our cost structure to deliver more sustainable profitability and cash flow generation.
As communicated during our Investor day, we remain focused on 4 strategic priorities.
First we are working hard to develop best in class quality service and accessibility for our products to accelerate growth and reach more patients of all backgrounds.
Second we are enhancing our enterprise capabilities to improve the patient and physician experience.
<unk> cycle management commercial capabilities and innovation.
Third we are expanding access to our genetic insights who new to the digital tools and leveraging our data to elevate and expand our core products.
And finally, we are committed to disciplined execution of key set of initiatives to fulfill our mission and drive long term growth and profitability.
Over the past year, and especially the last 6 months, we have made significant progress in our transformation plan to better deliver on these 4 priorities for.
Phase 1 and 2 are now largely completed.
And as we begin to move into phase III, we will continue to work to build a culture focus on service excellence and operational execution.
Improving patient and provider experience and elevating all of our products to their full potential.
We are also working to fulfill our ESG commitments with a focus on prioritizing diversity equity and inclusion.
We are quickly ramping up the phase III of the journey, where we aim to further advance our commercial strategy.
Accelerate growth and begin to increase our investments in R&D, new products and M&A.
As part of our commercial transformation, we have reduced our product R&D and technology projects by half and right size, the number of territories and outside sales reps, which enabled us to reduce our cost structure.
A portion of these cost savings were allocated towards increasing compensation for our best performing sales teams to minimize turnover and improve engagement.
Over the next several months, we will continue to rollout our enterprise commercial and product brand initiatives.
And besides of the 3 pillars of our brand proposition.
Improving patient outcomes and experience.
Delivering a frictionless experience for providers and improving access and equity care for all.
We are continuing to invest in new products and expand our reach yesterday, we announced my risks with risk score for all ancestors the.
Major proof point on our mission to expand access and reduce the racial and ethnic disparities in our health care system.
We are accelerating EMR integrations with external support and the plan to double the number of integrations in 2022 to improve the customer experience.
And we are improving lab processes from test the order to delivery. So we can deliver even faster results more efficiently.
At the same time, we are implementing customer segmentation revised kpis and improved processes and our commercial teams. We are launching of new unified portal by the end of the year. So health care providers can automatically order multiple tests simultaneously with the single process.
With the my risk and risk core launch we have taken important steps to increase access to genetic testing.
Now women of all ancestors will have equal access to a lifetime breast cancer risk assessment score and received the answers day deserve about their breast cancer risk.
In addition, we're increasing accessibility of our prenatal offerings for the cash price offering.
And finally prequel and amplify will offer women of all BMI classes in this disease equal the quality of care and the high test performance.
This work aligns directly with our mission and our teams have been working diligently to ensure smooth execution as we look for additional ways to unlock opportunities for our patients and accelerate growth.
This year, our commercial transformation is focused on implementing the first phase of our new commercial model, while stabilizing our operations.
And while we successfully reset our base of operations in the first half of the year. This has not been without some bumps in the road of territories, we reorganized.
That said our teams are settling in and we've seen less disruption than we actually expected. Our teams are winning again, signing new customers and earning back from customers that we've previously lost.
Now with the learnings from the mental health business unit, we're moving to optimize our commercial model across the rest of the enterprise and rollout our new product brand strategy.
This journey started with gene site and our efforts to reset the mental health of the new sales model and digital tools.
We are excited to see continued momentum in this business, which rolled out these programs roughly 2 quarters ahead of the other business units.
Our sales team is focused on of tighter list of higher value target clinicians.
And our medical teams are driving depth with our highest potential users.
This resulted in 2700, new ordering health care practitioners and of 12% increase in ordering clinicians in the quarter, representing our highest number of ordering health care practitioners for gene site in 2 years and we're doing it with a third fewer outside sales reps.
The success with mental health gives us the confidence in the roadmap for the transformation that is now underway in oncology in women's health.
Now, let me wrap up with a few exciting developments that we think will be catalysts for continued growth.
And mental health gene site delivered double digit growth for the fourth quarter and of ROE and our reintroduction of ADHD genetic marker and medication testing is bringing back loss providers with the results exceeding our expectations.
Our improved commercial approach and sales structure has allowed us to enhance our digital presence and drive growth with lower customer acquisition cost.
As a result, we're able to increase our investment in data collection.
Medical record integrations, R&D and technology.
In women's health, we continue to benefit from increasing support for genetic testing during pregnancy across the medical community. Most recently with the American College of medical genetics and genomics.
We can advise the genetic testing of carriers for 110 genetic disorders. The offered to all people who are pregnant or considering of pregnancy.
This expands from the prior recommendation for more limited carrier screening and the only for certain ancestors.
While recognizing that it will take time for some payers and providers for embraced the new guidelines, we expect both demand and coverage to increase over the next 12 months.
We see the potential to further penetrate the general prenatal carrier screening market as well as better coverage and reimbursement extend.
Prenatal momentum was solid with the business outperforming expectations, driven by both Asps and volume increases.
As a result of the continued success with the amplify which further increases the performance of prequel for non invasive prenatal screening test.
We're excited that Melissa Gonzales, our new women's health leader brings significant industry and commercial experience with a strong background of success to the business unit.
We expect continued benefits from improved focus and execution of our commercial transformation and women's health in the coming quarters.
Yesterday, the launch of my risk with risk score provides a breast cancer risk assessment for all women not previously the diagnosed with breast cancer.
Risk or offers of breast cancer risk assessment score the XI to improve patient outcomes and helped minimize the healthcare disparities.
And lastly, we are on track to launch the next generation prenatal tests, combining prequel and for site in 2022.
And oncology hereditary cancer benefited from stronger than anticipated volumes as well as strong cash collections on orders reported prior to Q2.
By the Cherry cancer volumes grew 7% sequentially. Despite considerable alignment changes to most of our territories and a significant reduction in our field sales force in April.
We had our best quarter ever with tumor profiling volume growing 13% sequentially, which was above our expectations driven by my choice CTX and Polaris.
We also continue to make progress in the evolution of our offerings.
And it had a positive response of our new branding and strong interest in our new product the combines germline and tumor profiling into 1 powerful solution.
We are making steady progress across all of our business units.
And our financial results are starting to show and provide us the momentum going into the second half of the year.
I'll turn it over to Brian now, who will cover the second quarter financial results in detail.
Thanks, Paul I am pleased to provide more detail on our quarterly results and business highlights as Paul mentioned, we had another impressive quarter reporting total revenue of $189.4 million, which increased 9% sequentially and 103% euro per year, our quarterly results benefited from higher than forecasted test volume as well as of <unk>.
$18 million in revenue from better than expected collections on tests reported in prior periods total test volumes increased 70% year over year and 8% sequentially importantly.
Our organic ASP was stable sequentially, we saw sequential improvements in cash collections for our hereditary cancer pharmacogenomics and prenatal tests in the quarter attributable to our focus on improved revenue cycle management and reducing the Red pay test Lastly, we returned to positive adjusted earnings per share of <unk> 12.
Ahead of our expectations.
During the second quarter adjusted gross margin was 72, 1% adjusted gross margin improved 70 basis points sequentially, driven by test pricing and molecular diagnostic revenue mix, partially offset by lower margin pharmaceutical and clinical services revenue.
Total adjusted operating expenses decreased $3.9 million sequentially to $123.1 million we.
We remain focused on driving profitable growth and expect increased commercial leverage as we transition through fiscal year 2021.
I would now like to discuss the revenue for our products starting with hereditary cancer.
<unk> cancer in the quarter was $86 million versus $39.9 million in the second quarter of last year.
Looking at the components of the change total test volumes increased 101% and average selling price increased 8% year over year.
During the quarter revenue in selling prices benefited from better than expected collections on the test ordered in prior periods on a normalized basis average selling prices were up slightly.
And mental health Pharmacogenetics revenue in the quarter was $22.6 million versus $8.5 million in the June quarter of last year, representing double digit growth 4 quarters in Iraq.
Looking at the components of the change test volumes increased by 161% year over year and average selling price was relatively consistent year over year.
From a volume perspective, we saw total gene side orders increased 22% sequentially.
I want to call out the mental health business unit hit non-GAAP profitability in Q2, allowing for increased investments in data collection and is operating at at and above pre pandemic levels.
In women's health revenue in the quarter was $67.3 million versus $30.2 million in the June quarter last year.
The prenatal screening revenue was $29.4 million compared to $16.6 million in the same period last year test volumes in the quarter increased 31% year over year and average selling prices increased 36% year over year on a normalized basis, excluding the benefits from better than expected cash collections on test order.
From prior periods average selling prices were up year over year due to improved revenue cycle processes test volumes for prenatal also increased 4% sequentially the.
The outperformance was driven by continuing success with amplify we anticipate this momentum will continue with yesterday's announcement of the launch of my risk with risk score for all and stress accessories. The first and the only hereditary cancer test offering of personalize the answer for up to 100% of all eligible unaffected patients regardless of ancestry.
In oncology revenue in the quarter was $76.3 million versus $34.6 million in the June quarter last year.
<unk> profiling revenue in the quarter was $29.2 million versus $10.5 million in the same period last year.
Jim of profiling test volumes increased by 41% year over year and by 13% sequentially. The improvement in average selling price year over year was primarily attributable to the new Medicare LCD for the Polaris test and the tumor profiling category, which took effect in December of 2020.
Sequentially average selling prices were down due to nonrecurring $7 million of back pay for Polaris that was recorded in the March 2021 quarter.
I would now like to discuss our financial metrics for the second quarter of 2021, adjusted gross margins were 72, 1% and increased 70 basis points sequentially, driven by test pricing and molecular diagnostic revenue mix slightly offset by increased lower margin pharmaceutical and clinical service revenue we are.
Moving to look for ways to further improve efficiency.
Total adjusted operating expenses in the quarter were $123.1 million compared to $99.2 million in the June quarter of last year, an increase of $23.9 million.
Yet on a sequential basis total adjusted expenses decreased by $3.9 million, which was attributable to improved operational efficiencies as a result of our strategic initiatives.
Given the continued unpredictability surrounding the COVID-19 pandemic and the impact it has had on the health care environment customer behavior and the ability to market tests. The physicians were not providing guidance for the quarter ending September 32021 for fiscal year 2021 at this time.
Moving forward as we think about the third quarter I would like to highlight a couple of points that are important to consider first our current quarter included $10 million of revenue from <unk> that will not be recurring in the third quarter due to the divestiture closing on July 1.
In addition in the second quarter, we had $13 million in positive revenue adjustments related to cash collected on tests from prior periods. The benefit from the positive cash collections is approximately 13% contribution to earnings and RPM had relatively no impact on earnings.
I want I want to also remind investors that the third quarter is impacted by summer seasonality and may be impacted by the recent surge of the COVID-19 Delta variant.
We have made progress on our previously announced divestitures on May 28, we closed the sale of my past the castle Biosciences for $32.5 million in cash on July 1 we closed the sale of RPM.
Q2 solutions for $198 million and we remain on track to close the of myriad autoimmune divestiture, including the Vectra test for rheumatoid arthritis by the end of the third quarter the.
These divestitures allow us to increase focus on our core business segments, which have the greatest growth opportunities. While also providing capital for investment in R&D technology and commercial efforts. We are approaching this reinvestment carefully in line with our goals to improve profitability and cash flow generation.
We ended the quarter with $184.3 million in cash cash equivalents of investments, while using $50 million to pay down debt in the quarter the balance on our outstanding on our revolving credit facility was $106 million as of June 30th in July of the company paid down the remaining balance outstanding under its credit facility.
<unk>, we expect to receive $348 million in gross proceeds during the third quarter from the divestitures of <unk>, which closed on July <unk>, and Vectra, and <unk>, which will strengthen our financial position and provide the financial flexibility to invest in the business and deploy capital as a means to enhance growth.
I'll now turn it back over to Nathan for the Q&A.
Thanks, Brian as a reminder, during today's call we use certain non-GAAP financial measures a reconciliation of the GAAP financial results to the non-GAAP financial results and a reconciliation of GAAP to non-GAAP financial guidance can be found under the Investor Relations section of our website at Www Dot <unk> Dot com.
Now we're ready to begin the Q&A session to ensure broad participation in today's Q&A session. We are asking participants to please ask only 1 question and 1 follow up operator, we're now ready ready for the Q&A portion of the call.
Thank you so everyone to register a question of press. The 1 followed by the for on your keypad, you'll hear of 3 tone prompt that acknowledges the request for your question has been answered and you would like to withdraw your registration press. The 1 followed by the 3 so again for questions. It's 1 off for.
Our first question is from some Vietnam with BTG. Please go ahead.
Hi, Thanks for taking the questions and congratulations on the quarter.
So my first question.
Paul and Brian could you talk about your go to market strategy for your comprehensive genomic profiling platform do you kind of watch next year in collaboration with in and out in the health I'm just kind of curious if you have some early access sites in mind and also whether you can leverage of your current channel sales channels.
Yeah.
Yeah. Thank.
Thank you for the question of probably a little early to talk about the launch, but we're we're on track doing a lot of great work with Kols the.
The team is really 1 of the things that we've insisted upon we were talking about this earlier today is a better go to market with our new product offerings.
Up and down the organization.
We are really excited about this opportunity we think it provides a differentiated.
The experience for providers, it's 1 of the things that we've talked about the debt the ease of use.
Is important and so bringing the the.
For the different <unk>.
First together into 1 product offering in 1 easy or better to understand report reconciled by us.
We think will be really compelling and so we're excited about that but were you know a quarter or 2 of them.
Into next year before we launch, we'll probably be able to talk more about that.
Early next year, yes, and Sanjay the only thing I would add is just referencing the channel I think there has been a little bit of confusion by some.
We'll offer this broadly across our entire oncology footprint across the U S. Not just within the markets that inner mountain served so it will be an opportunity for us to leverage our commercial channel broadly.
Gotcha. That's helpful. And then my follow up is I was wondering if you guys might be able to provide any updates in terms of the progress you're making on the private payer coverage side for gene side, great to see a nice rebound there in that business just kind of.
Curious what.
What kind of progress you've made.
Nothing material to report we've had some of recent successes a couple of blues plans.
But again I think embedded in our sequential results here that we are we are making progress.
Across the provider community, particularly with primary care folks of nurse practitioners, who in the context of the mental health crisis in America are really looking for solutions like this and so.
We're excited to be part of the answer to that mental health crisis and for the team continues to make progress with several payers and we have some new evidentiary.
Endpoints that we'll talk about next year in terms of some studies, which I think will accelerate that use but we're seeing broadly a lot of excitement about gene site.
From all from all aspects of our business.
Great. Thank you.
Sure. Thank you.
So again for questions. It's 1 for on your telephone. Our next question is from Andrew Cooper with Raymond James. Please go ahead.
Hey, thanks for the anyway.
I guess maybe first.
Kind of into the Nitty gritty of little bit on the P&L, but also at a higher level. The $13 million you called out in terms of improved collections you you've talked a lot about making changes in the revenue cycle is there something we should think about being sort of sustainable here is there a change to how you think about what you accrue and how do we think about these rev cycle.
<unk> starting the are continuing to flow through the model continuing to flow through the top line and then eventually sort of getting lap just help me think about what the trajectory and benefit from that looks like beyond just to keep that I guess is the question yeah sure. Thanks, Andrew I'll take the question.
Yeah, I think the the the answer is that we would expect to see ongoing positive impact from the initiatives that we've launched around our revenue cycle. We've been I think we've provided some data on the slide that showed you know for millions of of positive impact in the December quarter, and $13 million last quarter and 13 million of this quarter.
And so we expect that you know.
There'll be some portion of that maybe not 13 million, but some portion of that debt will add.
Absolutely be ongoing and recurring and where it ultimately impacts our accrual process in our accrual of cycle. As you know, there's there's a bit of of tail on this in terms of you know as you showed and demonstrated experience relative to the sales the collection, but I think broadly what I would say is yes.
It gives us a lot of confidence as we think about our 3% to 5% sort of price decline that we've talked about over the next couple of years in terms of the success that we've had and I think we will continue to have as the project continues I mean, we're really kind of in the early innings of it yes relatively speaking and would expect to continue to see improve.
Moving over time.
Okay, Great and maybe just you know.
The follow up.
Thinking about the commentary around seasonality around potential COVID-19 impact is there any flavor you can give us for for what the month of July has looked like in terms of has there been any pressure in the back 2 weeks or anything like that to think about it.
Just in terms of the pandemic impact.
Nothing particular to the call out just feels like everyone. We're anxious about what's happening in America today and we.
And we've got to take some extra precautions, even if we were sort of moving to a hybrid model and but you know in July.
In August for vacation times, and people are getting out and.
So that's that's our normal seasonality and I think we should all be cautious about.
The Delta variant and how it plays out over the next several months and so that's really all we we wanted to remind investors. This is our seasonally softest quarter.
And you know we've got a real crisis going on in America today that we should be mindful of in terms of expectations.
Okay, Great I'll stop there I appreciate the question.
Thank you.
Next question is from Mac Sykes with Goldman Sachs and that line is open.
Hi, Mark Brian Thanks for taking my question how are you doing.
I'm, just sort of a high level question. So the.
The growth of gene site was impressive and obviously as you pointed out the first 1 to really start to see benefits from your commercial approach.
How easily can we extrapolate the changes you made in the commercial approach of gene side for the other areas are there certain parts of the gene type market or that mental health market that might not be easily extrapolated in terms of your commercial changes that you'll make in the women's health oncology or can we read success. There is something that it's just a matter of time as you roll that out into other areas.
Yeah, I'm not sure if I extrapolate the 22% growth.
For Matt.
<unk> talked about this several weeks ago, we're very excited that our team is embracing change that are settled.
Dislocation around sales territories and all of that is behind us the <unk>.
Policy of women's health teams were in this week actually for business reviews, and meeting with the sales managers people, we're fired up we're winning customers back.
We had loss were winning new customers and we're just starting to roll out the segmentation work. The Bain is helping to facilitate so again, the mental health business had as of <unk>.
All of quarters ahead.
And as we had committed to that.
We believed and debt we were gonna be able to manage through this change.
Without significant disruption and that's kind of what happened has happened at the same time, we've become more productive in our customer acquisition costs are dropping which allows us to invest in more digital tools. So we.
We do expect that debt.
Debt, particularly in the women's health group, but even in the very competitive oncology space that we will continue to gain traction in the back half of the year in terms of growth that will continue to see growth in hereditary cancer.
We're very excited about the the early progress and tumor profiling and the new offerings. There that we just spoke about a couple of minutes ago. So as you and I and Brian spoke about several weeks ago.
We do think building the slot book platform and now extending it over the entire enterprise.
We will prove to be successful and accelerate growth in the second half of the year and again, none of these things that we're doing are novel and an American business. The other things that of other companies have been doing for a long time.
Our team is embracing those changes.
Thanks for that detail Paul and then just quickly just you know a good quarter for my choice CTX can you just talk about the volume trends, there and what's driving that.
Well, we've had tremendous success in Japan in particular their book.
Mitra I see the acts as a really differentiated product and again it'll help our.
Our combined offering our tumor profiling and Germline tests that we were talking about earlier that that's a big piece of why that we think that'll be differentiated.
And.
We're really starting to think about new opportunities for my choice <unk> and other companion diagnostics and in focused areas. So we would expect to the.
We will be talking more about opportunities of companion diagnostics.
The next year.
Thanks, very much guys.
Yeah.
Next question is from Derik de Bruin with Bank of America. Please go ahead.
Hi, Good afternoon. This is John on for Derek and I wanted to ask.
About the gross margins as as you guys have completed 2 of the divestitures and as they look to.
See the other day the divestiture of happening in the next couple of months, how how should we think about the.
The gross margins going forward.
Yeah. Thanks for the question I think I would I would.
Highlight the forward look that we gave in terms of improvement of gross margins of 100 of 150 basis points over time takes into account. The fact that we would be divesting those businesses, which for the most part we're at lower gross margin rates than our core.
So that sort of factored in there I don't know that there is a lot more than I could add we were happy with the <unk>.
70 basis point improvement that we saw in the current quarter sequentially, but that really only.
Impact was impacted by the my past acquisition, which our divestiture, which was relatively small, but but I think in general I just think of it as still being on that trajectory of 100 of 150 basis point improvement over time.
Gotcha Gotcha Gotcha and then.
Yes. This the new my risk with the risk score that that sounds like good news, but in terms of the impact on the hereditary testing demand is there anything material of that.
We should note.
Yeah look I think.
As we've talked about previously.
My risk is 1 of the most accurate products in the marketplace my risk with risk score for all ancestors really differentiates the product and gives as we've talked about all women insights into their risk around breast cancer and so this is really about an enhanced market positioning for my risk.
Which you get risk score for all ancestors with my risk.
And.
It's another tool.
Or arrow in the quiver of our sales force to grow hereditary cancer, and we believe it's going to be an important 1.
And accelerate growth in the back half of the year going into next year. It just further differentiate.
Well the score and provides.
Socially of a.
The response of an answer to making genetic testing in precision medicine available to people of all ancestor. It's not just people of eastern European descent. So that just broadens the the.
Field of play for US if you will and rightly so.
Gotcha. Thank you.
Sure.
Next question is from Jack Meehan with Nephron Research. Please go ahead.
Thank you good afternoon.
I was hoping Brian you could break out of the $13 million of out of period sales how much were in hereditary cancer testing and do you think this $86 million is a good number to grow off of moving forward.
Yeah. Thanks, Jack Yeah, Let me give you a little bit of the detail in the out of out of period. So of the 13 I would sort of characterize it as about 6 was related to hereditary cancer.
Route 5 was related to prenatal and about 1 was related to gene side. There's some rounding in there doesn't come right to the 13, but but as I said earlier on the call I think there is some portion of the.
Yeah. The 13 that is sustainable because we're continuing to make improvements in our process and we would expect to continue to make progress over the back half of the year I don't I don't know that I would say that it would all.
The recurring and in terms of the the entirety of the 13th so so.
Somewhere between 80 and 86, if I were to use the math I'm, giving you is would probably be the the right way to think about it.
And just looking at the aggregate hereditary number.
If I look back 2 years ago in the June quarter put up a $119 million of sales of $86 million. This year, obviously encompasses the pandemic period.
Do you think that this business has started to level off and can grow or you know is there.
Some other theme at play.
Yeah, I think I think so absolutely and that's what we said it would do I mean, I think if you look back at 2019, especially this quarter I think we were still in the midst of some of the reset relative to pricing and what we've said is that we've now sort of seeing stabilization in our sort of average ASP.
It's certainly been supported by collections, but I think with stable pricing and then that that hereditary cancer volume grammar number grew about 7% to 8% in the quarter in both cross women's health in oncology I think that's evidence of the fact that the business can grow from here.
Look the only thing I would add Jack is is.
We were even more confident in the numbers, we talked about the investor day, our ability to grow.
Top line, 8% to 10% Inc.
Clues of of continued pricing declines of 3 to 5 per cent and our ability to improve gross margins and manage our opex and there's tremendous leverage in our operating model and now we're at a point of inflection that quite frankly are ahead of schedule that we can really turn our attention to accelerating.
<unk> and R&D new products.
All of the things that we would hope to do to accelerate growth even beyond the 8% to 10%, but we are.
We absolutely believe that we can continue to grow hereditary cancer and our other products within the product categories and meet those objectives that we set out.
Great.
Mind me asking 1 more question on hereditary.
I'm sure we'll see when the 10-Q comes it seems like you've been putting up kind of steady growth in international markets. This has been something you've talked about for a long time as an opportunity, but it seems like you know over the last year or so it's finally really started to kick in can you just elaborate on what geographies you think or.
This is resonating and how much durability of that trend has.
It's principally Japan, but we're excited about the repositioning of our international operations, we see more opportunities.
An increasing more opportunities with more pharma partnerships. So again.
It's all part of the overall opportunities, we see with Polaris and kind of at our other.
Other products as well, the where we're making great traction so.
Again, we're excited about our future where we are.
We have reset our base of operations.
And I think we've demonstrated the ability to drive from the top of the bottom line.
The growth and profitability and as Bryan talked about were.
Debt free.
Generating cash flow, we're going to end up the year with the with a lot of dry powder to invest going into next year.
You can do the math in terms of its 4 to $5 per share potentially so we've got lots of the excited about.
Thank you Paul.
Thanks, Jeff.
Yeah.
No further questions from the phones.
Yes.
Alright.
Well. Thank you for our this concludes our earnings call a replay will be available via webcast on our website for 1 week and thank you again for joining us this afternoon.
Thanks, everyone I appreciate the support and participation today and again, a big shout out to our teammates who really made this quarter happened. So thank you all for listening in today.
And that does conclude our call for today, we thank everyone for participating and you may now disconnect.
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