Q2 2021 Sema4 Holdings Corp Earnings Call
[music].
Good afternoon. Thank you for standing by and welcome to the FEMA for second quarter 2021 earnings Conference call. At this time all participant lines are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone to withdraw question press the pound key.
Please be advised that today's conference is being recorded if you require any operator assistance press Star Zero I would now like to hand, the conference over to Vice President of Finance and corporate development, Joel Kaufman, Sir give it to you.
Good afternoon, everyone. Thank you for participating in today's conference call participating for the company today will be Eric shot founder and Chief Executive Officer, Isaac Ro Chief Financial Officer, and Jamey Coffin, President and Chief operating Officer earlier today <unk> released financial results for the second quarter ended June 32000.
21, a copy of the press release is available on the company's website.
Before we begin I would like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095 any statements contained in this call that relate to expectations or predictions of future events results or performance.
Our forward looking statements actual results may vary materially from those expressed or implied in the forward looking statements due to a variety of factors. Additionally, these forward looking statements, particularly our target volume for 2021, and our target revenue for 2023 involve a number of risks and uncertainties and assumptions for a list and descriptions of.
The risks and uncertainties associated with <unk> business. Please refer to the risk factors section of our definitive proxy statement filed with the Securities and Exchange Commission on July <unk> 2021.
We urge you to consider these factors and.
And you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.
During the call we may discuss certain non-GAAP financial measures for reconciliations of non-GAAP measures to GAAP financial measures as well as other information regarding these measures. Please refer to our earnings release and other materials in the Investor Relations section of our website.
This conference call contains time sensitive information and is accurate only as of the live broadcast today August 16, 2021, semaphore disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
That I will turn the call over to Eric.
Thanks, Joel and thanks to everyone joining us this afternoon.
Of course this is a big day for <unk> with our first earnings call as a public independent company.
Company that I can see dove in 2012 inside the Mount Sinai Health system.
Inspired the company's formation was a foundational view that rapid advances in genomics and artificial intelligence along with the exponentially growing oceans of molecular imaging and clinical data could and should be integrated into an information platform able to deliver a broad array of algorithms that when appropriately wired into physician workflow.
<unk> provides state of the art clinically actionable insights to patients and physicians, allowing them to more efficiently diagnose treat and even prevent disease and maintain wellness.
This vision became my and the company's main mission and today, we are powered by more than 1000 professionals focused on advancing the use of big data advanced artificial intelligence developments in machine learning and probabilistic causal reasoning to deliver better patient outcomes and transform the practice of medicine. Our success is underpinned.
By our access to data and <unk> proprietary health intelligence platform Centrella is one of the largest most comprehensive and fastest growing integrated health information platforms in existence.
Similarly, the software and the machine learning and other artists advanced artificial intelligence learning capabilities built into the software are among the most sophisticated in the world.
At the end of Q2, the platform had access to roughly 20 million patients with D identified deep longitudinal clinical records across 12 million of these patients hundreds of thousands of match genomic profiles in more general data assets comprised of more than 35 Petabytes of genomic test comprehensive medical record.
<unk> and among the most relevant life in biomedical science data and the digital universe. These data are organized structured an annotated and curated in a manner that provides easy access and facilitates analysis and reporting by artificial intelligence methods that reside within the centralized platform.
Standing today as an independent company, we're in a strong position having completed a strategic merger with C. M Life Sciences on July 22nd.
Which brought just over $500 million in cash onto the company's balance sheet and transformed our board of directors, adding top active and former life Sciences, Ceos, Cfos and industry experts with the right scale of capital and strategic talent. We are now able to catalyze our efforts organically and inorganically at a level.
That was simply not possible, while a private company inside the Mount Sinai Health system.
We can also now significantly accelerate the pace of investment in people technology and infrastructure required to extend our market leadership position in pursuit of our mission, helping physicians deliver better health outcomes for patients.
From where we sit today and incorporating future investments that Isaac will discuss in a moment, we see a path to $500 million in revenue by 2023 with each sample process that enclitic clinically relevant data to our platform and further informing insights to help physicians and patients make better clinically actionable choices.
Continually feeding the database is what powers our business in the long term earnings potential of <unk> and the.
The last three months alone, we processed more than 70000, non COVID-19 samples and catalog close to four five petabytes of data generating a number of new clinically relevant insights some of which have recently come out in high impact journals, such as clinical cancer research nature of digital medicine, and the journal of the American Med.
<unk> Informatics Association.
Some of which detail our digital phenotyping algorithms and applications to predicting risks of complications from common health course journey, such as pregnancy, where predictions significantly outperformed current standard of care assessments.
Already we have demonstrated patients' willingness to partner with us with over 80% of patients using our diagnostic solutions and patient portal, giving us their IRB approved informed consent to retrieve organize and manage their health records and data in partnership with them.
We have grown the number of patient records to which we have accessed by roughly 100% in the last year and we believe that our robust battle tested platform is ready to scale across an even broader network of partners in the ecosystem.
In fact, Amazon even recently acknowledged centrella is a game changer in terms of its robustness completeness and ability to secure and manage large stores of data while scaling to execute increasingly complex clinical and research workloads on Amazon Web services of.
Of course, our success to date is just the beginning as we grow our already massive data resources, our competitive moat grows stronger increasing the volume of tests patient engagement and system partnerships in a more integrated and holistic way to facilitate the delivery of precision medicine as a standard of care.
All operates like a virtuous cycle, improving the available insights powering better health outcomes and in turn driving more volumes, which of course, we expect to lead to more revenues and more profit for our business.
With the new Implex up capital and we are able to build out our solutions organically and inorganically and extend our footprint importantly, and critically our business model is one of partnership with patients physicians and health systems.
<unk> us to not only help expand the information and data available in the summer for our platform, but to deliver differentiated clinically actionable insights to patients in the context of their care at these health systems.
In fact today, we are highlighting the three new partners. We have brought into the <unk> network. This year Northshore University health system advent health and <unk> health. These deals have expanded our reach to an additional estimated 10 million lives and given us the opportunity to deliver better care at lower costs.
Which is the realization of precision medicine impacting the standard of care across a broad range of practices over the next few years, we expect to partner closely with an increasing number of health systems and to adapt our health intelligence platform to enable these health systems to deliver precision medicine across a broad range of disease categories.
The standard of care.
There are many companies that seek to address various components of our solution. None have been able to why are these components together at scale and in a way that fully engaged as health systems as a help delivery partner.
We have been at this for nearly a decade and did so within one of the leading health systems in the U S, allowing us to design a holistic delivery of precision medicine that produces results. We believe that's what makes US a partner of choice our sophisticated platform draws upon information from many sources from advanced genomic.
Testing solutions to patient electronic medical records and physician notes to hospital records in population health. Among many other large scale sets of data available in the digital universe of data <unk> enables patients and providers to drive differentiated insights in real time that can dramatically improve the standard of care.
It is an incredibly exciting time at time before as we scale up our commercial activities invest in strategic collaborations and actively explore opportunities for inorganic growth, we envision a future where doctors and patients were routinely query our platform of algorithms to help determine the most optimal health course journey person.
<unk> to each individual.
Before I pass this over to Isaac to review, our second quarter financial results I'd like to take a couple of minutes to share. Some examples of some of the <unk> impact on patients that demonstrate the power of the <unk> platform and the new emerging standard of care.
After being diagnosed with stage four lung cancer, one of our patients. The 76 year old woman was offered the current standard of care for this type of cancer platinum based chemotherapy and palliative radiation treatment.
However, after the patient's family saw the second opinion, they locked onto a medical oncologists plugged into the semaphore oncology platform and our whole exome whole transcriptome sequencing solution was carried out and identified that the PDL one pathway was activated in the patients tumor.
Pathway that had not been identified as being in play from the initial characterization carried out on her tumor.
As a result of the insights delivered by the centralized platform in conjunction with a multi disciplinary team. The tumor was reclassified as a stage III b tumor and with PDL, one activated a precision oncology.
Combination treatment approach consisting of Keytruda.
From extra.
Pemex drag and Carboplatin was undertaken after six cycles the patient achieved a solid response with the tumor shrinking by 85% no cancer growth metastasis observed elsewhere with regular monitoring and the patient is again active and living a full life and planning.
For the next five to 10 years plus.
We are excited to deliver these more advanced solutions in partnership with health systems, like <unk> health and our new precision oncology program, we announced with them last week.
Beyond this type of individual patient story, our genomic testing and information platforms demonstrated dramatic advances in patient outcomes.
Population scale.
Consider that with our expanded carrier screening genomic solution. We now routinely identify are greater than fivefold increase rate of carrier couples compared to today's standard of care advocated by professional organizations and large national payers out of all couples tested.
Were these carrier couples are at a 25% or greater risk of transmitting a very severe genetic disorder to their offspring the impact of using our reproductive health genomics solution is a dramatic increase in reproductive health choices reduce incidence of children born with rare genetic disorders, and lower overall healthcare burden.
That's the power of our platform and the potential ahead.
Now going to turn it over to our CFO Isaac Ro.
Thanks, Eric.
And the company in February of this year and it has been an extremely exciting and busy stretch of time.
Enjoyed re engaging with many of you in the investment community already and look forward to continuing the productive dialogue with this audience in the months and quarters to come.
And someone that has followed and analyze this industry and its enormous potential attract some of <unk> since inception, and I'm more excited today than at any other time for the prospects of this business the value of its data and how we can change medicine here.
Here are a few anecdotes that underpinned my excitement.
We have one of the largest and most advanced mgs based clinical testing capabilities anywhere and we are still in the very early days of optimizing our new World class lab in Stanford, Connecticut.
In Q2, we reported nearly 72000 tests, excluding COVID-19, which represents 85% growth year on year across our strategically important areas of reproductive health and oncology.
Second we are still expanding our menu of test menu.
Menu of tests.
In oncology, we grew over 300% year on year in Q2. This business is still less than 5% of our volume today. So we are still in the early days of building out our capabilities and look forward to updating you on these efforts in the coming months.
Thirdly, we have a rapidly scaling ability to partner with leading health systems with a differentiated go to market model.
Finally, our volume momentum is very strong growing 7% sequentially in Q2, excluding COVID-19.
And while the impact of the Covid Delta variant, it's difficult to handicap, we think these core trends underscore our momentum as we gained share signed new partnerships and expand our offerings.
Now turning to our financial results.
Total revenue for the second quarter of 2021 was $46.9 million representing growth of 56% compared to $30.1 million in the second quarter of 2020.
Diagnostic test revenue was $44.8 million in the second quarter of 2021 with up 50% as compared to $29.8 million in the same period prior year.
Of note our Covid testing revenue in Q2 declined by $12 million sequentially versus Q1.
Other revenue totaled $2.1 million in the second quarter of 2021 compared to <unk> 3 million in the second quarter of 2020.
The increase was mainly attributable to growth in collaboration service activities related to our new partnerships with health systems, which have higher margins and we expect this to grow substantially in the years to come.
Cost of services was $49.6 million in the second quarter of 2021, an increase of 36% when compared to $36 million in the same period of 2020.
Cost of services were impacted by one time investments, which include COVID-19 test supply stocking expenses and the rapid build out of lab infrastructure to support continued growth and scale and our testing volumes.
These investments are largely transitory and will enable us to accelerate volume growth, which we view as the most important factor in creating long term value.
This in turn gives us increased confidence in reaching our target of $500 million in revenue in 2023.
Operating expenses for the second quarter of 2021 were $41.9 million up 48% from $28.3 million in the same period prior year.
Overall, the increase in total operating expenses for the quarter were mainly attributable to higher personnel related costs, coupled with professional services related to the merger transaction.
Components of operating expenses are as follows.
Research and development expenses for the quarter were $12 million up 28% when compared to $9.4 million in the second quarter of 2020, driven by an overall increase in depreciation costs of $1.2 million, coupled with the zero point $9 million increase in expenses for reheat reagents laboratory supplies and software.
Sales and marketing expenses were $16.2 million up 87% from $8.7 million in the same period in 2020, due primarily to a $5.4 million increase.
Personnel related expenses from increased head count.
Since the start of Q2, we have increased our sales force and field organization by over 30% the benefits of which we expect to realize in the coming quarters.
General and administrative expenses were $12.8 million, an increase of 58% as compared to $8.1 million in the second quarter of 2020, driven by $1.6 million related to increased head count and $2.8 million for expenses related to the merger transaction.
This has largely been around the build out of our finance Department moving.
Moving down the P&L, we reported <unk> 2021, net loss of $44.8 million compared to net loss of $32.1 million in Q2 of 2020.
Turning to the balance sheet total cash, including cash equivalents was $26.5 million as of June 32021, subsequent to the close of the quarter, we received roughly $510 million in net proceeds associated with the business combination with <unk> life Sciences.
Given the confidence that we have in our growth outlook, we've pulled forward our investments across the organization with the mindset that we want to be unconstrained with regard to driving growth, while maintaining our commitment to providing gold standard levels of patient care as part of our cultural heritage within a premier academic medical system.
This means we are accelerating the evolution of the business to more efficient scalable and established industry practices with the goal of supporting many millions of patients in dozens of health systems and Biopharma industry partnerships in the years to come.
We also see new opportunities to support operations and forecasting and an increasing scale with the foundation now established for best in class operations. It's the right time to do this the market is fast growing we have the capital we have a reconstituted shareholder base and our brand and capabilities are well established and driving tremendous business momentum while we.
Undergo this evolution. We believe it is most important to focus on volumes and volume growth as the primary metrics with which to evaluate our progress towards our medium and long term company objectives, given the strong trends observed in the first half of 2021, our incremental investments and despite uncertainties around COVID-19. We are excited to share our target for <unk>.
It'll non COVID-19 volume growth in excess of 50% in 2021.
Further this represents sequential growth in excess of 20% in the second half of 2021% versus the first half of 2021, and an implied 54% year on year growth in the second half of 2021 versus the second half of 2020.
Finally to help you with your models, we estimate that COVID-19 testing drove 12% of revenue in Q3 of 2020, 38% of revenue in Q4 of 2020.
24% of revenue in Q1 of 2020 and 8% of revenue in Q2 of 2021.
Going forward the outlook is obviously difficult to handicap and we do expect de Minimis Covid testing volume in the second half of 2021 at this time.
As stated previously we feel that core testing volumes are the best indicators strengthened our business, which does not take into account the impact of any potential M&A transactions, where we do have a deep and actionable pipeline.
Encouraged by our engagements, where our differentiated data platform positions us as a value added acquirer and we are optimistic of being able to reach agreement on at least one transaction in the near future.
As we look to expand our menu and relationships with our health system partners. We believe there is a long runway of significant growth in testing volumes based on strong underlying genetic and oncology testing market growth rates and our continued momentum resulting in share gains we are tracking towards our long term targets in partnership with our health systems.
It is difficult to predict the timing of closing any one prospective health system partnership the level of engagement and excitement and leaves us confident in our ability to announced developments on this front in the coming months. We are in growth mode and looking forward remained committed to driving increased value to all of our stakeholders, including our new and future investors.
Now I'll turn it back to our founder and CEO Erik shot.
Great. Thank you Isaac before we open the call up for any questions I'd like to thank all of our employees and shareholders for their dedication and support that allowed us to complete our initial public offering.
Also want to recognize their performance amidst the COVID-19, pandemic, which required a tremendous re prioritization to assistant supporting patients. We have embarked upon a tremendous journey towards creating data and information based clinically relevant insights to help patients hospitals and therapeutic innovators that has required a.
<unk> amount of energy and investment and we are just beginning to push our technology and capabilities.
<unk> is growing rapidly and we anticipate the pace of growth to flow with innovation adoption and demonstrated success with our partners.
We look forward to keeping the investment community up to date as we progress with our strategic initiatives as a public company.
Now I would like to open the call for any questions operator.
Thank you, ladies and gentlemen, as a reminder, if you would like to ask a question. Please press Star then one on your telephone keypad once again Thats star one to queue for a question.
And our first question will come from the line.
Brandon Couillard with Jefferies.
Hey, Thanks, good afternoon.
Eric maybe just to start off at a high level.
Would you kind of talk about maybe some of the key milestones.
That you would suggest that we monitor in terms of thinking about how the big health system deals are progressing you've added three to date I think you're pretty comfortable with the four.
So right now that you sort of have under the belt, but were just some of the key metrics, we can sort of look at too.
Gauge, how those are progressing and integrating.
Yeah. Thanks, Thanks for that question so of course again, our big focus.
Is is on driving volumes.
Through the genomic testing solutions engaging patients engaging data around those patients and enabling those health systems to deliver precision medicine as a standard of care. So the way we think about.
Success with those health systems.
Number one.
Now how.
To what extent are we penetrating the health systems with respect to genomic testing solutions across a broad array of diseases and conditions from reproductive health.
Oncology to population health to drug safety to rare disorder diagnosis and so on so whats the degree so the degree of uptake of those solutions into standard of care practices throughout the system.
One of the key metrics the amount of data the percentage of data through the system that we're engaging to help inform on the patient care in the context, either in the context of our testing solutions or even completely independently of those solutions.
On guidance, we're delivering back to the system back to physicians in terms of <unk>.
Patient risks and so on.
So it's the the percentage of data in those systems that.
We're routinely managing and engaging.
The other would be the percentage of patients that we're able to engage throughout that system as our solutions get adopted as they spread the number of patients we are engaging in consenting and helping manage information and deliver insights.
Should it should also be growing so.
So just hopefully quickly summarize it.
The adoption of the genomic testing solutions throughout the system.
The degree of uptake and displacement of other vendors.
What's the percentage of data available in the health system.
<unk> access to your <unk> partnership with the health system.
And then what are the.
What percentage of the patients flowing through that health system are we engaging.
Got you and then in terms of M&A you source towards talk about the types of assets that you're most interested in secondary.
Bandwidth management to kind of absorb an asset at a time when youre also.
We focus on making sure that these new health systems.
Because customers are happy and that Youre very hands on in terms of the three.
Yeah for sure so maybe I'll.
Take a stab at that what we're thinking and then maybe jamey can jump in in terms of the ability to absorb.
Yes.
Roll those out so we're clearly in a very fast moving field with opportunity to build out our technology distribution, increasing total addressable market.
And so on.
Increasing expanding the expertise of the team through Aqua hires so all.
So a number of <unk>.
<unk> technologies that we have our eye on in terms of how to fill the gaps to enable better penetration better acceleration and uptake of our solutions into the health system.
So think of broadening again, our portfolio of genomic testing solutions.
So whether it's <unk>.
<unk> biopsy based technologies for oncology or whether it's.
Long read sequencing technologies for better characterization of genomes.
Better management of Commoditized components of information and structuring to achieve scale across many different health systems like those are the kinds of target areas that we're looking at to again fill out the portfolio of genomic testing solutions, but also better facilitate.
Better information partnership and more rapid leveraging of that information for improved insights delivered to patients.
And physicians so those are there.
Those are the some of the areas, we're looking at and our ability.
Again, we have the.
The cash infusion on hand to we think make a number of those kinds of acquisitions and our ability to absorb and integrate into our culture will be driven by a seasoned team that has a long history in delivering complex solutions across the health.
Genomic testing space.
Nick or Jamie I don't know if you have anything.
I would just add Eric.
You said, we brought it onboard.
From this industry is a huge amount of experience integrating into the customer's workflow, which is incredibly important uptake.
Yes.
So.
We're very committed to making sure that we have the best people in front of these health systems and we have to both.
Do the uptake from the physician practice level also but also from the enterprise level.
Distributed.
Good job, although we have a very experienced team including that.
That's and then.
Two part question for you I think.
I appreciate the comment around the $500 million target in 'twenty three does the $360 million target for 'twenty two still stand.
And then secondarily, how should we think about asps.
Moving into next year.
Should we think about.
Another step down in 'twenty, two or perhaps maybe 'twenty. One is at the end of sort of get that dynamic we should expect to see some stabilization.
As oncology becomes a bigger piece of the mix.
Yes. Good questions. Thank you. So let me just start with the framing statement to explain why we are thinking about building. This business. The way we are which is it.
Providing 2021 revenue guidance, because we're focused on volume we think that is by far the most important kpis to measure value creation, because the volumes are going to feed our flywheel. So as you know we've got volumes that we're scaling already at a significant rate and the more we do the more patients that come into our platform to give us data to feed the database.
To build out better algorithms to the future when I joined the company in February I did have a chance to really dig into the business and our long term strategy Super excited about where we are and Eric and I. Both believe that this game will really be about driving volume and data and so those are the metrics that we're solving for is we think about.
The near term and medium term, we can at this point give you.
Revenue guidance in part because there are a bunch of variables at play that could result in meaningful swings on revenue either way that are really related to payer contracts that we think are going to be for the most of our transitory very much something that you see in the industry. When it comes to companies and diagnostic scaling rapidly and becoming more important counterparties to to the payers and as we can.
Go through that and we think that it's still going to be about volume and so.
This really means is that we sell for scaling the franchise.
As we said earlier, we're expecting 20% volume growth sequentially in the second half of this year. So we need to invest for that we need to continue closing on health system partnerships and if we do those things we still think we're going to get to a $500 million of revenue in 2023, so lots of moving parts in this environment, but the trajectory is unchanged.
Okay. Thank you and then in terms of just to address I think on the ASP part of that question.
Just again offer some of <unk> comments I mean, just as a reminder, it's very typical for.
For a lab to renegotiate contracts when the status in the eyes of the payer changes and so in our case, we're moving from a hospital based system to independent.
Are we have made that move and from there to an even larger independent with a national footprint. So we've attempted to get out ahead of them but.
Many of our payer partners to provide as much near term visibility on reimbursement and that said this process takes time and no payer is the same.
So it's reasonable to assume that over time will end up with contracted rates that are in line with our industry peers.
For which we have comparable testing solutions, but that said we do.
Provide very differentiated and advanced products that are <unk>.
Often best in the class and we provide these to physician and patient.
And hope that will garner more favorable reimbursement in those.
In those cases, so we can't say exactly when we expect.
The remaining contracts to be negotiated and where we will see the asps stabilize in some cases, the asp's for a given test.
<unk>.
Likely go up in some cases theyre going to go down like take on the oncology front, where we're working on multi X approvals and so on that should improve our reimbursement, but the exact timing of that is to play.
Playing out now in real time, but we think over the next.
Several quarters will play out.
Got you. Thank you.
Once again to ask a question press star one on your telephone keypad.
And our next question is going to come from the line of Matt <unk> with Goldman Sachs.
Alright, Thanks for taking my questions I appreciate it.
Just maybe first.
How should we think about when you bring on new health system, how should we think about the onboarding process in terms of like duration and timing to get to kind of fully stood up.
And integrated.
Yes.
That's a great question and it's one we're.
Improving upon.
As we bring on additional systems. So initially.
The systems are a big lift in our first partners.
North shore.
System in the greater Chicago land area.
No.
Maybe a year and a half to two years.
Discussions and planning and getting to the right kind of framework agreement.
That.
Handles handles the major operation.
Of the agreements I think IP in scope and so on.
And then you get into statements of work, which are kind of like where do you.
Land and expand in terms of what are the initial problems you're solving.
With the health systems, all of the health systems have the we want precision medicine. The common vision, we want precision medicine as a standard of care, but how they.
The initial projects to kind of motivate that and get some of that in play.
Various so youre working that all out with different consulting teams and so on.
Once you once you hit some of the driver projects so take.
North shore, which is around a genomic health.
Testing solution that can then expand into assessing the risk of different.
Conditions have a patient that maintenance acetate additional genomic testing like heritable cancer.
Testing like once those kind of get in swing, there theyre pretty rapidly adopted and penetrate through the system and then youre going into different.
Other areas beyond that too.
Leveraging that success, so you kind of start seeing.
So it's a year and a half to two years for those early systems too.
Get to an agreement and began delivering some of the solutions for precision medicine than standard of care.
And then.
We expect those expansions to then progress much more rapidly.
Given the earlier successes with subsequent systems coming on we found that we can significantly lower that one five to two year cycle time and getting to an agreement and initial statements of work.
We think 12 months, we're at about the 12 month, Mark now and I think we could probably get that down to nine to 12 months.
For future systems, it's important to note, though that we had initially indicated five systems that $500 million 2023 number was based on five moderate to large sized systems, we've signed four as of today and have several others.
In the Hopper.
We think we'll deliver.
So the aim wasn't to have 100. The aim was five maybe five to 10 and really learn in partnership with the system. How you have to wire the various components together to deliver an effective solution. So we.
Those are a big lift they take a lot of delivery and support teams.
A lot of engagement with different operational and physician workflow aspects of the systems and Thats what were primarily focused on ticket acceleration and penetration of the system with our solutions.
Yes, I'll just add one thing which is it.
I think a little bit about where we are in the health system journey.
A term that Eric uses a lot which is learning based partnerships I mean, these are opportunities where the partners have given us tremendous.
Trust and access and so we want to be respectful of implementation. So I wouldn't expect that there'll be a cookie cutter number for every system. They are all going to a little bit different but so far so good in our first mission is to ensure that that partnership remains collaborative in an extremely.
<unk>, so that's been our the spirit with which we've invested behind these programs and so I just want to come back to.
The earlier question on <unk>.
The outlook for how all this kind of not factored revenue I think it's important to point out that the existing business that we have and we have a tremendous amount of.
Reach both in women's health and increasingly in cancer and the way our contracts are setup with payers. We believe that we are absolutely in a position, where we have healthy relationships and the reimbursement that we get is appropriate and we're not in any way over earning our share of the work we do what we're really talking about doing it growing this.
Business to $500 million in a couple of years doing it largely through health systems and to scale all of that the right way, we want to make sure that we work in partnership both with health systems and payers.
To do that in a way that is.
Consistent with industry's industry best practices, and we're making pretty good progress on all those fronts and we appreciate the support from our investors because it is.
It is a multifaceted lift and we think we're going to have a really compelling run over the next three years.
Great. Thanks for that and just maybe one last one just on the.
Commercial ramp you talked about the increasing head count investments, you're making where do you feel you are right now.
In terms of that investment in head count.
In terms of other what inning are you in or where do you feel you are at right now in terms of the overall book.
Are you.
What do you think about sort of the next six to 12 months you can see commercial ramp up.
Yeah, Great question so.
As we've mentioned in the script, we've got about 1000, plus ftes today to substantial operation in one of the things that really drew me to the components of that thousand people as Eric has been able to assemble a world class team of laboratory and of course in all of the support functions you need to be a public company, but on top of that we've got over 150 computational biologists.
The likes of which I don't think you see elsewhere in the industry until our ability to really lean into these health systems with cutting edge technology, not just test, but also the data science and all of that duration work that you need to do to bring the technology to life in a clinical context, we have that today and I think the marginal investment for us is going to be around the edges. So think about the staff.
<unk> resources, you need to implement and these health systems each of them being a little bit different number one and then number two in the G&A side. The Finance Department as an example, and made tremendous progress over the last six months I don't want to.
Point out that there's more opportunity across the G&A side, which doesn't tend to get a lot of attention and high growth companies, but I think that is going to be absolutely impactful to the operational output that you expect to see from us.
Yes, maybe just quickly to add on top of that.
And the previous response on learning based partnerships.
Like the kind of staffing we're doing today the uptake into these systems.
Precision medicine is standard of care solution does not exist today like it doesn't exist in any company semi for us at the forefront of how do we why are all the components you need.
Why are those together, whether it's the clinical labs, the genomic testing solution for the patient physician engagement.
The data structuring and curation the analytics all of those pieces you need to bring together and you need to learn with the system. The best way to bring those together to support the physician workflows like that that's the game and once we have that figure it out with these five to 10 systems, we're going to scale that to all systems.
But for the for the $2023.500 million number it's focusing learning.
5% to 10 systems and getting getting the uptake good penetration through those systems.
Great. Thank you very much.
Okay.
And at this time I see no further questions. So I will turn the call over to Eric chat with for closing comments.
Okay, well, great well. Thank you again, all for joining us today and for your interest in our progress we remain dedicated to increasing value to all of our stakeholders and keeping you updated on our progress and we'll look forward to that.
Next call in Q3.
Once again, we'd like to thank you for your participation on today's <unk> second quarter 2021 earnings Conference call you may now disconnect.
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