Q1 2022 Fulgent Genetics Inc Earnings Call
Good day and welcome to the Q1 2022 faulting genetics earnings Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to Nicole <unk>. Please go ahead ma'am.
Great. Thanks, Good afternoon, and welcome to the Fulgent Genetics first quarter 2022 financial results conference call on the call today are men Shea Chief Executive Officer.
Paul Kim Chief Financial Officer, Dr. Larry Weiss, Chief Medical Officer, and Brendan pursues Chief commercial officer.
The company's press release discussing its financial results is available in the Investor Relations section of the company's website.
Genetics Dot com, an audio replay of this call will be available shortly after the call concludes.
Visit the Investor Relations section of the company's website to access the audio replay.
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 any forward looking statements are subject to risks uncertainties and changes in circumstances that may cause actual results to differ from those.
<unk> described in the forward looking statements.
The company assumes no obligation to update any of the forward looking statements. It may make today to reflect actual results or changes in expectations.
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.
The company's actual future results may be materially different in what is described in or 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 in these forward looking statements.
And in the company's filings with the Securities and Exchange Commission, including the previously filed 10-K for the year ended December 31, 2021, 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 policies.
Generally accepted in the United States or GAAP management has presented these non-GAAP financial measures because it believes they may 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 results for the first quarter of 2022 for more information.
The description of how the company calculates non-GAAP income and income per share and a reconciliation of these financial measures.
Income and income per share the most directly comparable GAAP financial measures.
That I would now like to turn the call over to Meg.
Okay.
Thank you very much good afternoon.
Thank you for joining our call today to discuss our first quarter 2022 results.
We had a very good start to the year in terms of financial results as well as some exciting strategic announcements.
I will cover some highlights from the quarter before turning the call over to our Chief commercial officer Brendan to discuss.
Products.
And go to a market update.
Dr. Larry Weiss.
An update on our CSI expansion strategy.
And finally, Paul will cover our financial results.
And outlook in detail.
Taking a look at our first quarter results, which again exceeded our guidance for both core and Colgate revenue.
Revenue totaled $320 million.
11%.
359 million in the fourth quarter last year.
And up 27% compared to fourth quarter of 2021.
We delivered approximately three 2 million pets in the quarter.
Up about 31% compared to the fourth quarter of.
2021.
Though down from $3 8 million in the fourth quarter of last year.
The volatility we haven't seen in total revenue is a direct result of the fluctuating demand.
<unk>.
Testing.
Which was again strong in the first quarter, but the same core meaningfully in the second quarter.
Paul will cover the breakdown between our core and the Colgate business in more detail.
But I'll highlight level, our core business have grown 11% year over year to $25 million.
We continue to drive a strong profitability and generate a $4 93 per share and GAAP.
GAAP EPS.
<unk> hundred $88 4 million in operating cash flows in the quarter.
We had a strong start to the year with the fourth quarter results that exceeded our expectations.
At the same time, we're most excited about the strategy update we announced most recently.
This will include acquisition.
Informed diagnosis.
Which.
Clothes itself last week.
And the opening of our new oncology lab in Southern California, which.
Which we announced today.
As the demand environment for coal.
The team continued.
Yeah.
Our team is as much busier than ever we're working on growing the number of initiatives.
And that will drive long term sustainable growth for our core genetic testing business.
Brendan will cover our straight.
Strategy rump inform diagnostic.
I can answer in more detail.
But this acquisition is our largest today.
And create a meaningful expansion opportunities for Fujian <unk>.
Our top line.
<unk> one.
There are multiple compelling strategic benefits of this acquisition.
Including commercial yields and structure and they have built to support a nationwide footprint, which give us a seamless entry point to sell our full suite of forging.
Testing services.
Including newly launched Libre cancer liquid biopsy test.
We have seen this acquisition as highly complementary to our existing test menu and sales force and believe with the investment can drive meaningful retail for our core business over the long term.
The second initiative I would like to highlight is the opening our new oncology focus in southern.
California.
This new lab gives us an opportunity to bring lab and the oncology testing.
Capabilities.
Accord with.
CSI.
To our clients on the West coast.
We look forward to scaling our capabilities.
Cause cancer testing to our west coast customer base.
Dr. <unk>, who has been overseeing the integration of CSI into forging.
You'll also see oversee the operation of this left.
These announcements Mark notable steps forward in our strategy to drive long term sustainable growth in our core genetic testing business.
A key element of success of this strategy is a team of experienced leaders within <unk>.
We are executing on this mission every day.
We helped build a relatively lean, but extremely knowledgeable group of executives and widespread.
Who has become instrumental to our success for execution.
While the team has continued to grow in recent quarters.
It remains a cohesive and a highly effective group of leaders who are able to accomplish what they set out to do.
Our rapid scaling.
Covid testing during the pandemic is a prime example over the determination of our team.
The acquisition.
Integration of CSI.
Yes.
Is another notable proof point of our ability to execute successfully on our merger and acquisition strategy.
I have a high level of confidence that our team, we're able to effectively execute on the integration of uniform diagnostics.
To drive outsized growth in our core business in the year ahead.
We'll continue to look.
Additional M&A opportunities in science technology that could contribute to our long term growth.
We recognize that.
And whether we should cross the health care landscape.
Hi, Kim.
Even more attractive aimed at the recent market volatility.
And it will remain extremely well characterized.
One of these opportunities as they arise.
The future local.
Were bright.
Cogent.
I am very excited about the growing number of opportunities.
Well hard to capitalize on in the near future.
I'll now turn over the call.
Sure Brendan per hour.
Our chief commercial officer.
Brendan.
Thanks, <unk>, we have a lot of great things to talk about today while.
While we saw another wave of COVID-19 in the first quarter, which drove further cash generation, we remain diligent in our efforts to build upon our core business.
And were pleased to recently announced the opening of our new cancer labs, and the acquisition of informed diagnostics.
Starting with the exciting news of our acquisition of informed diagnostics and <unk> diagnostics was founded in 1996 and has grown to be one of the largest national outpatient pathology laboratories in the United States in large part thanks to the rigor of their quality the comprehensiveness of their solution offering and the experience expertise.
And dedication of their professional staff and.
Inform dx brings an expertise in hematopoietic ology anatomic pathology and neuropathology key service areas that complement our vision of becoming a one stop shop for a wide range of health care specialty.
Looking at the anatomic pathology business, we offer products in dermatology Gi urology and breath. Each of these areas have seasoned subspecialty trained pathologist on staff, which is a key differentiator and selling feature the.
The anatomical pathology sales team has approximately 20 sales managers spread throughout the United States and no individual state contribute more than 10% to overall anatomical pathology sale.
We see an immediate opportunity to expand this team to further penetrate the market.
In addition, one of the more exciting areas for US is the ability to cross sell for example, inform Dx had over 600 active Gi clients, which are focal call point for our new liver cancer liquid biopsy test.
While we have built a specialized sales team to call on Herpetologist, and Gis, which I will speak to momentarily, we inform dx sales managers, how these existing relationships and can walk us through the front door in.
In addition, the CSI division has existing client relationships that also sent our anatomical pathology services, which can be cross sold and economically included an existing daily pick up with other heme and surgical work.
Other synergistic sales opportunities to inform the clients include hereditary cancer to their breath client and molecular testing for UTI <unk> clients. These are just some examples and with the speed at which <unk> can launch new products and services, we will be looking at other tests, our account utilized and it makes sense.
We'll be launching those tests to increase our revenue per customer as well as better serve our clients.
On the heme side. This acquisition is a perfect fit for our oncology strategy informed Dx currently has four heme sales reps and we've already started expanding this with the addition of three new hires on the West coast.
With the intention of hiring more we believe our current menu and turnaround time is very competitive and we will continue to launch new <unk> services, such as <unk> and other heme panel.
An additional area of synergy is around managed care contracting inform Dx has done an impressive job obtaining contracts that collectively represent over 300 million covered lives.
These contract layered on top of CSI strengthen our in network coverage in most states. In addition, we believe the combined entity a full jet plus CSI plus inform diagnostics creates a unique multi state laboratory offering and sub specialties that provide an excellent value proposition to me.
Managed care.
Hope to be able to use this to build stronger relationships with existing payers and obtain additional contract and relationship moving forward.
Switching to our new liquid biopsy tests for liver cancer since launching the test late last year, we have made significant progress with our go to market strategy. This includes building out the sales team and that release to drive consumer awareness launching a redesigned website publication of the encore data continued progress in the <unk>.
<unk> clinical trial and Onboarding over 50, new accounts.
<unk> 50, new accounts in this short amount of time is significant we believe this shows enthusiasm for the test and represents execution by our new sales leaders and their team.
The enthusiasm is understandable considering the <unk> has the potential to transform how we screen and diagnose patients for liver cancer, leading to improved patient outcomes.
Changing the way medicine is practiced takes time, but we are excited to see the early momentum we have with our test.
Sure.
Another area of focus moving forward will be to continue to grow our organic core business specifically in pediatric testing.
Fulton has built one of the largest most comprehensive menu for pediatric genetic testing now offering testing for over 5700 condition phenotype with over 19000 test.
And for many of these tests, we are one of if not the only provider in the United States. This has allowed us to build a large national customer base, though we believe there is still work to be done to increase awareness across the customer base.
Over the recent months, we have built an inside sales team who will be deployed to help grow these accounts by focusing on the higher volume tests, such as exome sequencing genome sequencing and neurological panel.
We believe we have the test menu, Pat and quality to drive additional volume for pediatric and rare disease testing.
Over the next several months, we'll be connecting with the customer base and educating them on the full breadth of our services.
And as we bring CSI and inform diagnostic together, we can better serve these clients over time within network managed care contracts.
On the sales team front, we have expanded in a big way, which we said we would do on previous calls we now have a team of over 50 individual segment.
Sub specialty PD.
Pediatric and reproductive health.
Anatomical pathology oncology herpetology and Biopharma. These teams are currently functioning independently to ramp our recent investments and inform diagnostic and CSI, but there are clear synergies across the organization and we are beginning to take steps to cross train and integrate with teams across common platforms. The <unk>.
<unk> efficiency.
Okay.
And just a few quarters, we've been able to transform our business in a big way Fulgent is now one of the largest providers of genetic testing in anatomical pathology services in the United States. We believe our investments have come at the right time and at the right price.
In our setup to see significant growth over the coming years that said, we're still only at the very beginning of our story as we continue to leverage our AI technology and execute on our post COVID-19 strategy that will include additional investments in organic growth M&A and other strategic initiatives we look.
Forward to keeping our investors updated on our progress and we appreciate their support I'll now turn the call over to our Chief Medical Officer, Dr. Larry Weiss Baird. Thanks.
Thanks Brandon.
As you know oncology diagnostic testing is a major strategic area for Fulgent as we focus our efforts on driving long term sustainable growth in our core business.
We executed on our strategy in a meaningful way in August of last year with the purchase of CSI laboratories in Alpharetta, Georgia.
CSI has a strong regional laboratory offering diagnostic services to pathologists client base for both hemoglobin <unk> and surgical pathology using immuno histochemistry flow cytometry, cytogenetics fish and single gene molecular testing.
Using <unk> resources as a model and a source of validation of investments. Our goal was to build a state of the art laboratory on the West coast to offer diagnostic services to an oncologist client base as well as to supplement Csi's test menu with next generation sequencing somatic tumor offerings.
Starting from literally empty walls I am very pleased to announce that we have already been able to build a state of the art laboratory in El Monte, California, which has been clear approved the two labs will be complementary and not strictly duplicative to each other as while our Georgia lab has a pathologist climb.
We base, our new lab lab in El Monte will have a hematologist oncologist customer orientation.
The New laboratory includes about 25000 square feet of wet lab space, including large R&D areas as well as additional dry lab space for analysis and pathologist activities.
Currently able to offer immunohistochemistry flow cytometry, cytogenetics fish and single gene testing, we are actively validating and submitting a suite of next generation sequencing tests for reimbursement approval, including tissue and liquid biopsy tests for both hematology and solid tumor specimens for assessment of tumors.
As well as detection of minimal residual disease.
The new somatic Mgs testing in addition to <unk> current capabilities in Germline Mgs testing will also supplement both CSI and inform Dx is test menu.
As an aside germline testing is already important in breast cancer colon cancer pancreatic cancer pediatric cancer and many others and is included in many consensus guidelines for cancer patients. Our goal is to serve cancer patients and their families at all stages of their disease early as well as late.
And to become a meaningful contributor to revenue by the end of the year.
I will now turn the call over to our Chief Financial Officer, Paul Kim.
Paul Thanks, Larry revenue in the first quarter totaled $320 million compared to $359 million in the first quarter of 2021, while exceeding our original guidance of approximately 245 million billable tests in the quarter totaled $3 2 million compared to $3 8 million in Q1 of last year.
The year over year decline was again due to Covid testing dynamics Bill Conway.
Good morning.
So first quarter created a tremendous demand for COVID-19 testing and early in the quarter.
It off through the end of March and have since returned to much more normalized level breaking down our revenue a bit further roughly $295 million came from COVID-19 testing in Q1, which exceeded our expectations for.
Our revenue from our core business totaled $25 million, which also exceeded our guidance of $22 million and grew 59% year over year.
As a reminder, our core revenue includes our Ngls business contributions from our China JV contribution from CSI.
And it excludes NDS cover testing from the CDC.
Demand for Covid testing remains volatile and unpredictable we continue to take a conservative stance unexpected revenue from Covid testing, we remained focused on executing on our post COVID-19 growth opportunities, which include the integration of <unk> diagnostics expanding the reach of CSI capabilities executing on additional investment and partnership.
Opportunities ongoing work on joint commercialization opportunities and growing the footprint of our international operations.
Our ASP in the first quarter was $99 slightly lower than the 103, we saw in the fourth quarter of last year. Our ASP has remained relatively stable in the last few quarters fluctuating higher and lower as Covid testing evidenced bikes cost per test for the quarter was $24 slightly lower than the $25.
In the fourth quarter of last year due to shoring up reserves and the write off of some excess inventory at year end gross margin was 75, 7% down 370 basis points year over year and up 40 basis points sequentially.
Turning now to operating expenses total GAAP operating expenses were $40 6 million in the first quarter up from $38.
$7 million in the fourth quarter of last year non-GAAP operating expenses totaled $35 5 million up from $34 million last year.
Our operating expenses increased primarily due to ongoing investments and strategic head count across our organization fees and services associated with our heightened M&A activity additional credit losses for preferred provision.
Counts receivable due to the higher revenues in the first quarter, our non-GAAP operating margin increased 280 basis points sequentially to 65.
1%.
Our expense structure remains very lean, enabling us to drive significant profitability from revenue outperformance that being said our investments in people and business integration.
Sure in our operating margins in the near term ultimately we believe these investments will drive outsized future growth for our core business.
We remain pleased with the consistent operating leverage we are able to demonstrate even through M&A.
Adjusted EBITDA for the first quarter was $213 5 million compared to $271 9 million in the first quarter of 2021 on.
On a non-GAAP basis, and excluding equity based compensation expense and intangible asset amortization and income for the quarter was $158 7 million or $5 eight.
Per diluted share on $31 2 million weighted average diluted shares outstanding.
Turning over to the balance sheet. We ended the first quarter was approximately $1 $1 billion in cash cash equivalents in marketable securities. We generated $188 4 million of cash from operations during the quarter further adding to our cash balance.
Now moving onto our outlook, starting with covered revenues as demand for Covid testing continues to taper off we expect to see ongoing declines in our revenue from Covid testing our expectations for <unk> revenue for the full year remain unchanged.
We expect at least $480 million and covered our revenues for the year inclusive of the $295 million. We did in the first quarter, that's breaks out into roughly $85 million in Q2 and $50 million each Q.
Q3, and Q4 <unk>.
Clearly revenue from Covid testing has been hard to predict but volatile spikes and outbreaks. So we remain prudent with our expectations for Covid revenue contribution.
Moving onto our core revenue guidance, which will include contributions from informed diagnostics as the transaction closed on April 26.
We have continued to see strong growth across our organic business, while CF sign inform diagnostics will drive incremental growth.
We expect core revenues will be approximately $180 million in 2022, representing growth of 94% year over year, which was slightly better from the guidance. We provided during the announcement of the acquisition of inform diagnostics only a little over a week ago.
$480 million in core revenue and a $180 million in core revenues. We expect total revenues will be approximately $660 million for the year. We expect there will be continued volatility with COVID-19 testing and remained focused on executing our strategy to drive momentum in our core business.
From a profitability standpoint, we remain focused on investing in our business to drive sustainable long term growth that being said, we expect to see pressure on operating margins in the quarters ahead, as we integrate and further invest resources of our recent acquisition. In addition, our conservative.
<unk> of a dramatic decline in Cobra testing demand will result in lower growth and operating margins relative to the record high margins, we experienced during the Covid crisis long term, our foundational technology platform supports a strong margin profile.
And we will continue to manage our spending with discretion to drive operating leverage for.
For the full year of 2022, utilizing a 28% of tax rate and share count of $32 4 million. We now expect non-GAAP income to be approximately $6 per share for our shareholders, excluding stock based compensation and amortization of intangible assets versus our previous guidance of $7 per share.
Our acquisition of informed diagnostics is accretive from an adjusted EBITDA standpoint, and on a standalone basis. We're also anticipating heightened operating expenses due to integration costs associated with the transaction aggressive investments in our organic business such as the build out and sales ramp of our west coast oncology lab as well as <unk>.
Lower gross margins as the mix of curved pressing decreases in the coming quarters for the second quarter 2022, specifically, we expect total revenues of $125 million, that's breaks down into core revenues of at least $40 million representing growth of 78% year over year and as I had mentioned.
We expect approximately $85 million and Covid testing our updated guidance is posted on our slides on our <unk>.
Investor Relations website, which shows a detailed breakout I just discussed thank you for joining our call today operator, you can open it up for questions.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if youre using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again press star one to ask a question.
And we'll take our first question is from the line of Kevin <unk> with her. Please go ahead. Your line is now open.
Hey, great guys. Thanks for the comprehensive update.
Maybe just can you talk about the continued sales force build out I appreciate the update.
50 reps just kind of.
Really two questions here as we look towards the end of the year, how should we think about.
Margaret either head count number just sort of infrastructure build and then.
With regard to kind of integration.
Of the commercial team is that.
Should we think about that processes is substantiated maturing through the balance of 2022.
2023 and beyond priority.
Yes, I think Kevin as Brendan and the integration is ongoing and a top priority right now.
The acquisitions of CSI and inform diagnostics product meaningful increases in head count across our sales organization. So priority one integrate them into the <unk> system gives them on common platforms get them into default and culture.
We're doing that in a very very rapid fashion that said, while the sales team has grown in a big way, we now have much larger tam than we've ever had before.
The sheer number of call points for some of these new markets, we've been able to enter both through organic expansion as well as M&A is tremendous so I don't think we have a right sized sales team. So to speak I think there is tremendous opportunity for us to continue to increase that but in typical fashion, we will do it in a smart way.
Use the methodology, we've always had a growing responsibly.
But I've said the Tam that we now have is it's a big one and we're looking forward to.
Optimizing productivity out of the existing sales team leveraging leveraging those cross selling opportunities.
The teams coming together to work together to.
Third these clients, but long term.
It's going to continue to grow Kevin.
Yeah, adding brendan's comments.
The.
Currently.
Financial.
<unk>.
Product and service capabilities.
Where are tracking a lot of new sales talent to our organization.
We received a lot of inbound calls.
Ford is our new talent, joining us and that we will make announcements as we continue record retirements during the quarters.
Oh, great. Thanks for that and I appreciate the update on Helio liver.
I guess my question, there, though is really.
What is the most meaningful near term metrics to choose.
Predicts.
Ultimate GL commercial traction I think you called out.
Yes around 50, new accounts.
What's sort of the recurring metric, which we should look for the company's disclosing to you will be able to track progress there.
That's a good question, Kevin as I mentioned on the call. We're trying to change the way the collision commissions practice medicine and especially in the.
The hematology space for liver cancer, there's been no change in the way medicine has been practiced in a very long time right. So they have their protocols and procedures now we know the test that we have.
It is a big improvement over the standard of care.
That doesn't make it that much easier to change their thought process. So they have to hear it a lot. So we're proud of the fact that we've owned more than 50, new accounts and Thats kind of what we're tracking right now.
Think near term, meaning sort of quarter to the next few quarters I would like to see us begin to sort of track volume in utility.
And maybe more importantly, the volume would be the.
The the positivity rate right.
We know in early data so far we.
We have detected liver cancer that was going myth undiagnosed by standard of care. So I think going forward, we want to check volume and we want to track the utility of the test by tracking the positivity rate, where ultrasound myths and early stage without a cellular carcinoma.
Yes.
Kevin adding on the Brendan's comment this.
Oncology centers the physicians they do recognize that this is liquid test they too recognize the or where are in the leading position to provide that.
<unk> technologies and <unk>.
But.
Kenzo screens so.
Even though we see the product traction from dispositions in terms of the liquid biopsy test.
Also were interested though.
Our full suite of forging.
So the products and service offerings at <unk>, where we're a good entry point for this.
Physicians to explore our products and services and that will provide one stop.
Shopping for their test the selections.
That's great. Thank you I'll get back into queue. Thank you.
Thank you Kevin.
We will take our next question from the line of David Western Bank. Please go ahead. Your line is now open.
Hi, Thanks for the question questions and congrats on some good numbers here.
There is a lot lot earnings billing onto sorry, if I if I missed this but it looks like on the guide you added $5 million just in the last two weeks, which is pretty impressive on the core business kind of can you walk us through the difference did you find maybe inform us doing more revenue than you anticipated or is it may be heating up a business.
Trends that that just you saw in the last two weeks.
Yeah. So.
Thank you for taking notice that we raised our guidance even within the course of a week.
The reason why we guided higher and the strength of our overall core business. It has nothing to do with informed diagnostics.
Because the outperformance that we had was for the first quarter we.
Anticipated that we would do about $22 million of revenues during the quarter, even with <unk> and everything that was going on the actual numbers came in a little bit north of $25 million.
If you combine the momentum that we're seeing within our core business.
In addition to the contribution from inform Dx, but we feel very comfortable with achieving at least $180 million of core revenues and this year.
Got it I appreciate it and Paul I got.
Another one for you you mentioned some commentary around Asps going down with a decrease in COVID-19 testing relative to your prior guidance.
Can you talk walk us through maybe quantitatively what we're looking at in terms of.
The gross margins.
In the subsequent quarters.
In Q2, Q2s and Q3s.
Think of it as being maybe Covid lights, I wouldn't think any impact there, but just walk us can you walk us through on kind of the <unk>.
New implied gross margin impacts.
Sure.
So I'll.
I'll talk about growth as well as operating margins. So we made a very conservative assumption about COVID-19 testing demand because quite frankly, nobody can predict what the virus is going to do so we're anticipating in Q2, Q3, and Q4, a drastic drop off in <unk>.
<unk> terms of Covid testing demand, we're also making assumptions about a greater mix coming from our core part of our business.
And the other thing that we're also doing is we're investing heavily into our operations our facility we announced.
The opening of the oncology lab that is just one example, so when you combine the conservative assumptions and the mix changes were anticipating that gross margins to be at our historical levels of between 50 and 60% dip.
Depending on which quarter youre looking at and if.
If we have higher COVID-19 revenues because of the scale, our gross margins everything being equal will slightly be higher.
Thus the gross margins and then as far as the operating line terms I talked about the heavy investments that we're making in our facilities. We're also making capital investments, we're making investments in people.
Arthur.
Of the company.
Because of the foundation technology that we have now within operating expenses.
We anticipate an increase in.
R&D spending, but proportionately less because the foundation technology that we have so much efficiency and leverage behind it where we do believe we're going to be having the highest amount of operating expenses is in sales and marketing brand and talked about the size of the sales organization. They made some commentaries and sale.
And marketing Youre going to see heavy investments that we're going to be making.
By hiring just a wide set of people because based on the acquisitions that are enhanced capabilities. We can address a much wider market. We believe that we're in a position with.
The foundational technology, which really gives us the leverage and the performance of making these aggressive investments doing M&A also having a stock buyback program. All of these things, we believe will enhance shareholder value.
Yes.
Got it no. Thank you very much and actually Thats a good segway to my my last question here on M&A.
Can you talk about maybe some of the timing in terms of M&A or do you anticipate doing it this year and you mentioned the stock buyback program. I mean is there kind of an expiration date on make an acquisition, where you maybe move too.
Stock buybacks I mean, how do we think about capital deployment from here on out recognizing that inform diagnostics really only was $170 million in your near $1 billion in cash.
I'll make a few commentary and I'll turn it over to Mandy, who can talk about the philosophy of enhancing shareholder value.
Believe that all of these options that we have opened for us gives us a unique opportunity to address the market to set the pacing for the marketplace as to how we want to be able to penetrate certain spaces. It gives us the flexibility to hire people and invest in our business.
And Oh by the way if you take a look at the M&A landscape. The valuations of the assets that we have been paying attention to they are all coming in.
Aligning themselves to business prospects and what we're willing to pay so from an approach standpoint, we think that we're going to be 50 year than ever and the success that we're seeing in the synergies is actually getting the team more excited about engage or some of these targets, but I'll turn it over to min, who can talk about the.
Usage of our cash the philosophy behind M&A in our investments organically.
Alright. Thank you Paul Thank you David for the <unk>.
I think.
As in.
In mind paraquat during the discussion I'll focus on the science and technology.
We do believe <unk> has tremendous benefit.
India is a market with our existing team for the AI technology, we want to be the leader in this area that becomes the forefront of the digital pathology using the AI technology, we have.
Accumulative fiber our existing.
Teams for the year.
We will also focus on the other adjacent areas in the science and technology will give us much much bigger.
Baker, a differentiator for us using.
Our platform.
Insurance Payors infrastructure nationalists sales team to tenancies even further.
Distinct from the currently competitors competing elevating us to a new level and the premium generator that her attractive gross margins.
And for our shareholders.
Thank you ma'am, thank you Paul.
Great job on the quarter.
Thank you Dave Thanks, David.
Once again, if you'd like to ask a question. Please press star one.
At this time there are no. Further question. This concludes today's call. Thank you for your participation you may now disconnect.