Q1 2022 Invitae Corp Earnings Call
I think in general.
And administrative other income expense net as well as net loss and net loss per share in cash burn.
GAAP operating results as applicable among other items amortization of acquired intangible assets acquisition related stock based compensation post combination expense related to the acceleration of equity grants or bonus payments in connection with the Companys business combination adjustments to the fair value of certain acquisition related.
And liabilities, including contingent consideration and acquisition related income tax benefit.
And we exclude changes in marketable securities from our non-GAAP cash burn.
We encourage you to review our GAAP to non-GAAP reconciliations, which are available in the press release and in the appendix of the earnings slide deck, both of which you can access by the <unk>.
Company's web site at IR Dot <unk> dot com with that I will turn the call over to Sean.
Thank you Jack and good afternoon. Some press release, we are clearly.
A period in our economy.
Yeah.
On the demands that we as a company.
While simultaneously driving operational efficiency and optimize portfolio management for <unk>.
Business.
At the same time, the clinical and patient community that we serve to better inform their care.
Aggressively.
Pursuing our differentiated approach to an important and relevant mission has driven greater marketplace.
I know.
Our business is now at a scale with a full suite of technologies.
So we can tackle both operations.
Tom and growth demands simultaneously.
<unk> patient visits in our queue.
Q1 revenue grew by nearly 20% year over year.
While we started on the low end of the plan for the year, we have seen.
In the quarter.
Sure.
Number of product and service improvements.
In addition to new capabilities launched throughout the year.
We have been picking up the pace and new product introductions and our key efforts here will support accelerated growth throughout the year as we continue to take advantage of expanding <unk> and.
And winning in very large markets, while we create a new industrial category in which we are uniquely suited to women.
Additionally, our broad portfolio of crossing Vijay platform convey as an advantage.
With technology and clinical trials.
This is important as we have communicated over the past few quarters that we are exiting the era.
Yes.
The one where we manage the top middle and bottom line targets to the sustainability of our model.
And to that end this quarter, Mark a very important inflection for MBS.
As we communicated on our year end call. The company has hit a peak in this cash burn analysis and increased trajectory of burn reduction ahead.
And this quarter, we reduced our annual operating burn by over $100 million and we see a path to accelerate the efforts there in.
There is resolution across the organic.
Organization to execute and also of course, where necessary to ensure this acceleration.
Collectively that means we are ramping up our initiatives around driving higher margin growth containing.
Containing and reducing operating expenses priority.
Beyond.
Alright.
We will drive operating leverage while driving.
Customer base.
This unique case.
And our position in the day to execute on our vision.
For personal health information.
I'll now hand, the call over to Roxanne.
Walk us through the details.
Paul will discuss non-GAAP numbers.
As we've noted in prior quarters.
Nathan financial by providing that.
Comparison of the two sets of numbers with RC investors to review the detailed reconciliation.
Today's press release and at the back of this buyback.
In the first quarter of 2022, which generated approximately $124 million top line.
And the revenue breakdown was as follows.
Proximately 70.
And companion diagnostics.
Representing a 11% growth over prior year.
$5 million from our women's health offerings.
Putting on Ips area and the other reproductive tests, a 39% growth over last year.
Good morning.
<unk>.
And other testing hovering Hardy neuro newborn screening and pharmacokinetics of 35% growth over prior year.
Data on platform revenue was approximately $11 million grew 16% over last year.
Data management analytics.
Data as a service and certain Biopharma programs.
Moving down the P&L, both operating expenses and cash burn outperformed our annual operating plan for the quarter signaling the beginning of the shift we discussed on our year end call.
The flat, establishing a breaking trend and the inflection in span across a complex business has been having much.
By doing follow has become a principle parody at every level of the organization, where engraving that effort into the culture of the company and providing the tools necessary to track hub.
And drive decision, making in real time to assure control and our ability to make the inflection become the trends.
So this year's first quarter non-GAAP gross profit was $45 million, which translates to a non-GAAP gross margin of 36, 6%.
<unk> increased from Q4, 'twenty, one with early signs of stabilization and encouraging increases as we exited the period with.
We're still on track to post steady improvements throughout the year.
non-GAAP operating expenses were $209 million.
169% of revenue compared to $155 million or 150% of revenue in prior year and $216 million or 171% of our revenue in the fourth quarter. The operating expenses include costs from acquired businesses.
As we stated on earlier calls the rate of growth in spending will come down in 2022, we are committed to this goal as we scale the business and manage return on investment at the total portfolio level.
Moving to our cash position cash cash equivalents restricted cash and marketable securities totaled $885 million at March 31, 2022, compared to 1.06 billion at December 31 2021.
Cash burn in the first quarter of this year was $169 million compared to $196 million in Q4 'twenty one.
That represented a sequential drop of more than $26 million.
<unk> on a quarterly basis.
We're over $100 million in annual run rate.
Good start on Hayden our goal of lowering the overall burn by more than $200 million in 2022.
Trailing into operating expenses and cash burn as Sean pointed out we are at the inflection point.
Due to the internal and external market conditions, and the cost of capital and our fundamental commitment to creating a new kind of company a personal health information company, we're already well into a series of changes designed to extend our current runway and accelerate our pathway to cash flow and.
From an assay markets.
Those moves include <unk>.
Recent organizational changes and <unk> eliminated retirement programs in certain positions.
Aside from stock based compensation, we plan to hold operating expenses at a stable level.
<unk> will do more with less and we have the talent and plan to do so.
We are engaged in a portfolio optimization process that will generate opportunities to further focus our capital allocation on programs with our most impactful near term strategic benefits and the highest level of returns over the development plans in new clinical content areas.
In order to drive high margin near term.
Growth, while pushing out elements that will not be productive in the coming eight quarters.
Mind you. This aspect of our business is a critical part of our future and the huge differentiator at in detail.
As we navigate this environment.
The decision to make these moves and the discipline to execute on them is our use of cash in Chris.
Sorry wrong way through 2023 or beyond and allow for numerous options as it relates to shoring up the balance sheet and bridging the gap between the rapidly growing burden of the past two years through the decreases we posted in Q1 to cash flow positive territory in 2025.
Now stepping to the business metrics, we unveiled last quarter in order to communicate operational and financial measures that accurately describe progress tradeoffs and return on investment.
Our objective in sharing these metrics is to offer more transparency into a dynamic fast changing business and to provide consistent balanced perspective on performance.
And the portfolio grow our active accounts and access partners. Both continued our growth momentum in Q1 and served in a number of them who are available to share that data have also expanded steady growth from 51%.
64% in 2021.
Hi.
However, in the first quarter, we saw pullback in that number to 50%.
Voting from slowdown in new product launches in 2020.
Our top 2021, primarily due to COVID-19 disruption.
As Sean mentioned, we have a number of product launches either going on now or planned for the remainder of the year, which we expect to improve that metric throughout the year.
Revenue per patients measured by total platform revenue here yet dropped from.
$176 in Q4, 'twenty one to 400.
2022, primarily.
Really driven by product mix that favored lower priced testing product line.
Moving to operational excellence and non-GAAP gross margins have a ways.
To bow as we map our steady return towards the long term goal of 50%. The entire team is focused on this goal and we have communicated to our investors that margin improvement will take place throughout the year and as our initiatives start paying dividends.
Also aiding in uplift in 2022 and beyond will be the contribution from our higher margin products as we become more meaningful to our overall growth.
Variable cost productivity measures the efficiency all variable cost relative to volume growth in the period and it's important to note that negative numbers in that metric represents favorable productivity while business in the area that is impacted by a number of outside and micro factors such as price.
Increases in supply chain inefficiencies that you see across industries, we managed to continue to deliver favorable productivity in Q1.
Our cost initiatives continued growth and the increasingly meaningful impacts from our higher margin products will be central to continued our cash burn reduction effort.
On the strategic investment from the trend in R&D as a percent of revenue reflects continued strategic investment to fuel our growth ambitions and capabilities and that the impact of these investments should be demonstrated in our topline growth and new product vitality metric over time.
That said, we expect R&D investment as a percent of our revenue to come down as we continue to grow while actively up prioritizing programs and rationalizing our portfolio.
The capital used in M&A, we were not active in the first quarter.
Regarding guidance and our outlook for the year.
For revenue, we expect the need Q2 to grow between 15% to 20% over the prior quarter and we will need to repeat that pattern in the second half exiting the year on an annual run rate in the area of $800 million.
We have planned for a significant lift in the second half of the year.
Based on our revenue exit from Q1, our sales force expansion showing early traction and a number of new product launches. This is doable.
For gross margin, we continue to anticipate a steady increase over the course of 2022 for a full year gross margin to be in the range of 42% to 45% and exiting the year at a run rate higher than 45%.
On cash burn we had a good start in Q1 with annualized reduction of more than $100 million.
While much of this targets tied to the revenue and margin profile for the year.
We are deploying additional measures to decrease faster hit our 2022 Boes push our cash runway well into 2023 and generating cash flow in 2025.
Now I will turn the call back over to Sean to wrap up our prepared remarks, Sean thank.
Thank you Rajeev.
When we started this company a little over 10 years ago, essentially nobody was benefiting from genomic information in their day to day health and wellness.
10 years from now almost everyone though.
Current market environment. Notwithstanding this is the most exciting time in the most exciting industry transition of our time.
This is also one of the most challenging macro and sector environments, we have faced as externalities forced us to tip the scales of growth and profitability towards bladder.
We recognize the extremely negative sentiments in the capital markets and we know what is needed to extend our runway and get to a position of capital independence.
Even as we continue to plot a course to the creation of a new important category and technology meets health care to the benefit of all.
I want to especially thank our teammates and the investors who have been with us for years and who continue to carry on with the important work we are doing.
For many of US. This is so much more than an idea hey, John or.
<unk> investment for a return.
For many of us.
This is our life's work.
This is the future of medicine, and I extend a hearty invitation for anyone non ball to get onboard and be a part of this story.
With that I will now turn the call over to the operator for Q&A.
Thank you we will.
Now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the case.
If any time your question has been addressed and you would like to withdraw your question.
Chris Please press Star then Kay.
Our first question today.
Comes from Daniel Brennan of Cowen.
Daniel Please go ahead.
Great. Thank you. Thank you for taking the questions guys.
Maybe the first one would just be on.
I wanted to ask a question about the long term given a lot of the color you gave there but just on 2022, given where you started the year you talked about the exit rate kind of can you give us a sense of maybe more granularity on what the exit rate wise or anything that will give us confidence in the ability to kind of hit the full year numbers. Given you started the year off below both on the top line the gross.
And even though the burn looks good.
Annualized to burn it still looks like it might come up a little short maybe just some more color on that front and kind of what youre, saying.
Yes sure Dan.
Again, the important thing a few quarters ago, we told people, we werent pursuing growth at all costs anymore, we began.
Taking a look at the business, taking a look at rationalizing our spend.
Charting a course to managing top middle and bottom with pretty aggressive burn reduction for 2022.
Now of course, we are.
We're doubling down and making sure that we have the cash to get into the end of 2023 or beyond.
And so then the first quarter, which as I mentioned was on the lower end of our plan.
I think thats the source of the question.
No we wont, we wont break out specifically kind of inflection point.
January February March what March looks like but just suffice to say that the exit momentum was positive we were happy to see that.
Both on both on kind of the both on the revenue and.
And the margin.
And really now are looking.
If we look at our plan for the year. It is backend weighted that's not particularly unusual from retail, particularly in years of adding sales reps and launching new products.
And we're really now looking at 15% to 20% left for Q2 to keep us on track.
Okay.
Maybe maybe a second question would just be then on.
You talked a lot about.
A better pathway towards free cash flow I guess in 2025 and operating basis.
A lot of commentary about kind of our premium programs being really focused on with our high ROI was Jordan that contract is 40% the right way to think about the long term trajectory of the business, obviously, you've talked about how big the opportunity is but at the same time can.
Can you really balance that kind of topline growth. If in fact, you are managing the cost structure as tightly as youre going to be.
Yes.
Yes.
Looking to 2025 driving to driving our cash a positive territory.
Just a reminder, that kind of was the middle of last year. The team side as we look out to the year as we start pushing past 5 billion billion. Because you can move into 2 billion revenue, we think it warrants.
Our plan to get the company to cash flow positive territory by the time, we get there now now of course the.
Extending kind of the continued extension of our extremely.
Negative capital markets environment.
Okay.
Has us doubling down and just and just making sure everybody understands where our head is.
Is it extending our cash runway is a top priority we have a really flexible platform. We've got a broad set of products, we can trim and Taylor investment in R&D.
Depending on the time horizon needed in right now.
We're looking at things that are generating your ultimately strategic.
Important to carry on the mission and really focusing on near term gross profit gross profit generation.
With that said.
This is this is this last six months of the first time ever we've been running the business not just for top line at all costs.
And there is improvements we've made all the all of the efforts Roxy laid out are all in play.
And we believe we've got a plan to execute those and continue to meet the 40% growth for the foreseeable future year over year.
Yeah.
Great and then maybe if I could just maybe go with one more and I'll go back in the queue.
What's the plan.
On the 2004 it converts.
Good morning is there a plan to refinance those sooner rather than later, how do we think about kind of I know, it's still out there a ways, but how do we think about the timing at which you might look to do something with those.
And then thank you for the question. So I think we are.
<unk> discussed at the year end call. We continued to have a very strong balance sheet and we do recognize the market condition is volatile and.
We have a lot of interest parties on folks continue to have conversations with us.
So we will find the most opportune time and.
Comstock.
Two.
We move those over.
Overall kind of overhang on our balance sheet and so that our investor.
Community can focus on the growth and then that's really exciting business building.
Great. Okay. Thank you I'll get back into queue.
Thank you Danielle we now have Peter Freeman of Morgan Stanley . Please go ahead your line.
Hey, guys good evening.
Sean maybe just to sort of picking up on Dan's threat there on the backend loading implied by the guide.
And your <unk> performance here is there any way you can quantify for us how much sort of <unk> sort of disrupted the first quarter.
And then sort of on a related note I have a follow up on the pipeline as well, but maybe we'll start with omicron headwinds that you saw in January and perhaps some color on the month over month improvement.
Yes, so the there was for sure an impact.
And then maybe importantly, there was no other obvious.
Impact, we didn't see big accounts falloff there wasn't any.
Okay.
Major lumpy or obviously identifiable issues. So I think that that's kind of one thing is we for sure saw that that January to February impact I would say it was <unk>.
<unk> persisted.
With with that as I mentioned, however, as we exited the quarter, we saw kind of.
A reversal and a push to push for higher growth.
Which puts us in a spot.
Puts us in a spot on a on a year that was already backend loaded to make it even more backend loaded and that's where we as we sit today.
We look out to the end of the year taking into account the new sales reps taken account of new products and looking at the cadence of the year.
It looks to us.
15%, 20% lift in the Q2 will get us will get us on track to keep US there as I mentioned, we're on the we're in the lower end of our our performance envelope too.
Hit our plan.
So getting beat our guidance this year and that's where.
That's what we need to see in Q2 and.
And given what we see as we exit the quarter today, we have no. We have no reason to believe we can't do that.
Got it fair enough.
And then on the pipeline, maybe starting with Bcm any color you can share on early customer feedback there and.
And how are you thinking in terms of timelines for reimbursement.
Yes. So PCM is launched it is out and we have customers and then the details of the process are you.
Once once you have your first claim you can submit it in so.
We've now had our first patient we've submitted we've done that process.
Typically <unk>.
45 the links.
Kind of thing and then of course, you start billing it gets billed in arrears and bill going forward.
Im actually really pleased to say, we have launched that service are selling at our customers and began the.
Began the reimbursement submission process and we would expect to hear.
Favorably and be on our way.
With the Medicare Medicare population. In addition to then looking for are there other opportunities to expand that market.
Got it.
As you think about the second half of this year what are you baking into the guide in terms of these contributions from new product launches I mean, you've got PCM, but you've also got that <unk> therapy selection panel coming up and I believe you also launched the IBD kit right. So.
In Europe , so would be great. If you could just give us some color on what sort of assumed in the guide in terms of contributions from these pipeline launches.
Yes, that's right we've got I would say as we as we looked at the guidance and looked at the year.
With the new sales reps.
Formulary.
And based on past years tended to.
Given the amount tends to push push it back half back half weighted.
And I would tell you with one hand, let's call it half of the backend weighting compared to compared to and otherwise.
Great.
Straight sales in marketing year.
The new product, which you've got you've got a lot of them into the IBD kits you got the PCM launch there'll be therapy selection later in the year, we've launched it in neuro developmental delay.
Product, which we have high expectations for we have excellent improvements coming later moving a whole genome at the end of the year all the way to autism development of way intellectual disability ongoing improvements in the workflow for both reproductive health and oncology patient care management.
Risk assessment additional set of capabilities to allow us to push into urology.
And an improvements in.
I would say improvements in both the offering and the workflow and interpretation tools and reporting for pharmacogenomics.
All of which were expected to contribute in addition to the <unk> to the back half of the year. So that's kind of the.
The the slew of activity, we have coming it actually is one of them.
I kind of mentioned in my remarks, we've.
Really spent the last couple of years trying to get our new product velocity going and I think we're our plan. This year does indeed anticipate reaping some benefits of that.
Got it and one final one year for Roxy I'm not sure you mentioned this in your prepared remarks, Roxy, but on the Opex for the year are you still keeping to your target of increases at that 20% ish level year over year.
Yes. Thank.
Thank you for the question.
Planning to hold our Opex pretty stable from this moment on.
Which will translate.
Okay.
<unk>.
Production of revenue with the translate.
Half of the year over year growth of our guidance provided at the year end call.
Got it perfect. Thanks, guys I appreciate it.
Ill.
Slide 20% year over year growth.
We're looking at stable from here now.
Got it. Thank you I appreciate the color.
Thank you.
We now have Brian Weinstein of William Blair. Your line is now from Brian .
Hi, guys. Thanks for taking the question. This is dustin on for Brian .
Just talking.
Talking about the product launches later this year specifically on stratify.
Just wanted to make sure that <unk> is still on track to launch and just if you have any updated thoughts on the competitive positioning on that product.
Yes, no I appreciate it.
The therapy selection kits, all environments of them, including <unk>.
Stratify or are out and launched.
In IBD various regulatory formats around the globe.
In the U S. Most important is arguable Europe , obviously, IBD and then of course, Japan and others has specific local.
Versions of FDA approval.
So those are those kids are out and we are now selling.
The personalized cancer monitoring.
With the with the stratified technology inside as it were.
<unk> is now launched as MVP and we are now we are now selling and we expect that to contribute this.
This year to oncology growth, especially next year and beyond given the size size of that opportunity.
And then the other the other piece of that technology launched inside of service will come in the middle to the back half of the year in therapy selection offering running up a whole exome based therapy selection that is integrated fully with our monitoring.
And again with the added touch with the added nice such as also being fully integrated with our with our constitutional or inherited genetics, we think that'll be the best in class oncology offering.
We exit the end of this year.
Got it thank you for clarification on that.
And then guidance throughout the year I am wondering if we can get trends on specific platforms and maybe <unk>.
Men's health in particular.
In particular, how it relates to the noninvasive prenatal screening market given.
There are some recent commentary by the FDA on that.
Yes, I can what I can speak to us.
As Rafi broke out.
Women's health reproductive health as a rapid growing segment.
We would continue to ascribe to that a pent up market demand again, just just in the U S. Just as a reminder, the 6 million pregnancies $2 million to $3 million might get either one rarely both.
Carrier screen, a comprehensive care screen or nics.
Again, I know I know given the sentiment that talking about the future is not we're not going spend a lot of time doing it but I just want to point out that I think are in a short amount of time. It will it will seem unconscionable that women went through.
The process of having a child with as much risk on the table that could otherwise be taken off from those two test and that is the source of the growth in that segment.
That is a rapid adoption of those technologies and betterment of those of those individuals and thats driving that reproductive health.
The.
There was a.
You are referring to the kind of there was a there was a media event.
Around.
The Nics test the NPS offering.
As you pointed out.
Yes.
I think it's probably worth just summarizing what that was actually about as the b very nuanced, but very important difference between a test in a screen and how those how those noninvasive <unk> screens are being marketed in our being the information can be being conveyed to patients.
We do suspect that that that is what I would say is that is not unusual in our industry that happened many times over the past decades.
Welcome the attention and clarification on this it's a very important thing something which by the way. We have we have pointed out at the beginning of the reason, we launched and marketed as noninvasive screening for those very reasons.
And then subsequent to that of course, the FDA did put out a position statement.
These things need to be considered all of which I would say this does not impact our view at all of the future potential.
Our ability to be a leader in that space.
Okay. Thank you and then just one more on M&A.
Given the capital markets activity I'm wondering if there are any particular areas you guys are seeing.
Maybe I know the first quarter.
There was no deployment from you guys at all but anything Youre seeing.
You sit today. Thank you.
Yes, I think.
Given and I think the way you started the question is how I'll start answering it given the capital markets. We've mentioned that people were.
We are we are.
Including M&A activity acquisitions in our cash burn reduction plans and so thus.
M&A screen.
We arent looking at.
Technology developments that are going to add on additional burn significant additional burn for the coming years.
Still interested in things that can have near term cash generating improvement operation has proven workflow improvements cost out.
Or or scale of the business.
With better operating leverage.
Yes.
The historical path a good portion of what our historical path has been we're not we're not evaluating at this time.
Okay. Thank you.
Yeah.
The next question comes from.
Teeny Cheetah of STB Securities Sir please.
Please go ahead when you're ready.
Yes, hi.
Sean Roxy Thanks for taking the question so.
Ill ask two and then I'll hop back into the queue. So first one is really.
Quarter was obviously softer versus I mean.
I understand the omicron impact.
The second quarter sequentially is the way you described is also softer versus us and sort of the street as well.
Just trying to understand.
What sort of starts to work in the second half Youre pricing is coming in lower as well in the gross margin line as well. So just walk us through how should we think about what are the elements out of the four segments that where you have the most expectations for potential recovery.
<unk> recovery and if you can maybe give us any contribution among the four segments oncology women's health rare disease and data services.
For the second half and then Sean.
As we look at this industry, we have talked about a number of times before obviously this is a consolidating industry. So we saw one of your peers.
Acquire another competitor of yours, so on the <unk> side in the rare disease side. So as you look at this.
Maybe just help us understand how does that change your competitive landscape and how are you focused on.
Trimming some of the products and focusing on things that.
Likely to drive growth longer term, thanks, guys, thanks for taking longer questions.
Yes, yes, absolutely. Thank you.
Yes, so I think kind of the again the.
Our year is our plan is back half loaded that's again, that's not unusual, particularly with the amount of new products and the Salesforce expansion.
The Q1 was soft and I'll, just say Q1 was up flat all out right I think we.
But on the low end of that low end of our execution envelope.
We do believe we can we can execute for the rest of the year that would entail.
Pickup in oncology volume.
Sure.
Full thought that's probably the the commentary on there continue.
Continued growth in women's health with better pricing and margin.
Our work to be done on that.
In the rare and other like what we see and we're going to see we're going to we're going to see more of it with the product product portfolio coming out there and also there's good tailwind in reimbursement in that area.
And of course pharma partnership interest.
Within Lisa that data patient identification data and services, where this quarter was softer than that especially with our citizen patient network business.
That can be lumpy, given the contracts and revenue recognition and that's what we're expecting there is to continue that.
Continue that accelerate that effort grow that effort.
The topline synergies.
Going here this year.
<unk>.
We're expecting that lumpiness that.
Start to bake in as it were and.
So those are the if you go down the product areas Thats, what I would yes.
What we are expecting to see manifest in Q2, which will then contribute like I said, if we see a <unk>, 20% <unk> growth.
An improvement in margin toward our year end target.
We're feeling.
We're going to be feeling better about it.
I think that was.
I think that answered your question.
Yes.
Hello, sorry.
And the other question was on consolidation.
Yes, M&A and consolidation.
Yes, I would imagine that's going to pick up.
I think that.
That is definitely going to pick up here in the next year or two.
As for my comments about what we're looking for we're.
We've got a really full suite of technologies and are operating at a scale now where I think we have the benefit of being able to turn the dials on R&D investment and play with timelines of return. So that's a really good thing given our really aggressive cash out.
Pat now that we're on.
And I think I think we're going to probably stick to that.
Vis vis the M&A game like I mentioned, some things will make sense to help help accelerate that.
A lot of things won't and that's where we'll stay in.
In terms of the inherited the inherited business.
I often.
Think about it.
Across all these disorders across all of these patients are different phases of different stages of life and in truth. The inherited genetics game is one of the more difficult more and more complex costly ones with with very high Stakes.
High Stakes in terms of a miss by me.
Yes, I mean missing missing.
Missing on the highest quality for our patient readout.
And I think it's I think while I would expect to see further consolidation I also believe that.
We have built.
A really compelling offering with best in class economics underneath the hood.
With really the best service available for patients and I expect to compete handily, even as the consolidation continues in companies with really really high.
Oracle channels and great well run companies start picking up these assets I think we're going to we're going to hold our own.
Thank you.
We now have Matt sacks, with Goldman Sachs. Please.
Please go ahead, when you're ready months Max.
Thank you good afternoon, Shawn Roxy, Sean maybe just first question Big picture, you've mentioned a few times on the call on the release about portfolio optimization, just wanted to get any additional color on what you feel.
It would be appropriate what's on the table what's off the table in terms of how you think about your overall portfolio is progressed through the year and beyond.
In light of sort of the cash conservation and the move towards profitability eventually.
Yes, absolutely I'll kind of run down our high level thinking on it obviously there is oncology reproductive health and then the rare disease rare disease in pediatrics and other.
In that there.
There is a lot of new product and new product and new capabilities that is.
Essentially already paid for so it's kind of focusing on finishing those launching those getting those out and also investing in making sure that support the continued cost out of those of the various aspects of the production of the rate of revenue price or cost.
<unk>.
Then the other important piece that we want to make sure to stay on as the.
The launch of the patient network the idea that a lot more patient data coming in and being able to be used in the context of all of those patients across the all of those different disease areas.
Becomes very valuable not just for the patient themselves or the systems that they are being served by but also for other partners in the health care ecosystem without patient can find other other capabilities that can be put to use for their benefit and that's something that we're going to continue to invest in that also.
We believe in the next two years drives to an oversized growth in our data and services revenue, which of course is as nice high margin.
And really important for the strategic development of the company now.
Now the things that then we either put on hold or slow or significantly slow down or some of the other disease areas and which I know, we will get to our platform as I mentioned in our platform is.
Flexible enough in and can support the addition of new disease areas.
Pretty cost effectively.
Even even as cost effectively as it is right now is not the time, so and I view it unfortunate, but it's the reality cardiovascular genetics is a market that is my assessment.
My belief is as large as the oncology market.
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And the load.
The balanced load of genetics.
Both both rare and common for risk for individuals and families with those disorders.
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I don't know many people who don't have.
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Dementia Alzheimers Parkinsons.
There are some other areas that we've begun early investments in that.
Have bright ideas and great hopes for the future.
Also which are essentially an ISO or in a holding pattern keeping very focused on a few very specific.
Vance development outcomes, but otherwise really pulling back on the expenditure there. So that we can take all the cash out of the burn of this business and like I mentioned the goal. The goal now is keeps us keep this growth going.
While at the same time, extending this cash runway out to the end of June .
23 or beyond.
Great. Thanks for that detail shall I appreciate it and then Roxy just on the revenue per patient.
Some of the decline in this quarter. It was just a mix shift towards lower price test what can you do to impact that mix shift to ensure a sort of a stabilization and a re acceleration in revenue per patient.
I think you know revenue per patient as a metric.
As we look at looking forward is not a metric we're really looking at every quarter to increase that because the dynamic between revenue per patient and the number of patients will have is is that is there.
Interesting line that we're looking for the right balance.
As an example, right in our data business in the future you might have a revenue per patient $50, you'll have a much higher margin because of the nature of the business that bring down the revenue per patient, but not necessarily is a bad.
That business that we participate in.
Thanks.
But that's kind of a longer.