Q3 2022 CareDx Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the Coeur D X incorporated third quarter 2022 earnings conference call. At this time, we are getting additional participants and should be getting a couple of minutes. We appreciate your patience and ask that you. Please remain on line.
[music].
Good day, ladies and gentlemen, and welcome to the Coeur Dx incorporated third quarter 2022 earnings Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to Anne Cooney. Please go ahead.
Good afternoon, and thank you for joining us today earlier today <unk> released financial results for the quarter ended September 30th 'twenty 'twenty 'twenty 'twenty. Two the release is currently available on the company's website at Www Dot care Dx Dotcom, Reg Sito, Chief Executive Officer, and object Jain Chief Financial Officer.
Sir will host this afternoon's call before we get started I would like to remind everyone that management will be making forward looking may be making 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 1995 N E.
Statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation, our examination of historical operating trends expectations regarding coverage decisions pricing and enrollment matters and our future financial expectations and results are based upon current.
Estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements for a list and descriptions of the risks and uncertainties associated with our business. Please see our filings with the Securities and Exchange Commission.
The information provided in this conference call speaks only to the live broadcast today November 3rd 20, twenty-two Coeur D. S. Dx disclaims any intention or obligation except as required by law to update or revise any information financial projections or other forward looking statements, whether because of new information future.
I'd like to purchase my discussion on the following three topics. The first is held differentiate financial protocol in Q3 results.
Second is alcohol platform over the next 18 months, which we called the three seats.
<unk> and the pipeline collections improvement and coverage expansion.
Building on our vision of ladies chip in the transplant ecosystem.
Moving to the first topic.
The lost earnings call, we made a commitment to achieve adjusted EBITDA approximately by the first half of 2023.
Since then we've made tremendous progress towards his committee to go <unk>.
Notably when he meaningfully improve our adjusted EBITDA lawsuits in Q3 versus queue to this.
This is a trend break we liked especially when combined with a strong balance sheet and decorate physician.
As a management team and board, we believe maintaining the strong financial position is critical to go ahead and sustainable business, especially in his current economic environment.
We plan to deliver on our property legal and this will enable us to operators itself funding business.
This has been a constant source of feedback from a long term shareholders and truly differentiates Katie eggs when compared to others no space.
I would like to know financial position wait.
One retain an excellent catch position with $291 in cash and mackerel securities on the balance sheet to who maintained a higher gross margins highlighted by 73% gap and 74% non-GAAP assessment doses Street, which a strong volume growth with a 15% year over year and 3% sequential growth in full.
We improved our adjusted EBITDA opposition to enable our progress towards profitability.
Regarding future results overall revenue for the quarter was up 5% year every year and down slightly sequentially 79.4 million, primarily driven by testing services with lower Mark the growth and we projected.
Try to anticipate shifting pay mix to more commercial pays resulting in an increase in non reimburse test.
Great and incremented, 1% sequestration reduction Medicare tests.
And one off with the impact of Hurricane E and the last week of patient testing.
There was also log rudner products business from the impact of foreign currency and ongoing stopping shortages and HLA liberace that is for a new installation.
Despite days, where Abraham prevail adjusted EBITDA versus Q2, 2022, and we are on track to achieve adjusted EBITDA properly in the first half of 2023.
Now I'm transplant volumes the year over year growth Q3, 2022 with mid single digits.
The early signs of a stronger recovery we saw in Q2.
Hi sequential growth versus what transpired in Q3.
Notably it has taken 18 months to transplant volumes to finally reached the same baseline levels, we've lost or in Q2 2021.
Transfer instead of stopping shortages and decreased living donor kidney transplants remain two of the biggest challenges to market growth.
Testing service has remained the strength with leadership across kidney heart lung with kidney.
Main focus in executing on our long term strategy with now more than 100 transplant centered community nephrology practice.
<unk> <unk> kidney protocols.
Today, we are more than 75% usage across kidney transplant centers and we saw an increase in commercial market share in these transplants and as the entry into community for all G has been an outstanding success and is now approaching 10% of a liberal kidney volumes, we have more than 200 practices use our short kidney in to three G.
<unk> prodigy expansion. This represents a significant potential as the majority of transplant patients and management community setting.
Communications have a lower coverage levels, we have an ongoing commitment to support all patients regardless of pay coverage.
Who taught it has been great for Hot care remains about 95 per cent. This demand continues to reflect the value of Multimodality. As a reminder, we the only meditate kind of gene expression and done it arrived test in hot and the only chest with multimodal coverage through Medicare.
Today more than 90% of heart transplant centers of the United States <unk>.
Yeah, I Unplugged I'll show lungs address is a significant unmet need by providing a noninvasive option in the highest risk transplant patient population, we're wanting to wanting to lung transplant patients willpower within five years.
He used the balance shorelines exceeded struggled benchmarks and we already cheated grades with 60% penetration transplant centers within 12 months of commercial launch it stopped taking lungs reflects the incredible demand and the lung transplant comedian with credit in 2000 and tests ordered in Q3.
Now moving on to the second topic.
We're working towards a sustainable profitable model, we're excited by the future opportunities to accelerate revenue growth. We are focusing our efforts over the next eight months on three priorities towards the three seats tablets in the pipeline collections improvement and coverage expansion.
Onto the first seat catalysts pipeline I am pleased to announce the following first we can share that allomap kidney is currently under <unk> reviewed.
And secondly, we are completing clearer implementation work on your map in preparation for future <unk> mission. We look forward to bring these latest innovation clinical used to improve patient care.
No element of kidney destroy delivers on the market me for quantitative email questions <unk>.
<unk>, leading FTA queer gene expression test Allomap hot element kidneys, being built specifically for a kidney transplant patients.
Your map has now completed analytical and clinical validation and we have finalized and implementation in Aquila.
The breadth and quality of data for your best in class and define it multiple new England Journal of Medicine publication. Your map, it's a James signature thicknesses birth, the probably the rejection and the problem would be K bars and property.
Now onto the second fee collections improvements.
We continue to ramp up infrastructure and will sharing you metric, which looks at the E. S. P. N reimburse tests, notably allergy on pay tests had not changed over the last seven quarters <unk> will cover this in more detail.
During the last six months, we've ramped up in an internal infrastructure and third party support to address the increased workload across the different pets stages with pre submission submission kind of pills restart.
We're starting to see signs of improvements you know cash collection with improved collections in Q3 versus a product called a new rubber yet.
The reality of one collection cyclists on Medicare advantage and commercial planes means it visual progress with shock with a lag.
The third C coverage.
Non reimburse tests continues to increase without intentional strategy to launch a new organs, such as one and to move in between Acrology wait coverage as well.
This volume growth creates a longterm opportunity in the meantime, we are working towards obtaining peg courage to get these tests carpet and reimbursed by private page.
Heavy purposes, our biggest pinot liver.
For example, using 2021 volume numbers, we would have collected over $100 million in incremental adjusted EBITDA.
Current commercial tests enjoyed the same broad coverage is allomap hot the gold standard at about 70 per cent.
Now as reminders Ellis short kidney is at about 170% <unk> is between 25, and 30% courage and they'll show lungs is less than 5%.
We're now talking to specific milestone.
<unk> to expand though coverage now show Hot natural on and I'll show Hot we're expected we're encouraged by the inclusions don't drive <unk> and the proposed guideline updates at the April International Society of Heart and lung transplant meeting as a reminder, LMI part is called the ice age 50 guidelines ready, which was pivotal in expanding pay coverage vanilla.
<unk> when you work with mould X to achieve a determination of coverage by Medicare <unk>. So I can meet with only 2000 patients <unk> since the launch notably there are only 2500 lung patients transplanted itchy and 15000 patients needs immediate.
Yeah, I'm working on the third section.
Vision and strategy.
<unk>, it's a bit late in the chest and ecosystem and it's one of the few copies 100 per cent dedicated 100 per cent of dedicated to transplant <unk> as much as the market leader across the transplantation journey and built an incredibly deep within the transplant centers today, we are number one and posed transferred by market and kidney heart lung when number one in <unk>.
<unk> medication coverage.
Discharge with great in 100 transplant centers, when number one and transplant quality monitoring.
Great and 40 cents, and then number one and transcend specific app with more than 55000 downloads <unk> Alley cats.
And when number one in next generation sequencing tastefully typing.
As reflected milestone unit recently announced that there has been no more than a million patients transfer in the U S with 500000 or half of those in the last 15 years. We are proud that more than 100000 transplant patients have used the <unk> offering both of those last 15 years, representing 20% for transplant.
Patients U S. During this time.
You have any guidance as you throw in a press release, we allowed our guidance and that's the full year revenues to be in the range of 320 325 million disguise driven by the lowest you three revenues and had anticipated shipped to commercial <unk> <unk> will cover this in more detail in his section.
In closing we are committed to living on our path profitability in the first half of 2023 and there's a summary.
One we demonstrated the ability to improve our adjusted EBITDA. Despite a lower revenue. According to we've highlighted a rich set of potential revenue growth drivers to accelerate grocery three seasons.
What's in the pipeline, we can anticipate commercial launches Alamo keeping your map collections improvement through increased infrastructure include engagements third parties.
Coverage expansion through eligible long reimbursement and they tend to inclusion of don't drive sofa like al Shaw in the ice age Little guidelines, we look forward to the next 18 months as we continue to execute enough strategy with that alternative Dakota object discuss our third quarter financials.
Thank you rich we are pleased to report that get making progress on the commitment they made last quarter.
Or just to repeat the profitability.
I would also like to wait for the comment about our confidence in being able to expand coverage and improved collections overtime and leverage our business model.
Deluded to differentiate the exponential provides.
We provide further details from the <unk> number.
Number one <unk> <unk> physician of $491 million and sell funding business model number two solid volume growth and impressive gross margin performance.
<unk> progress on a path toward just really bitter profitability number for the strength and the consistency of ESP on reimbursed pets.
I want to start by highlighting our connection strength.
Ended the quarter with $291 billion in cash cash and marketable securities and know that we can do to invest our portfolio in line with our goals of preserving principle diversification and maximizing returns and.
<unk> to read the endangered over $1.2 million in net interest income.
We do not require to raise capital and have the flexibility to deploy capital that increases value for our shareholders.
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We remain confident that the business is self funding into the foreseeable future.
Moving to the quarter.
<unk> total revenues of $79.4 million up five per cent compared to $75.6 million in the third quarter of 21.
<unk> services revenue was down 2.6% to $64.8 million.
Revenues increased 10 per cent <unk> $7.2 million and patient and business solutions Avenue increased 185% you'd over a year to $7.4 million.
Ah revenues in Q3, 22, what impacted by slower than anticipated market volume growth of Haydn mix of non covered test final and second part of sequences patient cut.
<unk> with Hurricane Ian and ethics headwinds on our private business.
Both of the market growth was lowered in Q3 F compared to Q too. We were pleased to finally see total transplant volume down to the same level as ever.
More than 18 months ago.
It has taken longer than expected.
For the product testing volume do by 15% year over year toward 46500 tests.
We saw sequential volume growth in all good.
The non-GAAP gross margin for the quarter was 67% compared to 70 per cent in the third quarter of last year and 69 per cent in Q2.
The change in gross margin versus the last quarter is primarily driven by our products business returning to its normal gross margin.
We continue to maintain healthy gross margin of 74 per cent in our testing services business.
The continued increase in the mix of unpaid tax.
We are very pleased with the durability of gross margin precise and proud of our labs.
And like in team as they continued to drive efficiency.
non-GAAP operating expenses for the third quarter, what $57 million.
5 million sequentially from Q2 22.
We are extremely pleased to see this trend change given up committed goal of achieving positive or just really better in the first half of 23.
This was achieved by focusing on three factors number one financial discipline across the organization.
Number two operating efficiencies driven by process improvements number three increasing effectiveness tragic areas cough driving growth and improving collection and expanding coverage.
Notably despite the reduction in office, we continue to invest in clinical development. This study across solid organ and stem cell transplant.
For the third quarter of 22 re recorded negative or just really big dog $2.5 million compared to negative or just a big dog $5.7 million in the previous quarter.
We made a lot of ground when a commitment and I was pleased with the progress towards our goal of.
Delivering positive or just sort of data in the first half of 23.
Confident in our ability to continue to drive profitable growth.
Now let me go into ESP.
In order to provide further clarity on or the S. B this quarter beginning to disclose.
S P for tests.
We received reimbursement.
R N T four G and blood test has been essentially flat in about $2500 Q1 of 21.
The overall it we started to change in Q1, 21, which was the first.
In fact of Hello, Sheila Hart.
As a reminder, during 2020, an overall coverage and testing filled with is what about 70 per cent.
But the addition of Ellis short heart was only covered at 25 per cent.
Our focus is on expanding coverage what is the overall changes in a S. P. S. These include non covered.
To reflect this point S. B on page that will slightly about $2500. In Q1 21 and has remained about $4500 in this most recent quarter.
This is in contrast to walk overall is b, which includes non covered.
We want to highlight this matrix to emphasize that you're not seeing any price degrade nation for <unk> and.
And the change in <unk> S. P, which includes Nonpay test is driven by our strategy two number one grow market share and community nephrology.
Number two increased penetration in new areas, such as lung, where do you get to the sea brought reimbursement coverage and number three launching area drive innovation, such as Multimodality and heart.
<unk> coverage is in the area that will expand over time as a reminder of non-GAAP gross margin of 74 per cent has been achieved.
Greater than 70 per cent coverage for Allomap part an initial kidney.
25 to 30 per cent coverage for Ellis short and in less than 5% coverage for Hello show lungs.
Both of us to expand coverage to about 70 per cent across our testing services portfolio using <unk> as the board standard for coverage and reimbursement.
S discuss enough people call our strategy of gaining market share and helping patients improve long term outcomes covered with market dynamics has resulted in an increased percentage of nausea reimbursed tests.
<unk> <unk>.
<unk> <unk> <unk>.
Allowed us to offset these incremental laundry, but says why'd, providing us an opportunity to attend the coverage and improve collections overtime that we are vigorously.
Regarding the information to quit from the government, we do not have any material up this report.
Connect you to cooperate and a movie speed you shortly in responding to the request.
Turning to guidance, we are devising a full year guidance in the range of $220 million to $325 million from 325 million to 335 million previously.
This change in Bitcoin is driven by Lord <unk> Avenue, and hard to anticipate the chip to commercial pairs.
Specifically for Q4 in setting the guide we have assumed that there are no further sequestration card.
We do not plan for one off impact such as putting Indian.
See we have built on Lord market growth in a range <unk>, we have a zoo a hot commercial <unk> across the bridge.
Too close we have.
And I'll be able to connect your position healthy or just a poodle's margin strong cash position and solid volume growth. They have demonstrated his commitment to return to positive or just really bitter and first half of 43 by saying prudent on operating expenses by ensuring that we continue to invest in areas that will try to check with that.
Opened the call for questions.
Thank you, ladies and gentlemen, if you like to ask a question you may do so by pressing star one on your telephone keypad Star one for questions. Please make sure that my function on your phone is turned off so the signal can be read by our equipment.
Darwin for questions will pause a moment to assemble the phone queue.
[laughter].
We will take our first question from Brandon colored what's your Fries. Please go ahead.
Good afternoon.
Maybe just starting with the guidance for the year and applied for the fourth quarter and you've been running around 80 million in revenue.
Three quarters of the year doesn't apply a step awesome.
5 million sequentially in the fourth quarter.
He just library on level of confidence in that and you know how we should be modeling the realized ISP trends sequentially is there another kind of 567 per cent stepped down again.
Four Q.
Alright, Thanks, a spreadsheet and I'll handle objects takes more questions comments and yeah for US you know we have a strong run rate going to that's pretty 20th what you just sort of described in where we think you know there's actually further al Pacino in the marketplace will come from the testing services, we do see growth in it.
And the products business and also with digital so the guide obviously because outline of groceries step by step for you as well now yeah sounds good so Brandon Uhm debate the change in the guidance of the bitcoin from 330 to 322 and a half.
Primarily has been on account of two factors. The first one is a carrier with a Q trees Avenue that came in at the low end of our expectations.
I can change in the guidance My point is primarily due to the slight modification that they made on the market growth and updated mix assumption based on the Q3 desserts.
So those are the two factors that are changing as bitcoin.
<unk> to the 342 and a half now.
The level of confidence and I think that was the other question that you.
I think that is a very balanced guidance and the way I think about it that the market growth. The baby I was zooming out right now that it'll stay around things like digit number and.
And it's like.
Above and that's what we are assuming that are getting services volume growth per se.
It looks like you're above the market Jordan, we have made sure that Ah mixed will can do the shift towards the commercial ter and they will not be any superstation <unk>. So those until the pieces that you're assuming in our guidance and that provides a good confidence in the guidance that we are providing.
Okay.
They may not be indigestion, really talk too much about 22 or three yet but.
How should we figured out the S. P trains.
Next year and degree of you know further erosion lately.
<unk>, maybe give us something about.
That line.
Sure.
Yeah, right and I'll take the question they'll handle it up she I think wasn't that clear, but I think it how 'bout SP trying to find it so I think for us what we want to get too. It's it's in your hair instead of a tablet. So I mean, it's really is about carpet just thought about.
I used to say for us and I think you know your soul that we've shown a slide now which for the last seven quarters, where we get reimbursed tests we have.
<unk> makes it to 2500 and the key here is Henry not focus on getting the additional coverage will focus on additional collection in these areas, which will then overall benefits that inflection point with with iced tea. So we delivered as soon as the catalyst, which Gertrude launches, which goes through courage, and which goes through looking at different collections to improve that overall.
Price of it I think you know, we've often talked about and we're saying this over the last few cause I <unk> trying to try to transfer in here that really there is when we get reimbursed marine posted a pretty constant right right. When we not reimburse that's why we have to work on right. We have to work on how do we get coverage Fries and then we have to work on how do we collect they are the key pieces.
Which is why we focus so much on <unk>. This is Aaron may be on our infrastructure around like we've demonstrated during this quarter, we have the path to profitability right. That's the key matrix, we put out to next year I'm in a lost earnings or how do we get properly can we demonstrate and that's why we said the first half of next year. So Opex I think we have a good head on them China. The second thing is now light up is 18 months.
Sort of period of how we know build on getting input collections heavy leverage the catalyst, which we expect to come and then also have we been on coverage as part of that process, but I'll, let <unk> more on specific pieces required on the on the iced tea, but just to manage expectations issues when we're pivoting port.
No I think that you have covered it pretty bad Sofa I think this is what we have been trying to discuss and provide the clarity and the part that the way we look at the a S. P.
That is basically to make sure that we are actually taking care of the strategy of getting into the community Nephrology for example, or getting.
Getting into the new or guns or providing the multimodality for heart and do you spend a lot of time in our prepared remarks on that one and the key point that Brendan faced the 30th before the Patriots has not changed now. The question is how do we start to get paid on some of the <unk> or the non covered pets and that is the whole piece on the collection and the coverage.
So those are the two pieces and that's where we are going to be focusing on.
At your last one what next steps in terms of the timeline for kidney care and.
About the timing of the central commercial launch next year.
Yeah, we're really excited about some of the catalyst. So we have coming up and that's why I will thrilled to share what's happening with with kidney care with the element opinion now there was submitted to add some extra review and for US you know we know that there's demand for this test because we saw that through the yeah. The <unk>.
Enrollment, where this was really the the study that people wanted to to do and really understand more about this multimodality approach. They weren't mean, sending another <unk>, we really see that you know being in the market place from the market research. We've done the other thing that we also have taken the whiteness demand is having a quantitative test that is one that you can sort of get.
A longitudinal measure on as well as you as you do these tests and so for US the market practice with the team prepared with you know prepared for a mafia materials. The organization infrastructure is ready in place I think we've obviously had some nice publications resolve this or you know in terms of the offering itself as being defined.
And so again, we we look forward to you know exciting appeared and review process. When we have those discussions but clearly this is can you tell us for us which is way to put it in the pipeline and along with your map as well.
[noise] redness and the operator, if you you may be muted did you have any other follow ups.
Hearing no response, we'll take our next question from Alex Novak with Craig Hellion Capital Group. Please go ahead.
Alright. Good afternoon, everyone. This is quatre on for Alex.
I guess first multi actually holding a contractor Advisory committee meeting in mid November Titanic discuss the coverage of transplant test I mean, what what's gonna be discussed at this meeting is charity actually invited to present and I'm trying to do some some colors and you guys would be helpful.
Yeah, and thanks corner maintain caught everything laid out there is it's a it's an invitation offend people can also change will be attending as part of that but it's really being run by subject matter experts and it's amazing that's been run by an Iranian and in Palmetto. So.
Where are you from.
How <unk>.
She does it feel to transplant gets an additional meeting I'm looking at this process and we think we've got a lot to bring transplant to the forefront. There is an existing L. C D process, which have gone through which doesn't change the University LCD, which was completed uhm I believe in June of 2021, which we're going through current approvals through at this time.
There was in the past and kept meetings that were held for example, infectious diseases. Those one held in 2021 and I think about 14 15 months cited it wasn't update in terms of an L. C D, which actually became a broader L. C. D. So I think the thing here is that you know we've we've been invited I think everyone's being invited to attend it's open although that might be.
Taking questions from those attending it's by subject matter experts and it's fine you're reading as well as Palmetto at Saint hold on for two days one about the diaphragm on blood die frame and we look forward to learning more about that at the meetings.
Got it Okay. All makes sense and then just a couple of questions dig a little deeper on the pricing side I mean, I know you mentioned, you're having some success and appeals kind of through this better infrastructure, you're building, but just to kind of dig a little deeper like when when do you expect that to kind of help a S. P. A stop there.
Line.
And then just cut out.
Is the impact Asp's still roughly 25 per cent Medicare 75 per cent commercial or kind of how are we thinking about that right now.
Yeah, I'll I'll make some come install hand of it to talk to you again as we mentioned with findings while I mean, the way you want to think about is coverage. We've shared the iced tea on reimburse test it wasn't satisfied attaching with this webcast and I think when tests are reimburse are pretty much reimbursed about 2500 cross the portfolios and I think that's important thing that one should take note on where we don't get <unk>.
Reimbursed is a if we don't have coverage or if we don't collect so it's pretty simple right, we need to collect them. When you get coverage as part of that so I'll I'll, let obviously beside how he wants to add to that but I just wanted to get across again kind of emotion is you know you need courage and collections talking about decides he's been a bit a bit of a red herring because you're talking about there has been their price debuted actually.
Because of the slides were presented as well I've lost some quarters. So when we get reimbursed get reimbursed well yeah. No I think you've covered <unk> I would only add to that that on the collections infrastructure. When we talk about the the Presubmission service for submission side effect on the peace submission now we are building the capacity people almost double the capacity there.
By putting in more into another source is that then comes to submission of the post submission on the appeal site in fact, Vietnam contracting with a third party again please.
Double capacity there now how soon we are going to be seeing that.
A lot of these players are basically as you know the Medicare advantage with a commercial repairs and they have a long payment time. So generally it is not very immediate that you build the capacity and then he was talked with it does it does so this will definitely to let this point it will come and those are the pieces that we are trying to work on.
Got it that makes perfect sense and then maybe just one more I mean, the timing of the C. E. C meeting connect comes when you're speaking reimbursement for long I mean, I guess just.
It's been on my desk for Awhile, just any incremental updates there feedback from all the export are they saying things like that.
Yeah, as I mentioned as an existing topic, which is a universal today, which has been in place. Since June of 2021, you know we don't believe will be caught in any changes that the key here is that there was an existing process. We submitted we have good ongoing discussions with mould eggs and so we look forward to continue those discussions again. This is really just the.
Matter experts you know there is no agenda. That's been set you still have that CAC meetings well.
If we took a precedence where we saw that with infectious disease actually went in and actually brought in the L. C. D. Medicine. So again, we don't we don't know the the agenda. It hasn't been said uhm. It also says on the website that again, we do look forward to make hearing more about it but we've submitted under the current process, which is the existing process.
Alright got it thank you for the questions.
We'll take our next question for Matthew Sikes with Goldman Sachs. Please go ahead.
Hey, this is <unk> congrats on a quarter. So just two questions for me first one. According to recent data seems like transport volumes have recovered post COVID-19 seems to be trending upward compared to prior couple of years did you see that continuing and how do you account for that in your guide if at all.
Yeah, I'll call comment about the <unk>, Bob should get into specifics of the guy but for US. If you look at and I think this is also a cabinet slide in the webcast square you know just.
Taken 18 months to get transplant Barbies packet, where it was it it's previous Pico high and so we're thrilled that it's funny that but let's take it has taken 18 months.
And I think you know nothing is a given because we did see some sequential <unk> not as strong as we'd seen in two to where we so that's probably stronger recovery with the mid single digits and we saw it you know in probably the single digits again. This quota uhm longer time in mid time, you know it really is an exciting opportunity there are multiple levels that will increase.
You know the number of organs redone, the United States and I think we can go into a couple of different areas, including improvements profusion that the advent of uhm now most living donors, which has been impacted the most during this time period Uhm. We also neither of government initiatives increase the number of donation and transplantation, Rachel taking place here as well and you know it really there's there's a lot of different.
You know places where organ donation can can go out there you know at this age I think you know, we we haven't sort of saying that fool rebounds, and we sold that impacted again. This this quota with not hearing that higher projection that we had as well. So obviously I was talking about the the monster garage in terms of the the guy yeah. Thanks.
Oh so.
Start to look at the market growth actually the queue treat <unk> volume growth was lower than queue to uhm now when they start to look back with the last three quarters <unk> volume to recover from a high single digit declines in the third quarter of 21, two of mid single digits. Good old in the last quarter.
That growth or four per cent actually came out of nowhere to put expectations and that that kind of impacted some of expectation that testing services revenue for the current quarter now when we start to look at going forward, we have actually prune down up market goes cause I'm sure everybody in line with what we have seen the last couple of quarters.
And we will see as to how this kind of pans out in the next two before we actually let's talk to make more for the changes.
Got it. Thanks, that's really helpful. And then one last question could you talk about how you see the longer term opportunity for cell transplant. It's a timeline to realize this opportunity further out or do you see any factors that could accelerate the development of this opportunity.
Yeah Cross Salt cell therapy is really an exciting era and I think you know for us, it's really predicated on their cell therapies, making it onto market and that is at this stage there hasn't been once in a solid organ side that is that have made it through and I think that's sort of the key in it as we built out I think al L different Street.
Except it's more meaningful contribution probably in the five year time period. When you have more of the different therapeutics that are approved on the cell therapy sided. However that said we have you know increase in the number of partnership who held really excited about the progress we're making here. It is a really exciting stage of development and Uhm Frost, it's one that crosses.
For us as a company that's fully dedicated transparency gives us more.
Multiple options, we've been focused on solid organs now expanding different organs as part of that you've seen with kidney heart lung more to come as well and now we've had the chance also we can stem cell it should probably be more of a Nero time al Pacino and then then cell therapy named longtime beyond five years. This shelter, but again anything transplant is is is open for business tomorrow.
Side, but thanks for the question.
Great. Thank you so much.
We'll take our next question from Mason Curry Joe was Stevens. Please go ahead.
Hey, guys. Thanks for taking the question question. This is Jacob all information so just phone up here on the.
Kidney submission to multi X now that it's been submitted I know, it's largely out of your guys' his hands, but just kind of wondering what maybe your guys's internal timeline or expectation is to get Medicare coverage for that test is of the fourth quarter of 2023 still a possibility or is that largely off the table at this point.
Yeah, I mean, we've submitted the application typically there's like you know.
Six died.
Plus it's probably been a little bit longer than you know what we seek to obviously with the current process and I think for US, we'll just have to wait and see the feedback from the you know we again so we'll go to a pretty robust package with the publications, we've been able to do and I think with the you know demand that exist out there as well, but I think once again it really.
You know not dependent Alaska dependent on others. We we just responding provide answers wanna ask questions as part of that process.
Yeah understood. So in terms of the launch there once you do get positive coverage.
You anticipate focusing the initial launch within transplant centers or do you plan on driving adoption in both transplant centers as well as patients community setting and then any additional color on the difference and clinician behavior in those two settings D. C. It you see one being more strongly adopted and the other.
Yeah, I mean, I think there are two very different stages right. Amazing you have you know transplant centres were in more than 75%. We clearly deleted there we have extensive protocols and in the community. It's still fairly Elliot <unk>, although we had more than 200 <unk>.
Sure last quarter and now we <unk>, we started to get protocols here as well, but I would think of them as two very different segments.
Times of that approach and I think you know there's still more education that has to be done on the community side about you know usage of you know al sure other <unk> and its utility I think it's important not to just try to push it on me up it to provide the right education supported by strong clinical data with multicenter prospective studies and transfer specific tests, but on that.
We look at Allomap, Kenny I think it's probably more geared towards probably with his existing adoption of <unk>, you know using that as a basis because they know understand that utilities multimodality again. It all depends on the data. We think we have strong data and I think we had good experiences won't be seen in hot care as well.
Okay I got it thanks, that's it for me.
Yeah. Thanks for the question.
We'll take our next question from Yashin with H C. Wainwright. Please go ahead.
Hey, this is changed on behalf of <unk>. We just have a couple of quick questions. The first one being and I'm, sorry, I missed it.
Prepared remarks, but what are there any color on the data revenue quarter over quarter.
And then the second one being.
I guess this was answered a little better than the previous question, but any.
Color timelines, that's great too both of yours upcoming cabinets.
Okay.
Yeah, I'll take the catalyst questions, but I'll hand over to our side of the shakes I mean for US. It you know there's a set requirement of what one has to Smith and we've done that for all of my opinion you are met when their preparation for that as as we mentioned prepared remarks.
And then it it's actually I I back in full after this mission and normally there's there's ongoing dialogue with the with the agencies would take place so.
Hard for us that wouldn't be appropriate for us to comment on timeline, but what we do know is that we have good relations. We had good discussions and again, we feel really good about you know the scientific robustness of the packages we had to leave it in my opinion impossible to leave it for your map and again just to call. Your data I mean, you're meant for example, you know New England Journal Medicine publications.
Apart from element, but I think others have gone and being submitted with such worry about state is so again with were really good by the approach we're taking the timelines me permits but the organization prepared for all types of scenarios. So again you know al.
Alcohol has to have a fairly efficient code false it's concentrated it's one way they noticed stakeholders, there's been a very watching some of those stakeholders as well any other dog shake yep. So.
On the revenue side, the testing services revenue dropped by about a couple of million dollars worth of the last quarter. So there are a couple of the fact that the the the first one of course <unk> <unk>. It's hard to look back we didn't anticipate the sequestration in fact that we will have in Q3 2022 and you also may center assumptions on the market.
Pay it makes sense now the first piece on the secret station that came in as we had projected because we knew that this is going to be about one per cent for the card on the Medicare rate that.
That impacted one took off the overall revenue dropped the other drop came in because the market.
The the way people are anticipating the market goes actually came in at the lower end of that range. So that was the other in fact, the one could also drop and the loss and the third piece of the puzzle is basically okay. It makes.
We anticipated appeared mix and the actual paid mix came a slightly higher than that so that was the other third party, but those are the two people.
Excellent. Thank you so much.
We have no further questions in the queue I would like to turn the conference back to your presenters for any additional or closing remarks.
Yeah, Hi Register again, thanks for all the folks are listening in and thanks for the great question from the the different analysts you know, we we have a real incredible mission here at K D X, which is how do we improve patient outcomes, Oregon outcomes for very subsets special patient transplant community along that patient journey. So <unk>.
Zoe do day in day out we thank you for taking time to listen to this call in supporting <unk>, Sir all we do as well. Thanks again have a great day.
Ladies and gentlemen. This concludes today's conference. We appreciate your participation you may now disconnect.
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