Q3 2022 Exagen Inc Earnings Call
[music].
Greetings and welcome to the <unk>, Inc. Third quarter 2022 earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad other.
This conference is being recorded it is now my pleasure to introduce your host Brian Douglas Investor Relations. Thank you Sir you may begin.
Good afternoon, and thank you for joining us today.
Earlier today <unk>.
<unk> released financial results for the quarter ended September 32022.
Or at least is currently available on the company's website at www dot oxygen dot com.
John <unk>, President and Chief Executive Officer, smaller Dowie, Chief Financial Officer, Mark Hazeltine, Chief operating Officer will host this afternoon's call.
Before we get started I would like to remind everyone that management will be making statements. During this call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any 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 statements regarding our business strategy and future financial and operating performance.
<unk> 2022 guidance, our current and future product offerings and reimbursement and coverage a restatement of our financial statements for the second quarter of 2022, and our plan for remediation with respect to the one or more material weaknesses and internal controls over financial reporting.
We expect to identify 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 description of the risks and uncertainties associated with our business. Please see our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2021 and subsequent filings.
The information provided in this conference call speaks only to the live broadcast today November 14th 2022.
<unk> 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 events or otherwise.
As previously announced on October 17th estrogen appointed a new President and Chief Executive Officer, John <unk>.
I'm pleased to introduce John I will now turn the call over to him.
Thanks, Ryan and thank you to everyone joining the call I'm very excited to be joining <unk> as CEO .
We have developed a leadership position in one of the largest fields of medicine with our proprietary advised testing platform. Having spent the majority of my career working in labs, developing and commercializing diagnostics in oncology I'm looking forward to bringing that same successful approach to rheumatology with the incredible team here at <unk>.
Today I will discuss my initial impressions, along with our third quarter business highlights and give updates on Medicare reimbursement in addition to our pipeline.
I'll, then hand, the call over to <unk>, our CFO for details on our financial results.
Over the past four weeks I've started to evaluate <unk> current business and product portfolio, specifically I wanted to gain a better understanding of our competitive advantages and what can be done to enhance them.
<unk> platform is based on our proprietary technology and next Gen has established itself as a rheumatologist preferred partner and navigating the differential diagnosis of connective tissue disease.
The company enhances its competitive advantage by delivering high values of customer service in combination with its innovative technology.
I believe we can continue to differentiate through both service and our platform.
I'm working with the teams the nextgen to better define our plan in this area and anticipate speaking to it more in the coming quarters.
Even more excited about the opportunities I see in the organization and believe that my past experiences will provide great reference for improving the company.
Specific note is my experience, leading the growth of sales organization and products developing medical policy with Medicare on several laboratory developed tests recent management at forecast and CLIA laboratories, and optimizing revenue billing operations.
I expect my experiences to add value as I continue to evaluate all aspects of the company.
Regarding <unk> most recent quarterly performance our total revenue for the third quarter was $14 7 million, which included a record 35569 advise CTD tests delivered.
This is up 12% year over year. We also had 2287 total ordering health care providers, which is a 16% increase over the prior year quarter.
We have now delivered a record 101000 advise CTD test year to date.
We finished the quarter with 63 sales territories occupied by 54 reps.
Well, it's great to see the continued strong utilization amongst our existing health care provider base I believe we can grow faster.
Im working with the management team to review prioritize and take action on all aspects of commercial execution to accelerate the growth of our advised products.
Turning now to an update on Medicare reimbursement for advised Lucas for the past few months, we've been working with meridian to resubmit claims, including responding to their request for additional information. Following these efforts Medicare resumed paying claims and has continued to do so at a rate of $1085.
We have recognized approximately $3 7 million from claims that were submitted for Q2.
With respect to obtaining a formal coverage determination from CMS, we submitted our application for coverage to the Iridium medical directors on July 29 of this year.
We received notice that an iridium is deemed our application for a local coverage determination or LCD to be valid on September 27.
Ultimately receiving a favorable LCD is uncertain and maybe time consuming but our request for Medicare coverage for advised lupus is now officially in Q a.
Our successful LCD with improved transparency regarding Medicare support of advice lupus, which would also improve our communication of coverage for Medicare advantage patients to commercial payers.
We believe that our strong support in the rheumatology community robust clinical validity and proven clinical utility will help us successfully obtained in an LCD for advised lupus.
Our capstone study demonstrates the utility and advised lupus, which we believe will be a key component of the evidentiary review by CMS. However.
However, we must note that the process can be unpredictable and while we are being reimbursed for buys Lucas today reimbursement is not guaranteed throughout the process.
In terms of payment levels companies that develop new clinical diagnostic laboratory tests, such as advised lupus can apply for a new or substantially revised CPT code.
For the year in which this code is made effective the initial reimbursement rates are assigned by the Medicare administrative contractor in France again this isn't iridium.
As we previously stated iridium priced the advice Lucas DLA code 0312, you at $185 for 2022.
CMS establishes pricing by either a crosswalk, our gaslog methodology before finalizing on the clinical laboratory fee schedule or <unk>.
To determine pricing beyond 2022, CMS pricing process resulted in a recommendation at the advised lupus DLA code be crosswalk to the Vectra CPT code at a rate of $840 65.
We expect pricing to be finalized on the CFS by the end of the year.
This would then become our price with Medicare effective January one 2023 and remain effective through the end of 2025, given current payment reporting timelines.
Until an LCD is secured we expect iridium to adjudicate claims for advised lupus on a per claim basis and when determined to be medically necessary paid at the applicable law right.
As is common in the specialty diagnostic area unique laboratory developed tests face significant commercial payer scrutiny for medical necessity.
As discussed in the second quarter, we continued to see headwinds relating to commercial payer claim processing and revenue.
Now that we are billing under our Pls code, we are experiencing an increase in denials due to unfavorable medical policy with select plans and we expect this to persist.
This has resulted in a reversal of revenue and a write down of $1 7 million of accounts receivable in Q3 from prior period claims.
We will continue to engage with commercial payers to obtain and maintain coverage for advised lupus. While the dossier is a key component and engaging commercial payers for medical policy clinical guidelines do not currently recognize the advised lupus test we view the inclusion into guidelines as an important catalyst to expanding coverage and payment.
Our approach to commercial payers remains a focal point of the company and one that has my full attention.
Turning now to our pipeline our pipeline has several exciting projects and I'm very impressed with our team our lab and our scientific capabilities.
As would be expected with the change in leadership I am currently reviewing every project to assess how it fits into <unk> long term portfolio strategy and I plan to bring a fresh perspective to the prioritization of our research program.
My criteria for evaluation is as follows.
First and foremost is the products have the potential to deliver impactful results to clinicians and patients.
Next because they have a strong competitive advantage, which is durable it can be improved upon and finally does it have a path to reimbursement with an anticipated operating profile, which makes it a viable long term offering, thereby justifying the investments.
I'll discuss some of the milestones that we've reached recently.
Of specific note under the advise radar program, we enrolled our first rheumatoid arthritis patients into a prospective clinical trial known as Tiger.
This trial is to amass a clinical cohort capable of validating the work performed at Queen Mary University of London Wheeler.
We look forward to providing updates on our commercial development of Biomarkers from <unk> tissue to personalized therapy for rheumatoid arthritis patients. We remain focused on and we will communicate a reimbursement pathway for advised radar in the near future and plan to provide updates regarding our product pipeline as we continue our review.
This past week I had the opportunity to join our scientific team at the American College of Rheumatology Annual conference, where they presented nine abstracts and we were honored to be selected as a featured presenter.
At the conference I spoke with several health care providers that use the advice platform.
They expressed to me how important advice testing has been for them in their practice for helping diagnose connective tissue disorders, and specifically stress the value advised plays in the clinical management of their patients.
As I complete my first month.
Taking a holistic approach at analyzing the business and implementing changes to improve <unk> profitability I am very excited about <unk> future and I'm looking forward to building on the solid foundation, that's in place and leading the next phase of growth.
I'll now turn the call over to <unk> for details on the finances.
Thank you John and good afternoon, everyone.
First I would like to address the material weakness that we identified during the third quarter close process. The material weakness was caused by the transition to the PLE code for billing.
We have that corrected <unk> charge and air and reverse the revenue accrual that was built incorrectly.
As a company we are committed to best practices in our financial reporting and have taken immediate action toward Remediated. This weakness.
Earlier this year, we hired a consulting firm for upcoming Sox 404, b requirements and are working with them to strengthen our internal controls.
This weakness, we will be restating second quarter results and filing a restated 10-Q for the second quarter, yes.
She identified BLA codecs, you had an impact on revenue accounts receivable and other liabilities on our second quarter financials.
<unk> of these errors with an overstatement of revenue and accounts receivable and the amount of $1 4 million and <unk> 9 million, respectively, and an understatement of other liabilities in the amount of <unk> 5 million.
Second quarter revenue will be restated for $7 6 million.
As mentioned earlier, we continue to see the number of ordering health care providers increase.
This quarter, we achieved 2287 ordering health care providers compared with 1969% in the third quarter of 2021.
16% increase.
In the third quarter test grew approximately 12% year over year, and 2% quarter over quarter to 35569, best delivered compared with 31742 tap.
In the third quarter of 2021 and 34919 in Q2 2022.
We did see an impact on demand from hurricane and during the last week of the quarter as people began to evacuate Florida is one of our largest market and we saw the impact on demand continue through the first weeks of Q4.
Total revenues in the third quarter of 2022 were $14 7 million compared to $12 3 million in the third quarter of 2021 <unk>.
This represents an increase of 22% over the third quarter of 2021 as Jon mentioned this includes $3 $7 million in revenue from Q2 Medicare claims.
We saw continued disruption caused by the DLA code with commercial payers, which resulted in a reduction in revenue due to write downs from the trailing two quarters.
We're not collecting at the rate we have previously accrued and had to reduce their girl write down for <unk>.
<unk> picked up.
The $14 $7 million of Q3 revenue contained $3 7 million from Q2 Medicare claim.
<unk> CTD test revenue was $12 8 billion in the third quarter of 2022, compared with $9 9 billion in the third quarter of 2021.
Other testing revenue was $1 9 million in the third quarter of 2022, compared with $2 million in the third quarter of 2021.
Our revised DTD and other testing revenue resulted in testing revenues of $14 7 million in the third quarter 2022, compared with $11 9 million in the third quarter of 2021.
With Q2 financials are stated year to date revenue through the third quarter at $32 7 million compared to $35 6 million through the third quarter of last year.
The $2 9 million decrease in year over year revenue is primarily due to a decrease of $1 4 million in Avaya Edd testing due to lower asps.
Partially offset by an increase in volume of $1 million decrease.
Due to the termination of the <unk> agreement and a <unk> 5 million decrease from other testing.
Cost of revenue were $6 million in Q3, resulting in total gross margin of 59, 2% compared to 55, 2% in the third quarter of 2021.
<unk> gross margin was 39, 2% in the third quarter of 2022 compared to 53, 7% in the third quarter of 2021.
Operating expenses in the quarter were $22 5 million compared with $18 8 million in the third quarter of 2021. The increase was primarily due to larger expenses in the following areas.
Employee related expenses associated with the overall increase in head count marketing spend R&D expenses cost of revenue due to the increase in testing volumes and public company cost.
This equated to a net loss in the quarter of $8 1 million compared with $7 2 million in the third quarter 2021.
Looking at our balance sheet cash and cash equivalents as of September 32022 were proximately $68 7 million.
We put an ATM facility in place during the third quarter, we do not have any immediate plans to raise capital from an ATM offering we view this as a prudent way to make sure we have access to capital at opportunistic time to support the business as capital needs change.
Our burn in Q3 was seven 6 million.
Arguing all aspects of the organization's control spend we.
We are focused on improving our profitability profile.
We aim to provide a more detailed strategy of our path to profitability. Once our current analysis is completed.
For full year 2022, given current reimbursement trends, we are increasing our guidance to the revised range of $40 million to $43 million.
We will now open the call for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad a.
A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to have your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys, one moment. Please only Paul for your question.
Our first question comes from the line of Max Masucci with Cowen and company. Please proceed with your question.
Hi, good afternoon.
First question for John just wanted to congratulate.
Congratulations on your next chapter and nice start.
<unk>.
He served in a leadership role to safer during the company's triple digit growth phase through major reimbursement milestones and into a more maturing phase under the umbrella of parasites. So it.
It would be great to hear what initially.
<unk> interest in joining <unk>.
How that reality as compared to your expectations, and where you see an opportunity to.
To make an immediate impact.
Hi, Max Thanks, so much for the question really appreciate it.
So I've been part system successful teams and certainly have the opportunity to benefit in that regard and I think <unk>.
It very much has a similar foundation I was attracted to <unk> because it has proprietary testing and is working to deliver a service model that differentiates and I think that that's something that is a winning combination and that I'm.
Well suited to help with and provide value on.
Maybe I can speak a little bit to my process right now so for the last four weeks, what ive, but I've really tried to do is meet with as many folks within the organization as possible.
<unk> one on one meetings.
With a significant number of individuals in all facets of the organization. So field based folks are billing and provider relations our customer service organization.
In the laboratory I've spent time talking to our scientists and I've spent time with our research arm as well I think.
The opportunities are starting to arise but it is early for me to conclude our suggest exactly what.
Is there an appropriate path forward I think as I mentioned I'm, starting to see trends and and I think as I continue to have some of these one on one conversations and meet more folks that clear path will be reinforced throughout I don't necessarily think that I had the prescription right off the bat I think that would likely be a mistake.
In many regards and so I'm learning what special to ask again, what special to the products here and then leveraging some of the experience I have to assist in improvement so hopefully it.
Rides, a little color I do anticipate and recognize people are looking for.
Little more specificity here and I think over the coming quarters there'll be able to provide it but I'm very excited about what I've seen so far.
Yes.
Fantastic I appreciate the color.
First of all just with all the moving pieces.
Can you just sort of help us understand.
The bridge to the implied Q4 guidance.
I know it might be a bit premature to talk about 'twenty three but.
How are you thinking is there anything you can provide us to help us think about ASP.
And margin trends in 2003.
Yes, thanks for the question Max.
As you saw we had some strong volumes in Q3 and that's continuing into.
Our projections for guidance for the full year.
Reimbursement is definitely one of the biggest challenges we saw Medicare resumed paying but we still have headwinds with our commercial payers. We did note write down in Q3 of about $1 7 million that gets us clear through Q3 in our guidance that we provided on this call is.
Taking into account any future headwinds that we can see at this point.
But that's pretty much the most I can say with where we are at this point and improving our guidance to $40 to $43 million historically, we haven't commented on.
Next year's guidance until we get through our Q4 call and I think given the.
Fluid situation of.
What's changed in the past quarter with Medicare resuming pain payment and commercial payer headwinds, it's very prudent for us to wait until that time to give more color to 2023.
No no worries that's fine.
Final question for me would just love to hear any feedback.
Maybe first from Jon that you received.
Following some of the presentations at the ACR Conference in September just how the how the Hell radar.
As received.
And just generally.
The sort of feedback you had coming out of that event.
Certainly I think it's an important point and thanks again for the question.
ACR was exciting from my perspective, the rheumatology space is newer to me and so I got the opportunity to interact with our team there along with several rheumatologists and learned from them feedback from some of the individual presentations has been positive still actually need to connect with our team in greater depth. The conference runs through.
Tomorrow actually so we had a talk today and we had one yesterday as well so looking forward to finalizing some of that feedback, but I know our talks were well attended.
We had a significant number of physicians sign up to attend.
The talk regarding our Capstone study.
And I really leveraged the time to meet one on one with physicians our team as well, but I was able to speak.
With a few academics and it became apparent that our tests do have proprietary aspects, which are differentiating and that was reassuring to me and the value that they are providing is significant and so I think.
If we take a look at the business as a whole and continued to improve our service offering.
It gives me a lot of optimism going forward. So it was great in that respect I think well received certainly.
Great well, congrats again on the new role and thanks for taking the questions.
Thanks, a lot.
Thank you. Our next question comes from the line of Mark Massaro with BTG. Please proceed with your question.
Okay.
<unk> on for Mike.
A question.
Yes.
Last call you guys.
Talked about the percentage of claims that were denied by Medicare as well.
Recognize that required additional information and thank you for that color. That's quite helpful. If you could just comment.
Tomorrow right.
When it comes to Medicare we've resumed getting paid from all their testing and this goes back to Q2. That's why we have that adjustment of a positive revenue recognition of $3 7 million in Q3 for the Q2 claims and we are being paid for the Q3 claims so right now we are.
Getting paid for all the claims for buying <unk> and Lucas Thats being submitted to Medicare.
Bill the other thing I'll add Vivien, maybe helps us a little context to the process. So far so we applied for our Pls code, which became effective in April of this past year and then throughout the summer we worked with Medicare and specifically meridian, our local Mac to really address.
Questions. They had regarding additional information on a per claim basis, but also regarding our test in general as Im sure you can imagine when we obtain the BLA code.
It differentiates us in a positive manner, we believe but it also you have to re explain exactly who you are and what youre doing and so as we worked with meridian over the summer to address those request for additional information. They subsequently have resumed paying so hopefully that provides a little color.
Actually paid back to all claims from Q2 as well as Q3.
Okay got it thanks for the clarification.
Could you discuss.
Any color you may have on potential timing.
Thank you Jan.
And then any additional evidence or actually you might peak move along at conferences.
Thanks.
Certainly and I think a great follow up question.
I think guideline inclusion is a key aspect of an overall managed care strategy and specifically.
A key component of progress with Payors.
The guidelines as they pertain to lupus specifically are interesting so feedback from payers more recently, especially post PMA code or that they look to the ACR guidelines such as the American College of Rheumatology guidelines for whether or not advised lupus is considered medically necessary.
Nuance there that I think is important to understand the distinction that's relevant and that's that those guidelines actually are not diagnostic their specific for classification and so theyre designed or their aim intent. If you will is to provide uniformity in enrolling patients into lupus trials across the world actually.
Not even specific necessarily to the United States.
And so while payers are looking to those for diagnostic classification.
They are providing.
They are providing criteria for clinical trial enrollment and so we're working with ACR.
Thing that we've initiated.
More recently, but our medical team is actively engaging with them.
And then we're also.
Really need to evaluate over the next year how are current evidentiary packages received with some of these payers.
So I believe well I think it's a mistake to timeline right now I think it would be uninformed and likely very difficult to predict so it's tough to assess that always forecast. When these things are going to occur and so I don't think I'll do that four weeks in.
But from our perspective, we recognize the importance I'm highly focused on it.
The clinical demand of the product heavily supports its utility and our evidentiary package is strong we just have to get a little bit more feedback as to how strong and so those dialogues are occurring but I'll be happy to report back here over the coming quarters.
Got it thanks for taking my question.
Thank you. Our next question comes from the line of Andrew Brachman with William Blair. Please proceed with your question.
Hey, good afternoon. This is terrific on for Andrew Thanks for taking my questions.
Maybe just a quick follow up on the guide I think about $8 8 million implied in Q4 at the midpoint from an ASP perspective, if you take out that $3 7 million from the claims in Q2 as it relates to just what I have seen number about 250 Bucks in Q4, and then is that how youre sort of thinking about.
250 in Q3, and a Saturday sort of thinking about Q4 here.
Well when you get down to the $2 50, and ASP for Q3 that that's assuming that that $1 $7 million write down.
Continues on in Q4, so that's that.
That's an assumption that needs to be made and obviously, we had a write down in Q2, and Q3 and were facing payer headwinds.
So that's that's an unknown.
But it's definitely a challenge we're facing so it does.
We have to take that into account when we provided guidance of $40 to $43 million.
Now without that $1 7 million youre closer to just north of $300 ASP in.
In Q3.
Yes.
Got it that's very helpful. Thank you.
And then just a quick follow up on radar timelines I think initial plans had been for kom launch.
Time in the fourth quarter, and then maybe a commercial launch sort of mid 2023.
Any update to those which are sort of reassessing that chunk.
Certainly Griffin. Thanks for the question. It's an important note. So I mentioned in the remarks, a second ago.
I am evaluating every aspect of our research pipeline, it's very important to me that we have clarity and higher level of predictability into when we think our product can be reimbursed and I'm not quite there on the radar side, yet so I need to learn more as I mentioned it takes a little bit more time for me to make some of those conclusions.
But.
From my perspective, I'll be happy to provide updates here in the coming quarter.
But I don't have that level of certainty right now on a reimbursement side with the radar program. It is proceeding well from a development standpoint.
And from a research standpoint.
On the commercialization side.
I may have to reset some of those timelines.
Okay. Thanks for the questions.
Thank you. Our next question comes from the line of Kyle Mixon with Canaccord Genuity. Please proceed with your question.
Hey, Thanks welcome John .
I guess commodities a question for you on is $3 7 million in catch up revenue from the second quarter.
How many claims does that represent looks like maybe 3004 thousand like us or just kind of curious about that given it didn't occur in the third quarter.
And then I know look at the commercial side is kind of a storm right now, but like is there any risk at all youre not paid for Medicare claims next quarter.
So and so to address the first.
First part of that question.
And historically, we've seen our Medicare the percent of advise CTD volume come in at about 13%.
It's been pretty constant in terms of volume there. So you can imply what one quarter would be based on our testing amount.
And again it was all Medicare claims we are now getting paid on all Medicare claims to provide PPD and lupus for Q.
Q2, and Q3 from the start of when the Medicare reimbursement issue occurred I'm going to let John address the second part of the question in regards to going forward with Medicare in Q4, and 2023 sure. Thanks for the question Kyle.
From a long term predictability of Medicare payments regarding the advised lupus claims I don't think were in a place to state that.
With a high degree of confidence I think what I would do.
The way I would look at it is where we're at currently as Medicare has reached out to US and has asked us for additional information regarding our tests and for individual claims we have provided that information to a satisfactory level such that they have resumed payment on all claims over the prior two quarters.
That does give us confidence that on a claim by claim basis theyre being adjudicated positively.
But as to.
On a go forward basis, the appropriate path here is to secure an LCD, which we have started.
A local coverage determination and then.
Followed those next steps so hopefully that gives you what you're looking for.
Okay, Yeah that was great John and then just on that point.
The crosswalk conductor is kind of interesting I was wondering if you were surprised by that and like what was your reaction is this 40 rate I'll, let down compared to the 10 85.
So that's a great question I think from our perspective, we were looking to secure a price commensurate with.
The value and cost of the test being performed right and and so I think if you take a holistic look at it we were able to do that the company was able to do that.
Initially the price that is really consistent with your list price and the only mechanism to maintain that.
Over a longer period of time is really the <unk> route. So I think from our perspective to be crosswalk to a reasonable code, where it's similar resources used and.
And as similar analyzed evaluated I think it was a successful endeavor.
Okay. That's helpful. And then just back to the fourth quarter guidance it does imply to us.
Steep revenue decline, but the factors kind of makes sense I mean, it's just not quite clear if volume will increase is that in part in the expectation.
It seems like the trend are typically that fourth quarter volume should increase a little bit <unk> and John look I think maybe 2019 I was different but just could you just talk about what volume trend and should we expect a decline or flat or something like that we.
We had one year with Q4 being an anomaly where volume increased and was the Covid Euro 2020, and what we saw was a lot of physicians not there was no ACR. It was virtual they still stop patients and a lot of patients and physicians not paying indications around the holidays that was an anomaly.
Most of the years Youre going to see Q4 with lower volume in Q3, and Thats due to a few reasons and we see that the year after year.
Hope, it's not an issue and it's because the physicians are out of the office during ACR, which we just filed last week in Philadelphia and then your number of lab days, so because of the seasonality of the holidays hitting in Q4 with things, giving Christmas Hanukkah, we're going to have fewer lab data and then the last piece that we do have remaining towards the.
The end of the year, usually have less patient flow going to the physicians, which is going to cause for lower volume. So historically, we do see lower volume in Q4 than Q3, I don't think this year will be much different than that I would anticipate seeing those seasonality factors occur in Q4.
Alright, and then how about adopters in the third quarter I don't I didn't see that in the release or in the remarks.
Last quarter that was almost 800, how is that trending now.
Thanks, Kyle Great question relatively flat, if not a little bit down in Q3 relative to Q2.
The reason why it wasn't necessarily in the prepared remarks is actually ties back to.
My analysis of the company and evaluation of the company I'm really looking at every aspect, including all of our metrics and trying to better understand exactly how they drive.
Action on our site and so I may suggest an alternative metric in the future I just didn't have one.
Readily available at this time so.
I think of doctors is a good concept in general our definition I want to evaluate a little bit.
Okay totally fair John Thanks, a lot thanks, guys I appreciate it.
Thank you we have reached the end of our question and answer session I would like to turn the call back over to Mr. <unk> for any closing remarks.
Thank you I wanted to end by thanking everyone for joining the call today and for your interest in Nextgen I also want to thank the team at <unk> is they have continued to serve our customers through this transition in the company I look forward to continuing to drive.
Improvements within the organization and operations at <unk> and updating you on our progress over the coming months.
Okay.
Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
Okay.
Okay.
[music].