Q1 2023 Myriad Genetics Inc. Earnings Call

Adult please continue to stand by your myriad genetics call will begin shortly we thank you for your patience. Please remain on the line your call will begin shortly.

[music].

Okay. Good afternoon, and welcome to the myriad genetics first quarter 2023 earnings call. During the call. We will review the financial results. We released today and afterwards, we will host a question answer session or quarterly.

Earnings release was issued this afternoon on form 8-K and can be found on our website at investor Dot myriad data.

I'm, Matt Scott <unk> Senior Vice President of Investor Relations and on the call with me today are Paul <unk>, Our President and Chief Executive Officer, Bryan Riggsbee, Our Chief Financial Officer, Nicole Lambert, our Chief operating officer, and Mark variety, our Chief commercial officer. This call can be heard live via webcast at inverse.

<unk> got married Dot Com and a recording will be archived in the investors section of our website along with this slide presentation. Please note that some of the information presented today contains projections or other forward looking statements regarding future events or the future financial performance of the company. These statements are based.

Just on management's current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual.

Report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward looking statements with that I will now turn the call over to Paul.

Good afternoon, everyone and thank you for joining us on today's call. We will discuss highlights from the first quarter and provide updates on the strategic initiatives that are driving our long term growth plan.

So many positive changes happening across our organization I want to take a minute to thank our Marriott teammates and our provider partners for their continued commitment to advancing our mission and vision to make genetic testing in precision medicine more accessible helping people take more control of their health and to enable providers to better treat and <unk>.

<unk> disease.

Turning to slide four myriad genetics had another strong quarter as we kicked off 2023 ahead of expectations total revenue grew 10% year over year, driven by another strong quarter of double digit volume growth in both my risk hereditary cancer testing and gene site.

Total volumes grew 21% year over year and 10% sequentially.

Excluding St Pete.

A vegetarian cancer testing volumes grew an impressive 24% year over year in Q1, after growing 16% year over year last quarter.

For those who have made doubted our ability to sustain gene site growth, we processed a 110000 tests in the first quarter a company record.

And so our approximately 4000, new clinicians ordering gene site for the first time.

We're also very excited about the progress we made in our prenatal business.

Which despite some interruptions in the state of California through test volumes, 12% year over year in the quarter, excluding contributions from gateway genomics.

This quarter gives us confidence in our ability to achieve our full year financial guidance as well as reach profitability and positive operating cash flow in the fourth quarter of this year.

Additionally, we believe that our continued commercial execution robust product pipeline and top tier talent will fuel our long term growth even further.

In the quarter, we announced several new exciting strategic partnerships, including an expanded partnership with Illumina to combine our unique diagnostic development and commercial capabilities to expand our emerging biopharma business and broaden access to HRD testing in the United States.

We also announced a new collaboration with Simon that imaging one of the largest independent outpatient imaging providers in the United States to improve access to our my risk regulatory cancer tests with risk score for women of all ancestors. The call will speak to these new partnerships in more detail and we are excited about a number of other similar.

Development opportunities under discussion.

At myriad genetics, we strive to provide best in class quality tests and scientific insights for our providers and their patients from leading research and development and molecular companion diagnostics to products, helping to address our growing mental health prices. We are working at the forefront of innovation in our space.

We also want to ensure that we are actively removing friction points for our patients and healthcare providers to make it easier to do business with us.

The call will talk about some of the progress we've made in improving the patient and provider experience with new tools like our unified order portal and EMR integrations later on this call.

Finally, improving access to our tests for patients of all demographics is extremely important to us.

Serving underrepresented populations that this disease.

Our patient outreach programs is proving to be very effective and we are excited about our new point of care financial accessibility tools and payment programs to improve access for all patients.

Transitioning to slide six I'd like to outline.

Exactly why we think and what it takes to be a winner in our sector.

First we strive to have the best science in products, whose access and adoption are enabled by technology in our field.

For us this means having products that deliver real world.

The result in clinical settings to high quality actionable and differentiated tests that help support early detection and treatment decisions.

Second we believe you need automated scalable and cost effective lab operations to deliver on our mission.

Our labs, the future strategy, which the court will discuss later on the call allow us allows us to improve workflows.

As turnaround time and reduce costs through advanced technology and automation.

Similarly, the investments we've made over the last few years and modernizing our it platform allow us to better serve our patients and provider partners at scale across all products and channels at lower costs.

Third a strong commercial platform ensures that our providers and patients benefit from partnering with myriad genetics and that we can grow efficiently.

And finally to win what needs best in class regulatory revenues and revenue cycle capabilities, Great science used to develop practical high quality diagnostic tests operating state of the art facilities that reduce cost with the ability to get paid for our efforts is key.

Our payer markets team has deep industry experience and plays an integral role in the development of our product pipeline as well as our commercial reimbursement strategies. We see this as a competitive manage that does not often received the credit it deserves.

That I will turn it over to our Chief commercial officer, Mark variety to speak towards our commercial capabilities in more detail.

Thanks, Paul I'd like to start on slide eight and talk about our commercial team. We have made tremendous strides in our commercial execution over the past year were changes made across the organization that have enabled our sales force to effectively target and penetrate both new and existing accounts the results speak for themselves with robust volume growth over the past two quarters.

The vast.

The majority of which come from existing accounts. This gives us confidence in the changes that we've made in the commercial team because growth in existing accounts means that tailwind like market dislocation have to date not been the key drivers of our commercial performance what is driving our continued volume growth as our skilled and focused sales force with years of experience.

ZIP period, working alongside providers and their patients.

With new digital tools and scientific insights that help them better serve our customers while simultaneously attracting new accounts to the franchise. Our sales force is motivated by these new capabilities because it makes their jobs easier, which is why we've seen turnover across our entire salesforce drop down below 8% something that.

We are incredibly proud of.

Now I'll turn to slide nine and talk about our core business units.

Our oncology business delivered $77 6 million in revenue in the first quarter.

Ported test volumes were roughly 50000.

Polaris our market, leading prostate cancer test continues to reach patients with diagnosed prostate cancer to provide them and their physicians with important information needed for better treatment decisions in the first quarter Polaris volumes grew 22% year over year after growing 17%.

Year over year in the fourth quarter of 2022 Polaris is the only test with two validated thresholds at the time of diagnosis, one to identify which patients can safely go on active.

Surveillance and the other to identify which patients need multimodal therapy, who can safely avoid additional therapies like hormone therapy. In fact third party research shows the Polaris using active.

Surveillance threshold identified almost twice as many patients who can safely go on active surveillance compared to our peers.

This is not the only highlight in the quarter for oncology business hereditary cancer testing volume and oncology grew 16% in the quarter year over year, and we added a number of experienced leaders to the group to help drive growth even further with.

With improved operational efficiencies.

15% reduction in turnaround times for oncology tests compared to Q1 of last year, along with a net promoter score of 73% amongst oncology providers and a fully equipped salesforce. We anticipate continued growth from our core oncology tests.

Now I'll move to women's health on slide 10.

<unk> Women's health business service.

Women of all ancestry is by assessing the risk of cancer and offers prenatal testing solutions for those who are pregnant or planning family in.

In the quarter hereditary cancer testing volumes of women's health increased 32% year over year, making three consecutive quarters of positive volume growth. The strong momentum reflects a combination of deeper penetration of current accounts and new customer wins and ongoing gains and addressing unaffected patients with a family history of cancer.

We are also excited to announce that we have launched our unified ordering portal for the women's health business in the quarter to simplify the ordering process for our customers, especially for those ordering more than one <unk> product.

We plan on converting all existing myriad women's health customers to our new unified ordering portal by the end of the year.

And prenatal we are pleased to report a 12% increase in quarterly test volumes compared to Q1 of last year. This figure excludes any contributions from our recent acquisition Gateway genomics and features minimal contributions from the state of California due to ongoing disruption caused by the states revised prenatal screening.

We are very excited about this growth and look forward to continued strong performance, let's move now to slide 11, and talk about mental health and gene site.

Nigel owners continues to have a lasting effect on patients and their families in the U S. As those suffering failed to receive proper medical treatment.

Insight helps physicians better understand how antidepressants and other drugs will affect their patients importantly for this patient group. The tests can be performed with just a single cheek swab samples that can be taken in the privacy of their own home.

In the first quarter gene site volumes grew 31% over the prior year as we've added approximately 4000, new clinicians to the franchise, bringing myriad to more than 26000 active ordering physicians for the gene side test.

We believe that the ongoing success of gene site further demonstrates the effectiveness of our new commercial capabilities digital marketing strategies and patient centric engagement initiatives implemented over the past year.

On that note I want to turn to slide 12, and talk about our digital platform.

I've spoken about our digital capabilities before primarily as it relates to gene side I'll give another shout out to the GNC team for the success. They have seen in developing these capabilities and transferring them to other parts of the business specifically in women's health and urology.

Now, let's look at this funnel, which should help visualize some of the examples of these digital capabilities as you can see last year, we increased our total web site traffic by over 10% and more importantly, we have learned how to convert that traffic into greater qualified leads.

In other words, we've learned how to connect people, who need gene site to our website in 'twenty. Two we increased the number of qualified leads from website traffic by more than 50% compared to 2021 for both patients and healthcare providers than our inside sales outside sales and marketing teams equipped with new digital tools and automation technologies.

Our battle it able to convert those leads into actual orders in 2022, we increased the number of leads converted to order test by more than 30% compared to 2021. These results are outstanding and I just want to thank the team again for doing such a great job developing and executing on this digital platform as we look to 2023, we plan to lever.

These proven digital capabilities and drive growth even further.

I'll pass the call over to our Chief operating officer, No coal Lambert to talk about our products and key initiatives.

Thanks, Mark I'd like to start on slide 14, and speak about our products and priorities for 2023.

The aim at improving the customer experience and creating an environment of innovation, we talk a lot about making it easier to do business with myriad genetics, just means listening to our patients and providers and taking actions to address their concerns and adapt. However, we can recently, we added more genes to our primary my wrist tests and announced a partnership with <unk>.

Cause our providers ask us to.

Not only have providers responded positively to changes like these but they know that we're listening to them and we want to hear from them. We are pleased with the ongoing rule out of our new unified provider portal and our unify order management system, which not only ensure that we are getting the information required by pairs, but they also make it much easier for providers to order our test for their patience.

<unk> it reduces the number of times, we need to re contact our providers for this information.

R E M R integration with the likes of epic and others not only ensure that we are getting patient medical records from providers, but it also means that providers who are already in those M. Our systems do not have to provide those documents to us outside of their normal work flow.

On the next slide we can see the tremendous progress that we've made working with clinics using EMR integration to deliver more test results for my wrist, where the jury cancer test.

In January we launched our new unified provider portal and women's health and we're already seeing tremendous uptick from providers.

We plan to convert all existing married women's health customers, who are new unified portal in the very near term.

With that let's turn to slide 17, and talk about our updates to love with a future.

Preparation for a new lab with a future on track as both new facilities, one in West Salt Lake City, and our new headquarters in Central lot lab operations and the other in South San Francisco, The Walter Gilbert Research and Innovation Center, which is named after one of our Nobel Prize winning founders Walter Gilbert are both ready for moving this June in addition, we.

Taking steps to exit our current headquarters building in Salt Lake and are moving lab equipment to our new headquarters as we speak.

These new facilities not only to create a more cost effective approach to running our task, but they foster an environment of innovation in collaboration amongst our commercial support and scientific teams.

Next on slide 18, I'll talk more in depth about some strategic partnerships that we made in the quarter.

That's why I mentioned, we announce several new and exciting strategic partnerships this quarter, including an expanded partnership with alumina and a collaboration with Simon net imaging as.

Such a limited T. S. L 500, HRD test is now available in the U U S for research only and a unique companion diagnostic alliance has been established to enable more clinical research for gene based targeted therapies. We look forward to working more closely with aluminum to broaden access HRD testing in the United States.

We are equally excited about our new collaboration with Simon net imaging one of the largest independent outpatient medical imaging providers in the U S.

Together, we plan to launch a new hereditary cancer risk assessment program that combines diagnostic imaging with genetic risk assessment utilizing my risk with risk or to enable affordable access to genetic testing and deliver personalised insight to better inform clinical care for millions of patients served at Simon <unk>.

I will now turn the call over to Brian to discuss financial highlights in the quarter.

Thanks, Nicole I'd like to start by reviewing product volume crumbs on July 20th.

We generate a strong double digit growth in both registered Stanford testing and G. Five volumes in the first quarter thriller. So unimpressive, 20th 2% quarterly volume growth figure compared to Q1 of last year and prenatal volume excluding contributions from sneak peek through 12% year over year.

First quarter volumes grew organically, 21% over last year overall.

Overall, the quarter reflected really positive broad base volume growth across the portfolio.

Starting with the first order total revenue, we generated $181.2 million in revenue or 10 per cent growth over the year ago period.

A second consecutive quarter of double digit growth in total rubbish. This.

This growth rate reflects strong volume, which is partially offset by product mix of a challenging year over year Harrison related that out of period cash collections recall that first quarter 2022 benefited from approximately $12 million and positive out of period adjustment, which were immaterial in the first quarter of 2023.

In addition to make the price point create significant product mix product next impact taking these factors into consideration underlying asp's were in line with our longterm forecasted range of negative 3% to 5%.

Healthy growth across our business units reflect the number of comments hallmark, Nicole I've already mentioned, including improved execution by a strengthened and highly motivated commercial team as well as investments in core infrastructure and improving customer experience.

First quarter total adjusted operating expensive $144.5 million, while above our prior commentary reflects higher than forecasted performance space Commission and the timing of certain sales and marketing cough.

We remain confident that these investments will continue to support our birth story in January longterm shareholder value.

Will turn to 521 now to review our financial guidance.

We are updating our 20th twenty-three guidance to reflect the strong Q1 performance, we're raising the low end of our revenue range by $10 million, you're ordering a range of $730 million to $750 million or 8% to 11% growth over 2022.

Gross margin for 2023 remains unchanged between 68, and 70% and is expected to fluctuate in any order given seasonality.

While our first quarter adjusted Opex been with higher than anticipated it as a line with our revenue outperformance in the quarter. We are raising our 2023 adjusted Opex guidance about $5 million to arrange a $535 million to $555 million, we anticipate quarterly adjusted Opex to decrease in nominal dollars base.

Through the remainder of the year this will be accomplished through tighter cost controls across the organization and reflect some programs sunsetting throughout the year, including certain sales and marketing expenses that were going for in the first quarter.

Net net we are nearing our 2023 non-GAAP E. P. S loss range to 24 to 36 cents with the midpoint unchanged. In addition, we reiterate our previously disclosed target of generating positive adjusted operating cash flow and profitability in the fourth quarter.

Moving on in terms of the balance sheet, we ended the quarter with $109 million of cash no debt and continue to assess our capital position in the context of our overall forecast to be profitable and generate adjusted operating cash flow by Q4 <unk>.

Existing credit facility expires July 31, and we intend to replace it with a secure a new secured credit facility to provide additional financial flexibility.

That you want in the first half of 2023 reflect an elevated level of capital expenditures associated with ongoing process progress in our labs of the future strategy in facility built out that Nicole reviews, we expect capex to return to a more normal level and the second half of the year is the filled out of these facilities is completed.

I'll now turn it back over to Paul for closing remarks on the next line.

Thanks, Brian as you've heard we have a lot of exciting organizational change is happening we remain focused and confident on reaching profitability in the fourth quarter of this year.

<unk> and growth and innovation, while keeping an eye on profitability as an ongoing challenge and opportunity. The one we're committed to.

In closing I'd like to offer what we believe our strength and strategic advantages first we continue to grow volumes consistently every quarter across our businesses and we know how to get paid for our test.

Second pricing for our product remains stable and we have visibility into pricing moving forward.

Third we have a discipline cost management structure is we expect to maintain our strong gross margins and manage our opex responsibly.

Fourth we are committed to effective capital appointment in key areas that will provide the customer experience, including new technical technology tools and capabilities innovation commercial strength in our labs for the future to generate strong returns for our shareholders.

And finally, our growth catalysts are clear as we continue to elevate our products to their full potential and Opportunistically look for tucking acquisitions like gateway genomics transaction.

All of this reinforcing our position as a trusted differentiated lab and special Ed with specialized expertise best in class quality strong scalable commercial engine underpinned by data research and technology with industry, leading margins and does the Spanish.

I also want to point out what a great job. Our teams are done and listening to our patients and providers. We have re approached the way we engage with customers.

And they are starting to notice.

<unk> example, this is Nicole spoke to there are open source data strategy with <unk>.

Which is something that the genetic counseling community has been quite vocal about.

Keeping patients and providers at the centre of everything we do is starting to pay dividends and we are excited about finding new ways to make it easier to do business with us.

Everything from increased price transparency and affordability for patients to the rollout of initiatives like EMR integrations with ethics, and our unified order portal.

With improvements Samir incomplete or customized suite of services and workflow solutions that.

That alternative back to map for Q&A.

Thanks, Paul and as a reminder, during today's call we use certain non-GAAP financial measures for reconciliation of the gas to non-GAAP financial results in a reconciliation of gas to non get financial guidance can be found in our earnings release and under the Investor Relations section of our website.

Now we are ready to begin to June a session to ensure broad participation. We're asking participants to please ask only one question and one <unk>.

Operator, we are now ready for the two and a portion of the call.

Thank you very much if you would like to register a question. Please press the one followed by the four on your telephone.

You will hear a three tone prompt says acknowledges that request <unk>.

Question has been answered and you would like to withdraw your registration. Please press. The one followed by just three once again to register for question. It is one four on your touch Awesome. Your first question will come from the line of Andrew Cooper with Raymond James Your lungs.

Hey, guys congrats on a a nice quarter here on the top line and thanks for the questions maybe.

Let me just first thing I didn't really necessarily touch and in much depth on it and the call. So I just Wanna make sure in terms of timelines with some of the pipeline, what's what's working through that everything's on track or if there's any updates to the different pieces of precise as well as first seen in the rollout of some of these additional costs.

Yeah.

We continue to look at our product management across the portfolio, including the new product launches and so.

And to enhance the current products, we don't see any material changes in our timeline, we still expect to launch first Jean softly in queue for what exactly that looks like we have some enhancements to four site that we want to do.

Anticipation of expanded a called guidelines so there.

We've really instituted a product management approach across our current portfolio and and the new product launches in so for example.

Learning in our new oncology team is working on the precise rollout and we want to make sure that we've improved upon that before we rollout precise liquid.

And as we've talked a little bit about our our biopharma business is really taking off and that bodes well for the interests that we've seen in precise M. R. D. On the research side. So again I think enhancements to four site will improve the first gene launch and it is foundational to that but we don't have any any.

Material changes at all to kind of the pipeline or the timing that we're looking at this point.

Okay, Great. That's Super helpful. And then maybe secondly, maybe for Brian or Paul.

Whoever wants to answer it, but just a little bit more color on the Opex increase you know I think one of the questions and masters and had been on the ability to do some of these things without incrementally more spending. So just how much you know can you give us a little bit more color on what that is and how much of that sun setting that was mentioned and things like that one was already plan through the year <unk>.

Things that are coming in in an attempt to offset higher costs elsewhere, just a little bit of a kind of explanation or color around that would be it would be super helpful.

Yeah. Thanks to Andrew you know I I think first of all the you know as we said the Q1, you'll have some incremental costs, especially as it relates to some of the selling functions given the significantly yeah. This the step up in volume from Q4 to Q1, there was some cough that went along with that obviously.

He came in you know they noticed much higher on the revenue Klein or our plan for the year had all had always sort of been for you know some of the projects and initiatives that we had earlier in the year to start with to Sunset as we move through the year and so we continue to not only expect that but to also ask.

<unk> some of the cost control programs that we've put in place to have an impact Thursday through the year and that's how we get to be updated in our guidance.

<unk> I just want to reiterate.

We had sales and marketing expenses commissions.

That helped drive a lot of the growth that will sunset, yeah. Some of which was the way the commissions were budgeted quite frankly, given seasonality expected volumes to be down not up to the level, they work and but more importantly to the other underlying question. The the Opex budget here reflects.

All of the investments that we anticipate there'll be necessary to launch first Jean two advanced clinical validation work for M. R D and to keep everything else on track that you asked about before so so investors should be confident that there won't be any surprises in the opex in terms of new.

Product launches in fact, it's all about scaling new products on the current commercial infrastructure and leveraging that so that's that's what investors should count on here.

Great, Yeah, <unk>, new product or.

New comp Bogeys is is a high class problem they have to deal with so I appreciate it I'll stop there.

Thanks.

And your next question comes from the line of Dave Dylan Hunt with Goldman Sachs. Your line is open.

[noise] you guys congrats on the corner.

On the <unk> M. R integration could you tell us a bit more about how you <unk>.

Measure the productivity increase you'd expect there.

Yeah. Thanks for the question really we're looking at those account would you say Oh, yeah. Some of them are existing account for us to see okay. If we make the process that much easier. What's the list that we should expect that each of those accounts are working you know a fairly wide variability you know in in some.

Clinics to work for this isn't all that established instead of <unk>, but in a lot of these clinics you know the <unk>.

Clinical Beyen is already there the physician already believes in the product. It's just a matter of making it that much easier for the staff and so we looked at.

In the early days, we looked at those right like customers that we already have what's the uplift that we can see what they think the real power of that epic agreement is in those clinics, where we didn't already have existing customer and we can get new customers based on the ease of which they can order and how we can just bringing a sales force to.

To enforce the clinical utility and the value of our products and then the the uplift will be a lot faster than those clinics. So I would say, we're measuring sort of new customers and speed to getting up to you know to full potential and then what's the lift an existing customers. So what what was it to add what we have seen it.

And and the various EMR integrations.

Nichols spoke to us about a 25 per cent lift and volumes in wallet chair and I just wanted to reiterate that most of these solutions did not drive fourth quarter. In Q1 results. Most of these solutions are coming into place now so it really.

It gives us a lot of confidence in our ability to grow as we've we say that over the last year or ability to grow in 23 and going into 24. So the other thing that's really an important enhancement here is getting paid being able to pull medical necessity prior off it Adam.

<unk> or sooner what are the other <unk> that we're working on just create.

Creates less friction with the payers as well and that'll enables us to reduce our no pay and get paid faster. So there's just a lot of benefits here and obviously getting the reports back to the provider more quickly. So they can treat the patient. So it's it's a winter across the board.

Okay. Thanks.

Thank you.

And your next question comes from line of <unk> with Bank of America. Your line is open.

Hey, Paul and team this is Shaun on for Derek.

Yeah. So congratulations first of all strong double digit growth again, this quarter, but I want to make sure I I wanted to ask how much of that grosses off perhaps easier comps from probably a year due to COVID-19 versus incremental like like were there any catch up pay.

<unk>, perhaps from the new code going into effect or any any one time items.

No as a matter of fact this is Brian spoke to we had to overcome the prior to 12 million dollar prior period collection strong collections that we had in Q1 last year. So.

Clearly the pumps were easier to achieve given omnicom last year, but I would point you to as a quarter over quarter, 10% growth that we had sequentially and what is typically a four five per cent down quarter. So the momentum in our across all our products.

My risk hereditary cancer prenatal that grew 12% off of of of low performance last year really performance across the board and most of that is mark spoke to coming from wallet sure if existing customers were not even seeing yet the flow through of new customers that are just being on.

<unk>, so we're feeling pretty good about the mole medicine.

I appreciate that so that means you still expect gene side to grow upwards of 20 per cent for the year. How do you see my choice and <unk> the premium data products contributing to that gross.

If you're able to break down those segments.

Well, we we don't break down those segments, but I think what we tried to focus everyone's attention on his over the last year and Nicole spoke to this it is it is about with short products with known reimbursement in guidelines, where our principal challenge with ease of use for providers and you're seeing double.

Will digit growth across all the product lines and.

And still pretty low adoption right. So when you think about <unk>.

Is that segment that that area is only 25 per cent penetrated same number for hereditary cancer. So when people talk about hereditary cancer being commoditized or some melting ice cube on pricing.

It's just not true and and we're demonstrating that and and particularly with a 34 per cent growth in women's health unaffected patience with a family history that meet guidelines.

<unk>, which are 25 to 45 Yep, there's just great opportunity for patients to access my risks with risk or which is by far the best hereditary cancer tests in the marketplace.

[noise] Gotcha I appreciate it.

And your next question will come from the line Jackman with <unk> research.

Thanks, Good afternoon.

<unk>, Brian I wanted I wanted to ask you about the Genesight I S. P. Just how the coating change play down the quarter and calculating and E. S. P of about 290 Bucks sit down 13% sequentially My math under the Medicare rate came down 15%. It was my understanding that was only like 25 <unk>.

30 per cent of the volume, though so can you just talk about what you know is my math right and what was the remaining driver of the sequential decline.

Yeah, Yeah, I mean, I think in total the and I look at it sequentially as well I think yeah that that's the right math, what I would say is that over half of that sequential change was really driven by the normal seasonality that we see as long as well as a as a transitory billing issue that we didn't resolve until late in the <unk>.

Quarter and that'll play out over the course of the next few quarters. So those two items were were sort of over half of that change that you saw we did see some down as we have said at some downward pressure as it relates to the to the P. L. A code, but we still expect that over time longterm, yeah. That's that's gonna be a <unk>.

Positive to have a code like that that you need to gene fight recognizes yeah. It is it is transparent for folks as it starts to come in and be a covered service, but yeah that that was that was some portion of it but but the majority were the first two items that I mentioned Leslie.

<unk> forget the revenue growth quarter over quarter in June .

At the end of the day is what we're being judged by her.

<unk>.

Sure.

And then also wanted to ask just about the Dsos thing accounts receivable increased 17, and a half million sequentially. You know last year was 10 million in the prior year. It was 5 million just maybe this is related to the billing you were you were referencing but just like the increase was bigger than in the past.

Can you comment on that.

Yeah, I think two things one is you know when you think about the the year over year, a comparison that the revenue with us substantially you're you're especially when you back out the out of period cash collections out of last year that obviously would not have had an end of period, a are a fact and and and.

March typically the way the quarter pole is the biggest month of the quarter and there's not an opportunity to collect that so you know I think it I think the way we look at it if you have D. S. O's are right in the range that we would've expected really be increase in the in the balance is driven by the the increase in revenue.

And we've seen that five day pop in and worked it down every year as well so it's it's sorta seasonally consistent.

Okay. Thank you guys.

And <unk>.

Yes, a brief reminder, tool to register a question is is one four on your telephone keypad. Your next question comes from the line of <unk> with S. V. B. Your line is open.

Yeah, Hi, Paul Thanks for taking the questions. So.

Was there a research contribution on the M. R. D size in the corner and you know wondering what's the latest update their in terms of the product launch and how are you thinking about the market overall with the there's some new entrants into the market that are launching the assays prior to reimbursement and so obvious.

The number is growing in the markets and just wanted to get your latest as to how are you thinking about this market a world.

Yeah, we're still incredibly excited about how we stack up in terms of the <unk> that were standing up operationally in our existing labs for the technology that we have with prequel and my choice.

There were no M. R D revenues in the quarter as we talked about you that'll.

That we believe will happen in the back half of the year, a lot of interest, though and and discussions advancing with pharma on research M. R. D. So we do expect to to see some of that go through and I think that will.

No pun intended validate our <unk> and importantly, I did in the quarter, we did see some nice growth in our Biopharma research business, but it was not an M. R D. But those relationships continue to expand that's led to our companion diagnostic expansion in again as a cold spoke to we think the aluminum partnership.

We'll just open up more of those conversations so we have a growing form of Biopharma business and are excited about the differentiation of R. M. R D assay.

I I would underscore the differentiation is that when we come to market a.

We will generate revenues from research. So we're confident about that and be we can stand it up in our labs and commercialize it a lot quicker. So I will be talking over the next couple of quarters hopefully about some of the clinical validation work that we're doing with some academic medical centers and we hope to be talking about that here in the next several months.

Got it and then on as you look you know.

For the rest of the year you know you acquired sneak peek later last year just wondering in terms of the focus is it continuing to be on product launches and you know once you have trimmed the portfolio of it is it is it time opportune time to start looking at you know more.

S as in the space, obviously valuations will come down I just wanted to get to the late latest thoughts that emanate. Thank you.

Yeah I have a question then just give an observation to this sector and I am I only two and a half years into this but.

You know the focus on new product launches as opposed to getting the full potential of profitability on products that are leading and and and that have margins margin expansion I scratch my head about quite frankly, so we we have an exciting product.

Portfolio, we've talked about that contributing to 24, and particularly 25.

We're growing at 10% plus based on our existing portfolio and we see growth on top of that in terms of M&A, absolutely. We will continue to look for opportunistic tuck ins in in the areas, where we think we can win.

But yeah I'm just.

I don't know if I wanted to if I have an investor had on I'm really thinking about the opportunity to drive profitability and growth and core mature product for adoption rates are still low and the competitive environment has gotten a lot better that's not to say, we're not excited about first gene M. R D expanding to precise liquid but we're very.

Focus right now on Genesight My choice hilarious my risk in particular, I guess I would just underscore that from an investor's standpoint in return on invested capital.

Kind of makes sense and congrats on its own corner. Thanks <unk>.

Thank you <unk>.

Your next question comes from line of Mason <unk> with Stevens your lunch.

Okay Medicine.

This is <unk> cranberry on for medicine, Thanks for taking our questions. So.

You got to talk about the cross sewn opportunity for a number of your test across channels, whether it's selling genesight new ones I'll channel my risk into the neurology channel could you just elaborate on we're using the most success so far with that and what you use mostly tribe attractive opportunity on this front and it started this has been a dress for jumping around for you Tonight.

Yeah I drink. So this is this is mark speaking I think it's Paul mentioned were really in the early innings of that so I think what you're seeing now is receiving the fact that we do have commercial scale across those channels. So most importantly, they're all talking to one another they're making sure that a provider does want to get you inside.

We made sure that the Genesight rapids in the local area can certainly do that I think what you're seeing is through our digital capabilities and as Paul N. Nicole talked about where now billing unified ordering portals to where we're making it easier for providers to be able to do that and it started within the women's health field, where we've got my rescue of a prenatal products and very soon.

We'll be able to experience genesight M and to our other product lines. So we're still in the early innings, but as you can imagine we are seeing different different providers from our different segments start to use all of our products across the portfolio.

Maybe just talk about euro sweet cause we just launch that so yeah. So yeah. So let me think of when you think of your Sweet Alright, we do have the ability and we're the only company to be able to provide solutions for that for that provider and in that case, we already have the capabilities. So I think when you think of Euro Sweet when you think of women's health again with me.

My risk as well as for NATO product, we have those type of capabilities and I think soon you're gonna see capabilities to be able to think about you cite the obvious choice that we've talked about previous these jeans like going into when it's health segment.

And we will talk more about that in future quarters.

Okay. Thanks, that's that's helpful. And then so next on hereditary cancer.

Terry canceled volumes have been a bright spot recently in terms of the organizational changes in commercial oppositions that you've made within this business could you maybe speak to what commercial initiatives are still in front of you and what your key priorities are going forward to ensure that you continue to make these market Sharon wall share gains.

Been seeing more recently.

Yeah sure. So there's the basic blocking and tackling that I talked about last quarter, which is better targeting better segmentation I think there's the other pieces that we've talked about around goal setting commissions training right. Those are all sorted the basics, but I think as we've talked about making us easier to work with you know I think you've heard Nicole today.

As well as last quarter talk about many customers always liked the mirror products, but for one reason or another they decided to leave US now we are able to go back in there we've got easier solutions, we've got better pricing. We've just got more options and so I think as we look at the targeting across the space, there's driving depth within our existing counts, which we talk.

About today, but there's also some of the new customers that we know exists both large and small and will start to give a little bit more color to that for.

Okay got it thanks guys.

And there are no further questions I'll turn the call back <unk> closing remarks. Thank you.

Okay. Thanks, Operator. This concludes our earnings call a replay will be available via Webcasts on our website for one week. Thank you again for joining us this afternoon.

[music].

[music].