Q2 2023 GeneDx Holdings Corp Earnings Call
Good day, and thank you for standing by and welcome to the Gtx second quarter 2023 earnings Conference call.
At this time, all participants are in listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
So ask a question during the session you will need to press star one one on your telephone.
Here, an automated message advising your hand is raised.
To withdraw your question. Please press star one one.
Be advised that today's conference is being recorded I would now like to hand, the conference over to Joe Hart head of Investor Relations. Please go ahead.
Thank you Jules and thank you to everyone for joining us today on this call I'm Tricia true heart head of Investor Relations at Ges.
On the call today, we have Katherine Xu Linde, President and Chief Executive Officer, and Kevan Phili Chief Financial Officer.
Earlier today <unk> released financial results for the second quarter of 2023 ended June 30th 2023.
A copy of the press release, and our first quarter earnings slide deck are available on the company's website.
Before we begin I'd like to remind you that management will make forward looking statements within the meaning of federal securities laws, which are made pursuant.
Two the safe Harbor provisions of the private Securities Litigation Reform Act of $19 95.
Any statements contained in this call that relate to expectations or predictions of.
Future events.
<unk> or performance are forward looking statements.
Actual results may differ materially from those expressed or implied in the forward looking statements.
Due to a variety of factors.
Additionally, these forward looking statements, particularly our 2023 financial guidance.
Our expectations for revenue growth gross margins and profitability over the next several years and our expected cost savings and reduction in cash burn involve a number of risks uncertainties and assumptions for a list and description of the risks and uncertainties associated with <unk>.
Please refer to the risk factors section of our latest Form 10-K filed with the Securities and Exchange Commission and the other documents filed by US from time to time within the SEC.
We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.
During the call we may discuss certain non-GAAP financial measures.
For reconciliations of the non-GAAP financial measures to GAAP financial measures as well as other information regarding these measures.
Please refer to our earnings release and other materials in the Investor Relations section of our web site.
Conference call contains time sensitive information and is accurate only as of the live broadcast today August eight.
2023.
<unk> disclaims any intention or obligation.
Except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
And with that I will turn the call over to Katherine.
Thank you Tricia over the course of this year. Our team has been focused on three clear goals, one driving sustainable growth measured by increasing the utilization of our flagship exome to becoming the most efficient company measured by improving our gross margins and reducing Cogs and.
And three driving our company to profitability by way of increasing revenue, while reducing cash burn and by building a phenomenal team to get us there.
We are relentlessly focused on these goals and I'm pleased to share that we turned it a critically important corner in Q2, we saw our biggest revenue month in history in June and this is the direct result of the exome conversion strategy that we double down on in the first quarter.
More specifically, we saw a record breaking increase and whole exome and genome test volume this quarter with nearly 12000 patients tested at 56% increase year over year, and 36% increase compared to the first quarter of this year.
Revenue from whole exome and genome testing increased 28% compared to the first quarter of this year to $28 7 million.
What our second quarter's performance tells US is that our team is well on our way to delivering on our growth strategy centered on axiom and balances. They use a strategic tests that serve as a pipeline for introducing and expanding their use of our exome.
While our test menu is expansive today, our goal is to get to an optimized test menu of simply exome and genome as the backbone for testing all inherited diseases going beyond the rare disease population to cover every stage of life from newborn screening to adult diagnostics.
So I'd encourage you to think about our business in two parts.
One our exome and genome business, which today is generating more than 60% gross margin and growing rapidly.
And to the broader range of tests that we've called stepping stones that directly enable the growth of our exome and genome business.
These tests are critical to achieve our goal of putting an end to the diagnostic Odyssey for patients and we're gaining momentum and growing this entire pediatric market.
We've had a great quarter, our focus on accelerating physician conversion to genomic sequencing is working and we continue to shift our tech Smith, our test mix and our gross margins strengthening our financial outlook. We expect to continue this ramp through the second half of the year to meet our previously announced revenue guidance of 200.
$5 million to $220 million in 2023.
Let's turn to our commercial strategy, which has accelerated the use of exome and genome testing in patients with rare disease, which is increasingly recognized as being better for patients as well as better for our business.
As discussed during our last earnings call. We're actively working through several cross channel initiatives to build this momentum.
These include investments in our commercial team to include new territories, and dedicated cross functional team make and launching a variety of marketing and educational outreach to aid in physician engagement. We're also focusing efforts on product development to improve customer experience and operating efficiency, including automation of <unk>.
<unk> and shortening the turnaround time for our results we continue to contribute to clinical research demonstrating the value of exome sequencing for patients and importantly, this work is amplified by medical societies and by payers.
Through this strategy, we are gaining significant traction with both geneticists and non geneticists, who recognize the superiority of exome and genome tests.
<unk> volume is growing at a faster rate than what we call steppingstone tests, which include tests, such as CMA and FMR, one as well as multi gene panels that have long been our standard practice. These strategically important non exome panels laying important foundation for us to execute products switch to clinically superior.
Higher margin whole exome and genome test.
Encouragingly, we have been able to demonstrate we can expand market and gain new customer types, we've increased utilization of our services among pediatricians by 17% in June .
We are also seeing growth among pediatric neurologists, who have made us the largest proportion of new XOMA ordering clinicians in 2023.
In Oregon, and productivity is growing fastest and as clinicians segment.
Based on recent claims data, we have more than 80% of the exome and genome market share in the United States and physicians have come to rely on our exceptional diagnostic and analytical expertise clinical support and speed at which we can reliably provide a full report.
We are also we also continue to strengthen our leadership by leveraging our unique knowledge and database and building a better product with AI.
These tools enhance our interpretation capabilities, such as improved genetic variant discovery and mapping and better understanding of variance in certain non coding regions of the genome, which can provide a more precise diagnosis for physicians and patients to enable this we recently acquired and welcomed a team of Icelandic engineer.
<unk>, who has spent decades in the industry, including pioneering work at decode genetics. They are already accelerating our work to continuously improve our clinical interpretation platform.
As the leader in the market. We're also focused on navigating improved payer medical policies and reimburse reimbursement coverage and this is another pillar in our strategy to provide patient access to this new standard of care and capitalize on our commercial success.
Continued momentum in Medicaid coverage with 28 states covering outpatient whole exome sequencing and recently in Florida, and Arizona added inpatient whole genome sequencing coverage, becoming the seventh and eighth states to do so.
We have a focused team continuously working on improving asps and we have increased resources for claim management to improve collections. We're confident that these initiatives will enable reacceleration of ASP growth for the next several quarters and kevin's going to dive into that in greater detail.
Our commitment to patients and extend through our recent collaborations and partnerships as well we signed several new partners to our growing network this quarter, including a strategic deal with prognosis health to integrate our rare disease data into the progress marketplace, providing life sciences companies with a comprehensive de identified data set.
To accelerate patient access to lifesaving therapies. This partnership gives us the opportunity to go a step further and ending with treatment Odyssey to connect clinicians and their patients with rare diseases to appropriate treatment options and to ultimately improve health and health economic outcomes.
And we just announced yesterday morning, a fantastic collaboration with Pac bio and our seek first partners at the University of Washington to study long read whole genome sequencing. This is the first study of its kind to compare diagnostic yield rates across short and long read sequencing platforms for neonatal and pediatric care our pioneering.
Interpretation platform built on genomic based diagnostics will be paired with innovative technology to further advance the field of genome sequencing to deliver precise genetic diagnosis for young children.
And as we continue to drive progress over the rest of the year, we will remain absolutely focused on our three goals of sustainable growth operating efficiency and strengthening our path to profitability.
You can expect our teams to continue to drive expanded use of our exome continue to improve asps.
And continue to reduce our cash burn.
And any day now we will be hitting a new milestone of more than half a million dollars exome sequence since we introduced it a decade ago nearly half of those just in the past two years since we implemented a strategic shift in the company. It's a privilege to be able to set a new standard of care and to help so many more patients each and every day and we're grateful.
For the opportunity to do so with that I'd like to pass the call over to Kevin. Thank you Catherine and good afternoon, I would like to first take you through the growth in revenues both on a year over year and sequential basis cover the expansion of gross margins from continuing operations and then address what we're doing to continually reduce spend and cash burn I'll wrap up.
With 2023 guidance.
During the second quarter of 2023 total revenues were $48 $7 million pro forma revenues from continuing operations was $45 $2 million compared to $40 $1 million in the second quarter of 2022 and compared to $40 $7 million in the first quarter of 2023.
Those increases were driven entirely by growth in whole exome sequencing revenue, which grew 36% year over year and grew 28% sequentially compared to the first quarter.
Our team resulted nearly 12000 exome results in the quarter that is.
By far an all time high in terms of the number of lives, we're impacting and represents excellent volume growth of 56% year over year and sequential volume growth of 36% compared to the first quarter.
Pro forma adjusted gross margins from continuing operations in the second quarter of 2023 was 37% expanding from 34% in the first quarter.
As a reminder, we exited 2022 with 41% pro forma adjusted gross margins and have reaffirmed our guide to expand beyond that for the full year of 2023.
Let me bring you through the ways, we will do that.
First growth in exome.
<unk> gross margin for whole exome sequencing remained at a portfolio of leading 60% <unk>.
Whole exome sequencing represented 22% of all tests delivered in the second quarter of 2023 up from 17% in the preceding quarter, notably we saw momentum with each month of the second quarter with June topping out at 26% of all test results being whole exome.
In the first half of this year, we have successfully built up volumes on certain non exome test that represent near term candidates to convert whole exome. Examples include CMA and FMR, one, which made up approximately 16% and 10% of all test results in the second quarter.
Although these carry lower average reimbursement and low to negative gross margins. We previously discussed the shrinks and non exome mix is meant to be transitory. This year and we're pleased to see momentum in the proportionate XO mix this quarter.
As our strategy to way volume mix towards whole exome and genome takes hold we expect to see continued natural accretion in our blended gross margins.
Second increased payment routes.
Within the exome and genome test portfolio, 82% of aggregate volume runs through commercial insurance managed care and Medicaid programs.
Proximately, 70% of all commercial payers and nearly half of all state Medicaid programs have some level of positive coverage for XOMA <unk> genome.
All subject to various medical necessity criteria.
Today, we're currently being reimbursed on less than half of all claims are revenue cycle improvement efforts are mobilized and focused on improving target targeting towards well reimbursed regions and the use of automation and artificial intelligence and process designed to ensure we're capturing upfront medical necessity information in <unk>.
All time prior to claim submission.
This will help drive ordering behavior in adherence with individual payer policy and increase the likelihood of payment.
We also have identified a number of process improvements necessary to navigate disparate prior authorization hurdles in order to avoid unnecessary denials.
Improving claim payment rates are within our control and offer a substantial opportunity ahead.
The remaining 18% of all volume is institutional bill, which tends to be highly predictable with near 100% Collectability.
As utilization of whole exome and genome increases on the back of emerging guidelines and clinical support in particular with respect to our rapid product in the NICU and pick you where there is a large unmet need we expect over the long term the proportion of this relatively high priced institutional payor mix to increase overall, we're pleased with where pricing is.
Leveled out on this portion of the portfolio following some pricing resets, we discussed last quarter.
Third reducing cost per test.
In the second quarter, our team implemented a number of projects aimed at further improving both turnaround times and Cogs throughout our lab operations. These.
These include but are not limited to wet lab savings through the validation and launch of our first next generation of Illumina X plus sequencer in June with another machine expect it to be validated in the third quarter.
Dry lab savings through consolidation of our library preparation processes to twist Biosciences, which is on track to launch this month and we expect to implement further automation and AI across a number of end to end production steps in the fourth quarter and beyond.
Fourth portfolio rationalization.
We are closely monitoring the economic and clinical performance of our legacy panel test menu through periodic review, we've begun retiring low volume low margin tests and have a phased plan over the coming quarters and years to continue this work as guidelines policies in the marketplace evolves ultimately until we arrived at our goal.
<unk> of an exome and genome backbone for all inherited disease tests.
Turning to expenses.
Adjusted operating expenses expenses have declined 5% in the second quarter compared to the first quarter of 2023 are down 22% from the fourth quarter of 2022 and have declined to transformative $31 million or 34% from the comparable 2022 periods.
In April 2023, following the completion of substantially all semaphore wind down activities, we reduced our combined workforce, a further 5% primarily across G&A support functions.
This is equivalent to roughly $10 million in cost reductions the effect of which will not translate into operating expense declines until the third quarter of 2023.
We will continue to drive operating expense leverage as we separate from discontinuing operations leave substantial legacy tech debt behind in the coming quarters and continue our work to gain efficiency across all aspects of the business.
At the bottom line total company adjusted net loss for the second quarter of 2023 inclusive of all activity, including the discontinued legacy Sim afford diagnostic operations was $42 million compared to an adjusted net loss of $49 million in the first quarter of 2023 and 66 million.
In the same period of 2022.
Improvements of 14% and 37% respectively.
We decreased our cash burn by 10% sequentially and 36% year over year to $53 million for the second quarter of 2023.
Our total cash and cash equivalents and restricted cash were $157 $6 million as of June 32023.
Each included proceeds from the final tranche of $7 million from the registered direct offering that was part of the $150 million capital raised in January 2023.
Now turning to guidance, we reaffirm our previously issued 2023 revenue and gross margin guidance of $205 million to $220 million in revenue and our expectation to expand gross margins in 2023 beyond the 41% adjusted gross pro forma adjusted pro forma gross margin reported in the fourth quarter of 2022.
Two.
We are updating previously issued cash use guidance and now expect to use $70 million to $85 million of net cash and the remaining six months of 2023 inclusive of servicing obligations of the discontinued <unk> business.
By the end of 2023, we expect to have the quarterly cash burn from continuing operations from today's levels.
We are reaffirming our long term guidance to turn profit to profitability in 2025.
To conclude as of June 32023, we had $25 million 761147 shares of common stock outstanding.
And as a reminder, we affected a reverse split of our stock at a 1% to 33 ratio Accordingly, all common stock share numbers per share amounts in additional paid in capital for all periods presented today and filed in our 10-Q have been retroactively adjusted where applicable to reflect the reverse stock split.
With that I will turn the call over to Katherine.
I'd like to take a moment to thank our incredibly dedicated team.
We're an advocate to fight each day to get their children tested and our clinicians who work with us to get them answers. The work, we do is hard but.
But the parents and children, we serve inspire us to continue to strengthen our company every day and it is our shareholder to enable this and for that I want to say thank you.
And with that we can open it up for questions.
Thank you.
At this time, we will conduct a question and answer session.
As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Yes.
Our first question comes from the line of Mark Massaro of <unk>. Your line is now open.
Yeah.
Hey, guys. Thank you very much for the question and congrats on the strong growth in exome and genome.
Yes, if I'm doing this math correctly it looks like you generated about 40% to 41% of revenue in the first half, obviously, implying nearly 60% revenue growth in the second half.
I think we knew that this year would be backend loaded, but it seemed a little more backend loaded than I previously thought so maybe could you just walk me through some of the moving parts and what gives you confidence that that.
That you can maybe get to the midpoint of the guidance or do you think you are now.
Perhaps more likely to hit the low end.
Certainly I'm happy to kick it off and what it might Kevin to share as well I think we've talked previously about the commercial investments.
But we have made to add territories. So we added about 10 territories.
We have built out for the first time ever a team of medical science liaison or MSL.
So we now have a team of nine who are fully staffed in the field I believe as of June and they work really hand in hand.
Yeah.
With sales reps to be able to to focus on that conversion to exome and what we've seen.
Just based on some of the early experience with others that myself that we had.
Is that they are able to really effectively accelerate that that switch so they.
They help kind of supercharge, our sales team and I think what we saw in June this year with our strongest month ever it's the direct product of.
The strength of our exome performance and commercial execution.
So I would say that that is the major factor that really gives us the confidence and we've gone through to really understand what that.
Sales execution looks like for the second half of the year.
And now that we have.
I'd say, a more robust sales team amplified by those medical science liaisons.
We feel really confident that we're going to continue to be able to drive that conversion in that growth.
In the second half of the year.
Yes, the only thing I'd add to that is that.
At amplify team is just also supported by typical seasonality, which sees the fourth quarter for us come in and the strongest.
Over the years, both in terms of ordering volume, but also.
Average reimbursement rates.
Yes, great and then just for housekeeping Kathryn the 10 territories and then nine Msl's.
Sorry is that 10 direct reps or is that 19 ads.
Can you just remind us when these folks joined the company.
Certainly so we.
Last year, we ended I believe that's about 58.
What about 58.
Territories and so we've added about 10.
We usually account that theres going to be a handful of regions that are open throughout the course of the year.
As we continue to to drive sales force productivity.
So the total size of the field force is.
In that range and then on top of that there are nine regions and those nine regions each have.
Medical science liaison so each of those Msos is working with all of the reps within each of those regions.
Great and sorry, just to double check when did the new reps start at gene Dx.
So we've been adding them throughout Q1 and they were.
Largely in place I would say middle of Q2.
So we expect really that there's about a three to six months window by way of them getting ramped up and getting them to full productivity.
So we've had a really good seasoned team that has been working with each of those reps to make sure that they know exactly who their targets are they have the targeting data that really helps ensure that they are going to.
To clinicians where theres good coverage and then they now have the additional bolster of that MSL.
And the Msas for clarity we're.
We're fully staffed as of June we've been adding them throughout the first half of the year.
Alright, great and just a last one for me.
The exome and genome volume was 22% of your volume at the time that you expect to become profitable in 2025 do you have a sense for what percentage of your mix will come from exome and genome.
Yes, I think we've said in the past.
The longer term target there is around 40%.
Yeah.
Excellent alright, guys. Thanks, so much.
Thanks Mark.
Thank you. Please standby for your next question.
Our next question comes from the line of Brandon Couillard of Jefferies. Your line is now open.
Thanks, This is Matt on for Brandon.
All the color around the part of the portfolio that 80% or so that's not currently or I guess, just under 50% reimbursed Katherine you talked a little bit more about.
And investing to increase collection. So any chance you guys could talk about where that number could go over time and what any improvement there would be I think Kevin you talked about it being a substantial opportunity so any more color on where that improvement in reimbursement can go and kind of how to think about it from a <unk>.
Timing perspective thanks.
Yes.
And have our processes to ensure that we're driving home ordering behaviors that as closely Kent as closely aligned to pay her policies as as we see and we think there's a number of operational steps that we can improve on to to drive peyer payment rates. It it will take.
Some time to get there, but nonetheless, we we see the overall denial right and payment rate today as a significant opportunity.
To accelerate Asp's, and therefore revenue growth into the into the future. What has this most encouraged is G. D X very well contracted across the country I think 80 per cent of all commercial lives over there about we are in network with for a number of years now and not necessary.
Really reliant on new pair policies to come out in order to ensure we get paid properly for the work, but Ah morceau, ensuring that in the fields ordering behaviors in our front end processes.
Are paying attention to the various web of rules and requirements that are specific to each payer and we look forward to providing your progress reports in coming quarters on how we're progressing in that regard.
Thanks, and it kind of made me sick, we do appreciate all the color around the gross margin of treatment in the corridors really helpful. Any clarity edition color you'd like to add him to the back half of the year. I mean is kind of improvement we saw here sequentially fair to think about three two and then for you know maybe a bit higher given the.
Seasonality and some of the other initiatives you guys have under way you know really starting to take form any any help there.
Yeah, I think that's precisely how we would walk to get to that that full year being above that 41 per cent mark which.
Will mostly be driven by overall mix, but is also going to be helped by a number of Cogs reduction initiatives that we have in place for the X one portfolio and so the order of magnitude of expansion. We saw from Q1 to Q too you might expect <unk>.
Something in that range sequentially over the next two quarters.
Okay, great. Thanks, and then trying to sneak one more and on the prognosis health partnership <unk>, how long do you expect it to take to become fully integrated on their platform and be live and we've just talk a little bit more about the destruction of the deal is there an opportunity to work with or expand your work with some of the Biopharma cuss.
<unk> that are leveraging their marketplaces. Thanks.
So we're we're getting started barking like partners now and I expect that it'll be a few minutes and crashed can be and all that <unk> that <unk> database and I. You know I think we see that that is a great opportunity over the next several years just to be able to <unk> and <unk>.
That that.
The rarity of data is being put to work for a patient <unk> <unk> connecting that Clint essentially may have a patient who may be eligible for an F. D. A S. S. Happy. So this is something that we think is a wonderful longterm partnership and we expect that.
You know as as prominent family leans away and working with these companies to bring them onto the platform and we'll get you know a nice additional left over time.
Simultaneous they were gonna be continuing to drive additional what we've called <unk>.
Again at the identified way so similar to it to Prognose in that respect we are able to connect.
Connect biopharma companies with with clinicians you may have patient eligible for for clinical child development and and other efforts more on that then R&D side of things. So we think this is a nice way to have the the.
Herschel stage biotech company is engaging with us endless cognos as well as the the R&D stage company is interacting directly with US. So we will continue to drive business development across both of those efforts.
Super <unk>. Thank you.
Thank you.
Thank you.
Please stand by for next question.
Our next question.
<unk> comes from the line of <unk> of Goldman Sachs. Your line is now open.
Hey, guys. Thanks for the question can you speak to the impact of the Pan genome Research study what are the key findings from that study and how they informed your R&D spent.
Certainly so the Pan genome 30, I think it is one that what is at an important development you know coming out of the the the combination of semaphore and Jean D X. It's it certainly is something that I would say is not a huge area of focus.
For us from a commercial standpoint vote, we think that ultimately you know they they really help to advance the scientific community of the understanding of the complex genetic structure and variations across diverse genome sequences. So it's.
It's our way of contributing to uhm, ensuring that the data that we have continues to be presented and and peer reviewed fashions that continue to advance our overall understanding of a diverse group of of humans and and how they're they're.
Genomes may be different I would say it was really.
Moment of Pride for Us at Jane D. X is the diversity of patients that we have in our database, which I think is very unique to our space and I think it's reflective of the patient to reserve our our diversity is actually quite similar to the general population of the United States and typically because of the.
They use of genomics and hereditary cancer it tends to be really optimize for for the Caucasian population. So we have a unique database we want to continue to ensure that we have.
A diverse group of patients, who we are serving and that we are able to contribute to a growing body of evidence that really helps support our understanding of disease.
That's great to hear thank you and.
Have there been any updates in the federal regulatory landscape in terms of additional funding for rare disease research and could you just remind us of the current federal or private initiatives in the space.
Sure. It's a really important element of of the business because the the orphan drug Act has been for decades now one of the most important enabler of ensuring that patients have access to treatment. If you go to any of the patient advocacy groups.
The number one thing that they advocate now for his.
A diagnosis and they are very strongly talking about whole X L sequencing because they recognize the fact that we are able to provide a more definitive diagnosis and then panels or single gene tests.
So we work cooperatively with a patient advocacy organizations and you know I think as as we're starting to see a stronger voice.
On the Hell as it pertains to opening up access for rare diseases are only staying greater momentum to support you know I would say a more robust future for the orphan drug Act.
Awesome. Thank you.
Thank you.
Stand by for next question.
Our next question comes from the line of Dan Brendon Cohen Your line.
Great. Thanks for thanks singing the questions and congrats on the quarter, maybe the first one will just be an excellent mix reexpresses.
22 per cent in queue to be the bitcoin going forward or the order some more one off factors in the corner.
Yeah, I wouldn't call out any one off factors other than to say damn that we did see with each month throughout the quarter that number of exome results as a percent of total increase with each month of the second quarter with with again June topping out at.
At 26%.
And we really think that that's a launching point and would expect that as we move into the third quarter that we'd see continued.
Growth commensurate with what we saw a quarter over quarter from the first quarter to the second.
Great. Thanks, and then may be disarmed and sorry. If this was addressed earlier, but we were under the impression Q1 was generally P for for the year.
Looks like <unk> down sequentially due to a bit to 20.
2600 2400.
Still kind of how should we think about pricing and should we be should we expect.
And your prices to rise going forward from here.
Yep from Q1 Q2, we saw some variation.
We've we've got a keen eye on it but we don't necessarily be widows down for any systematic are pervasive reason more so just fluctuations do expect that in the third quarter, we'd we'd hold flat or slightly up within an uptick in asp's in the fourth quarter consistent with Pat.
Seasonal practices, what we expect to.
More significantly contribute to in terms of revenue growth is continuation of the volume momentum that we've seen them through the first half of this year and would expect growth rates on the volume side to be consistent with what we saw sequentially achieved in the second quarter.
Within really the fourth quarter uplift coming in part through increased reimbursement rates are collection rates and in part by continued volume ramp.
And then if I can sneak one moment just in terms of gross margins.
We were thinking goes Marge like mix it up is the biggest driver.
You had a material mixed up <unk> between them was below the 40 per cent you've gotten in prior quarter. So can you just walk us through a little bit of this dynamic.
Yeah I.
I think from a mixed perspective, what's important to also keep an eye on is the number of non exome test those really are important seeds for future growth as we expect test like CMA an F. M. R. One.
To convert overtime to X one.
But they are low and in some cases negative gross margins within or our portfolio. So.
Improving the ultimate mix and then just seeing the overall, either retirements or trimming of volumes and those low to negative gross margin tests very important to the overall blended gross margin and accretion that we expect over overtime at the same time in the background there is cogs reductions.
That we do expect to materialize in the second half of this year and beyond.
And.
Overall increase in payment rates or or Asp's.
Can have a significant upside to us and in the.
The future future periods outside of 2023. So it really is a combination of all of those factors overtime that come into play to boost gross margins from today's levels.
Great. Thank you.
Well, we appreciate everyone joining us today Uhm again Wanna Wanna, Thank our shareholders to support us and make all of this important work possible.
And we look forward to seeing you in upcoming contact us have a great rest of your day.
Thank you for participation in today's conference. This does conclude the program you may now disconnect.
[music].
[music].
[music].
[music].