Q3 2024 23andMe Holding Co Earnings Call
Operator: www.larryweaver.com and the D E B E D E E E E E E E E E E E E E E E E E E E E E E Hello and welcome to 23andMe's fiscal year 2024 third quarter financial results conference call. As a reminder, this call is being recorded. At this time, all participants are on a listen-only mode.
Okay.
Hello, and welcome to twenty-three any fiscal year 2024 third quarter financial results Conference call.
As a reminder, this call is being recorded.
At this time all participants are in a listen only mode.
Operator: After the prepared remarks, there will be a question and answer session. I would like to turn the call over to Ian Cooney, Senior Director of Investor Relations at 23andMe, to lead off the call. Thank you.
After the prepared remarks, there will be a question and answer session.
I would like to turn the call over to Anne Cooney.
Senior director of Investor Relations at 23, and me to lead off the call. Thank you. Please go ahead.
Thank you Valerie before we begin I encourage everyone to go to investors that 23, <unk> dot com to find the press release, we issued earlier today.
Ian Cooney: Before we begin, I encourage everyone to go to investors.23andme.com to find the press release we issued earlier today reporting our financial results for the third quarter. A replay of today's webcast will also be available on our website. Please note that certain statements made during this call regarding matters that are not historical facts, including, but not limited to, management's outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information that is now available.
Reported in our financial results for the third quarter.
A replay of today's webcast will also be available on our website.
Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management's management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is now available to us.
Ian Cooney: We encourage you to review the section entitled Forward-Looking Statements in our press release, which applies to this call. Also, please refer to our SEC filings, which can be found on our website and the SEC's website, for a discussion of numerous factors that may impact our future performance. We also discussed certain non-GAAP measures.
We encourage you to review the section entitled forward looking statements in our press release, which applies to this call.
Also please refer to our SEC filings, which can be found on our website and the Sec's website for a discussion of numerous factors that may impact our future performance.
Also discuss certain non-GAAP measures important.
Ian Cooney: Important information on our use of these measures and reconciliation to U.S. Gap may be found in our earnings. Joining us on our call today are Anne Wojcicki, our Chief Executive Officer and Co-Founder, and Joe Selsavage, our Interim Chief Financial and Accounting Officer. Jennifer
Important information on our use of these measures and reconciliations to U S. GAAP, maybe found in our earnings release.
Joining us on our call today are <unk> <unk>, our Chief Executive Officer, and co founder and Joe South average, our interim chief financial and accounting Officer Jenny.
Jennifer.
Ian Cooney: Thank you, Valerie. Before we begin, I encourage everyone to go to investors.23andme.com to find the press release we issued earlier today reporting our financial results for the third quarter. A replay of today's webcast will also be available on our website. Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information that is now available.
Thank you Valerie before we begin I encourage everyone to go to investors <unk> 23, <unk> dot com to find the press release, we issued earlier today reporting our financial results for the third quarter.
A replay of today's webcast will also be available on our website.
Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is now available to us.
Ian Cooney: We encourage you to review the second, Thank you, Valerie. Before we begin, I encourage everyone to go to investors.23andme.com to find the press release we issued earlier today reporting our financial results for the third quarter. A replay of today's webcast will also be available on our website. Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information that is now available.
We encourage you to review the second.
Thank you Valerie before we begin I encourage everyone to go to investors <unk> 23, <unk> dot com to find the press release, we issued earlier today reporting our financial results for the third quarter.
A replay of today's webcast will also be available on our website.
Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is now available to us.
Ian Cooney: We encourage you to review the section entitled forward-looking statements in our press release, which applies to this call. Also, please refer to our SEC filings, which can be found on our website and the SEC's website, for a discussion of numerous factors that may impact our future performance. We also discussed certain non-GAAP measures.
We encourage you to review the section entitled forward looking statements in our press release, which applies to this call.
Also please refer to our SEC filings, which can be found on our website and the Sec's website for a discussion of numerous factors that may impact our future performance.
Also discuss certain non-GAAP measures important.
Ian Cooney: Important information on our use of these measures and reconciliation to U.S. Gap may be found in our earnings release. Joining us on our call today are Anne Wojcicki, our Chief Executive Officer and Co-Founder, and Joe Selsavage, our Interim Chief Financial and Accounting Officer. Jennifer Lowe, our Head of Therapeutics Development, and Bill Richards, Head of Therapeutics Discovery, will join us for Q&A. I'd now like to turn the call over to Anne.
Important information on our use of these measures and reconciliations to U S. GAAP may be found in our earnings release.
Joining us on our call today are Andrew <unk>, our Chief Executive Officer, and co founder and Joe cell salvage, our interim chief financial and accounting Officer Jenny.
Jennifer Lowe, our head of Therapeutics development and Bill Richards head of Therapeutics discovery will join us for Q&A.
I'd now like to turn the call over to Ann.
Anne Wojcicki: Thank you, Ian. The third quarter was busy and productive at 23andMe. We made meaningful strategic progress across our three businesses. We introduced our first integrated care offering with Total Health, signed a non-exclusive research agreement with GSK, and filed our second IND in therapeutics. I am extremely proud of the effort put forth by our team as we work toward creating a new future of healthcare powered by genetics. Starting with our consumer business, the third quarter saw the company execute on our strategic shift toward actively engaging with our customers to manage their health based on their unique genetics and lifestyle. In November, we introduced a new membership called Total Health, a personalized preventative care service.
Thank you Ian.
The third quarter was busy and productive at 23 and me, we made meaningful strategic progress across our three businesses.
We introduced our first integrated care offering with total health.
Signed a nonexclusive research agreement with GSK and filed our second IND and Therapeutics IMAX.
I am extremely proud of the effort put forth by our team as we work toward creating a new future of healthcare powered by genetics.
Starting with our consumer business the third quarter saw the company execute on our strategic shift towards actively engaging with our customers on managing their health.
On their unique genetics and lifestyle.
In November we introduced a new membership called total health a personalized preventative care service and includes clinical grade exome sequencing.
Anne Wojcicki: It includes clinical-grade exome sequencing, biannual blood testing, and access to clinicians from our Lemonade acquisition with unique training in genetics. Members of Total Health receive all the reports and features offered in our existing 23andMe Plus membership, along with personalized guidance for ongoing disease prevention and early detection. This is an exciting step in our vision to bring accessible, genetics-driven preventative care to millions of our U.S. customers. In addition to the introduction of Total Health, 23andMe added more value to the 23andMe Plus membership with the introduction of 23andMe Health Action Plan and 23andMe HealthTrack. These personalized action plans are part of our broader effort to help our customers take action based on their genetic insights and other data. Over time, we will continue to add more dynamic recommendation content and intuitive ways to track phenotypic inputs, with the ultimate goal of helping customers improve their health span.
The annual blood testing and access to clinicians from our lemonade acquisition with unique training in genetics.
Members of total health received all the reports and features offered in our existing 23 in the plus membership along with personalized guidance for ongoing disease prevention and early detection.
This is an exciting step in our vision to bring accessible genetics, driven preventative care to millions of our U S customers.
In addition to the introduction of total health added more value to the 23 plus membership with the introduction of <unk> 23 in the help action plan and 23 and me help track.
These personalized action plans are part of our broader effort to help our customers take action based on their genetic insight and other data.
Overtime, we will continue to add more dynamic recommendation content and intuitive ways to track phenotypic inputs.
With the ultimate goal of helping customers improve their health span.
Anne Wojcicki: 23andMe HealthTracks is a digital health tool that helps customers gain a more holistic picture of the risk for developing a particular condition by integrating lifestyle and genetic factors into a single model for the first time with the goal of motivating behavior change. Health Action Plan helps customers take the next step to improve their health by drawing on genetics, health history, and blood and biomarker data to provide tailored, bite-sized health recommendations.
23 me help tracks is a digital health tool that helps customers gain a more holistic picture of their risk for developing a particular condition by integrating lifestyle and genetic factors into a single model for the first time with the goal of motivating behavior change.
Health action plan helps customers take the next step to improve their health by drawing on genetics health history, and blood and biomarker data to provide tailored bite sized health recommendations.
Anne Wojcicki: We will continue to innovate in this area to create a dynamic, meaningful experience to help our customers optimize their health. We will also continue to refine and improve our genetic reports and insights. Our updated BRCA test allows us to report 44 additional variants in the BRCA1 and BRCA2 genes known to be associated with higher risk for breast, ovarian, prostate, and pancreatic cancer. Many of these additional variants occur more often in populations that have traditionally been underserved by genetic testing, including the African American and Hispanic Latino communities.
We will continue to innovate in this area to create a dynamic meaningful experience to help our customers optimize their health.
We also continue to refine and improve our genetic reports and insights.
Our updated BRCA test allows us to report 44 additional variants in the BRCA, one and BRCA two genes known to be associated with higher risk for breast ovarian prostate and pancreatic cancer.
Many of these additional variants occur more often in populations that have traditionally been underserved by genetic testing, including the African American and Hispanic Latino communities.
Anne Wojcicki: As part of our August FDA clearance, we were granted the first ever FDA predetermined change control plan, allowing us to continue to update our BRCA report with additional validated variants without additional premarket review. As we continue to invest in our personal genomic service business, we also focus on creating value for our customers through the uptake of membership services. We see repeated engagement by our customers, and they have shown an interest in learning more about their genetics and how to apply those learnings to their lives. We are focused on moving to a membership model so that we can meet customer demand for more services, as well as develop a recurring revenue stream that will allow us to continue to innovate and grow the business in a way that is most helpful to our customers and shareholders.
As part of our August FDA clearance, we were granted the first ever FDA pre determined change control plan, allowing us to continue to update our broker report with additional validated variance without additional pre market review.
As we continue to invest in our personal genomic service business. We also focused on creating value for our customers through the uptake of membership services.
We see repeated engagement by our customers and they have shown interest in learning more about their genetics and how to apply those learnings to their lives.
We are focused on moving to a membership model. So that we can meet customer demand for more services as well as develop a recurring revenue stream that will allow us to continue to innovate and grow the business in a way that is most helpful to our customers and shareholders.
We continue to prioritize price inefficient marketing spend as we look to move our PGS segment toward cash flow breakeven.
Anne Wojcicki: We continue to prioritize price and efficient marketing spend as we look to move our PGS segment toward cash flow break even. However, we recognize this effort is likely to cause some uneven results in our business in the short term. And we saw some of that effect in Q3. PGS kit volumes were impacted in the quarter as we entered the holiday promotional period with firmer pricing discipline after raising prices for the first time since 2015. This, plus an environment of macroeconomic and consumer uncertainty, led to lower PGF kit sale volumes.
We recognize this effort is likely to cause some uneven results in our business in the short term and we saw some of that effect in Q3.
PGS kit volumes were impacted in the quarter as we entered the holiday promotional period with firmer pricing discipline after raising prices for the first time since 2015.
This plus an environment of macroeconomic and consumer uncertainty led to lower PGS kit sales volume.
Anne Wojcicki: We remain confident in our ability to transform our PGS segment into a sustainably growing and profitable business, and we are incredibly excited to help build toward a future of personalized preventative health. Transitioning over to therapeutics, we continue to advance our pipeline of clinical and preclinical programs. In November, we presented positive safety and preliminary efficacy data from a Phase 1-2a clinical trial of our wholly owned immuno-oncology program, 23andMe 610, at the Society for Immunotherapy of Cancer annual meeting. The study demonstrated that 23andMe610 is well-tolerated and shows promising preliminary efficacy in a number of patients with advanced solid malignancies.
We remain confident in our ability to transform our pgi segment into a sustainably growing and profitable business and we are incredibly excited to help build toward the future of personalized preventative health.
Transitioning over to therapeutics, we continue to advance our pipeline of clinical and preclinical programs in November we presented positive safety and preliminary efficacy data from our phase <unk> clinical trial of our wholly owned immuno oncology program 23 me $6 10 at the society for immunotherapy.
ERP of cancer annual meeting.
The study demonstrated that <unk> is well tolerated and shows promising preliminary efficacy and a number of patients with advanced solid malignancies in.
Anne Wojcicki: In December, we announced the further expansion of the ongoing Phase I-IIa study to include an additional 30 patients with advanced neuroendocrine and ovarian cancers, above the original enrollment goals. We are encouraged by the progress of 610 and anticipate reporting further data later this year. The company recently announced the U.S. Food and Drug Administration has cleared the IND application for 23andMe 1473, a natural killer cell activator intended to treat cancer. 23andMe plans to evaluate 1473 in participants with advanced solid tumors in a phase one clinical study beginning in the first half of 2024. 1473 targets ULBP6 to restore antitumor immunity through NK and T cells. ULBPs are stress-induced ligands found on the surface of cancer cells that bind to the receptor NKG2D on NK and T cells. Cancers escape immune cell recognition by shedding ULBP ligands from their cell surface, which acts as immunosuppressive molecular decoys. Blocking the binding of soluble UOBP6 to NKG2D may restore immune cell recognition and kill cancer cells.
In December we announced the further expansion of the ongoing phase <unk> study to include an additional 30 patients with advanced neuro endocrine and ovarian cancers.
The original enrollment goals.
We are encouraged by the progress of 610 and anticipate reporting further data later this year.
The company recently announced the U S food and drug administration has cleared the IND application for 'twenty, three and needs $14 73, a natural killer cell activator intended to treat cancer.
23, <unk> plans to evaluate $14 73 in participants with advanced solid tumors and a phase one clinical study beginning in the first half of 2024.
$14 73 targets <unk> to restore anti tumor immunity through NK and T cells.
<unk>, our stress induced ligand found on the surface of cancer cells that bind to the receptor NK <unk>, an NK and T cells.
Cancers escape immune cell recognition by shedding <unk> ligand from their self service, which acts of immunosuppressive molecular decoys.
Blocking the binding of soluble <unk> six to <unk> may restore immune cell recognition and killing of cancers.
Anne Wojcicki: Further, 1473 is FC effector enhanced, which provides an additional mechanism for NK cells to induce cell death of ULBP6-expressing cancer cells. 1473 also has the potential to address a major unmet need in cancer treatment, patients who may have or may develop tumor resistance to checkpoint inhibitors. By combining NK and T cell activation, 1473 may initiate a broader and deeper response of the immune system to treat cancer cells and delay tumor resistance seen in treatment with traditional checkpoint inhibitors. This program validates the power of the 23andMe database for identifying novel therapeutic targets and highlights the team's ability to develop molecules and advance them into the clinic. I also want to highlight that we launched our new therapeutics website at the end of December.
Further $14 73 is FC effector enhanced which provides an additional mechanism for NK cells to induce cell death, <unk> expressing cancer cells.
14, 73 also has the potential to address a major unmet need in cancer treatment patients, who may who may have or may develop tumor resistance to checkpoint inhibitors.
By combining NK and T cell activation $14 73 may initiate a broader and deeper response of the immune system to treat cancer cells and delayed tumor resistance seen in treatment with traditional checkpoint inhibitors.
This program validates the power of the 23 may database for identifying novel therapeutic targets and highlights the team's ability to develop molecules and advance them into the clinic.
I also want to highlight that we launched our new therapeutics website at the end of December we think the new site does a great job explaining how our team turns genetic insight into potential new therapies with a higher probability of success in the clinic and provides a great initial diligence resource for potential partners collaborators and investors.
Anne Wojcicki: We think the new site does a great job explaining how our team turns genetic insights into potential new therapies with a higher probability of success in the clinic and provides a great initial diligence resource for potential partners, collaborators, and investors. I encourage everyone to visit the new site at therapeutics.23andme.com. Moving to the research business In Q3, we extended our collaboration with GSK into the sixth year. The new one-year non-exclusive data license pays 23andMe $20 million upfront in exchange for GSK using the 23andMe database to conduct drug target discovery and other research.
<unk> everyone to visit the new site at Therapeutics Dot 23, <unk> Dot com.
Moving to the research business in Q3 extended our collaboration with GSK into the six year. The new one year Nonexclusive data license pays 23, and me $20 million upfront and exchanged for GSK using the 23 <unk> database to conduct drug target discovery and other research.
Importantly, this new collaboration as a sign of the significant value in the 'twenty <unk> database and the potential for continuous new insights and discoveries as we grow in size.
Anne Wojcicki: Importantly, this new collaboration is a sign of the significant value in the 23andMe database and the potential for continuous new insights and discoveries as we grow in size. The new collaboration is important for 23andMe as it generates $20 million and enables us to continue to collaborate with GSK, but in a non-exclusive way. We are actively pursuing new partnerships with other therapeutic companies. The excitement around AI and data opens up a tremendous opportunity for 23andMe as companies are establishing their data strategies. Genetics is fundamental to the world of AI-driven drug discovery.
The new collaboration is important for 23 and me as it generates $20 million and enables us to continue to collaborate with GSK, but in a non exclusive way.
We are actively pursuing new partnerships with other therapeutic companies.
The excitement around AI and data opens up a tremendous opportunity for 23 and me as companies are establishing their data strategies.
Genetics is fundamental to the world of AI driven drug discovery, we look forward to updating you with as discussions progress.
As I look to 2024 I'm excited about the opportunities for 23 and me there is a growing recognition about the potential for data and AI in drug discovery, and we have an incredible asset that can accelerate and improve drug discovery for the industry.
Anne Wojcicki: We look forward to updating you as discussions progress. As I look to 2024, I'm excited about the opportunities for 23andMe. There is a growing recognition of the potential for data and AI and drug discovery.
For customers, we are getting closer to our ultimate vision of having a complete solution for people who want to actively engage in their wellness and prevent disease.
We look forward to an exciting year.
With that I'll turn the call over to Joe to review, our financial results for the quarter.
Anne Wojcicki: And we have an incredible asset that can accelerate and improve drug discovery for the industry. For customers, we are getting closer to our ultimate vision of having a complete solution for people who want to actively engage in their wellness and prevent disease. We look forward to an exciting year. With that, I'll turn the call over to Joe to review our financial results for the quarter. Thank you, Anne, and hello, everyone. I'd like to reiterate Anne's excitement about the future of precision healthcare at 23andMe, and I'm proud of our ability to execute while maintaining cost discipline amid our shift towards a more sustainable operating profile. Revenue for the quarter was $45 million, representing a 33% decrease on another strong prior year comparable.
Thank you, Ian and Hello, everyone I'd like to reiterate and excitement about the future of precision health care 23, and me and I am proud of our ability to execute while maintaining cost discipline and then our shift towards a more sustainable operating profile.
Revenue for the quarter was $45 million, representing a 33% decrease on another strong prior year comparable.
Similar to last quarter year over year decrease in revenue was primarily due to the conclusion of our exclusive discovery term under the GSK collaboration in July.
As well as lower consumer services revenue and our PGS and telehealth businesses the.
The decrease in consumer revenue was driven primarily by lower sales volume as we entered the holiday promotional period with higher pricing than prior years.
These efforts are intended to increase product margin improved average selling prices and advertising efficiency, which remain a core focus of the company.
Anne Wojcicki: Similar to last quarter, the year-over-year decrease in revenue was primarily due to the conclusion of our exclusive discovery term under the GSK collaboration in July, as well as lower consumer services revenue in our PGS KIT and telehealth business. The decrease in consumer revenue was driven primarily by lower sales volume as we entered the holiday promotional period with higher pricing than prior years.
That resulted in lower than expected unit sales for the quarter as we believe the combination of higher prices and extended macro headwinds placed a temporary damper on demand for our products.
These decreases were partially offset by nonrecurring payments from other research partners in the current quarter and continued growth in our subscription services.
Joe Selsavage: These efforts were intended to increase product margins, to improve average selling prices, and advertising efficiency, which remains a core focus of the company, but resulted in lower than expected unit sales for the quarter as we believe the combination of higher prices and extended macro headwinds placed a temporary damper on demand for. These decreases were partially offset by non-recurring payments from other research partners in the current quarter and continued growth in our subscriptions. Looking at the composition of our revenue, consumer services revenue represented approximately 96% of total revenue, and Research Services revenue, which was primarily derived from other research partners, accounted for approximately 4% of total revenue for As a reminder, the new GSK data license announced in Q3 is expected to have minimal impact on this year's results, with the majority landing in FY25, given the terms of the agreement.
Looking at the composition of our revenue consumer services revenue represented approximately 96% of total revenue for the quarter and.
And research services revenue, which primarily derived from other research partners accounted for approximately 4% of total revenue for the same period.
As a reminder, the new GSK data license announced in Q3 is expected to have minimal impact on this year's results with a majority landing in fiscal year 'twenty five given the terms of the agreement.
Our gross profit for the third quarter was $20 million, representing a 35% decrease over the same period in the prior year.
The decrease in Q3 gross profit was driven primarily by the decrease in research services revenue, while subscription revenue and improved telehealth margins. Following the August 2023 disposition or eliminate limited in the U K helped to offset continued margin accretion within their respective categories.
Turning to our expenses.
Total operating expenses for the quarter were $301 million compared to $128 million for the same period in the prior year.
The increase in operating expenses was primarily due to a $199 million noncash goodwill impairment charge, taking over the quarter.
Joe Selsavage: Our gross profit for the third quarter was $20 million, representing a 35% decrease over the same period in the prior year. The decrease in Q3 gross profit was driven primarily by the decrease in research services revenue, while subscription revenue and improved telehealth margins, following the August 2023 disposition of Lemonade Health Ltd. in the UK, helped to offset the continued margin accretion within their respective, returning to our expenses. Total operating expenses for the quarter were $301 million, compared to $128 million for the same period in the prior year.
Which was partially offset by lower personnel related expenses following workforce reductions in prior quarters.
On the disposition of the UK entity.
A noncash impairment charge for intangible assets in the prior period.
Lower therapeutics related R&D spend due to significant IND, enabling activities also in the prior year.
Looking at the bottom line net loss for the quarter was $278 million compared with $92 million in the prior quarter.
The increase in third quarter net loss was driven mainly by the lower revenues and goodwill impairment charge mentioned previously.
Next our adjusted EBITDA.
For details on how we define adjusted EBITDA as well as the corresponding reconciliations to GAAP. Please see our earnings press release.
Total adjusted EBIT, a deficit for the third quarter was $48 million compared to a $43 million deficit for the same period in the prior year.
Joe Selsavage: The increase in operating expenses was primarily due to a $199 million non-cash goodwill impairment charge taken during the quarter. This was partially offset by lower personnel-related expenses following workforce reductions in prior quarters, and the disposition of the U.K., non-cash impairment charge for intangible assets in the prior period and lower therapeutics-related R&D spend due to significant IND enabling activities also in the prior year. Looking at the bottom line, the net loss for the quarter was $278 million compared to $92 million in the prior quarter. The increase in third quarter net loss was driven mainly by lower revenues and a goodwill impairment charge mentioned previously.
The increase in the adjusted EBIT. The deficit was primarily due to lower revenue, partially offset by lower personnel costs and lower R&D spend described previously.
We ended the quarter with $242 million in cash and cash equivalents compared to $387 million as of March 31 2023.
We intend to be judicious with our cash usage and believe the current level of cash supports <unk> plans for targeted investments in high ROI growth initiatives.
Now turning to our guidance.
As a reminder, the company's full year fiscal year 2024 guidance is based on a conservative approach recognizing challenges in recent performance continuing uncertainties in consumer sentiment.
The macroeconomic environment geopolitical conditions.
Joe Selsavage: Next, our adjusted EBITDA. For details on how we define adjusted EBITDA, as well as the corresponding reconciliations to GAAP, please see our earnings spreadsheet. The total adjusted EBITDA deficit for the third quarter was $48 million, compared to a $43 million deficit for the same period in the prior year.
The company is adjusting its full year guidance for fiscal year 2024, which ends on March 31 2024.
For revenue, we are updating our fiscal year 2020 for guidance to be in the range of $215 million.
Joe Selsavage: The increase in the adjusted EBITDA deficit was primarily due to lower revenue, partially offset by lower personnel costs and lower R&D spend, as described previously. We ended the quarter with $242 million in cash and cash equivalents compared to $387 million as of March 31, 2021. They tend to be judicious with our cash usage and believe the current level of cash supports 23andMe's plans for targeted investment and high ROI growth in the future. Turning to our guidance. As a reminder, the company's full year fiscal year 2024 guidance is based on a conservative approach, recognizing challenges in recent performance and continuing uncertainties in consumer sentiment. Macroeconomic environment and geopolitical conditions
$220 million with net loss adjusted to be in the range of $520 million net loss to 525 million net loss.
Full year adjusted EBIT deficit as adjusted to be in the range of <unk>.
180 million deficit to $185 million deficit for fiscal year 2024.
Our focus with the existing lines of the PGS on telehealth consumer businesses remains unchanged.
We continue to prioritize margin expansion and progress towards cash flow profitability.
Efforts include remaining disciplined with our pricing strategy to realize higher average selling prices.
Ongoing value additions to our current services like the health action plan and <unk> features within 23 meet plus.
Expanding the recently introduced total health membership to a broader audience and streamlining the expense profile of our consumer and therapeutic segments.
Within the Therapeutics and research businesses, we're investing only in projects. We believe are most strategically and financially valuable and continue to explore potential partnerships and collaborations.
Joe Selsavage: The company is adjusting its full-year guidance for fiscal year 2024, which ends on March 31st, 2024. For revenue, we are updating our fiscal year 2024 guidance to be in the range of $215 million. 220 million; Net loss adjusted to be in the range of $520 million net loss to $525 million net loss. The full year adjusted EBITDA deficit is adjusted to be in the range of $180 million deficit to $185 million deficit for fiscal year 2020.
Wrapping up we are.
With the company's strategic progress and improved operating discipline gives.
Given the current operating environment, we are being prudent in our planning and project prioritization, while remaining incredibly optimistic about the future of the company and our ability to help people access to understand and benefit from the Unum genome.
With that let's open it up for questions.
Yeah.
Thank you if you would like to ask a question. Please press star one on your telephone you will then hear an automated message advisory your hand has been right.
Operator: Our focus within the existing lines of the PGS and telehealth consumer businesses remains unchanged. We continue to prioritize margin expansion and progress towards cash flow profitability. These efforts include remaining disciplined with our pricing strategy to realize higher average selling prices and ongoing value additions to our current services, like the Health Action Plan and Health Tracks features within 23andMe+, and expanding the recently introduced Total Health membership to a broader audience. Streamlining the Expense Profiles of our Consumer and Therapeutic Segment. I think that therapeutics and research specific... We are investing only in projects we believe are most strategically and financially valuable, and we continue to explore potential partnerships and collaborations. Thanks for stopping by; we are pleased with the company's strategic progress and improved operating distance.
If you would like to remove yourself from the queue Starwood one again, one moment, while we compile the Q&A roster.
Okay.
And the first question that we have today will be coming from Steve Moss.
PD Cowen your line is open.
Greg can you guys hear me.
Yep.
Okay, Great, yes, sorry, apologies for the background noise.
Alright.
Could you yes.
Could you comment on the recently and this question for Anne.
Yes.
No Craig came across the wire could you comment on your recent interview you Dave.
On the consideration of splitting the consumer and therapeutics business.
How would that look would it be a spin out of the therapeutics business.
Private company with external financing or or some other structure, how should we think about that.
Operator: Given the current operating environment, we are being prudent in our planning and project prioritization while remaining incredibly optimistic about the future of the company and our ability to help people access, understand, and benefit from the Unum genome. With that, let's open it up. Thank you. If you would like to ask a question, please press star one on your telephone; you will then hear an automated message advising your hand has been raised. If you would like to remove yourself from the queue, press star 11 again.
Yes.
Yes.
So if.
We've said this before that we're definitely pursuing and exploring all of their branch options or being able to fund progress going forward on the therapeutic side. So as you know discovering and developing drugs is expensive.
If you look at where we are with our phase III program with <unk> and just initiating future <unk> into the clinic as well as a very robust pipeline behind that that's going to require capital. So we have not made any definitive decisions about what we are going to do but there is definitely.
Steve Moll: One moment while we compile the Q&A roster. And the first question that we have today will be coming from Steve Moll, LCD Cowling. Your line is open. Great. Can you guys hear me?
Opportunities and things that we're exploring with potentially.
Potentially having therapeutics be independent versus consumer.
Operator: Hello? Oh, hi. Okay, great. Yeah, sorry.
Anne Wojcicki: Apologies for the background noise. Could you, yeah, could you comment on the recent, and this question, and you know, a note kind of came across the wire. Could you comment on your recent interview you gave on the consideration of splitting the consumer and therapeutics business? You know, how would that look?
They're all just ideas that we're exploring right now there is nothing definitive but it is opportunity that we're considering about what is what's going to be the best way to make consumer successful.
And the ERP integration.
Okay.
Okay. Thanks, I appreciate the color.
With regards to $14 73 are you still on track to initiate phase one clinical trials in the first half of this year.
Yes, I have Jennifer low here as well if you want further questions, but yes, we are on track for that.
Anne Wojcicki: Would it be a spin-out of the therapeutics business into a private company with external financing or, or some other structure? You know, how should we think about that? Yeah, so, we've said this before, that we are definitely pursuing and exploring all different options for funding progress going forward on the therapeutic side. So, as you know, discovering and developing drugs is expensive. So if you look at where we are with a phase two program with P06 and just initiating P014 into the clinic, as well as a very robust pipeline behind it, that's going to require capital. So we have not made any definitive decisions about what we are going to do.
Okay got it okay.
I'll get back in the queue.
Okay, great. Thanks.
Okay.
Thank you one moment for our next question.
And our next question is coming from David Lebowitz of Citi. Your line is open.
Hi, guys John for David Thanks for taking my questions.
Got a few on our end so so building off of that report and Bloomberg.
And about the potential split between the consumer business in the therapeutics business.
Just wanted to dive into that a little bit more for you guys don't mind.
We're thinking about potential applications as it relates to the different segments. In your business you have a consumer business tech business in our biotech business basically all in one.
I guess can you just again doctor implications as it relates to maybe expanding your investor base and better teasing out the individual value of the components within your business.
Anne Wojcicki: But there are definitely opportunities and things that we are exploring with, you know, potentially having therapeutics be independent versus consumer. These are all just ideas that we are exploring right now. There's nothing definitive, but it is opportunities that we're considering about what is, what's going to be the best way to make consumers successful. With regard to 1473, are you still on track to initiate Phase I clinical trials in the first half of this year? Yes, I have Jennifer Lowe here as well if you want further questions, but yes, we are on track for that. Okay, I got it. Okay. Um, I'll get back in the queue.
Alright, sorry, do you want to repeat the core part of the question.
Sure sure.
As it relates to a potential spin out can you talk about the potential implications as it relates to expanding your investor base and potentially better teasing out the value of the individual components of your business.
Yes, I mean look I think that you again, you deal with you interact with different investors all the time and you recognize that people have very specific mandates.
So there are some investors who are only looking at biotech and some investors that are consumer and others that are focused on AI and you are absolutely right that we are an unusual company in that we have all of that we have a very robust consumer business. We have a very robust research database business and we have a very robust therapy.
Anne Wojcicki: Thanks. Okay. Thank you. One moment for our next question. And our next question has come from David Lebowitz of City. Your line is open. Hi guys, John on behalf of David.
Unix business so.
That is definitely been brought to our attention.
David Neil Lebowitz: Thanks for taking our questions; we have got a few on our end. So, building off of that report in Bloomberg about the potential split between the consumer business and the therapeutics business. Just want to dive into that a little bit more, if you don't mind. You know, we're thinking about potential implications as it relates to, you know, the different segments in your business. You know, you have a consumer business, a tech business, and a biotech business, basically all in one. I guess, can you just again talk about the implications as it relates to, you know, maybe expanding your investor base and better teasing out the individual value of the components within your business? Sorry, sorry, do you want to repeat the core part of the question? Sure, sure.
A number of different businesses with illness.
And what's the best way to make sure that we're maximizing value.
Got it okay that makes sense.
And then one on the product launch.
With respect to total health can you just walk us through some of your key learnings from the soft launch over the holidays and how you plan to use that experience to inform your rollout going forward.
Yeah total health.
Total halt is has incredible potential and where we look at that maybe taking off is in the world.
A preventive care against the market that I think does not people want it and it doesn't really exist right now so total health right now goes in the lineup and you look on the website. It goes in the lineup with.
Anne Wojcicki: Just as it relates to potential spin-offs, you know, can you talk about the potential implications as it relates to expanding your investor base and potentially better teasing out the value of the individual components? Yeah, I mean, look, I think that you, again, you deal with, you interact with different investors all the time. And you recognize that people have very specific mandates.
Other tests ancestry, you have health in assets, where you have <unk> plus and you have total health, what we're really offering here in care.
It's an opportunity to engage with a clinical product that our clinicians health care providers that are looking all across your genome and really thinking thoughtfully about how can you leverage your genetic information your blood information your Wearables your lifestyle your family history Air Medical.
Anne Wojcicki: So there are some investors who are only looking at biotech and some investors that are only looking at consumer, and others that are focused on AI. And you are absolutely right that we are an unusual company and that we have all of that. We have a very robust consumer business.
Reference to think about a true preventive care plan. So it's a real <unk>.
Anne Wojcicki: We have a very robust research database business, and we have a very robust therapeutics business. So that has definitely been brought to our attention that there are a number of different businesses within this. And what's the best way to make sure that we're maximizing value?
Soft launched it really with knowing that theres going to be an early market of people, who just want an XL much but the product is a very different type of experience and I think that more and more what you can imagine us doing west with total health as being able to help people not just get access to this information and to leverage it.
Anne Wojcicki: Okay, that makes sense. And then there is one on the product launch. With respect to Total Health, can you just walk us through some of your key learnings from the soft launch over the holidays and how you plan to use that experience to inform your rollout going forward? Yeah, you know, total health. I think total health has incredible potential, and where we look at that really taking off is in the world of self-pay, preventive care. I guess the market that I think does not, people want it, and it doesn't really exist right now. So total health right now goes on the lineup. If you look on the website, it goes in the lineup with.
Integrated into their life.
Okay No that's.
Helpful. Thank you.
And then one more one last one just on your new drug candidate $14 73.
Targeting <unk> B piece six can you just talk a little bit more about the target.
How it was determined if there are any other therapies going after <unk> and if there is any clinical data that youre aware of that is helps to validate our newest target.
Yes, let me point you over to Jennifer Lowe.
<unk>.
The <unk> six target was one of those that have been idle.
Identified through our genomic database.
Anne Wojcicki: You know, other tests, you know, ancestry. You have health and ancestry, you have health and ancestry plus, and you have total health. What we're really offering here is care. Like, it's an opportunity to engage with a clinical product that, or clinicians, healthcare providers, that are looking all across your genome and really thinking thoughtfully about how can you leverage your genetic information, your blood information, your wearables, your lifestyle, your family history, your medical records to think about a true preventive care plan. So it's a real, we've soft launched it really knowing that there's going to be an early market And I think that's more and more what you can imagine us doing with total health, being able to help people not just get access to this information but to leverage it and integrate it into their lives. Okay, no, that's helpful.
The premise of how we've been discovering potential targets at <unk> Therapeutics and and this was right along that line and we're really interested in this because it highlights a jump up way of approaching immune cells to attack cancer and they're all well.
Jeff rents other modalities out there right now that are activating NK cells or trying to co-opt NK cell, we believe that our.
<unk>.
Drugs that we're bringing into the clinic addressable modest shortcoming of other.
A bunch of programs and so we this was a dual backend of antibody that has.
Monoclonal antibody like half lives.
Should be.
Tolerated it should really for.
<unk> a novel way.
Debating NK cells and address an unmet need.
Got it and then just the last part I'm, sorry, if I missed that did you say.
If there is any clinical data that youre aware of that has helped to validate a derisk it.
There are other programs that are also looking at the NK pathway, but we have a lot of reasons to believe that this is a better way of addressing the issues that have plagued another.
Anne Wojcicki: Thank you. And then one more, one last one, just on your new drug candidate, 1473, targeting ULB-P6. Can you just talk a little bit more about the target, like how it was determined, if there are any other therapies going after ULB-P6, and if there's any clinical data that you're aware of that has helped to validate or de-risk the target? Yeah, let me point you over to Jennifer Lowe
Another program.
Okay.
Competition.
But but we really think that this is a novel and better way of interesting NK cell activation.
Okay, great. Thanks for the questions.
Okay.
Thank you one moment our next question.
Okay.
And we have a follow up from Stephen Moss of TV <unk> line is open.
Jennifer Lowe: Hi, The ULBP6 target was one of those that has been identified through our genetic database. It's the premise of how we've been discovering potential targets at 23andMe Therapeutics, and this was right along that path. And we're really interested in this because it highlights a different way of approaching immune cells to attack cancer. And there are a lot of different other modalities out there right now that are activating NK cells or trying to co-opt NK cells. We believe that our new drug that we're bringing into the clinic addresses a lot of shortcomings of other programs. And so this is a dual mechanism antibody that has a monoclonal antibody-like half-life. It should be tolerated.
Yes.
Hi, great. Thanks for taking the additional question Dan I apologize again for the noise that back here.
Just digging in a little bit more on the total health launch.
Maybe you can give us some color on how thats going how you guys are measuring internally the success of that launch and then if there's any learnings that can be instructive to the launch into the existing customer of <unk>, which I believe is slated for.
The spring.
Yeah, we're not giving much on on total health I think that more and more just it's the first real integration with lemonade and being able to have on <unk>.
Access to care being able to order blood being able to order medications at some point.
Being able all in all in one and al on the <unk> brand. So I think that is one of the big milestones for US I think what you can also anticipate in the future as more and more how do we bring what we're learning from total helm also to all of our existing customers. So the 14 plus million customers that we have.
Jennifer Lowe: It should really provide a novel way of activating NK cells and address the numbness. And then just to the last part, I'm sorry if I missed that. Did you say, you know, if there's any clinical data that you're aware of that has helped to validate or de-risk this? There are other programs that are also looking at the NK pathway, but we have a lot of reasons to believe that this is a better way of addressing the issues that have plagued certain other programs. We are very aware of the competition, but we really think that this is a novel and better way of addressing end-case selectivity. Okay, great. Thanks for the question. Thank you.
How is it that they can get a version of this type of care platform.
I think there's a lot that we've learned every time, we have launched something new to customers. I think there is a fair amount that we can learn about what is it they want holiday adopting what's the right way to explain it to them as I mentioned before I think that this is a.
As a big shift for us to from just being a test where people are getting information and learning about themselves to where they are now getting that information, but we are helping them apply. It I also would just point to things like health tracks.
Operator: One moment for our next question, and we have a follow-up from Steven Ma of TD Power. Your line is open.
Steve Moll: Hi. Yeah, great. Great. Thanks for taking the additional question, Dan. Apologies again for the noise back here.
As a way that in health action plan as ways that we are looking more and more to be able to give you. The genetic information your wearables self report data all into a score that helps you understand really where you are at on a risk curve for specific disease conditions.
Steve Moll: Maybe just digging in a little bit more on the Total Health launch. Maybe give us some color on how that's going, how you guys are measuring the success of that launch internally. And then, yeah, if there's any learnings that could be instructive to the launch and to the existing customers, which I believe is slated for the spring. Yeah, we're not giving much on Total Health.
So I think more and more you can see us integrating lots of different datasets to give you something that is truly personalized towards yield and I think you can see us emphasizing more and more subscriptions, which we call membership membership products that help people get affordable preventive care.
Anne Wojcicki: I think that more and more it's the first real integration with lemonade and being able to have on one system, access to care, being able to order blood, being able to order medications at some point, being able to do it all in all on one and all under the 23andMe brand. So I think that is one of the big milestones for us. I think what you can also anticipate in the future is more and more. How do we bring what we're learning from total health to all of our customers? So the 14 plus million customers that we have, how is it that they can get a version of this type of care platform?
Okay. That's helpful.
One more question.
Good afternoon, the BD effort in terms of partnering.
We lost you there.
I would now like to turn the call.
Back over to Ian for further questions to answer further questions.
Thank you.
Anne Wojcicki: So I think there's a lot that we've learned. Every time we have launched something new to customers, I think there's a fair amount that we can learn about what they want, how they are adopting it, and what's the right way to explain it to them. As I mentioned before, I think that this is a big shift for us from just being a test where people are getting information and learning about themselves to where they are now getting that information, but we are helping them apply it. I also would just point to things like health tracks as ways that in the health action plan, we are looking more and more to be able to give you your genetic information, your wearables, self-report data, all into a score that helps you understand really where you are on the risk curve for specific disease conditions.
Mike jumps back on I will now read the BOP shareholder questions from our same technology and Q&A platform.
I'll, probably go through five or six here. The first one which is top of mind for shareholders. What is the plan and stay compliant with NASDAQ listing environment.
Yes. This is something that's obviously top of volume for us as well.
We're actively monitoring markets staying on top of it.
And discussions considering things like a reverse stock split, but also most importantly, just continuing to execute on the business and showing and confirming shareholder value.
Great and sort of on that theme.
Shareholder value theme, a big kind of a second most popular question was what are you doing to increase the value of the company I know, we've talked about some of that stuff on the call, but maybe you can kind of go and reiterated yes three areas that I think are really key for people just to remember where we focus on value. So as I mentioned on the call.
Anne Wojcicki: So I think more and more you can see us integrating lots of different data sets to give you something that is truly personalized for you. And I think you can see us emphasizing more and more subscriptions, which we call membership, products that help people get affordable preventive care. Okay, that's helpful. And one more question, you know, on the effort and the DD effort in terms of partnering. We lost you there. I would now like to turn the call over to you.
Zimmer side, we really focus on expanding the offerings, we can provide to customers and it's been very much a people buy our product and it is a one time sale and we think about lots of opportunities where we can engage people to come back we can provide true value for them in the world of <unk>.
Operator: Back over to Ian for further questions. Thank you. Let's even jump back on. I will now read the top shareholder questions from our state technologies Q&A platform. I'll probably go through five or six here.
<unk> care and we can also established a truly viable membership business, where our customers are returning value and is a solid and stable recurring business model for the company.
So that is number one on consumer ended up that is very much where we are focused fiscal year on research research is a fascinating area right now, particularly because of the incredible interest in the world of AI and companies that are looking at how to really change their approach to drug discovery.
Ian Cooney: The first one, which is top of mind for shareholders, is what is the plan to stay compliant with NASDAQ listing requirements? Yes, this is something that's obviously top of mind for us as well. We are actively monitoring markets, staying on top of them in discussions, considering things like a reverse stock split, but also, most importantly, just continuing to execute on the business and showing and confirming shareholder value. Right, and sort of on that same shareholder value team, a big, kind of a second. The most popular question was, "What are you doing to increase the value of the company?" I know we've talked about some of that stuff on the call, but maybe you can go ahead and reiterate.
It can start in many different ways, but the foundation.
Is is genetics understanding human genetics understanding how that translates to biology, and how you can leverage genetic information to identify drug targets and be more efficient in the entire process that we are very excited about the collaboration that we signed with the price of a dime with GSK the operator.
Unity to do more and for us to really be a leader in AI drug discovery.
Lost in therapeutics.
Anne Wojcicki: Yeah, so three areas that I think are really key for people just to remember where we focus on value. So, as I mentioned, on the consumer side, we really focus on expanding the offerings we can provide to customers. So it's been very much like people buy our product, and it is a one-time sale.
It has been a long journey and in a very exciting journey.
Translating our data into novel Therapeutics.
And I am very excited about $14 73, and seen the potential and the opportunities and patients. So we look forward to updating you on $14 73, as aggressive, but I am very inspired and excited about what we have been able to do with that translation of data.
Anne Wojcicki: And we think about lots of opportunities where we can engage people to come back. We can provide true value for them in the world of preventive care. And we can also establish a truly viable membership business where our customers are returning value, and it is a solid and stable recurring business model for the company. So that is number one as a consumer, and that is very much where we are focused this fiscal year. On research, research is a fascinating area right now, particularly because of the incredible interest in the world of AI. And companies that are looking at how to really change their approach to drug discovery. It can start in many different ways, but the foundation is genetics. Understanding human genetics, understanding how that translates to biology, and how you can leverage genetic information to identify drug targets and be more efficient in the entire process.
And to patients.
Great. Thank you Ann.
Next one what is the cost of the data breach.
What is the plan to increase data security and restore trust in Nic.
We've incurred $2 $7 million in expenses related to the data breach.
Our data suggest cyber security incident.
To date we.
<unk> also booked $1 million in our financials that you see in the 10-Q as.
As we actually booked $1 7 million in anticipated insurance recoveries.
We continue to invest in data security, we now require two factor authentication from all of our customers and we realize that our business really runs on the trust of our customers right. It's what we hold in the highest regard.
I mean, instead of just doing this for a long time and continuing to drive innovation I've been using genetics to help people manage health risks and improve.
Anne Wojcicki: So we are very excited about the collaboration that we signed with, the partnership we signed with GSK, the opportunity to do more, and for us to really be a leader in AI drug discovery. Last, in therapeutics, it has been a long journey and a very exciting journey, translating our data into novel therapeutics, and I'm very excited about 1473 and seeing the potential and the opportunities in patients. So we look forward to updating you on 1473 as that progresses, but I am very inspired and excited about what we have been able to do with that translation of data. Great, thank you.
Their health span.
And for US we're continuing to look at how we can continue to increase data security in 2000.
And just to jump in there I would say the company has been a top priority. Since we started the company back data security and privacy and transparency are core values for the company. So we have as Joe mentioned, we have instituted two factor authentication.
It is core for us are.
<unk> priority for us to be leading in privacy and you will see us continue to be private theater as we sort of enter into a new era of how people are thinking about volatile data.
Great. Thank you.
Next question and you touched on this earlier, but maybe we can take.
Joe Selsavage: And next one, what is the cost of the data breach? And what is the plan to increase data security and restore trust in the company? We've incurred $2.7 million in expenses related to the data breach, or data and success cybersecurity incident.
Hey, Andrew will further AI is causing a new gold rush for quality data you have some of the best quality data out there are you engaged with any one specifically for AI use cases.
Create value.
Joe Selsavage: You know, to date, we have also booked $1 million in our financials, and you can see in the 10-Q, as we actually booked $1.7 million in anticipated insurance recoveries. We continue to invest in data security. For example, we now require two-factor authentication from all of our customers.
In that arena.
Yeah.
Very exciting times because it is.
You've seen data transform all these other industries and and you see it now coming fast and furious for the entire health care space and is a particularly exciting however world of drug discovery because drug discovery is so challenging and so expensive. So anything you can do that is going to make it more efficient.
Joe Selsavage: And we realize that our business really runs on the trust of our customers, right? It's what we hold in the highest regard. And we've been doing this for a long time and continuing to drive innovation and using genetics to help people manage health risks and improve, you know, their health. And for us, we're continuing to look at how we can continue to increase data security at 23andMe. And just to jump in there, I would say the company has been a top priority since we started this company that data security, privacy, and transparency are core values for this company. So we have, as Joe mentioned, we have instituted two-factor authentication.
And have a higher likelihood of success and cannot really trickled down and have huge upper class huge huge benefits or in the entire world.
So we see a lot of opportunities for our data we have the world's largest be contactable genotype phenotype database that is out there.
<unk> has been designed and set up since we started the company and designed for research. So we have been engaging in research projects almost since the inception of this company, we have a tremendous amount of experience with translating that data in for our therapeutics. So we are working on par.
Anne Wojcicki: It is core for us, a critical priority for us to be leading in privacy, and you will see us continue to be privacy leaders as we sort of enter into a new era of how people are thinking about all of this data. Great, thank you. Next question, you touched on this a little, Amber. Let's go a little further.
Our ships that want to mine the data and leverage and there is all kinds of varying abilities in the industry and people who are very familiar with AI models and that does it.
And with some of the work that they're already doing and then you got other groups that have different types of approaches of housing leverage genetics for drug discovery, but it is a very exciting time. There is no doubt that having lots of data is going to be a foundation for therapeutic discovery in the future.
Anne Wojcicki: AI is causing a new gold rush for quality data. You have some of the best quality data out there, anyone specifically for AI use cases, and how do you create value? I do not agree enough with Obama.
Anne Wojcicki: Yeah, it's a very exciting time because, you know, you've seen data transform all these other industries, and you see it now coming fast and furious for the entire healthcare space, and it is particularly exciting for the world of drug discovery because drug discovery is so challenging and so expensive. So, anything you can do that is going to make it more efficient and have a higher likelihood of success is going to really trickle down and have huge consequences, huge, huge benefits for the entire world. So, we see a lot of opportunities for our data. We have the world's largest recontactable genotype phenotype database that is out there. It has been designed and set up since we started the company.
We are also leveraging all this data for <unk> internal research.
Meaning that we are translating that for customers what are ways that we can leverage all of these sites and be world leaders and risk protection.
We're also doing a fair amount of work understanding how your G&A language models and how we can be best at predicting financially target.
The dedication of our therapeutics.
So theres a lot of great opportunities out there and we continue to stay on top of this industry.
Excellent so last one here for <unk>.
Anne Wojcicki: It's designed for research, so we have been engaging in research projects since the inception of this company. We have a tremendous amount of experience with translating that data into therapeutics, so we are working on partnerships that want to mine the data and leverage it. There are all kinds of varying abilities in the industry of people who are very familiar with AI models and think that this could fit in with some of the work that they're already doing. And then you get other groups that have different types of approaches to how they leverage genetics for drug discovery.
Joe can you address.
Yeah.
To the extent that you can any way how you plan to move the business towards profitability.
We were pleased with the progress we've made to date over the past year and moving the business to profitability, it's really a two pronged effort, but the most important being driving our growth in both membership and research businesses to have ongoing recurring revenue.
And we can also continue to look at how we can optimize our cost structure and we really have a high bar for how we invest in the business in the near term.
Anne Wojcicki: But it's a very exciting time. There's no doubt that having lots of data is going to be a foundation for therapeutic discovery in the future. We are also leveraging all this data for 23andMe internal research, meaning that we are translating that for customers. What are the ways that we can leverage all of these insights and be world leaders in risk prediction?
Great.
For us.
Thanks for joining us. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great evening.
Okay.
Goodbye.
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Yes.
Okay.
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Joe Selsavage: We're also doing a fair amount of work understanding how you can do DNA language models and how we can be best at predicting, potentially, target identification for therapeutics. So there are a lot of great opportunities out there, and we continue to stay on top of this. Excellent. Last one here for Joe. Can you address, to the extent that you can anyway, how you plan to move the business toward profitability? We've been pleased with the progress we've made to date over the past year in moving the business, you know, to profitability. It's really a two-pronged effort, but the most important being, you know, driving our growth in both membership and research businesses to, you know, have ongoing recurring revenue. And we can also continue to look at how we can optimize our cost structure and really have a high bar for how we invest in the business in the near term.
Yes.
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Hum.
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Operator: Great, that's it for us. Thanks for joining us. This concludes today's conference call. Thank you for participating. You may now disconnect everyone. Have a great evening! Goodbye. Good evening. I think we've had enough honors by now. Are you still coming? Right, I'd like to continue the content. Okay. You are probably proud of yourself for being a part of this entire process.
Hum.
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