Q4 2023 Guardant Health Inc Earnings Call

Will be muted during the presentation portion of the call with an opportunity for questions and answers at the end I would now like to pass the conference over to your host Carrie Amendable. Thank you you May proceed Kerry.

Thank you earlier today Guardant health released financial results for the quarter and year ended December 31, 2023, joining me today from garden or help me out to get co CEO and the early <unk> co CEO and Mike Bell Chief Financial Officer before we begin I'd like to remind you that during this call management will make for.

Looking statements within the meaning of federal Securities laws.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specified items.

Information regarding material risks and uncertainties as well as reconciliation to most directly comparable GAAP financial measures are available in the press release guardant issued today as well as in our Form 10-K, and other filings with the SEC.

Garden's disclaims any intention or obligation to update or revise financial projections and forward looking statements, whether because of new information future events or otherwise the information in this conference call is accurate only as of the live broadcast but that I would like to turn the call over to help me.

Thanks, Gary Good afternoon, and thank you for joining our fourth quarter and full year 2023 earnings call.

I will start off our call today by providing an update on our progress over 2023 and go into more detail across therapy selection and emerging.

I will then turn the call over to <unk> for an update on screening and finally, Mike will provide a more detailed look at our financials and outlook for 2024.

Starting on slide three.

We made substantial progress in each area of our business throughout the year, starting with therapy selection after years of investing in our infrastructure I'm very pleased that therapy selection reach cash flow breakeven at the end of the year, marking a major achievement for garden.

This follows a series of pivotal reimbursement wins throughout 2023.

We now have coverage from all major U S commercial health insurers regarding 360, surpassing 300 million covered lives.

<unk> surpassed 200 million covered lives for tissue next received national reimbursement in Japan for Garden, $3 60, and received Medicare reimbursement for Garden response.

We also exceeded 475 EMR integrated accounts as of yearend outpacing our prior targets.

Moving onto MRV.

I'm excited to share that we upgraded to reveal to the smart liquid biopsy platform at the end of the year, enabling even better performance reveal volumes came in strong with full year growth of over 90%.

We also received additional commercial coverage <unk> in CRC following Medicare reimbursement in 2022 and continue to produce compelling data across CRC in breast cancer for reveal demonstrating high clinical performance.

And finally with screening we completed our PMA submission for shield CRC made steady progress with FDA review and published the first paper foreseeable demonstrating improved adherence with a blood based CRC screening.

While we continue to believe that the performance of shield meets the bar for FDA approval, we have already demonstrated improved clinical sensitivity with our upgraded platform <unk> when compared to <unk>, one with data presented at our Investor day last year.

I'm, so proud of our team for pushing the boundaries of what's possible as we deliver on our mission to get everyone more time free from cancer.

In line with that mission I'd like to share a story of the impact our reveal test has had on patients.

In early 2023 women was diagnosed with triple negative breast cancer and underwent surgery.

Her physician been ordered a series of reveal test as part of her surveillance program in the second test came back positive for CTV and a 30 weeks after surgery.

The physician scheduled the patient for additional scans, which found a growing nodule in her lower left one well. This discovery. She is now undergoing further treatment.

This story highlights how reveal can be used effectively in Serbia and settings to identify the need for additional treatment and deliver better patient outcomes.

Turning to top line performance on slide four.

We had a strong finish to the year with revenue growing 22% to $155 million in the fourth quarter and 25% to $564 million for the full year 2023 coming in slightly above our pre announced range provided in January.

Turning to slide five clinic.

Clinical test volume reached 46400 tests in the fourth quarter and 172900 tests for the full year, 2023 up 29% and 39% respectively compared to the prior year periods Garden 360 has been the primary driver of clinical volume growth as we continue to enhance the customer experience.

With increasing contributions from newer products such as tissue next and response.

Moving onto Biopharma on slide six Biopharma test volume reached 9500 tests in the fourth quarter and 29900 tests for the full year, 2023 up 16% and 15% respectively compared to the prior year periods.

Major driver of this growth has been the increasing interest in our garden is going to be smart liquid biopsy platform, which now represents more than 30% of our biopharma testing volume and has become a major differentiator for our Biopharma business.

Looking forward, our robust companion diagnostic pipeline, coupled with our backlog of deals won positions us for continued growth in 2024.

We believe our active engagement with Biopharma leaders for strategic partnerships, especially in exploring the potential of epigenomics will drive even more demand for our products and services.

Now looking more closely at some of the recent highlights within our therapy selection business on slide seven.

We made great strides in improving Asp's for garden $3 60 over the last few quarters, specifically in November Medicare finalized its proposal for the garden 360, <unk> price to be cross walk through the price of Garden 360 CTX.

This took effect from January one of this year, increasing the Medicare price for Garden 360, <unk> from 3500 $35000.

We're also starting to see the positive impact from Garden 360, ASB from commercial payer coverage lens and believe that this is a tailwind that will continue to play out in the coming year. As a result, we expect that in the first quarter of 2020 for the Garden 360, <unk> ASP will increase to be in the range of $28 52 to $2900.

Turning to slide eight we are focused on streamlining the customer experience and investing in our commercial infrastructure.

To that end, we continue to make excellent progress integrating with the three largest oncology EMR systems with rapid growth of digital adoption. We believe these integrations will serve as a catalyst for increasing ordering depth per count throughout the year.

Another critical growth driver is not only increasing adoption of biomarker testing bottoms up at the physician level, but top down at the large group practice level, especially in the community setting where most patients reside accordingly, we recently announced the collaboration with the U S oncology network and leading community oncology practices to increase the use of biomarker.

Testing to identify patients who would benefit from therapies that target specific cancer pathways, notably the U S. Oncology network had more than 2500 providers across over 600 sites treating one 4 million patients annually.

We continue to see strong momentum as we expand our testing offering globally last quarter. The Royal Marsden Garden powered laboratory was awarded an expression of interest by the NHS to test advanced non small cell lung cancer patients potentially making our technology accessible to patients across England.

We also launched garden 316, China for Biopharma use and have already generated a strong pipeline of over 30 partnerships lifetime global Biopharma partnerships exceed 165, providing a solid foundation for future growth.

Now shifting gears to review on slide nine as mentioned earlier, we hit a major milestone by upgrading reveal tourists Martin liquid biopsy platform as of year end.

With this broad metal on wide technology, we can achieve high performance by tracking hundreds to thousands of active alterations per patient compared to $16 50 mutations from tumor informed assays.

Our low background methylation chemistry leads to ultra high specificity and we maximize overall accuracy by applying machine learning to thousands of clinical samples.

Accordingly, physicians will be able to use the test to track and quantify tumor fraction in the <unk> setting with high precision using our epigenomics based technology.

Reveal is currently available for CRC breast and lung cancers and will be expanded to other tumor types over time.

Moving on to slide 10, we.

We have already generated some promising MRV data on our smart liquid biopsy platform for CRC and breast cancers, starting with the previously shared data from our Cosmos colon study looking at stage, two and three patients reveal achieved 80% surveillance sensitivity with 99% specificity. This data was presented at the <unk> Gi Symposium in January and will.

Included in our submission to Medicare for our surveillance indications moving onto breast, where we have now assessed three clinical cohorts with a reveal as savings smart liquid biopsy, we achieved a blended 82% surveillance sensitivity for distant recurrence with 97% specificity on this combined sizeable cohort.

This data is very exciting as the performance is in line and if not favorable to other approaches in this space. We look forward to sharing more details about this data. This year. This data will be included in our submission to Medicare for our breast indication.

Moving on to slide 11 as.

As we have shared we have a strong data pipeline with many clinical cohorts for establishing validity and utility for reveal we have almost 80000 samples from 20000 patients across a variety of solid tumors from a biobank and trials. We are running this rich study pipeline will be instrumental in building compelling evidence that not only supports efforts to expand reimbursement.

But also has the potential to influence changes in practice guidelines. This year, we anticipate publication that will support submission to Medicare for potential additional coverage next year, we have important clinical validity studies for additional cancers, such as lung pancreatic and gastric that will support advancement of additional reimbursement.

With that I will now turn the call over to <unk> to provide an update on our screening business.

Thanks Hal me.

Turning to slide 12 two.

2024 will be a very exciting year for our screening business as we prepare to launch our shield IBD test for CRC pending FDA approval.

Pushing validity and utility for reveal we have almost 80000 samples from 20000 patients across a variety of solid tumors from a biobank and trials. We are running this rich study pipeline will be instrumental in building compelling evidence that not only supports efforts to expand reimbursement, but also has the potential to influence changes in practice guidelines.

After years of research and development. It is so exciting to prepare to match this test broadly available.

There are a number of key milestones for sure on the near term horizon.

First the data from our pivotal Eclipse study has been accepted in a top tier publications validating the strength and quality of the clinical data, we expect to see it published in the coming months.

This year, we anticipate publication that will support submission to Medicare for potential additional coverage.

Next year, we have important clinical validity studies for additional cancers, such as lung pancreatic and gastric that will support advancement of additional reimbursement.

Additionally, we are continuing to make steady progress with the FCA review.

Our interactive review process with the FDA continues to be collaborative and positive.

With that I will now turn the call over to a neuro Lee to provide an update on our screening business.

Advisory cognitive panel meeting will be the next milestone out their review process.

Lee: Tell me.

Turning to slide 12.

Lee: 'twenty 'twenty four will be a very exciting year far screening business as we prepare to launch our shield IBD test for CRC pending FDA approval.

In our recent discussions FDA has informed us that the meeting date, we will now likely take place in late Q2 as they continue to work to fill the remaining vacant advisory seats on the panel.

Lee: After years of research and development, it's so exciting to prepare to make this test broadly available.

The date and details of that meeting are subject to confirmation by the FDA and publication in the Federal Register.

Lee: There are a number of key milestones for sure on the near term horizon.

Lee: First the data from our pivotal Eclipse study has been accepted in a top tier publications validating the strength and quality of the clinical data.

That said, we continue to expect to receive FDA approval in 2024.

Our team is working hard to prepare for this panel meeting.

Lee: We expect to see it published in the coming months.

<unk> is preparing to scale up the commercial operations post FDA approval.

Lee: Additionally, we are continuing to make steady progress with FDA review.

Turning to slide 13, while shale has only been in market for a short time, we are highly encouraged by the overwhelming enthusiasm expressed by PCP and health systems.

Lee: Our interactive review process with the FDA continues to be collaborative and positive.

Lee: The Advisory Committee panel meeting will be the next milestone up their review process.

We are witnessing a real world evidence of its effectiveness and the potential to drive unparalleled compliance in comps and cancer screening.

In our recent discussions FDA has informed us that the meeting date will now likely take place in late Q2 as they continue to work to field the remaining vacant advisory seats on the panel.

In the first 20000 order shale test that <unk> rate was 94%, which is much higher than the range of 38% to 65% of its current modalities.

Lee: The dates and details of that meeting are subject to confirmation by the FDA and publication aimed at further outrageous there.

As we shared that J P. Morgan.

Lee: That said, we continue to expect to receive FDA approval in 2024.

<unk> system setting a randomized 2000 patient study was conducted at Kaiser Permanente to evaluate the impacts of introducing shield as a new option to improve the overall screening rate.

Lee: Our team is working hard to prepare for this panel meeting and in parallel is preparing to scale up to commercial operations post FDA approval.

Study Readouts was positive and the results were published two papers and plus one and got.

Lee: Turning to slide 13, while shield has only been in market for a short time, we are highly encouraged by the overwhelming enthusiasm expressed by PCP and health systems.

The study demonstrated that the one individuals who hadn't completed fit were offered shield.

The rate of screening increased by more than three times.

Lee: We are witnessing a real world evidence of its effectiveness and the potential to drive unparalleled compliance and comps ethane cancer screening.

Notably <unk>.

Over 40% of those patients who took the shale test for CRC screening.

Lee: In the first 20000 order shield test that <unk> rate was 94%, which is much higher than the range of 38% to 65% of his car and modalities.

Not been screened before.

Additionally, hundreds herself survey patients and physicians, we are optimistic about the idea of a blood based CRC screening test offering being incorporated into a routine health care visit.

Lee: As we shared that J P. Morgan.

Lee: Health system setting a randomized 2000 patient study was conducted at Kaiser Permanente to evaluate the impacts of introducing shield as a new option to improve the overall screening rate.

These publications highlight the significant impact of what shale can do.

This blood test is added as a new and accessible option for CRC screening.

This study Readouts was positive and the results were published two papers in plus one and got.

With that I will now turn the call over to Mike for more detail on our financials.

Thanks Ravi.

Lee: This study demonstrated that the one individuals who hadn't completely fit were offered shield.

Starting with our financial results on slide 14.

Total revenue for the fourth quarter of 2023 grew 22% to $155 1 million.

Lee: The rate of screening increased by more than three times.

Lee: Notably over 40% of those patients who took the shield tests for CRC screening.

Compared to $126 9 million in the prior year quarter.

Total precision oncology testing revenue for the fourth quarter was $142 2 million, increasing 25% compared to $113 8 million in the prior year quarter.

Lee: <unk> been screened before.

Lee: Additionally, 100% of surveyed patients and physicians, we are optimistic about the idea of a blood based CRC screening tests I'll frame being incorporated into a routine health care visit.

This increase was predominantly driven by strong year over year growth in both the clinical and Biopharma volumes.

Lee: These publications highlight the significant impact of what shield can do when this blood test is added as a new and accessible option for CRC screening.

Precision oncology revenue from clinical tests in the fourth quarter totaled $108 2 million up 29% from $83 7 million for the prior year quarter.

Lee: With that I will now turn the call over to Mike for more detail on our financials.

Fourth quarter clinical test volume was 46400, an increase of 29% from the same period of the prior year.

Mike: Thanks Ravi.

Mike: Starting with our financial results on slide 14.

<unk> thousand 360 continues to be the main revenue driver with strong year over year volume growth across all cancers in the U S. As.

Mike: Total revenue for the fourth quarter of 2023 grew 22% to $155 1 million.

As well as volume contribution from Japan, and the U K in the fourth quarter.

Mike: Compared to $126 9 million in the prior year quarter.

We also saw a sequential rise in the garden and 360, <unk> ASP in the fourth quarter, which increased to approximately $2750 from approximately $2700 in Q3.

Mike: Total precision oncology testing revenue for the fourth quarter was $142 2 million, increasing 25% compared to $113 8 million in the prior year quarter.

This was driven by the continued pull through from the expanded commercial coverage received either in the year and from the interim Medicare capital raises were done at 360 <unk>.

Mike: This increase was predominantly driven by strong year over year growth in both the clinical and Biopharma volumes.

Mike: Precision oncology revenue from clinical tests in the fourth quarter totaled $108 2 million.

Which increased from 3500 to $3967 on October the first.

Mike: 29% from $83 7 million for the prior year quarter.

As a reminder, the gun and 360 <unk> Medicare rate increased again on January 1st 2024 to the new rate of $5000.

Mike: Fourth quarter clinical test volume was 46400, an increase of 29% from the same period of the prior year.

Mike: <unk> thousand 360 continues to be the main revenue driver with strong year over year volume growth across all cancers in the U S.

Which we expect will increase the Gartner 360, ISP to be in the range 2850 to $2900 in the first quarter of 2024.

As well as volume contribution from Japan, and the UK in the fourth quarter.

Blended clinical ASP was approximately $2330 for the fourth quarter.

Mike: We also saw a sequential rise in the garden and 360 Asps in the fourth quarter.

Mike: Which increased to approximately $2750 from approximately $2700 in Q3.

Which was similar to the blended clinical ASP of $2320 in Q4 2022.

The increasing guidance 360 ISP of.

Mike: This was driven by the continued pull through from the expanded commercial coverage received either in the year.

Setting the mixed impact of different products and geographies.

Precision oncology revenue from Biopharma test in the fourth quarter.

Mike: And from the interim Medicare got cool rates were done at 360 L. T.

34.0 million.

Mike: Which increased from 3500 to $3967 on October the first.

Up 13% from $30 1 million for the prior year quarter.

Biopharma test volume was strong in the fourth quarter totaling approximately 9500 tests up.

Mike: As a reminder, begun in 360 <unk> Medicare rate increased again on January 1st 2024 to the new rate of $5000.

16% from the prior year quarter.

Biopharma ISP was approximately $3600 in the fourth quarter of 2024.

Mike: Which we expect will increase the gun at 360 ISP to be in the range 2850 to $2900 in the first quarter of 2024.

Development services and other revenue in the fourth quarter totaled $12 9 million compared.

Mike: Blended clinical ASP was approximately $2330 for the fourth quarter, which was similar to the blended clinical ASP of $2320 in Q4 2022.

Compared to $13 $1 million in the prior year quarter.

Total gross margin was 60% compared to 63% in the prior year quarter.

For precision oncology gross margin was 60% in the fourth quarter of 2023.

Mike: With the increasing guidance 360, ISP offsetting the mixed impact of different products and geographies.

<unk> to 62% in the fourth quarter of 2022.

While we saw improvements in the gross margin for clinical gotten 360, <unk> due to the increase in ASP.

Mike: Precision oncology revenue from Biopharma tests in the fourth quarter.

Mike: 34.0 million.

The overall precision oncology gross margin declined slightly due to changes in the mix of clinical and Biopharma tests.

Mike: Up 13% from $30 1 million for the prior year quarter.

Mike: Biopharma test volume was strong in the quarter.

A mix of government 360 tissue next reveal test.

Excluding approximately 9510 of 16% from the prior year quarter.

And the mix of U S and international.

Development services and other gross margin was 60% in the fourth quarter of 2023.

Mike: Biopharma ISP was approximately $3600 in the fourth quarter of 2024.

Compared to 74% in Q4 2022.

Mike: Development services and other revenue in the fourth quarter totaled $12 $9 million.

The change in margin was primarily due to the cost of processing shield <unk> samples, which increased in volume year over year.

Mike: Compared to $13 1 million in the prior year quarter.

For which we are currently booking the minimal revenue.

Mike: Total gross margin was 60% compared to 63% in the prior year quarter.

Total research and development sales and marketing and G&A operating expenses for the fourth quarter of 2023.

Mike: For precision oncology gross margin was 60% in the fourth quarter of 2023.

$206 6 million.

Mike: <unk> to 62% in the fourth quarter of 2022.

A reduction of $19 2 million compared to Q4 2022.

Mike: While we saw improvements in the gross margin preclinical gotten 360, <unk> due to the increase in ASP.

In Q4 2023, we also recorded a liability and a resulting nonrecurring charge to other operating expense of $83 $4 million related to the recent jury verdict in a patent infringement lawsuit.

Mike: The overall precision oncology gross margin declined slightly due to changes in the mix of clinical and Biopharma tests.

Mike: The mix of gun and 360 tissue next and reveal test.

Mike: And the mix of U S and international Sir.

Notwithstanding this onetime charge, we plan to file motions through overturned the jury's verdict seek a new trial and our amendment judgments.

Mike: Development services and other gross margin was 60% in the fourth quarter of 2023.

Mike: Compared to 74% in Q4 2022.

Net loss was 197 zero million.

Mike: The change in margin was primarily due to the cost of processing shield, <unk> samples, which increasing volume year over year and for which we are currently booking the minimum revenue.

A $1 58 per share for the fourth quarter of 2023.

Compared to $139 9 million or $1 36 per share in the fourth quarter of 2022.

Mike: Total research and development sales and marketing and G&A operating expenses for the fourth quarter of 2023.

Turning to the full year.

Total revenue was $563 9 million up.

Mike: $206 6 million.

Mike: A reduction of $19 2 million compared to Q4 2022.

25% from $449 5 million in the prior year.

Mike: In Q4 2023, we also recorded a liability and a resulting nonrecurring charged to other operating expense of $83 $4 million related to the recent jewelry about it in a patent infringement lawsuit.

Precision oncology revenue increased 31% to $514 2 million.

Clinical testing revenue was $403 9 million.

Which grew 35% year over year, driven by a 39% increase in clinical testing volume.

Mike: Notwithstanding this onetime charge, we plan to file motions through overturned the jury's verdict seek a new trial and our amendment judgments.

This strong volume growth was driven by guidance 2016 with growth across all cancer types tissue next which grew more than 80% and reveal which grew over 90%.

Net loss was 197.0 million.

Mike: A $1 58 per share for the fourth quarter of 2023.

Biopharma testing revenue was $110 4 million.

Compared to $139 9 million or.

Which increased 17% year over year.

Mike: A $1 36 per share in the fourth quarter of 2022.

Biopharma volume increased 15% year over year, primarily driven by the uptake of Infinity, which also led to an improved biopharma ISP in 2023 of approximately $3700 compared to $3610 in 2022.

Mike: Turning to the full year.

Mike: Total revenue was $563 9 million.

Mike: Up 25% from $449 5 million in the prior year.

Mike: Precision oncology revenue increased 31% to $514 2 million.

Development services and other revenue declined 14% to $49 7 million in 2023.

Mike: Clinical testing revenue was $403 9 million.

This reduction was in line with our guidance at the start of 2023.

Mike: Which grew 35% year over year, driven by a 39% increase in clinical testing volume.

Primarily due to the variable timing progress and milestones related to projects with third parties.

Mike: This strong volume growth was driven by garden suite 16 with growth across all cancer types.

As well as the year over year reduction in royalty revenue.

Total gross margin was 60% compared to 65% in 2022.

Mike: Tissue next which grew more than 80% and reveal which grew over 90%.

Mike: Biopharma testing revenue was $110 4 million, which increased 17% year over year.

For precision oncology gross margin was 60% in 2023 compared to 62% in 2022.

Mike: Biopharma volume increased 15% year over year, primarily driven by the uptake of dominant dependency.

Slight year over year decline is consistent with the change we saw in the fourth quarter were increases in asps have been more than offset by changes in product mix.

Mike: Total led to an improved biopharma asps in 2023 over approximately $3700 compared to $3610 in 2022.

Development services and other gross margin was 57% in 2023 compared to 86% in 2022.

The change in margin was primarily due to the cost of processing shield LTC samples.

Mike: Development services and other revenue declined 14% to $49 7 million in 2023.

Which was booked as a sales and marketing expense until the end of Q3, 2022, and which was booked to development services and other costs from Q4 2022 onwards.

Mike: This reduction was in line with our guidance at the start of 2023 and <unk>.

Mike: Primarily due to the variable timing progress and milestones related to projects with third parties.

In both 2022, and 2023 shield LDC revenue was not material.

Mike: As well as the year over year reduction in royalty revenue.

Mike: Wholesale gross margin was 60% compared to 65% in 2022.

Total research and development sales and marketing and G&A operating expenses for the full year 2023.

Mike: Precision oncology gross margin was 60% in 2023 compared to 62% in 2022.

$819 2 million, a decrease of $19 4 million compared to 2022.

Mike: The slight year over year decline is consistent with the change we saw in the fourth quarter were increases in ISP had been more than offset by changes in product mix.

Net loss was $479 4 million in 2023.

Compared to $654 6 million in 2022.

Mike: Development services and other gross margin was 57% in 2023.

Net loss per share was $4 28 in 2023 as compared to $6 41 in 2022.

Mike: The 86% in 2022.

Mike: The change in margin was primarily due to the cost of processing shield LDC samples.

Moving on to non-GAAP financial measures on slide 15.

Mike: We spoke to the sales and marketing expense until the end of Q3, 2022, and which was booked to development services and other costs from Q4 2022 onwards.

From this quarter onwards, we will report non-GAAP gross margin measures to provide better clarity on the performance of the business.

Most importantly, we will provide a non-GAAP gross margin measure, which excludes the cost related to performing screening test in a lab, which currently generate minimal revenue.

Mike: In both 2022, and 2023 shield LDC revenue was not material.

Mike: Total research and development sales and marketing and G&A operating expenses for the full year 2023.

As a reminder, from Q4 2022, we have recorded the costs of providing shield LDC screening tests and the development services and other line in our income statement.

Mike: $819 2 million.

Mike: <unk> of $19 4 million compared to 2022.

Mike: Net loss was $479 $4 million in 2023.

During both the fourth quarter and full year 2023.

The non-GAAP gross margin was 61% and the non-GAAP gross margin excluding screening was 63%.

Mike: Compared to $654 6 million in 2022.

Mike: Net loss per share was $4 28 in 2023 as compared to $6 41 in 2022.

Again, we'll continue to report this important metric going forward.

non-GAAP operating expenses, which exclude the nonrecurring charge mentioned earlier.

Mike: Moving on to non-GAAP financial measures on slide 15.

$183 $1 million for the fourth quarter of 2023 a.

Mike: From this quarter onwards, we will report non-GAAP gross margin measures to provide better clarity on the performance of the business.

A reduction of $18 1 million compared to the prior year quarter.

Mike: Most importantly, we will provide a non-GAAP gross margin measure, which excludes the cost related to performance screening test in a lab.

For the full year, we achieved our previously stated guidance that we would reduce non-GAAP operating expenses in 2023 compared to 2022.

Which currently generate minimal revenue.

During the full year 2023, non-GAAP operating expenses were.

Mike: As a reminder, from Q4 2022, we have recorded the cost of providing shield LDC screening tests and the development services and other line in our income statement.

$729 2 million.

Two 7% to $36 6 million in 2022.

Mike: During both the fourth quarter and full year 2023.

non-GAAP net loss was $75 9 million.

Mike: The non-GAAP gross margin was 61% and the non-GAAP gross margin excluding screening was 63%.

<unk> 64 per share for the fourth quarter of 2023.

Compared to a $119 6 million or $1 17 per share for the fourth quarter of 2022.

Mike: Again, we'll continue to report this important metric going forward.

Mike: non-GAAP operating expenses, which exclude the nonrecurring charge mentioned earlier were $193 1 million for the fourth quarter of 2023.

For the full year 2023, non-GAAP net loss was $252 3 million or $3 15 per share.

Compared to $435 $4 million of $4 26 per share for 2022.

Mike: A reduction of $18 1 million compared to the prior year quarter.

Mike: For the full year, we achieved our previously stated guidance that we would reduce non-GAAP operating expenses in 2023 compared to 2022.

Adjusted EBITDA was a loss of $78 $4 million in the fourth quarter of 2023 compared to a $109 8 million loss in the fourth quarter of 2022.

Accordingly, full year 2023, non-GAAP operating expenses were $729 2 million.

For the full year 2023, adjusted EBITDA was a loss of $344 2 million in 2023, which represents a $59 $2 million reduction compared to a loss of $403 4 million in 2020.

Mike: Compared to $736 6 million in 2022.

non-GAAP net loss was $75 9 million or <unk> 64 per share for the fourth quarter of 2023 compared to $119 6 million or $1.17 per share for the fourth quarter of 2022.

Free cash flow for the fourth quarter of 2023 was negative $83 8 million compared to a negative $100 8 million in Q4 2022.

Mike: For the full year 2023, non-GAAP net loss was $52 3 million.

For the full year 2023, we achieved our previously stated guidance that we would reduce our cash burn from a high of negative $387 million in 2022.

Mike: While $3 15 per share.

Mike: Compared to $435 4 million or $4 26 per share for 2022.

Below negative $250 million in 2023.

Mike: Adjusted EBITDA was a loss of $78 $4 million in the fourth quarter of 2023 compared to a $109 8 million loss in the fourth quarter of 2022.

Accordingly free cash flow was negative $345 million for the full year of 2023.

Looking more closely at our cash position on slide 16.

Mike: For the full year 2023, adjusted EBITDA was a loss of $344 2 million in 2023, which represents a $59 $2 million reduction compared to a loss of $403 4 million in 2020.

We ended the fourth quarter of 2023 with cash cash equivalents and short term marketable debt securities of approximately $1 2 billion.

And successfully lowered our cash burn to our target of less than $350 million, while continuing to grow our therapies such business Cigna.

Mike: Free cash flow for the fourth quarter of 2023 was negative $83 8 million compared to a negative $100 8 million in Q4 2022.

Significant investments in both the MLP and screening.

But how do we mentioned we achieved our target of reaching cash flow breakeven and therapy selection as of the end of 2023.

Mike: For the full year 2023, we achieved our previously stated guidance that we would reduce our cash burn from a high of negative $287 million in 2022.

As we look ahead to the next five years, we are confident that by starting to generate positive cash flow from therapy selection driving amounted to profitability and carefully managing the spending our screening business to approximately $200 million annually for the next five years.

Mike: Hello negative $250 million in 2023.

Mike: Accordingly free cash flow was negative $345 million for the full year of 2023.

We can continue to lower our cash burn each year.

Mike: Looking more closely at our cash position on slide 16.

By the time, we reach 2028 will be cash flow breakeven, which is achievable with our current cash balance of $1 2 billion.

We ended the fourth quarter of 2023 with cash cash equivalents and short term marketable debt securities of approximately $1 2 billion.

Now turning to our outlook and assumptions for the full year 2023 on slide 17.

Mike: And successfully lowered our cash, but our target of less than $350 million, while continuing to grow our therapy selection business.

We expect full year 2020 for revenue to be in the range of $655 million to $670 million.

Mike: Significant investments in both the MLP and screening.

Representing growth of approximately 16% to 19% compared to 2023.

Mike: As Hemi mentioned, we achieved our target of reaching cash flow breakeven and therapy selection as of the end of 2023.

This guidance does not include any revenue contribution from screening which are dependent on the timing of shield FDA approval and Medicare reimbursement coverage.

As we look ahead to the next five years, we are confident that by starting to generate positive cash flow from therapy selection, driving <unk> to profitability and carefully managing our spending our screening business to approximately $200 million annually over the next five years, we can continue to lower our cash burn each year.

We will update our revenue guidance to include screening revenue when appropriate.

For 2024, we're also providing guidance on a non-GAAP gross margin excluding screening.

Which we expect to be in the range of 60% to 62%.

Mike: So that by the time, we reach 2028 will be cash flow breakeven, which is achievable with our current cash balance of $1 2 billion.

We expect non-GAAP operating expenses to be in the range of $740 million to $750 million, representing 1% to 3% increase year over year.

Now turning to our outlook and assumptions for the full year 2023 on slide 17.

This guidance includes screening operating expenses, which will be primarily focused on the launch and commercialization of shield.

We expect full year 2020 for revenue to be in the range of $655 million to $670 million.

The expected FDA approval as well as continued screening research and development efforts.

Mike: <unk> growth of approximately 16% to 19% compared to 2023.

Finally, we expect free cash flow to be in the range of negative $320 million to $330 million in 2023.

This guidance does not include any revenue contribution from screening.

Mike: Which are dependent on the timing of shield FDA approval and Medicare reimbursement coverage.

This guidance assumes a maximum of 200 million net cash outflow for screening, which could adjust bandwidth during the year, depending on the timing and outcome of the FDA approval process.

Mike: We will update our revenue guidance to include screening revenue when appropriate.

Mike: For 2024, we're also providing guidance on a non-GAAP gross margin excluding screening.

To provide some additional color on our cash burn for 2024.

Mike: Which we expect to be in the range of 60% to 62%.

We expect cash used in operating activities to reduce by approximately $40 million compared to 2023.

Mike: We expect non-GAAP operating expenses to be in the range of $740 million to $750 million.

This reduction will be partially offset by a planned increase of approximately $20 million for the purchase of capital equipment as we ramp up lab capacity in preparation for the launch of shield.

Mike: Representing the 1% to 3% increase year over year.

Mike: This guidance includes screening operating expenses, which will be primarily focused on the launch and commercialization of shield following the expected FDA approval as.

Finally, turning to slide 18 to review our catalyst.

Mike: As well as continued screening research and development.

As we look ahead to 2024 and beyond.

Mike: Finally, we expect free cash flow to be in the range of negative $320 million to $330 million in 2023.

We have a number of upcoming catalysts in each of our business areas include.

Including smart liquid biopsy upgrades regarding 360 volume expansion across therapy selection.

Mike: This guidance assumes a maximum of $200 million net cash outflow for screening, which could adjust downwards during the year, depending on the timing and outcome of the FDA approval process.

Data publication for MRP, and shield FDA approval and launch.

With that we will now open the call to questions.

Thank you.

Mike: To provide some additional color on our cash burn for 2024.

We'll now begin the question and answer session, if you'd like to ask a question. Please press star followed by one on your telephone keypad.

Mike: We expect cash used in operating activities to reduce by approximately $40 million compared to 2023.

Any reason you would like to turn that question. Please press star followed by Tam.

Mike: This reduction will be partially offset by a planned increase of approximately $20 million for the purchase of capital equipment as we ramp up lab capacity in preparation for the launch of shield.

Again to ask a question press star one.

As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking a question.

Our first question comes from the line of Mark Massaro with BP.

Mike: Finally, turning to slide 18 to review our calculation.

Your line is now open.

Mike: As we look ahead to 2024 and beyond.

Hey, guys. Thank you for taking the questions. My first one is for a merrily.

We have a number of upcoming catalysts in each of our business areas include.

Mike: Including smart liquid biopsy upgrades took out at 360 volume expansion across therapy selection.

Can you maybe provide a little more context about the push out of the AD comm meeting.

Mike: The publication for MRP and shield FDA approval and launch.

Is it largely just logistical in nature.

Said late Q2, so should we kind of pencil in June in <unk>.

Speaker Change: With that we will now open the call to questions.

Curious if it's just a matter of <unk>.

Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like terminals that question. Please press star followed by Pam again to ask a question Press Star one as a reminder, if you are using.

Filling who will attend the meeting and then my second question is really around.

There's been a lot of discussion about advanced Adenomas.

Yes can you guys confirm if you are planning.

To request, an AA label from the FDA.

Speaker Change: Speaker phone, please remember to pick up your handset before asking a question.

Yeah. Thanks, Mark Great question. So in terms of ask or as I mentioned in the prepared remarks, FDA notified us that because.

Speaker Change: Our first question comes from the line of Mark mass area with B P. I G.

Mark Anthony Massaro: Your line is now open.

Scheduling on mainly the fact that the panel was half empty at the time that they call sort of pad all they need to go out and identify some additional members to be added to the specific panel that our device is going to go through the vetting process and so forth. So as a result.

They are kind of scheduled language now for late Q2.

Once we know that confirm date sky have communicated somehow it's got to be in the Federal Register.

At the appropriate time too so thats all we know at this time there is no other kind of resets behind this delay.

But I want to reiterate that this kind of ad com.

Timeline is not impacting the timeline for the FDA review on the expectation that we had from the beginning that we believe we get the FDA decision about shale that approval sometime in 2024.

Regarding <unk> I think that time seems to be an interesting hot topic in the field in terms of our label, we didn't get to the label discussions with the agency.

Mark Anthony Massaro: He added to the specific I hope that our devices going to go through the vetting process <unk>. So as a result, you know they are kind of scheduling. It now for Lacey Q2, one screen noted confirm dates.

It happens typically in very late innings of their review process.

But this discussion of CRC SaaS EVGA sensitivity that performance that we've seen in eclipse and the risk benefit.

Speaker Change: <unk> communicated somehow I, it's gotta be in the Federal Register.

This device and the intended use patient population.

Speaker Change: At the appropriate time too. So that's all we know at this time, there's no other kind of research behind this do like.

So this guy and get discussing the AD com. So you get some feedback from external opinion.

Speaker Change:

For agency.

Speaker Change: I want to reiterate that this kind of AD calm.

Yeah.

Thank you for your question.

Timeline is not impacting the timeline for the F. D. A review and the expectation that'd be had from the beginning that'd be building, we get F. D. A decision about Sheila approval shop time in 2024.

The next question comes from the line of Puneet <unk> with Leerink partners.

Your line is now <unk> hi.

Thanks.

It really helped me thanks for taking the question. So just I'll wrap two of my questions into one first one on just the core business <unk> hundred 60.

Speaker Change: Regarding a a I think that time seems to be an interesting hot topic in the field in terms of our label.

Speaker Change: We didn't get to the naval discussion with agency <unk> typically in very late innings of the review process, but this discussion of CRC sensitivity a sensitivity that performance that'd be obscene in eclipse and the risk benefit of this device same day.

Look at the guide.

You have 5000 reimbursement now for <unk> hundred 60 LDP.

Volume seems to be good.

Can you maybe just elaborate sort of what is driving the level of maybe for lack of better work conservatism. This year anything that we need to note on the <unk> side.

Speaker Change: And then use patient population potentially is gonna get discussing dotcom to get some feedback from external option yet four agency.

That is accounting for that.

And then on the shield, maybe just early could you remind us if FDA will require a publication of the paper before the Advisory Committee.

Speaker Change: Thank you for your question.

Mark Anthony Massaro: Next question comes from the line of <unk> with Leerink partners.

Thank you.

Thanks, Madhu estimates to give some color on the good yes.

Speaker Change: Your lines now <unk>.

Mark Anthony Massaro: Yeah, Hi, I'm really helped me. Thanks for taking my question. So Uhm just <unk> two of my questions into one first one on just the core business G. 360 look at the guide you have 5000 reimbursement now for G 360 L. D T.

On the on the guide you mentioned guidance 360, I mean, I think we're looking at 2024 is still being.

At year of strong growth forgone at 360, we got.

We had good traction in the U S.

In 2023, and so I think we expect that to continue and that's across across all cancer types and with a lot of the work that we're doing that a customer focused activities I think we can still.

Leerink: Volume seems to be good can you maybe just elaborate sort of what is driving the level of maybe for lack of better word you know conservatism. This year anything that we need to note on the M. R. D side that is accounting for that and then on the shield.

That growth to continue and also.

We're now seeing good traction outside the U S and especially in Japan and U K. So.

That should also lead to good volume growth you're right, we will get it we will get our ASP.

Leerink: Maybe just I'm eerily could you remind us F D. A will require a publication of the paper before the Advisory Committee.

Lift from Garden at 360, smart with the LDC now moving from.

Speaker Change: Thank you.

7500 to 500000, so again, that's very positive from an MLP perspective.

Speaker Change: <unk> <unk> <unk> <unk> get some color in the good yeah on the on the guys. You mentioned God in 360, I mean, I think we're looking at 2024 still being <unk>.

We saw something like 90%.

Both.

Last year, we're still expecting growth with reveal in.

Speaker Change: Strong growth forgotten at 360, we've got you know we have good traction in the U S.

2024.

We want to manage that growth, though we still.

When they get additional reimbursement.

Speaker Change: In 2023, and so I think we expect that to come to you and that's across across all kinds of diets and with a lot of them would that'd be doing that are customer focused activities. I think we can still expect that growth to continue and also.

Currently our gross margin negative test for us. So it causes every time, we run the test.

We just want to if we want to manage that.

Until we get incremental reimbursement and then we can tell you that the foot off the brakes and really drive that so hopefully that answers the questions on.

Speaker Change: We now seem good traction outside.

Speaker Change: Outside the U S and especially in Japan in UK. So that should also need to complain, but you're right. We will get it will get a S. P. A lift from garden at 360 as well with the L. D. C. Now moving problem 7500 to 5000, so that again, that's for the <unk> <unk> <unk> <unk>.

On the guide.

Quickly about shield on FDA on paper.

The review process is not dependent on paper publication on day, two theyre all.

<unk>.

Look at the data very detail.

That'd be have gone through that process.

Speaker Change: <unk>.

Speaker Change: You know we saw something like 90% are over Grove last year, we still expecting growth with Rubio and 2024.

Please with the progress so far so they go through their own evaluation of the data look at have you guys had publishing appeared to be a qualification I don't know.

Speaker Change: We want to manage that grows though.

Thank you for your question. The next question comes from the line of Dan Leonardo with UBS.

Speaker Change: So when it got an additional reimbursement. It's currently you know a gross margin negative test for us. So it cost us every time, we run a test and so we just wanted to <unk>. All you until we got incremental reimbursement and then we can tell you that.

Your line is now open.

Thank you I actually had a follow up on that last point.

A mirror Lee can you elaborate further on the timing of the Eclipse publication I think there was an expectation at one point that would occur in 2023.

Speaker Change: Breaks and maybe try that so yeah, hopefully that answers the questions on on.

Is that is that imminent or just any any color you could share. Thank you.

Speaker Change: The guide.

Speaker Change: Quickly about Sheila S. D. On paper you know the F. D. A review process is not dependent on pay per publication day do their own extensive.

Yes, actually that was our goal I think the tier update through now that we pay to us I think.

Speaker Change: Which at the day that very detail.

Top tier, which kind of impacts that some of the.

Speaker Change: That'd be have gone through that process I am pleased with the progress so far so they go through their own evacuation of data like that have you got a publishing appeared review of complications.

The review process, but we are very pleased that we went through that Jordan.

Right now on their embargo with that you are now so unfortunately I cannot sell a lot of details. So on that you are now.

Scheduling of the publication based on the issue of planning that they have.

Speaker Change: Thank you for your question. The next question comes from the lineup family interact with you B S.

So, but it should be within the next few airlines as I mentioned in the prepared remarks.

Lineup family: Yeah last name <unk>.

Speaker Change: Thank you I actually had a follow up on that last point Amir Ali can you elaborate further on the timing of the eclipse publication I think there was an expectation at one point that would occur in 2023.

Thank you for your question.

The next question comes from the line of Tejas Savant with Morgan Stanley.

Your line is now open hey.

Speaker Change: Is that is that imminent or or just any any color you could sure. Thank you.

Hey, guys good evening and thanks for the time here.

Maybe one for you Mike and then I have a follow up on that Marty.

AmirAli H. Talasaz: Yes, actually that was a cool that I think that here update through now that'd be <unk>.

In the guide Mike what are you factoring in in terms of O U S contributions this year or is it all just Japan and the U K largely or could we start to see some traction from China in Biopharma. In addition to that take my partnership that you recently announced and then on the <unk> side of things one for you.

AmirAli H. Talasaz: Top tier, which kind of impact that some of the review process, but we are very pleased that we went through that you are now you know we are right now under embargo with that you are now so unfortunately I cannot sell a lot of detail so and that your knowledge.

Where are you in terms of the <unk> data that you.

AmirAli H. Talasaz: Scheduling the publication based on the issue of planning that they have so but it should be within the next few months as I mentioned that <unk>.

<unk> talked about in your prepared remarks at <unk> Gi in terms of publication and then what are you assuming in the guide for CMS reimbursement and then revenue from the CRC surveillance syndication, which.

Obviously is a much bigger opportunity than just the adjuvant setting. Thank you.

Speaker Change: Thank you for your question.

AmirAli H. Talasaz: The next question comes from the line at <unk> with Morgan Stanley.

Yes, I can take on the international side.

Yes.

Brian Weinstein: Okay last name <unk>.

We're not breaking out obviously.

Brian Weinstein: Hey, guys. Good evening and thanks for the time here, maybe one for you Mike and then I have a follow up on M already in the guide Mike What do you factoring in in terms of O U S. Contributions. This your uhm is it all just Japan in the UK largely or could we start to see some crashing from China Biopharma. In addition to that take my partner.

Volumes on the revenue by by different geographies, but we'll start to see Japan, and the U K b the real the real drivers on the clinical side.

Outside of the U S. We got.

Japan reimbursement back in the second half last year. So that launch is going very well and then we started to come online with with Wal Mart in really in Q4 of last year. So.

Brian Weinstein: Ship that you recently announced and then <unk> side of things. One for you have me where are you in terms of the Cosmos data that you you know talked about in your prepared remarks that <unk> G. I in terms of publication and what are you is zooming in the guide for CMS reimbursement and then uhm revenue from the CRC server.

Again, we're seeing good traction and we think that they will start to contribute to the revenue and the volume in 2024.

In the Middle East.

Region with Hikma.

Brian Weinstein: Palin syndication, which you know obviously is a much bigger opportunity than just the adjuvant setting. Thank you.

<unk>.

Less of an opportunity to that.

But we still could start to see some contribution but really we're looking at Japan and the UK and then China is in the in the Biopharma mine and.

Speaker Change: Yeah, I can take the on the international side.

Speaker Change: Yeah we're.

Speaker Change: We're not we're not breaking out the volumes and the revenue by by different geographies, but we'll start to see Japan and you can give you the real real drivers on the clinical side outside of the U S. You know, we got Japan reimbursement back in second last year. So.

And again, I think with where.

We're assuming that that starts to contribute the lap that we have with Abbvie com came online just recently, we've got a really good pipeline.

In China, where it was.

And with potentially work with a lot of partners.

In that country, and so yes, that's going to contribute to our biopharma revenue.

Speaker Change: She is going very well and then we started to come online with with Rome, Austin really in Q4 of last year. So again that we've seen good traction and we think that they'll stop to contribute to the the revenue in the volume in 2024 in the in the Middle East.

During 2024.

Yes in terms of Mardi.

Yes, I think we're sort of preparing the publication for customers as we speak very happy.

With the data and we're going to push that out as best as we can and hopefully.

Speaker Change: Resume with Hikma I, you know I think.

Once it gets published it something that can make up the bulk of our dossier for the Cirrus surveillance indication, but I don't think there is.

Speaker Change: Probably less of an opportunity to that but we still you know could start to see some some contribution that but really really depend on the U K and then China is in the in the Biopharma.

Nothing that I think baked in to the guide this year in.

In terms of CRC of surveillance, so thats all upside right now.

Speaker Change: And again I think.

Speaker Change: We're assuming that desktops to contribute that the lab that we have with I'd become that came on line. Just recently, we've got a really good pipeline.

Thank you for your question.

The next question comes from the line of Dan <unk> with Stifel. Your.

Your line is now open.

Speaker Change: In China.

Speaker Change: And with that you know potentially work with a lot of partners in that country and so yeah, that's going to contribute biopharma revenue.

Yeah, Hi, guys. Thanks for the questions here help me can you just maybe Orient us on.

Liquid biopsy within the portfolio on the upgraded for reveal I just want to confirm that all the tests going out the door or through the smart assay and then when can we expect Q3 six can be upgraded and I know you said this year wondering if there's anything more specific in terms of first half versus second half and then just lastly, if I may are there any changes to.

Speaker Change: 2024.

Speaker Change: In terms of M. R. D. Yeah, I think we're sort of preparing the publication for cousin was it'd be speak very heavy.

Speaker Change: With the data and we're gonna push that out as fast as we can and hopefully.

Speaker Change: Once it gets published it's something that can make up the bulk of our dossier for this heresy surveillance uhm indication, but I don't think there is there's almost nothing I think <unk> to the guide says here in terms of curiosity of surveillance. So that's all upset right now.

The assay within clinical trials that are ongoing that need to be made and that we should be keeping in mind. Thanks.

Yes, great question. Thanks, Dan So yes, we are.

Reveal to us in our own smart liquid.

Biopsy, we've transitioned I think nearly all of the trials that were on that too.

Speaker Change: Thank you for your question.

<unk> smart liquid biopsy is I think we're in good.

Speaker Change: The next question comes from the line obtain areas with Stifel.

But there we're seeing really good traction I think a lot of excitement both on the clinical side as well as the Biopharma side in terms of the performance of that assay.

Speaker Change: Yeah mine is now open.

Speaker Change: Yeah, Hi, guys. Thanks for the questions here help me can you just maybe Orient us on.

Speaker Change: Martin liquid biopsy within the portfolio.

I think we are in a good place in terms of the transition around garden 360.

Stifel: The upgrade for reveal I, just want to confirm that all the tests going out the door or through the smart <expletive>, a and then when can we expect you three fixing to be upgraded I know you said this year wondering if there's any more specific in terms of first half.

We want to make sure that we transitioned the properly properly from a sort of reimbursement point of view and regulatory point of view those are going to be the gating items in terms of that transition, but I can tell you right now that there is a lot of excitement, especially at academic centers around $3 60 on this.

Stifel: The second half and then just lastly, if I'm a are there any changes to the assay within clinical trials that are ongoing that need to be made in that we should be keeping in mind. Thanks.

Speaker Change: Yeah, and a great question. So then so yeah, we all the reveal tests now smart liquid biopsy with the transition I think nearly all of the trials that were on.

<unk> liquid biopsy.

We see that as a major a major catalyst for our business when that.

It comes out.

And.

Speaker Change: The two where where possible to smarten lipid biopsies I think we're good.

And at the same thing on the we didn't mentioned in the prepared remarks, but.

Speaker Change: Spot there were saying really good traction I think a lot of excitement both on the clinical side as well as the Biopharma side in terms of the performance of that essay.

Tissue, we'll also be upgraded.

Here are two larger panel and then some more features and that's a project that has been doing well for us I think.

Speaker Change: You know I think we are in a good place in terms of the <unk> transition around garden 360.

A lot of these.

Sort of transition that will happen later this year.

Sort.

Speaker Change: We want to make sure that we transition properly properly from sort of reimbursement point of view and regulatory point of view. So those are gonna be getting items in terms of that transition, but I can tell you right now that there's a lot of excitement, especially at the academic centers around three six P. M.

Further upside in terms of where we could go from a clinical volume point of view.

Thank you for your question.

The next question comes from the line of Matt <unk> with Goldman Sachs.

Your line is now open.

Hey, good afternoon, Thanks for taking my question.

Maybe one for you Mike just.

Speaker Change: Smart liquid biopsy, we see that as a major major a catalyst for business one that.

Given you hit cash flow breakeven.

And therapy selection last year.

Speaker Change: It comes out.

Maybe you could you give us a sense for sort of the operating leverage within the individual.

Speaker Change:

Speaker Change: And you know and and then the same thing on the you know we didn't mentioned the prepared remarks, but tissue will also be upgraded this year or two larger panel and then some more features and that's the product.

Segment, just given the growth you expect to see this year.

Is there any kind of color you can give around sort of how that cash flow can grow over time. So they can kind of offset some of the spend youre doing I assume some of the spend and therapy selection is not as much as you might need for shield in other areas I'm, just trying to get a sense for how that cash flow and profitability can grow over the course of this year and into 'twenty five.

Speaker Change: Has been doing well for us I think a lot of these sort of transition that will happen. Later this year I think there's sort of further upside in terms of where we could go from a clinical volume quite a bit.

Yes, Matt.

A good question I mean I think.

We've laid it out.

Speaker Change: Thank you for your question.

I think quite consistently that neither therapy selection.

Matt: The next question comes from the lineup, Matt Thanks with Goldman Sachs.

Really what we're building infrastructure across that business and we can get huge leverage now from the from the infrastructure that we've built from us from a research and development sales and marketing G&A across the across all the lines.

Matt Thanks: Now open.

Matt: Hey, good afternoon, Thanks, taking my question.

Matt Thanks: Maybe one for you might just giving.

Matt Thanks: Giving you hit casual breakeven and I'm in therapy selection last year, maybe you could you give us a sense for sort of the operating leverage with an.

They are going to be relatively steady going forward, probably a 2024, the only area, where we look to slightly increase the spend on therapy selection is coming in sales and marketing as we really focus on on the customer experience elements in the EMR integration, that's going to be really the only incremental spend so.

Matt Thanks: Individual segments Uhm, just given the growth you expect to see this year.

Matt Thanks: Is there any kind of kind of color you can give around sort of have that cash flow can grow over time, so they can kind of <unk>.

Matt Thanks: Offset some of the spend your doing I assume the spending therapy selection is not as much as you might need for shield in other areas I'm, just trying to get a sense for how that cash flow and profitability can grow over the course of the sharing the 25.

More or less every sort of.

Additional dollar of gross property is dropping down to the Bottomline and therapy selection and maybe just to give a little bit of color on that.

Speaker Change: Yeah. It's it's a good question I mean, I think [noise].

Overall cash burn that we have.

And that we've guided to a $320 million to $370 million.

Speaker Change: We'd like it out I think quite consistently that now that you know therapy selection.

You can you can look at that and different terms roughly 200 million is screening.

Speaker Change: <unk> infrastructure across that business and we can get huge leverage now from the from the infrastructure that my balance you know from us from our research and development sell the mountain Gina across across all the lines you know.

Been very clear about that.

More than $100 million, it's still going to be an investment on the MLP side, you know, there's the cost of running the test the cost of generating clinical data in terms of sales and marketing effort. So we're still making heavy investments on the MLP side.

Speaker Change: Relatively steady going forward probably 2024.

Speaker Change: We look to slightly increase the spend on therapy session convenes <unk> really focused on on the customer experience elements in in the <unk> integration, that's gonna be with you on the increments and spend so.

Then from a capex perspective as well.

<unk> continues to increase capacity and automation, we're probably going to.

Spend around $40 million on Capex in 2024.

So that more than covered.

Speaker Change: More or less every sort of additional dollar of gross properties dropping down to the bottom line in service section in May.

The overall cash burn free cash flow that way that we've spoken about.

We will start to see positive cash in 2020 from therapy selection.

Speaker Change: Maybe just to get a little bit of color on the overall cashback that we've we've got two it's $320 million to $370 million. You know you can you can look at that and different chains. Roughly 200 million is is screaming we've been very clear about that.

Yes.

As the revenue grows again, a lot of that is going to start to drop down to the bottom line. So we will start to generate some significant cash from that business over the next few years.

Thank you for your question.

Speaker Change: More than 100 million is still going to be an investment on the <unk> you know there's the cost of running the test that the cost of generating the clinical data <unk>, we're still making heavy investments on the <unk> side, and then from a <unk> perspective us with continue to increase at <unk>.

The next question comes from the line of <unk> Burstein with Bernstein research.

Your line is now open.

Okay. Thanks, a lot for taking the question at Q2 on shield.

First in and models and talked a lot about the importance of it next year and quantifying the benefit of colorectal cancer screening and in the study that you highlighted today, you've shared that yet better adherence.

Speaker Change: We'll probably gonna.

Speaker Change: Spin around $40 million on Capex in 2024.

Speaker Change: So that that more than covers the overall.

Even if shell sensitivity and specificity that arent quite best in class versus other modality. If you could I still best in class impact and however in the past the USPS TF as needed model that assumes 100% adherence rate for all screening modality.

Speaker Change: Overall, cashback free cash flow that way we've spoken about.

Speaker Change: We will see positive cash in 2024 from therapy selection.

Speaker Change: As the as the revenue grows again, a lot of that is gonna start to drop down to the bottom line. So we'll start to generate some significant cash from that business over the next few years.

So to some extent for shell to score Wow, USPS TF will have to fundamentally change the methodology that they need.

Speaker Change: Thank you for your question.

So what conversations have you had or data points can you share that give you confidence that that will happen.

Berseem: The next question comes from the lineup Berseem with Bernstein research.

Berseem: Feeling is now open.

And then quick follow up question and on the investment in that field force that you've laid out fresh shield are any of those gated by.

Berseem: Hi, there. Thanks, a lot for taking my question at Q2 lines Shield.

Berseem: <unk> and and models and talked a lot about the importance of experience.

Getting at first or second line therapy.

Berseem: <unk> is correct the cancer screening.

Approval for F D, a or a b recommendation for USPS TF.

Berseem: Any any that you highlighted today, you said that yeah <unk>.

Berseem: Even <unk> authenticated.

Yeah sure. Thanks. This is great question, so adherence is definitely the value.

Berseem: Alright quite best in class and in a gallery, if you could <unk>.

Berseem: <unk> impact and however in the past <unk>.

Having a patient friendly modality, which generates pleasant experience to compensate that test. If we didn't have a base of that Trs. We would then have $50 million on a screen patients who don't have 76% debt rate is coming from on the screen patient population are the people who are not up to date with Castro.

Berseem: <unk> <unk>.

Berseem: <unk> 100 per cent adherence rate for all screening modality.

Berseem: <unk> <unk> <unk> the score Wow, Yeah T. S. T F will have to fundamentally change the methodology that thank you.

Berseem: So what conversations have you had a data point can you share that gives me confidence.

Screening so in terms of the impact the awareness is pretty high.

We are not at a stage that we can have conversation with USPS TF members, but having said that we've been in touch with some advisors that form our scientific director of USPS CFO has been very vocal in this field now.

Berseem: And and then quick.

Berseem: <unk> and on me and Daphne field force that you've laid out for shield are any of those can I.

Berseem: Getting at first or second line therapy.

It looks kind of.

Berseem: <unk> or you know a D recommendation for U S. T S T F.

Common sense that when they issue in the CRC screening is lack of adherence frankly people are not compensating the task.

Speaker Change: Yeah sure. Thanks. This is a great question. So adherence is definitely the value.

You need to have that perspective in mind, when you're evaluating this task.

Speaker Change: Having a patient friendly mortality, which generates pleasant an experience to complete that task. If we didn't have deja back here as we would then have $50 million on the screen patiently within half 76 per cent deaths rates coming from on the screen patient population are the people who are not up to date with cancer screening.

In terms of life shared games on our Cogs benefits.

Regarding the first line of search online in general and what we believe is this in order to build a multibillion dollar Brad we need FDA approval for Sheila.

Obviously first by its better but search online is actually a very good option for us and let me put that in some context for you.

Speaker Change: <unk> of the impact the apparatus is crazy heart.

Speaker Change: You know <unk>.

Speaker Change: We are not at this stage that'd be kinda have conversation with U S. P. S. T F members, but having said that you're being charged with some advisers a former scientific director of USPS. If that's been very bold color in this field now.

There are 120 million people and you add the U S are eligible for colon cancer screening right.

Out of this $120 million and $55 million or getting screening colonoscopy 15, valeant are getting screened by still tests. So we have about $50 million on a screen patient population.

Speaker Change: And it looks kind of.

Speaker Change: Common sense that you know when the issue in this CRC screaming his lack of that curious frankly people are not completing the task.

Effectively all of the first line indication is for all $120 million, but the reality the commercial operate strategy. As these tests are not going to replace a colonoscopy and reduce their rates up colonoscopy versus being complementary.

Speaker Change: You need to have that perspective in mind, when you're evaluating this task.

Speaker Change: <unk> apply to your game the outcome benefits.

Speaker Change: Regarding the first line of <unk> online.

As a result, what we are expecting on what we're seeing in the marketplace as the market size for first line testing would be for let's say 65 million people and market size for second line would be 450 million people.

Speaker Change: Generally what we believe is this in order to build a multibillion dollar Brad we need F D a approval for Sheila.

Speaker Change: Obviously, the first one is better but the second line is actually a very good option for us and let me put that in some context for Ya.

Other thing that maybe it would be interesting to note just recap there is screening rates that's happening right now with store base test they are pretty low like the overall adherence rate to fit over three years.

Speaker Change: There are 120, <unk> U S or eligible for colon cancer screening alright.

Speaker Change: Out of this hundred $20 million 65 million are getting screening colonoscopy <unk> valley and are getting screened by still tests. So we have about $50 million on a screen patient population.

It is about 10% to 20%.

The screening rates with Cologuard is also low after all these rate.

After all these years.

These are matching that consumer survey finding that we showed before that seven out of 10 people still based testing they don't want to do it again.

Speaker Change: Effectively although the first line and vacation is poor all hundred 20, melia, but the reality that commercial offer insurance is these tests are not gonna replace colonoscopy and reduce the rate up colonoscopy verses being complimentary. So as a result blood for your eye expecting on what you're saying in the marketplaces the market size for.

So the opportunity for us still test to really grow to this 50 million on the same patient population is pretty limited and their test is that sticky.

Speaker Change: First line testing would be for let's say 65 million people and market size four second line would be 450 million people.

As a result, we believe there is a huge opportunity for patient friendly that can be done on a completed the India office enabled by this blood based screening modality.

Speaker Change: Are they retained it maybe it would be interesting to know it's just the cat theory screening rates, that's happening right now which store based test they are pretty low like the overall adherence right to fit over three years.

So that's the context of why we think you are in a second line indication for shale can be.

Huge opportunity for us as long as we get FDA approval.

Speaker Change: Is about 10 to 20 per cent.

Thank you for your question.

Speaker Change: Re screening rates with Cologuard is also low after all these right.

The next question comes from the line of Dan Brennan with TD Cowen.

Speaker Change: After all these years.

Your line is now open.

Speaker Change: Five teams are matching that consumer survey finding that we should before that seven out of 10 people who've done spill based testing they don't Wanna do it again.

Great. Thank you thanks for the questions.

So the first one is just on the revenue guide back their 16% to 19%.

I know you're coming off a year of 25% growth in your Asps are going up. So just wondering if you could provide any color maybe kind of what would get you towards the bottom end of that range or are you baking in real conservatism in pharma or clinical maybe just any color that you can provide there and then the second one was just on reveal.

Speaker Change: So the offer insurance you for still tests to really grow with with this 50 million honest pain patient population is pretty limited and their test is that's P. T.

Speaker Change: As a result, we believe there is a huge offer insurance T for patient friendly that can be done and completed the value of your office enabled by this blood based screening.

I know you said, you're not baking in anything for CRC or very modest for breath, but can you just give us some color on kind of what the overall volumes were in 'twenty, three and timing and confidence for getting multiple approvals and those two new indications during 24. Thank you.

Speaker Change: So that's the context of why we think even a second line indications for shield.

Speaker Change: And the you know I see what you offer a transfer for us as long as we get the approval.

Yes, I can take a break down of the gross yes may be just to give a little bit more color on the on the guide across the different lines.

Speaker Change: Thank you for your question.

Speaker Change: The next question comes from the line has been pregnant with T D. Carolyn.

I'll start with development services.

Carolyn: Your life now open.

That's a that's a very lumpy line.

Carolyn: Great. Thank you. Thanks for the questions. So the first one is just on the revenue got back there 16% to 19%.

Swings around quite a lot but.

For the year, we expect it's going to be relatively flat against 2023, and so that implies that and thats sort of the midpoint in the precision oncology line, which is clinical and biopharma testing that's going to grow.

Carolyn: You're coming off of your of 25 per cent growth in your <expletive> cause you're growing up.

Carolyn: So just wondering if you could provide any color maybe kind of what we get you towards the bottom end of that range are you taking in will contribute to them and pharma or clinical maybe just any color that you can provide there and then the second one was just on reveal.

At around at around 20% year over year, and maybe breaking that that further biopharma.

Carolyn: I know you said, you're not taking anything for CRC or very modest for breath, but can you just give us some color on kind of what the overall volume four and twenty-three and timing and confidence for getting <unk> approvals and there's two new indications during 24. Thank you.

Sure.

We expect as we did last year to see some sort of low double digit growth on the Biopharma. We have a very strong we finished the year strong.

We've gone into 2024 with a very strong pipeline I think we just want to be continually conservative.

Speaker Change: Yeah, I can take a break down of the cosmic yeah, maybe just to give a little bit more color on the on the on the guys across the different lines.

On that line.

We see a lot of other companies being impacted by Biopharma spend and so I think there's sort of a low double digit expectation, where we're on the conservative side.

Speaker Change: I'll start with development services.

Carolyn: That's a that's a very lovely line.

Carolyn: Switched around quite a lot, but you know for the for the year, we expect it's going to be relatively fast against 2023.

You sort of put all those together I think pies and clinical revenue growth of at least 20%. So we still look at that as being very strong.

Carolyn: So that implies that and that's sort of the bitcoin the precision oncology line, which is you know clinical and Biopharma testing that's gonna grow [noise].

With plenty of upside that could come on that revenue growth.

Maybe just one other thing on the on.

The cadence of the growth.

Carolyn: Right around around 20 per cent yeah amazing.

I think it's important to know that we always have the seasonality in Q4, where we have very strong biopharma revenue and then that always.

Carolyn: It may be breaking that that further yeah biopharma.

Carolyn: You know, we expect as we did last year to see some sort of low double digit growth on the biopharma.

As companies are customers pushed through the budgets at the end of the year and we know that sequentially Biopharma revenue is always lower in Q1, so even though we will have an uplift of <unk> hundred 60, ISP in Q1, we still expect the overall revenue sequentially to be lower in Q1.

Carolyn: I have a very strong Tennessee, yet strong.

Carolyn: Calling to 2024 with a very strong pipeline I think we just wanna be continually conservative.

Carolyn: On that line you know, we see a lot of other companies premium Patsy by Biopharma span and so I think you know this sort of low double digits expectation, where where on the conservative side.

In Q4 of 2023, and then throughout the year, we expect it to sequentially grow into.

Each quarter, so, yes, hopefully that.

That's given some additional color on that guide.

Carolyn: If you just Wanna put all those together I think pies and clinical revenue growth of at least 20 per cent. So we you know we still look at that as well.

Yeah in terms of MRV.

We're preparing publications as they speak at least in CRC and then we will get the breast publication out at least in submitted as soon as we can.

Carolyn: Very strong with plenty of upsize that could come on that.

Carolyn: Maybe just one other thing on the on the cadence of the drug.

And really the gating item is gonna be time to getting those published.

Carolyn: I think it's important to know that we always have the seasonality and two four when we have very strong biopharma revenue and then that always.

The sort of back and forth with multi X in terms of submitting that data, obviously, we haven't really baked much. This.

Carolyn: Companies.

Carolyn: Customers pushed through the budget at the end of the year and we know that sequentially Biopharma revenue is always lower in Q1, so even though we'll have an uplift of G 360 E. S. P N two one.

This year in terms of this additional reimbursement.

Is certainly upside.

We manage to.

Sort of get through the gun, but theyre quickly.

Carolyn: Still expect the overall revenue sequentially.

I'll also say that I think we feel very good about the core business in general.

Carolyn: Q1.

Carolyn: <unk> 2023, and then throughout the year, we expect you to search sequentially grow each process. So yeah, hopefully that Sir <unk>.

We built I would say a lot of potential catalysts over the last 18 months into the business.

We have the partnerships with.

Carolyn: Some additional color on that guide.

Large group practices like U S oncology, the EMR integrations Martin liquid biopsy transition some of the upgrades of tissue next.

Speaker Change: Yeah in terms of emergency.

Speaker Change: Preparing publications you know as we speak at least in Ciara C. And then we'll get the publication out at least and submitted as soon as we can.

And a lot of that I think is.

As potential upside in terms of where we are so we feel very good including around the competitive landscape. That's there.

Carolyn: And really the getting item is gonna be tight time to getting those published the sort of back and forth with multiplex in terms of submitting the data obviously, we haven't really big much. This year in terms of this additional reimbursement.

Thank you for your question.

The next question comes from the line of Jack Meehan with <unk> research.

Carolyn: Is certainly upside if we're if we manage just sort of get through the gun, but there quickly I would also say that you know I think it was it felt very good about the core business in general.

Your line is now open.

Thanks, Good afternoon.

Had a couple of gross margin questions first for Mike.

If you include the dilution from shield what is the guide assume for gross margins for the year.

Carolyn: We built I would say a lot of potential catalyst over the last 18 months into the business. You know we have the partnerships with a large group practices like you have some college either any more integrations Martin Luther biopsy transition some of the upgrade so tissue next and a lot of that I think.

Any implications for shield volume growth embedded and for me I was wondering if you could talk about your sequencing strategy are there any changes you are planning to make in the labs, either with Nova acts or something just to help drive savings on the Cogs side.

Carolyn: Is.

Yes, Jeff on the gross margin side I think.

Carolyn: As as as potential upside in terms of where we are so we we feel very good including around the competitive landscape. That's there.

We really wanted to focus where the gross margin is going to be on the business, excluding screening and <unk>.

Speaker Change: Thank you for your question.

In 2023, and we saw something like.

Speaker Change: The next question comes from the line I've checked my hand with.

Two percentage point impact overall from from running the shield <unk> tests and again, we got we got pretty minimal revenue for those and so far.

Speaker Change: <unk> research.

Speaker Change: Your line is now open.

Speaker Change: Thanks, Good afternoon.

2024, we've given the guidance of the gross margins.

Research: I had a couple of gross margin questions at first for Mike. If you include the dilution from shield what is the guy who assume for gross margins for the urine.

Without without screening of 60% to 62%. So hopefully people can then start to really understand the performance of the business without screening.

Speaker Change: Locations from shield volume growth embedded.

If you go to.

Speaker Change: And for helping me I was wondering if you could talk about your sequencing strategy are there any changes you're planning to make in the lab, either with Nova acts or something just to help drive savings on the talk side.

Some of the impact is going to be throughout 2024 and screening obviously, it's going to depend on the volume and it's going to depend on the timing of FDA approval and launch and then what that volume ramp is going to be and it's also going to be dependent on when we get the initial <unk> capital rates and what that rate is going to be at.

Mike: Yeah, Jack on the on the gross margin side.

Speaker Change: [laughter], we we really wanted to focus the weather gross margin is going to be on the business, excluding screaming and in 2023, we saw something like two percentage point impact overall from from running the shield that'd be T tests and again, we got we got started minimum revenue for those and so far.

So.

That's why we really want to focus on gross margin without without screening.

Alternative measure but.

Got it.

Our aim excluding screening is to be at least 60% gross margins and I think we can.

Speaker Change: The 2024, we you know we've given the guidance of the gross margins without without a screening of 60 to 62 per cent. So hopefully people can then start to really understand the performance of the business without screening.

So comfortable with with all of the mix impacts across the core business that we can manage to that level.

Yes in terms of <unk>.

Sequencing.

I'd say just in general.

Pretty robust program around Cogs reduction and I think theres going to be some I think.

Speaker Change: It's gonna be difficult for us to say, what the impact is gonna be trapped 20th 24 on screening obviously, it's gonna depend on it for you. It's gonna depend on the timing of F. D. A approval and launch and then what that phone number and it's gonna be and it's also gonna be dependent on when we get the initial <unk>.

Good opportunities over the next couple of years, especially with some of the investments, we're making in terms of shield and.

Really the infrastructure there that is going to I think they dividends on the oncology side as well and we're certainly pursuing some of those sort of lower cost sequencing instruments, such as obviously ex <unk>.

Speaker Change: Gotcha, alright, and what that rate is going to be up so you know.

Speaker Change: That's why we really want to focus on gross margin without without screen.

Others may lower our overall cogs of running our tests.

Speaker Change: <unk> <unk>, but again.

Thank you for your question.

Speaker Change: R E X pre screening is to be at least 60% gross margin and I think we feel comfortable with with all of a sudden make some packs across the the business that we can <unk>.

The next question comes from the line of Doug Schenkel.

With Wolfe research.

Your line is now open.

Hey, good afternoon.

I wanted to ask a high level question, and then kind of a related follow up.

Speaker Change: To that level.

Speaker Change: Yeah in terms of sequencing I would say just in general pretty robust program around Cogs production I think there's gonna be some I think.

Relates to shield.

So theres clearly questions and the Investor and medical community about how.

Garden isn't managing trial design timelines, how you described complexity of moving from things like we want to be too.

Speaker Change: Good opportunities over the next couple of years, especially with some of the investments we're making in terms of shield and really the infrastructure. There that is going to I think they dividends on the oncology side as well and we're certainly pursuing some of those sort of lower cost sequencing instruments such as <unk>.

The level of attenuation, we stand post case control studies et cetera. There are not this is out there and I think it's fair to say this is a big reason why your stock prices where it is.

The new year is a good time for new resolutions. What do you think you can do better and what steps are you taking to get back that management premium that used to exist in the stock.

Speaker Change: You know others that may lower overall, <unk> running a retest.

And then my follow up on shield.

Speaker Change: Thank you for your question.

Yes, there is a range of outcomes for field in terms of.

Speaker Change: The next question comes from the line of <unk>.

Speaker Change: Which will free search.

How things go with the FDA, how things go with CMS and private payers.

Speaker Change: Your last name <unk>.

Speaker Change: Hey, good afternoon, I want to ask a high level question, and then kind of a related follow up as it relates.

How you're viewed by U S. P. S T. How you're viewed by the folks that set guidelines even better scenarios. This is a very expensive program with a really long runway under what scenario would you consider discontinuing or spinning off screening. Thank you.

Speaker Change: Relates to shield.

Speaker Change: So clearly questions and the Investor and medical community about how garden Mismanaging trial design timelines. How you described complexity of moving from things like do you want to be too.

Yeah actually a very good question, Doug So it's a fair question frankly.

Speaker Change: The level of attenuation, we seeing posts case control studies et cetera, there or not this is out there and I think it's fair to say this is a big reason why your stock prices where it is.

Hi.

I accept that.

Youre right.

Have you found out there I think.

Speaker Change: New year is a good time for new resolutions. What do you think you can do better and what steps are you taking to get back that management premium that used to exist in the stock.

The reality is yes is.

Eric.

Our focus on execution.

So that.

Hopefully this FDA approval with car, Matt you know Avi.

Speaker Change: And then my my follow up on shield.

<unk> status whats common a successful commercial launch with comment over time, I think that performance has gone on gerry's confidence that hey.

Speaker Change: Yeah, there's a range of outcomes for field in terms of how things go with the F. D. A how things go with C. M S and private payers, how you're viewed by U S. P. S. P. R. How you're viewed by the folks that set guidelines even in better scenarios. This is a very expensive program with a really long runway.

These guys.

I am Randy was talking about blood based CRC screening has huge potential evaluate the performances that we've seen with the one that did comps tomorrow the reality versus just betting on what this guy is talking about definitely there are some kind of.

Speaker Change: <unk> what scenario would you consider discontinuing are spinning off screening. Thank you.

Feedback accepting terms.

Speaker Change: Yeah sure very good question dark so it's a fair question, frankly, and I I accept that and you know I, you're right I think a bunch of <unk> out there alright, I think the reality that is you know you're gonna.

There were some bars of what a successful CRC screening would be to make a multibillion dollar brand and that bar versus just the data that we've seen before and blending the database was.

The Delta was very big and we ended up somewhere in the middle So I think that expectation management can be done in a while.

Speaker Change: Focus on execution show that you know.

Speaker Change: Hopefully this half day approval with calm Avenue a V. L. T status would calm and you know a successful commercial launch with comment over time I think that her farm S is gonna share it with confidence that hey, when these guys.

<unk>.

Yeah.

And if you're in a different way so I accept that shield in terms of our bandwidth shale I would tell you like we.

We are not here to waste on life doing something that we don't believe that just bearing that my name because we have the optionality of burning that.

Speaker Change: I'm glad it was talking about blood based CRC screening has huge potential evaluate the performance is that'd be sandwiched V Y dot com smart other reality versus just bitching on but this guy talking about definitely there are some kind of.

I would tell you if they figure out that this brand is not gonna have a commercial impact that we believe it will take.

With me now shield.

Speaker Change: Feedback that I accept and trams.

So.

We mentioned always that we have milestones and gateways. The first one for US is this FDA approval and getting this FDA approval. That's just the first the second one is trying that we can generate this business in a proper way by just trying to calm rational Sykes and so forth. So we have all of these milestones that were done on me.

Speaker Change: There was some bars of what a successful CRC screening would be to make him multibillion dollar Pratt and that far better assist the data that we've seen before I'm blaming the database was.

Speaker Change: The Delta was very big that'd be ended up somewhere in the middle So I think that expectation management can be done and that much.

Mining is being missed dose shale would continue and would generate multibillion dollar operating strategy too.

Speaker Change: Much more.

Speaker Change:

Speaker Change: In a different way sorry, I said that shield in terms of our primary sandwich Shield I would tell you like yeah.

Garden in P&L in the year.

No.

We are not here to waste our time.

Speaker Change: We are not here to waste our lives doing something that we don't believe in it just bear into my name because you know you have the option now that you're burning that money I would tell you if they figure out that this Brad is not going to have to commercial impact that'd be believe it.

Just playing with shield here better thanks to the airlines directly.

Well thank you for your.

Very very severe for Europe, very strong because we brought the potential here.

Sorry about that team. Thank you for your question.

Speaker Change: There would be no shield.

Speaker Change: So you know we mentioned always that you know we have milestones and gateways. The first one for US is this F D. A approval I'm getting this at their approval. That's just the first or second one is trying that you know we can't Jarrett this business in a proper way by shrank on Rachel <unk>.

The next question comes from the line of Rachel that in style with J P. Morgan.

Your line is now open.

Hi, Great. This is Casey on for Rachel.

Just could you guys talk about where things stand on the EMR integration front. You noted 475 accounts now integrated which was above your goal of 400 to end the year.

Speaker Change: All of these milestones that Vietnamese and as long as we meet those shelves would continue on with generate multibillion dollar offer to transfer you to.

Can you contextualize that number as a percentage of total accounts or total accounts that were eligible for integration and then maybe walk us through how you see those 475 account scaling up volumes over the course of the year.

Speaker Change: Gardner <unk>.

Speaker Change: So.

Speaker Change: We are not here to waste our time.

Speaker Change: Just you know playing with shield here, you have better things to do in life Franklin.

Yes.

We're going to break out the sort of number.

As a percentage of volume, but it is a significant percentage of our volume right. Now. So we're very pleased in terms of where we are what we're seeing is really I think significant uplift in those accounts as they turn on.

Speaker Change: Well. Thank you for your <unk> very very soon.

Speaker Change: Various trying to figure out the potential here.

Speaker Change: Sorry about that team. Thank you for your question.

Speaker Change: The next question comes from the line of Rachel Dot in style with J P. Morgan.

There is a lot of engagement that happens at the account level.

A lot of retraining.

Rachel Dot: Your last name <unk>.

It just makes life so much simpler when they can essentially use their existing <unk>.

Rachel Dot: Hi, Great. This is Casey Entre Rachel just can you guys talk about where things stand on D. E. M. R integration <unk> 475 accounts now integrated which was above your goal 400 to end of year you know.

Our system of brokered to just order the test and get the results back and so we think.

We're very pleased with the progress we've made we're seeing really a significant jump in terms of ordering rates in those accounts, but it is also early days, it's something that we sort of got to at the end of <unk>.

Rachel Dot: Can you can texturize that number as a percentage of total accounts are total accounts that were eligible for integration and then maybe walk us through how you see those 475 account scaling up volumes over the course of the year.

Last year, and I think we're going to see.

The dividends of that work we have.

Speaker Change: Yeah, I mean, I think we're gonna break out the Serb number of.

We've done pay off over this year and next we're still making very good progress in terms of the rest of the accounts.

Speaker Change: Sort of a percentage of volume, but it is a significant percentage of our volume right. Now. So we're very pleased in terms of where we are what we're seeing is really I think significant uplift and those accounts.

Think of the sort of slower process, where each one of us.

Hospitals.

<unk> sort of accounts has to be turned on at their level and we're increasing our pipeline. There. So that we can go as fast as possible, but I'm very pleased with the progress. The team has made and it's certainly one of the potential.

Rachel Dot: Turn on there is a lot of engagement that happens if that counts level a lot of retraining and it just makes life. So much simpler when they can essentially use their existing our.

Potential upside drivers of volumes this year.

Rachel Dot: Our system a broker to just order the tests to get the results back So we think.

Thank you for your question.

Rachel Dot: Are you pleased with the progress we've made were saying really a significant jump in terms of ordering rates and does accounts, but it is also early days it something that we sort of got two at the end of.

Our final question comes from the line of Andrew Cooper with Raymond James.

Your line is now open.

Hey, everybody. Thanks for the question, maybe just one more on <unk> and the breast data you disclosed in preparation there.

Rachel Dot: Last year, and I think we're gonna see the dividends of that at work. We have we've done pay off over this year and next we're still making very good progress in terms of the rest of the accounts.

Would love your thoughts given kind of how we think about different subsets of that breast cancer population and some lower shedding sort of subset in terms of the Cte DNA, how do we think about that in context of some of the numbers, we see out there whether from others went into certain subset or not and how.

Rachel Dot: Because sort of slower process, where each one of the hospitals.

Now that that 97% specificity.

Rachel Dot: Sort of accounts has to be turned on their level and we're increasing our pipeline. There. So that we can go as fast as possible, but I'm very pleased with the progress of the team is made and it's certainly one of the potential.

I think it was 82% or 4% sensitivity sort of stack up and then lastly, just you say that data is going to be included in your eventual submission is there any additional data you think you need before you submit to CMS coverage.

Rachel Dot: Potential upside drivers of volume this year.

Or do we just need to see kind of the current study is published.

Speaker Change: Thank you for your question.

Rachel Dot: Our final question comes from the line is Andrew Cooper with Raymond James.

Yes. Thanks for the question maybe start with the second one no. We believe this is more than sufficient in terms of.

Andrew Cooper: Your last name open.

Andrew Cooper: Hey, everybody. Thanks for the question, maybe just one more on on M. R D and the breast data you you disclose in preparation there just.

Data for a sort of a clinical validity from a Medicare perspective.

Andrew Cooper: Would love your thoughts given kind of how we think about different subsets of that breast cancer population in some lower shedding sort of some set in terms of the C. T. DNA now how do we think about that in context of you know some of the numbers, we see out there whether from others. When it's a certain subset or not and how that you know that 97% specificity and I think it was 80.

Barely fairly sizable core I think much much larger than other publications, we've seen and the <unk>.

A number of sort of time points.

It does have.

Good diversity across subtypes of breast cancer, you are right.

Different cancer types in breast cancer different subtypes of different shutting levels and when we looked at the breakdown there in terms of triple negative or above.

Andrew Cooper: Two or 4% sensitivity sort of stack up and then lastly, just you say that date is gonna be included in your eventual submission is there any additional data you think you need before you submit to see them extra coverage or or do we just need to see kind of the the current studies published thanks.

Positive or negative and so on.

We've seen.

Good performance as well there so even though no.

Sort of subtype by subtype level.

Speaker Change: Yeah. Thanks for the question maybe start with the the second one now we believe this is more than sufficient in terms of.

See I.

I think.

Really.

Pre leading performance.

It's the same thing on the CRC side, depending on site of metastases theres different setting rates.

Speaker Change: Data for sort of a clinical validity I'm from Ah Medicare perspective barely.

No method really so that is the factor of the biology in terms of the tumor type.

Speaker Change: Barely thoroughly sizeable court I think much much larger than other publications, we've seen and you know as a good number of sort of time coins. It does have you know I've been very good diversity across subtypes of breast cancer you right.

And so that's why these results typically hold.

Performs well in one subtype.

Potentially performs well in other subtypes, just because of the fact that you're detecting moral durations or detecting goes alterations at lower levels, but.

Speaker Change:

Speaker Change: Different cancer types in breast cancer different subtypes of different shedding levels and when we looked at the breakdown there in terms of triple negative or.

Right now, there's not a way to solve the sort of different shutting levels. That's a factor of the biology of it.

Speaker Change: <unk> negative and so on we've seen very good performance as well there so even though no.

Thank you for your question.

Speaker Change: Of subtype by subtype level, we see I think.

That concludes today's call. Thank you for your participation and enjoy the rest of your day.

Speaker Change: Really.

Rachel Dot: Industry, leading performance.

Rachel Dot: It's the same thing on the CRC side pending on site of metastases, there's different shutting <unk> and no method really so that that's at the center of the biology in terms of the tumor type and so that's why these results typically hold.

Rachel Dot: If it performs well in one <unk>.

Rachel Dot: Potentially performs well in other subtypes, just because of the fact that you're detecting moral durations or detecting goes alteration at lower levels, but.

Rachel Dot: Right now there's no way to solve the sort of different shutting <unk> the biology.

Speaker Change: Thank you for your question.

Speaker Change: That concludes today's call. Thank you for your participation and enjoy the rest of your day.

Speaker Change: [music].