Q4 2023 Myriad Genetics Inc Earnings Call

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Operator: Good day, and welcome to the Myriad Genetics 4th Quarter 2023 Financial Earnings Call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day and welcome to the myriad genetics fourth quarter 2023 financial earnings call. At this time, all participants are in listen only mode.

Operator: Later, we will conduct a question and answer session, and we ask that you please limit yourself to one question and a follow-up. As a reminder, this call is being recorded. I would like to turn the call over to Matt Scallo.

Speaker Change: Later, we will conduct a question and answer session. We ask that you. Please limit yourself to one question and a follow up.

Speaker Change: As a reminder, this call is being recorded.

Speaker Change: I would like to turn the call over to Matt Dallas You may begin.

Matt Scallo: You may begin. All right. Thanks, Michelle. And good afternoon and welcome to the Myriad Genetics fourth quarter and full year 2023 earnings call. During the call, we will review the financial results we released today, and afterwards, we will host a question and answer session. Our quarterly earnings release was issued this afternoon on Form 8K.

Matt Dallas: Alright, Thanks, Michelle and good afternoon, and welcome to the Marin genetics fourth quarter and full year 2023 earnings call. During the call. We will review the financial results. We released today and afterwards, we will host a question answer session.

Matt Dallas: Our quarterly earnings release was issued this afternoon on form 8-K and can be found on our website at investor Dot married Dotcom IMAX Gala senior Vice President of Investor Relations and on the call today are Paul <unk>, Our President and Chief Executive Officer, Scott Leffler, Our Chief Financial Officer, Sandra Hart, our chief operating.

Matt Scallo: It can be found on our website at investor.myriad.com. I'm Matt Scallo, Senior Vice President of Investor Relations. And on the call today are Paul Diaz, our President and Chief Executive Officer, Scott Loeffler, our Chief Financial Officer, Sam Raha, our Chief Operating Officer, and Mark Verratti, our Chief Commercial Officer. This call can be heard live via webcast at investor.myriad.com, and a recording will be archived in the investor section of our website along with this slide presentation. Please note that some of the information presented today contains projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K.

Matt Dallas: And officer and Mark variety, our Chief commercial officer. This call can be heard live via webcast at Investor Dot Mary Dot Com and a recording will be archived in the investors section of our website along with the slide presentation.

Matt Dallas: Please note that some of the information presented today contains projections or other forward looking statements regarding future events or the future financial performance of the company.

Matt Dallas: These statements are based on management's current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual report on form.

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

Matt Scallo: These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. I'll now turn the call over to Paul. Thanks, Matt. Good afternoon everyone, and thank you for joining us. On today's call, we will discuss the highlights from our fourth quarter and year-end performance and provide an update on the progress we continue to make in accelerating profitable revenue growth. I want to start by thanking the team here at Myriad Genetics for their efforts this year. Despite the challenges we faced in 2023, our team's commitment to delivering on our mission was evident as we served more patients and added more customers than ever before. Our overarching goals are to continue to develop best-in-class molecular diagnostic tests to better detect disease, support treatment decisions, and improve clinical outcomes.

Good afternoon, everyone and thank you for joining us on today's call. We will discuss the highlights from our fourth quarter and year end performance and provide an update on the progress we continue to make accelerating profitable revenue growth.

Paul: Wanted to start by thanking the team here at myriad genetics for their efforts this year.

Paul: The challenges we faced in 2023, our team's commitment to delivering on our mission was evident as we serve more patients and added more customers than ever before.

Paul: Next slide please.

Paul: Our overarching goals are to continue to develop best in class molecular diagnostic tests to better detect disease support treatment decisions and improve clinical outcomes.

Paul Diaz: Second, to improve clinical utility and ease of use for our patients and provider partners and make our genetic tests more accessible and affordable by leveraging technology and scale in our lab and commercial operations. On slide five, you'll see that we are not alone in our endeavor to become part of a more patient-centric and integrated healthcare system, as our industry partners help us create better products and data solutions that allow us to address friction points and expand adoption and access for our genetic tests. Over the next few years, we expect to build on these technology and healthcare system partnerships to drive continued innovation and growth. Turning now to the quarter and full year results released today, on the next slide.

Paul: Second to improve the clinical utility and ease of use for our patients and provider partners.

Paul: They make our genetic test more accessible and affordable by leveraging technology and scale in our lab and commercial operations.

Paul: On slide five Youll see that we are not alone in our endeavor to become part of a more patient centric and integrated health care system.

As our industry partners help us create better products and data solutions that allow us to address friction points and expand adoption and access for our genetic tests.

Paul: Over the next few years, we expect to build on these technology and health care system partnerships.

Paul: To drive continued innovation and growth.

Paul: Turning now to the quarter and full year results released today on the next slide.

Paul Diaz: We are pleased that we continue to deliver on our commitment to shareholders to achieve double-digit profitable growth, as total revenue increased more than 11% in 2023 compared to last year. And we achieved positive adjusted EPS as well as positive adjusted operating cash flow in the fourth quarter. With this strong performance and market share gains in mind, we are raising our full-year 2024 revenue guidance and introducing positive adjusted EPS guidance. In November of 2023, we raised $118 million from our successful equity offering, which puts our balance sheet in a strong position to enter 2024 with cash, cash equivalents, and markable securities of $141 million and no legal overhangs on the business. Next slide, please.

Paul: We are pleased that we continue to deliver on our commitment to shareholders to achieve double digit profitable growth as total revenue increased more than 11% in 2023 compared to last year.

Paul: And we achieved positive adjusted EPS as well as positive adjusted operating cash flow in the fourth quarter.

Paul: With this strong performance and market share gains in mind, we are raising our full year 2020 for revenue guidance and introducing positive adjusted EPS guidance.

Paul: In November of 2023, we raised $118 million from our successful equity offering.

Paul: Which puts our balance sheet in a strong position to enter 2024 with cash cash equivalents and marketable securities of $141 million and no legal overhangs on the business.

Paul: Next slide please.

Paul Diaz: As we look towards 2024 and beyond, we see adoption and use cases for genomic testing and precision medicine growing, providing strong tailwinds for organic profitable growth across our core products, with an increasing ability to sell across the sales channels where we have deep commercial roots. At the same time, we would remind investors that not only is it early days for precision medicine, but the market is highly fragmented with less than 20% of the share concentrated among the top players, providing us with a significant opportunity for market share gain. We are excited to expand the breadth of our oncology testing options this month with the acquisition of Intermountain Precision Genomics. Bringing precise tumor and precise liquid in-house allows us to capture 100% of the economics that we expect from these products and aligns these with our strategic priority of unifying our oncology offerings under our precise oncology solutions platform. We plan to launch PRECISELiquid from our campus west facility in Q3 of this year, with the rest of the acquired IPG lab operations, including PRECISETumor, moving by year end.

Paul: As we look towards 2024 and beyond we see adoption and use cases for genomic testing in precision medicine growing.

Paul: Providing strong tailwind for organic profitable growth across our core products with.

Paul: With an increasing ability to sell across the sales channels that we have deep commercial routes.

Paul: At the same time, we would remind investors that not only is it early days for precision medicine, but it is highly fragmented with less than 20% share concentrated among the top players.

Paul: Abiding us with significant opportunity for market share gains.

Paul: We are excited to expand the breadth of our oncology testing options. This month with the acquisition of inner mountain precision genomics, bringing precise tumor and precise liquid in house allows us to capture 100% of the economics that we expect from these products and aligned with our strategic priority of unifying our oncology.

Paul: <unk> offerings under our precise oncology solutions platform.

Paul: We plan to launch precise liquid form our campus west facility in Q3 of this year with the rest of the acquired IPG lab operations, including precise tumor moving by year end. We are excited to welcome the IPG employees to the myriad team.

Paul Diaz: We are excited to welcome IPG employees to the Myriad team. Over the course of 2023, we will continue to lay the foundation in our lab operations and back office to support accelerated profitable growth at scale in 2024 and beyond. In 2023, we hit our full-year revenue and fourth-quarter adjusted profitability targets, and we did so in a year that saw higher than average ASP compression above our pre-stated 3 to 5% range due to payer issues in transitioning to GeneSite's new PLA code at the start of 2023, as well as the transition of multiple Blue Cross health plans to new claims administrative processes that had a negative impact on our collections and ASP in the first half Having addressed these issues, we expect improvement in RISP at or below our pre-stated 3% compression target in 2024.

Paul: Okay.

Paul: Over the course of 2023, we continue to lay the foundation and our lab operations and back office to support accelerated profitable growth at scale in 2024 and beyond.

Paul: In 2023, we hit our full year revenue in fourth quarter adjusted profitability targets and we did so in a year that saw a higher than average ASP compression above our pre stated 3% to 5% range.

Paul: Due to payer issues and transitioning to gene sites TLA code at the start of 'twenty three as well as the transition of multiple Blue's health plans to new claims administrative processes that had a negative impact on our collections with ASP in the first half of 2023.

Paul: Having addressed these issues, we expect improvement in RSP at or below our pre stated 3% compression target in 2024.

Paul Diaz: Looking forward, we see the investments that we have made in R&D over the past three years starting to bear fruit with an emerging body of clinical evidence that we believe will support guideline expansion, clinical utility, and adoption, and improve reimbursement over the next few years. This morning, we were excited to announce a research collaboration with the National Cancer Center, Hospital East in Japan to use our highly sensitive, precise MRD tests for patients diagnosed with a wide array of solid tumor hematological cancers.

Paul: Looking forward, we see the investments that we've made in R&D over the past three years, starting to bear fruit with an emerging body of clinical evidence that we believe will support guideline expansion clinical utility and adoption and improve reimbursement over the next few years.

Paul: This morning, we were excited to announce the research collaboration with the National Cancer Center Hospital East in Japan to use our highly sensitive precise Mardi test for patients diagnosed with a wide array of solid tumor and hematological cancers. We.

Paul Diaz: We align with Dr. Oshino, Deputy Director of Hostile East, when he says this study has the potential to revolutionize the scope of WGS-based MRD projects. With a strong 2023 behind us, we look forward to continued growth into 2025 as we launch Foresight Universal Plus, expanded carrier screen, first gene multiple prenatal screen, precise liquid comprehensive genomic panel, and precise MRD for research use with our pharma partners. Now, I'll turn it over to Mark. Thanks, Paul. I'll start on slide 12.

Paul: We align with Doctor Shino Deputy Director of Hospital is when he says this study has the potential to revolutionize the scope or WGS base D projects.

Paul: With a strong 2023 behind US we look forward to continued growth into 2025, as we launched fore sight universal plus expanded carrier screen firsthand multiple prenatal screening precise liquid comprehensive genomic panel and precise Mardi for research use with our pharma partners I'll now.

Paul: Turn it over to Mark.

Mark: Thanks, Paul I'll start on Slide 12, we remain focused on women's health oncology and pharmacogenomics on the call I will share a snapshot of our 2023 performance by business unit as well as an update on our commercial transformation and product development efforts.

Mark Verratti: We remain focused on women's health, oncology, and pharmacogenomics. On the call, I will share a snapshot of our 2023 performance by business unit, as well as an update on our commercial transformation and product development. On slide 13, we saw strong double-digit growth across all of our core products in 2023. As the commercial leader of Myriad, I want to sincerely thank our commercial teams for their part in delivering this level of company growth and success. In the slides to come, I will share how we will plan to continue this momentum in 2024. Now, on slide 14, I want to provide an update on the commercial transformation that has driven our success in 2023. By creating enterprise-wide efficiencies across the company, we have optimized our enterprise and business unit capabilities, using data and insights to deliver consistent performance. We've also enhanced our customer targeting, digital marketing, and overall operating model to drive commercial leverage in 2024 and beyond. Next slide.

Mark: On slide 13, we saw strong double digit growth across all of our core products in 2023 at.

Mark: As the commercial leader of myriad our sincerely. Thank our commercial teams for their part in delivering this level of company growth and success in the slides to come I will share how we plan to continue this momentum in 2024 now.

Mark: Now on slide 14, I want to provide an update on the commercial transformation that has driven our success in 2023 by creating enterprise wide efficiencies across the company, we have optimized our enterprise business unit capabilities using data and insights to deliver consistent.

Mark: Performance, we've also enhanced our customer targeting digital marketing and overall operating model to drive commercial leverage in 2024 and beyond.

Mark Verratti: Continued commercial execution led to record-breaking volume growth for our pharmacogenomics business in 2023, as we added approximately 16,000 new providers ordering Genesight for the first time over the course of the year. In the fourth quarter, Genesight volumes grew 21% year over year, while revenues grew 11% over the same period. We continue to build on Genesight's strong foundation of clinical data, including a collaboration with Optum to create a multi-phase study design better to understand Genesight's ability to improve clinical outcomes and reduce overall health care costs. We look forward to updates on the Optum study sometime in the second half of this year. The momentum that our women's health team carried through 2023 is demonstrated by their strong results. In the fourth quarter, women's health grew hereditary cancer testing volumes 10% year over year. And after excluding sneak peek, prenatal volumes grew 17% over the same period.

Mark: Next slide.

Mark: Continued commercial execution led to record breaking volume growth for our pharmacogenomics business in 2023, as we added approximately 16000 new.

Mark: Providers ordering gene side for the first time over the course of the year.

Mark: In the fourth quarter genotype volumes grew 21% year over year, while revenues grew 11% over the same period.

Mark: We continue to build on <unk> strong foundation of clinical data, including our collaboration with Optum to create a multi phase study design better to understand Jean site's ability to improve clinical outcomes and reduce overall health care costs.

Mark: We look forward to the updates on the often starting sometime in the second half of this year.

Mark: The momentum that our women's health team carried through 2023 as demonstrated by the strong results in the fourth quarter Women's health grew hereditary cancer testing volumes, 10% year over year and after excluding sneaky prenatal volumes grew 17% over the same period.

Mark Verratti: Finally, we eagerly await the upcoming ACOG guidelines to include expanded carrier screening and look forward to rolling out Foresight Universal Plus in response. Myriad's oncology team ended 2023 on a strong note, as they increased hereditary cancer testing volumes by 7% in the fourth quarter compared to last year. We continue to add depth to our oncology offering with the addition of Precise Liquid to our testing menu. We've also expanded the urology portfolio with Myriad Xero Suite, a combination of Prolaris, MyRisk, and PreciseTumor that provides enhanced diagnostic information for prostate cancer patients. Prolaris revenues increased 14% in the fourth quarter and 21% in 2023 compared to the year prior.

Mark: Finally, we eagerly await the upcoming a cog guidelines to include expanded carrier screening and look forward to rolling out foresight, Universal plus and response.

Mark: Marriott's oncology team ended 2023 on a strong note.

Mark: They increased hereditary cancer testing volumes by 7% in the fourth quarter compared to last year.

Mark: We continue to add depth to our oncology offering with the addition of precise liquid to our testing menu. We've also expanded the urology portfolio with myriad Euro suite a combination of.

Mark: Polaris by risk and precise tumor that provides enhanced diagnostic information for prostate cancer patients.

Mark: Polaris revenues increased 14% in the fourth quarter and 21% in 2023 compared to the year prior.

Mark Verratti: Next slide. As Paul spoke earlier about the breadth of our testing menu, which is something that we're always investing in, it's important to note that we are investing in depth, not just chasing our newer products. We develop our tests to compete and win across our different channels while investing in IT, infrastructure, clinical data, and everything else that enhances the clinical utility and use of our tests. Finally, I want to give a brief look at how we see the future of our task coming together. Our product development is focused on new and innovative products that meet the ongoing needs of our patients and providers. In 2024, we expect to launch Foresight Universal Plus, First Team, Precise Liquid, and Precise MRD for research use to address these needs. I want to conclude by saying how extremely proud we are of every team across the enterprise as they continue to rise to the challenge of reaching more patients, exceeding our goals, and remaining patient and provider focused. Now, I will turn the call over to our new Chief Operating Officer, Sam Raha.

Mark: Next slide as Paul spoke earlier to the breadth of our testing menu, which is something that we're always investing in and it's important to note that we are investing in depth not just chasing our neuro products. We develop are tasked to compete and win across our different channels, while investing in our it infrastructure.

Infrastructure clinical data and everything else that enhances the clinical utility and use of our test.

Mark: Finally, I will give a brief look at how our how we see the future of our tests.

Mark: Coming together, our product development is focused on new and innovative products.

Mark: The ongoing needs of our patients and providers and 'twenty four we expect to launch foresight univar surplus.

Mark: First gene precise liquid and precise MRV for research used to address these needs I want to conclude with how extremely proud. We are of every team across the enterprise.

Mark: As they continue to rise to the challenge of reaching more patients exceeding our goals and remaining patient and provider focus now I will turn the call over to our new Chief operating officer Sandra.

Sam Raha: Thank you, Mark. I'm excited to be here today for my first earnings call since joining Myriad in December. I believe this company's mission to advance health and well-being for all, and I'm energized by the significant opportunity we have to shape the molecular diagnostics market and positively impact patient lives. Moving to slide 21.

Sandra Hart: Thank you Mark I am excited to be here today for my first earnings call since joining myriad in December.

Sandra Hart: I believe this company's mission to advance health and wellbeing for all and I'm energized with the significant opportunity we have to shape, the molecular diagnostics market and positively impact patient lives moving.

Sandra Hart: Moving to slide 21.

Sam Raha: Let me start with our enterprise-level strategic measures tied to driving near and long-term profitable growth. We actively measure and track key performance indicators for five important categories, people, quality, growth, productivity, and finance, doing so on a quarterly and annual basis. Our analytical capabilities are improving as we continue to mature into a high-performance business. We are increasing our focus on customer-centric initiatives and expanding how we track productivity gains in our commercial lab operations and technology functions. I'm turning now to the next slide.

Sandra Hart: Let me start with our enterprise level strategic measures tied to driving near and long term profitable growth.

Sandra Hart: We actively measure and track key performance indicators for five important categories people quality growth productivity and finance doing so on a quarterly and annual basis, our analytical capabilities are improving as we continue to mature into a high performing business.

Sandra Hart: We are increasing our focus on customer centric initiatives and expanding how we track productivity gains in our commercial lab operations and technology functions.

Sandra Hart: Turning now to the next slide.

Sam Raha: Let me touch on select operational highlights from 2023. We are proud to have a high level of organizational engagement across the company. We have been designated a great place to work, with 86 percent of our team indicating their strong endorsement of Myriad. We also significantly improved our employee turnover rate in 2023 to just 9%.

Speaker Change: Let me touch on select operational highlights from 2023.

Speaker Change: We are proud to have a high level of organizational engagement across the company. We have been designated a great place to work with 86% of our team, indicating their strong endorsement of myriad.

Speaker Change: We also significantly improved our employee turnover in 2023 and adjust 9%.

Sam Raha: Healthcare providers are among our most important constituents, and their satisfaction led to a net promoter score of 70 for 2023, a figure that has improved over the past few years as a testament to the focus and ongoing investments we have made in the patient and provider experience. We continue to see rapid test turnaround times in our labs while reducing operating costs and actively identifying opportunities to improve and differentiate ourselves. Notably, with credit to Mark and his team, we increased sales productivity by 12% in 2023 compared to last year and saw an increase of $45 million of revenue in excess of expectations in 2021 through 23, delivered by our revenue cycle. Moving to the next slide.

Speaker Change: Healthcare providers are among our most important constituents and their satisfaction led to a net promoter score of 70 for 2023, a figure that has improved over the past few years is a testament to the focus and the ongoing investments, we have made and the patient and provider experience.

Speaker Change: We continue to see rapid test test turnaround times, and our labs, while reducing operating costs and actively identifying opportunities to improve and differentiate ourselves, notably with credit to Marc and his team we increased sales productivity by 12% in 2023 compared to last year and so on.

Speaker Change: Increase of $45 million of revenue in excess of expectations and 21 2021 through 23 delivered by our revenue cycle team.

Speaker Change: Moving to the next slide.

Speaker Change: One of my highest priorities is to ensure that myriad continues to improve the patient provider experience.

Sam Raha: One of my highest priorities has been to ensure that Myriad continues to improve the patient-provider experience. Industry surveys and focus groups tell us that the health care provider's decision to work with a diagnostic testing lab is based on five requirements. First, tests need to be backed by strong clinical validity and utility. Second, providers want a comprehensive product offering and menu, which we see as an opportunity to differentiate ourselves from our competitors. Third, they require fast turnaround time, and fourth, ease of use in ordering a test, and results that are readily interpretable.

Speaker Change: Industry surveys and focus groups tell us that the health care providers decision to work with a diagnostic testing lab are based on five requirements.

Speaker Change: Tests need to be backed by strong clinical validity and utility second providers want a comprehensive product offering and menu, which we see as an opportunity to differentiate ourselves from our competitors.

Third they require fast turnaround time, and fourth ease of use and ordering a test and the results that are readily interpretable finally providers want testing options that are affordable to their patients. We are taking a structured approach to address these requirements.

Speaker Change: Ordinating across the company to ensure that we are all working towards the same goal.

Sam Raha: Finally, providers want testing options that are affordable for their patients. We are taking a structured approach to address these requirements, coordinating across the company to ensure that we are all working towards the same goal. While ensuring individual patient identity is never revealed, we believe in freely sharing our data with the broader scientific and medical community for the betterment of healthcare, rather than looking to monetize such patient-related information. On that note, we recently launched the Myriad Collaborative Research Registry that includes data across germline and tumor testing results from Myriad Genetics Precision Oncology Solutions products on more than 1 million patients. Moving now to slide 24.

Speaker Change: While insuring individual patient identity is.

Speaker Change: While ensuring that individual patient I think he has never revealed we believe and really sharing our data the broader scientific and medical community for the betterment of health care, rather than looking to monetize such patient related information on that note. We recently launched the myriad collaborative research registry that includes data across Germline and <unk>.

Speaker Change: Tumor testing results for myriad genetics precision oncology solutions products on more than 1 million patients moving now to slide 24.

Speaker Change: Digital technology is our foundational improving the customer experience and we have invested significantly to deliver value to patients providers and real world clinical settings to enable better treatment decisions for patients.

Speaker Change: This slide illustrates technology enabled projects that are actively being implemented at myriad.

Sam Raha: Digital technologies are foundational to improving the customer experience, and we have invested significantly to deliver value to patient providers in real-world clinical settings to enable better treatment decisions for patients. This slide illustrates technology-enabled projects that are actively being implemented at Myriad. Again, our focus is to invest in projects that make it easier to do business, from learning about our products to ordering tests and receiving easy-to-understand results supported by ongoing investments in EMR integration, enhanced patient provider portals, and our unified order management system. Finally, let me update you on our roadmap of enterprise-wide infrastructure and capability programs we've been focused on. We made significant progress in 2023, including the completion of our new facilities in South San Francisco and Salt Lake City. Earlier this month, we hosted investors for a tour of our new Salt Lake City facility and hope to see more investors who want to visit us.

Speaker Change: Our focus is to invest in projects that make it easier to do business with us and learning about our products to ordering tests and receiving easy to understand results supported by ongoing investments in EMR integration.

Speaker Change: Enhanced patient provider portals, and our unified order management system.

Speaker Change: Finally, let me update you on our roadmap of enterprise wide infrastructure and capability programs, we've been focused on.

Speaker Change: We made significant progress in 2023, including the completion of our new facilities in South San Francisco and Salt Lake City.

Speaker Change: Earlier this month, we hosted investors for a tour at our new Salt Lake City facility and hope to see more investors, who want to visit us.

Speaker Change: We also completed the transition of our prenatal products to the <unk> 6000 and sequencing platform in 2023.

Speaker Change: Our 2024 focus includes moving over the recently acquired precise tumor precise liquid tests as well as our precise Mardi assay to our Salt Lake City West facility and also building on our EMR integrations from the 200 locations that we successfully added in 2023 more than an additional nine.

Sam Raha: We also completed the transition of our prenatal products to the NovaSeq 6000 sequencing platform in 2023. Our 2024 focus includes moving over the recently acquired precise tumor, precise liquid tests, as well as our precise MRD assay to our Salt Lake City West facility. And also building on our EMR integrations from the 1,200 locations that we successfully added in 2023, more than an additional 1,900 locations are expected in 2024. All of these programs require significant investment, and we are confident that we will see a positive return in the form of improved test turnaround times, lowered operating costs, and improved customer experience, which will continue to differentiate us from our competitors. And now, let me turn it over to our newest executive, Scott Leffler, our chief financial officer. Thanks, Sam.

Speaker Change: 800 locations expected in 2024.

Speaker Change: All of these programs require significant investment and we are confident that we will see a positive return in the form of improved test turnaround times lowered operating costs and improved customer experience.

Speaker Change: We will continue to differentiate us from our competitors.

Speaker Change: And now let me turn it over to our newest executive Scott Leffler, our Chief Financial Officer.

Scott Leffler: Thanks, Sam I'm also excited to be here for my first earnings call with myriad genetics.

Scott Leffler: Sam I was attracted to myriad because of the Companys mission to advance health and wellbeing for all and for the opportunity to leverage my own experiences with both payers and lab services to drive profitable and sustainable growth.

Scott Leffler: We will begin on slide 27, with a review of key volume growth drivers.

Scott Leffler: In 2023, we delivered double digit volume growth year over year across hereditary cancer prenatal and pharmacogenomics. This.

Scott Loeffler: I'm also excited to be here for my first earnings call with Myriad Genetics. Like Sam, I was attracted to Myriad because of the company's mission to advance health and well-being for all and for the opportunity to leverage my own experiences with both payers and lab services to drive profitable and sustainable growth. We'll begin on slide 27 with a review of key volume growth drivers. In 2023, we delivered double-digit volume growth year over year across hereditary cancer, prenatal, and pharmacogenomics. This performance speaks to several factors, such as an improving customer experience that Sam talked about and the strong execution from our commercial team that Mark discussed.

Scott Leffler: This performance speaks to several factors such as an improving customer experience that Sam talked about and the strong execution from our commercial team that Mark discussed.

Scott Leffler: This most recent quarter marks <unk> sixth consecutive quarter of positive volume growth year over year in hereditary cancer testing and we continue to grow at the high end of our market growth estimates.

Scott Leffler: On slide 28, I want to highlight our financial performance by quarter throughout 2023.

Scott Leffler: As Paul mentioned full year 2023 financial results hit the high end of our financial guidance and we achieved our goal to generate profitability on an adjusted basis in the fourth quarter.

Scott Leffler: We delivered revenue growth in all three of our business units compared to 2022 and remained disciplined in our cost management, which contributed to our adjusted EPS of positive <unk>.

Scott Loeffler: This most recent quarter marked Myriad's sixth consecutive quarter of positive volume growth year-over-year in hereditary cancer testing, and we continue to grow at the high end of our market growth estimate. On slide 28, I want to highlight our financial performance by quarter throughout 2023. As Paul mentioned, full year 2023 financial results hit the high end of our financial guidance, and we achieved our goal to generate profitability on an adjusted basis in the fourth quarter. We delivered revenue growth in all three of our business units compared to 2022 and remained disciplined in our cost management, which contributed to our adjusted EPS of positive four cents and adjusted operating cash flow of positive $14 million in the quarter.

And adjusted operating cash flow, a positive $14 million in the quarter.

Scott Leffler: While revenue progression during the year typically follows a seasonal pattern, we benefited from a concentration of Biopharma revenue in Q1 of 2023.

Scott Leffler: That being the case, we expect only mid to high single digit percentage growth for revenue in Q1 of this year compared to last year.

Scott Leffler: We then expect year over year growth rates to increase in subsequent quarters.

Scott Leffler: Also as a reminder, adjusted operating expenses tend to be seasonally higher in Q1 due to timing of certain commercial spending resulting in negative EPS in the first quarter of this year.

Scott Leffler: Our balance sheet finished 2023 in a strong position with approximately $141 million in cash cash equivalents and marketable securities. This balance includes $40 million drawn from our asset base facility as we borrowed ahead of expected seasonal working capital outflows in Q1.

Scott Loeffler: While revenue progression during the year typically follows a seasonal pattern, we benefited from a concentration of biopharma revenue in Q1 of 2023. That being the case, we expect only mid to high single-digit percentage growth for revenue in Q1 of this year compared to last. We then expect year-over-year growth rates to increase in subsequent quarters. Also, as a reminder, adjusted operating expenses tend to be seasonally higher in Q1 due to the timing of certain commercial spend, resulting in negative EPS in the first quarter of the year.

Scott Leffler: We have made a step change improvement in adjusted operating cash flow in 2023 compared to 2022, especially during Q4 when adjusted operating cash flow was positive $14 million.

Scott Leffler: In addition, as Dan mentioned, we are excited by the progress of our transformation and real estate initiatives and are pleased to have the lion's share of the investment behind us.

Scott Leffler: That being the case, we should see significant reductions in those categories of cash costs that have been adjusted out of our non-GAAP metrics beginning with 2020 for.

Scott Leffler: Most importantly, we believe that we have line of sight to realizing the benefits of those investments beginning in 2025 as those assets are more fully operationalized.

Scott Loeffler: Our balance sheet finished 2023 in a strong position with approximately $141 million in cash, cash equivalents, and marketable security. This balance includes $40 million drawn from our asset-based facility as we borrowed ahead of expected seasonal working capital outflows in Q1. We have made a step change improvement and adjusted operating cash flow in 2023 compared to 2022, especially during Q4 when adjusted operating cash flow was positive $14 million. In addition, as Sam mentioned, we are excited by the progress of our transformation and real estate initiatives and are pleased to have the lion's share of the investment behind us. That being the case, we should see significant reductions in those categories of cash costs that have been adjusted out of our non-GAAP metrics beginning in 2024.

Scott Leffler: On slide 29, we compare actual full year 2023 results to our initial 2023 financial guidance offered in February of last year.

Scott Leffler: Actual 2023 revenue exceeded the initial revenue range with gross margin and adjusted operating expense within the initial range has provided a year ago.

Scott Leffler: This positive overall financial performance for full year 2023 reflects the significant progress <unk> has made on all fronts discussed here today.

Scott Leffler: On slide 30, looking forward, we are optimistic regarding the overall business trends and the companys ability to grow at or above industry growth rates, which is why we are increasing our full year 2020 for revenue guidance.

Scott Leffler: As mentioned earlier Q1 of 2023 with an unseasonably strong comp. So first quarter 2024 revenue is expected to grow at a mid to high single digit percentage rate over the prior year period and accelerate through the rest of 2024.

Scott Loeffler: Most importantly, we believe that we have line of sight to realizing the benefits of those investments beginning in 2025, as those assets are more fully operational. On slide 29, we compare actual full-year 2023 results to our initial 2023 financial guidance offered in February of last year. Actual 2023 revenue exceeded the initial revenue range with gross margin and adjusted operating expense within the initial ranges provided a year ago.

Scott Leffler: 2020 for gross margin is expected to improve between 50, and 150 basis points over 2023, given expected volume growth product mix pricing trends and our ongoing focus on operational excellence.

Scott Leffler: For first quarter gross margins are expected to be lower than fourth quarter levels, reflecting typical seasonality and are expected to ramp up throughout the year.

Scott Leffler: With adjusted operating expense is expected to grow between 5% and 7% in 2024, we expect to see operating leverage dropped to the bottom line with 2024, adjusted EPS expected to be positive versus a loss of 27 for full year 2023.

Scott Loeffler: This positive overall financial performance for full year 2023 reflects the significant progress Myriad has made on all fronts discussed here today. On slide 30, looking forward, we are optimistic regarding the overall business trends and the company's ability to grow at or above industry growth rates, which is why we are increasing our full year 2024 revenue guidance. As mentioned earlier, Q1 of 2023 was an unseasonably strong comp, so first quarter 2024 revenue is expected to grow at a mid to high single-digit percentage rate over the prior year period and accelerate through the rest of 2024. 2024 growth margin is expected to improve between 50 and 150 basis points over 2023, given expected volume growth, product mix, pricing trends, and our ongoing focus on operational excellence. For the first quarter, gross margins are expected to be lower than fourth-quarter levels, reflecting typical seasonality, and are expected to ramp up throughout the year.

Scott Leffler: This year, we are also introducing adjusted EBITDA as a new metric in our guidance for 2024.

Scott Leffler: Which we believe will be a useful metric for investors in understanding <unk> trajectory with respect to both underlying profitability and cash generating potential.

Scott Leffler: For full year 2024, adjusted EBITDA is expected to be between $20 million and $30 million.

Scott Leffler: While we arent, formerly including Capex and our guidance I'll note that capital expenditures are expected to return closer to normal levels in 2024 projected at approximately 20% to $25 million for the year and consistent with commentary made at our September 2023 investor event.

Now, let me turn the call back to Paul.

Scott Leffler: Scott Welcome we continue to build on the pillars of long term growth and profitability.

Paul: <unk> our strong results this year.

Scott Loeffler: With adjusted operating expense expected to grow between 5% and 7% in 2024, we expect to see operating leverage drop to the bottom line, with 2024 adjusted EPS expected to be positive versus a loss of 27 cents for full year 2023. This year, we are also introducing adjusted EBITDA as a new metric in our guidance for 2024, which we believe will be a useful metric for investors in understanding Myriad's trajectory with respect to both underlying profitability and cash generating potential. For the full year 2024, adjusted EBITDA is expected to be between $20 million and $30 million. While we aren't formally including CAPEX in our guidance, I'll note that capital expenditures are expected to return closer to normal levels in 2024, projected at approximately $20 to $25 million for the year, and consistent with commentary made at our September 2023 investor event. Now, let me turn the call back to Paul.

Paul: Our clinically differentiated products supported by technology.

Paul: Her value in real world clinical settings, and enable early detection and better treatment decisions for providers and their patients.

Paul: Our motto modernized lab and commercial engine are examples of where investments in automation and advanced technology are yielding improved workflows faster turnaround times and reduce operating costs.

Paul: Looking forward, we will deploy our strong balance sheet in a disciplined manner in ways that support the enterprise and our shared mission and vision to make genetic testing of precision medicine more accessible.

Speaker Change: With that I will turn it over for Q&A.

Speaker Change: Alright, Thanks, Paul and as a reminder, during today's call we use certain non-GAAP financial measures a reconciliation of the GAAP to non-GAAP financial results and a reconciliation of GAAP to non-GAAP financial guidance can be found in our earnings release and under the Investor Relations section of our website now we're ready to begin the Q&A session to <unk>.

<unk> broad participation, we are asking participants to please ask only one question and one follow up Michelle we are now ready for the Q&A portion of the call.

Speaker Change: Thank you if you'd like to ask a question. Please press star one one.

Paul Diaz: Scott, welcome. We continue to build on the pillars of long-term growth and profitability that delivered our strong results this year. Our clinically differentiated products, supported by technology, deliver value in real-world clinical settings and enable early detection and better treatment decisions for providers and their patients. Our modernized lab and commercial engine are examples of where investments in automation and advanced technology are yielding improved workflows, faster turnaround times, and reduced operating costs.

Speaker Change: Your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Speaker Change: First question comes from Doug Schenkel with Wolfe Research Your line is open.

Speaker Change: Okay.

Speaker Change: Is.

Speaker Change: Hi, This is actually calling babington in for Doug Schenkel I've got a question about MLR D could you give any updates on the timing of data releases and the path forward for reimbursement.

Speaker Change: Yes.

Speaker Change: <unk>.

Speaker Change: The progress that we're making in the study as we mentioned the study. This morning in the press release, we have decided with memorial Sloan Kettering as well, an MD Anderson advancing pretty quickly.

Paul Diaz: Looking forward, we will deploy our strong balance sheet in a disciplined manner in ways to support the enterprise in our shared mission and vision to make genetic testing and precision medicine more accessible. Thank you. If you'd like to ask a question, please press star 1 1. Hi, this is actually Colleen Babington on behalf of Doug Schenkel.

Speaker Change: Not really ready to call out sort of the expected readout of those studies, but for all indications are progressing well and all the analytical validation in our labs are also progressing really well to the specs.

Operator: I've got a question about MRT. Could you give any updates on the timing of new data releases and the path forward for reimbursement? Yeah, we're really proud of the progress that we're making in the studies. We mentioned the study this morning in the press release.

Speaker Change: And the.

Speaker Change: That we expect in terms of reimbursement.

Speaker Change: To some extent, we're taking we're going to take advantage of the progress that others have made here and be a fast follower.

Speaker Change: We're building those use cases and working on the clinical utility studies, which I think are going to be really important to reimbursement and so there are a number of different efforts in that regard.

Paul Diaz: We have a study with Memorial Sloan Kettering as well, and MD Anderson is advancing pretty quickly. Not really ready to call out the expected readout of those studies, but from all indications, they're progressing well. And all the analytical validation in our labs is also progressing really well to the specifications and standards that we expect. In terms of reimbursement, you know, to some extent, we're going to take advantage of the progress that others have made here and be a fast follower. We're building those use cases and working on the clinical utility studies, which I think are going to be really important for reimbursement. And so there are a number of different efforts in that regard that we'll be talking about. So we're expecting a commercial launch in 2025.

Speaker Change: That will be talking about so we're expecting a commercial launch in 2025. Following the research studies that we'll do later this year with pharma going into 'twenty five as well.

Speaker Change: But we'll have more to update on Mardi.

Speaker Change: Including our freedom to operate in and other.

IP in the months to come.

Speaker Change: Great. Thank you just one quick follow up there are there any concerns given the patent landscape and Mardi.

Speaker Change: We are quite confident in our freedom to operate.

Speaker Change: And as.

Speaker Change: As we've spoken to you before we've built these technologies on existing platforms.

Speaker Change: And systems and processes that have been in existence.

Speaker Change: And our patent protected for a ways back. So we're we're very confident when we come to market, we're going to have a highly accurate and sensitive assay and there will be able to participate in what is a large market and a great opportunity for patients most of all.

Paul Diaz: Following the research studies that we'll do later this year with pharma going into 25 as well, but we'll have more to update on MRD, including our freedom to operate and other IP in the months to come. Great, thank you.

Paul Diaz: Just one quick follow-up there. Are there any concerns given the patent landscape in MRD? We are quite confident in our freedom to operate.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Rachel Matt stall with JP Morgan Your line is open.

Paul Diaz: And as we've spoken about before, we built these technologies on existing platforms and systems and processes that have been in existence and are patent protected for a ways back. So we're very confident when we go to market, we'll have a highly accurate and sensitive MRD assay and that we'll be able to participate in what is a large market and a great opportunity for patients, above all. Thank you. Thank you. Our next question comes from Rachel Vestal of J.P. Morgan. Your line is open. Great Hi, this is Casey on behalf of Rachel.

Speaker Change: Great Hi, this is Casey on for Rachel Thanks for taking our questions. So wanted to start on pre Natal curious how sustainable that strength is that you guys have been seeing another strong quarter here in <unk> at 17% volume growth outside of sneak peak, what does that run rate look like in terms of share gains in 'twenty, four and how much upside with the carrier screening guideline.

Speaker Change: Updates.

Speaker Change: Later this year provide.

Speaker Change: Yes.

Speaker Change: Our women's health team and Mark can dive into some more we're really pleased.

Casey: About the progress that we're making both in terms of wallet share and new customers, obviously theres been a lot of dislocation in the women's health space.

Operator: Thanks for taking our question. So I wanted to start on prenatal. Curious how sustainable the strength is for you guys. Another strong quarter here in SportQ with 17% volume growth outside of Sneak Peek. What does that runway look like in terms of sheer gains in 24?

Casey: And we're certainly seeing our fair share of new customers and market share gains. So we do expect those gains to continue.

Casey: And as you noted we see significant upside both in terms of volume.

Casey: ASP.

Paul Diaz: And how much upside would the carrier screening guideline updates potentially later this year provide? Yeah, our women's health team and Mark can dive into this some more. We're really pleased about the progress that we're making both in terms of wallet share and new customers. Obviously, there's been a lot of dislocation in the women's health space.

Casey: As guidelines come out for expanded carrier screening and that will also be supportive of our first Jean launch hopefully later this year as well Mark would you add.

Mark: No I think Paul said it best I don't think when we think about the momentum coming out of 2023, we really don't see any headwinds in 2024, I think we've stated before it actually is an underpenetrated market.

Paul Diaz: And, and we are certainly seeing our fair share of new customers and market share gains. So we do expect those gains to continue. And, as you noted, we see significant upside both in terms of volume and ASP as guidelines come out for expanded carrier screening. And that will also be supportive of our first gene launch, hopefully later this year as well. Mark, would you add?

Mark: Awareness in many cases still seems to be low and so, especially when you think about the unaffected on the hereditary cancer side that is in the obgyn channel and so.

Mark: We expect this continued momentum going into 2024, both in driving depth as well as earning back from your customers due to the dislocation.

Mark: Okay.

Mark: Okay.

Mark: Yes.

Mark: Thank you. Our next question comes from Andrew Cooper with Raymond James Your line is open.

Andrew Cooper: Hey, everybody. Thanks for the question.

Mark Verratti: No, I think Paul said it best. I don't think when we think about the momentum coming out of 2023, we really don't see any headwinds in 2024. As we've stated before, it actually is an underpenetrated market, and awareness in many cases still seems to be low. And so, especially when you think about the unaffected on the hereditary cancer side that is in the OBGYN channel, and so we expect this continued momentum going into 2024, both in driving depth as well as earning back some new customers due to the dislocation. Thank you. Our next question comes from Andrew Cooper with Raymond James. Your line is open. Hi everybody.

Andrew Cooper: Maybe firstly I appreciate the comment on pricing being at the low end or a little bit better for 2024, I was hoping you could maybe just break that down a little bit more in terms of is it largely hereditary where you continue to see the headwinds in jeans I get a lot more stable after a bit more challenged of our 2023.

Andrew Cooper: Kind of how do we think across the segments about what pricing maybe it looks like as part of that build for 2004.

Speaker Change: Yes, Andrew I mean.

Speaker Change: Despite those headwinds we had a really good year and again hats off to Mark and the commercial teams and our folks in lab operations kept up with the volume so the volume more than made up for for a tough year on Asps and.

Speaker Change: And we made up the cash collection piece in the back half of the year I would say that obviously the low hanging fruit is with first gene I mean with with gene side, we see a lot of opportunity for improvement in coverage there.

Operator: Thanks for the question. Maybe first, you know, I appreciate the comment on pricing being, you know, at the low end or a little bit better for 2024. I was hoping you could maybe just break that down a little bit more in terms of is it, you know, largely hereditary, where you continue to see the headwinds and GeneSite gets a lot more stable after a bit more of a challenge in 2023. Just kind of how do we think across the segments about what pricing maybe looks like as part of that build for 2024? Yeah, Andrew, I mean, you know, again, despite those headwinds, we had a really good year.

Speaker Change: It's market by market Blues plans by Blues plans for the biomarker laws have given us.

Speaker Change: Another ability in 14 states now to look to expand coverage.

Speaker Change: But the transition issues, we have with the payers, we don't see any of that dislocation going into 2024, so really across the product portfolio.

Speaker Change: Probably less than Polaris, we felt really strong asps in <unk>, but both from for hereditary cancer, prenatal and especially for gene site, we see ASP opportunities here in 2024 and 2025.

Paul Diaz: And again, hats off to Mark and the commercial teams, and our folks in lab operations that kept up with the volume. So the volume more than made up for a tough year on ASP. And we made up the cash collection piece in the back half of the year. I would say that, you know, obviously, the low-hanging fruit is with First Gene.

Speaker Change: Okay helpful. And then maybe just I did notice I forget if it was in the slide deck or the press release.

Speaker Change: The word relaunch next step precise tumor just maybe a little bit of color on kind of some of the moving parts. There and then how do you think about the opportunity and how it changes when you do have that broader set of tumor and liquid and MRV and kind of the rest of the portfolio together as being.

Paul Diaz: I mean, with GeneSite, we see a lot of opportunity for improvement in coverage there. It's, you know, it's market by market, Blues plans by blues plans, but the biomarker laws have given us another ability in 14 states now to look to expand coverage. But the transition issues we have with the payers, we don't see any of that dislocation going into 2024. So really across the product portfolio, probably less than Polaris, we saw a really strong ASP year for Polaris, but both for hereditary cancer, prenatal, and especially for GeneSite, we see ASP opportunities here in 2024 and 2025. Okay, that was helpful.

Speaker Change: Really more than the sum of the parts. So just would love to sort of your latest thinking on how much of a step up Ken Ken that broader portfolio really mean as opposed to.

Speaker Change: Sort of individual pieces that are there today.

Speaker Change: Yeah. Thanks, I think it's an excellent question Doug.

Mark: This is mark.

Mark: Historically myriad has always been known for having the gold standard when it comes to the Germline test and I think more and more especially as you think of health systems, where we think of larger accounts. They are really looking for a single provider because it makes their workflows easier and ultimately they want as many answers are all of the answers that they can at the same time when they are making treatment decisions.

Mark Verratti: And then maybe just, I did notice, I forget if it was in the slide deck or the press release, the word relaunch next to precise tumor, just maybe a little bit of color on kind of some of the moving parts there. And then how do you think about the opportunity and how it changes when you do have that broader set of tumors and liquids and MRD and kind of the rest of the portfolio together as being, you know, ideally more than the sum of the parts? So just would love sort of your latest thinking on how much of a step up a broader portfolio can really mean as opposed to the sort of individual pieces that are there today. Yeah, thanks. I think it's an excellent question. This is Mark.

Mark: <unk> for their patients, so, bringing precise tumor being precise liquid and eventually mardi.

Mark: That's going to round out the Mary portfolio combined with what we're doing on the operational side, that's that Sam will talk to.

Mark: In terms of that ease of use is really first in mind for all of the health care system that we talked to Sam do you want to add to that yes. Thank you Mark.

Sam: On one of the slides that I covered right we know.

Very definitively one of the major drivers for our customers to providers and health care systems building on what Mark said is really the comprehensive nature of our offerings and this allows us to really participate all the way from here.

Mark Verratti: You know, historically, Myriad has always been known for having the gold standard when it comes to the germline test. And I think more and more, especially as you think of health systems, or you think of larger accounts, they are really looking for a single provider because it makes their workflows easier. And ultimately, they want as many answers or all the answers that they can at the same time when they're making treatment decisions for their patients. So bringing precise tumor, bringing precise liquid, and eventually MRD, that's going to round out the Myriad portfolio, combined with what we're doing on the operational side that Sam will talk about in terms of that ease of use, is really first in mind for all of the healthcare systems that we talk to.

Sam: Hereditary cancer unaffected all the way through therapy selection and down the line with with precise MRV, which we've touched on really to monitoring and <unk>.

Sam: So we think that we also have a really differentiation in the sense that listen liquid biopsy is very important we're all talking about it in the industry now but at myriad we've been doing this for almost three decades right because our my risk tests are foundational assay has been started from liquid and that also gives.

Sam: Has that capability the infrastructure all the way through collection through how we process samples to do it at scale with excellence, which I think will be part of the differentiation that we're going to have across the portfolio.

Speaker Change: And lastly, Andrew I would just say.

Mark Verratti: Sam, do you want to add to that? Yeah, thank you, Mark. Building on one of the slides that I covered, right, we know very definitively one of the major drivers for our customers, the providers of healthcare systems, building on what Mark said, is really the comprehensive nature of our offerings. And this allows us to really participate all the way from, you know, hereditary cancer, unaffected, all the way through therapy selection, and down the line with precise MRD, which we've touched on, really to monitoring and, you So we think that we also have a real differentiation in the sense that, listen, liquid biopsy is very important.

Speaker Change: We are having meeting with health systems, now that wouldn't talk to us six months ago and.

Speaker Change: So we really see a an emerging health system strategy, that's the world that I come from as you know and so we've built up a whole infrastructure and team.

Speaker Change: To really.

Across our portfolio from oncology to prenatal to pharma co genomics.

And.

Speaker Change: Inner mountain light point specialty providers like Simon Med are just the first of what we think will be a much bigger opportunity for us and also in academic medical centers that quite frankly, we had been shut out for many years.

Speaker Change: Some of our own self inflicted wounds those doors are opening up in and we're having some really great conversations and a lot of systems across the country.

Sam Raha: We're all talking about it in the industry now, but at Myriad, we've been doing this for, you know, almost three decades, right? Because our MyRisk test, our foundational assay, has been started from liquid, and that also gives us that capability, the infrastructure, all the way through, you know, collection, through how we process samples, to do it at scale with excellence, which I think will be part of the differentiation that we're going to have across the portfolio.

Speaker Change: Great I appreciate it and look forward to more next week. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Matt <unk> with Goldman Sachs. Your line is open.

Speaker Change: Hey, guys congrats on the quarter this for shock code on for Matt.

Matt Dallas: Could you provide some color on opex cadence throughout the year.

Matt Dallas: Sorry that was opex.

Matt Dallas: Cadence progression.

Matt Dallas: Youre asking about 2024 or 2020.

Matt Dallas: 2024.

Speaker Change: Yes, we made some reference in the prepared comments about the fact that seasonally Q1 does typically have an elevated level of capex and certainly.

Paul Diaz: And lastly, Andrew, I would just say we're meeting with health systems now that wouldn't talk to us six months ago, and so we really see an emerging health system strategy. That's a world that I come from, as you know, and so we've built up a whole infrastructure and team to really, across our portfolio, from oncology, to prenatal, to pharmacogenomics. And, you know, Intermountain, LifePoint, and specialty providers like Simon Med are just the first of what we think will be a much bigger opportunity for us. And also in academic medical centers that, quite frankly, we've been shut out of for many years because of some of our own self-inflicted wounds.

Speaker Change: Elevated relative to Q4 of 2023 on a sequential basis, and then you could see a follow normal normal seasonal pattern from there as well throughout the year, but beyond that we're not going to provide specific quarterly guidance.

Speaker Change: Yes, I think.

Speaker Change: Only thing I would add is I think you've seen a team just do a really great job in the lab.

Speaker Change: Cogs as well as managing Opex, you really saw us bring that down actually over the course of the year, even if we.

Paul Diaz: Those doors are opening up, and we're having some really great conversations across a lot of systems. Great. Appreciate it. Look forward to more next week.

Speaker Change: Address wage rate issues and other things and we're committed to continuing to do that for our teammates at cheap people competitive. So we've just continued to build more discipline on the opex, even as we're investing more in R&D. So as we find productivity gains.

Operator: Thanks, guys. Thank you. Thank you. Our next question comes from Matt Sykes with Goldman Sachs. Your line is open. Congratulations on that. Could you provide... Sorry, that was the op-ex, what?

Scott Loeffler: Through you're asking about 2024 or 2023 2024. We yeah, we made some reference in the prepared comments about the fact that seasonally, q1 does typically have an elevated level of capex and certainly elevated relative to q4 2023 on a sequential basis. And then you could see normal normal seasonal patterns from there as well throughout the year.

Speaker Change: Investing more and Dale shop in clinical studies.

Speaker Change: And other and other things to advance the portfolio. So it's it will continue to be a focus of ours, but.

Speaker Change: A real disciplined approach as Sam talked about.

Speaker Change: Got it and then can you just provide some color on revenue contribution cost implications in 2024 from the acquisition of Intermountain for both the <unk> 24 and for there.

Speaker Change: I'm, sorry, you're going to have to speak up because we really can't hear you.

Paul Diaz: But beyond that, we're not going to provide a specific quarterly cut. Yeah, I think, you know, the only thing I would add is that I think you've seen a team just do a really great job in the lab on COGS, as well as managing OPEX. You really saw us bring that down actually over the course of the year, even as we, you know, addressed wage rate issues and other things. And we're committed to continuing to do that for our teammates to keep people competitive. So we've just continued to build more discipline on the OPEX, even as we're investing more in R&D. So as we find productivity gains, you know, we're investing more in data shops and clinical studies and other things to advance the portfolio. So it will continue to be a focus of ours, but a real disciplined approach, as Sam talked about. Thank you for watching Color.

Speaker Change: Sorry about that can you hear me now.

Speaker Change: Little better go ahead.

Speaker Change: So can you provide color on revenue contribution and cost implications in 2024 from the acquisition of Intermountain.

Speaker Change: For both <unk> 24, and for 2020 for full year.

Speaker Change: Let me see if I can give you that specific number.

Speaker Change: Yes.

Speaker Change: I think it's modest.

Speaker Change: So we will certainly have transition cost and integration cost that we built into the guidance.

Speaker Change: And as Scott pointed out we will probably have a heavier hit for opex in Q1, because of all the new business that we're onboarding. So we'll probably spent an extra $2 million on EMR integrations for new customers and finally to try to keep mark to market.

Speaker Change: [music].

Operator: I'm sorry, you're going to have to speak up because we really can't hear you. Sorry about that. Can you hear me now?

Speaker Change: So.

So hopefully thats helpful. But we're we've got high returns on investment for the Opex that we're investing whether it's to bring on new customers or integrate intermountain precision genomics.

Paul Diaz: A little better. Go ahead. Um, can you provide color on revenue contribution and cost implications in 2024 from the acquisition of Intermountain for both 1Q24 and for the 2024 full year? Let me see if I can give you that specific number. You know, I think it's modest.

Speaker Change: Thank you.

Sure.

Speaker Change: Thank you. Our next question comes from Jack Meehan with Nephron Research. Your line is open.

Jack Meehan: Thank you good afternoon.

Paul Diaz: So we certainly have transition costs and integration costs that we've built into the guidance. And, you know, as Scott pointed out, we'll probably have a heavier hit for OPEC in Q1 because of all the new business that we're onboarding. So we'll probably spend an extra two million dollars on EMR integrations for new customers and trying to keep our market history. So, hopefully that's helpful.

Jack Meehan: Wanted to ask about hereditary cancer testing, so historically, the fourth quarters, a pretty seasonally strong volume quarter.

Jack Meehan: I'm not sure. If this is right, but I'm calculating a sequential decline in the fourth quarter of this year, though.

Jack Meehan: Talk about the sequential trends youre seeing in hereditary cancer testing.

Speaker Change: That's incorrect Jack.

Paul Diaz: But, you know, we've got high returns on investment for the OpEx that we're investing in, whether it's to bring on new customers or integrate intermountain precision genomics. Sure. Thank you. Our next question comes from Jack Meehan with Neffron Research. Your line is open. Thank you.

Speaker Change: And seasonally the hereditary cancer is pretty strong Q4, and it was off a pretty big base from the prior year and 23.

Speaker Change: And you saw really strong growth in women's health as well so.

Speaker Change: Pending on work in product and process and lots of different factors, but let me just underscore very clearly that we are we are very excited about both the organic growth of my risk hereditary cancer test is a highly differentiated product.

Paul Diaz: I wanted to ask about hereditary cancer testing. So, you know, historically, the fourth quarter's a pretty seasonally strong volume quarter. I'm not sure if this is right, but I'm calculating a sequential decline in the fourth quarter this year, though. Can you just talk about the sequential trends you're seeing in hereditary cancer testing?

Speaker Change: ASP opportunities there that was the bigger challenge in 'twenty, three quite frankly with not volume with ASB.

Paul Diaz: And, you know, seasonally, hereditary cancer is pretty strong in Q4, and it was off a pretty big base from the prior year in 23. And you saw really strong growth in women's health as well. So, you know, depending on work and process and lots of different factors, but let me just underscore very clearly that we are very excited about both the organic growth of my risk hereditary cancer tests and the highly differentiated product. ASP opportunities there, that was a bigger challenge in 23, quite frankly, was not buying with ASP.

Speaker Change: Having addressed those issues with with a couple of our payers as we worked through some of the coding issues.

Speaker Change: And we see accelerated market share gains so.

Speaker Change: When I joined the company everybody thought hereditary cancer, just like gene site should be put out to pasture I think we've proven that now to be an incorrect set of assumptions here.

Speaker Change: Okay. So I mean, just looking at your women's health volume in.

Paul Diaz: And having addressed those issues with a couple of our payers as we worked through some of the coding issues, and we see accelerated market share gains. So, you know, when I joined the company, everybody thought hereditary cancer, just like gene site, should be put out to pasture. I think we've proven that now to be an incorrect set of assumptions here.

Speaker Change: In the fourth quarter and the Deca was 191000 last quarter. It was 190000.

Speaker Change: But I assume prenatal wells how can we take everyone. Why don't you take your numbers offline, Jack and maybe focus on more strategic issues for the company we are.

Jack Meehan: I have questions about specific volume numbers of your model I'm sure. The team can handle that after the call.

Paul Diaz: Okay, so I mean, just looking at your women's health volume in the fourth quarter on the deck, it was 191,000. Last quarter was 190,000, but I assume prenatal. Why don't we take your numbers offline, Jack, and maybe focus on more strategic issues for the company? If you have questions about specific volume numbers or your model, I'm sure the team can handle that after the call. Sure, yeah, I just wanted to address the financial questions here on your fourth quarter earnings call. I have one guidance question for you. Can you talk about what gives you confidence from 15 to 150?

Jack Meehan: Sure Yeah, I just wanted to address the financial questions here on your fourth quarter earnings call.

Speaker Change: Maybe one guidance question for you can you talk about what gives you the confidence in the 50 to 150 basis points of gross margin expansion in 2024.

Speaker Change: Wondering on the downslope since 2013, so what's going to move this back to expansion.

Speaker Change: I don't think Thats correct, we have maintained there's quarterly volatility in gross margins depending on product mix.

And.

Speaker Change: And we always see that in Q1, but we have maintained within our guidance range of 68% to 70% gross margins vertical last two and a half years.

Operator: and the importance of gross margin expansion in 2024, just considering they've been on the downslope since 2013. So what's going to move this back to expansion? I don't think that's correct.

Speaker Change: Ken.

Speaker Change: Ken Im not sure what numbers, you're looking at Jack, but they're not the same numbers that were reported.

Speaker Change: Again, we're happy to go through those offline with you.

Speaker Change: Thank you. Our next question comes from David Westenburg with Piper Sandler Your line is open.

Paul Diaz: We've maintained that there is quarterly volatility in gross margins, depending on product mix, and we always see that in Q1, but we have maintained within our guidance range of 68 to 70% growth margins for the last two and a half years. So, Again, I'm not sure what numbers you're looking at, Jack, but they're not the same numbers that we're reporting. Again, we're happy to go through those offline with you. Thank you. Our next question comes from David Westenberg with Piper Sandler. Your line is open. Hi, thank you for taking the question. I have two questions.

David Westenburg: Hi, Thank you for taking the question I have two questions I'll just ask them both upfront here.

David Westenburg: Can you quantify or maybe just discuss if he can't some of the potential exits in BRCA.

David Westenburg: Brian in women's health and actually in noninvasive prenatal testing <unk>.

David Westenburg: Contemplated a big competitor exiting in your guidance or if that is upside to your guidance and then secondly, when should we anticipate or do you think you can anticipate expanded carrier screening in a cog and then can you tell about how much if that's contemplated in guidance and how fast.

Operator: I'll just ask them both up front here. Can you quantify or maybe just discuss, if you can't, some of the potential exits in BRCA, in women's health, and actually in non-invasive prenatal testing if you have contemplated a big competitor exiting in your guidance, or if that is an upside to your guidance? And then secondly, when should we anticipate, or do you think you anticipate, expanded carrier screening in ACOG? And then can you tell us how much, if that's contemplated in guidance, and how fast you can really get coverage for expanded carrier screening? Thank you. I know that's along with them both at the same time.

David Westenburg: You can really get coverage for expanded carrier screening. Thank.

Speaker Change: Thank you I know thats, along with the balls at the same time.

Speaker Change: Those are really very thoughtful questions.

Speaker Change: No.

Speaker Change: So as we mentioned before we do see a lot of disruption in the marketplace. It is not something that we are celebrating that some of our peers.

Speaker Change: Are struggling.

Paul Diaz: Those are really very thoughtful questions, you know. As we mentioned before, we do see a lot of disruption in the marketplace. But it is not something that we are celebrating that, you know, some of our peers are struggling. And, you know, I think we all want to make sure that patients have access, you know, to both hereditary cancer and prenatal testing. And I think everybody's working hard to make sure that that happens. And there have been several companies, unfortunately, that have struggled over the last year, and more sort of under the radar, smaller companies. As I said, this is still a pretty fractured market. We certainly expect to continue to see share gains. We don't have an overly aggressive sense of market share gains in our guidance. We're sort of trying to keep that pretty centered.

Speaker Change: And I think we're all want to make sure that patients have access to.

Speaker Change: Both our hereditary cancer and prenatal testing and I think everybody is working hard to make sure that that happens.

Speaker Change: And there have been several companies. Unfortunately that has struggled over the last year and more sort of under the radar smaller companies as I said this is still a pretty fractured market.

Speaker Change: We certainly expect to continue to see share gains we don't have a overly aggressive sense of market share gains in our guidance were sort of tried to keep that pretty centered it does.

Speaker Change: Present more opportunity for us, but we.

Speaker Change: We do not want to get ahead of ourselves here.

Speaker Change: And we're certainly not the only ones that are going to try to be there for patients.

Paul Diaz: It does present more opportunity for us, but we do not wanna get ahead of ourselves here. And we're certainly not the only ones that are gonna try to be there for patients and do that. With respect to ACOG, I think we've all been waiting for ACOG guidelines to be expanded. We think it might happen this spring. As we've talked about on prior calls, it'll take 12 to 18 months before the payers get on board. So none of that is really contemplated in terms of volume or ASP lift in 24.

Speaker Change: And.

Speaker Change: And do that with respect to.

Speaker Change: I think we've all been waiting for a guideline expansion.

Speaker Change: We think it might happen this spring.

Speaker Change: As we've talked about on prior calls it will take 12 to 18 months before the payers get onboard. So none of that is really contemplated in terms of volume or ASP lift in 'twenty four we certainly believe it could be a great tailwind.

Paul Diaz: We certainly believe it could be a great tailwind for Foresight Universal Plus, as well as for the first team in 25, but both of those are not factored into our guide. Thank you very much. Thank you. Thank you. Our next question comes from Mason Carrico with Stevens. Your line is open.

Speaker Change: For fore sight, universal plus as well as for <unk> and 'twenty five.

Speaker Change: But both of those are not factored into our guidance.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Nathan <unk> with Stephens. Your line is open.

Operator: Hey guys, congrats on the quarter in the year. First, could you talk about the opportunity to begin capturing some incremental hereditary cancer volumes this year? Given the disruptions with a key competitor, I think, at least in the near term, they'll continue to operate. So I guess the question is, what do you think has to play out, or what do you think the catalyst will be, for clinicians to begin shifting volumes away from them? Is it turnaround times that get impacted, or how are you thinking about that?

Nathan: Hey, guys congrats on the quarter and the year first could you talk about.

Nathan: The opportunity to begin capturing some incremental hereditary cancer volumes. This year, given the disruptions with a key competitor I think at least in the near term they will continue to operate so.

Nathan: The question is what do you think has to play out or what do you think the catalyst will be.

Nathan: For clinicians to begin shifting volumes away from them turnaround times get impacted or how are you thinking about that.

Paul Diaz: Well, look, I think over the last year, we've been talking about increased wallet share gains. And in part, as I mentioned earlier, you know, we have lost fellowship with genetic counselors and others. And so we've continued to see wallet share gains and, more recently, an acceleration in new customers, Mason. So we certainly believe that those trends will accelerate in 24. Even as we're signing some of these customers, you know, it'll take a quarter or so to onboard them, and even a couple of quarters to transition to the EMRs that they're hopefully we can transition to those will not happen overnight. But we do see both prenatal and hereditary cancer volume opportunities because of the dislocation in the marketplace among a number of different providers, and one, obviously, a big one that, again Yeah, it's a sad thing.

Speaker Change: Well look I think over the last year, we've been talking about increased wallet share gains.

Speaker Change: And in part as I mentioned earlier, we had lost fellowship with genetic counselors and others.

Speaker Change: So we've continued to see wallet share gains.

Speaker Change: And more recently, an acceleration in new customers Mason.

Speaker Change: So we we certainly believe that those trends will accelerate in 'twenty four.

Speaker Change: Even as we are signing some of these customers.

Speaker Change: It will take a quarter or so to onboard them and even if a couple of quarters to transition to the EMR that theyre hopeful we can transition to those will not happen overnight.

Speaker Change: But we do see both prenatal and hereditary cancer volume opportunities.

Speaker Change: Because of the dislocation in the marketplace among a number of different providers and one obviously.

Speaker Change: And a big one that again, where we are.

Paul Diaz: Got it. And then maybe a follow up here. I know it was still relatively recent, but just given what you're seeing from hereditary cancer and the opportunity there, has it changed your view at all around the mid-single-digit growth in hereditary cancer implied in your 2026 targets? You know, we are pretty excited about our core, my risk with risk with risk or product, it's clinically differentiated. We're, you know, we, we see guidelines expansions for the use cases for hereditary cancer.

Speaker Change: Yes.

Speaker Change: So.

Speaker Change: Got it and then.

Speaker Change: Maybe a follow up here I know, it's still relatively recent but.

Speaker Change: Just given what youre seeing.

Speaker Change: From hereditary cancer and the opportunity there is does it change your view at all around the mid single digit growth in hereditary implied in your 2026 targets.

Speaker Change: We are.

We're pretty excited about our core my risk with risk with risk or product that's clinically differentiated.

Speaker Change: We we see guidelines expansion for the use cases for hereditary cancer. So we do see probably upside in and the size of the market.

Paul Diaz: So we do see upside in the size of the market. And we certainly see upside in terms of our ability to win market share gains. And, as Sam and Mark both talked about, precise oncology solutions for affected patients, including MyChoiceHRD, and on the unaffected side, where it's only 15% penetrated, and you've seen, again, 17% growth in women's health this quarter, probably, I think, 20% last quarter.

Speaker Change: And we certainly see upside in terms of our ability to win market share gains.

Speaker Change: And as salmon and Mark both talked about that precise oncology solutions for affected patients.

Speaker Change: Including my choice HRD and on the unaffected side, where it's only 15% penetrated and you've seen again, 17% growth in women's health this quarter.

Paul Diaz: So, again, quarter to quarter, I'll just remind everybody that volumes can be choppy, but we have a high degree of confidence in our 2024 annual guidance that we gave you this afternoon. Okay. Thanks, guys.

Speaker Change: Paul I think 20 last quarter, so again quarter to quarter I would just remind everybody the <unk>.

Speaker Change: Volumes can be choppy.

But we have a high degree of confidence in our 2020 for annual guidance.

Speaker Change: That we've given you this afternoon.

Operator: Our next question comes from Kyle Boucher with TD Cowan. Your line is open. Hey, good afternoon.

Paul: Understood. Thanks, guys.

Speaker Change: Thank you.

Thank you. Our next question comes from Karl Buscher with TD Cowen Your line is open.

Paul Diaz: This is Kyle on behalf of Dan. I want to start, you know, maybe if you could just walk us through a little bit more detail on the announcement you made this morning at the National Cancer Center Hospital East in Japan. I guess, you know, what are the key milestones we should be looking for is this sort of progressive, Yeah, it's like 2000 patients across a broad array of indications. You know, the industry leader right now did a lot of their seminal work with this institution, so we're quite proud that they've chosen our, you know, highly accurate MRD assay to follow. But it's really too early to talk about readouts yet. But they are an incredibly efficient organization.

Karl Buscher: Can you give us and this is Kyle on for Dan I wanted to start maybe if you can just walk us through a little bit more detail on the announcement you made this morning.

Karl Buscher: With the National Cancer Center Hospital, Eastern Japan, I guess, what are the key milestones we should be looking for is this sort of progresses.

Speaker Change: Yes, it's like 2000 patients across a broad array of indications.

Speaker Change: The industry leader right now did a lot of their seminal work with this institution. So we're quite proud that they've chosen are highly accurate mardi assay to follow.

Speaker Change: But it's really too early to talk about readouts, but they are incredibly efficient organization.

Paul Diaz: And we've had great success in Japan and with MyChoice and other products. So we're quite excited about the study. And the fact that it does cover a broad array of cancers really will help us advance our MRD strategy again to be among the leaders in MRD. It will also help, you know, I think, as we work with optogenomics and others on clinical utility. You know, I am as enthusiastic about MRD as anyone, but it is early days here for adoption and use in clinics.

Speaker Change: And we've had great success in Japan, and with my choice and other products. So we're quite excited about the study.

Speaker Change: And the fact that it does cover a broad array of cancers really.

Willie will help us advance our <unk> strategy again to be among the leaders in Mardi.

Speaker Change: It will also help I think as we work with often genomics and others on clinical utility.

Speaker Change: I'm as enthusiastic about MLD as anyone but it is early days here for adoption and use in clinic a lot of the docs that we talked to you at San Antonio breast in other places. They are really excited about this they're not quite know what to do with it.

Paul Diaz: A lot of the docs that we talked to at San Antonio Breast and other places are really excited about this, but they don't quite know what to do with it. And, you know, I think that's on us to sort of figure that out. And the payers are certainly looking for us to figure out how and when to pay for MRD and how often, et cetera. Got it, got it.

Speaker Change: And I think that's on us to sort of figure that out and the payers are certainly looking for us to figure out.

Speaker Change: How and when to pay for Marty, how often et cetera.

Speaker Change: Okay.

Paul Diaz: Thank you. So, moving back to the disruption in the hereditary cancer testing market, I guess, conceptually, how should we think about, you know, maybe ASPs on hereditary cancer going forward? You know, if share gains come from, I think, you know, a bit of this market is maybe in a lower-priced space, you know, how should we think about that? But we're not taking on lower-priced profit-losing businesses. That has not been the strategy here, which is why we kind of stand alone as the only profitable company in our space with the gross margins that we have, you know, again, right around 69 or 70 percent, depending on the quarter.

Speaker Change: Got it got it thank you so much.

Speaker Change: Moving back to the disruption in the hereditary cancer testing market I guess conceptually how should we think about maybe asps on hereditary cancer going forward.

Speaker Change: Share gains come from.

Speaker Change: This market is maybe at a lower price.

Speaker Change: Space, how should we think about that.

Speaker Change: Well, we're not taking on lower price profit, losing business that's there.

Speaker Change: That has not been the strategy here, which is why we kind of stand alone as the only profitable company in our space.

Speaker Change: With the gross margins that we have.

Speaker Change: Again, right around 69, 70% depending on the quarter.

Paul Diaz: And as I stated earlier, we do see improvements in ASP. However, we had some disruptions for hereditary cancer ASP this year because of some payer issues. So we're not gonna be taking on business to go downstream in terms of pricing, which is why we don't buy customer lists and pursue the opportunity that way. Instead, people are moving to our products on our contracts. And as you know, we signed a four-year contract with United.

Speaker Change: <unk>.

Speaker Change: And as I stated earlier, we do see improvements in ASP, we had some disruptions for hereditary cancer Asps this year because of some some payer issues.

Speaker Change: <unk>.

Speaker Change: So we're.

We're not going to be taking on business to go downstream in terms of pricing.

Speaker Change: Which is why we don't buy customer lists.

Speaker Change: Pursue the opportunity that way so people are moving to our products on our contracts.

Speaker Change: And as you know, we signed a four year contract with United.

Paul Diaz: We've got a lot more visibility on ASP than we had in a long time, despite some of the things that we went through in 2023 or because of the things we went through in 2023. So again, we're very excited about the opportunities for hereditary cancer and as a sustainable growth part of the business.

Speaker Change: We've got a lot more visibility on ASP.

Speaker Change: Then we had in a long time.

Speaker Change: Despite some of the.

Speaker Change: The things that we went through in 2023 or because of the things we went through in 2023.

Speaker Change: No.

Again, we are very excited about the opportunities for hereditary cancer and that's a sustainable growth part of the business.

Speaker Change: Got it thank you.

Operator: Thank you. Our next question comes from Brandon Kramer with Guggenheim Securities. Your line is open. Hey guys, can you hear me okay?

Speaker Change: Thank you. Our next question comes from Brandon Kramer with Guggenheim Securities. Your line is open.

Operator: Yep. Awesome. Thanks. This is Brandon Knott for Subo Nambi.

Brandon Kramer: Hey, guys can you hear me okay.

Brandon Kramer: Yes.

Brandon Kramer: Thanks. This is Brendan on for Steve I, just had a quick follow up on the unaffected market.

Sam Raha: I just had a quick follow-up on the unaffected market. That 15% market share, do you have any levers that you're looking to push over the next one to two years that can help you grow that penetration? Yeah, no, the market is only 15% penetrated. That's what I meant. That's not our content, but that's what I'm saying. There's a lot of white space there. But Mark, why don't you take this?

Brandon Kramer: 15%.

Brandon Kramer: Market share do you have any levers that you are looking to push the next one to two years that can help you grow that penetration.

Brandon Kramer: Yes, the market is only 15% penetrated.

Speaker Change: That's not our guidance, but that's what I'm, saying there is a lot of white space, there, but mark why don't you take this yes, I think I think some of the levers and we've talked about them I think during our Investor day and previous I think one of the challenges with the unaffected market is really the customer journey that that patient is odd and quite honestly the awareness level I think we've called.

Mark Verratti: Yeah, I think some of the levers, and we've talked about them, I think, during our investor day and previous, I think one of the challenges with the unaffected market is really the customer journey that that patient is on. And quite honestly, the awareness level, I think we've quoted before. And if you look at the market, there are over 13 million women who are seeing OBGYNs who are getting mammograms but are not aware that they qualify for a hereditary test for cancer because they're just not being asked the questions around their family risk, and so on.

Speaker Change: Before and if you look at the market Theres over 13 million women.

Mark: We are seeing Obgyns, who are getting mammograms, but are not aware that they qualify for a hereditary test cancer because they are just not being asked the questions around there are family.

Mark Verratti: And so I think that the challenge that a lot of healthcare systems have is how, at time of intake, when they're collecting all the information, how do they accurately, in a very swift digital way that has a great ease of use and a great customer experience, ask those questions, raise those flags so that those patients actually know that they do qualify. So we have set up a digital solution that we're excited to share with different health systems. We're in conversations with many health systems now, which I think is probably one of the biggest levers, which is, how do we increase awareness? How do we incorporate it into the current customer journey where patients are visiting imaging centers, and they're getting mammograms? So a lot. You'll hear more from us on that as you're progressing. Great, thanks.

Mark: <unk> family risk and so on and so I think that the challenge that a lot of health care systems have is how.

At time of intake when they're collecting all the information how do they accurately in a very swift digital way that it has a great ease of use and a great customer experience ask those questions raised those flags so that those patients actually know the day that they do qualify so we've stood up a digital solution that we're.

Mark: <unk> share with a different health systems, we're in conversations with many health systems, now, which I think is probably one of the one of the biggest levers which is how do we increase awareness level, how do we incorporate it into the into the current customer journey, where patients are visiting imaging centers and they're getting a mammogram. So you'll hear more from us on that.

Mark: As the year progresses.

Sam Raha: And then just one quick follow up on the margin outlook. You said that in the first quarter, we expect a bit of a step down and then a ramp up in the second half. Is there anything strategically you would point out in the second half, like cost of goods sold per test or lab automation that you want us to focus on moving into the second half to help that margin boost? I mean, you know, we're in the middle of our lab moves, so the fact that we are maintaining the volume and gross margins that we have. While we're flying the airplane and changing the engines on the airplane in the air, it is a big testament to our team and that we continue to get through FDA approvals and CLIA certifications.

Speaker Change: Great. Thanks, and then just one quick follow up on the March outlook.

Speaker Change: You said that the first quarter expect a step down and then a ramp up in the second half.

Speaker Change: Is there anything strategically you would point out in the second half like cost of goods sold per test or lab automation that you'd want us to focus on moving into the second half to help that margin boost.

Speaker Change: I mean, we're in the middle of our lab moves. So the fact that we are maintaining the volume and gross margins that we have.

Speaker Change: While we're flying the airplane and changing the engines on the airplane in the air or a big Testament to our team and that we continue to get through FDA approval and CLIA certification Theres a lot of moving parts here that Sam and the team.

Sam Raha: There's a lot of moving parts here that Sam and the team are working through. You know, I think as we go into 25, as we finish these moves into the new facilities, and we continue to automate our Archer system, and, you know, essentially, we've moved the robots or built robots and moved them from South San Francisco into Campus West. For those of you that toured a few weeks ago, you got to see that.

Speaker Change: Our working through so.

Speaker Change: I think as we as we go into 'twenty five as we finished these moves into the new facilities.

Speaker Change: As we continue to automate and our Archer system.

Speaker Change: Essentially we've moved the robots are built robots and move them in South San Francisco into campus West for those of you that toward a few weeks ago got to see that so as we're standing that up and as we continue to move to new sequencing technology like X plus.

Paul Diaz: So as we're setting that up, and as we continue to move to new sequencing technology like X plus, you know, we see a lot of opportunity with that to improve margins over the next couple years. But trust me, Sam has a supply chain $200 million target that he is responsible for going after. So we do see near-term opportunities in supply chain that he and the team are going after today, even while the automation and the new lab of the future stuff take more time. All right, thanks again.

Speaker Change: We see a lot of opportunity with that to improve margins over the next couple of years, but believe me Sam has a supply chain $200 million target that he is responsible for calling after so we do see near term opportunities in supply chain that he and the team.

Speaker Change: Some are going after today, even while the automation and the new lab of the future stuff takes more time.

Operator: Sure. Thank you. Thank you. Our next question comes from Puneet Souda with SVB Security. Your line is open. I'm sorry, with Lyric Partners.

Speaker Change: Alright, Thanks again.

Speaker Change: Sure. Thank you.

Speaker Change: Thank you. Our next question comes from Puneet <unk> with SBB Securities. Your line is open I am sorry, with Leerink partners.

Operator: Hey, Paul, thanks for taking the question. So first of all, just a clarification. Was there any contribution from the biomarker bills in the quarter?

puneet: Hey, Paul Thanks.

puneet: Thanks for taking the questions.

puneet: First one just clarification was there a contribution from the biomarker bills.

Paul Diaz: And wondering just sort of what line items actually helped in the segment, in the assays. We saw a little bit of lift in a couple of states for gene sites. But it's early days. Remember, you know, many of these state biomarker laws are just going into effect in January; a bunch don't go into effect until July. And, and believe me, you know, it's, it's, the payers are like, what biomarker law, and then you have to go to the attorney general's office in the state to weigh into the GC of the payers, and then the payers say, well, we don't think it's covered.

puneet: In the quarter and I'm wondering just sort of what.

Paul: Line items actually it helped.

puneet: I mean in the segments in the assets.

puneet: We saw a little bit of lift in a couple of states strategic site, but its early days and remember.

puneet: Many of these say biomarker laws are just going into effect in January a bunch don't go into effect until July.

Speaker Change: And believe me.

Speaker Change: The payers are like what biomarker law and then you have to go to the Attorney General's office and the state to weigh into the GC of the payers and then the payers that while we don't think it's covered so but the fact that we have for oncology and <unk>.

Paul Diaz: So, but the fact that we have oncology and per gene site, you know, in 11 of these 15 states, and they're big states, you know, Texas, New York, and others, and California just passed the ability to put more pressure on the state health plans to cover our genomic products is an indication of a broader opportunity for adoption. Again, it's early days for genomic testing in this industry, or we're still toddlers here as compared to the rest of the healthcare system. And so I just think it creates a lot of opportunity to increase awareness, and penetration, and that's the tide that should lift all the boats in our sector quite a bit. And maybe if I could ask about MRD, could you just elaborate a bit on the indication path forward? I mean, there's obviously a leader in the space that has, you know, started out with CRC, then BREST, then IOM monitoring, other indications, and they, you know, more indications are coming on board. So just wondering sort of what your strategy is? Is there an indication that you're pursuing that's potentially maybe not mined just yet?

Speaker Change: Site in.

Speaker Change: In 11 of the 15 states and they're Big States, Texas, New York and others in California, just passed the ability to put more pressure on these state blues plans to cover our genomic products, it's an indication of a broader opportunity for adoption again, it's early days for Gino.

Speaker Change: Quick testing this industry here.

Speaker Change: We're still toddlers here as compared to the rest of the healthcare system and so I just think it creates.

Speaker Change: A lot of opportunity to increase awareness penetration and that's a tide that should lift all boats in our in our sector quite frankly.

Speaker Change: Got it.

Speaker Change: And maybe if I could ask you about Mardi.

Mardi: Could you just elaborate a bit on the indication.

Mardi: Path forward I mean, there is obviously a leader in the space that is.

Mardi: Starting with CRC breast than iron monitoring other indications.

Mardi: And the.

Mardi: More indications are coming on board. So just wondering sort of what's your strategy is there an indication that youre pursuing that's potentially maybe.

Mardi: Not minded just yet.

Paul Diaz: Obviously, a very nascent market still. Thank you. Yeah, no, I look. Our hats off to them.

Mardi: Obviously very nascent market still.

Speaker Change: Thank you.

Speaker Change: Look our hats off to them they have done a great job.

Paul Diaz: They've done a great job, and they've paved the way. So, you know, we are appreciative of the work they've done. But you know, we have a deeper test.

Speaker Change: And they've paved the way so we appreciate all the work they've done.

Speaker Change: Yes.

Paul Diaz: We think that that's going to matter, you know, particularly when you're talking about withholding treatment for patients. And so, but I think there's room for more than one, two, three, four, five in a market as big as this opportunity could be. I think you'll see us stay pretty disciplined to the cancers that, as Mark described, within the precise oncology solutions that we're known for, breast, ovarian, endometrial, prostate, you know. But the studies will enable us to look at the more complicated tumors and the ability to think about the different, you know, indications that we can express.

Speaker Change: We have a deeper test, we think that that's going to matter.

Speaker Change: Particularly when you are talking about withholding treatment for patients.

Speaker Change: And so but I think there is room for more than 12345 in a market as big as this opportunity could be I think youll see us stay pretty disciplined to the cancers that as Mark described within precise oncology solutions that we're known for breast ovarian endometrial prop.

Speaker Change: State.

Speaker Change: And but the the studies are will enable us to look at the more complicated.

Speaker Change: Tumors and the ability to think about the different.

Paul Diaz: And we're doing the same thing with our expansion of MyChoice HRD. Remember, that's ovarian only, and we're looking to expand that to breast and prostate as well. So, yeah, we're really excited about MRD for us as a company. I'm not sure if anybody is giving us credit for it on some of the parts basis or anything else, but we're quite excited to be a fast follower, and we think we'll have a highly sensitive test with a building body of clinical evidence between Memorial Sloan Kettering, MD Anderson, you know, in the study we announced this morning. I got it.

Speaker Change: Indications that we can express and we're doing the same thing with our expansion of my choice HRD remember thats ovarian only but we're looking to expand that to breast and prostate as well. So yes, we're really excited about <unk> for us as a company I'm not sure if anybody is giving us credit for it on some of the parts.

Speaker Change: Basis or anything else.

Speaker Change: But we're quite excited to be a fast follower and we think we will have a highly sensitive test with a building body of clinical evidence between memorial Sloan Kettering MD Anderson.

Speaker Change: The study we announced this morning.

Paul Diaz: Okay. Thank you. Sure. Thank you. Our next question comes from Derik DeBruin with Bank of America. Your line is open. Hey, good afternoon. This is John Kim on behalf of Derik.

Speaker Change: Got it okay. Thank you.

Speaker Change: Sure.

Speaker Change: Thank you. Our next question comes from Derik de Bruin with Bank of America. Your line is open.

Speaker Change: Hey, Good afternoon. This is John Kim on for Derek.

Operator: A quick one. If there are, how many opportunities are there left from improving private authorizations or cash collections or working on RCM or reducing no-pays? And looking at that medium-term plan, you have the MRD launching this year in the second half. What sort of contribution can we expect? Thank you.

John Kim: A quick one.

John Kim: Are there if there are how much opportunities are there less from.

John Kim: Improving.

John Kim: Authorizations or cash collections or working on RCM or reducing no pays and.

John Kim: Looking at that medium term plan you have mardi launching this year.

John Kim: In the second half what sort of contribution can we expect.

Paul Diaz: Yeah, so MRD for our pharma partners, great news, they pay, you know, and so we'll be running MRD assays for our partners, pharma partners in the back half of this year. That's our expectation, with hopefully a commercial launch with reimbursement and 25 sometime. You know, that's the goal. Again, plenty of runway, I think, for MRD, as we just described. Look, the broader rev cycle prior to the ASP issue is hundreds of millions of dollars. We are not getting paid 46% of the time for our job.

John Kim: You.

Speaker Change: Yeah, So Marty for our pharma partners Great news they pay.

Marty: And so it will be we'll be doing <unk> running <unk> assay through our partner <unk> pharma partners in the back half of this year is that our expectation with hopefully a commercial launch with reimbursement in 25 some time.

Marty: Yes, that's the goal.

Marty: Plenty of runway I think for MRV as we as we just described.

Speaker Change: The broader.

Speaker Change: Rev cycle prior off ASP issue is hundreds of millions of dollars.

Speaker Change: We are not getting paid 46% of the time for our test.

Paul Diaz: So, we are very focused across the portfolio, whether it's gene sites, where we have the biggest opportunity, but even in some of our more mature products, like MyRisk, our hereditary cancer test. So across our products, and it's one of the things that we're excited Scott can join the team, given his experiences. We do think there's a lot of upside over the next few years and in engaging with Washington and policymakers about prior authorization and know there was an OIG report that talked about the Medicare Advantage plan, not only for my lucky diagnostic providers but for others putting up undue barriers. But it's kind of trench warfare with the payers.

Speaker Change: So we.

Speaker Change: We are very focused across the portfolio, whether it's in gene site.

Speaker Change: <unk>, where we have the biggest opportunity, but even in our some of our more mature products like my rest of our hereditary cancer tests so across.

Speaker Change: Our products and it's one of the things that we're excited to Scott can join the team given his experiences.

Speaker Change: We do think there's a lot of upside over the next few years.

Speaker Change: And engaging with Washington policymakers about prior off and there was an <unk> report that talked about the Medicare advantage plan not only for molecular diagnostic providers for others, putting up undo barriers.

Speaker Change: But it's kind of trench warfare with the payers payer by payer state by state.

Paul Diaz: It's payer by payer, state by state, continuing to build clinical evidence, and working through all the gymnastics, but our investment in EMRs, which allow us to pull the prior authorization out of the record, to pull the clinical necessity documentation out of the record. All of that enables us to do a better job and be a better partner for the payers. So it is something that we're very focused on and we think provides a lot of opportunity for the company over the next few years. I appreciate it.

Speaker Change: <unk> to build clinical evidence.

Speaker Change: And working through all the gymnastics, but our investments.

Speaker Change: In EMR, which allow us to pull the prior off out of the record.

Speaker Change: Paul.

Speaker Change: Clinical.

Speaker Change: Necessity documentation out of the record all of that enables us to do a better job and be a better partner for the payers. So it is something that we're very focused on and we think provides a lot of opportunity for the company over the next few years.

Paul Diaz: And talking about investments, you know, you're tracking the guide in terms of the cash flow, and you're reducing the capex this year as you said you would, but are there any other organic... We've done everything we said we would, by the way, just for the record. Yeah, any assets that you see that would complement the existing portfolio? Anything that you're eyeing in, say, the MRD landscape?

Speaker Change: I appreciate it and talking about investments.

Speaker Change: Your checking the guide in terms of the cash flow and reducing the capex this year.

Speaker Change: You said you would but.

Speaker Change: Are there any others.

Speaker Change: <unk> done everything we said we would by the way just so just for the record.

Speaker Change: Yes go ahead.

Speaker Change: Any any assets that you see with complement the existing portfolio anything that.

Speaker Change: Yes.

Speaker Change: Say like Mardi landscape I know you have.

Paul Diaz: I know you have, you know, you're launching with the pharma partners in 3Q and going for that commercial launch next year. But yeah, just wanted to ask about that. We faced that question when I first came to the company, and we were told we needed to spend $500 million on MRD, and our team has built an MRD assay, all in probably for 75 million bucks by the time we launch commercially.

Speaker Change: Youre launching with our pharma partners in <unk> and going for that commercial launch next year, but.

Speaker Change: Yeah, just wanted to ask on that yet.

Speaker Change: We think that question when I first came to the company and we were told we needed to spend $500 million Mardi and our team has built an mrna assay.

Speaker Change: All in probably for $75 million, but by the time, we launch commercially so our return on invested capital for a for an assay that we know we can stand up in our labs that we know we can get through FDA approval.

Paul Diaz: So our return on invested capital for an assay that we know we can stand up in our labs that we know we can get through FDA approval. You know, we think that was the right decision for shareholders. You know, there's a lot of great science out there.

Speaker Change: We think that was the right decision for shareholders.

Speaker Change: Yes.

Speaker Change: There's a lot of great science out there and we're going to keep our eyes open.

Paul Diaz: And we're going to keep our eyes open, but be really judicious on their balance sheet and do tuck-ins like Intermountain that we did. We're something that we know we can put into the sales channel. It's additive.

Speaker Change: Really judicious on their balance sheet and do tuck ins like inner mountain that we did.

Speaker Change: Were something that we know we can we can put into the sales channel it's additive.

Paul Diaz: But we'd always rather build than buy, quite frankly, because we believe the probability of success is much higher there. But, you know, there are a lot of assets coming to market, and we'll be, and we are looking at some really interesting things right now. What we're not going to do is take on somebody else's big burn rate. What we're not going to do is take on people's commercial issues and coding, and those kind of things.

Speaker Change: But we would always rather bills, then by quite frankly, because we.

Speaker Change: Probability of success is much higher there, but yes, there's going to be a lot of assets coming to market and will be and we are looking at some really interesting things right now what we're not going to do is take on somebody else's big burn rate, but we're not going to do is take on people's commercial issues and coding and those kind of things so.

Operator: So we're going to be pretty careful about M&A. Thank you, appreciate that. Thank you. Our last question comes from Brandon Collier with Jefferies. Your line is open. Hi guys, this is Kayla. I'm on behalf of Brandon.

Speaker Change: We're going to be pretty careful about M&A.

Speaker Change: Thank you I appreciate that.

Brandon Collagen: Thank you our last question comes from Brandon collagen.

Brandon Collagen: With Jefferies. Your line is open.

Speaker Change: Hey, guys. This is kayla in for Brandon Thanks for taking my question.

Sam Raha: Um, I think I'll start off with just some of the modern. I love you guys. I know you talked about maybe around 12 billion a year of savings starting in 25. Is there any chance that we'll see that start to come in a little bit in 24? Or is that still more of a 25 and beyond?

Kayla: Start off with just some of our modern Robyn. Thank you guys are making and then you talked about maybe around 12 barring any Europe starting in 'twenty five is there any chance that we'll see that.

Kayla: Start to come in a little bit in 'twenty four is that Delmarva, Tony Hawk going beyond events.

Sam Raha: I mean, it's it's all in the mix, right? I mean, we have product mix changes that affect gross margins. The team has dropped, you know, our cost per test by 8% last year.

Speaker Change: I mean, it's all in the mix right I mean, so we have product mix changes that affect gross margins.

Speaker Change: The team has dropped off.

Speaker Change: Cost per test like 8% last year. So there's a lot of moving parts in there, but yeah I think.

Paul Diaz: I mean, there's a lot of moving parts in there. But yeah, I think, you know, every day, Sam and the team are working to stand up our new lab, get through CLIA certifications, and get through analytical validations. And there's a lot of process improvement the team is looking at across each of our products as we move them into the new labs. So we actually see more opportunity than at 12 that we originally identified. It's just gonna take time to get there. So you can assume what we have in the guide, though, is that we've assumed that people are gonna continue to work hard to get some of those savings as quickly as possible. Sam, I don't know if you'd add anything.

Speaker Change: Every day is to him and the team are working.

Speaker Change: To stand up our new lab get through CLIA certification get through analytical validation.

Speaker Change: And there's a lot of process improvement the team is looking at across.

Speaker Change: Each of our product as we move them into the new labs.

Speaker Change: So we actually see more opportunity that at 12 that we had originally identified it's just going to take time to get there.

Speaker Change: So you can assume what we have in the guide though is that we've assumed that people are going to continue to work hard to get some of those savings as quickly as possible Sam I don't know if you'd add anything Paul.

Paul Diaz: Now, Paul, I think that's comprehensive. Thanks. And then just quickly on Percise Liquid, before the launch in 3Q, do you have any steps you're taking on the commercial side ahead of that? Yeah, I don't know if there's anything unique about launching a precise liquid, right?

Sam: Paul I think that's comprehensive.

Speaker Change: Okay. Thanks, and then just quickly on per se liquid.

Sam: For the launch.

Speaker Change: Is there.

Paul: Or any stock that youre, taking on the commercial side ahead of that.

Paul: Yes, I don't know if there is anything unique about launching launching precise liquid right.

Mark Verratti: And we, I think, I think the good news is that we are currently in almost all of the oncology offices today that are currently using tumors both on the solid as well as on the liquid side. I think something that we spoke about on this call is consistently, when we talk to our customers, both large and small, they look for clinical utility, which Myriad has proven to do time and time again, but they do look for a very comprehensive panel. And so now that we have comprehensive offerings, both on germline, as well as solid tumor, and as well as liquid, I think that puts us in a very unique position with customers where before Myriad wasn't even considered. And then the other two points are obviously ease of use, which I think we've talked a lot about. And then the third piece is affordability.

Paul: I think I think the good news is as we are currently in almost all of your oncology offices today that are currently using tumor both on the solid as well on the liquid side.

Paul: I think something that we spoke to on this call is consistently when we talk to our customers both large and small so they look for clinical utility, which myriad has proven time and time again, but they do look for a very comprehensive panel and so now that we have a comprehensive offerings. Both on germ line as well as solid tumor as well as liquid I think that puts us in a very.

Paul: <unk> unique position with customers, where before married wasn't even considered and then the other two points is obviously ease of use which I think we've talked a lot about and then the third piece is affordability and so we have always met the customers in many of those but in the one area where myriad did not have we didn't have a comprehensive offering and now we will.

Mark Verratti: And so, you know, we, we've always met customers in many of those areas, but in the one area where Myriad did not have, we didn't have a comprehensive offering, and now we will. So we'll make sure to share some of those details. But I think Myriad has succeeded in launching products into the market.

Paul: We will make sure to share some of those details, but I think Marriott has got a success of launching products into the market and I think the benefit is we're already with most of those customers today.

Operator: And I think the benefit is we're already with most of those customers today. Great. Well, thank you all very much. Yeah, thank you very much. This concludes our earnings call. A replay will be available via webcast on our website for one week. Thanks again for joining us and have a good day. Thank you for your participation. This does conclude the program. You may now disconnect. www.mercierfilms.ca, Thanks for watching!

Speaker Change: Great. Thanks.

Speaker Change: Well, thank you all very much.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Thank you very much. This concludes our earnings call a replay will be available via webcast on our website for one week. Thanks again for joining us and have a good afternoon.

Speaker Change: Thank you for your participation. This does conclude the program and you may now disconnect.

Speaker Change: Okay.

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