Q1 2024 Biodesix Inc Earnings Call
Operator: Welcome to the Biodesix Q1 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I will now like to hand the conference over to your first speaker today. Chris Brinzey, Investor Relations. Please go ahead.
Welcome to the biodiesel Q1 2024 earnings conference call at this time, all participants are in listen only mode.
Chris Brinzey: After the speaker's presentation, there will be a question and answer session.
Operator: Ask a question during this session you will need to press star one on your telephone you.
Operator: It would be in here in the audit made it message advising your hand is raised.
Operator: To withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now.
Chris Brinzey: Now I'd like to hand, the conference over to your first speaker today.
Chris Brinzey: Chris Brinci Investor Relations. Please.
Chris Brinzey: Please go ahead.
Chris Brinzey: Thank you, operator, and good afternoon, everyone. Thank you for joining us today for a discussion of Biodesix's first quarter 2024 Business Highlights and Financial Results. Leading the call today will be Scott Hutton, Chief Executive Officer. He will be joined by Robin Harper-Cowie, Chief Financial Officer.
Chris Brinzey: Thank you operator, and good afternoon, everyone. Thank you for joining us today for a discussion of bio <unk> first quarter 2020 for business highlights and financial results, leading the call today will be Scott Hutton Chief Executive Officer, He will be joined by Robin Harper Kelly.
Chris Brinzey: <unk> financial officer after their prepared remarks, we will open the call for Q&A.
Chris Brinzey: After the prepared remarks, we will open the call for Q&A. An audio recording and webcast replay for today's conference call will also be available online, as detailed in the press release announcement for this call. Today, we issued a press release announcing our business highlights and financial results for the first quarter of 2024. A copy of the release can be found on the Investor Relations page of the company website.
Chris Brinzey: The audio recording and webcast replay for today's conference call will also be available online as detailed in the press release announcements for this call.
Chris Brinzey: Today, we issued a press release announcing our business highlights and financial results for the first quarter 2020 for a copy of the release can be found on the Investor Relations page of the company website.
Chris Brinzey: Actual events or results may differ materially from those projected as a result of changing market trends, reduced demand, and the competitive nature of the diagnostics industry. Such forward-looking statements and their implications involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the company's annual report on Form 10-K for the year ending December 31st, 2023, filed with the Securities and Exchange Commission, as well as subsequent quarterly reports on Form 10-Q filed during 2024, as applicable.
Chris Brinzey: Actual events or results may differ materially from those projected as a result of changing market trends reduced demand and the competitive nature of the diagnostics industry.
Chris Brinzey: Such forward looking statements and their implications involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projected.
Chris Brinzey: Forward looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the Companys annual report on Form 10-K for the year ending December 31, 2023 filed with the Securities and Exchange Commission as well as subsequent quarterly reports on Form 10-Q.
Chris Brinzey: During 2024 as applicable additional.
Chris Brinzey: Additional information concerning factors that could cause results to differ materially from our forward looking statements are described in greater detail in the Companys press release issued today and the company and in the company's filings with the SEC.
Chris Brinzey: Additional information concerning factors that could cause results to differ materially from our forward-looking statements is described in greater detail in the company's press release issued today and in the company's filings with the SEC. This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specified items. A reconciliation to the most directly comparable gap financial measure is available in the press release we issued today. I would now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott?
Scott Hutton: This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specified items.
Scott Hutton: A reconciliation to the most directly comparable GAAP financial measure is available in the press release, we issued today.
Chris Brinzey: I would now like to turn the call over to Scott Hutton, Chief Executive Officer Scott.
Scott Hutton: Thank you, Chris, and thank you all for joining us today. It's been a great start to the year, and I'm thrilled with our performance in the first quarter. Our organization and all team members remain committed to delivering upon the three goals we outlined last quarter. These include driving increased revenue through the adoption of our lung diagnostic tests and our biopharmaceutical and diagnostic services. Implementing operational efficiencies to improve gross margins and maintaining a cost-disciplined approach on our path to profitability. Achieving these three goals is all about the successful execution of our business plan.
Scott Hutton: Thank you, Chris and thank you all for joining us today.
Scott Hutton: It's been a great start to the year and I'm thrilled with our performance in the first quarter.
Scott Hutton: Organization and all team members remain committed towards delivering upon the three goals, we outlined last quarter do.
Scott Hutton: These include driving increased revenue through the adoption of our lung diagnostic tests, and our biopharmaceutical and diagnostic services.
Scott Hutton: Implementing operational efficiencies to improve gross margins and maintaining a cost disciplined approach on our path to profitability.
Scott Hutton: Achieving these three goals is all about successful execution of our business plan and I believe our first quarter results highlight the commitment of our team to making this happen and we are on track to meet and exceed our goals for the year.
Scott Hutton: And I believe our first quarter results highlight the commitment of our team to making this happen, and we are on track to meet and exceed our goals for the year. I'm pleased to share that total revenue grew 64%, driven by our 7th consecutive quarter of greater than 50% growth in lung diagnostic test volume and over 100% growth in our biopharmaceutical services revenue. Gross margins were 79%, which continues to rank among the highest in the diagnostic industry.
Scott Hutton: On top of that, we improved our adjusted EBITDA by 48%, making yet more progress on our path to profitability. Our pulmonology-focused sales team is comprised of sales consultants managing territories and associate sales consultants who focus on developing additional business and existing accounts in those territories. After a positive pilot program, we started building out the associate sales consultant team in 2023. In the first quarter, we had an average of approximately 55 fully-trained sales representatives, including both the territory managers and associates, and started the second quarter with approximately.
Scott Hutton: I am pleased to share that total revenue grew 64% driven by our seventh consecutive quarter of greater than 50% growth in lung diagnostic test volumes and over 100% growth in our biopharmaceutical services revenue.
Scott Hutton: Gross margins were 79%, which continues to rank among the highest in the diagnostic industry.
Scott Hutton: On top of that we improved our adjusted EBITDA by 48%, making yet more progress on our path to profitability.
Scott Hutton: Our Pulmonology focused sales team is comprised of sales consultants managing territories and associated sales consultants, who focus on developing additional business in existing accounts in those territories.
Scott Hutton: After a positive pilot program, we started building out the associated sales consultant team in 2023.
Scott Hutton: In the first quarter, we had an average of approximately 55 fully trained sales representatives, including both the territory managers and associates.
Scott Hutton: And started the second quarter with approximately 60.
Scott Hutton: Today, this model has been implemented in more than 50% of our sales territories, and we plan to continue strategically expanding through the remainder of the year by adding about six to eight additional sales representatives and associates per quarter. Overall, this model has proven to be very effective in strengthening account retention and expanding within an account by adding physician users. It also creates a successful, fully vetted, and fully trained bench to backfill territories as needed and rapidly expand into new territories to drive further growth.
Scott Hutton: Today. This model has been implemented in more than 50% of our sales territories and we plan to continue strategically expanding through the remainder of the year by adding about six to eight additional sales representatives and associates per quarter.
Scott Hutton: Overall this model has proven to be very effective in strengthening account retention and expanding within an account by adding physician users.
Scott Hutton: It also creates a successful fully vetted and fully trained bench to backfill territories that needed and rapidly expand into new territories to drive further growth.
Scott Hutton: In our biopharmaceutical services business, we continue to see the momentum that began in the second half of last year. Like our lung diagnostic testing, we're achieving growth through additional projects from existing customers as well as new contracts from new customers from an increasing number of incoming RFPs and operators. In addition to the lung diagnostic and biopharmaceutical service advancements made in the quarter, we were thrilled to announce our new co-development agreement with Memorial Sloan Kettering Cancer Center.
Scott Hutton: And our biopharmaceutical services business, we continue to see the momentum that began in the second half of last year like our lung diagnostic testing, we're achieving growth through additional projects from existing customers as well as new contracts from new customers from an increasing number of incoming rfps and opportunities.
Scott Hutton: In addition to the lung diagnostic and biopharmaceutical service advancements made in the quarter, we were thrilled to announce our new co development agreement with Memorial Sloan Kettering Cancer Center.
Scott Hutton: This expands on our earlier research collaborations and will accelerate the development of new diagnostic tests aimed at improving cancer treatment options and outcomes. Our Chief Development Officer, Dr. Gary Pisano, and Dr. Howard Scheer from MSK shared an update on this new collaboration at the 31st International Precision Medicine Tricon Meeting. The framework presented demonstrates our pipeline strategy that builds on our strengths in product development, quality, reimbursement, and commercialization, and gained strength from selectively partnering with premier clinical institutions, such as MSK, and also with other strategic partners in the technology and regulatory sector. Building on our existing body of clinical data, a new manuscript in which our liquid biopsy DD-PCR testing was an important component was published in collaboration with the Friends of Cancer Research.
Scott Hutton: This expands on our earlier research collaboration and we will accelerate the development of new diagnostic test aimed at improving cancer treatment option and outcomes.
Scott Hutton: Our Chief Development Officer, Dr. Gerry Fasano and Dr. Howard share from SK shared an update on this new collaboration at the 30 <unk> International precision Medicine Tri Con media.
Scott Hutton: The framework presented demonstrates our pipeline strategy that builds on our strength in product development quality reimbursement and commercialization.
Scott Hutton: And gain strength from selectively partnering with premier clinical institutions, such as <unk> and also with other strategic partners and the technology and regulatory space.
Scott Hutton: Building on our existing body of clinical data, a new manuscript in which our liquid biopsy DD PCR testing with an important component was published in collaboration with the friends of cancer Research and we shared a number of presentations at the American Association for cancer Research annual meeting.
Scott Hutton: And we shared a number of presentations at the American Association for Cancer Research annual meeting. The AACR data demonstrated our advancements in liquid biopsy testing, including the real-world value of actionable variant testing in the community, as well as informing clinicians with actionable information to make rapid and optimal treatment decisions. We also continue to enroll in ALTITUDE, our prospective randomized trial evaluating the clinical utility and performance of our notified test that's being conducted at a number of major academic institutes.
Scott Hutton: The ACR data demonstrated our advancements in liquid biopsy testing, including the real world value of actionable variant testing in the community as well as informing clinicians with actionable information to make rapid and optimal treatment decisions.
Scott Hutton: We also continue to enroll in altitude, our prospective randomized trial evaluating the clinical utility and performance of our notify testing that's been conducted at a number of major academic institutions.
Scott Hutton: This study is being overseen by a third-party independent data monitoring committee that will be determining updates on potential interim analysis and will provide more updates in the coming weeks. Finally, moving to operations, our team continues to deliver on test process automation and workflow optimization projects covering commercial diagnostics and biopharmaceutical services that continue to drive improvements in gross margin. We ended the first quarter with 79% gross margins, an increase of 14 points over last year and another two-point enhancement over an already strong fourth quarter.
Scott Hutton: This study is being overseen by a third party independent data monitoring committee that will be determining updates on potential interim analysis, and we'll provide more updates in the coming quarters.
Scott Hutton: Finally, moving to operations our team continues to deliver on test process automation and workflow optimization projects covering commercial diagnostics and biopharmaceutical services. They continue to drive improvements in gross margin.
Scott Hutton: We ended the first quarter was 79% gross margins an increase of 14 points over last year and another two point enhancement over an already strong fourth quarter.
Scott Hutton: We've been exceptionally effective in providing our tests with industry-leading turnaround times and have made great strides in becoming even more efficient in the delivery of those tests. With our commitment to an effective, efficient, and cost-disciplined approach, we've built a commercial and operational platform that will help facilitate long-term, consistent, sustainable growth. And I believe everyone is beginning to appreciate the operating leverage that exists within the business model and our efforts to demonstrate the team's significant progress and outstanding execution on our path to profitability.
Scott Hutton: We've been exceptionally effective in providing our test with industry, leading turnaround times and have made great strides in becoming even more efficient in the delivery of those tests.
Scott Hutton: With our commitment to an effective efficient and cost disciplined approach, we built a commercial and operational platform that will help facilitate long term consistent sustainable growth and I believe everyone is beginning to appreciate the operating leverage that exist within the business model and our efforts to demonstrate the team's significant progress.
Scott Hutton: Outstanding execution on our path to profitability.
Scott Hutton: Before I turn the call over to Robin, I'd like to reiterate our commitment to transform the standard of care in lung cancer and improve patient outcomes with personalized diagnosis. Lung cancer is still the deadliest of all cancers, as it claims more lives annually in the United States than the combined total of the next three deadliest cancers, breast, prostate, and colon cancer. Time is of the essence when it comes to diagnosing and treating these conditions.
Scott Hutton: Before I turn the call over to Robyn I'd like to reiterate our commitment to transform the standard of care in lung cancer and improve patient outcomes with personalized diagnostics.
Scott Hutton: Lung cancer is still the deadliest of all cancers as they claims more lives annually in the United States than the combined total of the next three deadliest cancers breast prostate and colon cancer.
Robin: As of the essence, when it comes to diagnosing and treating these patients.
Scott Hutton: By discovering, developing, and commercializing tests with demonstrated clinical utility and best-in-class turnaround times, we believe that our diagnostic tests play a critical role in these efforts to treat the right patients quickly and effectively. With that, let me turn it over to Robin to review our first quarter 2024 financial performance.
Robin: By discovering developing and commercializing test with demonstrated clinical utility and best in class turnaround times, we believe that our diagnostic tests play a critical role in these efforts to treat the right patients quickly and effectively.
Robin Harper Cowie: Thanks, Scott. First quarter total revenue was $14.8 million, a 64% increase over the prior year. We delivered approximately 11,900 lung diagnostic test results in the first quarter 2024 versus approximately 7,600 test results for the first quarter 2023, a 57% increase. Lung diagnostic revenue in the first quarter was $13.8 million, compared to $8.6 million for the first quarter of 2023, an increase of 60% over the prior year. This was driven by continued strength in testing volume growth despite continued challenges with certain Medicare Advantage plans.
Robin: With that let me turn it over to Robyn to review the first quarter 2024 financial performance Robin.
Speaker Change: Thanks, Scott first quarter total revenue was $14 8 million or 64% increase over the prior year. We delivered approximately 11900 lung diagnostic test results in the first quarter 2024 versus approximately 7600 test results for the first quarter 2023 57.
Robin Harper Cowie: <unk> increase.
Robin Harper Cowie: One diagnostic revenue in the first quarter was $13 8 million compared to $8 6 million for the first quarter of 2023, an increase of 60% over the prior year. This was driven by continued strength in testing volume growth. Despite continued challenges with certain Medicare advantage plans.
Robin Harper Cowie: As we've discussed in prior earnings calls, we continue to experience delay in some Medicare Advantage payments for our Medicare-covered tests from certain payers. While we continue to work with the plans to resolve the administrative hurdles, the backlog of claims continues and is now approximately 3.5 to 4 million. We will continue to provide updates in our calls as we work towards a satisfactory resolution.
Robin Harper Cowie: As we've discussed in prior earnings call, we continue to experienced delay in some Medicare advantage payments for Medicare covered tests from certain payers.
Robin Harper Cowie: While we continue to work with the plans to resolve the administrative hurdle. The backlog of claims continues and is now approximately three 5% to $4 million.
Robin Harper Cowie: We will continue to provide updates in our calls as we work towards a satisfactory resolution and as a reminder, we have excluded both the collections of any of the backlog and the perspective collections from tests from these payers from our guidance in 2024, as we work to resolve the administrative issue.
Robin Harper Cowie: And as a reminder, we have excluded both the collections of any of the backlog and the prospective collections from tests from these payers from our guidance in 2024 as we work to resolve the administrative issue. Biopharmaceutical Services revenue was $1.0 million in the quarter compared to $400,000 in the first quarter of 2023, an increase of 149%. Importantly, we continue to see continued strength in the number of incoming requests in this area of our business, and we ended the quarter with $9.0 million contracted but not yet recognized as revenue.
Robin Harper Cowie: Biopharmaceutical services revenue with $1.0 million in the quarter compared to 400000 in the first quarter of 2023, an increase of 149%.
Robin Harper Cowie: Importantly, we continued to see continued strength in the number of incoming requests in this area of our business and we ended the quarter with 9.0 million contracted but not yet recognized as revenue.
Robin Harper Cowie: Gross margin percentage in the first quarter of 2024 increased to 79%, up 14 percentage points versus 65% in the prior year quarter and 77% in the fourth quarter of 2023. The steady improvement we have seen and the current growth margin trend reflect the growth in our lung diagnostic testing and the successful completion of projects to decrease costs and optimize testing workflows. As we've made such large improvements over the last year, we anticipate that margins will remain fairly steady in the mid to upper 70s going forward.
Robin Harper Cowie: Gross margin percentage in the first quarter 2024 increased to 79% up 14 percentage points versus 65% in the prior year quarter and 77% in the fourth quarter of 2023.
Robin Harper Cowie: The steady improvement we have seen and the current gross margin trend reflects the growth in our lung diagnostic testing and the successful completion of projects to decrease costs and optimize testing workflows.
Robin Harper Cowie: And we've made such large improvements over the last year, we anticipate that the margins will remain fairly steady in the mid to upper 70% going forward.
Robin Harper Cowie: Overall operating expense excluding direct costs and expenses was $22.7 million in the first quarter of 2024 compared to $22.3 million for the same period of 2023, only 2% growth versus 64% growth in revenue, demonstrating the operating leverage that exists within the business model. The increase in operating expense versus the prior year quarter is primarily the result of an increase in non-cash stock-based compensation and depreciation expense related to the leasehold improvements in our new Louisville, Colorado office and laboratory, plus increased sales and marketing costs to support lung diagnostic sales growth to enhance product awareness and drive adoption, partially offset by a decrease in research and development costs.
Robin Harper Cowie: Overall operating expense, excluding direct costs and expenses was $22 7 million in the first quarter 2024, compared to $22 3 million for the same period of 2023.
Robin Harper Cowie: 2% growth versus 64% growth in revenue demonstrating the operating leverage that exist within the business model.
Robin Harper Cowie: The increase in operating expense versus the prior year quarter is primarily the result of an increase in noncash stock based compensation and depreciation expense related to the lease hold improvements and our new Lewisville, Colorado Office and laboratory plus increased sales and marketing costs to support lung diagnostic sales growth to enhance product awareness and drive adoption.
Robin Harper Cowie: Partially offset by a decrease in research and development costs.
Robin Harper Cowie: Specifically, operating expense for the first quarter 2024 includes $4.1 million in non-cash stock compensation expense, non-cash depreciation and amortization, and asset impairment as compared to $3.1 million during the comparable period in 2023 and $2.1 million in the fourth quarter of 2023. Net loss for the first quarter 2024 was $13.6 million compared to $18.7 million net loss for the same period of 2023 and $9.1 million for The decrease in net loss for the quarter was driven primarily by the increase in revenue, improvements in gross margin, and reduction in certain operating expenses, including R&D expenses. The increase in net loss versus the fourth quarter reflects an increase in depreciation expense related to the leasehold improvements in our new Louisville, Colorado office and laboratory and non-cash stock compensation.
Robin Harper Cowie: Specifically operating expense for the first quarter 2024 includes $4 1 million in noncash stock compensation expense noncash depreciation and amortization and asset impairment as compared to $3 1 million during the comparable period in 2023, and $2 1 million in the fourth quarter of 2020.
Robin Harper Cowie: Great.
Robin Harper Cowie: Net loss for the first quarter 2024 was $13 6 million compared to $18 7 million net loss for the same period of 2023 and $9 1 million for the fourth quarter 2023.
Robin Harper Cowie: The decrease in net loss for the quarter was driven primarily by the increase in revenue improvements in gross margin and reduction in certain operating expenses, including R&D expense.
Robin Harper Cowie: The increase in net loss versus the fourth quarter reflects an increase in the depreciation expense related to the leasehold improvements and our new Lewisville, Colorado Office and laboratory and noncash stock compensation.
Robin Harper Cowie: To provide better clarity of progress on our path to profitability, during the third quarter of last year, we started reporting adjusted EBITDA, which excludes certain non-cash items and COVID-19 testing revenue and direct costs and expenses. Adjusted EBITDA for the first quarter of 2024 was a loss of 6.96 million compared to a loss of 13.32 million for the first quarter of 2023, a 48% improvement. The improvement in adjusted EBITDA in the quarter demonstrates our focus on actively managing our operating expenses, our success in improving gross margins, and driving growth in top-line revenue, resulting in a decrease in our cash burn.
Robin Harper Cowie: To provide better clarity of progress on our path to profitability during the third quarter of last year, we started reporting adjusted EBITDA, which excludes certain noncash items and COVID-19 testing revenue and direct costs and expenses adjusted EBITDA for the first quarter 2024, with a loss of $6 $96 million.
Robin Harper Cowie: Compared to a loss of $13 three 2 million for the first quarter, 2023% to 48% improvement.
Robin Harper Cowie: The improvement in adjusted EBITDA in the quarter demonstrates our focus on actively managing our operating expenses our success in improving gross margins and driving growth in top line revenue, resulting in a decrease to our cash burn.
Robin Harper Cowie: While we ended the quarter with $11.5 million in unrestricted cash and cash equivalents as compared to $26.3 million at the end of the fourth quarter, I did want to highlight important subsequent events that have strengthened our balance sheet, putting us in a well-capitalized position for continued growth going forward. In April, we announced the closing of $55 million in gross proceeds raised in our successful, oversubscribed, and upsized underwritten offering and concurrent private placement.
Robin Harper Cowie: While we ended the quarter with $11 5 million in unrestricted cash and cash equivalents as compared to $26 3 million at the end of the fourth quarter.
Robin Harper Cowie: I'd want to highlight important subsequent events that have strengthened our balance sheet, putting us in a well capitalized position for continued growth going forward.
Robin Harper Cowie: This fundraise strengthens our balance sheet, expands our investor base, and provides us with the runway to accomplish our goals of growing the top line and achieving profitability. After taking into consideration underwriting fees and commissions, the company collectively raised net proceeds from the equity offerings of approximately $51.5 million. Subsequent to the end of the quarter on April 1st, the company made the scheduled milestone payment of $5.3 million for the acquisition of integrated diagnostics in 2018.
Robin Harper Cowie: In April we announced the closing of $55 million in gross proceeds raised in our successful oversubscribed and upsized underwritten offering and concurrent private placement.
Robin Harper Cowie: This fund raise strengthens our balance sheet expanded our investor base and provides us the runway to accomplish our goals of growing the top line and achieving profitability after taking into consideration underwriting fees and commission. The company collectively raised net proceeds from the equity offerings of approximately $51 5 million.
Robin Harper Cowie: Subsequent to the end of the quarter on April one the company made the scheduled milestone payment of $5 3 million for the acquisition of integrated diagnostics. In 2018. In addition, we prepaid the July one 2020 for milestone payment of $8 4 million, which included interest through the date of payment.
Robin Harper Cowie: In addition, we prepaid the July 1, 2024 milestone payment of $8.4 million, which included interest through the date of payment, saving approximately $160,000 in interest. The company has one payment of $6.1 million remaining due on October 1st, which does not accrue interest. Finally, turning to 2024 guidance, we are reiterating our plan to deliver 65 to 68 million in total revenue and are excited to deliver on our year of execution. Now, let me turn it back to Scott.
Robin Harper Cowie: Saving approximately $160000 in interest the company has one payment of $6 1 million remaining due on October one, which does not accrue interest.
Robin Harper Cowie: Finally, turning to 2024 guidance, we are reiterating our plan to deliver 65% to $68 million in total revenue and are excited to deliver on our year of execution now let me turn it back to Scott.
Robin Harper Cowie: Okay.
Scott Hutton: Thanks Robyn.
Scott Hutton: It's been a great start to the year, and we've delivered our seventh straight quarter of greater than 50% growth in lung diagnostic testing volume, over 100% growth in biopharmaceutical services revenue, 79% growth in margins, and substantial progress on our path to achieving profitability. And with the additional capital in place to support our long-term growth, I believe our future is brighter now than at any point in the company's history. We remain committed to executing upon our three goals, driving increased revenue by accelerating the adoption of our lung diagnostic test and biopharmaceutical services.
Scott Hutton: It's been a great start to the year and we've delivered our seventh straight quarter of greater than 50% growth in lung diagnostic testing volume over 100% growth in Biopharma services revenue.
Scott Hutton: 79% gross margins and substantial progress on our path to achieving profitability.
Scott Hutton: And with the additional capital in place to support our long term growth I believe our future is brighter now than at any point in the company history.
Scott Hutton: We remain committed to executing upon our three goals driving increased revenue by accelerating the adoption of our lung diagnostic test and biopharmaceutical services.
Scott Hutton: Implementing operational efficiencies to improve gross margins and maintaining a strict cost discipline to achieve profitability. By aligning these three strategic efforts, we are confident in our ability to sustain our aggressive growth trajectory, make progress on our path to profitability, and deliver value to health care professionals, their patients, and all shareholders. We are transforming the standard of care and are excited to be making such a significant impact. With that, I'll turn the call over to the operator for questions.
Scott Hutton: Implementing operational efficiencies to improve gross margins and maintaining a strict cost discipline to achieve profitability.
Scott Hutton: By aligning these three strategic efforts, we are confident in our ability to sustain our aggressive growth trajectory make progress on our path to profitability and deliver value to the health care professionals their patients and all shareholders. We are transforming the standard of care and are excited to be making such a significant impact.
Scott Hutton: With that I'll turn the call over to the operator for questions.
Speaker Change: Thank you.
Operator: At this time, we'll conduct a question and answer session. As a reminder, to ask a question, you need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A list. Our first question comes from Andrew Brackmann, from William Blair. Please go ahead.
Speaker Change: At this time, we will conduct a question and answer session. As a reminder to ask a question you need to press Star one one your telephone and wait for your name to be announced.
Operator: To withdraw your question. Please press star one again.
Operator: These standby, while we compile the Q&A roster.
Andrew Frederick Brackmann: Our first question comes from Andrew <unk> from William Blair. Please go ahead.
Andrew Frederick Brackmann: Hi Scott. Hi Robin. Good afternoon.
Andrew Frederick Brackmann: Scott Hi, Robin good afternoon, Thanks for taking the question.
Operator: Thanks for taking the questions. Maybe just starting here on the rep side of things, you could maybe just sort of talk to us about rep productivity by cohort. You've added a handful. You've really added a significant number of reps over the last handful of years, so just any color that you can provide on what you're seeing from these different groups, from those hiring classes, and how that plays into your confidence and volume ramp for the rest of the year.
Andrew Frederick Brackmann: Maybe just starting here on the Rep side of things can you, maybe just sort of talk to us about rep productivity by cohort you've added a handful.
Operator: We added a significant number of reps over the last handful of years. So just any color that you can provide on what you're seeing from the different groups from those hiring classes and how that plays into your confidence in volume ramp for the rest of the year.
Scott Hutton: Yeah, thank you, Andrew. I appreciate the question.
Speaker Change: Thank you Andrew I. Appreciate the question, Yes, we have continued to kind of maintain a six to eight sales professionals being added per quarter. We've continued to maintain.
Scott Hutton: Yeah, we have continued to kind of maintain six to eight new sales professionals being added per quarter. And we've continued to maintain about a three month timeframe from a new hire getting to a position where they're paying for themselves. So that gives us confidence that what we're doing is working in terms of training and onboarding. Now, when you look at the United States and where we have, you know, territories, we know that, especially in the West, we still have a number of territories that are too large.
Scott Hutton: About a three month timeframe from a new hire getting too.
Scott Hutton: <unk>, where theyre paying for themselves so that gives us confidence.
Scott Hutton: But what we're doing is working in terms of training and Onboarding.
Scott Hutton: Now when you look at the United States, and where we have territories, we know that especially in the west we still have a number of territories that are too large.
Scott Hutton: So when we place an individual in one of those territories, we know that that ramp might be a little bit lengthier, and those individuals are going to have potentially a higher cost associated with their day to day activities. So they aren't all created equal.
Scott Hutton: So when we place an individual in one of those territories, we know that that ramp might be a little bit linked here and those individuals are going to have potentially higher cost associated with their day to day activities. So they aren't all created equal.
Scott Hutton: But because we are seeing that that kind of path to profitability in their efforts be somewhat similar, it gives us confidence that we can continue to grow. We are also able to assess penetration and adoption within territories. And we know that we're just beginning to scratch the surface of this massive opportunity. So as we look at the full year, continuing to add six to eight sales professionals per quarter, we expect that we'll end the year somewhere around 70 to 72 who are contributing. The real key will be in that last cohort. How early do we bring them on board?
Scott Hutton: But because we are seeing that kind of path to profitability and their efforts be somewhat similar it gives us confidence that we can continue to grow we also are able to assess.
Scott Hutton: Penetration and adoption within territories, and we know that we're just beginning to scratch the surface in this massive opportunity.
Scott Hutton: So as we look at the full year continuing to add six to eight sales professionals per quarter. We expect that we will end the year somewhere around 70% to 72 that are contributing the real key will be in that last cohort. How early do we bring them on and how much are they able to contribute.
Scott Hutton: And how much are they able to contribute, probably into the second or third month of the quarter. So for us, we factored that in in our plans coming into the year. And we've guided really from a model and a position that, or a framework, I should say that's built upon that sales rep productivity and that sales rep expansion. Now, we have talked a lot about the Associate Sales Consultant. We've got, we're approaching 50% of our sales territory is actually having an Associate Sales Consultant.
Scott Hutton: Probably into the second or third month of the quarter. So for US we factored that in in our plans coming into the year and we've guided really from a model and a position.
Scott Hutton: Or a framework I should say that's built upon that sales rep productivity and that sales rep expansion.
Scott Hutton: Now we have talked a lot about the associated sales consultant.
Scott Hutton: We've got we're approaching 50% of our sales territory is actually having an associate sales consultant that mix will change its going to be based upon productivity, it's going to be based upon size of territory and the real opportunity to continue to grow and expand but we're grateful that we introduced that in <unk>.
Scott Hutton: That mix will change. It's going to be based on productivity. It's going to be based on the size of the territory and the real opportunity to continue to grow and expand. But we're grateful that we introduced that and piloted it a little over a year ago, and we see a lot of upside there remaining. Hope that was helpful, Andrew.
Scott Hutton: Did that a little over a year ago and.
Scott Hutton: And we see a lot of upside there remaining.
Scott Hutton: I hope that was helpful. Andrew Yes, very helpful. Great color, maybe I guess just sticking on the commercial infrastructure here for a minute as you've established that channel in Pulmonology can you maybe just talk to us at a super high level on how you're thinking about further leveraging that channel moving forward would be that through new products that are organically developed or even.
Andrew Frederick Brackmann: Yes, very helpful and a great color. Maybe I'll pick on the commercial infrastructure here for a minute, you know, as you've established that channel in pulmonology, can you maybe just talk to us at a super high level about how you're thinking about further leveraging that channel moving forward, be that through new products that are organically developed or even partnerships or having a... Yeah, you know, great question.
Andrew Frederick Brackmann: <unk> ships or M&A.
Scott Hutton: Yeah, you know, great question. We feel that it's one of our strongest assets. All of us know that many commercial efforts don't succeed the first or second time, so we don't take that lightly. The fact that we've built a fully integrated commercial team and channel and it's having the successes that it is having, we know that there are greater opportunities. We also hear it from our pulmonology customers, where they present new disease states or challenges, and really, they're all based upon a critical clinical question that remains unanswered.
Speaker Change: Yes, great question.
Scott Hutton: We feel that it's one of our strongest assets all of us know that many many efforts commercially don't succeed the first or second time. So we don't take that lightly. The fact that we've built a fully integrated commercial team and channel having the successes that its having.
Scott Hutton: We know that there is greater opportunities. We also hear it from our pulmonology customers, where they present, new disease states or challenges and really they are all based upon a critical clinical question that remains unanswered. So we know theres additional opportunities just to provide value. We also know that.
Scott Hutton: So we know there are additional opportunities just to provide value. We also know that there is a means by which we could potentially do so in a creative fashion by adding additional products to our sales reps' bags and, meanwhile, decreasing the size of their territories. Those are all on the roadmap and the horizon.
Scott Hutton: There is a means by which we could potentially do so in an accretive fashion by adding additional products to our sales reps bags and Ben.
Scott Hutton: Meanwhile, decreasing the size of their territory.
Scott Hutton: Those are all on the roadmap in the horizon.
Scott Hutton: You know, this has been an interesting year with our successes. We've had a number of companies reach out to talk to us about opportunities to sell their products, to distribute them, and we've said no. For us, it's laser-focused. We're so under-penetrated by this opportunity. We're focused, first and foremost, on really continuing to invest in this sales channel, and the reason I state that is, in the future, I still believe that this sales team can add two to three, maybe even four more products, as long as they're appropriate for that call point, and we're going to find a means by which we do that, whether that's organic or inorganic.
Scott Hutton: This has been an interesting year with our successes we've had a number of companies reach out to talk to us about opportunities to sell their products to distribute it and we said no for us its laser focus we're so underpenetrated in this opportunity we're focused first and foremost on really continuing to invest in this.
Scott Hutton: Sales channel.
Scott Hutton: And the reason I state that is in the future I still believe that the sales team can add two to three maybe even four more products as long as they are appropriate for that call point and we're going to we're going to find the means by which we do that whether that's organic or inorganic.
Speaker Change: That's great I appreciate the time today. Thank you thanks Andrew.
Andrew Frederick Brackmann: That's great. I appreciate your time today. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from Kyle Mikson from Conochord Genuity. Please go ahead.
Speaker Change: Thank you.
Speaker Change: We'll move for our next question.
Operator: Okay.
Kyle Alexander Mikson: Our next question comes from Kyle mixing from Canaccord Genuity. Please go ahead.
Kyle Alexander Mikson: Hey guys, thanks for the questions. Congratulations on the quarter. Um, on that note, revenue numbers did beat by almost a million core lung, and biopharma has momentum, and they're, you know, getting back on track. I guess, I guess, why not raise the revenue guidance? I'm just kind of curious, like given that momentum and, you know, the field looks pretty open here, is there anything to look out for in the lung diagnosis market in the near term that you see?
Kyle Alexander Mikson: Hey, guys. Thanks for the questions congrats on the quarter.
Kyle Alexander Mikson: I guess on that note.
Kyle Alexander Mikson: The number should be by almost $1 billion core logging biopharma habit momentum and they're getting back on track I guess I guess why not raise the revenue guidance I'm just kind of curious like given that momentum in the.
Kyle Alexander Mikson: The field looks pretty open here or is there anything to look out for in the one thing about this market in the near term that you see.
Scott Hutton: Yeah, thanks, Kyle. Great question.
Speaker Change: Yes, Thanks, Scott Great question.
Speaker Change: For us.
Scott Hutton: On this journey one of the things we focused on is really building trust and we've been very consistent about the opportunity very consistent about our priorities and so as we focus on trust.
Scott Hutton: You know, for us, on this journey, one of the things we've focused on is really building trust. And we've been very consistent about the opportunity, and very consistent about our priorities. And so, as we focus on trust, you know, getting the 2024 year off to a great start, putting up a good quarter was our first priority. And I think we've done that, and I think you will acknowledge that. We know once we've done it once, we want to do it twice. And so, if anything, we're just being mindful of managing expectations. It's early in the year,
Scott Hutton: Getting.
Scott Hutton: The 2024 year off to a great start putting up a good quarter.
Scott Hutton: Our first priority and I think we've done that and I think you acknowledge that.
Scott Hutton: Once we've done it once we want to do it twice and so if anything we're just being mindful of managing expectations. It's early in the year.
Scott Hutton: I'm certain that we'll talk a little bit about the LDT FDA ruling. Some of those uncertainties just cause us to pause and, you know, quote unquote, don't want to get over the tips of our skis. But we are very bullish on the year. We feel that we've got a lot of momentum, and I think you nailed it. The core lung diagnostic business continues to perform exceptionally well, with our seventh consecutive quarter of greater than 50% growth.
Scott Hutton: I'm certain that we'll talk a little bit about the LDP FDA ruling.
Scott Hutton: Those uncertainties just caused us to pause.
Scott Hutton: Quote unquote don't want to get over the tips of our skus, but we are very bullish on the year, we feel that we've got a lot of momentum and I think you nailed it the core lung diagnostic business continues to perform exceptionally well with our seventh consecutive quarter of greater than 50% growth and we're really excited to see that rebound we've been talking.
Scott Hutton: And we're really excited to see that rebound we've been talking about in the biopharma services business. And so to put up another strong quarter there, have greater than $9 million of contracted business yet to be recognized on the biopharma services front, we feel really good about that. But on the biopharma services front, that's been an area that's been quite lumpy. Whenever you're dealing with partners or third parties, you've got to make certain that their priorities remain consistent and strong throughout the year. And most of those contracts are reliant on us receiving samples.
Scott Hutton: [noise] about on the Biopharma services, and so to put up another strong quarter, there have greater than $9 million of contracted business yet to be recognized on the Biopharma services front, we feel really good about that but on the Biopharma services front.
Scott Hutton: That's been the area that's been quite lumpy whenever you're dealing with partners or third parties you have got to make certain that their priorities remain consistent and strong throughout the year.
Scott Hutton: Most of those contracts are reliant on us receiving samples and so.
Scott Hutton: And so we'll continue to talk a lot about the upside that we see. But for us, it's really, let's just execute. Let's put up strong performances, and we'll have those conversations at the end of the second quarter.
Scott Hutton: We will continue to talk a lot about the upside that we see but for us. It's really let's just execute let's put up strong performance and let's have those conversations at the end of the second quarter.
Kyle Alexander Mikson: That was great, Scott. Thanks so much.
Speaker Change: That was great Scott Thanks, so much.
Speaker Change: On that note the Biopharma revenue I guess the services side of things funding.
Kyle Alexander Mikson: Funding is definitely getting better understand IPO, there's been private deals.
Scott Hutton: And on that note, the biopharma revenue, I guess the services side of things, funding is definitely getting better. There's been, you know, IPOs; there's been private deals. So I'm wondering if, you know, this revenue contribution recently, what you're looking at in the near term, that's $9 billion in contracted revenue. Is that like new RFPs or just the completion of new deals? Is that, of all deals, excuse me, is that going to be what the revenue kind of gets filled in by?
Speaker Change: So I'm wondering if.
Scott Hutton: This revenue contribution recently, where youre looking at in the near term. This does 9 billion contracted revenue.
Scott Hutton: Is that like new Rfps or does the completion of new deals is that bulk deals excuse me is that going to be put the revenue kind of gets pulled in by and then what happens when the funding situation in the biotech world kind of levels out a bit because there'll be a bolus of this biopharma revenue in the first quarter and second quarter, maybe or would there be kind of like growth throughout the year with a flood.
Scott Hutton: And then what happens when the funding situation in the biotech world kind of levels out a bit? Could there be like a bolus of this biopharma revenue in the first quarter and second quarter, maybe? Or would there be kind of like growth throughout the year with a flush towards the year end, possibly? Yeah.
Scott Hutton: Towards the year end marketplace.
Scott Hutton: Yeah, that's a great question. For us, as we've focused on building that trust and rapport with our partners, what we've seen is a lot of continuation and build-on contracts. That's the ideal way to do it, where you partner with a partner, say, for an early-stage discovery effort. It works well.
Speaker Change: Yes, it's a great question.
Scott Hutton: For us as we've focused on.
Scott Hutton: Building that trust and report with our partners.
Scott Hutton: What we've seen is a lot of continuation and build on contracts that's.
Scott Hutton: That's the ideal way to do it.
Scott Hutton: Your partner with.
Scott Hutton: Partner safer and early stage discovery effort.
Scott Hutton: You move on to the second phase, you move on to the third, and those contracts become larger. But more importantly, you become of greater importance to that drug discovery and development effort. We've seen a number of those that have continued. We have seen new RFPs come in from new partners, and we're proud to share that we've signed some of those agreements. We don't really attribute any of that to new fundraising efforts. I think those biopharmaceutical companies that have completed some of those fundraising efforts are more on the horizon. They're going to be targets for us moving forward.
Scott Hutton: It works well you move onto the second phase you move on to the third in those contracts become larger but more importantly, you become <unk>.
Scott Hutton: Greater importance to that drug discovery and development effort. So we've seen a number of those that have continued.
Scott Hutton: We have seen new RFP has come in from new partners and we're proud to share that we've signed some of those agreements. We don't really attribute any of that new fund raising efforts I think those biopharmaceutical companies that have completed some of those fund raising efforts.
Scott Hutton: There are more on the horizon, there going to be targets for us moving forward and when it comes to <unk>.
Scott Hutton: When it comes to revenue recognition and achievement, it really depends upon the type of agreement that we sign and whatever their hypothesis is and what we're trying to help them answer the question. If it's retrospective samples, there's a likelihood that it can have a near-term impact once we receive those banked samples. If it's a prospective trial or study, obviously, those are a little bit easier to forecast, but those are going to be spread out over multiple years.
Scott Hutton: Revenue recognition and achievement. It really is dependent upon the type of agreement that we signed in whatever their hypothesis is and what we're trying to help them answer the question too.
Scott Hutton: It's retrospective samples there is there is a likelihood that it can have a near term impact.
Scott Hutton: Once we receive those those banks stamp samples if its a prospective trial or study obviously those are a little bit easier to forecast, but those are going to be spread out over multiple years. So we look at that $9 million under contract.
Scott Hutton: We look at that $9 million under contract, and the best way to look at that is we'll recognize the majority, if not all, of that revenue over the next two, maybe sliding a little bit into three years. It gives you confidence that there is a good book of business that's being built. It'll continue in a sustainable fashion for quarters to come, and then the sales team will be out continuing to expand that funnel. Great opportunity.
Scott Hutton: And the best way to look at that is we will recognize the majority if not all of that revenue over the next two maybe sliding a little bit into three years.
Scott Hutton: So it gives you confidence that there is a good book of business. That's built it'll continue in a sustainable fashion for quarters to come and then the sales team is out continuing to expand that funnel.
Scott Hutton: You highlighted the fundraising market for biopharmaceutical companies. One of the things we saw historically was a year-end push. We haven't seen that recently, so we'll keep you updated as we progress through this year to see if we actually anticipate a significant hockey stick towards the end of the year. But at this point in time, it's too early to say.
Speaker Change: So great opportunity you highlighted the fundraising market for biopharmaceutical companies one of the things we saw historically with a yearend push.
Scott Hutton: Haven't seen that recently, so we'll keep you updated as we progress through this year to see if we actually anticipate a significant hockey stick towards the end of the year, but at this point in time, it's too early to say, but we will be well positioned to capitalize if it presents.
Speaker Change: Okay that was great Scott. Thanks, a lot for that final one for Robyn is actually a two part question versus on the kind of like unpaid.
Kyle Alexander Mikson: question. First, on the kind of like unpaid MA, the Medicare Advantage claims. I think it was $3.5 to $4.0 million in claims.
Kyle Alexander Mikson: The Medicare advantage claims I think it was $3 five 4 million.
Kyle Alexander Mikson: I guess, you know, we've been hearing that for at least a few quarters now. Is there a possibility that you lose the opportunity to recognize that revenue after a certain period of time? Or is there just, you know, you have some unspecified amount of time to capture that? And therefore, you're probably good to go, you know, even if it takes years to capture.
Kyle Alexander Mikson: Million.
Kyle Alexander Mikson: And claims I guess.
Kyle Alexander Mikson: <unk> been hearing that for at least a few quarters out is there a possibility that you lose the opportunity to recognize that revenue. After a certain period of time or is there just some months as to why the amount of time to capture that and therefore youre probably good to go even if it takes years to capture that's the first part second one's on the six.
Kyle Alexander Mikson: That's the first part. The second one's the $6 million payment. I think it was, I think it's going to be paid in October. How is that structured? Is that just like a standard in your OpEx or something? And it's like... [inaudible]
Kyle Alexander Mikson: $6 million payment I think it was it was going to be paid in October how was that structured is that just on the standard in your opex or something thats like just like baked in there or is it incremental it most likely to have a kind of spaced out a bit.
Robin Harper Cowie: Yeah. Hi Kyle.
Speaker Change: Yeah, Hi.
Robin Harper Cowie: The Medicare advantage.
Speaker Change: Because we didnt recognize that revenue as an accrual in the period that the tests were performed.
Robin Harper Cowie: The Medicare Advantage, because we didn't recognize that revenue as an accrual in the period that the tests were performed; it will be recognized upon cash collection. So there's no clock for our ability to recognize it. When the cash comes in, that's when we'll recognize it. So we're in good shape there, and we'll keep you all updated as we make no interaction or transaction with a payer is fast, and so yes, it feels like a lot of quarters that we've been talking about this, which can be frustrating, but it's sort of the nature of the beast. The $6 million to be paid in October is just the last payment of the milestone payments for Indy.
Robin Harper Cowie: It will be recognized upon cash collection, so theres no.
Robin Harper Cowie: There is no clock for our ability to recognize it when the cash comes in that's when we'll recognize it so.
Robin Harper Cowie: We're in good shape, there and we'll keep you all updated as we make progress.
Robin Harper Cowie: No.
Robin Harper Cowie: No interaction or.
Robin Harper Cowie: Transaction with a payer is fast and so yes, it's been.
Robin Harper Cowie: Feels like a lot of quarters that we've been talking about that switch can be frustrating, but it's sort of the nature of the beast.
Robin Harper Cowie: The 6 million to be paid in October. It's just the last payment of the milestone payments for <unk>. So we had it set up that we were paying quarterly over the span of multiple years.
Robin Harper Cowie: So, we had it set up that we were paying quarterly over the span of multiple years on those milestones, and all but the last milestone carried interest. Following our fundraise in April, we actually prepaid the July 1st payment, which saved us about $160,000 in cash, so that's cash that stays in the business and doesn't leave. We did not prepay the October 1st milestone because there is no interest, so there's no real incentive for us to move it forward.
Robin Harper Cowie: Those milestones and all but the last milestone carried interest.
Robin Harper Cowie: Following our fundraise in April we actually prepaid the July 1st payment, which saved us about $160000 in cash so that's cash that stays in the business and it doesn't leave.
Robin Harper Cowie: We did not prepay the October 1st milestone because there is no interest so.
Robin Harper Cowie: There is no real incentive for us to move it forward.
Kyle Alexander Mikson: Perfect. Okay.
Speaker Change: Perfect. Okay. Thanks for clarifying all that thanks, guys.
Kyle Alexander Mikson: Thanks for clarifying all that. Thanks, guys. I appreciate it. Thanks, Kyle.
Speaker Change: Thanks Scott.
Operator: Thank you. One moment for our next question. Our next question comes from Thomas Flaten from Lake Street. Please go ahead.
Speaker Change: Thank you one moment for our next question.
Operator: Our next question comes from Thomas Flaten from Lake Street. Please go ahead.
Thomas Flaten: Great, appreciate you guys taking the questions. Robin, just to follow up on the Medicare Advantage, aside from maybe a desire just not to pay you, is there any commonality in the reasons for not payment? And what I'm getting at is, is there a trigger that could unlock a substantial portion of that backlog? Or is it just a whole mess of individual claims that need to be adjudicated as such?
Thomas Flaten: Great I appreciate you guys, taking the questions Robin just to follow up on the Medicare advantage aside from maybe a desire not to pay you is there any commonality in the reasons for not payment and what I'm getting at is is there a trigger which could unlock a substantial portion of that backlog or is it just a whole mess of individual claims that needs to be adjudicated as such.
Robin Harper Cowie: It's a mess of individual claims, but it's a pretty consistent sort of administrative hurdle. So if we can address the administrative hurdle that's been placed in front of us, it should lock up a good portion, unlock a good portion of those. And so it's not like we have to deal with each on a claim-by-claim basis, a more common issue across multiple.
Matt: It's Matt.
Robin Harper Cowie: Massive individual claims, but it's a pretty consistent.
Robin Harper Cowie: It's a pretty consistent sort of administrative hurdles. So if we can address the administrative hurdle that's been placed in front of us It should lock up a good portion unlock a part a good portion of those.
Robin Harper Cowie: And so it's not it's not like we have to deal each on a claim by claim basis, It's I'd say it's.
Robin Harper Cowie: And more common issue across multiple claims.
Thomas Flaten: Got it, got it. And just sticking with you Robin, on gross margins, you indicated that they would stay in the mid to high 70s, so if we call that like a 400 basis point swing, what causes it to move around within that window? What would cause it to be 76 next quarter versus 79 this quarter?
Speaker Change: Got it got it and just sticking with you Robin on the gross margins you indicated that they would stay in the mid to high <unk>. So if we call that like a 400 basis points swing what causes it to move around within that within that window.
Thomas Flaten: Cause it to be 76 next quarter versus 79 this quarter.
Robin Harper Cowie: Yeah, it's really a mix. So, you know, if we have a higher biopharmaceutical and we have, and the biopharmaceutical growth margins can be varied based on what the type of contract is. The last couple of quarters have been very strong, which has contributed to our high growth margins. But if we have a contract that comes in that's a slightly lower growth margin and that's a bigger portion of the business for the quarter, then you could see some movement. There's nothing that we would expect to cause any sort of issues from like a process or productivity standpoint. It's really just a mix of tests and biopharma.
Robin: Yes, it's really a mix so.
Robin Harper Cowie: If we have a higher biopharma and we have.
Robin Harper Cowie: So pharma.
Robin Harper Cowie: Gross margins can be varied based on what the type of contract is.
Robin Harper Cowie: The last couple of quarters have been very strong which has contributed to our high gross margins, but if we have a contract that comes in that's a slightly lower gross margin and that's a bigger portion of the business for the quarter. Then you could see you could see some movement there.
Robin Harper Cowie: There is nothing that we would expect to cause any sort of issues from mic up.
Robin Harper Cowie: Process or productivity standpoint, it's really just mix of of tests in biopharma.
Speaker Change: Got it got it.
Robin Harper Cowie: And then just a quick final one any any whispers on the potential for guidelines changes, particularly with ACP here in the fall.
Thomas Flaten: Got it. And then just a quick final one. Any whispers on the potential for guidelines changes, particularly with ACCP, here in the fall?
Speaker Change: Hey, Thomas Thanks for the question.
Scott Hutton: Hey Thomas, thanks for the question. You know, we're eager to hear. As you highlighted, the CHESS guidelines usually receive some sort of update or adjustment in and around their annual society meeting and conference, which occurs in the October-November timeframe. They have not given any guidance other than to state and comment that it's been nearly 10 years since they updated them, they're woefully behind, and they've got to make a change. So we're eager to see what they are willing to disclose heading into that, you know, fall convention timing.
Speaker Change: We're eager to hear.
Scott Hutton: You highlighted the chest guidelines, usually received some sort of update or adjustment in and around their annual society meeting and conference which occurs in the October November timeframe.
Scott Hutton: They have not given any guidance.
Scott Hutton: Other than to state and comment that it's been nearly 10 years since they have updated them. They are woefully behind and they've got to make a change.
Scott Hutton: We're eager to see what they are willing to disclose heading into that fall convention timing.
Scott Hutton: We continue to focus on data development and commercially, and we're going to do what we can to ensure that anyone that's associated with guidelines has an opportunity to be exposed to our testing, they appreciate the value that it provides, and they can go into those discussions with their own experiences that are personal in nature, but can help drive broader adoption across the industry. So we feel like we've put ourselves in a good position.
Scott Hutton: We continue to focus on data development.
Scott Hutton: And commercially.
Scott Hutton: We're going to do what we can do ensure that anyone that's associated with guidelines.
Scott Hutton: <unk> has an opportunity to be exposed to our testing. They appreciate the value that it provides and they can go into those discussions.
Scott Hutton: With their own experiences that are personal in nature, but can help drive broader adoption across the industry. So.
Scott Hutton: And again, we'll wait and see. And that really extends outside of just not just CHESS but into NCCN and even the Fleischner Guidelines. We continue to make inroads there, and, you know, we'll let everybody know as soon as we're informed and hear something. And whether it's this year or not, it is definitely a focus and a priority to continue to develop our tests, develop data, and put ourselves in the best position possible.
Scott Hutton: We feel like we've put ourselves in a good position.
Scott Hutton: Again, we'll wait and see.
Scott Hutton: Really extends outside of just not just chest, but into NCC in and even the Fleissner guidelines, we continue to make inroads there.
Scott Hutton: And we'll let everybody know as soon as we are informed and hear something.
Scott Hutton: Whether it's this year or not it is definitely a focus and a priority to continue.
Scott Hutton: To develop our test develop data and put ourselves in the best position possible.
Thomas Flaten: Great. I appreciate you taking the questions. Thank you. Yeah, thank you.
Speaker Change: Great I appreciate you taking the questions. Thank you.
Speaker Change: Yeah. Thank you Thomas.
Scott Hutton: Thank you. This concludes the Q&A session. I will now turn it over to Scott Hutton for closing remarks.
Thomas Flaten: Thank you. This concludes the Q&A session I will now turn it over to Scott Hutton.
Scott Hutton: For closing remarks.
Scott Hutton: Thank you operator, it's an exciting time here about ethics, we've worked long and hard to build the best Pulmonology focused commercial team and diagnostics.
Scott Hutton: It's an exciting time here at Biodesix. We've worked long and hard to build the best pulmonology-focused commercial team in diagnosis. With first-mover status in lung nodule management and an ever-increasing body of robust clinical data, we're building on the momentum we created as we further increase our clinical and payer adoption in this extremely large and underserved population. Ultimately, it is all about the healthcare professionals and their patients that they treat, and we believe in our unique ability to scale and have a material impact in the future.
Scott Hutton: With first mover status in lung nodule management, and an ever increasing body of robust clinical data.
Scott Hutton: Building on the momentum we created as we further increase our clinical and payer adoption in this extremely large and underserved population.
Scott Hutton: Ultimately it is all about the health care professionals and their patients that they treat.
Scott Hutton: And we believe in our unique ability to scale and have a material impact in the future.
Scott Hutton: We've had a great start to the year, and with a strong balance sheet to execute our plan towards profitability, we view 2024 as a pivotal year of execution, and we look forward to updating you on our continued progress and success on our next earnings goal. Thank you.
Scott Hutton: We've had a great start to the year and with a strong balance sheet to execute our plan towards profitability. We view 2024 is a pivotal year of execution and we look forward to updating you on our continued progress and success on our next earnings call. Thank you.
Operator: This does conclude the program. You may now disconnect.
Speaker Change: This does conclude the program you may now disconnect.
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