Q2 2024 Fulgent Genetics Inc Earnings Call

Operator: Hello, and welcome to the Fulgent Genetics Q2 2024 conference call-in webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. Our question and answer session will follow the formal presentation. You may press star 1 at any time to be placed in the question queue.

Hello, and welcome to the Fortuna Genetics Q2, 'twenty 'twenty four conference call and webcast. If anyone should require operator assistance. Please press star zero on your telephone keypad.

Operator: Hello and welcome to the Fulgent Genetics Q2 2024 conference calling webcast. If anyone could require operator assistance, please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. You may press star one at any time to be placed in the question Q. As a reminder, this conference is being recorded.

A question and answer session will follow the formal presentation.

You May press star one at any times be placed in the question queue. As a reminder, this conference is being recorded its now my pleasure to turn the conference over to Melanie Solomon Investor Relations. Please go ahead Melanie.

Operator: As a reminder, this conference is being recorded. It's now my pleasure to turn the conference over to Melanie Solomon, Investor Relations. Please go ahead, Melanie.

Melanie Solomon: It's not my pleasure to turn the conference over to Melanie Solomon, and that's the relations. Please go ahead, Melanie.

Melanie Solomon: Thank you, Kevin.

Melanie Solomon: Thank you Kevin Good morning, and welcome to the full second quarter of 2024 financial results Conference call on the call. Today are main Shea Chief Executive Officer, Paul Kim Chief Financial Officer, and Brendan personally as Chief commercial officer.

Melanie Solomon: Thank you, Kevin. Good morning, and welcome to the Fulgent second quarter 2024 financial results conference call. On the call today are Ming Hsieh, Chief Executive Officer; Paul Kim, Chief Financial Officer; and Brandon Perthuis, Chief Commercial Officer. The company's press release discussing the financial results is available in the Investor Relations section of the company's website, www.fulgentgenetics.com. A replay of this call will be available shortly after the call concludes on the Investor Relations section of the company's website.

Ming Hsieh: Good morning and welcome to the Fulgent second quarter of 2024 financial results conference call. On the call today are Ming Hsieh, Chief Executive Officer, Paul Kim, Chief Financial Officer, and Brandon Perthuis, Chief Commercial Officer. The company's press release discussing with financial results is available on the Investor Relations section of the company's website www.fulgentgenetics.com. A replay of this call will be available shortly after the call concludes on the Investor Relations section on the company's website.

Speaker Change: The company's press release discussing our financial results is available on the Investor Relations section of the company's website at Www Dot Fulgent genetics dotcom.

Speaker Change: This call will be available shortly after the call concludes on the Investor Relations section of the company's website.

Melanie Solomon: Management's prepared remarks and answers to your questions on today's call will contain forward-looking statements. These forward-looking statements represent management's estimates based on current views and assumptions, which may prove to be incorrect. As a result, matters discussed in any forward-looking statement are subject to risks, uncertainties, and changes in circumstances that may cause actual results to differ from those described in the forward-looking statement. The company assumes no obligation to update any of the forward-looking statements it may make today to reflect actual results or changes in expectations.

Ming Hsieh: Management to prepare remarks and answers to your questions on today's call will contain forward-looking statements. These forward-looking statements represent management's estimates based on current views and assumptions, which may prove to be incorrect. As a result, matters discussing any forward-looking statements are subject to risks, uncertainties, and changes in circumstances that may cause actual results to differ from those described in the forward-looking statements. The company assumes no obligation to update any of the forward-looking statements it may make today to reflect actual results or changes in expectations. Listeners should rely on any forward-looking statements of predictions of future events and should listen to mentions remarks today with the understanding that actual events, including the company's actual future results, may be materially different than what is described and/or implied by these forward-looking statements.

Speaker Change: Management's prepared remarks and answers to your questions on today's call will contain forward looking statements. These forward looking statements represent managements estimates based on current views and assumptions, which may prove to be incorrect. As a result matters discussed in any forward looking statements are subject to risks uncertainties and changes in circumstances that may cause actual results to differ from those described in the forward looking statements.

Speaker Change: The company assumes no obligation to update any of the forward looking statements. It may make today to reflect actual results or changes in expectation.

Melanie Solomon: Listeners should rely on any forward-looking statements as predictions of future events and should listen to management's remarks today with the understanding that actual events, including the company's actual future results, may be materially different from what is described in or implied by these forward-looking statements. Please review the more detailed discussions related to these forward-looking statements, including the discussions of some of the risk factors that may cause results to differ from those described in the forward-looking statements contained in the company's filings with the Securities and Exchange Commission, including the previously filed 10-K for the year ended December 31st, 2023, and subsequently filed reports, which are available on the company's investor relations website.

Speaker Change: Now should rely on any forward looking statements as predictions of future events and should listen to management's remarks today with the understanding that actual events, including the company's actual future results may be materially different than what is described in or implied by these forward looking statements.

Ming Hsieh: Please review the more detailed discussions related to these forward-looking statements, including the discussions of some of the risk factors that may cause results to differ from those described in the forward-looking statements contained in the company's filing with the Securities and Exchange Commission, including the previously filed 10-K for the year and the December 31st, 2023, and subsequently filed reports, which are available on the company's investor relations website.

Speaker Change: Please review the more detailed discussions related to these forward looking statements, including the discussions of some of the risk factors that may cause results to differ from those described in the forward looking statements contained in the company's filings with the Securities and Exchange Commission, including the previously filed 10-K for the year ended December 31st 2023, and subsequently filed reports which are available on the company's investor.

Speaker Change: Relations web site.

Melanie Solomon: Management's prepared remarks, including discussions of earnings and earnings per share, contain financial measures not prepared in accordance with accounting principles generally accepted in the United States or GAAP. Management has prepared these non-GAAP financial measures because it believes they may be useful to investors for various reasons, but these measures should not be viewed as a substitute for or superior to a company's financial results prepared in accordance with GAAP. Please see the company's press release discussing its financial results for the second quarter of 2024 for more information, including a description of how the company calculates non-GAAP income or loss, earnings or loss per share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating profit or loss, and margin, and adjusted EBITDA, and a reconciliation of these financial measures to income or loss, earnings or loss per share, and operating With that said, I'd now like to turn the call over to Ming.

Ming Hsieh: Management's prepared remarks, including the discussions of earnings and earnings per share, contain financial measures not prepared in accordance with accounting principles generally accepted in the United States or GAAP. Management has prepared these non-GAAP financial measures because it believes they may be useful to investors for various reasons, but these measures should not be viewed as a substitute for or superior to a company's financial results prepared in accordance with GAAP. Please see the company's press release discussing its financial results for the second quarter 2024 for more information, including the description of how the company calculates non-GAAP income or loss, earnings or loss per share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating profit or loss and margin, and adjusted EBITDA, and a reconciliation of these financial measures to income or loss, earnings or loss per share, and operating margins and most directly comparable GAAP financial measures.

Speaker Change: Management's prepared remarks, including discussions of earnings and earnings per share contain financial measures not prepared in accordance with accounting principles generally accepted in the United States or GAAP management has prepared these non-GAAP financial measures because it believes they may be useful to investors for various reasons, but these measures should not be viewed as a substitute for or superior to the company's financial results.

Speaker Change: Prepared in accordance with GAAP.

Speaker Change: Please see the company's press release discussing its financial results for the second quarter of 2024 for more information, including the description of how the company calculates non-GAAP income or loss.

Speaker Change: Our loss per share non-GAAP gross profit non-GAAP gross margin non-GAAP operating profit or loss and margin and adjusted EBITDA and a reconciliation of these financial measures to income or loss earnings or loss per share and operating margin. The most directly comparable GAAP financial measures.

Ming Hsieh: With that, I'd now like to turn the call over to Ming. Thank you, Mary. Good morning, and thank you for joining our call today. I will start with some comments on the second quarter and our two business lines.

Speaker Change: With that I'd now like to turn the call over to Ming.

Ming: Thank you Mary good morning, and thank you for joining our call today.

Ming Hsieh: Thank you, Melanie. Good morning, and thank you for joining our call today. I will start with some comments on the second quarter and our two business lines. Then Brandon will review our product and go-to-market updates for our laboratory services business in the second quarter, and Paul will conclude with the financial and the art group before we take your questions.

Ming: I will start with some comments on the second quarter and our two business lines, then Brendan will review our product and go to market updates for our laboratory services business in the second quarter.

Ming Hsieh: Then Brandon will review our product and go-to-market updates for our laboratory service business in the second quarter, and then Paul will conclude with the financial in the off-group before we take to your question. We are pleased with our results in second quarter, with 71 million dollars of total revenue. We recognize the $341,000 of revenue on previously billed the COVID-19 test, excluding COVID-19 revenue. Second quarter, core revenue of 70.2 million dollars was driven by momentum in precision diagnosis, particular reproductive health and oncology. We were pleased with the growth in all three areas of our laboratory service business this quarter, and we seem good momentum ahead as we continue to invest in reproductive health testing and the significance of those investments.

Ming: And then Paul will conclude with the financials and then I'll.

Ming: Before we take your questions.

Paul: We are pleased with our results in second quarter with $71 million over total revenue, we recognized $841000 of revenue on previously build a COVID-19 tests.

Ming Hsieh: We are pleased with our results in the second quarter. With $71 million of total revenue, we recognized $841,000 of revenue on previously billed COVID-19 tests, excluding COVID-19 revenue. Second quarter core revenue of over $70.2 million was driven by momentum in precision diagnosis, particularly reproductive health and oncology.

Paul: Excluding COVID-19, driving second quarter core revenue over 70.

$2 million was driven by momentum in precision technologies.

Paul: Particular reproductive health and oncology.

Ming Hsieh: We were pleased with the growth in all three areas of our laboratory service business this quarter, and we've seen good momentum ahead as we continue to invest in reproductive health testing and see the benefit of those investments. We have reached a very important milestone in consolidating the labs acquired as part of the informed diagnostic transaction. With our new 96,000 square foot lab facility in Coppell, Texas, we believe we'll have an opportunity to triple capacity, fueling potential future growth and expansion. Brandon will talk more about this.

Luisa: We were pleased Luisa.

Luisa: All three areas.

Luisa: Laboratory services business this quarter and we've seen good momentum ahead as we continue to invest in reproductive health testing and has seen the benefit of those investments.

Ming Hsieh: We have reached a very important milestone in consolidating the labs acquired as part of the Informed Diagnosis transaction. With our new 96,000-square-foot labs specifically in Capell, Texas, we believe we'll have an opportunity to triple capacity, fueling the potential future growth and expansion. Brandon will talk more about this.

Speaker Change: We have reached a very important milestone in consolidate TV. The labs acquired as a part of well informed diagnosis transaction with our new 96000 square foot lab, specifically in Texas.

Speaker Change: Texas, We believe will have the opportunity to triple our capacity fueling the potential future growth and expansion Brandon will talk more about this.

Ming Hsieh: In our therapeutic development business, we presented phase one clinical data using our lead therapeutic development, Kennedy FID-07, to treat head and neck cancer at the American Society for Clinical Oncology, or ESCO, annual meeting in June 2024. Of 11 head and neck sequamous cell carcinoma, or HNSCC, available patients with a weekly dose level from 50 milligrams per square meter to 160 milligrams per square meter, 5% or 45% had a partial response, and 7% or 27% had stable disease at risk. Three out of five HNSCC patients with a partial response have previously been treated with TAC. The duration of a follow-up meeting is four months. No high-grade neuropathy has been noted.

Ming Hsieh: In our therapeutic development business, we presented Faceline Clinical Data using our lead therapeutic development committee, FID-07, to treat head and neck cancer. At American Society for Clinical Oncology, ASCO, Annual Meeting in June 2020. Of 11 head and neck, Sequimment, Cell, Casinoma, or HNSCC, available patient with weekly dose level from 15 milligram per square meter to 160 milligram per square meter. Five or 45 percent had a partial response, and seven or 27 percent had a stable disease by visit. Three out of five HNSCC patients with a partial response had previously been treated as a taxi. The duration of the fall of a medium range is four months.

Brandon: Our therapeutic.

Brandon: The business, we presented phase one clinical data using our leap therapeutics.

Speaker Change: Kennedy Oh, seven to treat head and neck cancer at the American Society for clinical oncology or <unk> annual meeting in June 2000 to live there.

Speaker Change: 11th head and neck squamous cell carcinoma, or Ashton as C. C. You valuable patients with a weekly dose level from a 15 milligram per square meter 260 milligram per square meter five or 45% had a partial response and seven.

Speaker Change: Or 27% had stable disease.

Speaker Change: Three out of five.

Speaker Change: <unk> patient with the partial response had a phase III being treated because of taxes.

Speaker Change: The reason of our follow the meeting screen.

Speaker Change: Is it four months.

Ming Hsieh: No high grade in the bureaucracy has been noted. FID-07 demonstrated preliminary evidence of anti-tumor activity in cavity-pre-treated HNSCC patients across different primary tumor sites, with an overall response rate of 45 percent. As a result, we initiated a facial clinical trial of FID-07 in combination with the CTASIMAC in patients with HNSCC in January 2024, and the enrolment began in the second quarter. So far, we have enrolled, and those the first three patients in this trial. We expect to enrol approximately 40 patients in, where is the site to visit. The enrolment is expected to be complete in early 2026.

Speaker Change: No high grade and you obviously has to be noted.

Ming Hsieh: FID-07 demonstrated preliminary evidence of anti-tumor activity in heavily pre-treated HNSCC patients across different primary tumor sites with an overall response rate of 45%. As a result, we initiated a phase two clinical trial of FIDO7 in combination with cetastimide in patients with HNSCC in January 2024, and enrollment began in the second quarter.

Speaker Change: <unk> Oh, seven demonstrated preliminary evidence of antitumor activity in heavily pre treated at U S. C C patients across different primary tumor sites with an overall response rate of 45%.

Speaker Change: As a result, we initiate a phase two clinical trial.

Speaker Change: Oh seven in combination with Cetuximab in patients with etch and FCC in January 2024, and the enrolment beginning in the second quarter. So far have been enrolled and dosed. The first three patients in this trial, we expect to enroll approx.

Ming Hsieh: So far, we have enrolled and dosed the first three patients in this trial. We expect to enroll approximately 40 patients at various sites to, with enrollment, expect to complete in early 2026. We currently estimate the total patient clinical trial cost for the Phase II to be around $10 million. We continue to advance our second drug candidate, FID-022, a nanoencapsulate SN38, in preclinical studies toward an investigational new drug application by the end of this year.

Speaker Change: And the 40 patient you, whereas the side too.

Speaker Change: Recently enrollment expect to compete in early 2026.

Ming Hsieh: We currently expect the total patient clinical trial causes for the FID-12 to be a run of 10 million dollars. We continue to add once our second drug candy, FID-O2-2, a nano-incapsulated SN38 in pre-clinical studies toward an investigational new drug application by end of this year. While FID-O2-2 has shown superior efficacy of iron-kicking in words xenographed model include colon, bowed-up, or rearing and pancreatic cancers in our pre-clinical study. No significant unexpected toxicity were observed in both res and the monkey GRP toxicity studies. In addition, we also made a significant improvement in the development of antibody drug conjugates using our novel patent linker and a payload platform technology.

Speaker Change: We currently estimate the total patient clinical trial causal for the phase two to be around the $10 million.

Speaker Change: We continue to advance our second drug Kennedy <unk> nano and carefully the Sn 38 in preclinical studies toward.

Investigational new drug application by the end of this year.

Speaker Change: Well I.

Speaker Change: E <unk>.

Ming Hsieh: [inaudible] O22 has shown superior efficacy of Irene Keating in various xenograft models including colon, bowel duct, ovarian, and pancreatic cancers. In our preclinical study, no significant unspecified toxicity was observed in both rats and the monkey GLP toxicity studies.

<unk> has shown superior efficacy of <unk> T can you, whereas Zealand Roth model into the colon.

Speaker Change: Ovarian and pancreatic cancers in our preclinical study no significant unexpected toxicities were observed in both <unk> and the monkey GOP toxicity studies.

Ming Hsieh: In addition, we also made a significant advancement in the development of antibody drug conjugates using our novel patent linker and the payload platform technology. Our ADC has shown better efficacy overall in different tumors with a broad range of targeted antigen expression levels than some of the best ADCs benchmarked on the market in preclinical studies. In the meantime, ADCs with a novel target using our novel platform technology are also being prepared with the goal of generating leading candidates for clinical trials.

Speaker Change: In addition, we also made a significant advancement in the relevant or antibody drug conjugate using our novel patent the linker and payload platform technology.

Ming Hsieh: Our AEC has shown better efficacy overall over different tumors with a broad range of targeted antigenicrescent levels than some of the best ADC benchmark and the market in the pre-clinical studies. In meanwhile, ADC with a novel target using our novel type-on technology are also being prepared with the gold over-generated eating candy for clinical trials.

Speaker Change: AUC has shown better efficacy, but we're all.

Speaker Change: But we're different tumors with a broad range of targeted antigen expression levels than some of the best ADC benchmark in the market in the preclinical studies and Meanwhile, ADC with novel target using our novel.

Speaker Change: Python technology are also be prepared with the gold over generate the eating kenzie for clinical trials as.

Ming Hsieh: As a reminder, old artwork drug candies were formulated with our novel Nanointestrelation technology, which include over 30 issued active patents and active patents applications and target third-page pre-form designed to improve therapeutic windows and pharmacokinetics profile for both new and existing cancer drugs. Overall, we believe we have a good strategy with both our core laboratory services business and our therapeutic development business. We have seen momentum in our core business, which will be believed to continue to grow, strengthening our business model and fueling our therapeutic initiative. We continue to maintain a strong balance sheet to execute our strategy.

Speaker Change: As a reminder.

Ming Hsieh: All our drug candidates were formulated with our novel nanoencapsulation technology, which includes over 30 issued active patents and active patent applications, and the target therapy platform designed to improve therapeutic windows and the pharmacokinetic profile for both new and existing cancer drugs.

Speaker Change: All of our drug candidates or families that with our novel Nano encapsulation technology, which includes over 30 issued active patents and the active patent applications and the targeted therapy pro form.

Speaker Change: Designed to improve therapeutic windows and the formal call kinetic profile for both new and existing kinds of drugs.

Ming Hsieh: Overall, we believe we have a good strategy with both our core laboratory services business and our therapeutic development business. When we see momentum in our core business, we shall be believed to continue to grow, strengthening our business model, and fuel our therapeutic initiatives. We continue to maintain a strong balance sheet to execute our strategy. I would like to thank our employees, partners, and stakeholders for your hard work and loyalty in a very good second quarter for our business.

Speaker Change: Overall, we believe we have a good strategy with both our core laboratory services business and our therapeutic development business, we have seen momentum.

Speaker Change: Core business, which you'll be able to continue to grow strengthening our business model and a few of our therapeutic initiatives. We continue to maintain a strong balance sheet to execute our strategy.

Ming Hsieh: I would like to thank our employees, partners, and stakeholders for your hard work and loyalty in a very good second quarter for our business. We look forward to continue growth in the second half of 2024.

I would like to thank our employees partners and stakeholders for your hard work and loyalty Werent. Good second quarter for our business. We look forward to continued growth in the second half of 2024.

Ming Hsieh: We look forward to continued growth in the second half of 2024. I will now turn the call over to Brandon Perthuis, our Chief Commercial Officer, to talk more about our laboratory service business results during the second quarter.

Brandon Perthuis: I will now tend to call over to Brandon Prittis, our Chief Commercial Officer, to talk more about our laboratory services business results during the second quarter. Thank you, Ming. As a reminder, our laboratory service business includes precision diagnostics and atomic pathology and biopharmus services. These three represent our core revenue streams and do not include COVID-19 tests. We had another very strong quarter led by precision diagnostics, with all three areas showing strength. This is the first time we have seen all three areas pose quarter-over-quarter growth since 2022. In the past few quarters, we have experienced some headwinds in anatomic pathology and biopharmus services, but we are seeing the investments we made in those areas begin to pay off.

Speaker Change: I will now turn the call over to Brendan <unk>, our Chief commercial officer to talk more about our laboratory services business as a result during the second quarter Brennan.

Brandon Perthuis: Thanks, Ming. As a reminder, our laboratory service business includes precision diagnostics, anatomic pathology, and biopharmaceutical services. These three represent our core revenue streams and do not include COVID-19 testing. And we had another very strong quarter led by Precision Diagnostics, with all three areas showing strength. This is the first time we have seen all three areas post quarter-over-quarter growth since 2022. In the past few quarters, we have experienced some headwinds in anatomic pathology and biopharma services, but we are seeing the investments we made in those areas begin to pay off. I'll talk more about each of those in a moment.

Brendan: Thanks, Nick as a reminder, our laboratory service business includes precision diagnostics anatomic pathology and Biopharma services. These three represent our core revenue streams and do not include COVID-19 testing.

Speaker Change: And we had another very strong quarter led by precision diagnostics with all three areas showing strength. This is the first time, we have seen three all three areas post quarter over quarter growth since 2022.

Speaker Change: In the past few quarters, we have experienced some headwinds in anatomic pathology and Biopharma services, but we are seeing the investments we made in those areas begin to pay off I'll talk more about each of those momentarily circling back to precision diagnostics, it was up $5 $7 million or 15% quarter over quarter, and $11 $2 million or <unk> 35.

Brandon Perthuis: I will talk more about each of those momentarily. Circling back to precision diagnostics, it was up $5.7 million, or 15% quarter over quarter, and $11.2 million, or 35% year over year. The tremendous strength has been led by reproductive health testing, including vegan expanded care restraints. Beacon continues to be a bright spot for Fulgent. We have to have significant market share, establish strong B2B relationships, and continue to have a sales pipeline that gives us confidence and continued growth. The laboratory continues to perform exceptionally well, even with the record volume we are seeing. On average, our turnaround time has been 11 days, which is fantastic in a true testament to the power of our technology platform.

Brandon Perthuis: Circling back to precision diagnostics, it was up $5.7 million, or 15% quarter over quarter, and $11.2 million, or 35% year over year. The tremendous strength has been led by reproductive health testing, including Beacon Expanded Carrier Screening. Beacon continues to be a bright spot for Fulgent.

Speaker Change: 5% year over year.

Speaker Change: The tremendous strength, that's been led by reproductive health testing, including Beacon expanded carrier screening.

Speaker Change: Beacon continues to be a bright spot for Fulgent, we have captured significant market share establish strong <unk> relationships and continue to have a sales pipeline that gives us confidence of continued growth.

Brandon Perthuis: We have captured significant market share, established strong B2B relationships, and continue to have a sales pipeline that gives us confidence in continued growth. The laboratory continues to perform exceptionally well, even with the record volume we are seeing. On average, our turnaround time has been 11 days, which is fantastic and a true testament to the power of our technology platform. However, to scale this rapidly and continue to provide rapid turnaround is not trivial.

Speaker Change: The laboratory continues to perform exceptionally well even with the record volume we are seeing on average our turnaround time has been 11 days, which is fantastic and a true Testament to the power of our technology platform to.

Brandon Perthuis: Estail this rapidly and continue to provide rapid turnaround time is not trivial. We have also been able to give our clients the flexibility to cut some tailor the gene panel to their specifications. In addition, our strong engineering capabilities have allowed us to rapidly interface with client-side EMRs, allowing for orders and reports to be delivered electronically.

Speaker Change: Eldest rapidly and continue to provide rapid turnaround time is not trivial.

Brandon Perthuis: We have also been able to give our clients the flexibility to custom tailor the gene panel to their specifications. In addition, our strong engineering capabilities have allowed us to rapidly interface with client-side EMRs, allowing for orders and reports to be delivered electronically.

Speaker Change: We've also been able to give our clients the flexibility to custom tailor the gene panel to their specifications. In addition, our strong engineering capabilities have allowed us to rapidly interface with client side emr's, allowing for orders and reports to be delivered electronically.

Brandon Perthuis: Beacon will continue to be a focus for Fulgent as we now find ourselves as one of the leading providers of expanded launch a non-invasive prenatal test or NIPT for the first time, a test we have branded NOVA. NOVA is the first NIPT to include common annualities, micro-deletions, and monogenic conditions caused by day NOVA point mutations. We continue to make good progress with our go-to-market strategy and anticipate seeing additional progress in the coming quarters. As we have mentioned, we expect volume to be low for some time as we bring this novel test to market. However, we believe over time, clinicians will see the value of this new NIPT methodology.

Brandon Perthuis: Beacon will continue to be a focus for Fulgent as we now find ourselves as one of the leading providers of expanded care screening services. Staying on reproductive health, last quarter, we announced we had launched a non-invasive prenatal test, or NIPT, for the first time, a test we have branded NOVA. NOVA is the first NIPT to include common aneuploidies, microdeletions, and monogenic conditions caused by de novo point mutations.

Speaker Change: <unk> will continue to be a focus refulgent as we now find ourselves as one of the leading providers of expanded carrier screening services.

Speaker Change: Staying on reproductive health last quarter, we announced we have launched a noninvasive prenatal test or <unk> for the first time a test we are branded Nova Nova is the first <unk> to include common Aneuploidy micro deletions and monogenic conditions caused by de Novo point mutations we continue to make good progress with our go to market.

Brandon Perthuis: We continue to make good progress with our go-to-market strategy and anticipate seeing additional progress in the coming quarters. As we have mentioned, we expect volume to be low for some time as we bring this novel test to market. However, we believe over time, clinicians will see the value of this new NIPT methodology. I wanted to provide a quick update on our oncology portfolio. We recently gained MoldeX approval for our liquid biopsy assay for high-stage solid tumors, complementing our previously approved solid tumor tissue and heme NGS assays.

Speaker Change: Strategy and anticipate seeing additional progress in the coming quarters.

Speaker Change: As we had mentioned we expect volume to be low for some time as we bring this novel test the market. However, we believe over time clinicians will see the value of this new <unk> methodology.

Brandon Perthuis: I want to provide a quick update on our oncology portfolio. We recently gained multi-ex-approval for our liquid biopsy assay for high-stage solid tumors, complementing our previously approved solid tumor tissue and heme NGF assays. Our liquid biopsy offering is a comprehensive test, including over 500 genes, which detects tumor mutation burden, micro-satellite instability, endyls, endcopy number alterations, in addition to single nucleotide variants. The coverage rate is approximately $2,840 and is retroactive back to September 2023. This is just one more piece of the puzzle, helping complete a near-one-stop shop for oncologists. Over time, the focus will be to continue to build out the commercial team and capture market share, leaning on this one stop shop offering excellent quality Q and S rates in turnaround time.

Speaker Change: I wanted to provide a quick update on our oncology portfolio. We recently gained <unk> approval for our liquid biopsy assay for high stage solid tumors complementing our previously approved solid tumor tissue and heme NGF assays.

Brandon Perthuis: Our liquid biopsy offering is a comprehensive test including over 500 genes that detects tumor mutation burden, microsatellite instability, indels, and copy number alterations in addition to single nucleotide variants. The coverage rate is approximately $2,840 and is retroactive back to September 2023.

Speaker Change: Our liquid biopsy offering is a comprehensive test, including over 500 genes, which detects tumor mutation burden microsatellite instability in dells and copy number alterations. In addition to single nucleotide variance.

Speaker Change: The coverage rate is approximately $2840 and is retroactive back to September 2023. This is just one more piece of the puzzle, helping complete a near one stop shop for oncologist overtime. The focus will be to continue to build out the commercial team and capture market share leaning on this one stop shop offering and excellent quality.

Brandon Perthuis: This is just one more piece of the puzzle, helping complete a near one-stop shop for oncologists. Over time, the focus will be to continue to build out the commercial team and capture market share, leaning on this one-stop shop offering and excellent quality, Q&S rates, and turnaround time. Turning to anatomic pathology, we are pleased to see this area return to growth, albeit small.

Speaker Change: Q S rates and turnaround time.

Brandon Perthuis: Turning to anatomic pathology, we are pleased to see this area return to growth, albeit small. Anatomic pathology has seen multiple quarters of headwinds related to our integration of the acquisition of Informed Diagnostics and some macrofactors, but we now see this area stabilized. And more importantly, the sales team is closing meaningful new accounts, and the pipeline is strong. This is a result of a revamped go-to-market strategy and improved sales team and continued laboratory performance as it relates to quality and turnaround time. Also during the quarter, we relocated the operation to our newly purchased building at Capell, Texas, and consolidated our New York laboratory.

Speaker Change: Turning to anatomic pathology, we are pleased to see this area returned to growth, albeit small anatomic pathology has seen multiple quarters of headwinds related to our integration of the acquisition of a form diagnostics and some macro factors, but we now see this area a stabilized and more importantly, the sales team is closing meaningful new accounts in the pipeline is strong.

Brandon Perthuis: Anatomic pathology has seen multiple quarters of headwinds related to our integration of the acquisition of informed diagnostics and some macro factors, but we now see this area stabilized. And more importantly, the sales team is closing meaningful new accounts, and the pipeline is strong. This is the result of a revamped go-to-market strategy, an improved sales team, and continued laboratory performance as it relates to quality and turnaround time. Also, during the quarter, we relocated the operation to our newly purchased building in Capell, Texas, and consolidated our New York laboratory. This was not trivial, yet executed very well. A special thanks to all the team members who worked so hard on this.

Speaker Change: This is a result of a revamped go to market strategy and improved sales team and continue laboratory performance as it relates to quality and turnaround time.

Speaker Change: Also during the quarter, we relocated the operations to our newly purchased building at Capella, Texas and consolidated our New York Laboratory. This was not trivial yet executed very well our special thanks to all the team members who worked so hard on this we believe this investment will provide long term advantages related to capacity efficiency and cost.

Brandon Perthuis: This was not trivial, yet executed very well, especially thanks to all the team members who worked so hard on this. We believe this investment will provide long-term advantages related to capacity, efficiency, and cost. Biopharma services also return to growth in the second quarter. As we have mentioned previous calls, we continue to expand our technical capabilities, allowing us to address a larger market. We have invested an additional sales headcount in this area and are building a robust sales funnel. This market continues to expand as BioCarmelines more on multi-oamic studies for their drug development, and we believe we are in a good position to continue to partner up on these studies.

Brandon Perthuis: We believe this investment will provide long-term advantages related to capacity, efficiency, and cost. Biopharma services also returned to growth in the second quarter. As we have mentioned in previous calls, we continue to expand our technical capabilities, allowing us to address a larger market. We have invested in additional sales headcount in this area and are building a robust sales funnel. This market continues to expand as biopharma leans more on multi-omics studies for their drug development, and we believe we are in a good position to continue to partner on these studies. Nonetheless, this is an area where we still expect results to vary from period to period due to the nature of the project and a lengthy sales cycle.

<unk> services also returned to growth in the second quarter as we had mentioned in previous calls we continue to expand our technical capabilities, allowing us to address a larger market. We have invested in additional sales head count in this area and are building a robust sales funnel.

Speaker Change: This market continues to expand as Biopharma leans more on multi omics studies for their drug development and we believe we are in a good position to continue to partner up on these studies. Nonetheless. This is an area. We still expect results to vary from period to period due to the nature of the project and a lengthy sales cycle.

Brandon Perthuis: Nonetheless, this is an area we still expect results to vary from period to period due to the nature of the project and a lengthy sales cycle. As a potentially positive catalyst for Fulgent. Many of our tests are New York State approved, and we have over 20,000 tests launched on our menu before the May 6, 2024, publication date, which is the operative date for the purposes of the currently marketed test enforcement discretion policy. As long as they're not modified, it appears these tests will likely only need to meet device regulatory requirements that become applicable at stage 1, stage 2, and stage 3 of the FDA's phase-out timeline, and we don't presently expect material disruptions to our service offerings.

Speaker Change: There were some questions around the new FDA regulations on lab developed tests at the time of our last call and we have gained some clarification. Although many questions remain at a high level, we interpret the new regulations as a potentially positive catalysts for fulgent.

Brandon Perthuis: There were some questions around the new FDA regulations on lab-developed tests at the time of our last call, and we have gained some clarification, although many questions remain. At a high level, we interpret the new regulations as a potentially positive catalyst for fulging. Many of our tests are New York State approved, and we have over 20,000 tests launched on our menu before the May 6, 2024 publication date, which is the operative date for the purposes of the currently marketed test enforcement discretion policy.

Speaker Change: Many of our test our New York State approved and we have over 20000 tests launched on our menu before the May six 2020 for publication date, which is the operative date for the purposes of the currently marketed test enforcement discretion policy.

Brandon Perthuis: As long as they are not modified, it appears these tests will likely only need to meet device regulatory requirements that become applicable at Stage 1, Stage 2, and Stage 3 of the FDA's phase-out timeline, and we don't presently expect material disruptions to our service offering. Stage 1 includes FDA medical device reporting, which will require laboratories to report certain device-related adverse events and product problems to FDA within a specific time frame. Stage 1 also requires labs to maintain compliant files for each test they offer and to report any corrections or removals to the agency.

Speaker Change: As long as they're not modified it appears these tests will likely only need to meet device regulatory requirements that become applicable in stage, one stage, two and stage three of the Fda's phase out timeline and we don't presently expect material disruptions to our service offerings stage. One includes FDA medical device reporting which will require laboratories to report certain.

Brandon Perthuis: Stage 2 requires each laboratory to be registered with the FDA and to list their commercial tests with the agency. It also phases in device labeling requirements and certain other compliance rules. Stage 3 applies certain other quality system regulations to laboratories and their tests, with the specific requirements depending in large part on whether a currently marketed test is approved by New York State or not.

Brandon Perthuis: Stage 1 includes FDA medical device reporting, which will require laboratories to report certain device-related adverse events and product problems to FDA within a specific timeframe. Stage 1 also requires labs to maintain a compliant file for each test they offer and to report any corrections or removals to the agency. Stage 2 requires each laboratory to be registered with the FDA and to list their commercial tests with the agency. It also phases in lab, also phases in device labeling requirements and certain other compliance rules. Stage 3 applies certain other quality system regulations to laboratories and their tests, with the specific requirements depending in large part on whether a currently marketed test is approved by New York State or not.

Speaker Change: Device related adverse events and product problems to FDA within a specific timeframe stage. One also requires labs to maintain compliant file for each test they offer and to report any corrections or removals to the agency stays true requires each laboratory to be registered with the FDA and to list their commercial test with the agency. It also phases in lab.

Speaker Change: Also faces and device labeling requirement and certain other compliance rules.

Stage three applies certain other quality system regulation to laboratories and their test with a specific requirements depending in large part on whether a currently marketed tests is approved by New York state or not.

Brandon Perthuis: These new regulations may make it more difficult for new labs to open or new tests to be launched at existing laboratories, potentially creating a competitive mode for our company.

Brandon Perthuis: These new regulations may make it more difficult for new labs to open or new tests to be launched at existing laboratories, potentially creating a competitive moat for our company. However, there is a federal lawsuit pending against the FDA, which argues that the agency did not have the authority to announce the LDT final rule. The plaintiffs in that case are seeking to vacate FDA's issuance of the final rule. The outcome of that lawsuit is highly uncertain, and it may change the legal and regulatory landscape for clinical advocacy. Accordingly, this is all very new, and much could change. Ultimately, the effect of these regulations may not be as we currently expect.

Speaker Change: These new regulations may make it more difficult for new labs to open or new test to be launched at existing laboratories, potentially creating a competitive moat for our company. However.

Brandon Perthuis: However, there is a federal lawsuit pending against the FDA, which argues that the agency did not have the authority to announce the LDT final rule. The plaintiffs in that case are seeking to vacate FDA's issuance of the final rule. The outcome of that lawsuit is highly uncertain, and it may change the legal and regulatory landscape for clinical laboratories. Accordingly, this is all very new, and much could change. Ultimately, the effect of these regulations may not be as we currently expect, so we will continue to monitor the FDA's implementation of these new regulations and the ongoing litigation that is attempting to invalidate the final rule.

Speaker Change: However, there is a federal lawsuit pending against the FDA, which argues that the agency did not have the authority to announce the ODT final rule. The plaintiffs in that case are seeking to vacate fda's issuance of the final rule. The outcome of that lawsuit is highly uncertain and it may change the legal and regulatory landscape for clinical laboratories. Accordingly. This is all very new and much can change.

Speaker Change: Ultimately the effect of these regulations may not be as we currently expect so we will continue to monitor the fda's implementation of these new regulations and the ongoing litigation that is attempting to invalidate the final rule.

Brandon Perthuis: So we will continue to monitor the FDA's implementation of these new regulations and the ongoing litigation that is attempting to invalidate the final rule. In closing, we are very pleased with our progress so far this year and optimistic about the upcoming quarter. We believe with our large, diverse product offering and a powerful technology platform, we are primed to continue to build on our success. I'll now turn the call over to Paul Kim, our Chief Financial Officer. Paul? Thank you, Brandon.

Brandon Perthuis: In closing, we are very pleased with our progress so far this year and optimistic about the upcoming quarters. We believe that with our large, diverse product offering and a powerful technology platform, we are primed to continue to build on our success.

Speaker Change: In closing we are very pleased with our progress so far this year and optimistic about the upcoming quarters.

Paul Kim: We believe with our large and diverse product offerings and a powerful technology platform. We are primed to continue to build on our success I'll now turn the call over to Paul Kim Our Chief Financial Officer, Paul. Thank you Brandon revenue in the second quarter of 2024 totaled $71 million compared to $67 9 million.

Paul Kim: I'll now turn the call over to Paul Kim, our Chief Financial Officer. Paul? Thank you, Brandon. Revenue in the second quarter of 2024 total 71 million compared to 67.9 million in the second quarter of 2023. 841,000 came from COVID-19 testing in Q2, which was not part of our guidance. Revenue from our core business totaled 70.2 million. Gap Gross Margin was 37% and on a non-gap basis was 40%. Gross margins continue to improve year-over-year, showing the benefit of our continued efficiencies and streamlining of our business. Total gap operating expenses were $45.4 million for the second quarter.

Paul Kim: Thank you, Brandon. Revenue in the second quarter of 2024 totaled $71 million compared to $67.9 million in the second quarter of 2023. 841,000 came from COVID-19 testing in Q2, which was not part of our guidance. Revenue from our core business totaled $70.2 million. Gap gross margin was 37%, and on a non-gap basis, it was 40%. Gross margins continue to improve year over year, showing the benefit of our continued efficiencies and streamlining of our business.

Paul Kim: In the second quarter of 2023.

Paul Kim: 841000 came from COVID-19 testing in Q2, which was not part of our guidance revenue from our core business totaled $70 2 million GAAP gross margin was 37% and on a non-GAAP basis was 40%.

Speaker Change: Gross margins continue to improve year over year, showing the benefit of our continued efficiencies and streamlining of our business total GAAP operating expenses were $45 4 million for the second quarter compared to $43 9 million in the first quarter of 2024, primarily related to higher R&D spend.

Paul Kim: Total GAAP operating expenses were $45.4 million for the second quarter compared to $43.9 million in the first quarter of 2024, primarily related to higher R&D spend. Non-GAAP operating expenses totaled $33.8 million compared to $32.4 million in the first quarter of 2024. The non-GAAP operating margin increased approximately five percentage points sequentially to minus 7.4 percent, primarily due to higher revenue and gross margin in Q2. The adjusted EBITDA loss for the second quarter was $727,000, compared to a loss of $2.7 million in the second quarter of 2023.

Paul Kim: Compared to $43.9 million in the first quarter of 2024, primarily related to higher R&D spend. 7.4% primarily due to higher revenue and gross margin in Q2. Adjusted EBDA loss for the second quarter was $727,000 compared to a loss of $2.7 million in the second quarter of 2023. The non-GAAP basis and excluding stock-based compensation expenses and intangible asset amortization income for the quarter was $4.7 million for a positive $0.15 per share based on $30 million weighted average fully diluted shares outstanding. Turning to the balance sheet, we ended the second quarter with approximately $838 million in cash equivalent to marketable securities.

Speaker Change: non-GAAP operating expenses totaled $33 8 million compared to $32 4 million in the first quarter of 2024.

Speaker Change: non-GAAP operating margin to increase approximately five percentage points sequentially to minus seven 4%, primarily due to higher revenue and gross margin in Q2, adjusted EBITDA loss for the second quarter was 727000 compared to a loss of $2 seven.

Speaker Change: In the second quarter of 2023 on a non-GAAP basis, and excluding stock based compensation expenses and intangible asset amortization income for the quarter was $4 7 million or positive <unk> 15 per share based on 30 million weighted average fully diluted share.

Paul Kim: On a non-GAAP basis, and excluding stock-based compensation expenses and intangible asset amortization, income for the quarter was $4.7 million, or a positive $0.15 per share based on $30 million weighted average fully diluted shares outstanding. Turning to the balance sheet, we ended the second quarter with approximately $838 million in cash, cash equivalents, and marketable securities. Cash used in the period included investment and building improvements and lab equipment for our CAPEL lab, which Brandon mentioned. Additionally, we relocated our Texas lab in the second quarter.

Speaker Change: Outstanding.

Turning to the balance sheet, we ended the second quarter with approximately $838 million in cash cash equivalents in marketable securities cash used in the period included investment and building improvements.

Paul Kim: Cash use in the period included investment and building improvements in lab equipment for a Cappell lab, which Brandon mentioned we relocated our Texas lab in the second quarter.

And lab equipment for our Kapow lab, which Brandon mentioned.

Speaker Change: We relocated our Texas lap in the second quarter now.

Paul Kim: Now moving on to our guidance, we're reiterating our revenue outlook for 2024, with minimal revenues from COVID-19 testing expected or guiding to core revenues, which is total laboratory services revenue for the company. Without COVID-19 testing revenue, we continue to expect a total core revenue to be approximately 280 million for 2024, representing core growth of 7% year over year. There's no revenues from our therapeutic development business anticipated in our 2024 guidance. Turning to expected margins for 2024, excluding COVID-19 revenue and stock-based compensation, we expect non-GAAP growth margins to continue to be around the high 30% range that we signed Q2 and reach our target of 40% by the end of the year.

Paul Kim: Now moving on to our guidance, we're reiterating our revenue outlook for 2024, with minimal revenues from COVID-19 testing expected. We're guiding to core revenues, which is total laboratory services revenue for the company without COVID-19 testing revenue. We continue to expect total core revenue to be approximately $280 million in 2024, representing core growth of 7% year-over-year. There are no revenues from our therapeutics development business anticipated in our 2024 guidance.

Speaker Change: Now moving onto our guidance, we're reiterating our revenue outlook for 2024 with minimal revenues from COVID-19 testing expected, we're guiding to core revenues, which is total laboratory services revenue for the company without COVID-19 testing revenue, we continue to expect total.

Speaker Change: <unk> core revenue to be approximately $280 million for 2024, representing core growth of 7% year over year, There's no revenues from our therapeutics development business anticipated in our 2020 for guidance.

Paul Kim: Turning to expected margins for 2024, excluding COVID-19 revenue and stock-based compensation, we expect non-GAAP gross margins to continue to be around the high $30-$35 range, percent range, that we achieved in Q2 and reach our target of 40% by the end of the year. We expect to see slightly lower non-gap operating margins in the quarters ahead as we further invest resources to grow our business, an operating margin of approximately minus 16% for the year.

Speaker Change: Turning to expected margins for 2024, excluding COVID-19 revenue and stock based compensation, we expect non-GAAP gross margins to continue to be around the high 30 <unk>.

Speaker Change: Percent range that we signed in Q2 and reach our target of 40% by the end of the year.

Paul Kim: We expect to see slightly lower non-GAAP operating margins in the quarters ahead as we further invest resources to grow our business, in operating margin of approximately minus 16% for the year. We remain focused on managing our spend and continue to believe that our foundational technology platform supports a strong margin profile longer term. We continue to expect associated cash burn for therapeutic development business to be about 15 to 17 million this year, which is contemplated in our EPS and cash guidance. Based on the lower spend we achieved in the first half of the year and a more favorable tax rate forecast for the full year, we're lowering our expected gap EPS loss to approximately $1.95 per share, excluding any one-time charges, using a 30 million average share count.

Speaker Change: We expect to see slightly lower non-GAAP operating margins in the quarters ahead, as we further invest resources to grow our business.

Speaker Change: And operating margin of approximately minus 16% for the year.

Paul Kim: We remain focused on managing our spend and continue to believe that our foundational technology platform supports a strong margin profile longer term. We continue to expect the associated cash burn for our therapeutics development business to be about $15-17 million this year, which is contemplated in our EPS and cash guidance. Based on the lower spend we achieved in the first half of the year and a more favorable tax rate forecast for the full year, we're lowering our expected gap EPS loss to approximately $1.95 per share, excluding any one-time charges, using a $30 million average share count.

Speaker Change: We remain focused on managing our spend and continue to believe that our foundational technology platform supports a strong margin.

Speaker Change: Profile longer term, we continue to expect the associated cash burn for therapeutics development business to be about $15 million to $17 million. This year, which is contemplated in our EPS and cash guidance.

Speaker Change: Based on the lower spend we achieved in the first half of the year and a more favorable tax rate forecast for the full year, we're lowering our expected GAAP EPS loss to approximately $1 95 per share excluding any onetime charges using a 30 million average share count utilizing <unk>.

Paul Kim: Utilizing a non-gap tax provision and average share count of $30 million, we're lowering our expected full year 2024 net non-gap loss to approximately $0.30 per share for shareholders, excluding stock-based compensation and amortization of intangible assets, as well as any one-time charges. Finally, our cash position remains strong, excluding any stock purchases or other expenditures outside the ordinary course, which could include M&A or real We would anticipate ending 2024 with approximately $800 million of cash, cash equivalents, and investments in marketable securities. Overall, we see strength in our core business, which has grown organically and through strategic acquisitions, and we see good momentum ahead. Thank you for joining our call. Operator, now you may open it up for questions.

Paul Kim: Utilizing a non-gap tax provision and average share count of 30 million, we're lowering our expected full year 2024 non-gap loss to approximately 30% per share for shareholders, excluding stock-based compensation and amortization of intangible assets, as well as any one-time charge. Finally, our cash position remains strong, excluding any stock purchases or other expenditures outside the ordinary course, which could include M&A or real property purchases. We would anticipate ending 2024 with approximately 800 million of cash, cash equivalents, and investments in marketable securities.

Speaker Change: non-GAAP tax provision and average share count of $30 million, we're lowering our expected full year 2024, net non-GAAP loss to approximately 30 cents per share for our shareholders, excluding stock based compensation and amortization of intangible assets as well as any one time charges.

Speaker Change: Finally, our cash position remains strong excluding any stock purchases or other expenditures outside the ordinary course, which could include M&A, our REO property purchases, but we would anticipate ending 2024 with approximately $800 million of cash cash equivalents and investments in marketable securities.

Paul Kim: Overall, we see strength in our core business, which has grown organically, and through strategic acquisitions and be good moments in the head.

Speaker Change: Overall, we see strength in our card business, which has grown organically and through strategic acquisitions and see good momentum ahead. Thank you for joining our call. Operator now you may open it up for questions.

Operator: Thank you for joining our operator.

Operator: Now you may open it up for questions. Certainly. We'll now be conducting your question and answer session.

Operator: Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 at this time. One moment, please, while we poll for questions. Our first question is coming from David Westenberg from Piper Stanley. Your line is now live.

Speaker Change: Certainly will not be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one at this time one moment. Please while we poll for questions. Our first question is coming from David Westenburg from Piper Sandler Your line is now live.

Operator: If you'd like to be placing the question to you, please press star one at this time. One moment, please.

Operator: What will you pull for questions?

David Westenberg: Our first question is coming from David Westenberg from Pepper Sandler. Your line is now live. Hi. No.

David Westenberg: Hi, no, thank you for taking the question and a great job in the quarter. I think this one would be for Paul.

David Westenburg: Hi, no. Thank you for taking the question.

Paul Kim: Thank you for taking the question and a great job in the quarter. I think this one would be for Paul. I know. I think it's really obvious right now that your cash management has been fairly terrific over the course of through all your different acquisitions. With the 800 cash balance and your proven cash discipline, is there any thought to capital allocation going back to M&A strategy, or do you think you have maybe too many irons in the fire right now with all the different businesses and moving into more oncology tests and reproductive health and all the clinical trials coming up?

David Westenburg: Good job on the quarter.

David Westenburg: I think this one would be for Paul.

David Westenberg: I know, I think it's really obvious right now that your cash management has been fairly terrific over the course of through, you know, all your different acquisitions. So, you know, with an $800 cash balance and you're kind of proven in cash discipline, is there any thought to capital allocation going back to M&A strategy, or do you think you have maybe too many irons in the fire right now with all the different businesses and, you know, moving into more oncology tests and reproductive health and, you know, all the clinical trials coming up?

Speaker Change: I think it's really obvious right now that you're cash management has been.

David Westenburg: Fairly terrific.

Speaker Change: Over the course of through your all of your different acquisitions.

Speaker Change: With an 800 gig cash balanced in your kind of like proven.

Speaker Change: Cash discipline is there any any any thoughts on capital allocation going back to M&A strategy or do you think you have maybe two arent too many irons in the fire right now with with all the all the different businesses and moving into more oncology tests in reproductive health and.

Speaker Change: All the clinical trials coming up.

Paul Kim: I think our cash balance is certainly sufficient to do the things that we want to do to address a wider market that we can with our capabilities. When we take a look at the efficiencies in our business, we see it combined overall with the companies that we have purchased over the last couple of years. As you remember, in 2022, our core revenues was approximately 181 million. In 2023, the core revenues were 262 million. In 2024, as of today's call, we're reiterating 280 million of our core revenues. When we take a look at our overall business, the momentum for our core has seen a very, very nice growth.

Speaker Change: I think our cash balances certainly sufficient.

Paul Kim: I think our cash balance is, you know, certainly sufficient to do the things that we want to do to, you know, address the wider market that we can with our, you know, capabilities. When we take a look at the efficiencies in our business, we see it combined overall with the companies that we have purchased over the last couple of years. As you remember, in 2022, our core revenues were approximately $181 million. In 2023, our core revenues were $262 million.

Speaker Change: To do.

Speaker Change: The things that we want to do to address.

Speaker Change: Wider market that we can with our capabilities when we take a look at.

Speaker Change: The efficiencies in our business we.

Speaker Change: We see it combined overall, what the companies that we have purchased over the last couple of years.

Speaker Change: If you remember in 2022, our core revenues was approximately $181 million.

Speaker Change: In 2023, the core revenues were $262 million in.

Paul Kim: In 2024, as of today's call, we're reiterating $280 million of our core revenues. You know, when we take a look at, you know, our overall business, the momentum for our core has seen, you know, a very, very nice growth. But I think the other thing that we're very, very excited about is the improvement that we see in our overall operations, particularly our gross margins. If you look at the gross margins, you know, for the business, excluding COVID, the gross margin excluding stock-based compensation in the first quarter of 2023 was approximately 28%.

Speaker Change: In 2024 as of today's call, we're reiterating $280 million of our core revenues.

Speaker Change: When we take a look at our overall business the momentum for our core has seen a very very nice growth, but I think the other thing that we're very very excited about is the improvement that we see in our overall operations, particularly our gross margins. If you look at the gross margins.

Paul Kim: But I think the other thing that we're very, very excited about is the improvement that we see in our overall operations, particularly our gross margins. If you look at the gross margins for the business excluding COVID, the gross margins excluding stock-based compensation in the first quarter of 2023 was approximately 28%. When within six quarters for Q2 of 2024, even if you take out the COVID, our gross margins are 39.4%. That is over 11 whole points of improvements that we have in the gross margins, and then you get into the operating expenses. The operating expenses have been more favorable than we have anticipated.

Speaker Change: For the business, excluding COVID-19 the gross margins excluding stock based compensation in the first quarter of 2023 was approximately 28%.

Paul Kim: And within six quarters, for Q2 of 2024, even if you take out COVID, our gross margins are 39.4%. That is over 11 whole points of improvement that we have in our gross margins. And then you get into the operating expenses. The operating expenses have been, you know, more favorable than we anticipated. Now, some of that was due to better collection, you know, experience that we had within our regular business as well as COVID. But yes, you are correct.

Speaker Change: When within six quarters for Q2 of 2024.

Speaker Change: Even if you take out the covered our gross margins are at 39, 4% that is over 11 whole points of improvements that we have on the gross margins and then you get into the operating expenses.

Speaker Change: The operating expenses have been more favorable than we have anticipated now some of that was due to better collection experience that we had within our regular business as well as COVID-19, but yes, you are correct. The overall efficiencies in our business the efficiencies that we had with integrating our acquisitions.

Paul Kim: Now some of that was due to better collection experience that we had within our regular business as well as COVID, but yes, you are correct. The overall efficiencies in our business, the efficiencies that we had with integrating our acquisitions and cash management, has been much better than we have anticipated.

Paul Kim: The overall efficiencies in our business, the efficiencies that we have had with integrating our acquisitions and, you know, cash management, have been much better than we anticipated.

Speaker Change: And cash management has been much better than we have anticipated.

Brandon Perthuis: I just want to address the point. No, we don't have too many irons in the fire, to answer your question. However, we're going to be very careful with our acquisitions going forward. But the management team consistently evaluates opportunities for M&A. We've done two M&As thus far, and both have worked quite well. That's not always the case with companies.

Speaker Change: Okay great.

Paul Kim: I just want to address the point. No, we don't have too many irons in the fire to answer your question. However, we're going to be very careful with our acquisitions going forward. But the management team consistently evaluates opportunities for M&A. We've done two M&A thus far, and both have worked quite well. That's not always the case with companies. If we do a third or a fourth, we want to make sure it's something we can make work. But we don't have too many irons in the fire, and we consistently evaluate opportunities. Great, great. No, thank you, Brandon.

Speaker Change: I'm, sorry, I'm, sorry, sorry, Hi, David It's Brandon Yeah, I just wanted to.

Speaker Change: Address the point no we don't have too many irons in the fire to answer your question.

Speaker Change: However, we're going to be very careful with our acquisitions going forward.

Speaker Change: But the management team consistently evaluates opportunities for M&A, we've done two M&A, thus far and both have worked quite well that's not always the case with companies. If we do a third or fourth we want to make sure. It's something we can make work, but we don't have too many irons in the fire and we consistently evaluate opportunities.

Brandon Perthuis: If we do a third or a fourth, we want to make sure it's something we can make work. But we don't have too many irons in the fire, and we consistently evaluate opportunities. Great. Thank you, Brandon. That was a great clarification there. I'll stick with you in terms of the questions here, Brandon. Just in terms of the reproductive health business, there's a growing opportunity there.

branded: Great. Thank you branded that was a great hilarity there.

Brandon Perthuis: That was a great clarity there. And I'll stick with you in terms of the questions here, Brandon. You know, just in terms of the reproductive health business, you know, that's a growing opportunity there. Can you talk about some of the differentiation you have in the NIPT test? We talked about this in Emo a couple of weeks ago, but I think it's pretty important to reiterate this. And if there are any guideline expectations, obviously not in the guide, but, you know, what's the latest there? And would you indeed benefit from both expanded carrier screening, ACOG recommendation, and in addition microdeletions, particularly 22q, if that comes out.

branded: I'll stick with you in terms of the questions here Brendan.

Brendan: Just in terms of.

Speaker Change: The reproductive health business.

Brandon Perthuis: Can you talk about some of the differentiation you have in the NIPT test? We talked about this in an email a couple of weeks ago, but I think it's pretty important to reiterate this. If there are any guideline expectations, obviously not in the guide, but what's the latest there? Would you indeed benefit from both expanded carrier screening, ACOG recommendation, and in addition micro-deletions, particularly 22Q if that comes out, just in terms of timelines for when that could come out? Thank you. Yes.

That's a growing opportunity there.

Speaker Change: Can you talk about some of the some of the differentiation that you have in the <unk>, we talked about this and he made a couple of weeks ago, but I think it's pretty important to reiterate this and if there is any guideline expectations, obviously not in the guide, but what's the latest there and would you indeed benefit from.

Speaker Change: Both expanded carrier screening a cog recommendation in addition.

Speaker Change: Yeah.

Speaker Change: Micro deletions, particularly twenty-two queue if that comes out and just in terms of timelines for when that could come out. Thank you.

Brandon Perthuis: And, you know, just in terms of timelines for when that could come out.

Brandon Perthuis: Thank you. Yeah, thanks for the question. We also are hearing, you know, rumors of expanded ACOG guidelines going forward for expanded carrier screening. Certainly, that would benefit the industry. Quantically, we're there. If you look, especially on the infertility side of the business, expanded carrier screening is standard of care. That is what doctors are ordering for their patients going through infertility treatments. So it would be great to see the guidelines become more aligned with practice today. Most of the biggest benefits there, being payers, often fall in line with the guidelines. So we'll continue to monitor that.

Brandon Perthuis: Yeah, thanks for the question. We also are hearing, you know, rumors of expanded ACOG guidelines going forward for expanded carrier screening. Certainly, that would benefit the industry. Clinically, we're there. If you look, especially on the infertility side of the business, expanded carrier screening is standard of care. That is what doctors are ordering for their patients going through infertility treatments.

Speaker Change: Yes, thanks for the question.

Speaker Change: We also were hearing rumor.

Speaker Change: Rumors of expanded <unk> guidelines going forward for expanded carrier screening.

Speaker Change: Certainly that would benefit the industry.

Speaker Change: Clinically where there if.

Speaker Change: If you look, especially on the in fertility side of the business expanded carrier screening as standard of care.

Speaker Change: That is what doctors are ordering for their patients going through infertility treatments. So it would be great to see the guidelines become more aligned with practice today.

Brandon Perthuis: So it would be great to see the guidelines become more aligned with practice today, with the biggest benefit being that payers often fall in line with the guidelines. So we'll continue to monitor that.

Most the biggest benefit there being payers often fall fall in line with the guidelines.

Speaker Change: We'll continue to monitor that I know, it's being worked on.

Brandon Perthuis: I know it's being worked on, and I think it will be positive for the industry as it relates to expanded carrier screening. In terms of our NIPT test, the main differentiator there is being able to screen for de novo point mutations. Most NIPTs out there are screening for aneuploidy as well as microdeletions and some microduplications but don't include de novo point mutations for these monogenic conditions, which are quite serious.

Brandon Perthuis: I know it's being worked on, and I think it will be positive for the industry as it relates to expanded carrier screening. In terms of our NIPT test, the main differentiator there is being able to screen for de novo point mutations. Most NIPTs out there are screening for any employee, as well as micro-deletion and some micro-duplications. But don't include day-novo point mutations for these monogenic conditions. And these monogenic conditions are quite serious. They do cause severe disability. They are relatively common when you group them together. So, you know, we think this novel approach, over time, could be something that clinicians really see as added value when they think about picking an NIPT partner.

Speaker Change: And I think it will be positive for the industry as it relates to expanded carrier screening in terms of our <unk> test. The main differentiator there is being able to.

Speaker Change: Screen for de Novo point mutations.

Speaker Change: Most <unk> out there are screening for aneuploidy as well as micro deletions and some micro duplications, but don't include de Novo point mutations.

Speaker Change: For these monogenic conditions and these monogenic conditions are quite serious they do cause severe disability.

Brandon Perthuis: They do cause severe disability, and they are relatively common when you group them together. So we think this novel approach, over time, could be something clinicians really see as added value when they think about picking an NIPT partner.

Speaker Change: They are relatively common when you group them together. So we think this novel approach over time.

Speaker Change: It could be something conditions really see added value when they think about picking and an ICT partner.

Ming Hsieh: Great. And then, just because I haven't asked one for Ming, I'll ask one for you. Just in terms of the head and neck opportunity, you know, you said on the call that you had begun to start enrollment. When would enrollment end, and then how long would the study be? And then, Nick, can you help us size the opportunity for head and neck cancer, particularly for FDI 007? Thank you.

Speaker Change: Okay, Great and then just because I Havent asked one for me and I'll ask one.

Ming Hsieh: Great. And then just because I haven't asked one for me, I'll ask one for you. Just in terms of the head-and-neck opportunity, you know, you said in the call you have begun to start her role in enrollment. When will an enrollment end, and then how long would the study be? And then can you help us size the opportunity of head-and-neck cancer, particularly for FDI, one of... 0-0-0-7. Thank you. Okay. Thank you, David. We are excited with the performance or results of a Phase I study of FID 007. So, we are doing the second phase trial for the second line at the neck cancer patients.

Speaker Change: I'll ask one for you.

Speaker Change: Just in terms of the head and neck opportunity.

Speaker Change: You said in the call you had begun to starting her role in our enrolment win-win enrolment and and then how long would the study be and then Eric can you help us size the opportunity of head and neck cancer.

Speaker Change: Particularly for <unk>.

<unk> one of them.

Speaker Change: 007, thank you.

Ming Hsieh: Okay, thank you, David. We are excited with the performance or results of our Phase I study of FID-007. So we are doing the second phase trial for second line head and neck cancer patients. So the expected enrollment to end in early 2026.

David Westenburg: Thank you David.

Speaker Change: And so we are excited with the performance or results.

Speaker Change: Phase one study for <unk> 007, so we are doing the same.

<unk> phase <unk> trial for the phase four the second line head and neck cancer.

Speaker Change: Patients.

Speaker Change: So the expected enrollment to be and.

Ming Hsieh: So, the expected enrollment to be end in early 2026. So, and then we're definitely based on that result, so we'll probably move into the next phase 3.0. If the result is really impressive, which is around about 50% response rate, it might have changed to apply for the fast track of the FDA approval process. So, it's giving for the opportunity for the head and neck cancer patient. Currently, the first line treatment for head and neck cancer patient is using the immunotherapy, using the Kichuta for the treatment. Typically, the immunotherapy, the first line failed. There was no real standard for the second line treatment.

Speaker Change: In early 2026.

Ming Hsieh: So and then, based on the results, we'll definitely move into phase three. Oh, and if the result is really impressive, which is around about a 50% response rate, you might have a chance to apply for the fast track of the FDA approval process. So that's the opportunity for the head and neck cancer patient. Currently, the first-line treatment for head and neck cancer patients is using immunotherapy, using Keytruda for the treatment. Typically, in immunotherapy, the first line failed, so there was no real standard for second-line treatment.

Speaker Change: Oh, and then we'd definitely based on the results. So we will probably move into the next phase III.

Speaker Change: The result is.

Speaker Change: Really in <unk>.

Speaker Change: Precip.

Rhonda: As Rhonda above 50% response rate.

Rhonda: Haven't changed to apply for the.

Rhonda: The fast track of the FDA approval process.

Rhonda: <unk> gaming for the does the opportunity for the head and neck cancer patient.

Rhonda: Currently the first line treatment of <unk>.

Rhonda: Their cancer patients.

Rhonda: Using the.

Rhonda: The immunotherapy using the keytruda for the treatment.

Rhonda: Typically.

Rhonda: The email therapy first line failed.

Rhonda: There was no real.

Rhonda: Standard.

Speaker Change: For second line treatment, and we see the opportunity and let's try to get into this market.

Ming Hsieh: We see the opportunity, and let's try to get into this market for second-line treatment. There are over 50,000 patients with head and neck cancer in the U.S. alone. And that definitely is much, much bigger globally in terms of the cancer patient. So we are excited about the opportunity, and we do see tremendous potential for us to grow in that area. This is only for FID 07. Definitely, we're pushing for a next drug that will be on the market, in the clinical study in 2024, 2025. I'm sorry. Thank you.

Ming Hsieh: We see the opportunity and try to get into this market for the second line, the treatment. There's over 50,000 patients of head and neck cancer in the U.S. alone, and that definitely collaborates much, much bigger in terms of the cancer patient. So, we're excited about the opportunity, and we do see a tremendous potential for us at the growth in that area. This is only for the FID 007. Definitely, we're pushing for a next drug. We'll be into the market, into the clinical study in 2024. That's 25. I'm sorry. Thank you, guys. That's it for me.

Speaker Change: For the second line.

Speaker Change: The treatment.

Speaker Change: The over 50000.

Speaker Change: Patients of head and neck cancer in the U S alone.

Speaker Change: Globally some much.

Speaker Change: Bigger in terms of the.

Speaker Change: The cancer patient. So we are excited about the opportunity and we do see a tremendous.

Speaker Change: Potential for us to grow in that area.

Speaker Change: This is only for the <unk> seven definitely were pushing for a next drove into the market into the clinical study in 2024 25 I'm sorry.

David Westenberg: Thank you guys, that's it for me.

Speaker Change: Thank you guys.

Speaker Change: That's it for me.

Operator: Thank you.

Speaker Change: Thank you next question is coming from Dan Leonard from UBS. Your line is now live.

Operator: Thank you. The next question is coming from Dan Leonard from UBS. Your line is now live.

Dan Leonard: Next question is coming from Dan Leonard from UBS. Your line is now live. Thank you. My first question, what changed on the expense side? What changed on the expense side? You're talking about operating expenses, correct? Yeah, that was the big change in your guidance. I'm curious what would functionally happen there. The biggest change that we had was we had the lower GNA cost than what we anticipated, meaning that we were anticipating the GNA expense for the second quarter to be approximately $25 to $26 million, but we had favorable collections from what we had previously reserved for, so that reduced our expenses.

Dan Leonard: Thank you. My first question is, what changed on the expense side?

Dan Leonard: Thank you my first question what changed on the expense side.

Dan Leonard: Yeah, what changed on the expense side? That's good. You're talking about operating expenses, is that correct?

Dan Leonard: What changed on the expense side.

You are talking about operating expenses not correct.

Dan Leonard: Yeah, that was the big change in your guidance. I'm curious what would functionally happen there.

Dan Leonard: Yes that was the big change in your guidance I'm curious what functionally happen there, yes, we had.

Paul Kim: Yeah, the biggest change that we had was that we had a lower GNA cost than what we anticipated, meaning that we were anticipating the GNA expense for the second quarter to be approximately $25 to $26 million, but we had favorable collections from what we had previously reserved for, so that reduced our expenses.

Dan Leonard: The biggest change that we had.

Speaker Change: We had a lower G&A.

Speaker Change: Cost than what we anticipated, meaning that we were anticipating the G&A expense for the second quarter to be approximately $25 million to $26 million, but we had.

Speaker Change: Favorable collections from what we had previously reserved for for.

Speaker Change: So that reduced our expenses.

Paul Kim: And so it was the change on the reserve side as opposed to headcount or anything like that. That's right. I mean, the headcount and our operating plan, it was about what we anticipated, but we had a reduction in GNA due to better collections. The reason why we narrowed our EPS was due to that. And then, to a lesser extent, we had some tax benefits and credits come through on the provision, but overlaying the overall condition of the company. We've had better gross margins, as I indicated before. Our revenues were slightly higher, and then just the efficiencies that we have in running our business.

Paul Kim: So it was a change on the reserve side as opposed to headcount or anything like that? That's right. I mean the head...

Speaker Change: Okay.

Speaker Change: It was a change on the reserve side as opposed to head count or anything like that that's right I mean, the head count in our operating plan.

Paul Kim: That's right. I mean, the headcount in our operating plan was about what we anticipated, but we had a reduction in GNA due to better collections. And then the reason why we narrowed our EPS was due to that. And then, to a lesser extent, we had some tax benefits and credits come through on the provision. But overlying the overall condition of the company, we've had better gross margins, as I indicated before. Our revenues were slightly higher. And then just the efficiency that we have in running our business.

Speaker Change: It was there was it was about what we anticipated, but we had a reduction in G&A due to better collection and then.

The reason.

Speaker Change: Yeah, and the reason why we narrowed.

Speaker Change: Our EPS was due to that and then to a lesser extent, we had some tax benefits and credits come through on the provision, but overlaying right.

B.

Speaker Change: <unk> condition of the company.

Speaker Change: We've had better gross margins as I indicated before our revenues were slightly higher and then just the just the efficiencies that we have in running our business.

Brandon Perthuis: Anderson. And then, Brandon, I appreciate the thorough discussion on the FDA regulation of LDTs, but you did flag the uncertainty there. And I'm curious, you know, how does the uncertainty around implementation of that regulation impact how you manage your business? Well, that's a good question. Thank you. And I think for the most part, it doesn't. We believe whichever way they decide to go, we're in a good position, especially benefiting from the tremendous size of our test menu. We have over 20,000 tests on our menu, which would predate the new regulations. And in addition, most, a lot of our test anyway, our New York State approved.

Speaker Change: Understood.

Brandon Perthuis: And then, Brandon, I appreciate the thorough discussion on the FDA regulation of LDTs, but you did flag the uncertainty there. And I'm curious, you know, how does the uncertainty around the implementation of that regulation impact how you manage your business?

Speaker Change: And then Brandon I appreciate the thorough discussion the FDA regulation of <unk> that you did flag the uncertainty there and I'm curious how does the uncertainty around implementation of that regulation impact how you manage your business.

Brandon Perthuis: Well, that's a good question. Thank you.

Speaker Change: Well, it's a good question. Thank you and I think for the most part it doesn't.

Brandon Perthuis: And I think for the most part, it doesn't. We believe whichever way they decide to go, we're in a good position, especially benefiting from the tremendous size of our test menu. We have over 20,000 tests on our menu, which would predate the new regulations. And in addition, most, or a lot of our tests, anyway, are New York State approved.

Speaker Change: We believe whichever way they decided to go we're in a good position.

Speaker Change: Especially been benefiting from the tremendous size of our test menu and we have over 20000 test on our menu.

Speaker Change: Which would predate the new regulations and in addition, most a lot of our test any way, our New York State approved.

Brandon Perthuis: So should they continue down their current path, we think we're in a good position. And as I mentioned on the call, it maybe creates a bit of a moat around our business. But if the lawsuit is successful and all this goes away, then we're back to where we were a few months ago running our business. So I think we're in a good position either way.

Brandon Perthuis: So should they continue down their current path, we think we're in a good position. And I mentioned the call that maybe creates a bit of a moat around our business. If the lawsuit is successful and all this goes away, then we're back to where we were a few months ago, running our business. So I think we're in a good position either way. Appreciate that. And then just final question.

Speaker Change: So should they continue down their current path. We think we're in a good position and I mentioned in the call that maybe creates a bit of a moat around our business.

Speaker Change: If the lawsuit is successful in all of this goes away then we're back to where we were a few months ago running our business. So I think we're in a good position either way.

Speaker Change: Yeah.

Brandon Perthuis: And then just one final question. I'm curious how the market share picture is evolving. You know, since we last caught up, one of your big competitors was acquired, or at least the acquisition was finalized. And I'm curious if you've seen anything different in the market. Yeah, good question.

I appreciate that and then just final question I'm curious how the market share picture is evolving since we last caught up.

Brandon Perthuis: Curious how the market share picture is evolving; you know, since we last caught up, one of your big competitors was acquired, or at least the acquisition was finalized. And I'm curious if you've seen anything different in the market. Yeah, good question. A little bit, not a lot. The competitor, you know, said was acquired. So there was minimal, I think, disruption to their business there. I do think there was some, and we did pick up some market share, but it wasn't like the previous, you know, event where we picked up, you know, very significant market share in reproductive health testing.

Speaker Change: One of your big competitors.

Speaker Change: What was acquired or at least the acquisition was finalized and I'm curious if you've seen anything different in the market.

Speaker Change: Yeah. Good question, a little bit not a lot of the competitor you said what was acquired.

Brandon Perthuis: The competitor, you know, we said was acquired. So there was minimal, I think, disruption to their business there. I do think there was some, and we did pick up some market share, but it wasn't like the previous event where we picked up, you know, very significant market share in reproductive health testing. But certainly, there was some instability there and some market shakeup, but not to a large extent.

Brandon Perthuis: Yeah, a good question. A little bit, not a lot.

Speaker Change: So there was minimal I think disruption.

Speaker Change: To their business there.

Speaker Change: I do think there was some and we did pick up some market share, but it wasn't like the previous event, where we picked up a very significant market share in reproductive health testing.

Brandon Perthuis: But certainly, there was some, some instability there and some market shake-up, but not to a large degree. Got it. Thank you.

Speaker Change: But certainly there was some some instability there and some market shakeup, but not to a large degree.

Speaker Change: Got it thank you.

Speaker Change: Thank you next question is coming from Andrew Cooper from Raymond James Your line is now live.

Operator: Thank you. The next question is coming from Andrew Cooper from Raymond James. Your line is now live.

Andrew Cooper: Next question is coming from Andrew Cooper from Raymond James; you're lying. Is that a lot?

Brandon Perthuis: Hey everybody, thanks for the time. Maybe just first, I don't know if Brandon maybe you're the right one to answer this, but just on NIPT, I mean, talk to us about sort of what's happening now in terms of starting to detail clinicians and kind of how you see that process playing out when we, you know, should be thinking about potential rant potential, further appreciation of some of the differentiation given you said it is going to take some education to get there. So just with love, your thoughts on what that pathway can look like. Yeah, thank you, Andrew.

Andrew Cooper: Hi, everybody thanks for the time.

Andrew Cooper: Hi everybody. Thanks for the time. Maybe just first, and I don't know if, Brandon, maybe you're the right one to answer this, but just on NIPT, talk to us about sort of what's happening now in terms of starting to detail clinicians and kind of how you see that process playing out when we, you know, should be thinking about potential ramp-up, potential further appreciation of some of the differentiation, given you said it is going to take some education to get there. So, I would love your thoughts on what that pathway could look like.

Andrew Cooper: Just first.

Andrew Cooper: I don't know if Brandon maybe you are the right one to answer this but just on that ICT I mean talk to us about sort of what's happening now in terms of starting to detail clinicians and kind of how you see that process playing out when we should be thinking about potential ramp potential.

Andrew Cooper: Further appreciation of some of the differentiation given you said it is going to take some education to get there. So just would love your thoughts on what that pathway can look like.

Brandon Perthuis: Yeah, thank you, Andrew. I think it's going to take some time. This is the first, you know, novel NIPT product to hit the market in some time, so you're spot on. It is going to take some significant physician and clinician education. But I do think there is a powerful message behind it.

Yes, Thank you Andrew.

Brandon Perthuis: I think it's going to take some time. This is the first, you know, novel NIPT product to hit the market in some time. So you're spot on; it is going to take some significant physician and clinician education. I do think there is a powerful message behind it. The day noble point mutations for the monogenic conditions really does add a lot of clinical value, but it is going to require a lot of clinician education. Right now we have a pretty small sales team focused on that area. So I, you know, would expect some more meaningful volume, probably not until 2025, as we really said, focused on the education part as well as doing some additional publication and invalidation studies and some expanded indication.

Brandon: I think it's going to take some time.

Speaker Change: This is the first novel <unk> product to hit the market in some time. So you are spot on it is going to take some significant physician and clinician education.

Speaker Change: I do think there is a powerful message behind it.

Brandon Perthuis: The de novo point mutations for the monogenic conditions really add a lot of clinical value, but it is going to require a lot of clinician education. Right now, we have a pretty small sales team focused on that area, so I, you know, would expect some more meaningful volume, probably not until 2025, as we're really, as I said, focused on the education part, as well as doing some additional publication and validation studies and some expanded indications. So, I'm thinking more of a, you know, meaningful volume.

Speaker Change: De Novo point mutations for the monogenic conditions really does add a lot of clinical value.

Speaker Change: It is going to require a lot of clinician education.

Speaker Change: Right now we.

Speaker Change: A pretty small sales team focused on that area.

Speaker Change: So.

Speaker Change: Would expect.

Speaker Change: So a more meaningful volume probably not until 2025 as a really I said focused on.

Speaker Change: The education part as well as doing some additional publication and validation studies and some expanded indications so I'm thinking more of a meaningful volume in 2025.

Brandon Perthuis: So I'm thinking more of a meaningful volume in 2025.

Brandon Perthuis: Okay, helpful. Maybe shifting a little bit just to anatomical pathology, you talk about winning new accounts and some real positive things there. The business isn't necessarily growing materially, though, so maybe just give us a sense, you know, are these new account wins more recent or what's the moderating factor where maybe your scenes and customers go out the door on the other side or some volume transition one way or the other to keep that business from growing a little bit better? Yeah, well, it looks been going the wrong direction for some time, which we've been working on.

Speaker Change: Okay helpful.

Brandon Perthuis: Okay, helpful. Maybe shifting a little bit just to anatomic pathology, you talk about winning new accounts and some real positive things there, but it isn't necessarily growing materially, though. So maybe just give us a sense, you know, are these new account wins more recent? Or what's the moderating factor where maybe you're seeing some customers go out the door on the other side or some volume transition one way or the other to keep that business from growing a little bit better? Yeah,

Speaker Change: Maybe shifting a little bit just anatomic pathology, you talk about winning new accounts and some real positive things there and the business is.

Speaker Change: Isn't necessarily growing mcnair early though so maybe just give us a sense.

Speaker Change: Are these new account wins more recent or whats the moderating factor, where maybe you're seeing some customers go out the door on the other side or or some volume transition one way or the other to keep that business from growing a little bit better.

Brandon Perthuis: Yeah, well, look, it's been going the wrong direction for some time, which we've been working on. Some of that was macro factors, some of that was around contracted rates and reimbursement and other, you know, situations. But either way, the business is going the wrong way.

Speaker Change: Well look it's been going the wrong direction for some time, which we've been working on some of that was macro factor some of that was around contracted rates and reimbursement and.

Brandon Perthuis: Some of that was macro factor, some of that was around contracted rates and reimbursement and other, you know, situations, but either way, the business is going the wrong way. We've addressed most of those, and I think the biggest thing we've done is make sure we adhere to our turnaround time at the lab, which we've done. Even moving, even during the move, which we did in the second quarter, we still maintained our turnaround time. We've also revamped the sales team, we've restructured the sales team, we've restructured comp plans to more align with our corporate objectives, so we've tackled this at all different angles, and we're seeing it pay off.

Speaker Change: Other other situations, but either way the business is going the wrong way.

Speaker Change: We've addressed most of those and I think the biggest thing we've done.

Brandon Perthuis: We've addressed most of those, and I think the biggest thing we've done is make sure we adhere to our turnaround time at the lab, which we have. Even during the move, which we did in the second quarter, we still maintained our turnaround time. We've also revamped the sales team. In fact, we've restructured the sales team. We've restructured comp plans to more align with our corporate objectives. We've tackled this from all different angles, and we're seeing it pay off.

Speaker Change: Is make sure we adhere to our turnaround time.

Speaker Change: The lab, which we've done even moving even during the move which we did in the second quarter, we still maintained our turnaround time.

Speaker Change: We've also revamped the sales team we've restructured the sales team, we've restructured comp plans to more align with our corporate objective.

Speaker Change: We've tackled this at all at all different angles, and we're seeing it pay off.

Brandon Perthuis: I know this quarter wasn't much growth, but there was some. We think the business has been stabilized. When we look at the sales pipeline and the recent wins, the very recent wins, the sales team is finding bigger deals. I think the back half of the year for AP should continue to have some really good momentum.

Brandon Perthuis: I know this quarter wasn't much growth, but it was some, so we think the business has been stabilized. And when we look at the sales pipeline and the recent wins, the very recent wins, the sales team is finding bigger deals. So I think the back half of the year for AP should continue to have some really good momentum.

Speaker Change: I know this quarter.

Speaker Change: It wasn't much growth, but it was some so we think the business has.

Speaker Change: When stabilized and when we look at the sales pipeline and the recent wins the very recent wins there. The sales team is finding bigger deals. So I think the back half of the year for AEP should continue to have some really good momentum.

Brandon Perthuis: Perfect, that's super helpful.

Speaker Change: Perfect. That's Super helpful. And then maybe for Paul We've seen you guys active in terms of buybacks.

Andrew Cooper: Perfect, that's super helpful. And then maybe for Paul, you know, we've seen you guys active in terms of buybacks in some recent quarters. So just would love, maybe any thoughts on that, given, you know, not executing on M&A, having a great cash balance and, you know, doing well from that cash management side of things. Maybe how you think about potential deployment of that capital, whether to more repurchases again or elsewhere.

Paul Kim: And then maybe for Paul, we've seen you guys active in terms of buyback in some recent quarters, so just with love, maybe any thoughts on that, given not executing on M&A, having a great cash balance and doing well from that cash management side of things, maybe how you think about potential deployment of that capital, whether to more repurchases again or elsewhere. As you remember, we have a $250 million buck buyback program. To date, we bought back about $100 million, so there's $150 million left. We do see buyback as one of the options that we have for the usage of our cash.

Speaker Change: In some recent quarters. So just would love maybe any thoughts on that given.

Paul Kim: Executing on M&A, having a great cash balance and doing well from that cash management side of things.

Speaker Change: Maybe how you think about potential deployment of that capital whether to to more repurchases again or elsewhere.

Paul Kim: Yeah. So, as you remember, we have a $250 million stock buyback program. To date, we've bought back about $100 million, so there's $150 million left. We do see buyback as one of the options that we have for the usage of our cash. There are times when we can buy, and there are times when we can't buy.

Speaker Change: Yeah. So.

Speaker Change: As you as you remember, we have a $250 million stock buyback program.

Paul Kim: To date, we bought back about $100 million sort of the $150 million left.

Paul Kim: We do see buyback as one of the options.

Paul Kim: We have for the usage of our cash.

Paul Kim: Cash.

Ming Hsieh: There are times where we can buy, and there are times where we can't buy. We've shown also in the past that we deployed that cash in making two significant acquisitions: CSI and Inform DX. I think the operational results show that we have had tremendous success in integrating and creating value from those acquisitions, which are being reflective in our overall results. We believe the best way to return value to shareholders in an ROI is to continue to invest in this market and to expand our business. I think then adding the point for Paul mentioned. I think we are actually looking for the target for M&A, but taking a look at what we did for those two transactions, inform DACA offices and the CSI laboratory service.

Paul Kim: There are times, where we can buy and there are times, where we can't buy.

Paul Kim: We've shown in the past that we deployed that cash in making two significant acquisitions, CSI and InformDX. And I think the operational results show that we have had tremendous success in integrating and creating value from those acquisitions, which are reflective in our overall results. And we believe the best way to return value to shareholders in an ROI is to continue to invest in this market and to expand our business.

Paul Kim: We've shown.

Paul Kim: So in the past that we deploy that cash and making two significant acquisitions <unk>.

Speaker Change: Sign inform Dx.

Paul Kim: And I think the operational results show that.

Paul Kim: We have had tremendous success in integrating and.

Paul Kim: Creating value from.

Paul Kim: Those acquisitions, which are being reflective in our overall results and we believe the best way to return shareholder return value to shareholders in an ROI is to continue to invest in this market and to expand our business.

Paul Kim: Yeah, I think then, adding the point that Paul mentioned, I think we are actually looking for the target for MIA. Taking a look at what we did for those two transactions, informed diagnosis, and CSI laboratory services, not only do we spend money on the acquisition, but we also need to spend time and reinvestment to integrate those businesses. I did a rough calculation.

Speaker Change: I think that then adding the point for Paul mentioned I think we are actually looking for the target for MAA for the taking.

Speaker Change: Taking a look to what do we do the four doses two transactions uniformed diagnosis and the CSI and laboratory services.

Ming Hsieh: Not only do we spend the money for the acquisition, but also we need to spend the time and re-investment to integrate those businesses. I did a rough calculation. Besides, we spend above the $220 million to buy those businesses; we also invest more than $60 million cash and try to integrate and streamline those businesses. We do see those acquisitions making this; this was a very strategic move, which led us to the capability to grow our precision diagnosis business, which is, we showed the results. Without those insurance contracts, we're not able to get us into the position to be a major player in the reproductive health area.

Speaker Change: Not only we spend the money for the acquisition, but there is also we need to spend the time and the reinvestment.

Paul Kim: To integrate those businesses.

Paul Kim: Did a rough calculation.

Paul Kim: Besides, we spent close to $220 million to buy those two businesses; we also invested more than $60 million in cash and tried to integrate and streamline those businesses. We do see those acquisitions as making this very strategic move, which led us to the capability to grow our precision diagnosis business, which we showed results for. Without those insurance contracts, we're not able to get into the position to be a major player in the reproductive health area. We continue to execute our strategy. We're looking for the old opportunities for the MIA and internal development, so that's the way we will spend our cash.

Paul Kim: Beside that we spend about $220 million to buy those business to business. We are also investing more than $60 million of cash and tried to integrate and streamline those businesses well.

Andrew Cooper: Great, I'll stop there. Thanks again.

Paul Kim: We do see those acquisition.

Paul Kim: Making this.

Paul Kim: This awards, whereas strategic move which leaves us with the capability to grow our precision diagnostics businesses and wishes. We showed that result resolve those insurance contracts were not able to get us into the position to be a major player in the reproductive health area.

Ming Hsieh: We continue to execute our strategy; we're looking for the old opportunities for the MIA, as well as our internal development. So that's the way we will spend our cash.

Paul Kim: We continue to execute on our strategy, we're looking for the old opportunities for the MAA and as well as our internal development. So that's the way we will spend our cash.

Andrew Cooper: Great, I'll stop there.

Paul Kim: Great I'll stop there thanks again.

Operator: Thanks again.

Operator: Thanks, Andrew.

Andrew Cooper: Thanks, Andrew.

Operator: Thank you.

Operator: Thank you. We've reached the end of our question and answer session. And, ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Thank you we've reached end of our question and answer session and ladies and gentlemen that does conclude today's teleconference and webcast. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

Operator: We reach out to our question and answer session, and ladies and gentlemen, that does conclude today's teleconference webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.