Q2 2024 Biodesix Inc Earnings Call

August 7, 2024

Chris Brinzey: Thank you, operator, and good afternoon, everyone. Today, Biodesix released results for the second quarter of 2020. Leading the call today will be Scott Hutton, Chief Executive Officer. You will also be joined by Robin Harper-Cowie, Chief Financial Officer. An audio recording of today's call and the press release announcement with the quarterly results can be found in the Investor Relations section of the company's website at Biodesix.com, as today's call includes forward-looking statements.

Good day and thank you for standing by. Welcome to the Biodesix Q2 2024 Earnings Conference Call.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during this session, you will need to press star 11 on your telephone.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Brinzey, Investor Relations. Please go ahead. Thank you.

Speaker Change: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Brinzey, Investor Relations. Please go ahead.

Scott Hutton: We encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings, which identify certain factors that may cause the company's actual performance and Chris Brinzey. With that, I'd now like to turn the call over to Scott Hutton, Chief Executive Officer. Thank you, Chris, and thank you all for joining us today.

Chris Brinzey: Thank you, operator, and good afternoon, everyone. Today, Biodesix released results for the second quarter of 2024. Leading the call today will be Scott Hutton, Chief Executive Officer. You will be joined by Robin Harper-Cowie, our Chief Financial Officer. An audio recording of today's call and the press release announcement with the quarterly results can be found in the Investor Relations section of the company's website, at Biodesix.com. As today's call includes forward-looking statements, we encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings, which identify certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast.

Scott Hutton: Thank you, operator, and good afternoon, everyone. Today, Biodesix released results from the second quarter of 2024. Leading the call today will be Scott Hutton, Chief Executive Officer.

Speaker Change: You will be joined by Robin Harper-Cowie, Chief Financial Officer. An audio recording of today's call and the press release announcement with the quarterly results can be found in the Investor Relations section of the company's website at Biodesix.com.

Speaker Change: As today's call includes forward-looking statements, we encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings, which identify certain factors that may cause the company's actual events, performance,

Speaker Change: and results to differ materially from those contained in the forward-looking statements made on today's webcast. In addition, we will discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release.

Chris Brinzey: In addition, we will discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release. With that, I'd now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott. Thank you.

Speaker Change: With that, I'd now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott.

Scott Hutton: Thank you, Chris, and thank you all for joining us today. I'm thrilled to report that it's been another strong quarter marked by exceptional performance in all areas of the business. For 2024, our team and organization remain committed to delivering on three key goals, which include driving increased revenue through the adoption of our Lung Diagnostic Test and our Biopharma services; implementing operational efficiencies to continue to deliver strong gross margins and maintaining a strict cost-disciplined approach on our path to profitability.

Scott Hutton: I'm thrilled to report that it's been another strong quarter marked by exceptional performance in all areas of the business. For 2024, our team and organization remain committed to delivering on three key goals, which include driving increased revenue through the adoption of our Lung Diagnostic Test and our Biopharma services, implementing operational efficiencies to continue to deliver strong gross margins, and maintaining a strict cost-disciplined approach on our path to profitability.

Scott Hutton: For 2024, our team and organization remain committed to delivering on three key goals, which include driving increased revenue through the adoption of our lung diagnostic test and our biopharma services,

Scott Hutton: Implementing operational efficiencies to continue to deliver strong gross margins and maintaining a strict cost-disciplined approach on our path to profitability.

Scott Hutton: In the second quarter, we excelled in all three key goals, delivering 51% growth in revenue year over year, 78.4% gross margins, and 38% improvement in adjusted EBITDA year over year. Based on this continued strong performance, we're raising our 2024 total revenue guidance to $70 to $72 million, up from the previously provided guidance of $65 to $68 million.

Scott Hutton: In the second quarter, we excelled in all three key goals, delivering 51% growth in revenue year-over-year, 78.4% gross margin, and 38% improvement in adjusted EBITDA year-over-year. Based on this continued strong performance, we're raising our 2024 total revenue guidance to $70 to $72 million, up from the previously provided guidance of $65 to $68 million. This change in guidance reflects our continued confidence in the business, and we believe the first half results have set a strong trajectory for continued success in 2024 and beyond.

Scott Hutton: In the second quarter, we excelled in all three key goals, delivering 51% growth in revenue year-over-year, 78.4% gross margins, and 38% improvement in adjusted EBITDA year-over-year.

Scott Hutton: Based on this continued strong performance, we're raising our 2024 total revenue guidance to $70 to $72 million, up from the previously provided guidance of $65 to $68 million.

Scott Hutton: This change in guidance reflects our continued confidence in the business, and we believe the first half results have set a strong trajectory for continued success in 2024 and beyond. Our lung-focused commercial team is making considerable progress selling our five Medicare-covered tests to help improve early lung cancer diagnosis and treatment decisions. They delivered 42% growth in test volumes over the second quarter of last year. In order to address this massive multi-billion dollar market opportunity, we're continuing to grow and expand the Lung Focus commercial team. And in the second quarter, it had an average of approximately 61 fully trained sales representatives, as compared to an average of 55 in the first quarter, 2024.

Scott Hutton: Our lung-focused commercial team is making considerable progress selling our five Medicare-covered tests to help improve early lung cancer diagnosis and treatment decisions. They delivered 42% growth in test volumes over the second quarter of last year. In order to address this massive multi-billion dollar market opportunity, we're continuing to grow and expand the lung-focused commercial. And in the second quarter, we had an average of approximately 61 fully trained sales representatives, as compared to an average of 55 in the first quarter of 2020.

Scott Hutton: Our lung-focused commercial team is making considerable progress selling our five Medicare-covered tests to help improve early lung cancer diagnosis and treatment decisions.

Scott Hutton: They delivered 42% growth in test volumes over second quarter of last year.

Scott Hutton: In order to address this massive multi-billion dollar market opportunity, we're continuing to grow and expand the lung-focused commercial team.

Scott Hutton: and in the second quarter, had an average of approximately 61 fully trained sales representatives, as compared to an average of 55 in the first quarter, 2024.

Scott Hutton: As a reminder, it takes about three months before a Biodesix rep is fully trained, and by that point, they're paying for themselves. Consistent with the plans we've shared before, we will expect to add approximately six to eight reps per quarter to better reach more physicians, in addition to growth and test volume. We've added a number of new reimbursement coverage policies for Notify XL2 over the last several months. The coverages include policies from various Blue Cross Blue Shield plans, including Highmark. HMSA in Hawaii, Kansas City, Louisiana, North Carolina, South Carolina, Rhode Island, Tennessee, and Vermont, plus private plans such as Geisinger, Health Partners, Medica, and others.

Scott Hutton: As a reminder, it takes about three months before a Biodesix rep is fully trained, and by that point, they're paying for themselves. Consistent with the plans we've shared before, we will expect to add approximately six to eight reps per quarter to better reach more people, in addition to growth and test volume. We've added a number of new reimbursement coverage policies for Notify XL2 over the last several months. The coverage includes policies from various Blue Cross Blue Shield plans, including Highmark, HMSA in Hawaii, Kansas City, Louisiana, North Carolina, South Carolina, Rhode Island, Tennessee, and Vermont.

Scott Hutton: As a reminder, it takes about three months before a Biodesix rep is fully trained, and by that point, they're paying for themselves.

Scott Hutton: Consistent with the plans we've shared before, we will expect to add approximately six to eight reps per quarter to better reach more physicians.

Scott Hutton: in addition to the growth and test volumes.

Scott Hutton: We've added a number of new reimbursement coverage policies for Notify XL2 over the last several months.

Scott Hutton: The coverages include policies from various Blue Cross Blue Shield plans, including Highmark,

Scott Hutton: HMSA in Hawaii, Kansas City, Louisiana, North Carolina, South Carolina, Rhode Island, Tennessee and Vermont, plus private plans such as Geisinger, Health Partners, Medica and others.

Scott Hutton: Plus private plans such as Geisinger, Health Partners, Medica, and others. We're pleased with the steady advancement in reimbursement and remain focused on adding more private payer coverage policies for our tests. In addition, we've also added more contracts, which, combined with these coverage policies, have led to improvements in the average revenue received per test result delivered. Combining the improvements in average revenue received with the growth in test volumes resulted in a 44% growth in revenue from lung diagnostics.

Scott Hutton: We're pleased with the steady advancement in reimbursement and remain focused on adding more private payer coverage policies for our tests. In addition, we've also added more contracts, which, in combination with these coverage policies, have led to improvements in the average revenue received per test result delivered. Combining the improvements in average revenue received with the growth in test volumes resulted in a 44% growth in revenue from lung diagnostic tests. We continue to generate clinical data to help drive awareness and adoption of our test.

Scott Hutton: We're pleased with the steady advancement in reimbursement and remain focused on adding more private payer coverage policies for our test.

Scott Hutton: In addition, we've also added more contracts, which in combination with these coverage policies have led to improvements in the average revenue received per test result delivered.

Scott Hutton: Combining the improvements in average revenue received with the growth and test volumes resulted in 44% growth in revenue from lung diagnostic tests.

Scott Hutton: We continue to generate clinical data to help drive awareness and adoption of our test. In May, we presented new data at the 2024 American Thoracic Society International Conference in San Diego, highlighting the ability of our Notify XL2 test to identify benign nodules in patients with emphysema. Emphysema is a common comorbid pulmonary condition in patients with lung nodules.

Scott Hutton: In May, we presented new data at the 2024 American Thoracic Society International Conference in San Diego, highlighting the ability of our Notify XL2 test to identify benign nodules in patients with emphysema. Emphysema is a common comorbid pulmonary condition in patients with lung nodules.

Scott Hutton: We continue to generate clinical data to help drive awareness and adoption of our tests.

Scott Hutton: Emphysema is a common comorbid pulmonary condition in patients with lung nodules.

Scott Hutton: This presentation demonstrates how the Notify XL2 test can successfully assist with ruling out lung cancer, regardless of a patient's emphysema status. Enrollment in ALTITUDE, our prospective randomized trial evaluating the clinical utility and performance of our notified test, continues at a number of major academic institutions. This study is being overseen by a third-party independent data monitoring committee that will be determining potential interim analysis and will provide more updates in the coming quarters following its meeting.

Scott Hutton: This presentation demonstrates how the Notify XL2 test can successfully assist with ruling out lung cancer regardless of patient's emphysema status.

Scott Hutton: Enrollment in Altitude, our prospective randomized trial evaluating the clinical utility and performance of our notified test, continues at a number of major academic institutions.

Scott Hutton: This study is being overseen by a third-party, independent data monitoring committee that will be determining potential interim analysis and will provide more updates in the coming quarters following their meetings.

Scott Hutton: We also publish new data in the Annals of Oncology that highlights the role of our GenoStrat testing to monitor the efficacy of new therapeutic regimens. Our tests using the BioRAD ddPCR technology to analyze circulating tumor DNA have been included in a variety of studies and publications from Biodesix, biopharmaceutical partners, and consortia partners.

Scott Hutton: We also published new data in the Annals of Oncology that highlights the role of our GenoStrat testing to monitor the efficacy of new therapeutic regimens. Our tests using the BioRAD ddPCR technology to analyze circulating tumor DNA have been included in a variety of studies and publications from Biodesix, biopharmaceutical partners, and consortia.

Scott Hutton: We also publish new data in the Annals of Oncology that highlights the role of our GenoStrat testing to monitor the efficacy of new therapeutic regimens.

Scott Hutton: Our tests utilizing the BioRAD ddPCR technology to analyze circulating tumor DNA have been included in a variety of studies and publications from Biodesix, biopharmaceutical partners, and consortia partners.

Scott Hutton: Data has been presented showcasing the utility of the targeted test for detecting treatment resistance and detecting cancer recurrence even before imaging and monitoring treatment response, such as the data included in this peer-reviewed publication. Speaking of our biopharma services business, we continue to see the momentum that began in the second half of last year, growing 228% over the second quarter of 2023. This service combines our multi-omic data with our artificial intelligence platform to uncover novel, unbiased insights that our customers use to personalize patient care and help improve disease detection, evaluation, and treatment.

Scott Hutton: Data has been presented showcasing the utility of the targeted test for detecting treatment resistance and detecting cancer recurrence even before imaging and monitoring treatment response, such as the data included in this peer-reviewed public. Speaking of our biopharmaceutical services business, we continue to see the momentum that began in the second half of last year, growing 228% over the second quarter of 2023. This service combines our multi-omic data with our artificial intelligence platform to uncover novel, unbiased insights that our customers use to personalize patient care and help improve disease detection, evaluation, and treatment.

Scott Hutton: Data has been presented showcasing the utility of the targeted test for detecting treatment resistance, detecting cancer recurrence even before imaging, and monitoring treatment response, such as the data included in this peer-reviewed publication.

Scott Hutton: Speaking of our biopharmacist services business, we continue to see the momentum that began in the second half of last year, growing 228% over second quarter 2023.

Scott Hutton: This service combines our multi-omic data with our artificial intelligence platform to uncover novel, unbiased insights that our customers use to personalize patient care and help improve disease detection, evaluation, and treatment.

Scott Hutton: We're achieving growth through additional projects from existing customers, as well as new contracts with new customers, from a steady number of incoming RFPs and opportunities. Moving to operations, our team continues to deliver steady and consistent gross margins of 78.4%, which represents the fourth quarter in a row in the upper 70s.

Scott Hutton: We're achieving growth through additional projects from existing customers, as well as new contracts with new customers, from a steady number of incoming RFPs and opportunities.

Speaker Change: Moving to operations, our team continues to deliver steady and consistent gross margins of 78.4%, which represents the fourth quarter in a row in the upper 70s.

Scott Hutton: Not only have we been effective in providing our test with industry-leading turnaround times, but we've also been efficient in delivering those results. With our commitment to an effective, efficient, and cost-disciplined approach, we've built a commercial and operational platform that will help facilitate long-term, consistent, sustainable, and profitable growth. I believe everyone is beginning to appreciate the operating leverage that exists within the business and our efforts to demonstrate the team's significant progress and outstanding execution on our path to profitability.

Scott Hutton: Not only have we been effective in providing our test with industry-leading turnaround times, we've also been efficient in delivering those results.

Scott Hutton: We've also been efficient in delivering those results. With our commitment to an effective, efficient, and cost-disciplined approach, we've built a commercial and operational platform that will help facilitate long-term, consistent, sustainable, and profitable growth. I believe everyone is beginning to appreciate the operating leverage that exists within the business and our efforts to demonstrate the team's significant progress and outstanding execution on our path to profitability. We not only have an incredible opportunity but a responsibility to transform the standard of care in Lincoln.

Speaker Change: With our commitment to an effective, efficient, and cost-disciplined approach, we've built a commercial and operational platform that will help facilitate long-term, consistent, sustainable, and profitable growth.

Speaker Change: I believe everyone is beginning to appreciate the operating leverage that exists within the business and our efforts to demonstrate the team's significant progress and outstanding execution on our path to profitability.

Scott Hutton: We not only have an incredible opportunity but a responsibility to transform the standard of care for lung cancer. Lung cancer is still the deadliest of all cancers, as it claims more lives annually in the United States than the next three deadliest cancers combined, breast, prostate, and colon cancer.

Speaker Change: We not only have an incredible opportunity, but a responsibility to transform the standard of care in lung cancer.

Scott Hutton: Lung cancer is still the deadliest of all cancers, as it claims more lives annually in the United States than the next three deadliest cancers combined—breast, prostate, and colon. Time is of the essence when it comes to diagnosing and treating these patients.

Speaker Change: Lung cancer is still the deadliest of all cancers, as it claims more lives annually in the United States than the next three deadliest cancers combined, breast, prostate, and colon cancer.

Scott Hutton: Time is of the essence when it comes to diagnosing and treating these patients. By discovering, developing, and commercializing tests with demonstrated clinical utility and best-in-class turnaround times, we believe that our diagnostic tests play a critical role in these efforts to treat the right patients quickly and effectively. Finally, in addition to providing product and service excellence, we believe we're building something unique and special here at Biodesix. In June, we were named to Inc. Magazine's 2024 Best Workplaces.

Scott Hutton: By discovering, developing, and commercializing tests with demonstrated clinical utility and best-in-class turnaround times, we believe that our diagnostic tests play a critical role in these efforts to treat the right patients quickly and effectively. Finally, in addition to providing product and service care, Biodesix also offers a variety of products and services to help you get the most out of your life. Biodesix Biodesix. We believe we're building something unique and special here at Biodesix. In June, we were named to Inc. Magazine's 2024 Best Work list. This prestigious award is only granted to approximately 500 U.S. companies each year across all industry sectors, both public and private firms of all sizes.

Speaker Change: Time is of the essence when it comes to

Speaker Change: By discovering, developing, and commercializing tests with demonstrated clinical utility and best-in-class turnaround times, we believe that our diagnostic tests play a critical role in these efforts to treat the right patients quickly and effectively.

Speaker Change: Finally, in addition to providing product and service excellence, we believe we're building something unique and special here at Biodesix.

Scott Hutton: This prestigious award is only granted to approximately 500 U.S. companies each year across all industry sectors, both public and private firms of all sizes. This is one of our highest honors as it validates and affirms our entire organization's commitment to a culture of excellence. It is a reflection of our amazing team and their commitment to making a difference in patients' lives, and I want to thank everyone for their hard work and dedication. With that, let me turn it over to Robin to review the second quarter 2024 financial performance. Robin.

Speaker Change: In June , we were named to Inc. Magazine's 2024 Best Workplaces.

Speaker Change: This prestigious award is only granted to approximately 500 U.S. companies each year from across all industry sectors, both public and private firms of all sizes.

Robin Cowie: This is one of our highest honors as it validates and affirms our entire organization's commitment to a culture of excellence. It is a reflection of our amazing team and their commitment to making a difference in patients' lives. And I want to thank everyone for their hard work and dedication. With that, let me turn it over to Robin to review the second quarter 2024 financial performance. Robin.

Speaker Change: This is one of our highest honors as it validates and affirms our entire organization's commitment to a culture of excellence.

Speaker Change: It is a reflection of our amazing team and their commitment to making a difference in patients' lives, and I want to thank everyone for their hard work and dedication.

Robin Harper-Cowie: Second quarter total revenue was $17.9 million, a 51% increase over the prior year and a 21% increase over the first quarter of this year. Lung diagnostic revenue in the second quarter was $16.5 million from approximately 13,900 tests, as compared to $11.5 million from approximately 9,800 tests for the second quarter of 2023, representing a 44% growth in revenue and 42% growth in test volume. In prior earnings calls, we have provided updates on our efforts to resolve certain administrative challenges imposed by a select few Medicare Advantage plans. While we do not have more to report at this time, we continue to be in discussions around a resolution.

Robin Cowie: Thanks, Scott. Second quarter total revenue was $17.9 million, a 51% increase over the prior year and a 21% increase over the first quarter of this year. Lung diagnostic revenue in the second quarter was $16.5 million from approximately 13,900 tests, as compared to $11.5 million from approximately 9,800 tests for the second quarter of 2023, representing a 44% growth in revenue and 42% growth in test volume.

Robin: With that, let me turn it over to Robin to review the second quarter 2024 financial performance. Robin?

Robin: Thanks, Scott. Second quarter total revenue was $17.9 million, a 51% increase over the prior year and 21% increase over the first quarter of this year.

Robin: Lung diagnostic revenue in the second quarter was $16.5 million from approximately 13,900 tests.

Speaker Change: as compared to $11.5 million from approximately 9,800 tests for the second quarter of 2023, representing a 44% growth in revenue and 42% growth in test volumes.

Robin Cowie: In prior earnings calls, we have provided updates on our efforts to resolve certain administrative challenges imposed by a select few Medicare Advantage plans. While we do not have more to report at this time, we continue to be in discussions around a resolution. However, any potential revenue resulting from a resolution is not included in our revenue guidance.

Speaker Change: In prior earnings calls, we have provided updates on our efforts to resolve certain administrative challenges imposed by a select few Medicare Advantage plans. While we do not have more to report at this time, we continue to be in discussions around a resolution.

Robin Harper-Cowie: Any potential revenue resulting from a resolution is not included in our revenue guidance. Biopharma services revenue was $1.4 million in the quarter, compared to $400,000 in the second quarter of 2023, an increase of 228%. Even with the completion and recognition of significantly more revenue than in prior quarters, our pipeline is robust, and we ended the quarter with approximately $8.1 million contracted but not yet recognized as revenue. Gross margin percentage in the second quarter of 2024 was 78.4%, up 5.7 percentage points versus 72.7 percent in the prior year quarter and consistent with 78.6 percent in the first quarter of 2024.

Speaker Change: any potential revenue resulting from a resolution are not included in our revenue guidance

Robin Cowie: Biopharma services revenue was $1.4 million in the quarter, compared to $400,000 in the second quarter of 2023, an increase of 228%. Even with the completion and recognition of significantly more revenue than in prior quarters, our pipeline is robust, and we ended the quarter with approximately $8.1 million contracted but not yet recognized as revenue. Gross margin percentage in the second quarter of 2024 was 78.4%, up 5.7 percentage points versus 72.7 percent in the prior year quarter and consistent with 78.6 percent in the first quarter of 2024.

Speaker Change: Biopharma services revenue was $1.4 million in the quarter, compared to $400,000 in the second quarter 2023, an increase of 228%.

Speaker Change: Even with the completion and recognition of significantly more revenue than in prior quarters, our pipeline is robust and we ended the quarter with approximately $8.1 million contracted but not yet recognized as revenue.

Speaker Change: Gross margin percentage in the second quarter of 2024 was 78.4%, up 5.7 percentage points versus 72.7% in the prior year quarter and consistent with 78.6% in the first quarter of 2024.

Robin Harper-Cowie: Following a variety of operational improvements over the last year in both our lung diagnostic testing and biopharmaceutical services, we have delivered on four straight quarters of gross margins in the upper 70s and expect that gross margins will remain steady in the upper 70s going forward.

Robin Cowie: Following a variety of operational improvements over the last year in both our lung diagnostic testing and biopharma services, we have delivered on four straight quarters of gross margins in the upper 70s and expect that gross margins will remain steady in the upper 70s going forward. Overall operating expense, excluding direct costs and expenses, was $22.3 million in the second quarter of 2024, compared to $19.6 million for the same period of 2023, a 14% increase. Operating expense for the second quarter 2024 includes $2.7 million in non-cash stock compensation expense, depreciation, and amortization, and asset impairment, as compared to $1.9 million during the second quarter 2023.

Speaker Change: Following a variety of operational improvements over the last year in both our lung diagnostic testing and biopharma services, we have delivered on four straight quarters of gross margins in the upper 70s and expect that the gross margins will remain steady in the upper 70s going forward.

Robin Harper-Cowie: Overall operating expense, excluding direct costs and expenses, was $22.3 million in the second quarter 2024, compared to $19.6 million for the same period of 2023, a 14% increase. Operating expense for the second quarter 2024 includes $2.7 million in non-cash stock compensation expense, depreciation, and amortization, and asset impairment, as compared to $1.9 million during the second quarter 2023. The increase in operating expense versus the prior year quarter is primarily the result of an increase in sales and marketing costs to support lung diagnostic sales growth to enhance product awareness and drive adoption, as well as an increase in depreciation expense related to the leasehold improvements in our new Louisville, Colorado office and laboratory.

Speaker Change: Overall operating expense, excluding direct costs and expenses, was $22.3 million in the second quarter 2024, compared to $19.6 million for the same period of 2023, a 14% increase.

Speaker Change: Operating expense for the second quarter 2024 includes $2.7 million in non-cash stock compensation expense, depreciation and amortization, and asset impairment, as compared to $1.9 million during the second quarter 2023.

Robin Cowie: The increase in operating expense versus the prior year quarter is primarily the result of an increase in sales and marketing costs to support lung diagnostic sales growth to enhance product awareness and drive adoption, as well as an increase in depreciation expense related to the leasehold improvements in our new Louisville, Colorado office and laboratory. The net loss for the second quarter of 2024 was $10.8 million, an improvement of approximately $2.5 million or 19% as compared to a $13.4 million net loss for the second quarter of 2023 and $13.6 million, or a 21% improvement, for the first quarter of 2024.

Speaker Change: The increase in operating expense versus the prior year quarter is primarily the result of an increase in sales and marketing costs.

Speaker Change: to support lung diagnostic sales growth.

Speaker Change: to enhance product awareness and drive adoption, as well as an increase in depreciation expense related to the leasehold improvements in our new Louisville, Colorado office and laboratory.

Robin Harper-Cowie: The net loss for the second quarter of 2024 was $10.8 million, an improvement of approximately $2.5 million, or 19%, as compared to a $13.4 million net loss for the second quarter of 2023 and $13.6 million, or a 21% improvement, for the first quarter of 2024. It is important to note that the net loss for this quarter included a net $600,000 of one-time other expenses that are not expected to occur going forward but increased the net loss in the quarter.

Speaker Change: net loss through the second quarter two thousand and twenty four was ten point eight million an improvement of approximately two point five million or nineteen percent

Speaker Change: as compared to a $13.4 million net loss for the second quarter of 2023 and $13.6 million or 21% improvement for the first quarter of 2024.

Robin Cowie: It is important to note that the net loss for this quarter included a net $600,000 of one-time other expenses that are not expected to occur going forward but increased the net loss in the quarter. Adjusted EBITDA, which excludes non-cash and other one-time expenses, with a loss of $5.6 million compared to a loss of $9.1 million for the second quarter of 2023, a 38% improvement.

Speaker Change: It is important to note that net loss for this quarter included a net $600,000 of one-time other expenses that are not expected to occur going forward, but increase the net loss in the quarter.

Robin Harper-Cowie: Adjusted EBITDA, which excludes non-cash and other one-time expenses, with a loss of $5.6 million compared to a loss of $9.1 million for the second quarter of 2023, a 38% improvement. This is our fifth straight quarter of year-over-year improvement in adjusted EBITDA, which is driven by our increase in revenue, strong gross margins, and our focus on actively managing our operating expenses. We ended the quarter with $42.2 million in unrestricted cash and cash equivalents, as compared to $11.5 million at the end of the first quarter, which included an increase of $51.3 million in net proceeds raised in an oversubscribed and upsized underwritten public offering and concurrent private placement and a decrease of $13.8 million from milestone payments paid during the period for both the scheduled second and scheduled third quarter as a result of the acquisition of integrated diagnostics in 2018.

Speaker Change: Adjusted EBITDA, which excludes non-cash and other one-time expenses, was a loss of $5.6 million, compared to a loss of $9.1 million for the second quarter of 2023, a 38% improvement.

Robin Cowie: This is our fifth straight quarter of year-over-year improvement in adjusted EBITDA, which is driven by our increase in revenue, strong gross margins, and our focus on actively managing our operating expenses. We ended the quarter with $42.2 million in unrestricted cash and cash equivalents, as compared to $11.5 million at the end of the first quarter, which included an increase of $51.3 million in net proceeds raised in an oversubscribed and upsized underwritten public offering and concurrent private placement, and a decrease of $13.8 million from milestone payments paid in the period for both the scheduled second and scheduled third quarter as a result of the acquisition of integrated diagnostics in 2018, prepayment of the third quarter milestone resulted in cash savings from avoided, We are pleased to note that the final integrated diagnostics milestone payment is expected to be made at the end of the third quarter, bringing these milestone payments to a close.

Speaker Change: This is our fifth straight quarter of year-over-year improvement in adjusted EBITDA, which is driven by our increase in revenue, strong gross margins, and our focus on actively managing our operating expenses.

Speaker Change: We ended the quarter with $42.2 million in unrestricted cash and cash equivalents, as compared to $11.5 million at the end of the first quarter, which included an increase of $51.3 million in net proceeds raised in an oversubscribed and upsized underwritten public offering and concurrent private placement,

Speaker Change: and a decrease of $13.8 million from milestone payments paid in the period for both the scheduled second and scheduled third quarter as a result of the acquisition of integrated diagnostics in 2018.

Robin Harper-Cowie: Prepayment of the third quarter milestone resulted in cash savings from avoided interest. We are pleased to note that the final integrated diagnostics milestone payment is expected to be made at the end of the third quarter, bringing these milestone payments to a close.

Speaker Change: Prepayment of the third quarter milestone resulted in cash savings from avoided interest.

Speaker Change: We are pleased to note that the final Integrated Diagnostics Milestone Payment is expected to be made at the end of the third quarter, bringing these milestone payments to a close.

Robin Harper-Cowie: Cash flow from operations, excluding the milestone payments, which, for clarity, are labeled on the statement of cash flows as contingent consideration, also made significant improvements quarter over quarter. For example, in the first quarter of 2024, net cash and cash equivalents used in operating activities was $15.3 million, inclusive of $3.4 million for contingent consideration. Therefore, it was $11.9 million of cash used in operations in the first quarter, exclusive of the contingent consideration. For the first half of 2024, net cash and cash equivalents used in operating activities were $33.9 million, inclusive of $17.2 million for contingent consideration.

Robin Cowie: Cash flow from operations, excluding the milestone payments, which, for clarity, are labeled on the statement of cash flows as contingent consideration, also made significant improvements quarter over quarter. In the first quarter of 2024, net cash and cash equivalents used in operating activities was $15.3 million, inclusive of $3.4 million for contingent consideration. Therefore, it was $11.9 million of cash used in operations in the first quarter, exclusive of the contingent consideration.

Speaker Change: Cash flow from operations, excluding the milestone payments, which for clarity are labeled on the statement of cash flows as contingent consideration, also made significant improvements quarter over quarter.

Speaker Change: In the first quarter of 2024, net cash and cash equivalents used in operating activities

Speaker Change: with $15.3 million, inclusive.

Speaker Change: of $3.4 million for contingent consideration, therefore it was $11.9 million of cash used in operations in the first quarter, exclusive of the contingent consideration.

Robin Cowie: For the first half of 2024, net cash and cash equivalents used in operating activities was $33.9 million, inclusive of $17.2 million for contingent consideration. Therefore, it was $16.7 million exclusive of that amount, or $4.8 million of cash used in operations during the second quarter of 2024, exclusive of the contingent consideration payment. The difference of $7.1 million, which is a 60% improvement in cash used in operations during the second quarter of 24 versus the first quarter of 24, is again the result of our increase in revenue, strong gross margins, and focus on actively managing our operating expenses.

Speaker Change: For the first half of 2024, net cash and cash equivalents used in operating activities was $33.9 million, inclusive of $17.2 million for contingent consideration. Therefore, it was $16.7 million exclusive of that amount.

Robin Harper-Cowie: Therefore, it was $16.7 million, exclusive of that amount, or $4.8 million of cash used in operations during the second quarter of 2024, exclusive of the contingent consideration payment. The difference of $7.1 million, which is a 60% improvement in cash used in operations during the second quarter of 24, versus the first quarter of 24, is again the result of our increase in revenue, strong gross margins, and focus on actively managing our operating expenses. Finally, turning to 2024 guidance.

Speaker Change: or $4.8 million of cash used in operations during the second quarter 2024 exclusive of the Contingent Consideration Payment.

Speaker Change: The difference of $7.1 million, which is a 60% improvement in cash used in operations during the second quarter of 24 versus the first quarter of 24, is again the result of our increase in revenue, strong gross margins, and focus on actively managing our operating expenses.

Robin Harper-Cowie: As Scott mentioned, we are increasing the 2024 total revenue guidance to $70 to $72 million, up from $65 to $68 million, reflecting the strength of the first half and our confidence in the second half of 2024 and beyond. Now, let me turn it back to Scott.

Robin Cowie: Finally, turning to 2024 guidance. As Scott mentioned, we are increasing the 2024 total revenue guidance to $70 to $72 million, up from $65 to $68 million, reflecting the strength of the first half and our confidence in the second half of 2024 and beyond. Now, let me turn it back to Scott.

Scott Hutton: Finally, turning to 2024 guidance. As Scott mentioned, we are increasing the 2024 total revenue guidance to $70 to $72 million, up from $65 to $68 million, reflecting the strength of the first half and our confidence in the second half of 2024 and beyond. Now, let me turn it back to Scott. Scott?

Scott Hutton: Thanks Robin. Overall, we are exceptionally pleased with the progress made in the quarter and through the first half of the year. We are increasing our 2024 revenue guidance, and we continue to make substantial progress on our path to profitability. We are transforming the standard of care, and our organization is motivated every day knowing that we're making a significant impact on healthcare professionals, their patients, and those patients' families. I believe our future is brighter now than at any point in our company history. With that, I'll turn the call over to the operator for questions.

Scott Hutton: Thanks, Robin. Overall, we are exceptionally pleased with the progress made in the quarter and through the first half of the year. We are increasing our 2024 revenue guidance, and we continue to make substantial progress on our path to profitability. We are transforming the standard of care, and our organization is motivated every day knowing that we're making a significant impact on healthcare professionals, their patients, and those patients' families. I believe our future is brighter now than at any point in our company history.

Scott Hutton: Thanks Robin. Overall, we are exceptionally pleased with the progress in the quarter and through the first half of the year.

Speaker Change: We are increasing our 2024 revenue guidance, and we continue to make substantial progress on our path to profitability.

Speaker Change: We are transforming the standard of care, and our organization is motivated every day knowing that we're making a significant impact to healthcare professionals, their patients, and those patients' families.

Scott Hutton: With that, I'll turn the call over to the operator for questions. Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: I believe our future is brighter now than at any point in our company history.

Operator: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question will come from Andrew Brackmann of William Blair. Your line is open, Andrew.

Speaker Change: With that, I'll turn the call over to the operator for questions.

Speaker Change: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster. Our first question will come from Andrew Brackmann of William Blair. Your line is open, Andrew. Hi, Scott. Hi, Robin. Good afternoon.

Andrew Brackmann: Hi Scott. Hi Robin. Good afternoon.

Speaker Change: Our first question will come from Andrew Brackmann of William Blair. Your line is open, Andrew.

Andrew Brackmann: Thanks for taking the question. Maybe just to start here, you're obviously seeing some nice momentum in the business, especially on the volume side this quarter. Anything you can share in terms of where you're seeing that strength, where you're winning, be that in certain accounts, different institutions, group practices, or even geographies? Thanks. Yeah, great question, Andrew.

Andrew Brackmann: Hi, Scott. Hi, Robin. Good afternoon. Thanks for taking the question.

Speaker Change: Maybe just to start here, you're obviously seeing some nice momentum in the business, especially on the volume side this quarter. Anything you can share in terms of where you're seeing that strength, where you're winning, be that in certain accounts, different institutions, group practices, or even geographies? Thanks.

Scott Hutton: Yeah, great question, Andrew. No, we're seeing consistent growth across all opportunities and sectors. From a product perspective, as we've stated in the past, notify our nodule management tests are driving and fueling that growth. But as we continue to expand the sales force, you know, as a reminder, starting the quarter at 60 and continuing to expand by six to eight each quarter, we know we're reaching positions that we've never reached. So in those territories, it's easy to see growth come from kind of new accounts and new ordering physicians.

Scott Hutton: No, we're seeing consistent growth across all opportunities and sectors. From a product perspective, as we've stated in the past, notify our nodule management tests are driving and fueling that growth. But as we continue to expand the sales force, you know, as a reminder, starting the quarter at 60 and continuing to expand by six to eight each quarter, we know we're reaching positions that we've never reached. So in those territories, it's easy to see growth come from kind of new accounts and new ordering positions. And in the more mature accounts, we're seeing broader adoption within a practice, and then we're also seeing growth in total test volumes. So pretty balanced, pretty equal across the board.

Speaker Change: Yeah, great question, Andrew.

Speaker Change: No, we're seeing consistent growth across all opportunities and sectors.

Speaker Change: from a product perspective, as we've stated in the past.

Speaker Change: notify our nodule management test or driving and fueling that growth.

Speaker Change: But as we continue to expand the sales force

Speaker Change: As a reminder, starting the quarter at 60 and continuing to expand by 6 to 8 each quarter, we know we're reaching physicians that we've never reached. So in those territories,

Scott Hutton: And in the more mature accounts, we're seeing broader adoption within a practice, and then we're also seeing growth in total test volumes. So pretty balanced, pretty equal across the board. Nothing that's glaring in terms of a deficiency or an opportunity for improvement at this time.

Speaker Change: It's easy to see growth come from kind of new accounts and new ordering physicians, and in the more mature accounts, we're seeing broader adoption within a practice.

Speaker Change: and then we're also seeing growth in total test volumes. So pretty balanced, pretty equal across the board. Nothing that's glaring in terms of a deficiency or an opportunity for improvement at this time.

Scott Hutton: Perfect. And then maybe just on pricing, thanks for all the color on sort of the wins this quarter. Certainly, it looks like you saw some improvement quarter over quarter in the second quarter. But first, how should we sort of be thinking about continued improvement just given the wins that you have had so far this year? And then secondly, can you give an outline of where the funnel stands for additional contracts or coverage policies moving forward? Thanks.

Scott Hutton: Nothing that's glaring in terms of a deficiency or an opportunity for improvement at this time. Perfect. And then maybe just on pricing, thanks for all the color on sort of the wins this quarter. Certainly, it looks like you saw some improvement quarter over quarter in the second quarter. Just first, how should we sort of be thinking about continued improvement just given the wins that you have had so far this year? And then, secondly, just can you give us an idea of where the funnel stands for additional contracts or coverage policies moving forward? Thanks. Yeah, thanks, um...

Speaker Change: Perfect. And then maybe just on pricing, thanks for all the color on sort of the wins this quarter. Certainly looks like you saw some improvement quarter over quarter in the second quarter. Just first...

Speaker Change: How should we sort of be thinking about continued improvement, just given the wins that you had so far this year? And then secondly, just can you level set up on where the funnel stands for additional contracts or coverage policies moving forward? Thanks.

Scott Hutton: Yeah, thanks, um... In our guide, we are not building in any real improvements in reimbursement and in additional coverage policies, so we tried to take a fairly conservative approach in the guide itself. Obviously, from a business perspective, the team is out working on expanding both coverage and contracts for all of our tests. We've had a lot of good wins, including some recent wins we look forward to telling everyone about for XL2 and are anticipating starting to see some momentum here for CDT as well.

Scott Hutton: In our guide, we are not building in any real improvements in reimbursement and in additional coverage policies, so we tried to take a fairly conservative approach in the guide itself. Obviously, from a business perspective, the team is out working on expanding both coverage and contract for all of our tests. We've had a lot of good wins, including some recent wins we look forward to telling everyone about for XL2 and are anticipating starting to see some momentum here for CDT as well.

Speaker Change: Yeah, thanks.

Speaker Change: We...

Speaker Change: In our guide, we are not building in any real improvements in reimbursement.

Speaker Change: and in additional coverage policies. So we tried to take a fairly conservative approach in the guide itself. Obviously, from a business perspective, the team is out working on expanding both coverage and contracts.

Speaker Change: for all of our tests. We've had a lot of good wins, including some recent wins. We look forward to telling everyone about for XL2 and are anticipating starting to see some momentum here for CDT as well.

Scott Hutton: As a reminder to everybody, Medicare accounts for about 60-ish percent of our business. So while each individual private payer coverage policy does not necessarily move the needle a lot, the momentum and the number of them coming in together do start to improve it. So we've got a great funnel. There's some real excitement out there. And as I've said for a lot of years, one of the hardest things is getting the attention of payers and making sure they understand the problem you're trying to solve. And payers know about this problem. They know we're missing cancers, and so we need to diagnose cancers earlier. And they know they're paying for unnecessary invasive procedures on benign nodules.

Operator: As a reminder to everybody, Medicare accounts for about 60-ish percent of our business. So while each individual private payer coverage policy does not necessarily move the needle a lot, the momentum and the number of them coming in together do start to improve it. So we've got a great funnel. There's some real excitement out there.

Speaker Change: As a reminder to everybody, Medicare accounts for about 60-ish percent of our business, so while each individual private payer coverage policy does not...

Speaker Change: necessarily move the needle a lot.

Speaker Change: the momentum and the number of them coming in together does start to improve it. So, we've got a great funnel, there's some real excitement out there, and as I've said for a lot of years, you know, one of the hardest things is...

Operator: And as I've said for a lot of years, one of the hardest things is getting the attention of payers and making sure they understand the problem you're trying to solve. And payers know this problem. They know we're missing cancers, and so we need to diagnose cancers earlier. And they know they're paying for unnecessary invasive procedures on benign nodules. And our nodule management test can help address both of those issues.

Speaker Change: getting attention of payers and making sure they understand the problem you're trying to

Speaker Change: They know we're missing cancers, and so we need to diagnose cancers earlier, and they know they're paying for unnecessary invasive procedures on benign nodules. And our nodule management test can help address both of those issues.

Scott Hutton: And our nodule management test can help address both of those issues. Great. Thanks so much.

Dan Brennan: Thank you. One moment for our next question. Our next question will be coming from Dan Brennan of TD Cohen. Your line is open.

Operator: One moment for our next question. Our next question will be coming from Dan Brennan of TD Cohen. Your line is open. Hey, good afternoon. This is Kyle on for Dan.

Speaker Change: Great. Thanks so much.

Speaker Change: Thank you. One moment for our next question.

Speaker Change: Our next question will be coming from Dan Brennan of TD Cohen. Your line is open.

Dan Brennan: Thanks for taking the questions. I want to start with one, you know, maybe if you could elaborate on the ongoing Salesforce expansion, what's been the impact thus far upon demand creation and just test volumes? Thank you. Yeah, thanks for the question, Kyle. Good to hear from you.

Speaker Change: Hey, good afternoon. This is Kyle on for Dan. Thanks for taking the questions. I wanted to start with one, you know, maybe if you could elaborate on the ongoing Salesforce expansion. What's been the impact thus far upon demand creation in just test volumes? Thank you.

Scott Hutton: Yeah, thanks for the question, Kyle. Good to hear from you.

Scott Hutton: You know, this quarter, as everyone knows, we completed a fundraise intra-quarter. Part of the use of the proceeds was continued investment in and expansion of the sales force. So we brought those sales reps on a little bit later this quarter than we had done in prior quarters. So one way of really kind of looking at the most recent additions is, yes, we've continued to see them begin paying for themselves at the three-month mark.

Speaker Change: Yeah, thanks for the question, Kyle. Good to hear from you.

Speaker Change: You know, this quarter, as everyone knows, we completed a fundraise intra-quarter. Part of the use of proceeds were continued investment in and expansion of the sales force.

Speaker Change: So we brought those sales reps on a little bit later this quarter than comparatively what we had done in prior quarters.

Speaker Change: So, one way of really kind of looking at the most recent additions.

Speaker Change: is yes, we've continued to see them.

Scott Hutton: These new team members really had a limited amount of time to impact the quarter, so we were really excited to see the team that was already in place prior to those additions go out and continue to excel and grow. What we do know is that we continue to see sales rep productivity in and around the million dollars per rep target annualized. So it's always going to be advantageous for us to bring those new team members on earlier in the quarter, giving them an opportunity to contribute as quickly as they can and impact the overall year. That's remained pretty consistent, Kyle, so nothing has changed in the recent months or quarters.

Speaker Change: begin paying for themselves at the three-month mark, these new team members really had a limited amount of time to impact the quarter.

Scott Hutton: So we were really excited to see the team that was already in place prior to those additions go out and continue to excel and grow. What we do know is that we continue to see sales rep productivity in and around the million dollars per rep target annualized. So it's always going to be advantageous for us to bring those new team members on earlier in the quarter, giving them an opportunity to contribute as quickly as they can and impact the overall year.

Speaker Change: So, we were really excited to see the team that was already in place prior to those additions go out and continue to excel and grow.

Speaker Change: What we do know is that we continue to see sales rep productivity in and around the million dollars per rep target annualized.

Speaker Change: So, it's always going to be advantageous for us to bring those new team members on earlier in the quarter, giving them an opportunity to contribute as quickly as they can and impact the overall year. That's remained pretty consistent, Kyle, so nothing has changed in the recent months or quarters.

Scott Hutton: That's remained pretty consistent, Kyle. So nothing has changed in the recent months or quarters. Got it. Thank you. And then I just want to go back to the altitude study, you know, which you mentioned in the prepared remarks.

Scott Hutton: Got it. Thank you. And then just want to go back to the altitude study, which you mentioned in the prepared remarks. Is this still on track for year end 24 completion? And what's your level of confidence in the trial work? Yeah.

Scott Hutton: Is this still on track for year and 24 completion? And what's your level of confidence in the trial work? Yeah, great, you know, great question. We feel really good about the study design. It's difficult to comment on kind of how it's going since we're blinded to that data. But, you know, we worked with a number of major academic institutions and really prominent pulmonologists, many of whom contributed to the ATS standard for prospective trial design.

Kyle: Got it, thank you. And then just want to go back to the altitude study, you know, which you mentioned in the prepared remarks. Is it still on track for year and 24 completion and what's your level of confidence in the trial working?

Scott Hutton: Yeah, great, you know, great question. We feel really good about the study design. It's difficult to comment on kind of how it's going since we're blinded to that data. But, you know, we worked with a number of major academic institutions and really prominent pulmonologists, many of whom contributed to the ATS standard for prospective trial design. So we feel confident that in the study design, we've had others look at it and kind of confirm that our approach is best in class.

Speaker Change: Yeah, you know, great question. We feel really good about the study design. It's difficult to comment on kind of how it's going since we're blinded from that data. But, you know, we worked with a number of major academic institutions and really prominent pulmonologists.

Scott Hutton: So we feel confident that in the study design, we've had others look at it and kind of confirm that our approach is best in class. From a timing perspective, we've stated in prior calls that due to early enrollment delays due to the pandemic, we were a little delayed, and we were off. So we do not expect complete enrollment and the closing of the study in 2024.

Kyle: many of whom contributed to the ATS standard for prospective trial design. So we feel confident in the study design. We've had others look at it and kind of confirm that our approach is best in class.

Scott Hutton: From a timing perspective, we've stated in prior calls that due to early enrollment delays due to the pandemic, we were a little delayed, and we were off. So we do not expect complete enrollment and the closing of the study in 2024. It'll probably be late 25 going into early 26, but that's the other reason that we have highlighted the Data Safety Management Board and the role they'll play. They're going to meet here in the next couple of months, and we'll wait to receive feedback from them.

Kyle: From a timing perspective, we've stated in prior calls

Kyle: that due to early enrollment delays due to the pandemic that we were a little delayed and we were off.

Scott Hutton: It'll probably be late 25 going into early 26, but that's the other reason that we have highlighted the Data Safety Management Board and the role they'll play. They're going to meet here in the next couple of months, and we'll wait to receive feedback from them. And at that time, I'll be able to answer questions about interim analysis, any sort of data that they want to share. But we're really pleased enrollment has continued to pick up, and site engagement is really high. Got it. Thank you.

Kyle: So we do not expect complete enrollment in closing the study in 2024. It'll be probably late 25 going into early 26.

Kyle: But that's the other reason that we have highlighted the Data Safety Management Board and the role they'll play.

Kyle: They're going to meet here in the next couple of months.

Scott Hutton: And at that time, I'll be able to answer questions about interim analysis, any sort of data that they want to share. But we're really pleased enrollment has continued to pick up, and site engagement is really high.

Kyle: and we'll wait to receive feedback from them and at that time I'll be able to answer questions about interim analysis, any sort of data that they want to share, but we're really pleased. Enrollment has continued to pick up and site engagement is really high.

Operator: As a reminder, if you would like to ask a question, please press star 1-1 on your phone and wait for your name to be announced. Our next question will be from Thomas.

Operator: As a reminder, if you would like to ask a question, please press star 11 on your phone and wait for your name to be announced. Our next question will be from Thomas Flaten of Lake Street Capital Markets. Your line is open.

Speaker Change: Got it, thank you.

Speaker Change: As a reminder, if you would like to ask a question, please press star 11 on your phone and wait for your name to be announced. Our next question will be coming from Thomas Flaten of Lake Street Capital Markets. Your line is open, Thomas.

Thomas: Good afternoon, thanks for taking the questions. With the Lewisville facility being complete, are there any significant investments that will be made in that facility?

Thomas Flaten: Good afternoon, thanks for taking the questions. With the Lewisville facility being complete, are there any significant investments that will be made in that facility? I'm assuming no, but then also flipping to DeSoto, are there any investments there we should be aware of you guys making in the near term? Hi Thomas. Great, great question. No, you've nailed it.

Thomas Lat: Good afternoon, thanks for taking the questions. With the Lewisville facility being complete, are there any significant investments that will be made in that facility? I'm assuming no, but then also flipping to DeSoto, are there any investments there we should be aware of you guys making in the near term?

Scott Hutton: Hi Thomas. Great question. No, you've nailed it. As we moved into this facility really at the beginning of the year, there was no needed expansion, investment, or anything that needs to occur here in Colorado. We have begun looking at how best to set up the Kansas laboratory and team up for long-term sustainable results, and we will be looking at improving their facility, giving them space to grow and expand. But that won't occur this fiscal year, so we'll begin looking at that kind of in that 2025 to 2026 time horizon. But just as a reminder, the Colorado facility is our headquarters. It's 80,000 square feet.

Scott Hutton: As we moved into this facility, really at the beginning of the year, there was no needed expansion, investment, or anything that needed to occur here in Colorado. We have begun looking at how best we can set up the Kansas Laboratory and team up for long-term sustainable results. And we will be looking at improving their facility, giving them space to grow and expand. But that won't occur this fiscal year.

Speaker Change: Hi Thomas, great, great question.

Speaker Change: No, you've nailed it.

Speaker Change: As we moved into this facility, really at the beginning of the year, no needed expansion, investment, or anything that needs to occur here in Colorado. We have begun looking at how best we set...

Speaker Change: the Kansas Laboratory, and team up for long-term sustainable results.

Speaker Change: and we will be looking at...

Kyle: improving their facility, giving them space to grow and expand, but that won't occur this fiscal year, so we'll begin looking at that kind of in that 2025 to 2026 time horizon.

Scott Hutton: So we'll begin looking at that kind of in that 2025 to 2026 time horizon. But just as a reminder, the Colorado facility is our headquarters. It's 80,000 square feet.

Scott Hutton: The majority of the growth and expansion will occur here. The needs of the team in Kansas really are related to the two notification tests and running those, and it's a much smaller footprint. So we feel really good about the real estate options there, and we'll try to be mindful of cost as we enter that project. But it really is about better enabling that team to work effectively and efficiently. And we'll provide more details as we get closer. Got it. I appreciate it.

Scott Hutton: The majority of the growth and expansion will occur here. The needs of the team in Kansas really are related to the two notification tests and running those. And it's a much smaller footprint.

Speaker Change: But just as a reminder, the Colorado facility is our headquarters. It's 80,000 square feet. The majority of the growth and expansion will occur here.

Speaker Change: The needs of the team in Kansas really are related to the two notify tests and running those.

Scott Hutton: So we feel really good about the real estate options there, and we'll try to be mindful of cost as we enter that project. But it really is about better enabling that team to work effectively and efficiently. I'll provide more details as we get closer.

Speaker Change: and 's it's a much smaller footprintts so we feel really good about the real estate options there and we'll try to be mindful of cost as we as we enter that project that really is about better enabling that team to work effectively and efficiently

Scott Hutton: I appreciate it. And just to confirm, Scott, the six to eight ads per quarter on the sales team that has you ending the year 75-ish, is that the right number for us to be thinking about? Yeah, Thomas, I think you're thinking about it exactly how we are. The key component, like I said earlier, is, you know, the sooner we can bring them on board, the more, you know, time they have to contribute.

Scott Hutton: And just to confirm, Scott, so the six to eight ads per quarter on the sales team, that has you ending the year 75-ish. Is that the right number for us to be thinking about? Yeah, Thomas, I think you're thinking about it exactly how we are. The key component, like I said earlier, is, you know, the sooner we can bring them on board, the more, you know, time they have to contribute. If we bring in, you know, let's say we end the year at 75, the truth is, we'll probably have four or five of them that are coming on later in the quarter, and that really just sets us up for success to come out of the gate strong as we enter 2025. But your numbers and the cadence of additions are exactly how we're playing.

Speaker Change: And we'll provide more details as we get closer. Got it. I appreciate it. And just to confirm, Scott, so the 6 to 8 ads per quarter on the sales team, that has you ending the year 75-ish. Is that the right number for us to be thinking about?

Speaker Change: Yeah, Thomas, I think you're thinking about it exactly how we are.

Speaker Change: The key component, like I said earlier, is the sooner we can bring them on, the more time they have to contribute.

Scott Hutton: If we bring in, you know, let's say we end the year at 75, the truth is, we'll probably have four or five of them that are coming on later in the quarter. And that really just sets us up for success to come out of the gate strong as we enter 2025. But your numbers and the cadence of additions is exactly how we're playing. And then just one quick final one, kind of following on from an earlier question about where you guys are winning, I was curious if there are, quote unquote, mature accounts or pulmonologists in terms of having been called on a lot that you don't feel are fully penetrated.

Speaker Change: If we bring

Speaker Change: You know, let's say we end the year at 70.

Speaker Change: Five. Truth is, we'll probably have four or five of them, you know, that are going to be coming on later in the quarter. And that really just sets us up for success to come out of the gate strong as we enter 2025. But your numbers and the cadence of additions is exactly how we're planning.

Scott Hutton: And then just one quick final one kind of following on from from an earlier question about where you guys are winning I was curious if there are quote-unquote mature accounts or Pulmonologists in in terms of having been called on a lot that you don't feel are fully penetrated I don't know if there are such people but I would be curious if there are What is their hesitancy to kind of going all in with the notify products?

Speaker Change: And then just one quick final one, kind of following on from an earlier question about where you guys are winning.

Speaker Change: I was curious if there are quote-unquote mature accounts or pulmonologists, in terms of having been called on a lot, that you don't feel are fully penetrated. I don't know if there are such people, but I would be curious if there are, what is their hesitancy to kind of going all in with the Notify products?

Scott Hutton: I don't know if there are such people, but I would be curious if there are, what is their hesitancy to kind of go all in with the Notify product? Yeah, it's a great question. It really is, in any one of those scenarios, it's going to vary.

Scott Hutton: Yeah, it's a great question. In really, in any one of those scenarios, it's going to vary. It'll vary by practice, it'll vary by referral patterns, and the patient population they see. You know, there's nothing glaring, nothing standing out that limits us, and what we've seen is continued or deepened penetration into those accounts. We now have a handful of accounts that have exceeded their 300th order, and we have one that's over 500 notified test results, so you can see the longer we're in those accounts, we are seeing, you know, broader and continued use and adoption.

Scott Hutton: It'll vary by practice, it'll vary by referral patterns, and the patient population. They see, you know, there's nothing glaring, nothing standing out that limits us. And what we've seen is continued or deep penetration into those accounts. We now have a handful of accounts that have exceeded their 300th order, and we have one that has over 500 notified test results. So you can see the longer we're in those accounts, we are seeing, you know, broader and continued use and adoption.

Speaker Change: Yeah it's a great question. It really, in any one of those scenarios, it's going to vary. It'll vary by practice, it'll vary by referral patterns, and the patient population they see.

Speaker Change: There's nothing glaring, nothing standing out that limits us. And what we've seen is continued or deepened penetration into those accounts.

Speaker Change: We now have a handful of accounts.

Speaker Change: that have exceeded their 300th order.

Speaker Change: And we have one that's over 500 notified test results.

Scott Hutton: You know, we've tracked over time. What we really see is once an account gets to kind of that 10 to 20 test orders, and we can have a, you know, consultative review of those test results, we find that reorder rates jump pretty significantly, and then once they get beyond that 40 to 50, it's pretty linear as they continue to grow and scale from there. We've not seen anything new or in recent months or quarters that have changed that, and so we feel really good that we can continue to add the sales reps that we're planning on adding, enabling them to get out and really share the value that the notified tests offer, and we're excited to do so and continue to provide these strong results.

Speaker Change: So you can see the longer we're in those accounts, we are seeing broader and continued use and adoption. You know, we've tracked over time, what we really see is once an account gets to kind of that 10 to 20 test ordered, and we can have a...

Speaker Change: you know, consultative review of those test results.

Speaker Change: we find that reorder rates jump pretty significantly and then once they get beyond that forty to fifty

Speaker Change: It's pretty linear as they continue to grow and scale from there. We've not seen anything new or in recent months or quarters that have changed that. And so we feel really good that we can continue to add the sales reps.

Speaker Change: that we're planning on adding, enabling them to get out and really share the value that the Notify test offer, and we're excited to do so and continue to provide these strong results.

Thomas: Excellent, I appreciate you taking the questions and congrats on an awesome quarter.

Scott Hutton: Thanks, Tom, and I am showing no further questions. I would now like to turn the conference back to Scott for closing. Thank you, operator. It's an exciting time here at Biodesix. We've worked long and hard to build the best pulmonology-focused commercial team in diagnosis, with first mover status and lung nodule management and an ever-increasing body of robust clinical data. We are building on the momentum we created as we further increase our clinical and payer adoption in this extremely large and underserved population.

Speaker Change: Excellent, I appreciate you taking the questions and congrats on an awesome quarter.

Operator: And I am showing no further questions. I would now like to turn the conference back to Scott for closing remarks.

Thomas Lat: Thanks, Thomas.

Speaker Change: And I am showing no further questions. I would now like to turn the conference back to Scott for closing remarks.

Scott Hutton: Thank you, operator. It's an exciting time here at Biodesix. We've worked long and hard to build the best pulmonology-focused commercial team in diagnosis, with first mover status and lung nodule management and an ever-increasing body of robust clinical data. We are building on the momentum we created as we further increase our clinical and payer adoption in this extremely large and underserved population. We've had a great start to the year, and with a strong balance sheet to execute our plan towards profitability, we view 2024 as a pivotal year of execution, and we look forward to updating you on our continued progress and success on upcoming earnings calls. Thank you.

Scott Hutton: We've had a great start to the year, and with a strong balance sheet to execute our plan towards profitability, we view 2024 as a pivotal year of execution, and we look forward to updating you on our continued progress and success on upcoming earnings calls. Thank you. And this concludes today's conference call. Thank you for participating. You may now disconnect. Thanks for watching!

Scott Hutton: Thank you, operator. It's an exciting time here at Biodesix.

Speaker Change: We've worked long and hard to build the best pulmonology-focused commercial team in diagnostics.

Scott Hutton: With first-mover status and lung nodule management, and an ever-increasing body of robust clinical data, we are building on the momentum we created as we further increase our clinical and payer adoption in this extremely large and underserved population.

Speaker Change: We've had a great start to the year and with a strong balance sheet to execute our plan towards profitability, we view 2024 as a pivotal year of execution and we look forward to updating you on our continued progress and success on upcoming earnings calls. Thank you.

Operator: And this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: And this concludes today's conference call. Thank you for participating. You may now disconnect.

Scott Hutton: You know, we've tracked over time. But we really see that once an account gets to kind of that 10 to 20 test orders, and we can have a, you know, consultative review of those test results, reorder rates jump pretty significantly. And then once they get beyond that 40 to 50, it's pretty linear as they continue to grow and scale from there.

Scott Hutton: We've not seen anything new or in recent months or quarters that have changed that. And so we feel really good that we can continue to add the sales reps that we're planning on adding, enabling them to get out and really share the value that the notify test offers. And we're excited to do so and continue to provide these strong results. I appreciate you taking the questions and congrats on an awesome quarter.

Q2 2024 Biodesix Inc Earnings Call

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