Q2 2024 Myriad Genetics Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the Myriad Genetics Second Quarter 2024 Financial Earnings Conference. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. 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 first speaker, Matt Scalo, Senior Vice President of Investor Relations. Please go ahead.

Good day and thank you for standing by welcome to the myriad genetics second quarter 2024 financial earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session you'll need to press star one on your telephone you will then hear an automated message.

Speaker Change: Advising your hand is raised.

To withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first Speaker <unk> Senior Vice President of Investor Relations. Please go ahead.

Matt Scalo: Thanks, Gerald. And good afternoon, and welcome to the Myriad Genetics second quarter 2024 earnings call. During the call, we will review the financial results we released today, and afterwards, we will host a question and answer session.

Speaker Change: Thanks, Gerald and good afternoon, and welcome to the myriad genetics second quarter 2024 earnings call. During the call. We will review the financial results. We released today and afterwards, we will host a question and answer session. Our quarterly earnings release was issued this afternoon on form 8-K can be found on our website.

Matt Scalo: Our quarterly earnings release was issued this afternoon on form 8k and can be found on our website at investor.myriad.com. I'm Matt Scalo, Senior Vice President of Investor Relations, and on the call with me today are Paul Diaz, our President and Chief Executive Officer, Scott Leffler, our Chief Financial Officer, Samraat, our Chief Operating Officer, and Mark Verratti, our Chief Commercial Officer. This call can be heard live via webcast at investor.myriad.com, and a recording will be archived in the investor section of our website along with this slide presentation.

Speaker Change: Investor not married to Dot com.

Speaker Change: <unk> senior Vice President of Investor Relations and on the call with me today are.

Speaker Change: Our president and Chief Executive Officer, Scott Leffler, our Chief Financial Officer, Sam Ross, Our Chief operating Officer, and Mark variety, our Chief commercial officer. This call can be heard live via webcast at Investor Dot married Dot Com Edinburgh.

Speaker Change: And will be archived in the investors section of our website along with the slide presentation.

Matt Scalo: Please note that some of the information presented today contains projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the SEC, specifically the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-Q. These documents identify important risk factors that could cause actual results to differ materially from those contained in our projections or forward-looking data.

Speaker Change: Please note that some of the information presented today contains projections or other forward looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons.

Speaker Change: We refer you to the documents the company files from time to time with the SEC specifically the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on form 8-K. These documents identify important risk factors that could cause the actual results to dish.

Speaker Change: Materially from those contained in our projections or forward looking statements I'll now turn the call over to Paul.

Unknown Executive: I'll now turn the call over to you. Thanks, Matt.

Paul Diaz: Thanks Matt and good afternoon everyone, and thank you for joining us. On today's call, we will discuss the highlights from our strong second quarter performance and provide an update on the progress we continue to make in accelerating profitable revenue growth. First, I want to thank my Myriad teammates and our provider partners for their continued support and commitment to advancing our mission and vision to make genetic testing and precision medicine more accessible to help people take more control of their health.

Paul: Thanks, Matt and good afternoon, everyone and thank you for joining us on today's call. We will discuss the highlights from our strong second quarter performance and provide an update on the progress we continue to make accelerating profitable revenue growth for.

Paul: First I want to thank my myriad teammates and our provider partners for their continued support and commitment to advancing our mission and vision to make genetic testing in precision medicine more accessible to help people take more control of their health.

Paul Diaz: Our Board of Directors and the entire Myriad team is incredibly excited about how our management team has come together this year under the leadership of Samraat Raha, our Chief Operating Officer, Scott Leffler, our Chief Financial Officer, and Dr. George Daneker, the new President of our Oncology Division. We're also thrilled to welcome Jennifer Fox as our new chief legal officer, along with several strong new additions to our payer markets, technology, women's health, and urology teams. Next slide, please.

Speaker Change: Our board of directors and the entire myriad team is incredibly excited about how our management team has come together this year under the leadership of Sam Rob <unk>, Our Chief operating Officer, Scott Leffler, Our Chief Financial Officer, and Dr. George Danaher, the new President of our oncology Division.

Speaker Change: Also thrilled to welcome Jennifer Fox as our new Chief Legal officer.

Speaker Change: With several strong new additions to our payer markets technology women's health and urology teams.

Speaker Change: Next slide please.

Paul Diaz: We continue to deliver on our commitment to our patients and shareholders as we achieve 15% revenue growth in the second quarter compared to last year, reflecting both volume and revenue per test improvements across the portfolio. Our focus on profitable growth came through as we reported a 17% increase in gross profits, adjusted EBITDA of $12 million, and a positive adjusted EPS of $0.05 in the second quarter. We also generated positive adjusted free cash flow of $8 million as our capital expenditures continue to return to a more normalized level as compared to last year.

Speaker Change: We continue to deliver on our commitment to our patients and shareholders as we achieved 15% revenue growth in the second quarter compared to last year, reflecting both volume and revenue per test improvements across the portfolio.

Speaker Change: Our focus on profitable growth came through as we reported a 17% increase in gross profit adjusted.

Speaker Change: Adjusted EBITDA of $12 million and a positive adjusted EPS of five cents in the second quarter.

Speaker Change: We also generated positive adjusted free cash flow of $8 million as our capital expenditures continue to return to a more normalized level as compared to last year.

Paul Diaz: Market dislocation contributed modestly to the 25% revenue growth in prenatal testing this quarter but should accelerate in the second half of 2024. As I mentioned last quarter, we expect market share gains will take time to realize, but we are excited to be in the process of converting three large new health system accounts in the fourth quarter of this year. The second quarter saw continued payer coverage wins, including a recent decision by Buke Shield of California to follow the state's biomarker law and add gene sites to its medical policy for commercial and managed Medicaid beneficiaries.

Speaker Change: Market dislocation contributed modestly to the 25% revenue growth in prenatal testing this quarter, but should accelerate in the second half of 2024.

Speaker Change: As I mentioned last quarter, we expect market share gains will take time to realize but we are excited to be in the process of converting three large new health system accounts in the fourth quarter of this year.

Speaker Change: Second quarter saw continued payer coverage wins, including a recent decision by bug shield of California to <unk>.

Speaker Change: Followed the state's biomarker law and add gene sites to its medical policy for commercial and managed Medicaid beneficiaries.

Paul Diaz: We also continue to reinforce our prenatal offerings with the launch of our expanded carrier screening panel, Foresight Universal Plus. In light of our continued positive momentum, we are raising 2024 financial guidance and increasing our long-term revenue growth target to 12%. This is an important step up as it reflects the progress we've made over the last four years.

Speaker Change: We also continue to reinforce our prenatal offerings with the launch of our expanded carrier screening panel foresight Universal plus.

Speaker Change: In light of our continued positive momentum, we are raising 2024 financial guidance and increasing our long term revenue growth target to 12%.

Speaker Change: This is an important step up is reflects the progress we've made over the last four years we.

Paul Diaz: We remain optimistic about our future and the evolution of our product portfolio as we continue to enhance our existing products, publish additional clinical validation studies, improve reimbursement, and launch new products. At the same time, we continue to improve access and ease of use for our customers, as we accelerate EMR integrations for new customers and make meaningful progress in our labs as a future initiative. We continue to anchor ourselves around those things that our customers tell us they rank as the most important.

Speaker Change: We remain optimistic about our future and the evolution of our product portfolio as we continue to enhance our existing products publish additional clinical validation studies.

Speaker Change: Improved reimbursement and launch new products.

Speaker Change: At the same time, we continued to improve access and ease of use for our customers as we accelerate EMR integrations for new customers.

Speaker Change: Make meaningful progress in our lab to the future initiative.

Speaker Change: We continue to anchor ourselves around those things that our customers tell us they rank as the most important die.

Paul Diaz: Diagnostic tools that have proven clinical validity and utility, a lab that offers a comprehensive set of offerings that they most often need, and reliable, fast turnaround time. Ease of use from the time of order to the receipt of clinically actionable results and tests that are affordable for their patients. These customer insights continue to solidify our strategic pillars to drive long-term profitable growth and innovation. Including increased investment in research and development and continuous improvement in customer service and commercial execution as we invest in our technology platform, including AI tools to power our operations and scale our infrastructure in the lab, revenue cycle, and administrative support functions to improve everything we do. Now I'll turn it over to Mark.

Speaker Change: Diagnostic tools that have proven clinical validity and utility of.

Speaker Change: Allowed that offers a comprehensive set of offerings that they most often need.

Speaker Change: Reliable fast turnaround times.

Speaker Change: Abuse from the time of order to the receipt of clinically actionable results.

Speaker Change: And tests that are affordable for their patients.

Speaker Change: These customer insights continued to solidify our strategic pillars to drive long term profitable growth and innovation.

Speaker Change: <unk> increased investment in research and development and continuous improvement in customer service and commercial execution as we invest in our technology platform, including AI tools to power operations and scale, our infrastructure and lab revenue cycle and administrative support functions to improve everything we do now I'll turn it over.

Mark Verratti: Thanks, Paul. I'll start on slide 7 to talk about our strong performance and our product growth. What you are seeing this quarter is an increased focus from the commercial team on profitable growth, working with our customers to maintain access and ensure payment to reduce our no-pay rates across all of our products. Starting with hereditary cancer testing, Myriad continues to lead the market with differentiated insights offered by our MyRisk with RISC-IV test. Last 12-month year-over-year revenue growth through Q2 of 15% demonstrates the growth and potential of our category and our commercial capability. Let me provide a bit more color regarding this performance.

Speaker Change: Tomorrow.

Tomorrow: Thanks, Paul I'll start on slide seven to talk about our strong.

Tomorrow: Performance in our product growth.

Speaker Change: We are seeing this quarter is an increased focus from the commercial team on profitable growth working with our customers to maintain access and ensure payments to reduce our no pay rates across all of our products starting with hereditary cancer testing <unk> continues to lead the market with differentiated insights offered by our my risk with risk or test.

Speaker Change: Last 12 month year over year revenue growth through Q2 of 15% demonstrates the growth.

Speaker Change: Potential of our category and our commercial capabilities.

Speaker Change: Let me provide a bit more color.

Mark Verratti: As you may recall, our hereditary cancer testing business includes both MyRisk and BRAC analysis CDI. We continue to see strong volume growth in MyRisk with increased Adoption with Strong Pair Coverage, which was slightly offset by lower BRAC analysis CDX volumes in the quarter. Looking forward, MyRisk is expected to continue its strong growth as it benefits from expanded guidelines and Acceleration and EMR integrations, which are on track for Q3 of this year

Speaker Change: Regarding this performance as you may recall, our hereditary cancer testing business includes both my risk and break analysis CTX, we continue to see strong volume growth in my risk would increase that.

Speaker Change: Our adoption was strong payer coverage, which was slightly offset by lower break analysis CTX volumes in the quarter.

Speaker Change: Looking forward my risk is expected to continue its strong growth as it benefits from expanded guidelines and acceleration in EMR integrations, which are on track for Q3 of this year.

Mark Verratti: In fact, we've begun transitioning several large accounts, including several multi-state health systems. As Paul mentioned in the last earnings call, Myriad is focused on investing in EMR integrations as they play an important role in the overall customer experience and revenue cycle management. Importantly, we expect to achieve double-digit growth in hereditary cancer testing volumes with stable average revenue per test in 2025. Next slide.

Speaker Change: In fact, we've begun transitioning several large accounts, including several multi state health systems.

Speaker Change: As Paul mentioned in the last earnings call myriad is focused on and investing in EMR integrations as they play an important role in the overall customer experience and revenue cycle management importantly, we expect to achieve.

Paul: Achieved double digit growth in hereditary cancer testing volumes were stable average revenue per test in 2025.

Mark Verratti: In the second quarter, our women's health team delivered 29% prenatal revenue growth year over year. This result was driven by a 12% increase in testing volume over the same period as we continue to sell deeper into current accounts and win new accounts. We remain focused on evaluating new potential accounts, and we believe the market is becoming more rational regarding market pricing for these services. We continue to see growth opportunities with new customers as we move throughout the year. Next slide.

Speaker Change: Next slide in the second quarter, our women's health team delivered 29% prenatal revenue growth year over year. This result was driven by a 12% increase in testing volume over the same period as we continue to sell deeper into current accounts and win new accounts, we remain focused on evaluating new potential accounts and we believe market has become.

Speaker Change: More rational regarding market pricing for these services, we continue to see growth opportunities with new customers as we move throughout the year.

Mark Verratti: In June, we launched our expanded carrier screening test, Foresight Universal Plus, which features an expanded panel of genes as well as more efficient work. While we wait for ACOG action, we believe the expanded guidelines will improve patient health and expand the market opportunity for carrier screening. Once ACOG publishes expanded guidelines for carrier screening, we believe the rest of the market and payers will also adapt, which will likely result in growing demand and adoption, along with revenue protests.

Speaker Change: Next slide in June we launched our expanded carrier screening test foresight, Universal plus which features an expanded panel of genes as well as more efficient workflows.

Speaker Change: While we wait for the Cog action, we believe the expanded guidelines will improve patient health and expand the market opportunity for carrier screening once aicar publishes expanded guidelines for carrier screening. We believe the rest of the market and payers will also adapt which will likely result in growing demand and adoption along with revenue per test improvements guideline.

Mark Verratti: Guidelines expansion would also support our multiple prenatal test screen, First Gene, that we expect to launch next year. In the second quarter, gene site revenues increased 22% year-over-year, as we reported approximately 129,000. Genocyte revenue per test improved both year over year and quarter over quarter in the second quarter, reflecting a combination of revenue cycle management and improving payer coverage driven in part by a growing list of states that have enacted biomarker laws, as Scott will discuss later.

Speaker Change: Expansion, but also support our multiple prenatal test screen first gene that we expect to launch next year next slide.

Speaker Change: In the second quarter gene site revenues increased 22% year over year as we reported approximately 129000 tests.

Speaker Change: <unk> revenue per test improved both year over year and quarter over quarter in the second quarter, reflecting a combination of revenue cycle management and improving payer coverage driven in part by growing list of states that have enacted biomarker laws.

Mark Verratti: I will close with brief pipeline activity highlights. We continue to see positive momentum with our Precise Tumor Test, which we acquired in early 2024. We remain on track to move this test into our Salt Lake City facility in Q4 of this year. We are also excited to have launched Foresight Universal Plus in June and await ACOG guideline updates that could potentially expand this market opportunity. Sam will address Precise Liquid and MRD as these new products provide tremendous value for our providers and support growth above and beyond the long-term revenue growth target of 12%. I look forward to giving additional color on these products and other commercial updates at our investor event this fall. Now, I will turn the call over to our Chief Operating Officer, Samraat Raha.

Speaker Change: <unk> will discuss later.

Speaker Change: Next slide I will close with brief pipeline activity highlights we continue to see positive momentum with our precise tumor test, which we acquired in early 'twenty four we remain on track to move this test into our Salt Lake City facility in Q4 of this year. We are also excited to have launched foresight universal plus in June and a weighted <unk> guideline updates that could.

Speaker Change: Potentially expand this market opportunity.

Speaker Change: Sam will address precise liquid Mardi as these new products provide tremendous value for our providers and support growth above and beyond the long term revenue growth target of 12%.

Speaker Change: I look forward to giving additional color on these products and other commercial updates at our Investor event. This fall now I will turn the call over to our Chief operating Officer Sandra.

Samraat Raha: Thanks, Mark. Let me start on slide 13 with an update on select operational highlights from the quarter. We continue to see a high level of teammate engagement across the company and have been recognized again as a great place to work. Our team's commitment is also reflected in our low turnover.

Sandra: Thanks, Mark let me start on slide 13, with an update on select operational highlights from the quarter.

Sandra: We continue to see a high level of teammate engagement across the company and have been recognized again as a great place to work. Our team's commitment is also reflected in our low turnover level.

Samraat Raha: Along with high internal engagement, we are honored to have been recently recognized by Time Magazine as one of America's best mid-sized companies of 2024 and to report a customer net promoter score of 72. In terms of efficiency and productivity, we continue to deliver rapid test turnaround times to support health care providers in making timely treatment decisions. With full ownership of the precise tumor ordering through report delivery process, we continue to see improvement in turnaround times for delivering results.

Speaker Change: Along with high internal engagement, we are honored to have been recently recognized by time magazine as one of America's Best Midsized companies of 2024 and.

Speaker Change: And to report our customer net promoter score of 72.

Speaker Change: In terms of efficiency and productivity, we continue to deliver rapid test turnaround times to support health care providers make timely treatment decisions in the quarter. We also increased commercial productivity by 21% compared to last year. As a result of the continued execution of our commercial transformation, including improved.

Speaker Change: Sales planning and process optimization that Marc and his team are leading.

Speaker Change: We also had a 6% year on year increase in the average revenue per test based on the continued programmatic focus and rigor, we're putting into the revenue cycle activities, including expanding air coverage next slide.

Speaker Change: The overall objective of our labs are the future program is to drive innovation operational excellence at scale to continue delivering high quality testing results that meet regulatory requirements, while shortening turnaround times and reducing our cost per test.

Speaker Change: The work we've been doing on this program supports our ongoing focus to improve the overall patient and provider experience.

Speaker Change: As you May recall, we completed construction of our new lab facilities in Salt Lake City, and South San Francisco in 2023 last quarter, we made important progress at both sites after gaining our New York State permitted in Salt Lake City, we have started to ramp the volume of samples processed for both pro Lewis our prostate.

Speaker Change: <unk> test as well as precise Mardi for our Biopharma partners and clinical validation research participants. We also continue to make good progress on moving precise tumor or therapy selection tests that we acquired from Intermountain precision genomics and are on track to complete validation and start processing samples in Q4.

Speaker Change: Four of this year with full ownership of the precise tumor ordering through report delivery process. We continue to see improvement in churn on times for delivering results.

Speaker Change: We're also seeing monthly sample volume growth and expect this trend to continue accelerating as we head into 2025, we're aiming to launch precise liquid in late 2025 to early 2026.

Speaker Change: In South San Francisco, we have completed the required validation of both prequel are in Aps test and foresight, our expanded carrier screening test the.

Speaker Change: The transition a prequel to this lab is already underway and we will transition foresight in Q4 of this year based on our continued progress we're on track with our plans to complete the moves at both sites by the end of 2025.

Speaker Change: Next slide.

Speaker Change: Coming out of <unk> in June.

Speaker Change: Shout out to Dr charged anacker, Mark our oncology team for setting our deep engagement with many key customers. After speaking with numerous oncologists their excitement is evident and we see a meaningful opportunity for myriad to serve community oncologists and health care systems, who trust <unk> gold <unk>.

Speaker Change: Standard hereditary cancer in HRD tests with precise tumor now and with precise <unk> differentiated highly sensitive assay in the future over the last couple of months, we have strengthened our freedom to operate and ability to deliver tumor informed high definition <unk> assays.

Speaker Change: With the issuance of second foundational method patent from the U S. PTO for detecting circulating tumor DNA and patient fluid samples. In addition to our recent agreement with personality to cross license, our patents states covering tumor informed approaches to Marty.

Speaker Change: We view these announcements as both fortifying our position as well as enabling us to broaden patient access to the benefits of a new standard of MRV testing.

Speaker Change: We've continued to add studies this year, including a research collaboration with the National Cancer Center Hospital East in Japan to study the prognostic and predictive value of MRV in the scrum monster screen III study to monitor circulating tumor DNA overtime in patients diagnosed with a wide array of solid and hematological.

Samraat Raha: Q2 revenue growth was driven broadly by hereditary cancer testing, prenatal testing, and pharmacogenomics, bolstered by an improving customer experience and continued commercial execution. Lastly, our second half of 2024 revenue considers an approximately $5 million impact from the development of our endopredic platform.

Speaker Change: Again.

Speaker Change: Q2 revenue growth was driven broadly by hereditary cancer testing prenatal testing and pharmacogenomics bolstered by an improving customer experience and continued commercial execution.

Speaker Change: We have spoken about how the commercial team with enhanced analytical tools are addressing health care provider needs, while more effectively generating revenue growth on.

Speaker Change: On the next slide I'll address the standout contribution from our revenue cycle efforts in the second quarter.

Speaker Change: We continue to see positive traction from ongoing investments in revenue cycle, workflows, which improve our ability to process timely prior authorizations collect medical records and automate workflows and ultimately are resulting in improved revenue per tests across our portfolio.

Speaker Change: We are also seeing improvements from our ongoing payer engagement activities, including working with health plans to encourage their implementation of medical policies that conform to state biomarker legislation.

Speaker Change: As discussed on prior earnings calls there is a growing list of states that have passed legislation focus on providing quality care for their citizens, including access to precision medicine and advanced diagnostics as.

Speaker Change: As Paul mentioned, we recently received expanded commercial and managed Medicaid coverage with Blue Shield and a large managed Medicaid plan in the southeast that added gene site to their medical policy effective July of 2024.

Paul: And there are several other payers that have recently taken a positive step forward with gene site coverage, giving us momentum in both commercial and managed Medicaid coverage.

Speaker Change: It is longer term revenue growth target of 12%, which Paul mentioned a few minutes ago.

Speaker Change: Overall, we are increasing levels of confidence in our ability to consistently grow the topline at this pace, but the most recent update to our revenue growth targeted bolstered by our improved reimbursement profile that I just described for Q2, and which we have generally been seeing all year.

Speaker Change: Much of the downward pressure on contracted rates that we've seen in the past year has moderated and we see a maturation in both our revenue cycle activities and the reimbursement environment more broadly in our space.

Speaker Change: Next slide.

Speaker Change: With our focus on profitable growth. We recently closed the sale of our endo predict business, we incurred a onetime noncash charge in Q2 and expect minimal cash restructuring costs.

Speaker Change: Overall, the reorganization and sale, we will have about an $11 million annual run rate impact on our revenue.

Speaker Change: But importantly will be accretive by more than $4 million per year to our go forward adjusted operating income by streamlining our cost structure.

Speaker Change: Second half of 2020 for impact on revenue and Opex are reflected in the updated guidance that I'll be discussing shortly.

Speaker Change: Next slide.

Speaker Change: In our updated 2024 financial guidance, we do expect our opex run rate to be higher in the second half of the year as we ramp up spending to accommodate growth and strategic development.

Speaker Change: Year to date SG&A is down more than $8 million, while we've accelerated check an R&D investment by around $9 million. We are pleased to be concentrating more of our spend in these critical areas.

Speaker Change: Our strong revenue growth and margins in Q2 drove significant improvement in overall profitability, including an adjusted EPS of <unk>.

Speaker Change: Versus a loss of eight in the second quarter of last year.

Speaker Change: Next slide.

Speaker Change: Gross profit dollars in the second quarter grew 17% over the year ago period. This reflects double digit revenue growth and improved margins supported by positive revenue per test trends in the quarter.

Speaker Change: Building off a strong gross profit base and being mindful of ongoing strategic investments, we generated $12 million of positive adjusted EBITDA compared to a loss of $4 million in the prior year period.

Speaker Change: We saw meaningful year over year improvement in adjusted operating cash flow with an inflow of approximately $16 million in the second quarter of 2024 versus $6 million in the second quarter of 2023.

Speaker Change: We have raised our adjusted EPS range to between eight and 12% from a previous range of zero to five.

Speaker Change: I emphasize we intend to increase spend to accelerate actionable commercial opportunity in a changing competitive landscape to further drive the topline.

Speaker Change: An example of that accelerated spend would be our EMR integration efforts were new customer wins are often dependent on our ability to meet the requirements of prospective customers.

Speaker Change: Overall, we are optimistic regarding the business trends and the companys ability to grow at or above industry growth rates now, let me turn the call back to Paul. Thanks, Scott. He's strong results are consistent with prior quarters as we continue to build on our pillars of long term growth profitability and innovation that.

Speaker Change: The momentum we continue to see across the enterprise supports our decision to raise full year 2024 financial guidance and adjust our long term revenue growth target to 12%.

Speaker Change: We remain confident in our ability to serve the underpenetrated markets that we operate in with clinically differentiated products that deliver value in real world settings, and are supported by technology and automation.

Speaker Change: Our new labs in workflows are yielding faster turnaround times and reduce operating costs.

Speaker Change: I would just just to put a little more clarity most of the gains are our wallet share gains.

Speaker Change: With as we talked about the last couple of quarters, the new customers just starting to roll in Matt So, but importantly, its profitable growth and maintaining access to patients that were focused on and Melissa and her team just did a really great job. So we've got some big cut.

Speaker Change: <unk> is to maintain this growth rate going into next year.

Matt: On the volume side for sure.

Speaker Change: Great. Thanks, and just for a follow up maybe a higher level question for for Scott or Paul.

Speaker Change: Just as you guys think about the operating leverage in the business clearly with the EBITDA EPS guidance raise.

Speaker Change: Displaying some of that.

Speaker Change: Kind of wanted to know how youre thinking about funding.

Speaker Change: Funding the new pipeline.

Speaker Change: Predominantly mardi while at the same time moderating opex on some of your more mature tests are you going to be able to continue to fund that <unk> spend or pipeline spend.

Speaker Change: And at the same time moderate some of the spend that youre seeing in your mature category I just wanted to understand how you think about that.

Speaker Change: Yes, absolutely, Matt I mean, and Scott Scott can add.

Speaker Change: Thanks for taking our question I was wondering if you could provide some color on volume trends seasonality for the second.

Speaker Change: Half of the year for the different testing segments in your portfolio and then I have a follow up question.

Speaker Change: Yeah, I think we've discussed usually Q3, we do have some some seasonality within Q4 being slightly stronger. So I think we expected growth as we mentioned in the back half of the year, both in volume and as well as stable Asps. So I'm not sure. We can provide much color more than that we don't really break out those numbers.

Speaker Change: In terms of our guidance sorry.

No. That's helpful. Okay, and then for you mentioned then just referenced again the revenue seasonality are there any seasonal in terms of gross margin that we should be aware of in the second half or is that just going to be based on the volume and revenue seasonality.

Speaker Change: No I think you can take the guide for what it is in a high confidence level in our guide for 2024.

Unknown Executive: Scott laid out, that includes, you know, the OpEx we took on to integrate IPG, that includes the benefit of the international restructuring, so there are a bunch of puts and takes. We think that there's upside in our biopharma business, you know, heading into next year. We saw some softness there. So we have a number of different levers, I think, to grow and meet or exceed our guidance this year and, certainly, to hopefully achieve our targeted 12% next year.

Speaker Change: Got laid out that includes.

Speaker Change: The Opex, we took on to to integrate IPG that includes the benefit of the international restructuring. So there are a bunch of puts and takes.

Speaker Change: We think that there is upside in our biopharma business heading into next year, we saw some softness there.

Speaker Change: So we have a number of different levers I think to grow.

Speaker Change: And meet or exceed our guidance this year and certainly hope.

Speaker Change: Hopefully achieve our targeted 12% next year.

Speaker Change: Great. Thank you.

Speaker Change: Thank you for your question.

Speaker Change: It looks like we saw with United Health care for for my risk that that's part of the ASP benefit we saw in the first half of this year.

Speaker Change: By way of example, so again thats going back to the earlier question I think why we feel more confident in the stability of our current.

Speaker Change: Revenue per test and the ability to hopefully continue to build on that modestly.

Speaker Change: In the future.

Speaker Change: Got it that's helpful. And then maybe just as a follow up can you just talk about the initial feedback that you've seen from the foresight Universal plus launch in the quarter and maybe just elaborate on how you are positioned in that market. If a car guidelines coming positively I think you've previously talked about a $10 million to $20 million revenue benefit there upon guideline inclusion so just as that.

Speaker Change: Still the right way to think about it and any feedback on that launch. Thank you.

Speaker Change: Yes, I think I think you are right in our comments related to what the opportunity is I think youre seeing on the adoption side myriad is very well positioned regarding that test as well as our other prenatal test. So I think adoption is there, but I think what we're really being focused on is making sure that we really wait for the <unk> guideline expansion.

Speaker Change: I think providers, often get way out in front of where the.

Speaker Change: Payer markets are or even the guidelines and so I think we're just being very choice over we're being very focused.

Speaker Change: But we have a very competitive panel and lots of providers appreciate doing business with us so.

Speaker Change: Thank you for your question.

Speaker Change: One moment please.

Speaker Change: Our next question.

Speaker Change: Comes from the line of sung <unk> Nam from <unk>.

Speaker Change: <unk> the floor is yours.

Unknown Executive: Hey, this is Corey Rosenbaum. I'm from Sungjee.

Cory rosenbaum: Hey, this is Cory rosenbaum on for sung <unk>. Thanks for taking my questions. So first one might be with regard to the cross licensing agreement with personnel that you recently announced because there will be opportunities or interest down the road to essentially collaborate on developing mrna assays together any color you can provide on this agreement.

Unknown Executive: Thanks for taking my questions. So first, on MRD, with regard to the cross-licensing agreement with Personalities that you recently announced, could there be opportunities or interest down the road to potentially collaborate on developing MRD essays together? Any color you could provide on this agreement and its impact on the MRD business would be much appreciated.

Speaker Change: Back on the M&A, because this would be much appreciated.

Speaker Change: Yeah, we have a collaboration agreement in Biopharma already with personality and we really appreciate the relationship we have with Chris and the whole team there and principally the cross licensing agreement is protecting each company's freedom to operate.

Speaker Change: And quite frankly, we share that philosophy that the <unk> opportunity is just too big for patients.

Speaker Change: And too big to change the paradigm of oncology care to be restrictive and theres plenty of market opportunity both on the biopharma side and commercially for both companies.

Speaker Change: Certainly we continue to dialogue with them about further collaborations, but we think this accelerated path for both companies on a number of different ways and we will continue to work with our partners a personality to do that.

Speaker Change: Great. Thanks for that insight and again on MRV can you discuss any key data readouts, we could expect over the next 12 18 months maybe.

Speaker Change: Maybe remind us what was the first indications are under consideration for for Medicare submission maybe when.

Speaker Change: Well I think you mentioned in the prepared remarks or in the commercial lines as well.

Speaker Change: Yes, I think we're going to have a lot more data to share at our Investor day. This fall.

Speaker Change: And we hope the readout in a couple of our studies already so I think we're going to be a much better place to share that but as Sam said, we're really pleased with the analytical validation work that's coming through in the in the samples that we're running with MD Anderson and others. So everything is really the trajectory there.

Speaker Change: As great and Dale and his team are just want a great job there and again, it's coming out of <unk>, It's really accelerated the interest in Biopharma partners to work with us in <unk> and I think that will bode well for studies for mold <unk> admissions and other things and so yes.

Speaker Change: We're excited about carving our piece of the <unk> market.

Speaker Change: And we think we're going to be highly competitive with with many others in that regard.

Speaker Change: Thank you for your question one moment please.

Speaker Change: Our next question comes from the line of.

Puneet Sooner: Puneet sooner.

Puneet sooner: <unk> partners.

Unknown Executive: Yeah, hi, Paul. Thanks for taking my questions. So, first one, just wondering, and I'm not sure if this was already covered, but just what's your expectation on the ACOG front with the micro deletions, potentially here also on carrier screening, any updates on timing for that?

Speaker Change: The floor is yours.

Puneet sooner: Yeah, Hi, Paul Thanks for taking my questions.

Speaker Change: So first one just wondering and I am not sure. If this was already covered but just.

Speaker Change: What's your expectation on the <unk> front with the micro deletions potentially here also on carrier screening any updates on timing for that.

Speaker Change: No I mean.

Speaker Change: We're still all sort of waiting to hear and expecting that we.

Speaker Change: We are well prepared if in fact micro deletions gets included.

Speaker Change: It's a it's an opt in thing right now so it's a pretty easy I mean, I won't say this to the tech guys will kill me about.

Speaker Change: Its some work, but we can flip that switch.

Mark: And as Mark said, we've already taken steps to advance foresight, Universal plus but we know we need to see within the guidelines of what teams are in the final genes or in the guidelines, but we are very excited about over time.

Speaker Change:

Mark: The expansion of the opportunity for patients. So we think this can do for adoption rates and again over time.

Speaker Change: $20 million opportunity to get paid.

Speaker Change: For for the panels that we're offering and so that is definitely upside.

Speaker Change: We see down the road for need, but we're waiting to hear like everybody else and we'll just have to see where they go.

Speaker Change: And again, the payers will take more time, they're not going to just jump up out of their chairs and say how great. We can't wait to coverage more pay more for coverage for for our carrier screening, but we are as we speak getting ourselves organized for that effort.

Speaker Change: With United and Aetna, Cigna and others.

Speaker Change: Got it and then can you talk a little bit about where you stand with the cross sell opportunities.

Speaker Change: You have multiple tests on the <unk>.

Speaker Change: Jewelry and now somatic testing side.

Speaker Change: Just trying to understand where you are getting traction and where theres more work to be done.

Speaker Change: Yes, let me comment on that so I think youre seeing in the growth we are seeing traction across multiple test whether it's within our oncology team of hereditary mixing with precise tumor or whether within our prenatal team of multiple prenatal products <unk> added hereditary cancer. So I would say we are just in the early innings.

Speaker Change: We've got a lot of growth happening there and some of thats going to happen by the EMR enablement, where it makes it easier to order multiple task through a single provider.

Speaker Change: So I would see that as growth and again, that's just the confidence that we have in terms of the long term guidance for both Scott and Paul talked about.

Speaker Change: It's an interesting thing you get what you measure and get what you pay for that our commercial teams have really responded well to the revenue incentives and they're really responding well to the cross selling incentives.

Speaker Change: There are just many offices, where we're selling prequel, but not fore sight.

Speaker Change: We're selling hereditary cancer, and not prenatal and women's health and Melissa and Ruben and the team are all over that so as Mark said.

Mark: I think our best days are yet to come.

Speaker Change: But again in the near term, we've been really focused on profitable growth and making sure that that at the end of the day. It's the revenue that is growing not just pushing out volume that we're not going to get paid for it.

Unknown Executive: Got it. And then, you know, just last question on, you know, Paul, I'm just wondering if you can, you know, provide some more color into where you stand with sort of the position in the market in terms of the gene side? Has anything changed with the competitive landscape? And do you think, you know, where the penetration stands here and the opportunities to grow?

Speaker Change: Got it and then just last question on <unk>.

Speaker Change: Paul I was just wondering if you can.

Speaker Change: Providing some more color into where you stand with sort of the position in the market in terms of gene side.

Speaker Change: Has anything changed with the competitive landscape and.

Speaker Change: Do you think.

Speaker Change: Where do you think where the penetration stance here and the opportunities to grow.

Speaker Change: Thank you.

Speaker Change: Yes, let me comment on <unk> remains the market leader.

Speaker Change: Not to say that there isn't any competition. So there are several that are in this space, but gene side by far is out in front and the reality of it is a very very large market roughly where less than 15% penetrated.

Speaker Change: So unfortunately, there are a lot of people who suffer from <unk> and a lot of that is being treated by primary care providers nurse practitioners. So it is a vast market and I think we continue to improve the gene type test and as Paul mentioned and as we commented on the call to have a 129000 tests in the quarter. We didn't comment at this time, but previously we've gone at all if we can.

Speaker Change: <unk> to add providers in the thousands quarter over quarter.

Speaker Change: So the market is expansive and gene side is well positioned to continue to weigh it yeah. I mean, you know we would expect more competition when people see success and so we know whether we have some competitors that recently launched.

Speaker Change: The near term focus is coverage, which we're making great progress and I think longer term, we're pretty excited about the energy around pharmacogenomics generally.

Speaker Change: My only hesitation to expanding or offering new products. There is making sure that payment is there but in our R&D. We've got a fair amount of work around other medication administration opportunities and challenges that pharmacogenomics can solve too I think learning the lessons that we've learned over.

Speaker Change: The last four years.

Speaker Change: Is when we come to market with a new pharmacogenomics, we're going to have a better line of sight on reimbursement as well as adoption and so that's something in an R&D hopefully we'll be talking about down the road.

Speaker Change: That's helpful. All right congrats guys.

Speaker Change: Thanks for me. Thank you for your question.

Speaker Change: Our next question comes from the line of Dan Brennan.

Speaker Change: TD Cowen your line is now yours.

Speaker Change: Hey, Good afternoon, guys. This is chi on for Dan. Thanks for taking the questions I wanted to go back to high level question on the updated long term guide for 12% growth you guys have been pretty positive over the last several quarters now as it relates to the share gains in pricing.

Speaker Change: Really strength across the entire product portfolio. So I guess my question is really what is the most incremental.

Speaker Change: Incremental driver of the 12% now and why is now the right time to increase the guidance from the 10% plus.

Speaker Change: Because we did 15 this quarter.

Speaker Change: And we've done 13% year to date.

Speaker Change: Yeah, So I mean.

Unknown Executive: We're just seeing great momentum and progress across the portfolio. As we talked earlier, reimbursement, which has really stabilized for us this year, and with a lot of hard work from the RevCycle team, and the traction we're getting with gene-side pair coverage, and quite frankly, the coverage that we're seeing because of guideline expansion for hereditary cancer testing, as well as Polaris that was covered by United beginning this year, across the portfolio.

Speaker Change: Well I don't know it.

Speaker Change: We're just seeing great momentum in progress across the portfolio as we talked earlier the reimbursement.

Speaker Change: Has really stabilized for us this year and with a lot of hard work from the Rev cycle team and the traction we're getting with Jean <unk> payer coverage and quite frankly.

Speaker Change: The coverage that we're seeing because guideline expansion for hereditary cancer testing as well as Polaris that was covered by United beginning this year really are across the portfolio. So.

Unknown Executive: So I don't think it's tough arithmetic to get to 12% as we think about the things in front of us and the momentum we have in the business. And so I think, you know, anyway, we are. Putting that out there now, because, as somebody raised earlier, I'm kind of sick of looking at models at 7 or 8% when we did 9, 11, and 13% year-to-date.

Speaker Change: I don't think it's tougher arithmetic to get to 12% as we think about the things in front of us and the momentum we have in the business.

Speaker Change: And so.

Speaker Change: So I think you know.

Speaker Change: Anyway, we are.

Speaker Change: Putting that out there now because as somebody raised earlier kind of take a look at our models that seven or 8% when we did 911 and 13% year to date.

Speaker Change: Got it. Thank you and then just one on on <unk> say it again I know you've mentioned in the past Jean.

Jean: Jean site volume, maybe slowing from a growth perspective, not from a market dynamic, but more just the fact that the base has gotten a lot larger over the last couple of years is there any range you guide people to in terms of what that sustainable growth of GSA volume could be over the next few years.

Speaker Change: I mean, the bigger gets the harder it is to grow.

Speaker Change: But double digits is still kind of what we think we can do in <unk>.

Speaker Change: Plus a couple of percent on on on an ASP.

Speaker Change: S P.

Speaker Change: That's where the.

Speaker Change: The upside continues to be in gene site, so double digit growth and hopefully as a function of all the hard work of our team and the biomarker laws.

Speaker Change: That's a positive ASP story contributing to the overall strong revenue per test story that we've talked about over the last several quarters and again this is not a quarter in the making this is the last three years in the making.

Speaker Change: Got it thank you.

Paul: Sure. Thank you Paul.

Speaker Change: Thank you for your question.

Speaker Change: That concludes the question and answer session I would now like to turn it back to Matt Gallo Senior Vice President of Investor Relations for closing remarks.

Matt Gallo: Okay. Thanks Gerald.

Matt Gallo: This does conclude the earnings call a replay will be available via webcast on our website for one week. Thank you again for joining US. This afternoon have a good day. Thanks everybody.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].