Q3 2024 NeoGenomics Inc Earnings Call
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Speaker Change: Welcome to the Neogenomics third quarter 2024 financial results conference call and webcast. At this time all participants are in a listen only mode. Please note. This conference is being recorded and an audio replay will be available on the company's website I will now hand, the call over to Ken just Sweeney.
Vice President of Investor Relations you may begin.
Ken Sweeney: Thank you Jenny good morning, everyone and welcome to the Neogenomics third quarter 2024 financial results call with me today to discuss the results are Chris Smith, Chief Executive Officer, Jeff Sherman Chief Financial Officer. Additionally, members of the management team are available for Q&A, including Morgan Stanley Chief Commercial officer.
Ken Sweeney: Melody Harris, Chief operations Officer, and President of Informatics, Andrew Laconia, Chief Innovation Officer, Dr. Nate Montgomery had a medical and Korean side head of strategy and transformation.
This call is being simultaneously webcast, we will be referring to a slide presentation that has been posted to the investors tab on our website at IR Dot Neogenomics Dot com.
Starting on slide two during this call we will make forward looking statements regarding our anticipated future performance. We caution you that such statements reflect our best judgment.
Ken Sweeney: Based on factors currently known to us and that actual events or results could differ materially. Please refer to our most recent forms 10-K, 10-Q and 8-K, we filed with the SEC identify important risks and other factors that may cause our actual results to differ materially from the forward looking statements are forward looking statements made during this call speak only.
Ken Sweeney: As of the original date of this call and we undertake no obligation to update or revise any of these statements.
Ken Sweeney: During this call we refer to non-GAAP financial measures that involve adjustments to GAAP results to non-GAAP financial measures are presented should not be considered an alternative to the financial measures required by GAAP and are unlikely to be comparable to non-GAAP financial measures provided by other companies.
Ken Sweeney: Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures and a table available in our press release, we issued this morning I will now turn the call over to Chris Smith, Chief Executive Officer of Neogenomics.
Chris Smith: Kendra good morning, everyone and thank you for joining us today on today's call. We will discuss the highlights of our strong third quarter performance and provide an update on the progress made and accelerating profitable sustainable growth.
Ken Sweeney: Before we discuss our financial results I do want to take a moment and acknowledge the communities in North Carolina, and Florida, including our headquarters in the city of Fort Myers, which has shown incredible resilience following the impacts of Hurricane Helene and Milton I'm, especially grateful to our new teammates for their continued commitment to our patients our mission and our vision is such estimates.
Ken Sweeney: Jordan, one neo culture that our labs throughout the country stepped up and covered an increased workload to ensure there was minimal disruption to patients why our employees in the stores path. We're seeking shelter. So thanks to all of our teammates.
Ken Sweeney: I believe our people are what makes me such a special place to work on the business side, our position between the large reference labs in the niche oncology companies is what sets us apart our value proposition stems from our mission to be a comprehensive oncology testing and information partner to provider serving cancer patients in the community setting.
Ken Sweeney: Approximately 85% of all cancer patients are traditionally seen in the community setting and we believe that trend is likely to persist for seeable future given the convenience and cost effectiveness and a level of personalization that can be delivered to cancer patients in that setting.
Ken Sweeney: We believe Neogenomics is leading the democratization of precision oncology testing and information and enabling cancer patients in rural America to have access to the same level of care is a patient has.
Ken Sweeney: Access to and NCI designated cancer Center in a large metropolitan centre.
Ken Sweeney: Genomics has and will continue to build the industry, leading community oncology translation platform, which is where a vast majority of our investment is being directed today.
Ken Sweeney: This platform comprises three layers first and industry, leading customer experience layer with the flexibility and the versatility to deliver a comprehensive oncology solution portfolio with internally developed and externally sourced products across <unk> and solid tumor indications and that are fit for the community generalists.
Ken Sweeney: Seth and increasingly automated production capability, where our geographical balanced footprint drives operational efficiencies across all test modality.
Ken Sweeney: Delivers best in class turnaround times, and cost effective solutions to patients and providers and finally a.
Ken Sweeney: Data interoperability layer that will layer allows us to deliver integrated seamless and user friendly clinical reports and associated insights to our customers.
Ken Sweeney: These three building blocks of our community oncology translation platform are what we believe continue to lead to sustainable competitive differentiation for neo as the leading comprehensive cancer testing and information partner.
Ken Sweeney: Now, let's get into the Q3 highlights on the next slide.
Ken Sweeney: We continue to execute on our goals to deliver double digit year over year growth in Q3 total revenues grew 10% in the in the clinical business revenues actually grew 14% as compared to the fourth quarter I mean, excuse me the third quarter of last year and was a record quarter in total test volume and revenues.
Ken Sweeney: This was on top of Q3 2020, excuse me Q3 of 2023, which was our strongest revenue growth quarter last year with 18% growth.
Ken Sweeney: To achieve this result, we grew volumes by 9% and revenue per test by 5%.
Ken Sweeney: <unk> continues to be a key driver for growth, increasing 26% and representing 31% of our total clinical volume.
Ken Sweeney: And revenue.
Ken Sweeney: We are also proud that we have improved adjusted EBIT by $10 million or 305% from prior year, making that five consecutive quarters of positive adjusted EBITDA.
Ken Sweeney: We are seeing the benefits of the investments that we made in our commercial business over the last few quarters sales automation efforts with a focus on support team and customer experience by increasing the effectiveness of our sales force, which has enabled us to serve more patients in a single quarter than ever before.
Ken Sweeney: Since our Investor day last year our.
Ken Sweeney: Our focus is set on delivering long term sustainable growth.
Ken Sweeney: Core to achieving this optimization of our commercial business are.
Ken Sweeney: Our clinical business continues to execute on our commercial strategies to deliver volume growth enhanced by success of our customer connectivity digital strategy and increased A&P improved mix driven by the strength of Ngls.
Ken Sweeney: Neogenomics drove significant organic volume growth in the third quarter across the portfolio as our commercial and our lab ops team continued to execute.
Ken Sweeney: We believe all of our modalities grew faster than the overall market based on our review of industry data.
Ken Sweeney: Growth was especially robust across Ngls with revenue growth of 26% driven by competitive account wins improved mix and adoption of larger test panels.
Ken Sweeney: As we discussed on our last quarter call. We will continue to invest in our commercial team to drive incremental volumes and capture market share. This.
Ken Sweeney: This is taking hold as we experienced our highest quarterly retention rate and had several key hospital wins.
Ken Sweeney: To further drive market penetration into community oncology, we are expanding our commercial resources. These new teammates are joining at a very exciting time for Neil as we look to launch new tests in the coming months in October we launched Neo AML Express a rapid AML test to help patients diagnosed with AML begin.
Ken Sweeney: Their treatment up to two times faster than our previous tests.
Ken Sweeney: AML Express when combined with our exceptional customer experience enhances our position as the market leader in <unk>.
Ken Sweeney: We also gained conditional approval in New York State for New comprehensive solid tumor this approval broadened patient access to our NGL delivering.
Ken Sweeney: Delivering better diagnostics.
Ken Sweeney: <unk> and cost effectiveness, and then single gene testing.
Ken Sweeney: We are only scratching the surface of potential customers and with more reach and frequency of an expanded commercial organization. We will continue to penetrate both new and existing accounts with our comprehensive menu of oncology testing solutions.
Ken Sweeney: Through our CRM initiatives, we are continuing to expand commercial coverage and having success in reducing denials to ensure we're getting paid for the work that we do.
Ken Sweeney: The most important factor in growing the commercial business is keeping the patient as our top priority. We know that different today can make while waiting for test results. So we put a premium on turnaround time I am pleased to say that this quarter, our lab improved turnaround time by 10% compared to Q3 of 2023, even with significant increase in test volumes.
Ken Sweeney: With a focus on customer satisfaction in early 2025, we will launched neo helix and exceptional end to end digital experience for our customers New helix is an intuitive platform that supports physicians and patients from order to result provides guideline driven decision support and future patient education.
Ken Sweeney: Turning to slide eight let's talk about innovation, we believe innovation is a turbocharger for growth and as we look to the future of the industry with new technologies and data.
Ken Sweeney: Utilizing our current resources and executing on the right opportunities positions us well for long term sustainable growth.
Ken Sweeney: In the last 18 months, we brought several new and upgraded products to market to improve patient care I just mentioned our newly available AML Express test.
Ken Sweeney: <unk> tracer, a liquid biopsy CGP tests launched commercially and pharma for pharma in Q3 and will launch commercially in the clinical business in the first half of next year.
Ken Sweeney: And the clinical test setting pan tracer liquid biopsy will be comprehensive and highly sensitive liquid biopsy test complementing traditional tissue testing for therapy selection and advanced stage solid tumor patients.
Ken Sweeney: To further accelerate our innovation I'm pleased to share that Andrew <unk> has joined <unk> as our Chief Innovation officer with nearly 25 years of experience in the clinical diagnostic industry, Andrew brings a wealth of experience specializing in developing strategic programs and processes to introduce innovative regulated products to the market as CIO.
Ken Sweeney: Andrew will lead our new office of innovation, driving cutting edge R&D, while ensuring continuous advancement and integration of new technologies.
Ken Sweeney: Finally, we are executing on margin expansion initiatives to deliver sustainable profitable growth.
Ken Sweeney: Through a combination of efforts, including automation staffing efficiencies and technology investments, we drove 355 basis points of gross margin improvement in the quarter earlier.
Ken Sweeney: Earlier this year, we shared our plans to improve and upgrade our lab information management system and.
Ken Sweeney: In Q3, we successfully launched the first <unk> module and have a session to over 350000, new cases in the quarter through this new system.
Ken Sweeney: Additionally version one of the New test Compendium has launched and is now being populated.
Ken Sweeney: The migration to one single Lim system is a multiyear process and these milestones represent significant progress.
Ken Sweeney: From a legal perspective in September we announced that we had negotiated a settlement relating to the ongoing litigation with the terror, which we agreed to a permanent injunction on radar one point out as we focused our efforts resources on the development of radar one one importantly, the carve outs in this preliminary injunction remain in place so.
Ken Sweeney: There is no disruption to patients already utilizing the technology.
Ken Sweeney: Radar one one is now through the feasibility stage and progressing through development and as expected.
Ken Sweeney: Declarer CLIA validation in the first half of 2025.
Ken Sweeney: Beyond the litigation pathway, we continue develop new <unk> assays as well as evaluate opportunities for in licensing our strategic partnership arrangements to enhance and bolster our efforts to drive innovation and bring optionality to patients who can benefit from <unk> testing as we stated in the past we are committed to being in the margin market and supporting <unk>.
Ken Sweeney: <unk> throughout their cancer journey from diagnosis to monitoring.
Speaker Change: And now let me hand, it over to Jeff to go through the financial results.
Jeff Sherman: Thanks, Chris I'll start with a little more detail on our operating results for the quarter. We delivered a strong overall performance in Q3 with yet another quarter of double digit revenue growth, increasing 10% over the prior year to $168 million. The combination of clinical test volume growth the ongoing shift to higher.
Jeff Sherman: <unk> tests and improvements in revenue per test due to RCM initiatives continue to drive revenue growth adjusted gross profit was up 19% to $80 million and adjusted gross margins improved by 355 basis points to 47, 8%.
Jeff Sherman: And EBITDA improved 305% from prior year to positive $13 million, an improvement of $10 million as Chris said Q3 was our fifth consecutive quarter of positive adjusted EBITDA.
Jeff Sherman: Clinical services revenue of $146 million was an increase of 14% over prior year. The increase in clinical service revenue reflects a 9% increase in testing volume and an increase in average unit price due to more higher value Ngls tests and strategic reimbursement initiatives.
Jeff Sherman: Volume growth is especially noteworthy as Q3 has historically been a seasonally weaker quarter impacted by fewer patient provider interactions and general summer travel.
Jeff Sherman: As our expanded salesforce penetrate deeper into the community oncology setting we are seeing increased adoption of Ags testing, which is driving higher volume growth.
Jeff Sherman: The strong demand for MTS testing and the insights. It provides continued a few revenue growth and earnings.
Jeff Sherman: Despite the <unk> effect of our large panel neo comprehensive tumor and myeloid disorder tests, which were introduced last year, we still experienced double digit growth in ngls in the face of tough comps.
Jeff Sherman: We delivered the 14th consecutive quarter of improvement in revenue per test up 5% over prior year to $463.
Jeff Sherman: NTS testing NRC initiatives, including improved pricing remain the biggest contributors to these improvements.
Jeff Sherman: Earlier this year, we announced the restructuring of our commercial organization, bringing pharma services under Warren's leadership, we noted on our first quarter call that we expected AVX revenue to be in a similar range in Q2 and Q3 of this year to our Q1 performance Q.
Jeff Sherman: Q3 results were in line with our expectations with revenue declining by 10% over prior year to $22 million the.
Jeff Sherman: The decline was primarily driven by international site closures restructuring activities and lower our radar one point, though revenue.
Jeff Sherman: However, our prioritization efforts led to adjusted gross profit growth of 6% and expanded adjusted gross margins by 644 basis points over prior year as a result of the consolidation of four and standardization of operations.
Jeff Sherman: We expect <unk> revenue to begin to accelerate in the fourth quarter. We also see the expansion of our NGL business and success of larger panel tests will be a future driver of our informatics business as we continue to produce more data and information that pharma research teams are looking for we are developing a comprehensive plan to <unk>.
Jeff Sherman: Further expand the monetization opportunity of our data assets.
Jeff Sherman: Looking at our third quarter financial overview on slide 15, adjusted gross profit increased by 19% over prior year as a result of revenue growth and operating leverage generating higher adjusted gross profit and margins.
Jeff Sherman: Regarding operating expenses sales and marketing expense was $20 million R&D expense was $8 million in G&A expense was $67 million.
Jeff Sherman: The $5 million increase in G&A over prior year was primarily due to an increase in legal and professional fees, including a settlement payment for IP litigation.
Jeff Sherman: We ended the third quarter with cash and marketable securities of $388 million flat with the second quarter, even with increased capital expenditures cash flow from operations was positive $9 million an improvement of $15 million from Q3 of last year as a result of improved operating results.
Jeff Sherman: Our may 2025 convertible notes with a principal balance of $201 million are now presented as for our liabilities on our balance sheet, given our strong cash position and liquidity profile, we maintain our plan to use our existing cash and marketable securities to retired in 2025 notes in may.
Jeff Sherman: Let's move on to our revised guidance given our strong performance through the first three quarters of the year and our disciplined approach to operating the business. We are in the position to again increase our adjusted EBIT Guide the.
Jeff Sherman: The previous adjusted EBITDA Guide was 33% to $37 million $33 million to $37 million up from our initial guidance of $21 million to $24 million. We are further revising our guidance range to 37% to $40 million representing growth of over 1% versus last year and an over 70% improvement from the original guidance.
Jeff Sherman: At the midpoint.
Jeff Sherman: Given our consistent and strong revenue and earnings growth in 2023 and year to date in 2024. Our plan is to provide an updated long term revenue growth target. When we report full year 2024 results in February of next year and with that I'll hand, it back to Chris to wrap up.
Chris Smith: Thanks, Jeff it's been a great quarter and I'm proud of our teammates for working so hard to sustained performance that delivered these type of results.
Chris Smith: Plan to expand our portfolio with the launch of Neo can trace for liquid biopsy to further strengthen our strong position in the marketplace in the coming months, our broad menu and customer experience have enabled us to serve more patients than ever in a single quarter. In addition, we continue to gain operating leverage on the business as we execute on our priorities. We are confident in our approach to the.
Chris Smith: The final quarter of 2024, so now let me hand, it back over to Jenny for questions.
Jenny: Thank you very much we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question. Keith You May Press Star two if you would like to remove your question from the key to any participants using speaker equipment.
Jenny: It may be necessary to pick up your handset before you press the keys.
Speaker Change: Can you talk about an OSB poll for questions.
Speaker Change: Thank you. Your first question is coming from Andrew Brockman of William Blair. Your line is <unk> life.
Andrew Brockman: Hey, Andrew Hey, guys. Good morning, Thanks for taking the question.
Andrew Brockman: I wanted to ask on the profitability evolution here you are making some nice strides on expanding margins I think the incremental margins on revenue growth has been averaging about 60% for last few quarters. So I guess, how should we be thinking about new balancing continued investment into growth opportunities. While also expanding that moving forward and I want to also point on Q4.
Andrew Brockman: It does imply a little bit of a decline in margins I guess, just any any thoughts there I appreciate it. Thanks.
Speaker Change: Yeah, Thanks, Andrew I'll, let Jeff take some of the financial but just strategically look I think melody and the team on the ops, we had a lot of opportunity to expand gross margin and look I think through the first couple of years I think it was a big focus on improving turnaround time, while doing that and we are just now beginning to bring things like our new limb system and automation to place.
Andrew Brockman: We continue to feel very confident that we can do that I think it's about Bam.
Speaker Change: Balancing priorities. So I think we as a leadership team we look at what the opportunities in the market and we think the market continues to be based.
Speaker Change: Basically frothy with opportunity, where we can provide those services. So we have to invest in places like new products and.
Speaker Change: In sales, but at the same time, making sure that we're driving an expansion in gross margins. So we can accelerate the bottom line. So I think that strategy is working but maybe Jeff you want to give more color to the drop through of that yeah. I think as you pointed out Andrew we continue to have very good net revenue conversion to our adjusted EBIT line and expect that we're going to have continued favorability.
Jeff Sherman: As we progress forward as this year progress we did talk about some of the investments we are making in those investments will occur in Q4 as well. The continued sales force expansion what will be a driver in Q4.
Jeff Sherman: Investing in the liquid biopsy.
Speaker Change: Some of our product development as well so I think those will impact some of the Q4 numbers, but overall I think if you look at our performance year to date, we've had very good conversion and we continue to see opportunities kind of across the spectrum with volume opportunities with pricing with RCM opportunities.
Speaker Change: <unk> margin improvement and continuing to get operating leverage on the Opex line as well so as we look at 2025, and we will give guidance in 2025 and.
Speaker Change: In February we still see a lot of opportunities to expand our margins.
Speaker Change: Great Okay.
Speaker Change: Thanks, guys.
Speaker Change: Thanks.
Speaker Change: Thank you very much. Your next question is coming from Josh Sullivan of Morgan Stanley Jeff Your line is live.
Hugo: Hi, This is Hugo on the call for T cells. Thank you. Thank you for taking our questions.
Hugo: Hello, several crows have noted soft demand from large pharma customers due to re priorities prioritization on portfolio from the IRI as well as cost realignment initiatives and the post pandemic era could you comment on whether youre seeing any of these dynamics and then separately given the pricing pressures noted by <unk>.
Hugo: Arose from competition are you seeing any trickle down effects of <unk> on your pricing within the advanced diagnostics segment.
Speaker Change: Yes, I'll take a high level and I'm going to have more and pick it up because warn now leads that business for us, but I think as everybody knows I mean, there's been some industry dynamics that were causing some some compression that industry I think and I and Warren can correct me, if I'm wrong, but I think it's in 19 of the 20 top pharma companies are largest spend is on oncology drugs in R&D. So.
Speaker Change: I think we feel good going forward, but Warren do you want to add a little more color to the question, yes. Thanks Sidney Thanks, Chris.
Warren: You're absolutely right 19 of the top 20 pharma companies that oncology is the number one focus area from an R&D investments and now with that as a backdrop, it's a very large and attractive market opportunity is there.
Speaker Change: Say that like many ad.
Speaker Change: She is in this space in <unk>, we have sort of seen a slowing of market growth.
Speaker Change: And that is certainly one of the factors that have impacted the performance on the pharma business in 2024, I'd say from our perspective looking at activity levels and those sorts of things, we feel it's bottomed out and starting to sort of.
Speaker Change: By no means return to pre pandemic levels, but we're starting to see indications that there is an upward swing.
Speaker Change: And we're looking to sort of capitalize on that in terms of early stage opportunities.
Speaker Change: In terms of the pricing side of things I cannot say that.
Speaker Change: In terms of how we're looking to position the services that we bring to the market I cant say that we are seeing increased price sensitivity at this particular point.
Speaker Change: Got it. Thank you for the color and then also I know you don't have multi gene panels for behavioral health.
Speaker Change: In light of United's decision to no longer covered how.
Speaker Change: How do you think the challenges that some of the private payers have faced recently on borrowing costs weighing on user enthusiasm for genetic testing more broadly, including perhaps using more stringent prior authorization requirements.
Speaker Change: Yes.
Speaker Change: Payer relations reports of the Jetblue at a high level for US we've been really pleased with the movement on bio market legislation in the states and I think thats ultimately going to have a dividend, but Jeff do you want to add more.
Jeff Sherman: And that I think there is at least 12% 13 states now that have passed biomarker legislation and as we've said on previous calls the fact that our state just passed a legislation doesn't mean it automatically flip the switch for us to get paid we still have to do the work kind of in the trenches and working with the payers.
Speaker Change: To get work I think at the end of the day for US we firmly believe our tests are being used to diagnose and treat patients and we should be paid for them.
Speaker Change: And sometimes the <unk>.
Speaker Change: Testing is ahead of some of the guidelines. So I think overall the biomarker legislation is going to be helpful. We think over time as these as these larger panel tests become more prevalent.
Speaker Change: More overall acceptance and we know from our clinicians and who we interact with that about our tests are being used to diagnose and treat patients and for us at the end of the day, that's going to be the driver we believe for further reimbursement.
Speaker Change: Thank you very much.
Speaker Change: Thanks Keith.
Speaker Change: Your next question is coming from Dan Brennan of TD Cowen Dan Your line is live.
Speaker Change: Hey, Dan.
Speaker Change: Hi, This is Tom on for Dan. Thanks for taking my question here.
Tom: So I wanted to focus more on <unk> in the quarter, clearly still very impressive up 26%.
Tom: But a modest deceleration I guess on a two year stack.
Tom: I guess like how do you see how do you see the broader market I mean, clearly you had near comprehensive lapping, but I guess looking forward from today.
Speaker Change: How do you feel about the headroom for CGP and the market.
Speaker Change: Your ability to continue to gain share in and that kind of more competitive titer.
Speaker Change: The environment.
Speaker Change: Yes, Thanks, Tom look I'll hit a couple of different ways and then maybe have.
Speaker Change: Jeff or Warner Craig chime in as well, but look I think the market is still has a lot of runway. When you look at what the size of the penetration of the market is and so we continue to believe that we have big upside there now I would say when you look at our growth compared to other quarters remember that Q3 last year we.
Speaker Change: A tough comparable in the sense that that was when we had launched we have launched products in Q1, and then in Q3, but I would still think we feel very strong and especially because of we are still very very early days in the community oncology setting we have a strong presence in the community hospital, but as those community oncologists and Thats, where the majority of these <unk>.
Speaker Change: Larger solid tumor panels are coming from and so when you look at Ngls, we probably have a very high share in <unk>, we would have a very low share in solid tumor and the <unk>. So we think that we continue to have a lot of runway and the other reason we like that is because the majority of those customers that are buying large panels from our competitors are buying something from us. So.
Speaker Change: We are already in there we already have a relationship and I think what we which you are starting to see and as volume growth. In this quarter is that our customers don't want to buy from multiple vendors. So I think we having this comprehensive menu has turned out to be a <unk>.
Speaker Change: Strength, but I don't know a cream if you want to mention anything on the market or of our warrants.
Speaker Change: I mean, I'll add I'll add a couple of things I would say just a couple of things. So we are we've noted that we're continuing to expand the commercial organization to gain better penetration into this market and so although our Ngls was a little bit lower this quarter were still up almost 40% for the year.
Speaker Change: Yes revenue, so I would say robust growth.
Speaker Change: Chris said with some new products being introduced getting more traction on the solid tumor side and still seeing significant growth on the heme side. So I think we like where our position is is where we're investing resources both from a from an R&D as well as a commercial perspective, and we think theres a lot of incremental market share grab.
Speaker Change: Maybe two additional points from my side, the Jack I'd say.
Speaker Change: Adding an additional element that sidney going to fuel our growth from an NGL perspective is the launch of Penn trace the liquid in the first half of next year, obviously today, we don't have a.
Speaker Change: Pan cancer liquid solution in that space, which is growing rapidly and still very underpenetrated.
Speaker Change: We also recognize the importance of attributes so.
Speaker Change: From a product perspective, and we're looking to.
Speaker Change: Add a few additional attributes to our new comprehensive numerous sort.
Speaker Change: Sort of avenues for us to increase our attractiveness from a portfolio perspective, coupled that with a market, which is still attractive and growing as well as the investments in the commercial organization that Jeff touched on I think that sort of traffic that places us in a very strong positions.
Speaker Change: Continuing this sort of growth trajectory that we've showcased over the last three quarters this year into 2025 and beyond.
Speaker Change: Great. That's really helpful. And then just a quick quick follow up on your base business. I mean that continues to be impressive from both a volume and pricing standpoint, I guess and when you surprised with the kind of lack of cannibalization you're seeing in that business I think the thesis maybe a year or two ago was that market might continue to decelerate.
Speaker Change: Nuomi that as these come to market I guess why aren't we seeing that in.
Speaker Change: Does that change your view of where the base clinical business of yours can go over the next three years.
Speaker Change: Gordon you want to comment on that yes.
Speaker Change: Sidney I think.
Gordon: There is certainly some cannibalization that's taking place as people move from sort of multi modality testing solutions that we offer into these larger panel so that is happening and sort of underneath the sort of numbers that you are looking at.
Speaker Change: And we obviously offsetting that with the growth and we feel that that will continue to happen over time.
Speaker Change: But the reality is all of the other modalities that what's working for US is the is the commercial strategy I think that the biggest element to the commercial strategy.
Speaker Change: Dividends driving the other modality growth is trailing the protect side of things. We fundamentally are losing for less business. We had in the past so any sort of a creative business new wins that we take on and we spoke about a reference to a few health system wins et cetera that brings on a lot of the sort of base business that you refer.
Speaker Change: Good too and layers on top of the business, which is actually as I said, we're losing at a very slow rate compared to historical levels. So that's driving the growth that we're seeing there as well so.
Speaker Change: I think it's a combination of factors, but ultimately the successful and effective execution of the commercial strategy is a big driver yet.
Speaker Change: And we still see numerous additional targets.
Speaker Change: That we are looking at commercially in the rest of this year in 2025.
Speaker Change: To continue to bolster the growth of that base business.
Speaker Change: Awesome, Thanks very much.
Speaker Change: Thanks, Thank you very much.
Speaker Change: Your next question is coming from David Westenburg of Piper Sandler David Your line is live.
David Westenburg: Hey, good morning, guys. Thank you for taking the question so.
David Westenburg: Just in terms of.
Speaker Change: Our EBIT positive.
Speaker Change: For a number of quarters that keeps tracking in the right direction.
Speaker Change: What are you thinking now about capital deployment, our tuck in acquisitions available now and I would say like the National Labs for extension question lab core actually seeing an uptake are available.
Speaker Change: Breach progress and whatnot I know oncology outreach programs are probably not as numerous as others, but are those available to you and if capital appointment is not a consideration or less of a consideration would you think about buybacks at this level. Thank you.
Speaker Change: Yes, I'm going to let Jeff take that.
Speaker Change: Around the capital deployment, and then cream sure I'll, let him talk a little bit about how we're thinking about opportunities for growth, yes. So we.
Jeff Sherman: We finished the quarter with almost $390 million in cash and we've said we've got.
Jeff Sherman: Convertible note coming due next year that we plan to retire with cash that still gives us a lot of liquidity and we expect to be producing cash and in 2025. So I think as we think about strategic priorities.
Jeff Sherman: We've hired Karim and our corporate development role to take advantage of opportunities and I would say there are opportunities.
Jeff Sherman: Coming and I'll, let <unk>.
Speaker Change: <unk> comment on that but I think from an overall capital deployment strategy right now.
Speaker Change: Got plenty of liquidity to run the business and continue to invest in the business. We saw some stepped up capital expenditures. This year, we're expanding our lab Raleigh and we've got some some wins expenditures. This year some of that won't repeat next year. So I think we will be positioned well with sufficient liquidity to invest so I would say our priority will be.
Speaker Change: <unk> invested in the business right now, we'll always look at.
Speaker Change: Stock buybacks as an option and discuss those with the board and then I'll, let Craig talk about kind of the M&A corporate development side, Yes, David So I think we've talked about this before so we've been proactively looking at opportunities to acquire businesses that gives us leverage geographical reach and grow our overall delivery footprint.
Speaker Change: Especially as it relates to new Mgs modalities, so theres plenty of opportunities out there I would say, we're cherry picking we're being selective in terms of opportunities that we can rapidly and efficiently integrate that are complementary to our capabilities and that we could leverage in the community channel, which is really the channel that we shine and then where.
Speaker Change: Also looking at opportunities to supplement our product portfolio, whether that be in MRV, which we've talked about at a high level before but also in other modalities of testing. So today we're much.
Speaker Change: We've got a bigger presence in diagnostic testing modalities in solid tumor much more in heme. Some in therapy selection, but we haven't really played in the germline space and we're very slowly but deliberately getting into the <unk> space and now we're starting to look at these areas. So yes, I'd say there is there are a lot of opportunities and we're pursuing them and hopefully you'll hear more of them in the future I think.
Speaker Change: One other thing to think about it would be very very strategic, especially I would say from.
Speaker Change: We look at areas, where we maybe are underserved from a turnaround time perspective in our labs. So that maybe would be something that you like you referred to others, but otherwise it's really a lot about how do we find some of these strategic partners or in license technology to take it through our strong distribution channel. We think we have one of the best commercial organizations and Theres a lot of innovations out there that don't.
Speaker Change: A way to get it to customers. So it's.
Speaker Change: It's still early days in that process and stay tuned, but I will tell you that we're very committed to driving both the top line, but also the bottom line.
Speaker Change: Thank you that was a really long answer so hopefully this one will be a little bit shorter sorry about that no no I just don't want to hog theres a lot of analyst covering so just in terms of continuation of Andrew's question, you really have gotten really good operating leverage and even kind of the.
Speaker Change: As you are lapping these tough comps are still kind of getting the operating leverage here. So if we think about on a go forward basis, how much of that has just been low hanging fruit.
Speaker Change: In terms of cuts versus.
Speaker Change: Going forward I mean, you are expanding the sales force. So I don't know if theres necessarily human capital.
Speaker Change: A reduction in human human capital.
Speaker Change: Where do we think about operating leverage on a go forward basis considering.
Speaker Change: Those factors.
Speaker Change: Yes, so I think again, focusing on Ngls, which has a higher revenue higher margin business. That's been a driver. So I wouldn't look at that as basically taking out cost, but actually adding higher hard.
Speaker Change: Value business, but at the same time, we've been getting more efficient as we've done that so even in this quarter, where our volume was a record volume quarter. We actually saw improved turnaround time. So I think our operations teams are really executing at a high level to both increase our turnaround time as well as increased throughput I think.
Speaker Change: Automation investments I think the limb system is going to help that over time. So I guess as we think about it we're continuing to expand to expand at a higher margin.
Speaker Change: Yes, we see overall growth.
Speaker Change: Across all modalities faster than the market, we've got capacity in our existing labs, we're expanding our lab in Raleigh, and we have pricing in RCM initiatives. So I think theres a lot of things that can expand gross margin and then I think on the Opex side, we're getting good operating leverage on the opex side as well.
Speaker Change: And trying to manage that so I think the combination of those still presents a pretty strong runway for us to expand margins over time.
Speaker Change: Got it thank you.
Speaker Change: Thanks, Dave.
Speaker Change: Thanks very much. Your next question is coming from Mike Mattson of Needham and company Mike Your line is live.
Speaker Change: In mind, yes.
Mike Mattson: Hey, guys. So I guess first just with regard to the Hurricanes was there any sort of impact your revenue in the third quarter or do you expect any sort of impact in the fourth quarter.
Speaker Change: So I would say.
Speaker Change: Minimal impact in the third quarter, we have seen particularly in the Florida and the Carolina regions.
Speaker Change: Some slowness.
Speaker Change: In the October time period, and I would say, we do we do expect to recover that the timing of that will be hard to predict and really like maybe some other medical services. I mean, we do have capacity constraints in some of the oncologists are seeing patients. Some of them are opening office hours on Saturday, we've been told.
Speaker Change: So I think there's probably a little bit of impact, but rolling into the fourth quarter. We think over time that will kind of probably just even out and play out it's just a timing issue.
Speaker Change: Okay got it and then just as far as the newer <unk> test can tracer in AML Express can you, maybe just talk about the market opportunity or Tam with those.
Speaker Change: Yes, So why don't you answer.
Speaker Change: A little bit about both of those markets and how things are going and how we see the opportunity.
Speaker Change: Yes Sidney.
Speaker Change: And as we said earlier looking to launch this.
Speaker Change: In the first half of 2025 and again this is a panel that.
Speaker Change: Is greater than 500 genes, including team BNS MSI and we feel confident again that we are able to offer very competitive turnaround times on this and adding as I made some comments earlier, we see this as a very attractive market exited.
Speaker Change: Actually there has been some recent research that has come out it's actually said the Tam is actually larger than what was previously anticipated and also.
Speaker Change: More under penetrated than than in the past. So this is obviously within within the therapy selection part of the cancer continuum.
Speaker Change: We see this as a very very significant opportunity to supplement our current solid tumor portfolio and ultimately address one of the largest gaps that we have within our portfolio strategy.
Speaker Change: You don't want to give an answer.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes, yes, so we launched <unk> express very early in quarter.
Speaker Change: Quarter four.
Speaker Change: And again this is a product that is targeted towards the diagnostic side of things and within our cost of hospital setting, where we have a very high market share. Both in terms of <unk>, but also just in terms of that as a segment.
Speaker Change: We've seen a lot of very early demand for the product based on the sort of value proposition from a health economic perspective getting results up to two days earlier and the associated sort of inpatient costs associated with that the demand is ramping up very quickly in operation you doing very very well in terms of.
Speaker Change: The expected turnaround time on that test as well.
Speaker Change: Yes, maybe the way to think about that AML test from a market opportunity is again. It is hospital based not in the community oncology. So it's patients that are in the hospitals and that is by nature, a smaller market opportunity than the big to me in oncology, but it's a place where we've always been the market leader and we will.
Speaker Change: We saw a huge room for to be able to expand that with that test.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thanks.
Speaker Change: Thank you very much. Your next question is coming from Matt Hewitt of Craig Hallum Capital drain match. Your line is live.
Matt Hewitt: Good morning, and congratulations on the good quarter and I'm not sure if youre going to have this number but you commented that you've launched or upgraded 13 tests over the last 18 months, how much has that contributed to your growth.
Matt Hewitt: That period, and how should we think about new launches, particularly once you commented on impacting your growth for next year.
Speaker Change: Yes, I think so I would say in that timeframe. There was probably three to four major products that were launched and then I would say somewhere some single genes are just kind of line extension. So maybe think about it that way if we were not competing in the solid tumor market and so one of our big players last year was to get into that market and.
Speaker Change: I would say that is helping our ngls growth, obviously, because we have been and he's been the market leader for a long time, a larger percentage of that growth is coming out here because we still only have a couple of points of market share in the solid tumor market. So while it is helping with the growth I wouldn't say, it's being driven by the growth.
Speaker Change: You want to talk more about some of the additional products and the impact that they may yes. So we haven't we haven't broken out like individual products and some of these products are upgrades to existing products, but clearly they have helped.
Speaker Change: In terms of both market Receptiveness and on our pricing front, we've said the Ngls NGL growth continues to be a driver of our A&P overall.
Speaker Change: Still probably driving roughly 60% or more of the increase in AEP. So I think some of it is just becoming coming from a higher mix as we move more into those higher end tests are certainly driving revenue, but we still see the market opportunity as being significant there. Yes, we talk a lot about the solid tumor, but one of the big products. We launched was the largest myeloid panel.
Speaker Change: That was a big growth driver for us and it kind of goes under the radar I think because the whole industry is thinking solid solid solid and I think.
Speaker Change: Undervalue team and now if you look at the market dynamics of heme is generally growing 10%. So that market is still a great growth market, but I think the whole industry has been very enamored with solid so we probably get caught in that sometime talking more about solid and heat.
Speaker Change: That's really helpful. Thank you and then you commented that youre, adding to your commercial team could you give us a head count maybe exiting Q3 and your anticipated ads before the end of the year yes.
Speaker Change: Yes, so we talked about in the last quarter that we thought we would add commercially 30% to 40 people between the Q2 earnings results in the end of the year I would say that we're aggressively pursuing all of that.
Speaker Change: Some good reps, we'd love for them to her.
Speaker Change: Our department.
Speaker Change: But our goal is our big sales meeting as late January and so our goal is to try to have those people in place when we go to our sales meeting and train on some of these new products. So we're kind of in the middle of the of that.
Speaker Change: Got it thank you very much.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question is coming from Matthew <unk> of Goldman Sachs. Matthew Your line is open.
Speaker Change: Hey, Matt.
Speaker Change: Hey, guys. Congrats on the quarter. This is for Sean coda on for Matt.
Sean: Can you talk about the pacing or timeline of R&D spend left in the development of the new radar and can you also help quantify the amount of R&D spend needed to fully develop this new product.
Speaker Change: Yes, I will give his overview and then Jeff can talk to the numbers. So look I think one of the things that we did quickly and we've talked about this on a call earlier is because we were moving.
Speaker Change: Quicker on radar one one we went through and obviously to the settlement and so a lot of that cost has been absorbed into this years financials and as you probably heard in the call. We will get through CLIA validation. We believe in the first half. So I think that gives us a product on the market look I think the next step is really radar to point out and Thats, where they are.
Speaker Change: Spending a lot of time, but remember a lot of the R&D costs and some of the big products that we worked on whether it was liquid and tracer or solid tumors last year, those fall off and as we move it and to be fair Andrew I think it's been on board for about six weeks, So I think giving and Andrew time to be able to come in as we go through the process and be able to work with his team and look.
Speaker Change: What's in the pipeline and how we allocate resources, but we definitely know that we need to invest more in R&D, because it's a turbocharger, but I do think it's looking for where those market opportunities are one is we want to continue to be the leader in Haynesville, where I spent a lot of time, there, but it's also to fill gaps like MLD or solid nuanced.
Speaker Change: I think I would just add I wouldn't I wouldn't expect the incremental spend that the changed much from our from our base level today that we've been experiencing as Chris said things will fall off and some new things will go on I think the incremental spend from there will be where Andrew is going to help us direct those incremental dollars.
Speaker Change: And again, we've talked about having opportunities from from.
Speaker Change: M&A perspective, corporate development perspective, we also see opportunities from an internal R&D perspective, when we just want to align those investments with our strategy, where we see the most opportunity and I think that's where the focus is going to be for Andrew over the next year.
Speaker Change: Several quarters and it really is balanced and we've said this to the market on many times. We believe we grow revenue faster grow gross margins faster to grow profits faster. So it's not that we're going to pivot and go into a money losing situation from a product. So we as a leadership team work together and identify what are the best opportunities, where we can get the best return on our investment so commercials.
Speaker Change: <unk> won but I think as we learn more about what our opportunities with R&D and BD. We will look at also shifting resources into those areas and I think finally I would just say look our clinical revenue growth has continued to be very strong over 15% on a year to date basis, we've talked about.
Speaker Change: And that leveling out in Q2, and Q3 and starting to Reaccelerate. So we do see going into next year, we expect to see growth there and I think that's going to be.
Speaker Change: I hope to drive the overall revenue growth rate.
Speaker Change: Got it thank you and just any color following up on that.
Speaker Change: On how incremental step up in top line growth longer term will including the new radar provide.
Speaker Change: So previously Matt Yeah, So we're going to come out and gives our long range guidance in February when we do year end results.
Speaker Change: Got it thank you.
Speaker Change: So stay tuned.
Speaker Change: Thank you very much. Your next question is coming from Mark Massaro of BTG Mark Your line is now live.
Speaker Change: Mark.
Mark Massaro: Hey, Chris how is it going good good to hear from you guys.
Mark Massaro: Yeah. So I just wanted to start with the Neo Pan tracer.
Mark: I do agree with Warren that the therapy selection market is underpenetrated I think there are some people that wrongly think it's saturated in the growth curve is.
Mark: As Don.
Mark: Disagree with that but I would be interested to hear yes, I would be interested to hear how you think you plan to compete on sensitivity and limit of detection I know that is one of the core metrics.
Mark: Should we expect any papers.
Mark: Just to show, perhaps a comparison on the data and then.
Mark: I also wanted to ask.
Mark: How quickly do you think you can turn on payer coverage.
Mark: For Pan Tracer lbs.
Mark: From CMS and commercial and I'm curious if you think it can contribute to your 2025 revenue.
Mark: Thank you.
Speaker Change: Where do you want to start and then maybe it will happen and Andrew kind of chime in on what we're doing is around as far as sensitivity of the test and trials and then.
Mark: Yes, yes.
Mark: So mark again.
Mark: I kind of view on this market.
Mark: Very large market actually believe it to be more than 700000 patients than.
Mark: In the U S and some of those patients and some of these patients get more than one test.
Mark: And only partially penetrated less.
Mark: Less than 15% of <unk> some of the data that we have available. So we see it as very attractive just to put that out there.
Mark: In terms of <unk> studies, I'll leave that to Andrew but we actually believe this is going to contribute to our revenue in 2025.
Mark: We're expecting it.
Mark: To be able to launch this with the CMS reimbursement in the first half of 2025.
Mark: After which we will go down and selectively knock off.
Mark: Third party payers, which is going to be critical to the success of all penetrates the liquid.
Mark: Can we be certain studies that we are intending to yearend straight off should validation. So maybe that's a good junction for me to hand, this across to Andrew to talk about studies and sensitivity et cetera.
Andrew: Yes, no I appreciate it warranted mark good to reconnect.
Andrew: So I think.
Andrew: The way I would look at it is these type of diagnostics kind of warrant some type of publication record to go right along with the launch I'm pleased to say we have a couple of those.
Mark: Clinical studies already kind of in the Q4 kind of orthogonal comparison, which I think is a.
Mark: A strong way to get us out of the gate, that's probably a 2025 conversation.
Mark: Coming up so I think with that I think we're well poised to move forward I will ask Nate wants to have any more commentary on.
Speaker Change: Maybe on the sensitivity.
Nate Montgomery: Yeah, I think what I would say on the sensitivity is until the validation is entirely wrapped up will probably be cautious about sharing publicly about the lower limit of the sensitivity, but we certainly.
Nate Montgomery: Expect the test to be competitive in the marketplace.
Nate Montgomery: And then the only other piece that I would add is around the payer piece I think we've had a lot of success with other with other products in terms of going through the multi pathway and so we feel optimistic about the path forward there too.
Speaker Change: Yeah. Thanks, Thanks for that and I agree. The one other thing is we have probably 150 to 200 payer contracts I mean, I think because of our broad portfolio. We have relationships with a lot of these third party payers for a long time. So I think it's very different than some companies that don't have any type of relationship and they're bringing a product out. So I think we'll be able to move.
Speaker Change: Well so.
Speaker Change: Okay.
Speaker Change: Excellent and then real quick as a follow up.
Speaker Change: Advanced diagnostics has been under pressure for the last few quarters or so can you maybe just walk us through what you believe to be the key elements of potentially staging a recovery in 2005, I understand you'll be going up against probably easier comps, but just walk us through what you think the key levers there are.
Speaker Change: Yes, I'm going to give you a high level I'm gonna have worn gets little more specific but <unk> to.
Speaker Change: I remember I mean that was a business that was losing money or some certain aspects of that business and so look we made a very conscious decision to change the way that we went to market. So we kind of we.
Speaker Change: Foreshadowed that the business would relatively be fact, but if you look at the gross margin expansion that the team has done it's significant so I think we're on very solid footing and then I think handing that business over to Warren to create a new commercial strategy is starting to take root for Warren you want to give a just a real quick high level of how youre thinking about that.
Speaker Change: Thanks, Chris Mark I think one of the key aspects is obviously and I said. This earlier is what happens from a larger market perspective. We think this is sort of bottomed out in slide <unk>, we see seeing increased activity levels coming from particularly.
Speaker Change: Particularly big pharma, but also some of the smaller pharma and biotech as well, which is an encouraging sign. So there is a market dynamic here as well, which is obviously largely out of our control, but I think strategically totally within our sort of re medicine, we will at a sales meeting next year, which Chris already highlighted the fact that.
Speaker Change: January we are launching.
Speaker Change: And you sort of go to market strategy for our farmer team.
Speaker Change: With that we've got a new business model that we launching as well, which ultimately will allow for increased focus and targeting into warehouse sweet spot from a capability technology point of view, but also from that profitability aspect that where we're looking at so.
Speaker Change: Key and we're actually adjusting the deployment of our sales resources against this new business model as well so net net overall is that.
Speaker Change: <unk> got it hits the road at the at the end of January.
Speaker Change: And the work that we're doing right now sort of leading up to that around building a robust pipeline of those opportunities, but also what we call statements of work sort of bookings that we have within that business is also a key factor for us in terms of driving growth in 2025.
Speaker Change: I think for me in the longer term.
Speaker Change: This is a very attractive space for for Neogenomics is a long sales cycle business I just wanted to maybe temper expectations and just in terms of how quickly we can turn this around.
Speaker Change: So within this sort of longer range plan I see this is a major contributor to our success.
Speaker Change: I think we're going to move on here because we've already got a few minutes left so let's go on please.
Speaker Change: Okay. Thank you very much. The next question is coming from Nathan <unk> of Stephens incorporated your line of life.
Speaker Change: Hey, guys I'll ask my two upfront here if that's all right could you talk about the ordering patterns that <unk> seen from docs, who start ordering the larger solid tumor panels from you guys are they typically one off orders do they tend to move most of their volumes over once they start ordering just trying to get a sense for.
Speaker Change: How volumes may shift once the liquid panel launches and then second.
Speaker Change: Do you think that having the liquid assay could end up driving more neo comprehensive volume just given how.
Speaker Change: Having both of those products available.
Speaker Change: May be valuable to clinicians given how they they can reflex to the other if necessary.
Speaker Change: So <unk> been like in our go to market strategy for that product meeting that is totally we absolutely think it will help the solid tumor business. So the answer is yes on the first one listen on the second one.
Speaker Change: Just real quick if you've seen one territory and <unk> seen one hospital you've seen one so I would say that look we are I would say that our focus has been very much on accounts, where we have relationships that maybe were using other people, but part of our strategy in this business, especially with the community oncologist you have to become a sticky and historically community oncology.
Speaker Change: This will move quickly so we actually measure our reps in the quantities based on account. When we think we then that account is stock and we don't share that publicly but I would say one of the metrics that we're using is that level and I think what you see.
Speaker Change: If we do a really good job is the company managing the customer it ends up being much more sticky as opposed to ordering one from US one from somebody else from somebody else. So it's about the way that we.
Speaker Change: Use digital outbound with our field organization and also with that customer.
Speaker Change: Got it thanks.
Speaker Change: Thank you very much. Your next question is coming from Michael <unk> of Bank of America. Michael Your line is now.
Speaker Change: Yes.
Speaker Change: Hey, Michael Hello. Good morning, This is John Kim for Michael.
Speaker Change: So I think in the past you've talked about and yes, reaching perhaps 50% of the clinical revenues is there a clear timeline for that as we stand where we where we are from the 31%.
Speaker Change: And then you mentioned the informatics piece I'll ask my second question as well here.
Speaker Change: Has there been any initial uptake with feedback there.
Speaker Change: In terms of the licensing data to the finance. Thank you, yes, so look I would.
Speaker Change: Say on the license that data is still early days kind of with the solid with the solid tumor given signals do you plan on that.
Speaker Change: Okay.
Speaker Change: And I'm, sorry tell me again your first one.
Speaker Change: So Ngls is about 30, sorry, yes political revenue. So today, we're at 30%, 31% I think.
Speaker Change: Quick question really on a call that said could you just go to 50% if you look at the market.
Speaker Change: NPS is growing 15% to 20% of the other modalities are growing anywhere from probably 2% to 4%. So the whole market is moving that way. So it's hard to predict what percent of our business would eventually.
Speaker Change: Does that get to but you can't forget that one of our leading things as comprehensive test. So, yes, mgs will get significantly bigger.
Speaker Change: I think it's one of these things is going to be a long time to do that because we keep growing both sides of our business.
Speaker Change: So we haven't said that we think it will be 50%, but I will tell you. We have a lot of room to run when you look at we're at 30% and majority of the people we compete with it's like 80% of the revenue.
Speaker Change: Alright, thank you.
Speaker Change: Thank you very much and your next question is coming from Andrew Cooper of Raymond James Andrew Your line is live.
Speaker Change: Andrew.
Andrew Cooper: Hey, guys. Thanks for the question good morning.
Andrew Cooper: Lot's already been asked so maybe just one could you dive in a little bit deeper on the Neo helix I think you said in terms of the new rollout to the.
Andrew Cooper: Customer facing and patient facing technologies and I think you mentioned, including clinical decision support there so is that integrating.
Andrew Cooper: Hello, or how do we think about kind of some of those pieces that you've acquired over the years and potentially any ability to monetize monetize those products. So we're super excited about it I'm going to let <unk> kind of give you some high level as well as warrant on that.
Speaker Change: Hi, Andrew.
Speaker Change: So the main push toward new helix. This year is really integrating all of our digital customer experience into a single platform while it is.
Speaker Change: Capable of hosting clinical decision support and we will be using some of the pieces of trapelo on it that's not our initial push on it. Our initial push is really around that seamless customer experience. So and then another important part that we've heard from our customers is making sure that its mobile enabled so this will.
Andrew Cooper: The first time that Neil is able to go to a full mobile experience with with our customer portal.
Andrew Cooper: I don't know if you want to add some additional commercial pieces around that.
Andrew Cooper: Yes.
Speaker Change: Summed up the helix is fantastic.
Speaker Change: Fantastic I think maybe just the rollout.
Speaker Change: First target is to Institute a community oncology segments again, an area, where we've really tailored the needs of this.
Speaker Change: Helix solution towards <unk> and that'll be the first segment and then we will go to that Jack.
Andrew Cooper: Hospital based segments thereafter.
Andrew Cooper: During the rollout starts in 2025.
Speaker Change: And if I can.
Speaker Change: Sneak in just one more quickly.
Speaker Change: The sizable deal announced in the space last night, just curious kind of your thoughts.
Speaker Change: As you do look out at that M&A landscape.
Speaker Change: How you would have thought about that potential deal and what it does to maybe change the competitive landscape if at all.
Speaker Change: Yes look I think every company has their own strategy and has to go and execute on their own strategy I mean, I think that because of.
Speaker Change: Our breadth of menu, where we are today and our distribution system, we will look at opportunities and we see what's going to be the payback and how quickly it will have an impact on the business. So look again.
Speaker Change: If it's the right thing for them then applause.
Speaker Change: Tempus doing that but at the end of the day, we're out there, we'd probably see most of the stuff that others see and we make the decisions that we think are best for our shareholders long term.
Speaker Change: Great I'll stop there. Thank you.
Speaker Change: Thank you very much Joe last question is coming from Puneet <unk> Leerink partners. Your line is live <unk>, thanks for being patient man.
Speaker Change: Yes.
puneet: No worries Chris.
puneet: Just given the time I'll combined my question.
puneet: For the <unk>.
puneet: Increase you're continuing to see benefit from on the NGL side.
puneet: For several quarters now is it safe to assume that <unk> that we're seeing in the quarter here at least as a baseline for.
Speaker Change: <unk> 2025, and then on the clinical side and then on the commercial payer pressure question, where that competitor had recently just wondering.
Speaker Change: I'm wondering can you provide us how much of the mix of clinical the.
Speaker Change: Clinical revenues for you is commercial versus Medicare versus the traditional hospital contracts that you had thank you.
Speaker Change: Yes, so on the mix side, we do put that in our in our Qs. So in Q3 about 58% of the revenues from coming from direct client Bill about 15% commercial and about 13% governmental so still about two thirds.
Speaker Change: Direct client Bill.
Speaker Change: And.
puneet: I think that.
puneet: That has been pretty consistent.
puneet: Over time.
Speaker Change: So I'd say our exposure on the commercial when it's a 15% is lower than a lot of our competitors.
Speaker Change: Yes.
Speaker Change: Yes, that's helpful and then on the NGL side for.
Speaker Change: For 2020, yes.
Speaker Change: Yes, I think I think we expect AEP to continue to grow over time, particularly as that NGF component of the business.
Speaker Change: It continues to grow and so I think it's reasonable to we'll continue to see growth there over time, and we are still having success with overall pricing increases and with our cm initiatives. So I think it's reasonable and we'll continue to see that grow over time, but we'll talk more about kind of the pacing of that as we get into next year.
Speaker Change: <unk>.
Speaker Change: Okay, alright, okay. Thanks, guys. Thanks Vinny.
Speaker Change: Thank you very much well that's the end of our question answer session I will now hand back over to Chris for any closing comments.
Chris: Yes. Thanks, everybody. We really appreciate you taking the time really the great questions and look it was nice to have the leadership team here to give you kind of more color and deeper insights into the answers.
Speaker Change: We will look forward to following up with you guys. All soon and see you on the market take care.
Speaker Change: Thank you very much. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.