Q4 2024 GeneDx Holdings Corp Earnings Call
The End
Thank you. Thank you.
And reconciliations of non-GAAP measures and additional information regarding our results.
A discussion of factors that could cause actual results to materially differ from forward looking statements.
Katherine: And with that I'll turn the call over to Katherine.
Katherine: Thanks, Sabrina and good morning, everyone and thank you for joining us today.
Katherine: 2024 was a remarkable year for <unk> across all metrics.
Katherine: We cemented and extended our position as the market leader in exome and genome testing expanded patient access.
Katherine: Solidified our operating processes across all aspects of the business and started to generate cash to fuel the next leg of growth.
Katherine: Our fourth quarter results surpassed expectations with revenues exceeding $95 million and gross margins expanding to 70%.
Katherine: While providing early and precise genetic diagnoses remains our purpose.
Katherine: And financially strong business drives our progress we.
Katherine: We are dedicated to helping as many patients as possible and it's not just about what we do but how we do it in service of our customers.
Katherine: With clinical excellence urgency and integrity.
Katherine: Our flagship exome and genome business delivered enormous growth in 2024, and we're bringing our focused operational discipline and commitment to profitable growth with us into 2025.
Katherine: In the coming year will be layering on additional investment into growth.
Katherine: Innovation and talent to add velocity for our market development.
Katherine: You will by our 2024 and early 2025 momentum.
Katherine: Setting guidance for 2025 to a range of $350 million to $360 million in revenue with at least 30% growth in exome and genome volume and revenue.
Katherine: What's unique about our technology is that it enables a more efficient model both for families and for the U S health care system.
Katherine: Broad genetic testing like our differentiated exome and genome services are massively underutilized.
Katherine: Causing the over utilization of other diagnostic tests that don't accurately diagnose disease.
Economic burden of rare diseases is estimated to be around a trillion dollars annually with delayed diagnoses contributing heavily to that cost on.
Katherine: On average a child with a rare disease will undergo around 16 ineffective tests and.
Katherine: And three misdiagnosis.
Katherine: Most recent literature tells us that on average a child with a rare disease will go on a five year a diagnostic Odyssey.
Katherine: That's down from six years, previously, which implies that we're succeeding in our mission.
Katherine: By enabling early earlier diagnosis with our product <unk> Dx alleviates unnecessary suffering for patients and families and offers a readily available solutions to reduce inefficient health care spending.
Katherine: Theres, a reason health care spend at top of mind for this administration policy makers insurers and hospital system and <unk> is in a unique position to help them solve solve this costly problem.
Katherine: <unk> is proud to be helping American families have healthier kids and healthier lives and by doing so reducing health care costs.
Katherine: But the large market opportunity in hand, it's important to understand that not all exome and genome tests are created equal.
Katherine: There is a reason eight out of 10 clinician to order exome testing choose <unk>.
Katherine: Fueled by more than 750000, exome and genome is our rapidly growing data asset and clinical expertise differentiate our products from competitors by enabling us to identify novel gene disease connections that are not widely available and ensuring we can offer the clinical utility accuracy and easy to understand.
Katherine: Works that clinicians need.
Katherine: As we set our sights on offering these services to pediatrician neurologists cardiologists and more specialists in the future. We've recruited some of the best product talent to deliver the smoothest end to end customer experience.
Katherine: Throughout 2025 will be releasing a steady stream of new features designed to further simplify our customer experience to make it the easiest to use for all.
Katherine: <unk> already made great progress in the first few months of year and our epic or integration is just one example of that.
Katherine: We've launched <unk> ordering and resulting workflows at patient's bedside and clinician exam room.
Katherine: While we have the first mover advantage, there's a large unmet need ahead, and we're running as fast as we can to help as many families as quickly as possible.
Katherine: Our position becomes more formidable and our competitive advantage strengthened with the compounding force of each additional patient that we sequence.
Katherine: Reading, a flywheel effect that makes our underlying interpretation platform smarter faster and more scalable.
Katherine: We're seizing our advantage to accelerate market development by scaling utilization of rapid genome testing in the NICU and expanding our dominance in the outpatient setting.
Katherine: Last week, we announced our ultra rapid whole genome sequencing product, which delivers results in as soon as 48 hours.
Katherine: Our ability to offer an ultra rapid genome demonstrates how our lab operations continue to innovate.
Throughout 2025, and beyond we're prepared to capitalize on coupling our clinically and rich data set with AI machine learning and automation.
Katherine: To drive cost and turnaround times down in service of patients providers and partners.
Katherine: In preparation for our full launch into the NICU in 2025.
Katherine: We recently expanded our enterprise sales team launched multiple genome product enhancements and epic Ora and are bringing our ultra rapid product to market.
Katherine: In the outpatient setting pediatric neurology proved successful driving most of the growth in 2024.
Katherine: We've only scratched the surface of the outpatient segments potential with a focus on patients with epilepsy, autism and intellectual and developmental delay there.
Katherine: There are countless applications still to come in 2025, we'll be leaning into new patient populations.
Katherine: Cerebral palsy and hearing loss are just two such examples will target as we expand our footprint.
Katherine: Additionally, we are developing new patient access channels like our new telehealth pathway, which accelerated access to testing for parents and caregivers stream.
Katherine: Streamline referral process.
Katherine: Intimately the personal line of defense for families lives within their general pediatrician.
Katherine: And the American Academy of Pediatrics guidelines are updated and reimbursement pathways are clear we are ready to deploy our commercial strategy and meaningfully expanded salesforce against this new call points.
Katherine: Longer term, we will extend our market leadership to the genomics newborn screening market in total pediatric testing is a $25 billion market and while we've made progress this opportunity remains largely untapped with multiple levers for growth ahead.
Katherine: While rare diseases affecting one in 10 Americans say also affected over 300 million people worldwide.
Katherine: We will strategically target opportunities outside the U S to meet the incredible need for testing on a broader scale.
Katherine: All of this is underpinned by our ability to provide valuable products and services to biopharma leveraging our unique data assets two enables faster cheaper and more effective therapeutic development all in service of expediting therapies to market for patients.
Katherine: We're in a privileged position to be in a market leader with a product quality scale talent and commercial strategy.
Katherine: For them the standard of care and win in an ever expanding market.
Katherine: The opportunity ahead is ours for the taking and we're moving quickly and decisively to claim it.
Katherine: With that I'll turn it over to Kevin Thanks.
Kevin: Thank you Catherine and thanks, everyone for joining us fourth quarter 2024 revenues from continuing operations reached $95 $3 million.
Kevin: Exome and genome revenues grew 101% year over year, and 31% sequentially contributing $78 $8 million this quarter.
Kevin: And reimbursement contributed to the growth.
Kevin: Thanks, So much you don't test accounted for 38% of all tests in the fourth quarter up from 27% a year ago and 33% from the previous quarter.
Kevin: <unk> delivered over 20000 of these flagship test, which was up 32% year over year and 7% sequentially.
Kevin: We are driving a long term replacement cycle of the industry individual gene tests and panels into exome and genome in 2025 trends to date are encouraging in.
Kevin: In addition to growing off of this base.
Kevin: Layering on new growth curve in the NICU and new indications in the outpatient setting in 2025 both.
Kevin: Both of these initiatives are starting at near zero today, and we anticipate these brokers to ramp in the second half of 2025.
Kevin: Demand is strong and we balanced that demand with discipline targeting only volume with a high propensity to get paid fairly.
Kevin: So speaking of getting paid average reimbursement rates have come to have come entirely from reduced denials.
Kevin: In the fourth quarter, the underlying average reimbursement rate for XOMA genome. After all denials was approximately 3500 dollar excluding the discrete benefits from our large appeal wins in the quarter.
Kevin: That's up from $3100 last quarter and up from approximately $2500 in the same quarter of last year.
Kevin: Our work to refine insurance specific workflows to minimize administrative and procedural denials and the activation of additional state Medicaid policies cover exome and genome testing more broadly both contributing.
Kevin: 32 States now cover exome and genome outpatient and <unk> cover rapid Juno and patient.
Kevin: Continuously focus on improving processes, producing clinical and health economic data supporting patient advocates and leaning into policy work.
Kevin: State and federal level.
Kevin: We built the operational strength and tools to now open the aperture of volume.
Kevin: Now, we will target to drive growth to higher levels.
Kevin: Adjusted gross profit from continuing operations in the fourth quarter was $66 $9 million, which is up 106% compared to the prior year and up 36% sequentially from the previous quarter.
Kevin: Translates to an adjusted gross margin of 70% in the fourth.
Kevin: Quarter up from 56% a year ago, and 64% last quarter.
Kevin: Our team has exceeded expectations on Cogs throughout 2024 in Q4 was no exception.
And while we're pleased with how far we've come to reduce cost per test there is still work to do.
Speaker Change: I am excited to partner with our recently on boarded Chief operating officer, Brian to Carol.
Speaker Change: He has begun to retool resources and our approach to extract the next leg of scalability and product enhancements.
Speaker Change: Beyond that Bryan is leading a new charge with respect to innovation and enabling a next generation customer experience to make ours. The most attractive in this space.
Speaker Change: Down to the bottom line total.
Speaker Change: Total company adjusted net income for the fourth quarter of 2024 was $16 8 million, our second consecutive quarter of profitability.
Speaker Change: Full year and fourth quarter 2020 for revenues adjusted gross margin and adjusted net income includes $6 $8 million of discrete benefit in connection with a multiyear appeal win from a single player.
Speaker Change: $5 $8 million of that benefit went to exome and genome.
Speaker Change: This recovery to overturn pass denials is a prime example of the quality and professionalism of the revenue cycle team we've assembled here at <unk>.
Speaker Change: And on the balance sheet.
Speaker Change: Cash cash equivalents marketable securities and restricted cash totaled $142 2 million as of December 31, 2024.
Speaker Change: Cash flow for the fourth quarter 2024 included $12 $4 million in cash generated from ordinary operations, including receipts of $6 $8 million in connection with the fuel recovery.
Speaker Change: And $31 $9 million of proceeds net of fees from the issuance of 406726 shares of common stock in connection with sales pursuant to our ATM program.
Speaker Change: Those inflows were partially offset by $19 $6 million in scheduled payments to serve as previously recorded liabilities of legacy some afford.
Speaker Change: Now turning to guidance.
Speaker Change: We expect to deliver at least 30% growth in exome and genome volume and revenues and expect total revenues between $350 million to $360 million for full year 2025.
Speaker Change: We expect full year 2025, adjusted gross margin between 65 and 67%.
Speaker Change: For comparison full year 2024 was 65% we.
Speaker Change: We expect to maintain profitability each quarter and for the full year 2025 on an adjusted net income basis.
Speaker Change: You can generally defined adjusted EBITDA less share based compensation.
Speaker Change: And in our business adjusted net income should conform fairly closely to operating cash flow over time.
Speaker Change: As we previously shared we will continue to optimize the test menu towards genome only paradigm.
Speaker Change: And in order to focus all investment and investment into accelerating exome and genome growth hereditary cancer as a noncore fit within our business we are exiting in 2025.
Speaker Change: So I'll wrap with this gene Dx has spent two decades investing in the accumulation and expert curation of data know, how and tools necessary to interpreted genomes worth of information most definitively in previously unimaginable scale.
Speaker Change: And under Catherines leadership over the past three plus years, it's now coupled that long history of clinical expertise with the strategy commercial effectiveness and operating disciplines to finally scale the promise of genomics.
Speaker Change: Stepping forward, we intend to address a large unmet medical need and do so while saving an overly complex loaded and expensive health care system massive dollars.
Speaker Change: <unk>, where cost efficiency for health care in the United States is top of mind for hospital executives insurance partners policymakers politicians and taxpayers alike, the gtx exome and genome or a large part of the solution.
Scott: And with that we welcome any questions Scott.
Speaker Change: Operator.
Operator: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Operator: Okay.
Operator: Okay.
Speaker Change: Our first question comes from Dan Brennan with TD Cowen Your line is open.
Speaker Change: Great. Thank you. Thanks for the questions congrats on the quarter, maybe to start off Kevin could you just give some color on the implied.
Speaker Change: The implied price assumption for 25, obviously, youre, saying, 30% plus Rev and volume. So I guess the implications may be pricing can be.
Speaker Change: Flat or so obviously, great progress in the quarter on price, but can we understand it so decently below the institutional and Medicaid rates in the commercial list price. So just wondering how we're thinking about pricing and 25.
Speaker Change: Yeah, the way I'd look at it Dan is the $3500 in the fourth quarter was very much improved and outpaced expectations.
Speaker Change: And I.
Speaker Change: I would say at this point, we consider rates to be stable and have room to go much higher we're still at a point where nearly half of all tests are being denied and the team continually is refining processes to avoid those denials. We're certainly optimistic that we can get that rate higher than what we just posted in the fourth quarter.
Speaker Change: Our guidance philosophy tends to be very much data dependent and we look forward to updating you as we move throughout the year.
Speaker Change: Got it okay.
Speaker Change: And then can you speak a little bit to like what's implied you talked about being adjusted net income positive and adjusted EBITDA positive in 25, which is I think consensus has you guys to that level at a low level, but could you just speak to how we should think about opex leverage and kind of what the magnitude of kind of EBITDA and cash flow could be in 'twenty five.
Speaker Change: Yes, so there'll be a step up in opex as we.
Speaker Change: Look to ways look for ways to accelerate growth and reduce costs.
Speaker Change: <unk> is a prime example of that that will be about $5 million annual to add to the current opex base.
Speaker Change: And so we will certainly see areas to invest.
Speaker Change: And spoke about some across the commercial <unk>.
Speaker Change: Commercial teams in ways to drive further automation.
Speaker Change: I think we built up the discipline.
Speaker Change: Within the company at large to look at the multitude of bets.
Speaker Change: <unk> that we can place and ensure a high level of.
Speaker Change: Probability of success the way, we think about it is you've got the revenue and gross margin guide Opex will step up and but only in a way in which we're committed to keep profitability positive for each quarter and for the full year.
Speaker Change: Okay, and then maybe just a final one you talked about new opportunities are kind of baking into the guide in the second half you mentioned the NICU, but you've already launched there. So I'm just wondering could you speak to kind of what these new opportunities are and can you frame like relatively how meaningful they are in the 25 got it. Thank you.
Speaker Change: Yes, so the NICU as one.
Speaker Change: We did deliver the epic or integration ahead of schedule still expect the second half of year ramp in the NICU, maybe pulling that forward a couple of months into the second quarter.
Speaker Change: What's also.
Speaker Change: Built in that we're excited about is turning on new indications and use cases for exome and genome.
Speaker Change: Growth to date or at least over the last.
<unk> plus has been on that focus of epilepsy autism intellectual delay developmental delay cross the peat neuro call points.
Speaker Change: Maybe just a couple of examples in there just a couple.
Speaker Change: So stepping into use cases like cerebral palsy.
Speaker Change:
Speaker Change: As a as an example hearing loss maybe another one.
Speaker Change: So use cases to drive further same store sales within coal point, we've already launched into will be a focus of the second half of the year.
Speaker Change: Thank you and have a great. Thank you one moment for our next question.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Our next question comes from William Vanilla with Craig Hallum Capital Group. Your line is open.
Speaker Change: Okay.
William Vanilla: Thanks, a lot guys.
Speaker Change: Just wanted to follow up a little bit more on the.
Speaker Change: The comments on the earnings guidance and profitability.
Speaker Change: Incremental investment maybe maybe two things in particular.
Speaker Change: One you mentioned expanding the sales team I am wondering if you can give us any sense of magnitude of that expansion and maybe the.
Speaker Change: Corresponding cost and then I'll ask the next one.
Speaker Change: Certainly so and thanks, Bill a couple of things on sales for so.
Speaker Change: We have expanded our enterprise team from about five to 10.
Speaker Change: And that is something that we have our ion as we get off the ground as we start really getting more experience, we're going to keep an eye on that and we're prepared to continue to add reps.
Speaker Change: And as we make progress on the plan on the <unk> side of things.
Speaker Change: We also have.
Speaker Change: Tired inside sales reps for the team that's been focusing on the outpatient opportunity I think we've talked about the fact that.
Speaker Change: At that sales force has been.
Speaker Change: They've been out there focused on new accounts on the same store sales, but they're also doing a lot of administrative work so and we've hired a team of about 25.
Speaker Change: People to focus on the inside sales that are really helping that to offload the administrative burden and ensure that our sales reps can be focused on.
Speaker Change: Bringing in new accounts and looking for additional opportunities within existing accounts.
Speaker Change: I would say our sales force is by far in order of magnitude three times larger than the next.
Speaker Change: Sales force and our space so.
Speaker Change: You know our focus is on continuing to get greater productivity out of that team and the.
The customer experience that we're investing in is also intended to create a really intuitive.
Speaker Change: <unk> experienced that will also offload some of the more manual work.
Speaker Change: And so we think that the investments that we're making on customer experience are going to pay off in terms of stickiness and same store sales as well in the future.
Speaker Change: Sure.
Speaker Change: In terms of cost I mean that sounds like maybe one to 2 million bucks or something like that.
Speaker Change: Yes.
Speaker Change: Certainly I don't know if I give you the exact number but say it's it's.
Speaker Change: Order of magnitude is not that large with I'd say the epic investment that I cited being the single largest investment year over year.
Speaker Change: The way I think about cadence on the bottom line is Q1 being.
Speaker Change: Near breakeven slightly positive and then ramping in the latter three quarters.
Speaker Change: Okay.
Speaker Change: And then that was the follow up on profitability. So is your goal to just ensure that you stay profitable or I mean, you were meaningfully profitable in the fourth quarter.
Speaker Change: How are you thinking about growing profits.
Speaker Change: <unk> two <unk>.
Speaker Change: Revenue this year and maybe next year.
Speaker Change: Yes.
Speaker Change: So we've stated it is a commitment of ours to keep the company profitable from this point forward.
Speaker Change: That said, we're excited about ways to accelerate growth as we enter into a new call points and new indications.
Speaker Change: We want to see what it takes to really dominate and win those markets and have some latitude to toggle accordingly.
Speaker Change: Okay.
Speaker Change: That's very helpful. Thanks, a lot.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Tycho Peterson with Jefferies. Your line is open.
Speaker Change: Thanks, Matt on for Tycho.
Speaker Change: Maybe first one going back to some of the new product innovation on the ultra rapid whole genome sequencing products. You recently launched can you just remind us the immediate opportunity that opens up for you like what size of the market or kind of Tam business I'll. Let you address now and then what are your kind of expectations for penetration of that opportunity sounds like.
It's more maybe back half of the year and beyond we are just trying to get a better understanding of the potential impact from this launch on volumes as we move through 'twenty five and beyond thank you.
Speaker Change: Yeah. So one I would say ultimately down the road, we want to be delivering the best fastest and most cost effective genome across the board. So we ultimately want to move to just being able to run.
Speaker Change: <unk> highly accurate fast clinically actionable genome.
Speaker Change: But in the meantime that product is indeed focused in the NICU setting.
Speaker Change: So we think being able to have the five day turnaround time and now the ultra rapid.
Speaker Change: For patients.
Speaker Change: Who maybe and most need really unlocks what is roughly considered to be about $1 billion market opportunity and that <unk> in patient setting.
Speaker Change: Fewer than 5% of babies in the NICU get a genetic test today.
Speaker Change: And so we think there is just that it's massively underutilized in that setting. So this gives us.
Speaker Change: The ability to provide either that five day turnaround time or four super tier cases that the ultra rapid as well.
Thanks, and then maybe one on capital allocation I think you've talked about in the prepared remarks kind of fueling the next leg of growth.
Speaker Change: You talk about what your priorities are today, how that might differ between organic and inorganic and if there are items on the inorganic side can you remind us kind of.
Speaker Change: Your types of assets you might consider looking at them either on size or kind of where it fits relative to your existing portfolio today. Thank you.
Speaker Change: So and in terms of priorities of investment continuing to invest in growth is obviously critically important so product having best in class products, having the best in class customer experience.
Speaker Change: We think this is a prime opportunity to really be able to deploy AI and machine learning and other automation.
Speaker Change: Technologies to help smooth out that overall customer experience as I mentioned, we've hired and.
Speaker Change: In particular.
Speaker Change: One of the leading industry.
Speaker Change: Customer experience product designers, who.
Speaker Change: <unk> has tremendous experience.
Speaker Change: In terms of making it a really sticky experience for everyone.
Speaker Change: Anyway to automate as much of the lab as possible that interpretation platform.
Speaker Change: Those are the major areas as we think about prioritization of investment all of that of course.
Speaker Change: To fuel.
Speaker Change: Fast growing market.
Speaker Change: We want to make sure as I said that we've got the best fastest.
Speaker Change: And most competitive in terms of pricing we have invested a lot in scale. So I think we're really pleased about our ability to have the highest level of clinical excellence, but also be able to do it more cost effectively than anyone else in our space.
Speaker Change: Thanks, and maybe just one more I could sneak in for Kevin on the hereditary cancer 25 could you just.
Speaker Change: Like what's in or out of the guide for that and then any more color on.
Speaker Change: Timing when when we could expect the type of exit we could expect in 'twenty five for that hereditary business. Thank you.
Speaker Change: It assumes in 2025.
Speaker Change: Losing.
Speaker Change: The vast majority nearly all of the hereditary cancer contribution that we saw in 2024.
Speaker Change: Super Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Matt <unk> with Goldman Sachs. Your line is open.
Matt: Hi, Thanks for taking my questions. This morning.
Speaker Change: Kevin maybe just two quick ones for you and then I have a follow up Catherine for you a more bigger picture, but just.
Speaker Change: Kevin can you talk a little bit about what your expectations are for trips within that guide for 2025, I know that Q4 was more of a one off appeal, but how should we think about true.
Speaker Change: True ups as we move through this year as a portion of that revenue and then secondly, just given the exit rate of gross margin in Q4, and then your guide for $65 to 67, how should we think about phasing for gross margin improvement over the course of this year on a quarterly basis.
Speaker Change: Yeah. Thanks, so on the true ups I think fair to say that the order of magnitude.
Speaker Change: Subsequent quarter true ups may come down some naturally.
Speaker Change: As we're getting to a more mature spot.
Speaker Change: Although I will say, we're still a far way off from what we think is at the rack theoretical Max on payment rates, which is probably likely around 80%.
Speaker Change: So still a lot of room to go.
Speaker Change: But would expect that every quarter.
Speaker Change: We're on the positive side of those drops frankly.
Speaker Change: It's an estimate.
Speaker Change: Is meant to align to expected cash collection, and Theres always some slippage up or down on that and it's our hope that we're being appropriately conservative and coming back with positive true ups in that regard.
Speaker Change: And then on gross margin.
Speaker Change: So we're certainly excited about the ability to unlock further efficiency and cost savings in the dry side of the lab.
Speaker Change: I would think most of the impact to come.
Speaker Change: In the second half of the year, but but not really in a large step down function more so pretty smooth frankly, theres a lot of manual steps, we think ripe for automation and so we'll have a bit of a rolling launch of automation throughout those steps rather than one big Bang really.
Speaker Change: Got it and then Katherine just when you think about.
Speaker Change: The moat youre trying to build around this business you've mentioned a few things in this call.
Speaker Change: Product development and design.
Speaker Change: Investment in commercial sales force turnaround time et cetera, how do you think about protecting the market share you've got while also expanding the business keeping in mind.
Speaker Change: Some of the competitors or might not have the resources you have but others might get into this business over the course of the next few years, how do you think about building that moat and protecting that and what types of investments we can make to do that.
Speaker Change: Currently I mean, a couple of things come to mind.
Speaker Change: As the first mover, we have an advantage so long as we run fast and I think we have proven over the past several years, we're running fast and if there is if there is a message we want to make sure everyone understands coming out of this call.
Speaker Change: We're going to continue to run fast and hard this year to I think continuing to diversify our customer base and really cementing the JV X brand and in settings like the NICU.
Speaker Change: And continuing to cement our brand with health system.
Speaker Change: It is critically important.
Speaker Change: As I said on the call. There is a reason eight out of 10 genetics experts use us and them.
Speaker Change: We intend to ensure that we can continue to leverage that as we introduce our services to new call points as well.
Speaker Change: We think that's going to that's going to pay dividends once we move into the general Pediatrics segment.
Speaker Change: The endorsement by the genetic experts is going to go a long way for us.
Speaker Change: But at the end of the day. The reason why we have prevailed not just over one year or two years that over a decade, where competitors have entered our space and have failed to catch up to us is because our data asset is indeed truly valuable it sets apart our interpretation platform and ensure.
Speaker Change: Is that clinicians can can trust the answers that we're providing them we deliver fewer variants of unknown significance. Our diagnostic yield is higher it's a better product and that's the reason that that we have the stickiness with the most discerning genetics experts out there so.
Speaker Change: We're going to continue to build that that data Mount rapidly, we're going to build as I said a customer experience that we think will be an amazing complement to that date amount.
Speaker Change: Just making it super intuitive and easy to order easy to understand.
Speaker Change: And I think the rate at which we're onboarding, new customers and continuing to see same store sales.
Speaker Change: It is exactly the reason that we will continue to win in this space.
Speaker Change: Great. Thank you very helpful. Appreciate it.
Speaker Change: One moment for our next question.
Speaker Change: Yeah.
Our next question comes from Mark Massaro with <unk>. Your line is open.
Mark Massaro: Hey, guys. Thanks for taking the questions and congrats for a strong 2024.
Speaker Change: Catherine the first one I wanted to ask have you is the ultra rapid whole genome.
Speaker Change: Which I think youre targeting turnaround time in about 48 hours can you just remind us how that compares to the turnaround time of your legacy.
Yeah.
Speaker Change: XOMA genome that you have in the market today and is there a potential for going back to Payors and looking for more payment as a result of potentially higher clinical utility or is this more of a feature that you want to ensure that it's best in class.
Speaker Change: Yeah.
Those are all spot on question. So a couple of things just zooming out it wasn't that long ago that the turnaround times for an ex Omar genome, we're six months.
Speaker Change: So I think that part of part of the reason why exome and genome are now and part of the reason why multi gene panels will become obsolete in time is for exactly the point that you're making mark we can now do this.
Speaker Change: Not just in weak not just in days, but in ours and we want to continue to be the driver in the innovator that insurers that that we can get turnaround times as quickly as possible. So, whereas a few years ago genomes, where we're six months.
Last year, our our genome with 14 days, we were able to get that down to five days.
Speaker Change: And then the the 48 hour ultra rapid just gives us an additional boost in terms of making sure that.
Speaker Change: That we can provide the most profit result.
Speaker Change: As necessary, we will have a higher price point for that ultra rapid test.
Speaker Change: That is in the NICU.
Speaker Change: So again that is an institutional pay.
Speaker Change: And so it's not contemplated in our contracts with payers, but.
Speaker Change: We think that it ensures that for the most dire cases, where.
Speaker Change: Where it may be warranted that we can that we can provide that but there is a higher price and all that.
Speaker Change: Although I would say that's really we're confident mark to that higher price point.
Speaker Change: So we will be in a position to be the most competitive price in the marketplace.
Speaker Change: And then in terms of that.
Speaker Change: Institutional price for a hospital systems in the NICU or down the road as we just.
Speaker Change: <unk> effectively <unk>.
Speaker Change: Eradicate the terms rather than not rather than make all.
Speaker Change: Okay.
Speaker Change: Well.
Speaker Change: Its always our intention to ensure we are bringing to payers the <unk>.
Speaker Change: Data that shows the value add not just clinically but from a health economic standpoint of getting these answers into the hands of providers as soon as possible.
Speaker Change: Okay. Great. This is actually you can invest your question can you walk us through the phasing of the first and second half of revenue.
Speaker Change: And do you think in Q1, we should expect volumes to grow sequentially off of Q4 or do you expect any impacts related to <unk>.
Speaker Change: Lingering holidays, or any new product rollouts that might impact Q1 volume.
Speaker Change: Yes, I would expect Q1 to be.
Speaker Change: Slightly slightly above Q4.
Speaker Change: Does show tremendous underlying growth there is a seasonal effect in our business and across the industry typically Q1.
Speaker Change: The seasonally weakest Q4, the seasonally highest as patients are trying to get into physician offices before copays and deductibles reset.
Speaker Change: So there is a fairly.
Speaker Change: Habitual.
Speaker Change: Q1 <unk>.
Speaker Change: Not just for us but across the industry, we expect to grow beyond that.
Speaker Change: To keep volumes at or above Q4 levels, and then ramp up significantly around the same pacing.
Speaker Change: As you saw in 2024 in terms of cadence for each of the quarters, but Q1, the lowest in Q4, the strongest data to date.
Speaker Change: Through Q1 is very encouraging despite the fact that.
Speaker Change: Much of the country at a rough January and February in terms of weather.
Speaker Change: And in terms of the wildfires, but very encouraged and happy with the data that we're seeing to date.
Okay last one for me.
Speaker Change: Mark I would though expect a larger proportional second half of the year solely as a function of us activating the NICU opportunity and those new indications we talked about.
Speaker Change: Both of those hitting.
Speaker Change: Hitting at best late.
Speaker Change: In the first half, but really ramping up in the second half of the year.
Speaker Change: Okay I got it.
Speaker Change: Maybe last one for me it was great to meet Brian last month.
Speaker Change: I think in the press release higher I think he might be overseeing the program management office.
Speaker Change: I'd be curious to better understand some of the programs or initiatives you guys have rolling out in 'twenty five 'twenty six and then specifically I wanted to ask about the opportunity in adults.
Speaker Change: You've done a really nice job with pediatrics, but im curious what inning you think we're in an adult and maybe can you touch on some of the clinical areas that you can.
Speaker Change: To help address unmet needs for in adults.
Speaker Change: Absolutely, yes, so so it's been fantastic, having Brian onboard he's he's on week six.
Speaker Change: It feels like six months and the best way possible, though he really has a modest.
Speaker Change: And he's responsible for operations Medical affairs.
Speaker Change: Product technology, and the program management office, so that the PMO is really intended to ensure that we accelerate any sort of automation efforts.
Speaker Change: Coming out of the product and technology groups and end to end to that the lab operation.
Speaker Change: In addition to any sort of customer experience efforts that we've mentioned that we're investing in customer experience is one of our biggest areas of focus for the year.
Brian: So the the PMO just helps us Brian it more efficiently.
Speaker Change: Just recruited a fantastic person.
To lead that organization so.
Brian: That is Brian So I guess in addition to our new innovation team.
Speaker Change: <unk> is looking at as you know.
I think in a more forward looking way, how we continue to to make sure that.
Speaker Change: As new technologies come to bear or whether it's from a sequencing companies.
Speaker Change: Or otherwise that we can be as forward leaning as possible. So those are the sorts of efforts that long.
Brian: And out of Brian's organization.
Speaker Change: Adult side of things.
Speaker Change: Hum.
Speaker Change: The way that we the way that we think about it.
Speaker Change: Inning inning like zero right now on that we have like a smattering of tests that come in for adults today and historically that's been the case.
Speaker Change: And so that is a massive and untapped opportunity ahead. The clinical areas that we think are most representative to think narrowed to generative disease for adult Parkinson's Alzheimer's.
Speaker Change: Think about some of the cardiac conditions.
Speaker Change: So amyloidosis.
Speaker Change: Hypertrophic.
Cardiomyopathy, so some of those areas, where youre seeing biotech companies focus on genetic based medicine.
Speaker Change: So those are areas that we think are important and as we continue to build our biopharma pipeline.
Speaker Change: Having conversations and some of those areas as well.
Speaker Change: Thanks, so much.
Speaker Change: One moment for our next question.
Speaker Change: Okay.
Speaker Change: Our next question comes from Brandon Couillard with Wells Fargo. Your line is open.
Speaker Change: Yes.
Brandon Couillard: Hey, Thanks, good morning.
Mark Massaro: Kevin that's surprising to see exit hereditary cancer can you just remind us what the gross margin profile of that revenue stream was imagined it's slightly accretive exiting.
Speaker Change: Perfect guys, it's probably slightly accretive overall this year.
Mark Massaro: That'd be helpful.
Speaker Change: Yeah, It was about 40%.
Speaker Change: Okay, and then Catherine on the epic Aura rollout so you've launched in one site right now at UNC health, how many sites do you expect to have by the end of the year and just remind us what the process is like from kind of turning it on.
Speaker Change: Educating doctors and until you start.
Speaker Change: Recognizing revenue from that yeah.
Speaker Change: Yeah, absolutely I'll kick it off and then let Kevin comment as well so before we even made the decision to sign that the epic contract.
Speaker Change: We booked a large pipeline of business that was primed to flip when we had the epic or a functionality. So we did a lot of the pre work and we have to those customers warm over the course of time as we did all of that then tooling required to really building that capability.
Speaker Change: D U N C.
Speaker Change: And it's one that we've been close with and they want it to be and wanted to be the first we've got.
Speaker Change: A number of others in the waiting room that are fast followers and then we'll continue to drive our sales effort as I said, we've got.
Speaker Change: And expanded enterprise sales team that that will be focused in this area.
Speaker Change: But we're starting with with UMC will start adding them as we start to build that muscle in terms of how we work.
Speaker Change: Quickly with with these health systems not just on their.
Speaker Change: Their side of the integration, but then starting to pull through the the volumes and the revenues.
Speaker Change: And so that's part of the reason why it will be a slower start in terms of the guide and then start to pick up really in the back half of the year.
Speaker Change: Brandon It was about six months of picks and shovels from the time, we signed the contract to going live we're launching last week that was really to build the infrastructure. So I consider that effort or build one time at this point, though.
Speaker Change: Moving forward it radically improves our time to deliver new integrations with willing hospital systems down to a matter of something close to two to three weeks for each additional hospital system.
Speaker Change: So a massive improvements overbuilding customized bespoke bi directional interfaces.
Speaker Change: So we're really excited to deliver that better experience of integrating with hospital systems and then to your point the end user the real key is.
Speaker Change: Putting bedside.
Speaker Change: Ordering and results delivery on the screen in the exam room or at the patient's bedside.
Speaker Change: Great. Thank you.
Catherine: And ladies and gentlemen, this does conclude the Q&A portion of today's call I'd now like to turn it back to Catherine for any further remarks.
Catherine: I mean, well we look forward to seeing you all very soon.
Catherine: At Investor conferences, and thanks, so much for your ongoing support and have a good day.
Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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