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MYGN Myriad Genetics

Participants
Scott Gleason Vice President-Investor Relations
Bryan Riggsbee Interim President and Chief Executive Officer
Bill Quirk Piper Jaffray
Doug Schenkel Cowen and Company
Tycho Peterson JPMorgan
Sung Ji Nam BTIG, LLC
Ivy Ma Bank of America
Puneet Souda SVB Leerink
Jack Meehan Barclays
Call transcript
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Operator

Greetings, and welcome to the Myriad Genetics Second Quarter 2020 Financial Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded today, Thursday, February 6, 2020.

I would now like to turn the conference over to Scott Gleason, VP, Investor Relations. ahead. go Please

Scott Gleason

afternoon, second Good to Myriad the Thanks, XXXX and earnings fiscal quarter call. Genetics Dave. welcome

During the question-and-answer call, released we will review the which, will today; financial we host the session. after results we

a chance be can our If you’ve on not to our release, found quarterly myriad.com. at review website it earnings had

Bryan Presenting be Executive Riggsbee, Myriad for will Officer. Chief today

Investors call will be recording can And myriad.com. a be This website. in heard Section the at our live via webcast of archived

today’s call earnings a of is addition, X-K. to Investors which presentation In on slide Section call pertained our we there the filed on in website, following the Form

Company statements the filed note other based Company’s expectations annual current information projections the documents These important the forward-looking differ or that with reports its Form a Form XX-K, reports its the and on presented from on from in to on cause the differ actual some future and on reasons. risk specifically or for events the from expectations quarterly regarding adversely Securities contained These identify current time the could our X-K. variety projections XX-Q Commission, report actual or and Exchange time results documents refer events and contain to of Form of are Please statements materially factors We performance that these the to those future materially management’s today results statements. forward-looking of may or financial may Company. you the

Bryan. to I’m pleased to that, turn the over call With

Bryan Riggsbee

everyone and call. Thank you thank today’s joining Scott, you, for

today's CEO search spend been the well as the other role company's Capone will to the and Board I Mark's in continue serve afternoon has Directors. CEO replacement. this and Board and as a as as about resigned our conducts have for while appointed announcements. talking Interim CFO, and I President of member as that we second this discuss Before results, moment Mark want quarter We President announced a

numerous the of and scientific played made his contributed it him behalf want company Mark's and company, years leadership. during around with the have health the in pivotal of a and the to the Mark transformation guiding XX life have on today, that to is We to where company I patients advances thank role business significantly world. for

we drivers as next in Ultimately and talented that highly profitable of the business and phase value objective growth We’ve agreed forward that Mark for it's we mutually as in an the as sustained position front value a focused the the Board to team on in of Myriad Myriad us, and to success right leadership our creation, a execute its on time to take factors CEO and interim growth on emphasize Myriad have critical and that remain numerous will the opportunity I this growth. position for want drive are now creation transition. and us foundation organization we for deliver strong for our we confident positioning future.

is earnings. our call quarter this said, that With about second

press release questions transition, issued afternoon have refer background. we leadership additional you to to the If will related this I the for you

financial share per to financial adjusted and well for below of million $X.XX, fiscal second were generated turn our results. of quarter. quarterly $XXX we me the let Now quarter, the earnings In which revenue the guidance

inconsistent We our provide results, with goal are which are to with guidance. disappointed these achievable

the system cash color industry negatively to homegrown system by the collections lower quarter. this shortfall saw on billing the transition business. additional reasons used were Prenatal our operations collections cash Counsyl some second than Myriad. fiscal in provide now quarter, impacted from the the prenatal standard an In in during will billing that issues I we for occurred by anticipated of

prenatal for in negative a resolved issues be in second disruption will adjustment this cash necessitated the quarter collections prior recognized the revenues in periods. quarter, While the

we lower rates performed the these we tests in to collection. in to addition, result out-of-period in second are match If the required that revenue In quarters. will positive quarter prenatal of in the historical historical excess for adjustment a lower rates successful future accrual were at collecting

$XX which these quarter to two represented related financial our total, the in shortfall than I The review detail lower discuss cash prenatal to In adjustments will in collections GeneSight revenue. about quarter the million from a impact remaining second when more second was results. anticipated UnitedHealthcare, I

of average have seen price. last in with higher selling been $XX selling the activities our molecular months the share quarter as second in significantly earnings. perspective, the months, put remained they have In onslaught if XX prices payer of have would were same that an XX industry revenues average the $X.XX million per To testing additional unprecedented impacted this ago, have

To have operations. shifting we coding average directions. these of results address organizational be changes, revenue contract department selling price fluctuating To largely fluctuation called establishing lower denials, new including to patient. rules, clear, challenges, are preauthorization Instead reductions made unrelated in ineligible we’ve and or new a documentation prices requirements -- they are significant these which inappropriate

the the the to opportunity. priority highest new to coordinate approaches enterprise responsive develop to -- attack This organization has and responsibility resources across

billing in example, the can act immediately. by anomalies them earlier, intelligence powered deployed For an artificial quarter, warning to second early and on so developed we system detect we

XXXX about Nevertheless, future new improvements quarters. optimistic in already for some of the blocks organization, and gone growth. future from remain not anticipate delivering we seen fiscal material, near-term but start this focused building as more has We've significant Clearly, progress expected.

XX% negotiations are final with we Also, GeneSight additional an that physicians a that our and third responsible anticipate primary six LCD cover could quarter employers. for the we lead XX in have major test prescriptions. employers for now GeneSight, to antidepressant coverage care With by of MolDX who ordered

to we expect to important publish continue as we strengthen Lastly, coverage commercial additional data decision the dossier. new

GeneSight reimbursement, by are expand which significant high with force call return broaden to to physicians, Given slated this will to GeneSight to the we our combined primary points growth. optimism, sales care decile is XX% additional

we fixed reflects products new foundation, the our UnitedHealthcare's for of The of in volume hereditary portfolio a are UnitedHealthcare with first forward-looking as price contract guidance consistent now will goal cancer of terms hereditary the The year hereditary January reduction solid the cancer contract. the of X. anticipate contract with our pricing X-year cancer effective offset entire a to hereditary signing cancer the maintain growth

Following sensitivity our have In of of to in number the physicians prenatal have the contract, we the the lives, sample with continue vast UnitedHealthcare prenatal signing we volumes positive test. future commercial will visibility. after of business, ordering of data the improved improvements grow majority of and seen highlighting renewed pricing publication contracts providing the

of included test was regular the that volume of stating College minimum in accelerated that for standard testing several has Rheumatology Vectra publication, test since use. the activity one measures disease was a clinic American met

presented diagnostic Medicare expect near-term volume in of supporting data continue coverage approvals recent for prostate additional CDx patients. more also We’ve -- XX% and to an the have including of and myChoice Prolaris companion increase companion received cancer proprietary our to we approvals multiple product.

Lastly, for myPath we're a of provides commercialization that annual the after LCD beginning in million. market reimburse access Melanoma, stages more of to Medicare $XXX obtaining than

Given in than from the progress these quarters. offset confident past our events the more products new will with opportunities, two the earnings impact that we're highly

to details like our I'd results. discuss financial the Now around

saw single-digit quarter. million the $XXX.X was We volume quarter versus a hereditary cancer quarter. year-over-year basis in $XXX.X the growth second the in revenue on cancer mid million first in Hereditary in

the revenue GeneSight, was in million. $XX.X onto quarter Moving

growth were cash revenue than While two the anticipated decision, anticipated lower from reasons. had sequential UnitedHealthcare collections we coverage for

First, were a compared denied XX% been assuming. higher to had percentage of we the samples

to we we As are continue a this physicians, to expect, task you that about would aggressively significant this With situation. improve make is working ordering XX,XXX progress.

because Second, insurance seen we patient portion company. higher which costs the for are selling lab longer out-of-pocket historically is typically saw what price lower than expected, than our a and collections average pay and industry from take patient lowered

$XX.X the the first in was $XX.X million revenue quarter. to in quarter compared Prenatal million

I accrual out-of-period for transition earlier, billing As in rates. impact lower million disruption adjustments $XX noted revenue and the approximately accounted

unfavorable quarter Vectra million in offset was revenue -- second double-digit to due revenue mix. in volume -- with average sequential million selling lower quarter the and was in in quarter second expectations. Prolaris price $X.X by $XX.X the with the first growth line a quarter

the mix to prostate on shifting the impact Prolaris Medicare business, the of patients cancer expansion a in material the Given would have all LCD business.

test We in in were international both U.S and the million. markets. and EndoPredict increases $X.X revenues first revenue in quarter saw volume

associated timing of the clinical to services due and than million was based pharmaceutical pharmaceutical from trial RBM our lower revenue $XX samples upon business Myriad clinical our with anticipated Lastly, revenue for partners.

prenatal year-over-year I cancer and decline points test and selling for were test. due would remainder now metrics the out-of-period points prices on XXX The our revenue hereditary the basis financial basis. quarter. like of in discuss average XX to lower adjustments for basis margins to a declined gross our was Adjusted a were the XX.X%

operating million saw to we Moving to and quarter. on sequential operating $X Adjusted $X a expenses approximately sequentially last expenses, compared cost million and following million continue million expense development on decline focus was year. $XX.X last decline control research $XX.X to

Adjusted million last expense quarter. second was the this per quarter $XXX.X Adjusted SG&A million quarter of in for year. the to second were compared share fiscal $X.XX $XXX.X earnings

XXX credit cash facility million This quarter our $XXX in and the ended on million we -- with $XXX and outstanding equivalents. cash

guidance. like revised Now year to XXXX financial would fiscal discuss I our

million revenue prenatal For impact to UnitedHealthcare revenue associated to in change requirements, the with and the out-of-period guiding for businesses, now the first cancer This quarters. hereditary GeneSight and cancer $XXX accrual the fiscal lower the a accounts adjustments two taken we're revenue $XX prenatal approximately and of for XXXX, in our million. rates of year due guidance hereditary testing preauthorization

are earnings $X.XX the revenue. of cancer earnings approximately reflects out-of-period share adjustments On hereditary prenatal per an to -- adjusted and basis, which negative adjusted impact $X.XX, total per revenue to due share the to in lower adjust of guiding we

Now discuss assumptions like updated underlying I our to guidance. the would

volume cancer, hereditary fiscal we're growth forecasting year-over-year second the the for year. First, of in single-digit half

assuming the the Japanese cancer or hereditary pancreatic approval not from impact approval. recent cancer positive are We companion approval, the anticipated recent diagnostic cancer any prostate

of on Medicaid XXXX, fiscal Based has renewal modest a half and been and contract Medicare of in the guidance. pricing in hereditary expecting revenues, cancer incorporated cancer upon are hereditary second decline the year impact into which we PAMA our our

growth, in not factored yet care are we anticipating payers, from GeneSight, from primary or Medicare or benefit employers commercial volume decisions any For any continued additional reimbursement managers. have coverage pharmacy but

but any improvement in to revenue For continued expect factored growth, in not rates volume accrual prenatal collections. cash improved the have we due business,

trends. revenue and assuming Prolaris For are current with Vectra, we consistent EndoPredict,

are sale $XX in and the assuming clinic in lower in of lower of research the business clinical other year we due approximately the the upon second million pharmaceutical half milestone and pay. a in decline based revenue Finally, services revenue German pharmaceutical the

does could note revised fiscal materially several include impact would that XXXX. transition this and we guidance earnings revenue events not into that as we We believe

to and current $XX approximately volume. earnings First, add an would care annually expansion of at million the in GeneSight primary Medicare LCD $X.XX

risk high would $XX million and Second, to add earnings. per a patients for LCD in Medicare intermediate $X.XX expansion Prolaris unfavorable share annually and about

improved and Third, for earnings. could annually test and share collections prenatal GeneSight $XX $X.XX per in million add

of could with the sales sales neutral XXXX and additional GeneSight in million Finally, 'XX. to $XX revenue additional in the over add annually and for expansion fiscal impact earnings in earnings be team fiscal an

be events would than financial Combined, headwinds more faced -- fiscal first of would in these have the offset XXXX. than offset we half more the

we guiding third fiscal per $X.XX. earnings adjusted quarter, the For and share revenue to million are of of $XXX

by of We pharmaceutical prenatal are modest the to revenue seasonality contracts and and new of the flat based decline rest revenue in seasonality lower hereditary the to a payer renewed a will expecting impact negative a revenue hereditary milestone, research portfolio. sequential million $X increased offset revenue the upon PAMA, million product sale and cancer $XX decline sequential due relatively be cancer our from as clinic negative in

the to this in or reflects in our results very we While two exceed puts the changes are half In that significant a through guidance rebase have first increased delivering cash expectations clear year. challenges, in financial upside to I some us accountability fiscal to disappointed meet confident in these ensure for made fully am business we the quarters, collection. position second of and the response organizational

growth. evaluating focused revenue maximizing also on We initiatives profitable additional are

the product opportunity before some new discuss would our Medicare to nine quarter, every for $XX revenue, Because annual discuss company. I the the at billion $X has In current a the in per reimburse portfolio addressable market addressable United from products total least with coverage. the is market business States in significant over like the alone a highlights billion Before of year. I

currently reimbursed are decision. additional gaining these priorities penetrating coverage market Our and

the of would that the to I the into near-term potential. some spend of like discussing remainder will this to cap blocks building call start

First, fiscal with GeneSight. the several in We continues had to which second publications reimbursement LCA. the important strengthen quarter,

benefit Journal the includes the the to the study of who interactions. at drug guided published first XXX analysis medicine GeneSight patients was study in and The was which medications the upon population was Clinical gene Psychiatry. on intended precision based baseline of publication analysis with guided from a patient predicted are and This

their symptoms, all statistically show in significant. XX% remission, The GeneSight treatment a XX% improvement a and analysis that patients in improvement who in improvement by response had of guided XX% were which saw

Additionally, six the BMC analysis we trial of published a psychiatry. clinical the guided new in HAM-DX item using

is eight, HAM-DXX depressive The a finding using scale been that subset there a better the week study HAM-DXX were as the remission, measure significant than symptom. in key scale Between three and of usual and improvement of shown statistically GeneSight core guided care HAM-DX to scale, the of HAM-DX the scale. symptoms has the endpoints, was be clinical at treatment response all and

be conditions depression you as such could the associated questions excluded example, are had HAM-DX from with which score. trouble than sleeping, other For have

being in with picture the contemporary it study. believe endpoint original along result, GeneSight the a patient is analysis, the a that improving an We As and as data clearly create is data guided precision red outcomes. medicine switching incorporated compelling study clinical pharmaceutical publication this increasingly

GeneSight with agreement. We pharmacy including currently a make customers manager discussions, pharmacy cover employer manager have six major engaged following and employers in continue to we that our progress especially recent Additionally, benefit signed employers Service other the of agreement. XX that GeneSight Master plans, benefit will

progress, current evaluating productive LCA. now continue anticipated payers, our advancing year. reimbursement multiple expansion plans technical reimbursement also sales national that organization assessment an our force large We important we're GeneSight have and upon this fiscal to with dialogue Based are the

quarter. are the additions wave XX% with by first expand sales We force anticipating will fourth sales new in XX the territories with the beginning

reflect revenue these guidance occur not impact additions fiscal the starting any of XXXX. mostly Our fiscal XXXX in benefits as does will

last with the and no quarter, GeneSight formed that updated with interactions the developments have list in more report. Recently have references basis the been report. a material to on than the XXX test of the I been FDA Finally, has the website would been changes consistent note test our GeneSight, there for there have no provide to clinical rest that of

market, continue the science to predictions with Antonio to for symposium of our women In Cancer personalize ongoing riskScore development of San product we positive for risk test. some the hereditary demonstrating pioneering Breast cancer risk who this for differentiate we ability introduced the mutation. year, At the test genetic

would a being XX%. before be with that example, risk with For patient PALBX had informed a mutation modified up she riskScore, a of to

be However, when the from result is modified using riskScore, the XX% patients risk anywhere can toXX%.

range competitive similar of to the be medical We significant different year test mutation fact, the we or introduce be this for significantly into which potential BRCAX calendar In new management. in will of tool the patients a risk to our high-end report differentiator. believe BRCAX would XXXX, plan with

From with this CDx. CDx a progress perspective, companion we saw and myChoice diagnostic quarter significant both BRACAnalysis

diagnosed XX,XXX FDA cancer BRACAnalysis in pancreatic people approval received approximately less year hereditary in are and States we tested believe United mutation. than First are we pancreatic for for with X% cancer. the CDx Every cancer

half the study, time of limited a approval AstraZeneca submitted compared resistant In prostate with BRACAnalysis the clinical from to FDA highly in options year. pancreatic creating when disease the our for castrate CDx for metastatic given doubled in An FDA almost progression for January, anticipated application patients. fiscal second to argument treatment cancer Lynparza the compelling we cancer testing placebo the

incident this XXX,XXX OlympiA indications be breast XXXX. In announced the cancer indication addition, vast adjuvant per year. which would fiscal to of we this half from of fiscal approval to in to testing patients. for breast expecting it indication second in another patients If majority approved, lead is data could the patient are the expand cancer population is XXXX, The study

proprietary FDA in niraparib Additionally, myChoice fourth-line diagnostic our for the instability cancer our genomic in for CDx, patients ovarian assessing received as test approval considered treatment the companion being setting.

myChoice XX% also to received first we approval, LDT the with in increase for this the initial test quarter. for ADLT run Based during volume the relative of initial status the PAMA the fiscal upon $X,XXX. the of saw We test rate quarter under version an price CDx

of the ovarian meeting, of Oncology at Society Medical cancer, fall first-line European myChoice partners analysis. PARP a several data our this then pharmaceutical in on included presented CDx Importantly,

our We of CDx in this partners myChoice in commercial the the with FDA role currently discussions and are on indication.

of POLO improvement New published in highly study myChoice saw similar free no in survival in significant Journal CDx saw progression For positive example, positive progression CDx the England recently population. Medicine, group the myChoice free where a negative to in survival, patient BRCA the significant improvement statistically the statistically

cancer sPMA first myChoice quarter. are inhibitor CDx have we pursuing this myChoice PARP result a and in Japan recently setting. line last Also, studies, with FDA in Europe, filed for the indications with ovarian in in CDx the Japan and already filed an we myChoice CDx As of China

the help products versus important had competitors. which Our we differentiate second prenatal publications test quarter, fiscal two will in believe our

First, Prequel in industry we fraction in patients and array-based for no study published in in range data follow test X% with on and is X,XXX more rate from samples sensitive technologies such one This as than one is fetal the rates. low call lead our expensive leading can showing an typically invasive amniocentesis. to procedures other XX,XXX

a study that of rate accuracy population of industry patients .X% test and index. Second, including achieved an low we general published high Prequel women pregnant failure body with women high with mass a showing

to half led of fact, high tests of in In NIPS using can patients, obesity. patients against significant to College American call in pregnancies. NIPS constitute all with and the XX% recommend BMI This no which SNP-based data Genomics to be the Genetics rates up up for Medical

and no where our procedures. call in to important be new will are data market rates believe very invasive frustrating very more We differentiator lead the a

pregnancies and for on NIPS improve initiatives screening. carrier to three guidelines and risk and with average Lastly, microdeletions we expand progress reimbursement continue to make

Vectra, an achieved was disease of measures for test For in stating activity College that the the an regular was test of one Rheumatology included the minimum in quarter important we several American publication standard a as milestone clinic that use. met

a also rheumatologists. XX% of United which the Rheumatology Vectra than As Bendcare is in listed guidelines, represent more and reminder,

We at to inflammation. of broader from cardiovascular on helping the ability of progression unmanaged physician additional a Additionally, Rheumatology communicate indications clinical American risk the presented new significant radiographic these of predict value meeting, risk. by Vectra and to College Vectra the data add was and understand impact believe

to publication data. additional We plan the after add year of indications our in to XXXX these calendar report Vectra the test

intermediate quarter Prolaris lives. Wellmark Shield favorable Blue Finally, Blue additional MolDX Cross coverage risk a X patients coverage covered of approximately additional expect for announced is discussions patients Prolaris high it this end also a XX,XXX year. by this the the coverage would and for If a with regarding per year. provide million adding Medicare for in unfavorable fiscal request decision decision and expansion We're favorable, an

some faced the In the headwinds about and have conclusion, company. XX the industry for outlook over months, while significant we Myriad the optimistic remain past

Our the we the with on hereditary cancer by long-term reimbursement renewal new test afforded products top have of foundation expanded opportunities greater reimbursed our substantial a market And build future untapped coverage. continue of volume and upside stability and product contract. new these currently potential to in even pricing with growing successful

for the to our call With I'm back to session. pleased Scott Q&A that, turn over

Scott Gleason

Thanks, Bryan.

Investor reconciliation reminder, GAAP financial results use found website. financial non-GAAP financial non-GAAP we during under the our a guidance today's results to section Relations of of to can call certain GAAP of financial non-GAAP measures. A and As reconciliation the the a be

and broad now participants we to we are only begin ready in question today’s ask ensure for Q&A session. Operator, of the Now ask Q&A portion are call. session, one In ready we the to please follow-up. our Q&A order participation

Operator

Bill question much. comes Thank Jaffray. the from First very line Piper of you [Operator Quirk, Instructions]

open. is line Your

Bill Quirk

afternoon, Great. everyone. Thanks. Good

and the transaction in company So, to us want excuse help replace timetable I about of Thanks. thinking respect or you terms or Mark -- you board appreciate doesn’t state how leadership of could bit Bryan, little and you affairs But challenges nominate some change necessarily the led reimbursement that to I change such. the CEO. here rather, -- given -- light Can announced. formal and the is with give to with me, to with about the here guess here shed what a a to hitting that rather the guidance talk just the with of

Bryan Riggsbee

as There the you phase Myriad. for transition was just have It was all now for that’s Board mutual growth a time the point. Bill going Mark Thanks, and and of will value at to are to creation that is leadership question. next at the release. the refer in back really I for looked just press to on really Really comment right Sure. the just that this we that a a agreement us --

Bill Quirk

guidance the year, does then with that we Okay, collection assume improvements under and current same. for the matter of that half respect the that that think environment Does stays environment? such any about got to when the the is it. operating for back -- there you or the And are any effectively that [ph] Bryan, in that in challenges pre-ops suggest worsening any that

Bryan Riggsbee

what we’ve back we're level of Yes, Sure. for same now. the that of year is rates half reimbursement just quo status the assumed seeing the

I you the think some you on to initiatives. rates. now have those But we're time focused start as cash modest like, to our year more as of an intend -- know than improvement things initiatives the and be will have impact go the on take we through there execution our collection but

And status we're impact a purposes guidance, looking in of we’ve so what quo. at But going for forward. is positive built

Bill Quirk

All right. Thank Understood. you.

Bryan Riggsbee

Thanks.

Operator

Doug Cowen. Schenkel, from comes question Next

open. is line Your

Doug Schenkel

Doug?

Operator

Doug Schenkel?

Doug Schenkel

Okay.

hear you can now? Sorry, me

Bryan Riggsbee

hear Can now. you

Doug Schenkel

Okay.

over what last So across just couple bigger quarters? cleanup forward the then and given picture revenue talk with series of few revenue developments question. maybe a question you about of your practices a changes recognition first with and a businesses a contra Can going

Bryan Riggsbee

sure. Yes,

they seeing talked for at order or I that the of the in historically. some changes we’ve than of help payers -- pay we lesser about to in trends it during or terms have some on others identification script formal extent collection in rates made to improvements are we earlier the where patients of think

biggest in forward, and we're about have we quarter was that think I to that impact case accurate the to more as current as and changes hereditary to really point where an the over some had what’s going So we it that's the place us address the for get code make fiscal making going this had positive we corrective we year. cancer the put sort a that the of in the switch bled to first part as that of out-of-period of had is think example, adjustment measures change the

what early early So I sort really detection. now and think that’s on focused warning we’re is of

Doug Schenkel

Okay.

Bryan Riggsbee

Did there I answer more to Was it? the question?

Doug Schenkel

That -- yes, that helps.

Bryan Riggsbee

Sure.

Okay.

Doug Schenkel

decisions at the and comes decade the after What more. to at So for this management the so the know Not a picture past ask expect we it mean at Directors same really largely bigger I for why and was fair to making is change change. investors the go ones? of bigger the enough? the should I been the of and helm many and decade. pretty right to picture but Board this also terms make team should question. be but clearly has think rude, with just Does broader that level management, change? what trust Bryan next hear CEO why the it's plus The Board should team far on a of And this question, don't in for management to time Board timeline wrong leadership investors I trust direct

Bryan Riggsbee

terms right with ship we is answer question, I the think the it's will help we're I is, Well, pretty focused where in -- riding Sure. of really hitting Doug. out yes sort do What now of put there. you a the that numbers direct that formula

an and So mindset. really execution having accountability

So first on foremost, and focusing that.

think launch long you broader and a so is this where is that, FY the in see we the path to business positives have reimbursement a about on 'XX talked beyond from think to we I path to the horizon. I utilization you of commercial that conception some as

think really GeneSight, are payer coverage. recent we Prolaris, of myChoice Melanoma, CDx on especially just realizing, myPath with the the cusp I for

that is the think I aligned to just the about that the would the I GeneSight. path the more why that's it accelerate in we reality and Board, we the sales terms like these of we’ve and things than the anyone the as strategy we would think call all quickly, growth is longer out much best go talked But and the cycle like. management think as just returning force we take that commercial and believe around expansion it's I for to to launching team of of are laid part on to -- for

we -- the largely think that where about I step gas revenue just some to delivering at we’ve historically are and now the will we I that and raised. point think on really the need on talked relative that to the of concerns you alleviate

Operator

And next Peterson question J.P. line comes from the Morgan. with of Tycho

Your open. line is

Tycho Peterson

test guided have of overall retention Invitae $X.XX Obviously, want it that going Can there you’re speak with start gone you lot how the for the now. know thanks. has NIPT I a year, in happen. with do to $XX that's to a issues. competitors like turnover of and you Hey, billing prenatal to I accretive But the and out gone? be what's issues. integration integrations setting lot patient side. just the talk to maybe there, this Counsyl on pay We’ve going heard how anecdotally, to there's not originally you been

So why that is pricing for business not an problem too.

Bryan Riggsbee

Thanks, Sure. Tyco.

I think obviously quarter. obviously one there the I the deal billing current in as that integration we Counsyl at had we've issues and there, the foremost, look to with the first challenges to comes here been the some is business, operations have that of think mind

in nice and some approach which other actually talked those that seen we’ve what IVF to the base the for month, days force, Ob/Gyn actually a some the to is focused record -- I We clinics the you focused. couple relatively we in businesses. of we’ve relative a the about primarily on where current about And about clinics, probably broadening of think volume on are the January, record we're market folks towards seen increase that actually large fact think volumes probably talking and sales a are -- in the is less the relative volumes. you had we’ve broader -- so of focused these as

driving So penetration is issue I think driving really volume. the further and don't

I that we're think positioned the issues collections, and and some business point we billing operational but at this believe it still we’ve excited sustainable relative long-term growth. about to for

Scott Gleason

there's the is, And commercial price, actually It you Tycho, where drivers pay would really large stability referenced the I thing thinking where and the can earlier and think on the a contracting. thinking testing, a that rearrangements, price. patient a when the of of highlight, market I call. of the average just when also cash then collection And lot you upside think we that’s in And we’ve of number you’re referenced $XX of look matters cash we in initiatives I contracting. start about on executing at pricing terms risk side lot just Bryan a seen ECS go, And one where guidelines. when start about pricing is

here. we And trending pricing current we see so up levels from forward actually move as

Tycho Peterson

then right. operating the you protect of terms in All goal on And follow-up, to emphasized first earnings. margins. Bryan,

XXXX, -- this earn I you’re If supposed $X back to you go year. to

about Now $X.XX. we’re talking

So margins try to taking you talk take will and … about can are going protect you steps operationally, to forward

Bryan Riggsbee

Yes.

Tycho Peterson

including and restructurings? … potential

Bryan Riggsbee

Yes. Sure.

said product on biggest One always improving percentage. margins comments I our of impact margin the a for couple is driver that operating think would this we’ve has I have for is, the reimbursement there. obviously, operating significant that our and

two and over and quarters, our prepared about as expense. we've seen think talked during last we we lower roughly the cost our million look operating $X this at initiatives, remarks, I

cost the our business, are where to Elevate and business on XXXX integrate Counsyl we focused been successful to integration costs out well through yield that continuing drive the as very managing has very program, which savings. we continue So as of both

be the to to then be about getting profile. at reimbursement higher how operating primary to we margin. managing focused think time going we drivers and going improve the are It's are going those same cost on our -- better So as also

Tycho Peterson

I last quick If Right. GeneSight. just on could one ask one

it, factoring you into spray. that given then, discussions? going issue in or like other the How secondly, we’re with that Just it approved you're been the have an with other that, so incorporate with incorporated clear, trial? do you is wasn’t any new pre-auth your forward, in fair that to Is original other And that payers United. not say SPRAVATO, have nasal there drugs

Bryan Riggsbee

I first, FY pre-auth provided that 'XX haven’t have. that we have based FY relative on provided for GeneSight and 'XX the say We’ve and the and guidance. guidance to payers -- they Well, its what programs would we

So added the impact new we and any spray programs, any nasal pre-auth of haven’t question … then on

Scott Gleason

therapies. the Yes. drugs most Tycho, some are of where of are on selections acute-care the making of more patients pharmacogenetic in settings you longer side, remember of look some newer them I at mean term on kind our when the

cases, a in necessarily so relevant. aren’t those lot And of

Tycho Peterson

All right. you. Thank

Operator

Next comes of Nam line the Sung Ji BTIG. question from with

open. is line Your

Sung Ji Nam

for taking Thanks the Hi. question.

so, missed non-contracted I Sorry, collections driving an making around are terms cancer out-of-period hereditary for And it, last talked payers last the there incremental that. but you progress in if was quarter? quarter? of payer what’s And about the since adjustment any that you

Bryan Riggsbee

Yes.

So, Sung question. the Ji, for thanks

was the you around Q, the see will the out-of-period than it I million. $X is prenatal Prenatal think out-of-period have was. which when what the less -- total

update small payers, on that that we and quarter. to was is a initiative to it positive of out-of-period we're large which And revenue. contracting so largely capture hereditary and what referenced, of contracts in we probably with to able and continue is adjustments for cancer by are had continue that positive some some focus the part these we But have positive to the hope you those driven balance we

Sung Ji Nam

guess, talked I And actually. wondering driving Okay. Thank you. higher percent you about I what’s And from of samples denied What that, was then the that? UnitedHealth. drove

Bryan Riggsbee

through I I was we're -- screen. the XX%. drivers pre-auth modeled, we what focused which think had making said Yes, now United right for we’ve we it Sure. than just said it all further mean, was What higher not understanding the what’s on

number that going I not specifics, because focused that get to mean, of the a a little process. make range that of to take part issues enterprise it's But is dealing are don't we into wide that on through there. talked it that’s operations bit team, that further, we’re about the revenue reducing the We dedicated team with just a pre-auth when

current So -- just just launch that what to had we is make higher seen time, than what in the improvement level expected. quarter we we’ve hope but over are are since levels

Scott Gleason

do some portal. the have preauthorization preauthorization things the and and the physician other call a that of in that on registered one in actually portals the Ji, we about go payers to Sung be was And where has user talked

that order signed so about to psychiatry, that tend we obviously the think aren’t have of is of work through you physicians to physicians test. things up. And one diagnostic getting When these a lot

so and And enrolled is to get that’s in out those for getting been a preauthorization physicians major team undertaking portals. there the

Sung Ji Nam

you. Thank Okay.

Operator

Derik America. with Bruin from of comes Bank de question Next

open. is line Your

Ivy Ma

for Thank on Hi. Derik today. for my Ivy This taking you Ma is questions.

on of the see those you so as color rank terms upside about drivers. to Thanks. I items potential what’s in those happenings? those unpack items? then can of likelihood wanted appreciate one, order First of those you probability I the Basically, or them talked

Bryan Riggsbee

two that LCD expand referenced. I first Obviously, Medicare we primary the Ivy, into think care. for that GeneSight could Yes. the

on so initiative. We that on relatively the resolution here expect near-term third resolution in OB that quarter, have and the

intermediate something the talked we into fiscal year. that expanding what’s Additionally LCDs for risk non-favorable That’s patient. Prolaris about expect high this and would we

on. that So resolution we those events are should get relatively near-term

other of The mainly That’s collections a business big collections here. cancer the of is and piece for business. forward the prenatal going business and hereditary and the the improvements obviously focus which

actively number initiatives. of We implementing the are working on

upon the right As Bryan is now. we any guidance are that number of actively that something doesn’t improvement anticipate ongoing But our stated, based that’s implementing. programs

Bryan Riggsbee

And that one sales lastly, expansion. just Ivy, force last on the was list the

on on revenue are is One delivering are line. that of top we focused initiatives that things our on aggressively the acceleration the moving

impact. doing hiring reps. those we QX hiring and year in expected will would so the And We have we said be we fiscal XXXX a be to

Ivy Ma

one on GeneSight. Thank And Got then it. you.

pricing a arrangement United. there You said was with fixed

the you Thank or see given comment to range, current commercial could wanted rough ASP what if So that you. on the coverage? is

Bryan Riggsbee

going said our -- Yes. on a in price give are of contract. signed fixed the long-term the we But, portfolio release We we with had press ASP new yes, UnitedHealth contract and didn’t not we for that product. our in to call the

Ivy Ma

All right.

Bryan Riggsbee

comment we headwinds that did with is hereditary the is one around very cancer I favorable. the contract we in contract. would pricing one offset in to lead could associated make face the year that new that described we The agreement Ivy, think felt the growth volume

Ivy Ma

GeneSight you on kind like I pretty characterize And the bag, without much That’s in care see to volumes, GeneSight the the decision year? but the then wanted primary the sounds with for of of care rest is it what primary Great. would volume trends or helpful.

Scott Gleason

Yes. Ivy, I mean, obviously the Medicare decision yet. hasn’t come

with dialogue discussions that so And we’ve said positive we’ve come, will had Medicare, quarter. and this but decision

you that are And patients I is care channel. focusing high-volume of the market, at that really primary said we'd on we've physicians. historically in be about think initially what when look XX% the ordering

lists doctor comprise physicians -- more have that that We than of about with volume. XX,XXX half the larger total

the expansion. of that force so And sales focus initial the be would

other The on we is levels it piece also that on a basis. reimbursement have data nationwide of

launch doing territories putting nationwide the look will Medicare we and reimbursement targeted on the where helpful be the reps a be obviously most front. be so levels we'd and really at reimbursement And that would there's on basis, very favorable would LCD into those that

Ivy Ma

Great. you. Thank

Operator

Next with question SVB comes from Puneet Leerink. Souda

Your open. line is

Puneet Souda

you is Hi, be do of is and ASP first to resolved land going transition all do in terms you when Counsyl billing think after Bryan, that completed. thanks. question, Yes. think where the you

Bryan Riggsbee

to our largely the -- systems. the Thanks, We've new billing in-house Puneet. transition completed to

done. that’s So

focused where We we’re that went process. ops think that had this I is transition. focused some on issues we the rev is point team through improving as on at process

saw ASP So are where impact our ASP, is currently what we obviously in expect we relative see guidance. factored the would what specific that I think into given than is you our would the think and current given quarter haven’t them product they we to but higher I

Puneet Souda

worsening for -- in then revenue the do payers And you And did in worsening mentioned that the ASP you had the I and about year? of -- ASP know to us call -- XXX among hereditary. where Okay. trend group through payers update expect the those you prior you see contract that could account -- smaller XX% you or there,

Bryan Riggsbee

Yes.

feeling as would I and we this lot make payers, in that so to continue year. again, our think we you out what quarter play again, in -- the they're at when at -- that large group through order by QX, we contracting small with the saw previously. see we’ve that, a the takes it expect over is we've of the and difference. expect a look the should of driven adjustment current done I which time, really that -- actually process improvements would back individually, as a half is we look But positive communicated to But very think general

Puneet Souda

Okay. Thank you.

Bryan Riggsbee

Thank you.

Operator

Barclays. with the from comes question Next line Jack of Meehan

open. line Your is

Jack Meehan

wish with a to Want testing. our first luck, to hereditary Mark good start cancer interactions. one And from Thanks. learned lot

but high revenue So referenced in were that mid the in single-digits, the digits. you volumes growing single declined

imply was and talked the adjustments price would there. that the in So double-digits of down about some

double the for XXXX? look United we as United forward, expectation what's contract, digits Can a again. So in it reasonable new pricing be in -- down the

Bryan Riggsbee

it that volume data that one. the that pricing few in And the relative contracts Thanks, QX in to for the was the renewed point we there that a Was the of about we reference I seasonality, million. that made. the sequential other offset we we had. to question. about Jack, hereditary of the was impact hereditary million the $XX think change growth gave contract the change United related was the our what total know impact and PAMA, of was about we’ve When talked then year cancer QX to from would

So our that’s -- X. -- and expectation would that retro contract be is to January

will will you from the -- United in will an representative be perspective the incorporate impact what of of ASP QX where kind of see the impact we of So renewal. --

Scott Gleason

what the on impact go when materially through And this year. standpoint. call, we that pricing said look didn’t next we anything we contracting that year, would from we Jack, And the is else at a anticipate as

Jack Meehan

under hereditary the reason volumes accelerate contract? any the there why new would Is UnitedHealth

Scott Gleason

when think contract volume. the doesn’t I look really obviously at mean, impact I the you contract, Yes,

are same. network in UnitedHealthcare. will provider We status with remain That the

volume. that we the coming series current in change so about the at we new of when -- to that next look variety of year here. don't of relative approvals a a our the companion would We’ve see back the half are And anything factors. diagnostic in talked outlook I And volume year,

is contract indication, and impact OlympiA our those adjuvant a that of the have But talked very an cancer in on be pretty could expand One about. indication wouldn't would which very itself be we dramatically. breast in testing breast large which could data space the significant, cancer From volume. that the Astraseneca, is

Jack Meehan

follow-up And GeneSight. Okay. on then one

Is to this your we quarter. the then risk you as similarly, Just Thanks. own pursue reduced. test. any price GeneSight the of code planning $X,XXX are for that there await LCD the could CPT get finalization And

Scott Gleason

we look when Jack, to nothing is has this actual It Yes. a decision. at with pricing, pricing. the do coverage remember

through price our contractor local contract Medicare a for have We administrative GeneSight.

pricing maybe on of second And -- no been there's horizon. can type there's the I’m question, remind indication any sorry. we change that you so When

Jack Meehan

the playing test. CPT for you the Are procedure code on

Scott Gleason

about series code Yes, GeneSight. that publicly we around about a There's to obviously strategy We’ve for discussed talked thought there, things think our CPT of but internally. about haven’t haven’t that. we

Operator

with And presentation gentlemen, Please there questions your or Thank continue are no present time. closing remarks. you. at further

Scott Gleason

call. Thanks. Dave. our for A us This webcast via joining will for afternoon. website available right. again our earnings and concludes Thanks replay be one All this week.

Operator

you your disconnect for call conference ask the very And for thank today. your We that and lines. does much conclude you please participation