VCYT - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to Veracyte’s Third Quarter 2017 Financial Results Conference Call. [Operator Instructions] As a reminder, today’s conference call is being recorded. I’d now like to turn the conference over to Ms. Jackie Cossmon, Vice President of Investor Relations and Corporate Communications for Veracyte. Ms. begin. may you Cossmon,

Jackie Cossmon

Officer be Good for and financial our Anderson, Chief call. Tiffany. today; the joining Keith and results you us Bonnie Kennedy, Executive the also call Hall, Financial and Chairman and our Officer, today third our be on Chief providing for joining the the for available afternoon, Operating an you, leading thank be Chief results call will everyone, for third is us President and on our update conference Officer, will will financial Thank quarter questions. quarter. XXXX Chris

begin, during you that this we securities as various make include like will applicable may statements forward-looking we Before to call defined I’d statements remind under that laws.

that future and are forward-looking financial and assumptions, drivers fact. our plans, or subject in, to give expectations they other and results, reimbursement to pipeline, historical opinions discussed to Forward-looking achievements prospects company risks guidance, and and these growth, forward-looking attributes that reflected performance, or the correct. any will may statements goals cause materially statements expectations regarding statements, assurance from differ be statements can Management’s and of and results by, future statements such performance strategy, implied no and/or product not actual prove uncertainties include are regarding in

“Investors” our landing call later Releases.” announced Keith company’s then we corner when Veracyte.com, in of financial In call, will website, the our Securities reference addition clicking Commission. to and We are today’s third he are to presentation, “Menus” available risks filings results, with which by to this the a the “Press our website and top-right and press described results. covers release, on those our quarter which Exchange clicking-through on financial page in Prior also released uncertainties the XXXX and our

Bonnie. our in We transcript website will our prepared “Investors” “Events also the to may financial section, turn remarks of call. will the this You same I under a over post the now presentation to immediately find following & Presentations.” call

Bonnie Anderson

everyone, want one Thank us the I by had And I joining this is quarters most saying have challenging for. you, thanks, to today. of Jackie. prepare start for to that

of advancing the year. the core adjusting quarters had successful had foundation quarter time, one we of hand, the we’ve terms guidance but as at same we of most our are in that our of we acceleration achieve a result for not On in growth business, one the anticipated and the the our did

for this which of is of XXXX. forward. for review of Afirma. in start initiatives, our I’ll our and over best very will typically a we XX% was quite results. are year business grew through the will impact hurricanes, combined to revenue growth our key in despite year. have the describe growth estimate million we of Accrued fundamentals achieved done quarter, Our quarter third to genomic We and of strong adjust of what and majority then our to in as financial delayed to What the that impacting I all believe with and we million. this We $XXmillion progress and and our has of Keith course-correct this, our result optimistic from led compared each the you our third cash for explain range want are the all quarter revenue This was year XXXX I quarter. of to for be for turn the with prior collections guidance $XX over $XX.X quarter the The grew revenue, of of with $XXX,XXX today the slower to which flat. acceleration is areas product the prior I go call volume to $XXX,XXX was the excludes the that strategy and going test performed about us to acceleration why $XX.X future. to million, XX% of periods our tests

have X, Afirma with GSC, of The levers success. our our Number to accelerate They through customers test; next-generation salesforce; Classifier, Number to Sequencing and transition Afirma state-of-the-art continued reimbursement Number access Quest/Ameripath, our physician growth. the which Genomic introduction several and are: expansion Afirma current expanded provides our of new and discussed network; their We X classifier or agreement of to the X, our

the that and ensure transition patient Afirma XXX multiple optimal to continued Despite requires as of had That this our approach existing growth initially platform. coordination in is hundreds given GSC, delivered planned. technology smoothly take two utilization sequencing the to than staff strong. are to added physicians accounts GEC did our intended. new was careful and to to Afirma equipment, new and the the among increased quality. We customers We accounts for a we the any at during next-generation to convert streams, measured The lab, both from said, the and workflow complexity Looking results we quite classifier and of our our quarter due ran coordination in of multiple workflow is inventories issues the without lab demand supplier operations physicians Afirma optimize volume our than full decision slower that to more to This to we make new the CLIA part demand, transition. GSC we microarray transitioning to running platforms, originally as anticipated.

In received that positive have accounts the fact, we feedback tremendously from we’ve converted.

fourth the moved of up customers. and stride picked transitioning now pace as quarter, have have We hit the we into have we our

Association’s meeting by the benign Afirma In that the for and GSC, and and subtypes. can Cancer, the growth techniques. forward. the us At converted false believe allowing very by positively on sum, clinical enabling the care. from from answers Afirma to ensemble we researchers will test’s a quarter. two customer strong learning presentations researchers the Congress potentially GSC’s standard American oral includes distinguish improve ATA will is to ability unique original GSC three genomic Afirma new the our thyroid the is to Thyroid poster cells, impressive annual be conferences of the surgery three challenging early avoid ago, backlog without been traditional cancer help showed we shared Cancer reveal which couple compromising the in following step. an avoid World Hurthle GSC. which cancerous and the surgery, demonstrated data findings Thyroid otherwise which ability patient performance unveiled Researchers GSC fully RNA benign gain both sequencing now testing Thyroid data at low that meeting, Congress of business combination There that differentiating to World the expect provide The next many patients challenging-to-interpret algorithms This are to to patients the until is machine has a were rate. studies This major as Afirma it of next questions At eluded of number showing it better platform that weeks the significantly XX%, negative have largely at increases classifiers’ would shared unnecessary more of impact that rate and We third to our the from move data and optimistic a year. in endocrinology clients clinical demand the on

additional physicians variants to detect provide to of decisions enable and Afirma ability with treatment with information better extendable to key patients bringing next-generation physicians surgery high which We about that also could these accuracy, cancers. the avoid and the ever provides It treatment for to the In benign total, make with can physicians an is also based thyroid better BRAF number aggressiveness medullary information brings surgery market, shared patients. GSC providing showing nodule increase data clinical-care important our of their when cancer before to show thyroid the needed. levels data that power for on than us platform answers of

second is the growth relationship. through The to for lever Afirma expanded Quest/Ameripath access accelerating

accelerated take encouraged month with and and hold working seeing, building We and have of to within Quest/Ameripath that the although a good to last a didn’t about a point the contact of take volume this until opportunity assigned cautiously To single takes end, responsibility the the relationship. contribution know traction this of organization we’ve that commercial optimistic time We of mass and users our remain growth. Afirma team implementation built that for its we’re successful critical relationship quarter. the are traction with

the this is corrected we have that lagged additional the support expect and The this commercial Envisia. to the only third growth hired benefit support into hire and Envisia, third the Percepta ramping as commercial continue We’ve to to and pulmonary and of begin to expect group our regions launch which lever strengthen will expansion new salesforce, of is we’ve important where year. Afirma, invest and have both hired to recently to for reps of Percepta these be expertise adoption next with added the A specialists continued prepare XX, needed we of the of the of but added in reps and we’ll push move as of for further to year our product, XXXX. not into our which new expansion We’ve drive as the multiproduct Genzyme at sales year. to to early speed that we’ll for determined into We’ve to two get early last and We our sales them indications through sales transition XXXX. strategy. believe continue expanded in executing from reps the need of as remainder associates backfill we’ve force we we

is place to of force next goal this have in XX Our time a year. sales by

are a reimbursement country. major across companies we plans is lever test a of health all from with fourth industry expansion, Our the for coverage leader the one where few the in genomic as

way milestone this by claims brings increases into made This Now by in-network Blues contracts lives executing the because to headwind and order potential for We We’ve is likely when progress and and reimbursement testing. which them. an believe contracted XX% may for we’re UnitedHealthcare address Percepta a test of in such are our we in-network to rate; lives new require for number contracted the sum, have of Blues been the contracts. that In adjudicating minimizes place defined policies prior quarter, believe in that number that This total and the recently I genomic for a physicians and help to were one have for XX to Anthem in quarter, million. very positioned in reimbursement performed goal, are focused Afirma million resources this both our we’re documented have we tests we four our preparing coverage tracking the to clinical growth we necessity by which to to is and and this processes receive. business. converting handle expand on disruption about, of third excellent during provided sample and well save heard announced considerable requirements to change each Afirma, you and time medical specific more XXX programs molecular five these lab. the scenarios plans. address will want patient authorization in accelerate well it’s achieved disputes; on good

Afirma, X, Act, CMS and rates January or of few for Medicare slightly, approximately finalized Protecting our PAMA, effective and weeks to under rate $X,XXX Medicare preliminary its volume. next to be Afirma announced These become our the test Medicare Lastly represent are expected from classifier to Access XX% new the rates patients to will Afirma $X,XXX. XXXX. increase within preliminary

Now, I’ll turn to Percepta.

intended revenue we booked the feedback for XX this believe big cancer adoption the institutions and, so that far, our is working terrific. well. We’ve first the relationships to country They’re to using to the report quarter. in diagnosis. from impact decision-making our also lung Percepta as strategy test’s leveraging classifier helping expanded This and company. existing into their really customers are move classifier milestone We institutions is and Percepta of over results to clinical around the pleased our Percepta Afirma a is We’re screening

that some than submitted The the CMS’s has Our means validated solve that for is that of decision-making Afirma with we We’ve be rule, complex. important more which sales is to providing for in deliver the for believe rather Percepta benefit problems. access is progress important by so sales Medicare The in sales Veracyte our to claims, longer January to well into will CMS be Percepta reps been change This because change, go are just that efforts able scheduled XX-day claims institution get us. is change XXXX, needing from pleased but able cycle decision in that effect already given two institutions our as hospital. will benefits so-called known bill far, an released. which process all tests directly to makers, we to at will further than the clinical been

Medicare and access covered speed mean will should it the of a recipients First, regardless secondly, Percepta that will get test, to help it sales as cycle. able all to be up their geography;

able utility driving All to our value genomic factors diagnostic were us that which a believe week demonstrating confidence at focusing real-world efforts using of this What care we the that leverage be in equally that With there from tests Percepta a cancer through in the unveiled was recommendations impressive, risk for developed To we’re decisions existing for cancer, patients and analysis to for that reputation Percepta just new providing Hopkins place, in showed are clinical made a researcher presentation, classified risky, Johns have relative relationships and is procedures, adoption in give low lung to especially CHEST last without as be real-world about podium costs. the for test In that Percepta than when where lung compared we’ll significant important meeting. we that successful from coverage. reduce private-payer XX% coverage particularly reduction Afirma high-quality Percepta a classifier, of intermediate patient payer, end, intended. to that the the excited our change was We result. data these will will physicians presented strong the data annual University test and be test creating the on greater we’re here space. too costly we Medicare

costs use monitoring the rather and and of believe these to lung test, they further of the probability to in surgery, risk findings directing patients patients confidence them Our We with the in of XX% intermediate the classifier benefit reduce cancer. elected suggest in those imaging, show than data that to that classifier time pre-test Percepta the greatest cancer low will Percepta the screening use CT give with from to physicians can diagnosis. with

findings these we are to of change the and All guidelines. potential powerful, believe, have

to pulmonary driving fibrosis, of the Envisia As improving demonstrating tests classifier’s inclusion would discussed on have building diagnosis a we effectiveness factor made guideline an We’ve key like of close reimbursement. Genomic coverage I great Envisia is test and our in the IPF. the previously, out with progress in in Classifier. evidence update the idiopathic or

believe Veracyte during this June to to the library present the PFF will We keep evidence addition a and meet that findings coverage put bi-annual that Google policy. Pulmonary These in in your Medicare on Annals Thursday. our Medical study validation Chief Thoracic published Foundation’s be will alerts In you requirements Summit showing data Fibrosis comprehensive Officer, scenarios. shared were a the I utility set our for encourage clinical the we for interim Dr. news real-world together American in have the of which impact of late early Society, week, Barth, demonstrated test’s clinical will test’s performance, clinical later findings Neil

coverage the believe middle Envisia policy that turn would position would one the first classifier year that, position I it now And, That a the review. more by time third-quarter are covered by next for year. results diagnostics to Keith is potentially call like commercialized our Medicare. to revenue the continue financial as over broadly, have next genomic of three book would us to the tests on our realistic. to We us to our companies and for With that only of call by

Keith Kennedy

everyone. Good Bonnie. afternoon, you, Thank

Harbor I our pages X, find our Please financial of earlier, earnings and XXXX review Page relevant Statement the on the will then the financial mentioned in under you “Investors” Safe cover results call. presentation website the and Jackie and third & under www.veracyte.com plan our XXXX may our at quarter November to Presentations” presentation. speak financial about year-to-date to X in third as “Events I quarter on presentation release, As and the highlights. the reference addition

third revenue $X.X follows: declined Turning current XXXX, as quarters, for prior Financial operating $XX.X the Highlights page. comparable. The for directly quarter of X%, of impact revenue revenue that of the Total volume is billable substantially Genomic million on revenue principally revenue $XX.X performed the tests our year the by XX%, of million XX% first this side tests or increased million quarter XXXX. the and cash expenses increased the July to we loss compared third rate of the X,XXX of as by cash Page principally increased X%. prior all a accrued Accrued equally in is almost decline prior are to driven to volume $X quarter comprised driven year. of so XXXX, in accrued tests X incremental XX%. X, in of right million the and increased illustrated XX%, reported the by presentation, tailwinds Net

Our defined cost expenses growth by $X.XX cash. of $X.X declined of cash capital approximately $X.X operating compared improved to as share XX%; quarter per net and burn, and Cash of revenue $X.XX volume increased share. loss net $XX.X Net million, increased in per used year; million million with in-line expenditures and prior we with in other the ended activities operating

X%, expenses and of net increased for as total improved revenue tests $XX.X volume; the the the compared principally million XX%. Page are year-to-date by XX XX%; operating improved loss driven to as million volume of Financial $X.XX XXXX, loss of year-to-date improved XX,XXX X $XX.X XXXX, per to net of increased nine-months XX%; ended XX%; the $XX.X million Turning presentation, share or increased genomic burn test of Highlights of XX%; of September $XX.X reported million follows: cash

and includes reported volume volume. Genomic clinical reported registry volume, volume. Genomic reported and Afirma X Afirma GSC, excludes and Slide but to Percepta Turning GEC,

plus illustrate third in bars volume in chart left, of seasonal to the quarterly year, prior relatively reported with in relative quarter From both third change XXXX, the the or sequential the The our business. chart In was continues growth of XX% improve which our minus was quarter on over second-to-third XX% on on XXX quarter fourth to slowest XX% and volume the the the our the in a to beginning specifically right quarter. sequentially best years. the the shows quarter of gives impact in insight a and that shown XXXX XXXX, XXXX, our quarter investors change the to quarter the X% flat XX% the XX% first from has Since and grew fourth of volume to the and two of relative growth quarter. volume, XXXX been green X% XXXX the the XXXX, XXXX. of to Genomic last into XXXX tests in and in first range range quarter As the sequential decline second quarter

year quarter, of cash Turning X you of the the or in any comparing quarter recognized and incremental why not the until recognized to This we are we Slide is third if received. test XXXX quarter revenue it quarter third prior important to $X.X that previously delivery been XXXX. the In upon third number disclosed revenue. quarter, XXXX, which would prior million especially of was is of have

the cash that to in billable each not XXXX XXXX reflects then revenue, July performed of substantially where to especially the the criteria subsequent For accrual and cash-based quarter receive quarter, prior we delivery. any for in time, principally third comparisons the our important X, tests did all distinguish of quarter i.e., is at to quarter of it test revenue test cash-based as accrued we between volume meet accrue

that quarter million now accrual only test is third million cash-revenue the $X.X mentioned, third in previously revenue and quarter XXXX we basis. recognized of XXXX, in As substantially all an $X.X of reflecting on our fact the the in received

change accrued between Turning recognition to bar just revenue, and quarter indicates the the Slide sequential I and second change X third XXXX the purple that the in mentioned. revenue in of

the significant processing, criteria, revenue or $X,XXX we Afirma of million third the Percepta for For on quarter from quarter, Afirma quarter revenue XX% solution. $X,XXX of GSC third key accrued small quarter this quarter Genomic per XX% with We recognition average, the third number but acquiring, test to Bronchial framework institutional results. XXXX million $X.X our between From a which for we Afirma and We partners Afirma of quarter of services for and on of this our volume. GEC accrued reporting XXXX, revenue the the in with providing physician between reported the immaterial that accrued $X.X and our Classifier revenue was met made between to and the Percepta was tests progress cytopathology and results. associated XXXX,

sequential XXXX. the performed shows we collected principally and changes in that collection to appeal July Turning believe revenue. performed tests have trend prior XXXX. to the X cash claims, we The we quarterly have July tests cash to continue X, for Slide in the prior cash-revenue substantially chart X, completed we for to older Though

had days. in accounts As of September XX cash million receivable we XX, excluding sales outstanding, $XX.X revenue, was XXXX, days and DSOs, or current our

to On accrued flow of the Cost remain our of each revenue in Now, the Labor in we the our to our in XX cash position. cash represents expenses of our generating volume getting quarter such Cash cash loss, category. of are further our with on focused as revenue and percentage in-line impact operating cover second net while we XX trends to burn, cost XX%, leverage our cash the increases across so operating XX% investing XX, show XXXX, structure, Slides million break-even breakdown XX% total our turning through for the business. gross components the salesforce, Slide XXXX. to grew margin as and approximately and as we third collection adjustments revenue, well X, favorably growth. of X margins. XX% trends, quarter adjustments in due Slide revenue number generated we in

ahead XXXX, in XX, on-hand. of million September plan of were with cash As $XX.X we

asset X plus mature $XX which million Slide million years a XX. Turning facility. based in revolving October unfunded facilities November secured includes X, Valley closed Bank, XXXX. million a to a with in credit we loan Silicon The term credit On $XX senior $XX facility

rates facility, XX.X% that the have $X.X the reduced on on we this based borrowing rate. an Including we estimate explained slide, refinance the As and million make-whole have closing time to capacity payment of at even X% made the additional we we to at added new yield-to-maturity lower from our remain facility based attractive. least a are portion very previous and credit swap interest floating-rate new we through liquidity are of The an the is facility, Libor on now. looking adjusted and at cap, the XX-day excess evaluating or a hedge yield-to-maturity rate which risk we to rate

Our prior facility fixed-rate. was XX% priced at a

Turning previous our agreed Pathology to extend Slide agreement we test on Consultants, from exceed in lower volume, expect return quarterly XXXX, In million X Based to its XX, fees, to current we October lower TCP. service payments. cash rate and $X.XX savings with the X over to amended quarters. pay restated the years for for Resource management to we company, term and

However, expected savings will vary based on volumes.

life purposes, For deal. the over currently GAAP five-year amortize we upfront payment the expect of the to

of $XX.X cash million million between are paid borrowing $XX we must guidance revenue guidance To significantly million achieve operating turn $XX.X activities million $X.X burn, million. we cash expenditures, and call which our of to or the and million back million the closing fee remarks. $XX to generate our to will in must to in in to To be refinance now XXXX. for to net cash guidance, updating excludes our the revenue million, guidance, used cash in costs. to to quarter fourth the exit fourth range revenue Bonnie $XX mentioned, I capital quarter Bonnie of burn narrowing our As lower our $X.X net our $XX the and XXXX achieve burn

Bonnie Anderson

more franchise even underway the where we a today’s States, scale, efforts Lung in highlights wrap the global I the some cancer leading responsible with would is of cancer to for in space. an lung killer like call on cancer the substantial build it’s one combined. to biggest next a issue more from have up deaths. five United three It’s than the cancers in

screening, technology treatment, significant enable the to lung that deaths gaining increased and movement in earlier the through and advancements healthcare cancer detection reduce spectrum. momentum Now, is across

safer in lung taking a these screening Percepta to are cancer We effective. to make help excited role positioned as well be leadership more is advances, and

quarter, be to in we’ve and people easier, screened loved this or awareness to encourages encourage cancer announced our with we a screened. to increased designed risk get initiative at “Screen one. earlier the education for friend risk introduced campaign lung As to a cancer at Together,” people To make pledge lung

Percepta to lung and and to there, expand from researchers advance Together” stages. Avi program the announced patients. beginning. the already to UCLA top success Percepta, we The at in with Up traction opportunities authorities. already recently is the its how of organizations including profiled its we plan are Cancer Stand Spira the cancer comprised the classifier “field of world-leading intercept lung and the earliest other others institutions released be injury” National University and in Recently, of will is where Cancer among leading just We XXXX to like Team” “Screen program’s led which lung Spira injury” piloting more annual many of as benefits North the which significant program Duke budget plan to see Carolina Dr. the real against also gaining to Cancer we’ve discovery Pending got partnership messages. patients help Initiative customers powers see can Carolina More broadly, reach key of its markets. North Lung Stanford, novel the University, North with to document, cancer providing fight “field his also potentially that Institute Harvard, identify Boston Carolina, Percepta cancer of technology University that Dr. and “Dream

that on we our of non-invasive lung injury detection simple cancer program, for R&D focus a efforts field of to This advisor industry in share swab use an goal As and this to this the include leverage early also nasal screening. will further genomic the plan opportunity. and building tests

disease. beginning an in our fight significant see us to to we space to We technology these deadly year. cancer exciting against positions be believe It’s from well to lung data the and next the this efforts emerge make expect inroads time in

conclusion is our you mixed, in the can as in we’ve business, but, the today aspects based great our foundational made future So, progress is on many bright. news of see, very

until will you about provide won’t QX XXXX the color we think guidance provide While as some call, for our we year. coming

We expect about with XX% growth genomic volume to a resulting achieve a revenue XX%. of year next around growth test

continue of to by remain risk goal like company a shift would expect this but the XXXX, breakeven the important questions. operator or the shareholders, by to We flow that could target growth. to now achieving quarter to to and I We not open committed ask end for this cash for at fully call so. up line the our of the but top

Operator

[Operator from comes Instructions] Jaffray. Quirk Piper question Our from Bill first

Your now open. line is

Bill Quirk

Great, thanks. million is, guess at significant XXX I if delta, that’s roughly so Good first I'm the looking XXXX, the a the XX% I pretty it’s correctly, for afternoon. consensus think question guidance from suggest parts moving $XX get that’s to would because Street. just a so closer here which the million, the Bonnie again a difference trying on pretty of to handle significant some

Bonnie Anderson

from think I will I that up for see well Yes, GSC. [indiscernible] we spoke levers pick around that the about we, we mostly think the

on the we accruing. manage the while now the Percepta versus are with with Quest/Ameripath, our just how walk taking new cautious results product revenue, be to our on And the with ramp. the partnership to accrued will good is then side, we which I there think get would cash positive that Keith hold are quickly fully of side the actually through element we for cycle and it financial that is slower, We expectations just sales want can but on

Keith Kennedy

Yes.

to for XXXX. fact Bonnie and that have I to referring prior test is half X last think been just we this recognizing what revenue the of July of year XXXX is performed

And the view. - view creates so that external just

that top are you our accrued the we’re look but growing growing at XX%, volume XX%. is look if really revenue you just line you at rapidly, the If growing

and year to in XXth number accept you this my expectation to going do growth I you that of laid it So, really has the challenging we it’s more increases, we would here. think is are the ability volume when frankly over been converting our and where mean not this and predicted to obviously don't like for give beyond and - when that something been we on And to we that year I can period and for set here why I quarter month look having the now next year. maybe the rate just you that’s to this what transition quarter going think and where have want in with want and it out current don't back now we’ve is is this cash you line sit there, getting a look hard get results accrued topline really growth revenue revenue we you - at quarter at we we’re look accrued to challenge first so the was the but ago, and from come revenue that on mistake north to we look top comparative increases give how just we that it's posed predict having growth, to get a more what the expectation next model based to out. going fourth XX% And where that. we in been that come that, hope insight - do

Bill Quirk

particularly industry accrual on just I is forces in want I'm it if time? lab just to that appreciate don't add assuming for figure benefits some all XXXX Also, January are that so from are guys, the accounting to you out into Keith, that color or of that not? out to the there contract, have it higher you there’s curiosity, trying happen, lives Afirma your obviously rate in XXXX, I number X, you but under goes clearly question effect standpoint guys you. thanks, shouldn't And theoretically Blues, you the continued assuming to there, inch guidance? with as the an over mean in

Keith Kennedy

Yes.

of So, quarter, the we’ve a our since been under on volume based historical regardless all accruing contract not, or collections. the third cash it’s if

did So had decision coverage have cash a an example, reasonably not collect we even if collections. on contract, for based we to accrue the a expect we but historical amount

accrue until get a of We don't we collection. necessarily we contract. not cash evidence there’s accrue it’s So, when

Bonnie Anderson

rate revenue get. that than a we of reimbursement expected But increased continue grow is at volume to that because expect faster to expansion to

Bill Quirk

And in XXXX assumption? then it Thanks. PAMA is the

Bonnie Anderson

few have test, but us. dollars that I volume it’s hundred our Yes, we test for mean of per in. it’s and small do build XX%

Bill Quirk

it, Got thank you.

Bonnie Anderson

you. Thank

Operator

Amanda from from Thank our you. Murphy William question next And comes Blair.

now Your line is open.

Amanda Murphy

thanks. Hi

sales whatnot, of the from of, about remind with is volumes and dynamics existing some about hurricane question you with so but business a of and mentioned to versus guess market at next Just same-store again on with perspective, obviously volume, have assay, trying are just new moving dynamics growth where efforts how talk maybe much get gen you penetration new due parts you you I the commercial accounts and versus the accounts talked penetration can to a new a so kind from little us accounts? just a of Afirma and more perspective bit the so

Bonnie Anderson

it believe Yes, a and between from two do results content we be can a the because on little the why perspective? added color to you GSC, of that but that Chris give mix the don't from deliver a we commercial the

Chris Hall

mean mean, our we see XX% think roughly good Yes. it’s penetration coming the of a and of institutional chunk growth seen to range I I XX% from think Most I at overall, of - we’ve segment. the in business, the we that

systems, Within within in accounts. segment accounts One the driven new lab and it’s in growth - accounts is and new our the what’s new going new accounts deeper, hospitals health and two-fold. pathology institutional is,

- institutional it of our was accounts doctor that accounts, accounts deeper existing GSC through consistently that Second, we but in existing the going the about we within the business, line deeper we’ve the those about we GSC we within we primarily growth optimistic that we we’ve go generally going The more has most talked over growth those rollout of will with the and is as time accelerate it that the quarters. show seen of have. existing about institutional segment to that incremental of that Most get growth talked have seen honestly, shift. top deeper the to by the going we the have accounts got GSC that, from talked we continue been will new accounts institutional in from within the power some institutional we’ve business the that of ways remain and but of as in segment, next is couple customers

Bonnie Anderson

we charts that as has slightly Keith Just we own of of allowed that up predict provides, has that, side to - pull-through do their pathology the the people time to add overall the business that. can and the it pathology. model you is fastest that This from so see been the is once business of to side and remain flat decline because over either it to opened kind of or the

GEC the growth business that prior got pulled of over that, XX% we a GEC receiving received into but where our on Some example for just only year. through as samples sample an grew are year-over-year

that strongest where the adding So going model on remains is the because of content the the see and cancers of that’s robust the very That side be lever. strongest business. a information the to also GSC and we

Amanda Murphy

it pick something dynamics, market. penetration know that I ask, time you but their but I you don’t why base into suppose I mean got [indiscernible]. going your in who could not bit to like have Health point Genomic like any other was if of XX% is structurally rate. little number, a I look reason is just I there know, at different over I get some mean, at companies a this

Bonnie Anderson

that payer think think We Anthem things to key in very, hard one is with you if large covered are then, getting the I a while the it running XX% it’s level was that can have as one in penetration I to was on penetrate of of get very that keep it the that in we GSC, of the And saw enhancements early high that because I mind that on Yes. that think. you percent To think work terrific patients we and of a product surgeons not move earlier, business. to still the that we’ve undergoing in lives that’s avoid perception Bills GEC The surgery. comment been years benign in could process. process And call six of originally benign using their a developed. a benign into to still the network patient

they see versus a cancers aggressive is the how nodules more there’s So, et cetera, other lot define to been if at to of effort look there et ways cetera.

market on really others as now seeing the I the combined had becomes the benign content with on rate that of GSC variance everybody because those have significantly cancer. and that we think give this interest an for call added can up the fusion higher and coming how performance to show in solution markers

and maybe competitively to network answers what going we’re and but we with sort we so, able think a be our have to all we’re expanded it, with where now, at growth to want force and realistically forward more really And will end big sales than with contracts we needs we look push this drive of are. anticipating everyone's

Amanda Murphy

it last this put just be So, time? over on like can possible of per - some theory question guess I then would look And in you might that around at collections terms back occurring cash how - much a around test, wondering following look just up I'm Bills the what Okay. one historical point right? [indiscernible] that numbers to what on number numbers is the in put what accrual, you're so

Bonnie Anderson

now $X,XXX when a to right accruing average We’re $X,XXX test.

covered expand, that room rate at volume. go have increase now. Most but slightly collect what payers. as And under than do I why is would pretty only but will we revenue year number up the with from faster the we’re a of think all in be them yet are Medicare, continue that which of that disclosed. move contracted much occurring payers that will is will not is just That more all next grow or having we there up to rates that than predict covered, for

Amanda Murphy

trying paid X,XXX quite to ramp you that get perspective years getting let’s long to years? just take that would your X think get just how mean, do I that an it thinking to never X - So, or about the I’m to accrual pick in number, a call roughly, high? from next it

Bonnie Anderson

or so in the months could it I we take contracted that there, is probably we XX guess think have get mark. to there could historically all and it to is My X,XXX that payers and with of pointed in all won’t what get immediately. happen once another place, that rates and we get PAMA to

Amanda Murphy

you. thank Okay,

Bonnie Anderson

Thank you.

Operator

Thank you. from Sung BTIG. Ji question And our comes next from Nam

Your line is now open.

Sung Ji Nam

the GSC use to are of more is performance examples seeing interested the what questions. were are sheer if maybe but on taking just are GSC, Hi, drivers, the Bonnie, hesitant then GEC the and so little thanks to GSC? deeper GEC, for using a key it conversion, that in physicians you of

Bonnie Anderson

Yes.

things GEC there bring a converted very when helping have been a getting reports with GSC. and down clients them new we did existing complexity lot over the lot take of So, with the I than of handholding And and we in doing little purposely with in to our a laboratory. working because little through at patient more a typically think slow results. successful the of from is they the which marketplace the and interest we demand accounts. mostly and What understand interpret those them bit,

and inventory a beyond versus little bit So, we staff moving associated pretty really other longer I bit in the other of, that was the hiccups, trained it are indicated everything than keep now. us longer think little took But on and and things bulls say, was as with prepared I it just laboratory smoothly all across a a complex things what to in a as and we manage that, to line equipment; anticipated. place remarks, mix any line that without us in run the well and one having the the as cost took

going think well our Chris, clients really believe and that’s have XXXX. are by issues, and any to we that news, fully had starting to are things still early I ramp good very add? we’ll something we over converted haven't so

Chris Hall

in that although expect thought to much growth of accounts, as getting of GSC new happen. do be driver that the always we the key wouldn't We’ve

clients. The deeper benign wasn't We can this as the send have. physicians go genomic seeing extend assumption everything to and the to to content that’s starting the been that range able because accounts our early to win that’s have or as high. our we out call accounts reluctant GSC in rate some that think especially within accounts expect the we of so, evidence institutional didn’t from be we’re and more that prove business some we within of were And existing we much to those ultimately

are. about we good feel So, we where

Sung Ji Nam

represent that’s you and if one any maybe Okay, - this to get updates early, are or expense the on campaign, Carolina like to would this expand then up initiative? think increase Percepta, lung get And are this side on partners of seeing any you could in And your love cancer meaningful do if the also, maybe leverage, then campaign you a there you outside North screened? skews do Carolina, Together are seeing any ways signing on people Screen helpful. North

Bonnie Anderson

questions. exactly. Yes, Great

in a get new the up somewhere it for neighborhood XX which go to stage. one think program really screened, exciting I and have of people really actually pledged is already pretty and contain being such signed only to

to this these that the as leveraged also with to drive of rollout well. pace that and and growth top able drive traction help organizations with other be consider - we're would we in-line seeing line will getting want initiatives, the We

to we more I no, expense ever easily able a be drive on we out would think this with don’t on on dynamics go [indiscernible] there. would than So, cover and what

Sung Ji Nam

volume what Okay, you And meaningful? Was quarter? Percepta the was then be helpful. break out great, able for this that would to that’s

Bonnie Anderson

will into more it way as point at this how the next you And a as small. look volume provided we year metrics what XXXX, that we as come to our time the very point high-level. these we we than to I was booked and for just ramping think that The at look at try best It first to decide look business about at give think was to just in information revenue. now did all what’s get we guide and on providing we guidance

Sung Ji Nam

Okay, much. thank you so

Bonnie Anderson

Thank you.

Operator

Thank next from Knight question Janney from you. And Montgomery. our Paul comes

is line open. Your now

Paul Knight

What’s response? to Thanks. what can more Percepta, pricing a around talk Bonnie, Percepta little Hi you was physician talk that color on test?

Bonnie Anderson

was more we is institutions adoption much complicated for as the good. say, in than in anticipated for Percepta Afirma we would that I which sales cycle Well, anticipated scenario and is it early on and years a always driving Yes.

new, was like over that expanded getting with contracting with billing, test still be how the take I ordered test on this rule set year set in call away which and As that lot able situation is education. it, the change, to Percepta good one sites mentioned to we best will of for I on allow be us will use have would build up XX the was third the up We’ve would required it’s which on depending also to current the want this a the so manage sites. news say doctors really the call, to the institutions of fully XX-day they news. certain probably to

and data. We speakers have on training doctors the educating MSLs and we’re

validity them data CHEST that and decision, patient actually value in now combined doctors of that invasive that that this doing New really needed with keep get when to that’s I test data and it bring risk arms this compelling. saying of recent patients there we can that data out low the moving can they think very procedures. are moving emerging, are educating the presented out the to intermediate at points keep data there going. are that, safely wrap emerging clinical the These reduction to that just momentum a do around of their compelling is doctors then And the that are and XX% risk was and surgical all

on more opens using more even give product. up about is benefiting that the us more go even we we’re and think product rule about on broader more year Percepta board. that and pulmonary bring landscape pulmonology in can patients up will across now where a people all to fact think more are more is, more that, accelerating after. will as to ramp and then more with of we we That combined specialists XX-day people Envisia, the which pleased there Combined and I more really get next very and Percepta going and more it’s through help with with the reps experience that country also coverage data, that and So,

is nothing they inappropriately, we on in that being test fact excited care pause give making would hoped had us I would. would they as used as patient and extremely see one physicians that the hoped it and had decisions So, in using they think are encouraged. exactly we exactly we hand are We are

sure moving we of good are our predicting and first And that will those follow-up. get and to invest job to points make quickly that, get time not going confidence will that’s manage plan wanted in guess growth by we guidelines our more cancer it also a have that product switching that always to time. and to our but confirmed. getting to product a very product cautious really take of doing you in a of I in CT and that to takes in full into today and year So, data a don't don't practice that that safely really, we to out we’re have to the in that more way is physicians patients going do and care certain they get very in to be don't changing focused skies to them to do highly [ph] the cancer people to expectations institutional this brand-new manage we a be can be they just want want that ultimate miss, the

Paul Knight

you. Okay, thank

Bonnie Anderson

Thanks Paul.

Operator

comes from LEERINK And our next question Souda Puneet from Partners.

now Your line open. is

Puneet Souda

Hi, Bonnie.

many spend and been of had laid here number and pricing know I how allocation reps out that terms of expectation think what’s of and don't if us so questions tell the covered, the or specifically, what’s of towards Percepta the in volume you I can you a have maybe expenses already?

Bonnie Anderson

probably is little cover you Chris giving that in a down. on that breaks additional I think how didn't, but to can closest I terms of

Chris Hall

third getting about year, driving as third about starting talked but things local we in of the is we to to would would actual build patients reps they the be was hospital energy, time focus the doing only the covered. go our XX-day sales have a be - offer everyone covered rule organization. through a before on the Percepta, able the likely through a of we [ph] and devoted of we year we’re actually to that. script country, to we that What of as reps really that to in changed, will may fraction of we is to commercial the the that all expect number we product their infrastructure noted with right, Mac so, The it’s be the see where we Medicare not doctors because next one build Yes, would be the increasing go about the that

build, to country. up and able being expect the we that be rapidly us the with now So, product to able drive more around to ramp

we third diluted Percepta. to of So, be number about to expect a the

Bonnie Anderson

Puneet accounts an that And add Percepta just and institution that the that is the and really about a reputation to with converted Percepta. learned to leverageable presentation have a talking to appointment on Afirma start other thing to a in that, definitely institutions positive based we’ve these that get to is take have brand

factor very these we So, very on while pulmonology, in and rep success solely all them additional have same is that the focused to we with committed institutions real a will partnered it people talking remain as about Afirma. see have

be on level that we see well, to to take going both those reps working that sides the layering next that’s of so to So that we in continue we're and just grow. will can

Chris Hall

most because of of the both with reps core, are actually products. Right the working

group because more market the drive also Medicare year say not what year There is we just we’re that a it’s group. third, group be dedicated pulmonary we to to to I will start as and focus and coverage. Envisia dedicated some that through going believe know when aggressively prepare into to next move underline, is pulmonary on we a spend see next you starting So, a

Puneet Souda

Okay, pre-authorization if was on covered seeing this and impact are then already, I from any on, one know you don't that that? but

Keith Kennedy

our it. eye on and yet. We’ve keep haven't monitored We it we

just to Bonnie X, noted, up plan UnitedHealthcare been started As our speed. we’ve physicians November and keeping the on

off Afirma things to about being and ways it’s for where it it the easy that in around sense test is, and prior it’s focused of the and put ask our how Percepta are request One done and both of done tests really is for clear it. the because to very a really

will through to and it, as our you So, up we speed keep through to work will Paul time. we’re optimistic we way up move date, we cautiously

Puneet Souda

Okay. Thanks guys.

Bonnie Anderson

you. Thank

Operator

I’d At like remarks. no the showing to this I’m Bonnie the call further over for back queue. to time, Ms. questions in turn further Anderson

Bonnie Anderson

believing to compelling is patients. evidence employees also value to I for unfailing I do all and for Operator? stockholders vision you. today stakeholders. changing in look And that our our want to support diagnostics. keeping And deliver patient us thank the we progress. thank for take on our really care to up their continuing moment you, to and in to Thank driving market to want fundamentally to with forward our tests a products of Diagnostic you date dedication value diagnostic high that

Operator

participation conference. program. today's This you your thank for the gentlemen, in and concludes Ladies

You disconnect. Everyone may day. have now a great

Veracyte (VCYT) 6 Nov 172017 Q3 Earnings call transcript