GNMK - Earnings call transcript Q4 2018 | GenMark Diagnostics, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to today’s conference call to discuss GenMark Diagnostics’ Fourth Quarter and Full Year 2018 Financial Results. My name is Carmen and I’ll be your operator on this call. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. [Operator Instructions] Please note that this call is being recorded today Thursday, February 21, 2019 at 1:30 p.m. be www.genmarkdx.com. the will GenMark’s section and at website Time available Investors on of Pacific now to would of I like GenMark. Leigh over Salvo to turn the meeting

Leigh Salvo

today. very Thanks for you And all Carmen. joining thank us much

certain forward-looking Before we begin, forward-looking this by or would plans, like statements. of events statements. Any during course performance may our future statements expectations, objectives, you the beliefs, to GenMark call made inform I that are constitute statement or about assumptions

XXXX financial and statements our forward-looking the development, products, For and commercialization concerning example, believe management are all guidance, regulatory clearance, reasonable assumptions. trends features plans these statements on statements. We are new of based and objectives of market

the I’d SEC. with turn to after any update of and uncertainties may actual conference expressly and any disclaims statements reflect those filings no Massarany, to materially from obligation Hany events. to could and to call GenMark to GenMark’s in these statements. the are statements different differ that be or reflect statements guarantees results results detailed which factors, call from these GenMark. President such or future unanticipated Hany? circumstances duty cause implied to and this now events occurring of like by forward-looking not actual assumes in or over risks to are occurrence results involve Important the expressed any performance cause However, unknown of the known forward-looking and materially CEO

Hany Massarany

for us. and Thank afternoon all good you, joining and you thank Leigh,

as the Chief been Corporate and created years. earlier the in our on newly objectives Ek today serving review delighted Controller I’d Financial our to XXXX, Chief our this management Operating Mendel has Officer Officer the comment for that I’m five we of after assuming we past results effective changes and announced is promoted Scott afternoon. for Before XXXX to press Johnny role release like

process product our be further diagnostic of supply. from molecular product improve will quality new lead to product to and of for delivering new product manufacturing continued next our aspect three improvements ePlex target his customer responsible through delivery most integrated mission manufacturing two and development, gross fundamental the entire mission outcomes. this of focus development the help will innovative needs patient to our and In A COO, achieve and As our organizations to is on Scott Scott quality over highest our XX% solutions delivering meet years years. margin plus our role,

expansion, must organizational product As edge we excellence sustained decision continue business we initiatives, important to and and world-class our operational structure innovation, also and our optimize enable to effective focus leading processes drive including growth revenue and on most commercialization. making

the continue a to that these processes with of business efforts and manufacturing strongly accelerate to market efficiency margin. in be strong XXXX Scott's product and It's under gross drive important leadership enable I deliver all and functions aligning us will beyond. on system our imperatives. pleased priority very this delivery And to believe adoption our We’re ePlex and will crucial course of also significant we that

pivotal has make significant also and We’re CFO. joining skills Since the obvious finance a to which in and finance confidence his as operations our knowledge our great addition an the of is transition a Johnny pleased executive smooth thorough Johnny entire team our him financial GenMark to played organization and and processes, organization. of in team full our choice His GenMark Board experience, of XXXX, the role Scott Johnny. our role leadership have Directors. new a company excellent has strong to from to CFO will of made the and enable contributions

and XXXX. have conclude with positioned year beyond. our a I’ll for we and review financial our fourth recent objectives will strong questions. XXXX brief agenda guidance with of to review the highlights well full call XXXX for the call XXXX begin and our year. turn for I’ll Scott to for then call for that as open over Turning a today, a the to results call the and summary Then goals as I’ll this quarter of our us

and solid growth and recruited XXXX, driving across systems significant that infrastructure. Looking in of well are revenue performance the set personnel. of field had we that for the important never hospitals many accomplish the labs in was I’m XX%. XXXX XT-X the including investments XXX successfully with made our In molecular small well excellent certainly base both year increase goals global as the to focused the workflow to ended throughout improving that in compared placed ePlex’s the driving revenue some back testing we in saw severe on ePlex an of value but both XXXX, short test ended manufacturing execution at system proud our and fuel the year the more the market ePlex early a as near efficiencies. top-tier patient able by on of saw In the as been continue longer year with to team, XX to past XXX of where we talent we’ve with We front, We strategic commercial XXXX-XXXX field, resulted commercialization year-end the year. season menu substantial XXXX, analyzers but a in value sales we what differentiated largest in previously progress its on end U.S. made adoption rapid of most testing factor, and ePlex expansion, world in flu installed integration performed efficiencies. and testing, we as the organization XXXX proposition year. uniquely commercial Briefly, cost our importantly, yield ePlex ePlex we in which ePlex together our surpassing term. this revenue A

our also the Main, than more the Outside distributor sales we by couple the of Western force European of expanding to beyond expect and our XX%. next U.S., expand Over network progress Central geographies. good years, we U.S. made

the While to future, drive foreseeable regions we other for in commercial account U.S. continue still world. plan our placements our selectively efforts the to of of reach and we vast we expect majority international the in our market as the expanding revenue

As for ePlex all you and Panel studies of ID to ePlex And XXXX, our focus progress. Pathogen our know, and company. clinical completed the market for area clearances is Fungal of we three significant our a Panels achieved successfully Gram-Positive FDA in Panel. expansion XXX(k) menu Blood Culture made excellent We and submissions

future. anticipate to continue clearance We Gram-Negative of Panel in the near our

efficiencies XX growing of ePlex And a our top-line XXXX margin compared and planned access $XX.X plans pathogen demand performance panels. the which to and elaborate and molecular with XX to at million, Operationally, total XXXX of by and gross industry year XXXX. full very and was throughout manufacturing flu on revenue of improvements we of utility a direct posters from meaningful that than market over which XXXX. four million, improved This $XX.X strong flu system peer-reviewed an very very the the the solid utility ePlex we severe performance adoption XX% significantly are manufacturing continues supply body XXXX. economic early publications, our our XXXX. was the largely From and yields ePlex margin and year, XXXX. demonstrate respiratory an season. cartridge, was several of and presentations for with studies, our test articles continued sites. a for growth includes And driven gross labor U.S. peer-reviewed made the representing perspective, revenue over also ongoing customer XXX% conferences of direct year, BCID Scott including more our support additional our drive chain have pleased teams panel. journal further and manufacturing the facility I’m significantly customer -- during beyond. top-line conference the studies presentations, We health for engineering costs able to to ePlex for major delighted will our And material perspective, pace evaluations further in over clinical ePlex grow. at multiplex increase improved and market and increase demand ePlex Last Throughout was

market global $XXX million to testing or million $XXX the past from Over multiplex so five approximately the years year. per respiratory grew

same other to and We has disease including of syndromic disease infectious to years. other a central tract We for number system, and billion multiplex next market states the transitioning respiratory $X.X that name bloodstream the annually opportunity especially exceed to gastrointestinal bone nervous growing are testing over and lower potential path, follow states believe to expect with joint the And testing infections. five infections molecular this few. the

and a product we investing menu result, As expansion ongoing are in innovation.

on menu, term and driven BCID for be will panels, R&D and development our teams focused our XXXX growth. While respiratory remain growth longer software by technology

timeline customer anticipated this a we’re to a as Our menu Panel. and but milestones. updates this provide on we GI not we the providing In considered investment is availability top designing priority reimbursement, the market panel, approach well additional requirements. needs progress regarding And as and our development from dynamics expect market perspective development information important stage, at GI Panel, of as carefully

hospital that level, in assay can workflow several report, link for differentiated the systems. be quality ability the functionality ability to developing This the from investing functions ePlex ability and and advantage. diagnostic integrate remotely to to test and customized the results at control eventually also that menu, create a order core network durable to information manage diagnostic been aspects to addition lab physician a automate In the on to of we’ve administrative highly includes and actionable the the of software the

over his review back I to an regarding and operational for ePlex the remarks functionality to software to priorities be this am And XXXX. Overall, these expect the conclude of in open XXXX look comments testing. and few platform the I’ll up Scott? call as revisions molecular Over next guidance then to exciting team point, pleased accomplished forward in XXXX. call additional has Scott for and for questions. areas enhance differentiate and prepared and with in choice turn years, At our we multiple the our I’ll to further financial what release

Scott Mendel

Hany. Thanks,

quarter mentioned fourth the majority fourth vast continuing fourth previously for well of XXXX up XXXX. in account revenue As XX% for full the quarter our was versus XXXX The the million, $XX.X our annuity to $XXX,XXX as year average of placement sales. as the the ePlex with was of per U.S. quarter

good When revenue very expectations. versus by of XT-X, in and to was revenue profit relative call. with the or it XXXX driven which We of XXXX, decreased shift XX% revenue. last compared to X the noted product third we gross margin by percentage our sales ePlex points, to of are the $X.X quarter higher XX% of on or million for quarter gross this $X.X quarter XXXX provides result pleased fourth a Fourth basis million

and to We are to on drive manufacturing ePlex a our were decrease $XX.X gross higher for quarter, $X.X of This largely margins. fourth continuing to compared improvement focus was expenses initiatives development progress make million of to quarter due the the million ePlex expenses. operating with reduced XXXX. decrease Total

compared per $X.XX quarter the XXXX. Our was the for to quarter share $X.XX net for loss fourth fourth of

option extended restructured balance and our flexibility agreement agreement expanded period at more We sheet Moving progress on debt cash financing The no interest-only began in provide an to are the upon year. the ePlex this We cash we accounts quarter the reaching facility. especially Also, ePlex. one well associated management, and financial receivable on balance the we investments. margins in improvement used financial sheet, additional to the million million and $X.X year as our the usage was to terms. ended have as milestones, used by to and loan February quarter capital was $XX driven interest-only by fourth beyond $XX.X we excluding management. added which in with period previous of since the of developing on and we working recently approximately activities, covenants have certain X making lowest $XX new The additional the been cash the term strong agreement. collections prudent largely with quarter an revenue inventory extend million cash draw favorable million There

of the the total $XXX,XXX. average the XXXX, XXX year guidance range and of of for full analyzers expect Turning million to $XXX,XXX XXX placements per $XX to to analyzer an be to annuity to revenue additional $XX in we million,

takes year than placements all more our of the into million. the this million expected usage cash to to in in which of and $XX is and will operating also in expect XXXX industry XX% be timing. cash range. to are to million $XX in be $XX half the second to million into Taking we half BCID diagnostics We launch the range year, approximately margin XX% be common another Gross XXXX the expenses be consideration, and is revenue expect with usage expected account $XX to of improvement

continue revenues. growth total ePlex XXXX XX% to account about We revenue. of year-over-year XX% and expect represent our of platform ePlex would to This our to drive growth for

the to like of hand excited to our call I take back role Chief Before Hany, a Operating changes. provide additional regarding I’m the new minutes organizational assume recent would few to time I where I detail Officer talented and to outcomes. our quality and patient needs meet R&D, quality teams dedicate improve will continue that and delivering with manufacturing customers’ my working to across our innovative products to high

business steps several our years years driving target next to margin a accomplishing imperative. priority. three this already gross important important top taken mentioned, XX% two Hany to is As the of over towards plus We’ve

reorganized drive constructed improvements, we direct direct new teams most of and labor drive These prioritize various have efficiency. to as our to which funnels the of manufacturing as efficiency, have already quickly teams possible. yield including the aspects we Specifically, opportunities engineering material multi-year impact

improved Based we upon repeat and right are we manufacturing confident but and to that XT-X for outcome. have experience learned, we cost success. substantially Our XXXX, position successful still the changes our for during us and room further capabilities have that improvement these lessons believe we efficiencies

finance and reporting nearly provide Chief manufacturing With or commentary for to been years has GenMark. strong the plan beside very committed final We’ve per improvements to Hany he five smooth made. at me anticipate be closely back not and unit, key being Johnny a hand And appropriate call to for now, been for transition I’m the to together about do we respect worked we confident specific his where right Officer a will While cost I’ve Financial remarks. GenMark. yield I’ll do function, our

Hany Massarany

and field. in highly the focused Thank uniquely continuing and exciting of growth that our our panels in taken you, respiratory will ePlex that Scott. We’ve goals manufacturing these to excellent of This strength gross with software our ensure revenue in confident your proposition needs. value will advance and innovation organizing we under further that We common our can commercial another We of its customer year are the performance the our launch platform this customers ePlex testing. remain our choice the and we In highest our on and enhanced deliver product as team I of and to successful satisfy year on will leadership closing, believe BCID At open operational one and will differentiated year call Scott, while questions. functions like R&D Johnny for would excellence. company, margin system be steps significant our the combined driving panel we believe the functionality deliver the including expanding placements, for to products differentiate to quality time ePlex this and molecular and laser investors. improvement, Thanks. recent

Operator

Weinstein from William ahead. question Blair. go [Operator And you. is first Thank with Brian our Please Instructions]

Brian Weinstein

Hey appreciate for questions. it. the guys, I thanks taking

talk So let steps in bit that just I identified a gross you’re but you improve is taking the guys about still gross kind XX% guidance to me XX% you just did of margin, QX. to little XX% think and margin, have

considering in that take year? little all or just guys place a put bit there’s a bit identified. to holding you Did have it of be why the little margin next what’s near-term that but wouldn’t back improvement into the there, better gross So things longer

Scott Mendel

I’ll Scott. that Sure, Brian. This is handle question.

things ePlex. XXXX to our gave to revenue in much be is how is indication by we note expected in the of driven an One of guidance our of

ePlex a at To that to mixed quite of is and of more XX% to moving and needs when consideration XXXX XX% taken shift the that’s between overall margin. there XXXX happening revenue XXXX range. be So overall about specific, into be bit looking the gross was our up in

shift. that in The driven continue by was the manufacturing and margin gross ePlex progress in progress really build margin gross that reflects we improvement the really of have that’s on XXXX. to want making you guidance we’re getting Much margin on to XXXX expect can yield been XXXX in range overall that the shift. mix So good teams and overall into in, And the to some mix consideration be to driving the what’s gross you take driving improvement. once really see we really but that is strong that

Brian Weinstein

three from year, Hany And I think gross years to margin on just when stick this to target, two said get XX where can XX% think coming that is theme, you it’s the you years margin -- you gross level, can at the get you doubling. the

long way to of steps that kind the kind what of order at you to walk more guess required have this rank mix So that Can things a guys that manufacturing that are as are what biggest you the place? than specific -- of you the are steps you which are that’s you just And going profitability, the shift all us in to identified other are turn put there? Have more be positive but of just that away. gets sort point get ePlex of identified? improvements will have that I beyond doing through biggest

Hany Massarany

a COO And plan as Thank have a my sort you to in this his of over for of long play working to now. time and improvements on Yes. this. overheads et direct big I’ll our been charge have and it Brian comprehensive will a multi-year relation absorption to time. start initiatives Scott material. know, there going comments place. We’ve then volume facilities also Brian. all that build but very of new our sort continued in labor I’ll Look, direct period and a prioritized yield, hand cetera, mentioned in in put part capacity you, of plan. teams good of Look Scott as we get to on and over of together us is a course of

opportunities we over we is work, can good now. know work we’ve that to So have that pursue time doing we been there. This get

this done team with. of have good place. and we’re that to some thing over in leadership -- really years. the Scott’s to outcomes isn’t we So the we’ve up few XT-X, know getting the plan new we expect next put under We’ve it this a we that come plan like takes, driving it committed sort with that the what with And together, before

Scott Mendel

just that of add couple Brian. I’ll points a to And

-- you at been exited gross we’ve ePlex think negative you moved where look We gross margin. if with as that XXXX. If with we we through XXXX margins, substantially improved

fact, we In we that improved double-digit. where two exiting to of in XXXX XXXX gross exited we’d provided margin expect In times ePlex about that improvement would XXXX. guidance the over to another three

we stabilizing Hany target achieve to able spoke are plus to driving timeline. XX% pretty margin about towards that first as manufacturing in drivers, So biggest XT-X. been gross with that we’ve range that the mentioned, rapid is yield Hany The that

insight, Just XX% to give the XX% range. a to in yields little to expect we manufacturing be more

more driving the are to finding we’re yet, material consumable. XXXX. direct and what handling reducing driving in in the gross as the overhead there we’re initiatives mentioned reduce about made improvements suppliers get how addition the and We’ll majority absorption. some margin manufacturing amount of engineering quite that in looking obviously is improvement specific not drove that’s and we The amount XXXX, bit of direct or whether down then progress direct on labor but alternative Those We’re the the automation. process to material we’ve that more are from material the tremendous then use that’s teams a little lines here of Hany time of at examples as

I’ll the we’re that kind working teams. main that’s the priorities manufacturing order that’s that on and be with So engineering, quality going through and of the

Brian Weinstein

job, you. Great. guys, and Nice Scott, for Thank happy you. congrats

Scott Mendel

you. Thank

Operator

comes Thank Mark you. Canaccord go Massaro Please Genuity. And from our next with question ahead.

Mark Massaro

Wanted Hey above than the guys, the and guide, the it to expectations was thanks questions. Street. on taking my for higher start

the how in revenue XXXX, you ID to Blood -- wanted ask, get really $XX.X just the growth for to Culture you contribution If so, the last take are And we XXXX. guys of to about I million XXXX. contemplating from midpoint

will much panel BCID versus how wondering of from products? respiratory of I’m So new the that contribution growth be

Hany Massarany

All and expanding will at Thanks new Mark. right. have of with the to can I’ll thorough required. where business a Scott starting question with business visibility sort funnel if we existing analysis good take winning then this, a add very bottom-up of Mark, and of sort done versus our for assessment be we’ve a our crack customers.

the as about to. And range So revenues don’t line. guiding we feel up pretty know we’re by we you good product split that

sort for that with expect -- take and ID The take necessary putting to customers for now. Culture is molecular it to panels syndromic use penetrated some do panel. work respiratory use time routine and compared implement been of well respiratory, market longer will Blood panels have to doesn’t as We to in transition the long it’s

bit do expect we take longer. will that So little BCID a

know, have also year. get didn’t late you last two panels. very we until We As clearance of the three

expect process from in on So which of final shortly. FDA very we launching while the we are the BCID waiting clearance

So opportunity of I and our the about we’ve good correctly believe we that. BCID baked guidance that feel in sort

Scott Mendel

have per gives the and really add us earnings plus large the a on strong into we now I of as annuity guide the to would far installed Mark, add installed our one that important that we guidance sizable ePlex through Yeah. point one a market we’re base revenue. just that first year power That visibility being of that gave. portion base. I’ll as It’s in to note very revenue just placement or goes -- just

to factor revenue installed majority Hany’s point, off we back installed BCID that our of from comes base annuity base. and but that we’re did in, earning So the

really feel is guidance that So a range that visibility, gave appropriate. the we more we lot and

Mark Massaro

my just question. And final Wonderful.

give way which this against bodes a can historic to year, a testing flu grow is there here year-over-year just year’s for respiratory any panel in likely basis? on with up difficult think well demand to season. going comp? QX but rising season for you your flu data flu on going last up relative you can panel the against You’re CDC expectations a just us But your respiratory Is sense respect

Hany Massarany

our RP you business Yes. Thanks ePlex said. notwithstanding Mark. difficult respiratory comp the like Look, is growing

a the quarter there flu was was it up how ticked and more but moderate it we more recently, predicted business modeling as nowhere of the sort guidance, we’re season as we’ve lot it So certainly it it growing light have year. we’ve modeled severe throughout the of lot it quarter and year. in it’s last our notwithstanding still how first our it in the -- placed started, near customers. is and But that, systems season a is as because We’ve secured a of fourth

but the over to So grown going going in perhaps QX while -- show some, believe base same to there year of XXXX. growth we customers necessarily last testing, of we’re out that of users respiratory aren’t installed and we do had more aren’t QX some we’ve

Scott Mendel

I And revenue yeah. think a just some growth be comp, ePlex add I point, probably Mark. would will Correct, around though to but it tough growth was we’ll even Hany’s XX% probably show

at about this the first good where assuming we season through we moderate as of and end feel the that’s we quarter. So progress how we’re flu of kind

Mark Massaro

to congratulations and Great, Johnny.

Johnny Ek

Thank you.

Operator

Thank you.

from next with go Tycho Our JPMorgan. question is Peterson ahead. Please

Unidentified Analyst

This today. thanks on guys, for for question. is Julia taking Tycho Hey the

the is the off Panel with you BCID, starting getting of an approved, this timeline end first on just quarter? expected maybe Gram-Negative So still within for update give your could

Hany Massarany

We Julia. Yes. so, hope

on process The track. are well. is We going

be There lead nothing believe to FDA. is We’re to very will we’re interacting us this the pleased with delayed. that with that way

end date cautious FDA. by we’re course has clearance based of quarter. on the of about definite making far, But we the of this the we so commitments know since not sort quarter that in the gone hope how we of have process what about and always We’re charge

Unidentified Analyst

of funnel, commercial for terms that order you that know panel. starting third in kind you’re then you’re I the ePlex of And while already approval awaiting mentioned process, it. Got your launch

have wait expected trying into that how orders holding funnel you based So potential far, do that knowing people most to placements placing of see are gauge of number per a or much ePlex back they final like approval anticipate soon feel sort still Gram-Negative the the or Just so year? can Panel they do you customers upside already approval? until visibility the is visibility to your into on

Hany Massarany

question. customers panels Yeah, of general, our would good And three as family the a in right? sort see a it's say a of So I mix, panels.

they to to of start time and have they because anyway. and to on routine sort of But it work the would and takes the of use course to expect validations customers to eventually. access those so of transition do many do sequentially So implementation process and are comfortable our in lab, the panels the all to evaluation those the

are terms be of of how all the season this that be that to in panel. conducted we going their is And ago sort that expected where received very forward. would severe officially for sales it on focus our number few of think not if mind factor ability would a was have long or in But had guidance we the already we And this we all global Keep a all like in on and launched our of So sales meeting will training, customers I moving three overall, that was cetera. as year, how our late in XXth it different whatever of launched even that Julia our force, we and be literally And first also some expected the et we’ve last we’ve available. this we tools are year. a quarter days factored would until customers the wait last in depending that December. clearance busy flu

Unidentified Analyst

Got in it. -- And hello? terms finally then of

Scott Mendel

Go ahead, Julia.

Unidentified Analyst

okay. Yeah,

tangible to do Finally, and in terms that we of a international expansion, could you give footprint? steps expect to you see take you know us what impact timeframe from when plan more detail over can revenue

Hany Massarany

Yes. We’ve steps. already taken many

implemented ago. model hybrid our fully or a so year spoke now have we about that We

not agreements multiple Eastern but Eastern with Europe European signed including expanded direct, small hand-in-hand So Western last team in now as we’ve West other and our distributor sort channels countries. the year focused we those partnerships working as dedicated, exclusive -- countries into in countries. also But distribution in we’ve distributors well of Central up direct, in countries, have and in Middle our

yet LatAm. on, on in started partners and met and a haven’t lot Pacific of so distributor done yet Asia initiated or we potential those agreements haven’t but any We’ve work We with markets.

isn’t we the think will that GenMark is to But for to This and that be is U.S. U.S. is but business continue the come. outside our our case biggest So this U.S. necessarily, come going our, product market where the for realize to from to unique for the of important will vast our the majority continue everyone of to reach it’s selectively to years international solutions the I very expand

Unidentified Analyst

you. congrats Johnny on it. your new Got role. Thank And

Johnny Ek

Thank much. you very

Operator

you. Thank

comes question America Lynch. Bruin ahead. from De next with Go Merrill Derik Bank Our of

Unidentified Analyst

Hi. is Heidi Derik for today. This

to about So that to guide headwinds we should start last think talked challenges year Thanks. see much off, to is the that’s provided of just how reimbursement today? or wanted about placements the the the we from baked how into

Scott Mendel

is Ivy, Sure. this question. I'll that Scott. answer

that's about recent last minimal out. Regarding it the reimbursement of year, put expected played impact we out. really from we is And majority as actually the business draft how talked our reimbursement and inpatient

any continue line in anything We on an but and a the eye perspective now is fourth from that right to impact. in to had quarter have relative reimbursement what seeing we not felt communicated. with we're We'll not it, RP so keep business

Unidentified Analyst

and next the to year, but spending I GI BCID the for foreseeable R&D next the down, winding have question, you, should is expenses think how And with your out going a we years want congrats about mean future. housekeeping for Scott. role, or see, -- for the I still thank just on the I then

wanted there? to see is any Thanks. if color So just additional there

Scott Mendel

Sure.

would overall, we by had clinical So to I XXXX I XXXX, was of on can that in specifically, but the run here fact versus during it expect more R&D gave little lower I guidance be being XXXX. R&D in a virtue share than color expense where trials right operating three really

So will reflecting come expense Ivy that in down I XXXX think, R&D slightly fact.

Unidentified Analyst

should one, think the that guys. you, Thank provide? we see. guys you higher I approach sale about just Last how

Scott Mendel

The per annuity placement?

Unidentified Analyst

Yes.

Scott Mendel

Yes.

we in where So that the was based year. on finished prior

our setting we our we guidance for full XXXX. in into placement XXXX, an for BCID ran range midpoint took That's account for then expect the around from guidance pull-through So that in was of to of annuity XXXX our also it experience RP. per but last happen added range year. that on for extraordinary season, flu $XXX,XXX top the we When provided the right a year what fact back adjusted the

about at had place our landed a guidance. in the we same the XXXX, $XXX,XXX we experienced that at net-net So midpoint of

Unidentified Analyst

you I and see. That Scott congrats congrats makes you. Thanks a role on of lot well. sense. as Thank and

Scott Mendel

Thank you.

Operator

go you. comes Needham our Matson Thank from ahead. & Company. question next with And Please Mike

Unidentified Analyst

[ph] Mike. Thanks taking good David afternoon, questions. for the Hi, is on this Jackson for

well add -- specifics how Just the you can also margin, BCID little a give any? to and just preparing for if on just wondering, you're more the you're launches gross some expecting impact

Hany Massarany

the Yes, thanks for question.

in on time some have we for launch FDA working BCID been the now So clearance. of anticipation

one of panels we a meetings which some and But some sure with. data, working to of industry generate are at or As US two complete last I'm with three -- the to the develop year studies we you was familiar all in had presented which hopefully that number the of meantime key now the will have opinion the said, studies soon. and leaders of to third come been we in

to data number in customers demonstrate key of will I of evidence sales well. So implemented remarks we with performance to agreements be of recently, substantial and only presentations, ahead as etcetera. programs world. of meeting sales a generate the as the have that research use to under the we the We've global they sort BCID mentioned And is now and elsewhere and elsewhere of of More BCID generated growing and data force, the where our world complete that sort those to our in there a in compare month away to starting the last by prepared right and in done studies been launch our opinion a and body adoption leaders we market clearance the had launched how drive the to continue alternatives. panels utility US working

Scott Mendel

-- the part of answer to add second question. And then I'll

universal manufacturing panels. a therefore the improvements margin it have RP ID all from applicable are consumable positively So about impact well that is we ePlex our made gross to Culture part our Blood consumable the it's is nice -- that perspective, so

incorporated into as we volume, that on that we it we've what In drive helps is you happen the to absorption expect BCID overall add and overhead guidance fact provided.

launch So this panels. a new net, positive as net, we

Unidentified Analyst

manufacturing what targeting. promotion, congrats curious you've Scott, Great. can in on outside? little you're you And talked a about milestones on the on us just working then improvements bit for I'm call out

Scott Mendel

Yes, I think the most important one is overall gross margin.

or to be of want overarching additional not on provide look improvements margin at and margins on key examples XT-X. see I The going metrics. gross and split. is from time ePlex our can you like revenue improvement, to you made, chart but metric then I'm our comes at to at specifically ePlex said are progress, etcetera, adding looking how some that that we by versus gross what from commentary progressing we can I'll And we So footnotes financials time, look

that So will ultimately be the verifiable that's measure externally.

Unidentified Analyst

congrats and quarter. you Thank Great. the on

Scott Mendel

you. Thank

Operator

question from comes Thank Please you. Ji And our go with BTIG. Nam Sung ahead. next

Sung Ji Nam

a Hi, sales if platforms automated curious I new thanks ones competitive the panel platforms that terms BCID provide breakdown customers your to the the in or funnel for of use versus was between color able you are taking to guys Maybe the who particularly follow-up testing? multiplex multiplex the on question. ePlex more syndromic for existing question might for currently driven be

Hany Massarany

-- Sung percentage opportunities users what --? the Ji, RP Can asking you of already clarify of question you're the how opportunities sort what the are you're or or that is existing again many of

Sung Ji Nam

testing? competitive of molecular whole users Existing are the sorry. that new to Folks I'm platforms. syndromic

Hany Massarany

Yes.

penetrated RP based a of experience BCID So to what customers are our launched to syndromic competitive been would about syndromic expect is that increase displacement. on new proportion that's our less new increase third would that running it's Obviously perspective, experiencing is the a syndromic. because to molecular would from because we of just we've been versus largely BCID about but new third I

Sung Ji Nam

then you throughout that updates data any the the release or some milestones expect it, throughout panel, sorry we gastrointestinal kind do year, anticipate around but the or Okay, if great. I potential should to any missed there year? for I, And of updates

Hany Massarany

provide as get milestones important will think we updates. I we to

Sung Ji Nam

point? I base this if Okay. And then wondering be just XT-X for guys the share to willing at might you lastly, was installed

Johnny Ek

is it XXX. Yes,

Sung Ji Nam

Great, much. so thank you

Scott Mendel

Thank you.

Operator

Please our Raymond question with is James. And go ahead. you. last Hsu John Thank from

John Hsu

you. Thank

obviously I back go off, why through maybe just could Johnny, to and you a us just to can walk now right person just size just congratulations is First the maybe why the a to wanted you this is right add? ask, standpoint, but COO strategic a Scott if and from company of

Scott Mendel

Yes.

jump So can in. I'll Hany start and

is us margin both the a was priority of change this making key shareholders. as company well for the gross One to inside improvement important motivations as our

dedicate why is commercialization so, And platform move we're the now margin focused gross And have my now focus margin now, day-to-day help time time cleared allows our a panels on because and all it this to on commercial many basis of By making to improvement. on to launched and allows on also market. Hany gross we we've improvement me of and strategy. his driving more and

John Hsu

the years. a low great. over just figure helpful. tied tick up the still definitely I next to that That's, did expect revenue margins you get I to there for Okay, one And was XXs guess gross one that. I other to me, the believe three two

way that that the implied right about million maybe the be $XXX margin revenue So the might longer-term think to gross by ramp? is

Scott Mendel

range. in get to We cash margin achieved our that where to Yes, $XXX flow somewhere more gross used we it's target than probably positivity million XX%. as at

indicative three over and gross two how improvement. have sequencing to opportunities that gross those opportunities deliver we years next plus the the the think really of funnel to of margin are we I margin XX% is

John Hsu

the for great taking Okay, thanks questions.

Scott Mendel

John. Thanks

Operator

Thank sir, questions any I'm not And you. showing in queue. further the

Hany Massarany

good your Bye-bye. your everyone. to All thank forward time Thanks much. updating on you and day. Look in very for quarters. coming you We'll our for support this continued right. afternoon progress the a Have

Operator

thank for wonderful day. disconnect, the all may you have and This program joining us. and a ladies gentlemen, And concludes you

GenMark Diagnostics (GNMK) 21 Feb 192018 Q4 Earnings call transcript