NVTA - Earnings call transcript Q2 2018

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Operator

Good afternoon. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Invitae Second Quarter 2018 Financial Results Conference Call. [Operator Instructions] Laura D'Angelo with Invitae, you may begin your conference.

Laura D'Angelo

Thank you, operator, and good afternoon, everyone. us second joining call. XXXX in you for quarter our earnings Thank

COO; our us our our Bob our George, are CMO; Katherine Shelly Bendekgey, Joining Sean CFO; CEO; today Commercial Chief Officer. Guyer, our Lee and Stueland, Nussbaum,

we and to press have quarter. commentary which our on call, available, well as you financial to the As you results conference as encourage listen includes today's our release our metrics

our our you not that of demand this Before our differ pipeline including various is Act. Securities forward-looking and business could that focus integrate we statements It materially to thereof, for businesses and for our acquire, to results our and products begin, future, on are I'd the of from of therefore and of plans the accurately we difficult results, and we provisions meaning services our our and call about market to reimbursement remind that and operating our Safe operations historical, services actual like those services, infrastructure guidance. make our timing and future prospects, Harbor our opportunities, Private our manage remarks within financial constitute predict in demand strategy, investment Reform plans the the Litigation the products,

settlements. XX, Our December forward-looking only section of we We ended With will to that materially legal among particular, call acquisitions, our refer results guidance XX-Q turn differ Sean. hereof. for don’t Factors to the from assumes restructurings in speak on that, quarter could that the investments, additional you future as These other to cause conclude expectation. or the things Risk information company actual date I over factors titled on performance business the any current to statements additional XXXX, for the our

Sean George

Thank again and you, thank for you, all us. joining Laura,

momentum to of in integrate medical more genetic effort With an our our information are execute. market XXX% Invitae, to delivering volume the indicators, all several our key of on medical growth addressable practice. information win XXX% opportunity people stages lead ability performance the fundamentals, and systems a than across billion year-over-year genetic strength way at million health profit. and all care businesses our competitive revenue in Here mainstream growth simultaneously we and a while of integrating huge nearly Delivering into to we the maintained to and these more showing and fronts speaks We continuing modern on from face continue life. in gross to than company delivering to on well one mission multiple on to $XX.X in new this across worldwide, in

a as are a us with rates analysis our fundamentals are future. multiple ability all from have for reduction differentiated us, manage With we other need compared pull QX. were as and to to combined XX% our profit, to can in further third-party we capital $XXX in and to Medicare annual payers. of payments the drive to gross our than year our We an our to lead we revenue in from raising more result pending exit OpEx, we due the burn that ability the accelerating as cash volume, million COGS well with that levers extend business the reimbursement, available confident resulting XX% again a momentum in of into to on duplication and deletion improvement success guidance With collection

screen intent benefit this reproductive It comprehensive, testing, number high-quality, affordable to offering carrier better a health is the infrastructure information. from individuals model existing offering technology while replicate by genetic we those end is our quarters. of we proven customers starting industry-leading our can the in better out of that to serve than a we less were to reproductive developed able to our expanding can At leverage family. introduce utilization serve June, we've While and This who in expanded space. this three an rounds

metrics, the for over of demonstrates the screens financial of business advantage is and it Shelly perhaps case the Invitae's offerings, I of past and lowest-cost the than infrastructure This comprehensive, to the quarter. our the highest-quality, will turn flexible today. one is available with As any that ongoing provides. results highlight more differential much our carrier investment development, in now to other the call

Shelly Guyer

the Thank more double-digit indicator our of XXst is you, XX,XXX quarter our marks on XX% This increase the quarter, from annual XX,XXX increase that sequential growth, given XX,XXX in is which accrue This accessioned billable XX% our in a the metric increase the a quarter. report of volume tests best XXXX. second tests, compared this first a Billable for real-time we XX,XXX is Volume did from and XXX% quarter samples metric samples is for to more Sean. second revenue, quarter. XXXX. with XXXX We the than volume than working. quarter in all the a consecutive now the relevant that more accessioned business in model was more prior not the than almost of of nearly

clinicians of few based larger well with as quarter. as across volume well as suite ability patients this our accounts. comprehensive, stand We offerings continue areas to genetics accounts their existing high-quality, serve out to and drive affordable new a as on better A

old see XX:XX to accounts oncology to and encouraging and The to is health test. as beginning carrier and the using reproductive accounts screening was we order care numerous new space. a both pickup entered OB/GYN our see about it of First, ratio

in we had from Second, partnership-sponsored know success continued effectively as drive once volume, in sales account. children's new we as cardio-neuro hospitals third, new orders and we number We well a same-store nice piece, on from in our can programs. accounts. international volumes or testing And growth bring record we of CMP had a

growth of So market this potential. is a key indicator

further pull-through. success volume, is revenue. this our the of improved next quarter, is revenue indicator indicator leading the our key While we've In

we $XX.X sequential XX% representing quarter, $XX.X of million, increase second prior XXXX XXX% from than reported the increase and this the revenue over million a more quarter. revenue quarter of For of

Importantly, what others working and CPT ovarian been deletion paying analysis using XXXXX. for have with breast pay Medicare cancer for duplication patients some us they code and to we've for been time, regularly

This from would recognized in in quarter, $X.X of del/dup second in in quarter, delivery one-time XXXX. test revenue in million $XX we revenue comparable in this for we Without million increase period the XXXX. an XXX% the analysis revenue, for hold have

including under saw programs that testing increasing pharma an and revenue We new went in in collection in diagnostic payers, to mix seven increase particularly partnership also live from from institutional and improvement partners, third-party due other true-ups we that rates of to such expected collection Recall no quarter. hit There in were quarters will prior quarter. this XXXX. These in or true-up underestimates ASC in this revenue. would from XXX, true-ups need any over rates

quarter. the controlling second will content term, half our of that see pressure reductions that increased and revenue. COGS our we medical all Medicare which tests as on revenue complete quarter, see COGS: greater seen revenue in will adding dramatic was this that approximately categories payment. approximate this first non-cash we includes COGS of per year. dramatic $XXX on of we cost expanded put we factors from held cost additional acquisition, the especially in the from quarter efforts year. do the countervailing from interpretation, XXXX believe COGS. quarter across from COGS. Average and capacity flat to our prior the a COGS we $XXX reduction becomes of in quarter. per launch of tests a Two benefit and of percentage upward on $XXX to not San second to remained lab average the in volume excludes This essentially focused we first we volume-related Longer we XXXX of reductions focus to rather expect inconsistent as finalize second the expect test the decreases payers more panels half transition corporate quarter. of increasing $XXX anticipation We our we priority while COGS marks production of one-time Remember And continue in continues carrier the our modest if have comprise integration all in Cambridge we down growth experience up and costs of the business to was the XX% a to profit as genes, Francisco in XXXX of not reductions, in the includes in indicator XXXX, critical other novel from success. COGS production have and a tests flat remain provide cost in the and second of for Our is past, of in and noted than the sample the the gross In that This larger COGS quarter we experience. add focus and

million with to of $X.X full quarter, $XX.X profit increased the second of gross profit single and XXXX year the million the compared in a the $X.X first nearly profit. XXXX. in quarter gross gross quarter, In our Over equaled quarter substantially million XXXX

Our experienced keeping increased in while collection COGS check. as business rates model working, is we

Medicare, Our second strips first the to the gross If XX%. margin was the would XX% period XX% XXXX one compared XXXX. one-time in of gross in XX% quarter the out in quarter comparable been have margin and in

making gross across platform. We continued testing XX% entire of towards progress are our the Invitae goal margin

second XX% of one in test prior down year, levers remainder $XX.X and XXXX of quarter spend last increase than quarter. we call incurred the of and excluding and have million, X% For XXXX, the that four cost to throughout on second of $XX.X quarter more OpEx. the the we bring the operating We earnings in expenses, a burn of the controlling was over discussed only million revenue,

X% maintained and We gross we revenue are OpEx in quarter, profit. that this significant versus volume, to growth growth pleased

modestly screen. end grow introduced last production XXXX PGT San are month, expect the our to extended our the facility. over expenses And At fully Francisco of few operating carrier next the integrated. acquisitions transitioned the we We as the quarter, to quarters we

continue to content. of products streamline the to will handle the in automate and to and many to critical our and invest able rapid all being processes, functions, of billing volume We production aspects other our and engineers addition new growth

For included non-cash in operating expenses $X.X the expenses, million million including compensation. $X.X stock-based second in quarter,

the second balance million quarter are closed in This decrease including XXXX. we through investments, is we With time We additional available $X.X million million more now cash, grow ended And positioned the in frame a net in we $XX take than cash. we year-end million from extended future. at XX, the exercises. foreign included to and down the proceeds which in sheet, capital which June to scale and financing including cash and equivalents and $XX.X $XXX with in into April burn debt, business strengthened cash totaling can proceeds restricted the $XX.X in from early equity million access in the

received second the exit to cut turn the $XX.X advancing we cash first quarter. $XX.X the was the are for will in operations as was testing. demonstrating million quarter from of to And field we helped recent commitment genetics. quarter of during XX% goal the XX% our XXXX. to call Our by million some to that track over from from the cash the burn our first cash burn to With highlight reduction on we've clinical past burn of by del/dup in This $X.X I data million with Bob generated, in and quarter that, compared Medicare to stated excellence

Bob Nussbaum

able that you, Being company to success field. in also that knows: that are understand the fact clinical quality on based means the offers genetics is excellence Thank we reputable community we provider very deliver drive only Shelly. highest-quality the a but not Invitae's only testing. the

They Although not us decisions testing choose simply based we their increasingly accessible supports on make before, science makes because not to it have who could price that customers important because price. is it everything do. of sound many

number be specialists the range that CNVs CNVs For testing other in array areas Detecting from areas and showed of prevalence be of have number is for to fraction genes and all largest XX% make XX% routine wide of necessary conducted a to the testing diagnosis referred of for to example, variants. Accurate difficult genetic in testing to patients the changes clinical part by mutations. or and some decisions. testing clinical between is XX% a sensitive. we variants, disease-causing for copy CNVs, the known Results if published disease-causing medicine. been over identify study significant of these a important in who up therefore, must, of type date of of complete and copy Frequency of neurology as treatment

gene Importantly, demonstrate not negatives. ability labs to all therefore, such and avoid that their identify changes hard-to-do false reliably,

inform if study criteria for patients narrow and Medicare's results affordable is that we there disease-causing and, patients X,XXX that nearly is the press that that in the was from regardless of is testing. meet care of does through bit and conversation in same mutations not met or study people did clinically those with information a they payers of Among are past so mutations no This is with in Broadening we not or was harmful about significant rationed What testing company's may The risk nearly whom involving or expensive decisions. criteria of need quite success received benefit Another difference more to statistically a show health of key genetic example the gene include difference unnecessary. of and in bringing the was research information percentage criteria hereditary for and patients, to testing the the recently breast holdover testing in breast high-quality out there ovarian carrying change from to mutations yield genetic at our governments yield begins their to such when to Medicare-eligible a published either a disease-causing of testing. medicine. women between asked this patients, showed status. mainstream in of cancer criteria, implementation is very does meaning pricing, of cancer rationing market the who our

causing health. diagnostic suspect driving population. the in did and testing, is collaborative not had for their is therefore, area for is the they that they the valuable to study health in addition In DNA testing their In we everyone for information to and initial received Mayo screens More reported of testing, inform through individuals can XX% which Stanford disease proactive had Proactive are that health University found on even provides other tested genetic subset death. those we proactive perhaps, testing at with actionable medically Clinic, primary others, who among a care the Invitae were X,XXX of genetic than and their patients have condition physicians. changes

As at and given and Human presented demonstrated a condition oral American don't fall. actionable be could Meeting, medically about there a Medical College study study the This was of call, people in do XXX something are this the to this Society an you about. on of Genetics of Genomics in slide, have know likely XX follow-up presentation as Genetics this listening American spring at will that means if you currently and genetic Meeting that

month is study child patients our last condition. just of launch precisely our We carrier the are contemplating same game the unbeknownst have with The who, a to them, medical initiating our increased the expand This a changer tip proactive we or and a the risk couples having pregnancy, with offering to of substantial findings. iceberg. X,XXX of was a where next serious couples identify for a at for screen can step

for child practiced when Genome a the they're done. Medicine are the was in want for serious Human at at only UCSF family. a screening, Head a the if was Invitae. Research couple others nine Invitae my having is carrier, starting Genetics project medical Branch was to I've way coming call. a of Chief availability While child illness prices, everyone on for with it always throughout with is available years genetics of to having will before illness. that, of a Institute we at that intent learns to thought entire And I National by of unconscionable years. it that NIH was the rising XX risk a Department genetic carrier that genome the which After being to I raising limit the I make

and will their for and to impact and offering, information the of more to increase clinically As relevance screening know the essentially health will and to individuals more where useful actionable. genomic point seek our we everyone family add indications that's genetic

tested. benefit everyone to are the we've that access asked has benefit genetic for a focus We statement. need are genetics When than from testing, currently may many it. from been our really a service shown not people to company's just lip people more to paying could highest-quality relentless This the significantly how beginning: mission increase

existing We're only turn could providing the I'll more for part focusing call we're at this the unmet high-quality now not on who better before not now information have but able to do affordable For answering need get reason, those access. in by that vast to this serving and back over testing prices. patients, Sean.

Sean George

Thank you, Bob.

and As growth building everyone, is Bob's genetic and information. across today, genetic rapid is people The undeniable. many this the comments benefit the more of landscape understanding from evidence illustrate, importance can information of eventually, that their

commercial is across in questions. to Q&A. complex all serious all ahead to and over and confidence complete Invitae of operator of on-the-ground some turn the to areas opportunity the provide more call experience unbound the Our grow life's I'll channels effort to now us answers leads for disease the With leading that, most us.

Operator

[Operator Doug Instructions] Your Schenkel first from question comes from Cowen.

open. is line Your

Adam Wieschhaus

This Adam Hi, my on is questions. taking Doug. for guys. for Wieschhaus Thanks

color Your were revenue up correct? drivers it based test just due test confirm, Can that seem looks on of the the reimbursement upward like Is were? to ASC increase. $XX collections? remaining And from your last And adjustments what per XXX. about it or del/dup an prepared step of So on you up $XX quarter. to any provide just improved there any was like $XXX doesn't average that remarks, mix add

Shelly Guyer

unpack me Let bit. a little that

well no the prior in So the quarter. but quarter. to in happen future, due not from That increases the may this true-ups

about last from portion up $X.X before. ASPs actually $XXX from The Medicare, was a of went million correct. to $XXX you're from year. the And So about that

major third-party the in and oncology del/dup the pretty and the strength The saw guidance this Did this of are and of at collections, area. the to time. under we that other to contracts. from in forward XXXX we your to confidence payers from Adam? areas, be collections both mostly And the in $XXX little pickup have the better though, all collections. those see have that's flatter range increased did mostly related nice catch we million to on doing other A dispersed some but other $XXX increase widely a I from moving through payers, why to And year pieces able during among million questions, Medicare

Adam Wieschhaus

reimbursement expanded similarly, And of the newly carrier a about Shelly. about bit on should think product COGS reimbursment receiving? could how then you compared panel that just to we did, little talk start you. about this Thank with your And one should testing, how the we You think can and former rate rate launched product? between

Sean George

Yes.

line think a I in as that around with Starting pretty very now we ability last much talk testing. mentioned our stages briefly. I bring and answer expanded or specifically out, dynamic space COGS we can the carrier we about market do capabilities key that, all think, our pricing diagnostic our entered the giving is the the we let we've reproductive life. investing as what been rested We've addition what to into similar I'll across before – that is so pricing the much comprehensive screen us the to in know maximum carrier eight in on about And other now But COGS. health to years infrastructure. think

Bob Nussbaum

was which at until won't Meeting, carrier testing, – of pricing CLFS there a know, new of XXXX. the there be panel effective you for a as extended code consideration the So Annual XXXX

pay, it's coded, Good everyone we, panels And paid the third-party like that a using which than panel, very bill third-party get the – we are, how in GeneVu such we them Start selling. not meantime, different so most as when else, commonly when bill smaller codes, the frankly, the we're payers

us the infrastructure. today different not doing we bringing big to and The carrier our are difference pricing it by the line that So per for is ECS with the panel. in automated smaller cost that ourselves is compared more

but that's near-term opportunity us: that and cost for by is So driving where the our way. raising prices, improving are not margins volume by

Adam Wieschhaus

the all color. Appreciate great. Okay,

Operator

from comes Leerink Partners. question Puneet Souda from next Your

is open. line Your

Puneet Souda

of from I I play continues Sean, get you. in just terms had the hi. you to better what And just Yes, consolidation of to want before out. understand was to – highlighted view a hoping space

as it's to in to with obviously same With your competitor. us – – has a the more here somewhat a have in it you beneficial but larger consolidation, expectation place? [indiscernible] obviously, Help recent taken the at the it market that's just well as grown. position, does share competitor – the time, the What's creates understand your

Sean George

I step things we've a a something again, now. the – has a think, for back years of the to industry is suggested come. It take while consolidation become for order to natural for

In attracted not it. who would are adopt suspect will broaden to new company or going it There can And it's will up. fact, everybody in either information that picking use the course, incumbents technologies the and use of start genetic of for I new formation. interest

only this ones all at that everybody think care. massive I to the of benefit serving we're the in this opportunity the point are not across information up seeing health

the fair always to one, went guess, to take or And would general, been We've the rationalizing most benefit I market of think, more day-to-day, we quality, favor. have kind product, take out from with our flexible. in in to from – the As better growth. to day quarter-to-quarter or managed of kind players to And our and moves. consolidation, worked service, has share new allowed out – consolidation continue a other us able it's we've kind of past, of expect highest I importantly, same. to gone more the think impact than And I share better we've of

Puneet Souda

volume? maybe in is challenges was how that. the of to don’t that sense a you is having some on much we exome for or give And I covered if stand thanks Okay, of of I know already. there us of – that that a time, you just know wanted and could base where terms turnaround part I do touch now if are

Lee Bendekgey

is Hi, Lee. Puneet. This

process. we have streamlined So just we exome – our are

But part free our relatively volume the again We part that of up will to to it our will volume force. a back line with expectations start have revenue of time and sales brought into our we mix. modest exome expect we sought. be as continue grow the turnaround we And

grow, a percentage, So going I what small expect. will as it's while. think for can a It that's remain you but to

Puneet Souda

thank you. Okay,

Operator

[Operator question Your from Instructions] Blair. Amanda from Murphy William comes

Your open. line is

Amanda Murphy

thanks. Hi,

Just so new mentioned of accounts. traction you growth volume some you were a decent the question, getting that terms of in

little I of accounts who talked So you? in What a of them profile kind this wondering effort give the relatively. a just those are? of more And bit was a kind of past lean you kind maybe about also, just moved of sales to idea having then

just if et And you you're tests to mix with so menu, I'm curious getting of incremental where the scale and new your the kind [Technical and of – avenue, adding do cetera, Difficulty].

Operator

Amanda, no longer we to are able you. hear

Amanda Murphy

Can me? you hear

Sean George

I Yes, think…

Amanda Murphy

Sorry, okay. hear that, not did you

Sorry about that

Sean George

everything… heard We

Amanda Murphy

sorry. ahead, Go

Sean George

Yes.

end, offering I based of on from the very odd that is think much In yes. our in general, so start very, strategy genetics comprehensive heard well is we – we'll in again, process everything the set very information life.

indeed, we days oncology, up cardiology, both addition seeing the the little account in for health, We way et and detail, on thought as is And our strategy. reproductive are in large bring kind even marketing sales more the accounts decision if health volume having but have I'll the a space is our of in as proactive of early the let leaders, of result a pick to a it it focus on makers, core key Katherine cetera. offering short

we the think the out what it we're Katherine of a can addition work bring and little that So But in general, dynamic we accounts I suspect in is more here excited expect about future. – yes, out. from on in about going play to – the to

Katherine Stueland

Yes.

look we're we really caused all the accounts, of – are new targeting. they as So clinicians all at that of the

think the children's it as So comprehensive, that opportunities affordable according encouraging OB/GYN seeing quality, in cancer to carrier setting. us synergies between starting high that as really well the are the the And we're well. hospital I in is as in sector now testing and setting offer we're new oncology what's carrier

days, we we early certainly, see new it hope – when technology. So the acquire see – happen to but we'll as

new as really account the we're we're increase to growth sales well see across same-store So as clinicians serving. all to pleased that continue of

Amanda Murphy

it. Got

move or side? could guess, the was for for space And, I more – around around semantic update And to FDA for relationship any assay? you FDA's the comprehensive are – thoughts I And more more approval with the KEW? just I in then And generally, speak Okay. wondering if guess, a assay broadly? effort to into involvement your cosmetic that – on thoughts FDA where the

Sean George

I two. Sure. do can

So do let's the FDA then and KEW, regulatory. start or with

think I KEW. no a with collaboration really KEW, there's We with material KEW. update development announced

going us testing Our years plans germline with couple capabilities. our were semantic of on now almost combine asking to a

are I quickly going that be pretty moving think tumors. way characterization where guidelines – do, of is like kind to of to best the to

collaboration things. every of of that cancer. likely cancer is and There a that's people to KEW. year, our XX patients clients that than more with new view often the of development put – sense of the our million kind we rest purpose all characterization of need with this in patients if KEW Our disease And a of makes input from new is approach work lot – of and lot areas, that are kind you and with with the the clients, scale is up spirit that reduce of the worldwide cost that

think push forward, think front, As regulatory recent overall front, we the On hope the continue to extent past up the of some combination year. kind next months, I commercialize positive. I few or we are time some to FDA to

course, so to We, for takes determine time, next and reimbursement of of whichever it any this and and clear that's It’s care, provide up direction it important think to to characterization prevention. pathway kind good regulatory there's extent, coordinated a types takes therapies say a different move indications to thing. what in under I and always more a or current We operate anybody of different different ways and business variety of so team expectations anticipate over our prepared that go. it. on and the that regulatory whatever than form we're takes of testing, as kind could forecast would a

evolve. FDA perspective help our interested if in to we on would working out and CMS are and provide can, and this We trying with how

I we make importantly, sure everybody. should think very think just I – make clear

will of for the could effort said, not to our an be million seeking However, the in XX new a price like we CMS I maintain and otherwise, useful a to FDA combination information that artificially deploy be cancer patients year. course,

Amanda Murphy

Thanks Okay, much. got it. very

Operator

further There at back over call Laura I'll no turn D'Angelo. time. questions are this the to

Laura D'Angelo

everyone, today. you at We for look conferences. soon catching joining forward with us upcoming up you, to Thank

Operator

This concludes today's conference call.

disconnect. now may You

Invitae (NVTAQ) 8 Aug 182018 Q2 Earnings call transcript