NVTA - Earnings call transcript Q3 2018

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Operator

Good afternoon. My name is Denise, and I will be your conference operator today. At this time, I would like to welcome everyone to the Invitae Third Quarter 2018 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise [Operator Instructions]. After the speakers’ remarks there’ll be a question-and-answer session [Operator Instructions]. you. Thank may you your begin D'Angelo, conference. Laura

Laura D'Angelo

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

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

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

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

to or our Risk from press With hereof. our on review We any to speak cause the consider don’t Our turn in in you to you prepared the investments, of guidance our to legal that on additional GAAP are cash XX, Factors and reconciliations, future the financial for that We that, To Principles, XXXX, call burn. the among release. Generally with These materially results additional forward-looking for information will ended business June statements only Accepted States, United the section refer current which conclude monitor acquisitions, over particular, as Accounting other company available expectation. we we supplement actual performance could assumes, statements in the or accordance encourage in differ settlements. things, titled factors quarter consolidated restructurings I XX-Q date to Sean.

Sean George

and you, time, again as for ability in driving to our growth, accelerates the continued we us. you at joining Momentum Laura, while Thank practice. investing into medical information bring all thank same differentiated mainstream genetic

growth, This a annual and volume XXX% raising growth quarter, are reported we our on revenue XX% both. guidance XXXX

another reduced for our cash, around we’ve operating Our cash paired continued burn cash, Net by increase the the success ability investment million in and almost required drive growth infrastructure per to to the million, first equivalents quarter demonstrating our $XX.X execution achieve to Especially was $XXX delivered expansive XX% $XX.X worth Invitae’s quarter. restricted decrease mission. in from to further with sample. COGS technology noting, in in cash

to highlight strength Now, in will and personalized as in in more capital, to sheet ever our leadership in and of with the providing call balance our now we quarter. Shelly are healthcare. results over access confident the the to continue increased to ability future turn million I than the for genetics financial $XXX as

Shelly Guyer

Thank you, Sean.

we indicated, and as volume growth across our execution continued raising are Sean As result business a both revenue of guidance again, and our indicators.

to than volume increasing guidance from successions samples are in XXX,XXX We more XXX,XXX more than XXXX. sample

$XXX in due from success continued million our volume to This million $XXX million Additionally, in to guidance to we’re strength revenue $XXX is $XXX annual our to increasing million. reimbursement. up and

our real-time cancer, del/dup working. we for model paid by recently as is colon Medicare business collection notified other from would is payers. for indicator In fact, we Volume rates improvement best well as in be third-party that were the

of XX,XXX sample XXXX. of is XX% volume third quarter a This accessioned increase compared samples. in XXXX, in For annual we the XX,XXX to third the quarter approximately accession

relevant XX,XXX we XX% in test that from our revenue. third now tests, XX,XXX XXXX. all quarter, the more accrue of a reported Billable given This quarter is billable of tests approximately the metric increase billable we representing almost

on their affordable ability genetics our patients this to accounts serve volume continue quality, We new products. expanding as comprehensive and quarter, saw high clinicians success better with drive and of well suite we as across to existing based Again, an accounts.

nice we just see to neuro including piece medical and brand international or genetic and build We counselors, growth experts, continued our are volume our in we OB/GYN While and children's to hospitals. volume in from success specialists. continue genetics beginning with growth IVS saw geneticists cardio CNP from in centers,

testing volume from tripled have year. sponsored institutions Additionally, in bio partnership and pharma our programs we the past

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

For the XXXX, $XX.X of we third the generated million, XXXX. a of increase over of third XXX% quarter revenue quarter

delivered in we in in ovarian reminder, hereditary revenue in bolus, our this increase a Without second del/dup As quarter-over-quarter. been million $XX the and revenue revenue for million approximately $X.X revenue recognized the would the represents second $X.X tests million thus, million breast and of quarter XXXX. have XXXX, analysis $XX.X in one-time cancer for quarter; in

constitute revenues Additionally, from revenue. increasing mix approximately collection XX% rates we in healthy a due other institutional pharma of and from and to partners, of saw third-party improvement payers; which our

per an XX% del/dup to one-time In see about a average of year-over-year. we hereditary reduction one-time to fourth analysis in XXXX, out del/dup third we we the In the quarter. colon which test from quarter, second Medicare average for the for payment for ovarian just COGS representing COGS and increased quarter of $XXX $XXX the tests. cancer revenue a quarter; second quarter’s after Medicare cancer This breast for received sample payment by tests, expect stripping in $XXX, reduced under per to

XXXX. profit our as del/dup expect invest to content profit and Gross sample. bolus Medicare profit related $XX.X to million the features in one-time and will Without third While testing, and we from million $XX.X for down a costs customers for nearly we the and we volume believe quarter-over-quarter. million new gross increase was our from in $X.X quarter, represents COGS to in balance from the HBOC in $XX.X reduce been have profit continue up ability COGS introducing gross thus, would $X fluctuate the we driving see million per in our gross reductions, COGS second the quarter million quarter; benefit

gross margin Our third period was XX% the in the comparable compared in to XX% in quarter XXXX.

and of year, while to continue goal volumes, This towards We maintain our four our testing all flat doubled progress platform OpEx. the entire have across gross Invitae XX% companies we integrated margins

stock-based the we expenses impairment included of an and in cash, over took XXXX. increase cash compensation. $X.X financing $XXX.X equivalents, charge totaled This For the quarter, million million the $X.X includes XXXX, restricted revenue incurred At $XX down quarter. cash third net operating securities we during million, quarter the third a off and where operating excluding million. million $XX equity XX% proceeds of quarter of September of In test of ATM XXXX, cost XX, our expenses, third marketable

This of quarter, our we compared quarter reduction ahead in of representing nearly in quarter quarter, achieved goal million successfully XXXX, $XX.X burn first a burn XX% reaching $XX.X to one the time. from stated cash million the first

is non- slightly of our burn higher puts timing QX expect burn a our measure and fourth be press we GAAP noted million. would Cash Given to as in than quarter QX the the in $XX.X takes, and the release.

facility $XXX cap from million have annual has component for annual in the interest in XXXX down up prior participation at for portion of managed return has an reduced debt we to were future into close of We total capacity new The to facility with XX% rate the Capital. of with in a are seven proceeds financing XX% debt X.XX%; year of by to and nearly equity a that in million compared under arrangement needs. entered our $XX only facility. debt revenue used fixed our covenants new pay rate to and excited that debt $X This prior the down We Oberland funds a took million and expanded starts facility. business announce

to on quarter’s $X forma a new access capital with approximately hand facility. $XXX received cash another with debt Oberland. pro new have $XXX we Thus, million basis on from this also We investment equity our our cash in million million added from end, to at

in are the forward mainstream mission medicine. we business control our $XXX into ability genetics million our bringing Given at to our of burn positioned drive disposal, to capital realize to well over and

more any trade-offs. quarter, the to one goals. focus of may one less to talked have previously four the spend volume, We’ve We us demonstrating of we drive Volume our pull about manage levers will the business and remains these collection, as the and our on burn down, enable our of to or business the there health four levers. key each levers operating that in expenses. of these any In ability indicator meet be needed and COGS our

that instance, volume down impacts the is For flipside volume we drive face access revenue. we our Within may COGS, COGS. our helps similar that But tradeoffs. that

COGS impacted more maybe in add near-term. As we the content,

In plan technology terms of customer and to our facts, continue investing we improving the experience. infrastructure in

the the for We will best make long-term health business. of choice the

a nearly and did remarkable business driving have grown improving If $X to ability $XXX important year we our we Equally working. to today. under $X,XXX from million. to happen decrease XXXX is This five COGS in been volumes our in this not shown, million As at quarter's back on grew has years, has from quarter $XX.X Revenues dramatically XXXX our collections. revenues under our this overnight. look to focus model rates our due

flow. we’ve $X.X profits. now and of profits two personnel million $XX.X from Success us With volume these in cash will in towards midterm helped, turned seeing in to automation, to Sean. growing operating OpEx the our terms in We’ve also has drive made drive negative generating enabled and this areas to call that, to gross over of begin business While back million These enable down equipment, I'll quarter. goal pay-offs the investments XXXX and to gross the COGS. in significant processes, us turn cover

Sean George

where by or they stages can to clearly life, face of integration across be execution, regardless Shelly. After years report rational widely them test by all expansion in. you, by a healthcare now offering in utilized migration from away world our continued today of and the face of test, for of they infrastructure, challenges future of of stage information see technology investment report capabilities, genetics new customers what the this we can setting set Thank

look to combined we on customers, business and year of over it's be the of forward mainstream the say Given I our how Taking capabilities the increasing to as in the broader patients' that year, account fair strength these benefit focus the developments us. believe so, offered demonstrating potential only perception to relentless With growing healthcare. industry that, continued of in our can a the scratches patients' visible many. of possibilities never the the information world call has see Even operator so now we surface broad will so for the believe lives to the over and turn I Q&A. for this improve in been genetic to we that front of past

Operator

from first Morgan. Tycho JP [Operator Instructions] Your comes with question Peterson

Your is open. line

Unidentified Analyst

Julia the on taking for congrats and on quarter thanks Tycho the It’s question. today, for

on mentioned you very maybe that quarter. I strongly volume this the So grow volume, your know pharma

could of over sense of currently segments? you rough about possible, how from extent pricing direct the evolving Thanks. volume give do to us to can any you two between see test patient partners, is then differences your how a talk much and your mix So time? pharam And the maybe your you that versus

Sean George

Sure.

within all that XXX% as Same drop pay. our breaking market. frankly start out the back particularly customer elasticity a I again, little others. of the rapidly note has in Over around growth, show noise. our But has to that it’s going pharma did not time allowed to up, against explicitly. grew think pricing more relative we’re been the We So up business the patient with segments

of and price is that ASP X,XXX. course, are contracts and the pay publicly volume to, enterprise today. mix our around -- And $XXX the of prices of patient leads all what lead Our and are again institutional slightly mix at our noted insurance and of those

quarter happy going out each we’re forward, yes, we’re the But So happy breaking with not really and of segment. yes, with each. the growth

Shelly Guyer

through ordering to seeing beyond The I when the those would clinicians programs, pharma these are seeing we program. thing is add we’re that only additional through volume come clinicians that pharma

them it’s beyond ensure that So, with customers to pharma up we’re pull opening through program able stickiness itself. a relationship with these the to longer-term

Sean George

mention is showing for just then pay year, remind we more see the do actually, about we development volume -- to that development. published for patients. criteria patients come. patients. diagnostic and the that guidelines prices factor one And an up to for direct and the would from be the cancer It And interest criteria a certainly, I years Medicare with decision-making patient we same guidelines patients I more about will about committee mention to a as of for breast now, that's study the thing And does me it hereditary services to basically to essentially Perhaps have important testing -- our yield hope lot third with ovarian within going add our thought this in societies, party think and continue speed professional reimbursements.

Unidentified Analyst

this I since re-launched then test. And just on quarter you up expenditure is follow believe full first the of a screening. the ECS

on talk So market could ECS that’s And about share seen what expectation strong to pricing? the effective have growth lately? Thanks. and any developments you code you then maybe much XXXX, new the was the regarding how is of for attributed dynamics latest and volume that you that

Sean George

product catching particularly in us, in still So OB in still we’re that in are putting directly days. We the now, prenatal next sector. I'd namely know the days introductions be which I'd sector, segment year the for IBS it's will with screening, mentioned we're businesses help. it's or learning year that say before. a the will early strong non-invasive We say OB early there think we've

contributors to safe offering broad Really big it's it's there, particularly one the it. what like we growth, of massive but think see in our we with certainly the say segment. opportunity in to I so that And the range like of

As no. code, for -- the the code HET

easily perhaps just it. I actually XX% We're margin the OB infrastructure, -- balance participating suit cost or We're say think, of segment, that We're we’re in more fine. IBS I'd development. that With we payment gross obviously. even and can also foresee rates platform. interested. now watching our the in us the our mind But

the the cash flow So and on is. with we’re happy upside if And in with business. where improves elsewhere alone it regeneration will our invest it we that that

Operator

Company. next from Doug Cowen question with and comes Your Schenkel

is line You open.

Adam Wieschhaus

thanks This Wieschhaus for on Doug, for taking is questions. Adam my

revised for it wasn’t up implies you'll year volume or revision QX. in approximate samples guidance Your full a more XX,XXX year. it was Acknowledging, the

that volume down think step would sequentially. be a I

you just arrived I could my was make that color so, So, perhaps revised right. want to provide guidance? math you how some sure at And if on

Sean George

math. to not So your I’m going challenge

I text well. think -- my as out written there that my

year, absolutely don’t really on that want just like we said get guide think we us. we have front in quarter I make in all we'd sure to And -- to see that of which be all quarter, typically Thanksgiving in of particular and by particular, you've other. to relative course got far of ahead And too ourselves. right QX next NSGC is the each largest And far. this

far told, range to great all too make don't of for to want -- feel future And that’s so business. just in sure the -- we that we bullish set But about the growth. We get think so decided good feeling about ourselves. ahead measure. We guidance

Adam Wieschhaus

the launch remaining there product, you when can in-house Thanks. development NRBQ could the do expect be on hurdle any And before provide commercially to of available? you update and such what’s it your as that

Sean George

idea is year. The it -- at commercialization get the next working out for So beginning that. to there on as we of been it we’ve mentioned, have

track million this on Let’s again, X.X excited with U.S., other reproductive even could with offerings portfolio. we’re in And year at point, getting in about every combination do that the NIPS do million to our say, women -- we’re health what the services to in so. only today, the service pretty X still

Operator

Leerink. next Souda Your Puneet question comes with Instructions] [Operator from

open. is line Your

Puneet Souda

ask the the bit me the on let Shelly, components first a of question growth.

seeing most level of on seeing high You've done of And COGS reduction, versus picture interpretation. Where anything medical a and you growth sample you going are to trying perhaps reproductive good the any growth? the sequencing there? the Where it we are seeing provide job are could just COGS COGS you bioinformatics If most Is through Where how the year? understand. reduction? versus about versus in then reduction growth COGS think hereditary should you growth, last just the forward? reduction,

Sean George

in forward. to that see let’s understand increasingly disease, going us And the questions again, difficult help whether simply communicate product the segment. won’t nor around to looking all mean, or on business. to segments, going everybody bundling for I as It's just diagnosing that’s we out setting you answering preventive desire first. our of as be So not depending begin our we together, everybody you’re the genetics. more mentioned, reproductive remind obsolescence at business, for proactive content the health simple screening this It's of or become diseases a traditional to breaking

our saw So that areas that’s days level, for high the about reproductive. talk all we -- board the growth at as on just to mentioned, I With the rationale. and said disease across early

front of we’re we end perspective. at that so our And ramp from the on the looking

into think reducing I business, has will it point per continue that operating mentioned, relentless And where at do and COGS, the there works this for can on. pricing, we life patient look this flow, to per years. thinking think, new as COGS eight and answer the of for go COGS continually sample went, been the day-to-day last Lee content, on toward will detail. about I or begin we’ll capabilities a in year. balance focus more so is, new perhaps, versus the a the no did particularly business is short mentioning, focus On worth cash where But COGS it we we Shelly be of really this forward to in-market per Albeit, matter

three Going figure just do Lee, specifics the main few to and outlook. in buckets the forward, want we’ll out the that you about of some talk future But next months. on

Lee Bendekgey

examples. I’ll -- of maybe, some way give you by Just

small which Francisco, Sean particularly COGS our said, because we in and focusing assays for mentioned general, the COGS our amount San carrier, now smaller. getting small and on As reductions, been PGT of what we focusing attention we’ve stat really extended reproductive long list savings. reproductive dollar on done our our were -- turned individually and back offerings, that last now to quarter, had relatively are running we we've are In up

assays COGS the We that we stack have the -- than than entities better acquired. a that profile we

to thing. as know, So starting you real was that's be lab see as to the always progress long-haul report one in we which interpretation We're expenses. writing, and varied going reduce

so there to And shipping that. everything continue pricing and down. way then kit Prozac we're through cost do we that as can working we bring are things to And our

list can you to in us so continue work the small And increments the expect quarter-over-quarter. see in

Puneet Souda

West Sean, Has the we a everything on companies And one on somatic growth seen consolidation. to get the confirm wanted to just Coast Obviously, coming -- then view lab last on of Just that? to number can you a lab, market moved if significant have bit testing, market. there.

Just trying And ago? opportunities to there for somatic again. the the understand, --is and versus is do how cost if to now year value. opportunity down drive that view a there opportunity Thanks market you bringing as

Lee Bendekgey

take terms of first in Yes. lab. I'll the So the question

Francisco. running testing carrier in assay We’re assay, both pre-implantation well our San as as genetic screen

yet perhaps not the in decommissioning by lab the to this either quarter but end have we that beginning completed next We Cambridge of quarter. of do expect or

up completed So, Francisco into have But we integration Cambridge. those we're operations. wrapping the yes, of the assays San our still

Sean George

risk, to in it monitoring clinical the the that lifetime, or X.X recurrence the with at I that the of I And liquid efficient more at for are do really on disease. in coming today. U.S. late, a using individuals I for against people information And journey life the treat think able and up rooted manage be think actually going million be as way X.X were, that come for are natural there molecular that that exciting come I see with move of million will it of see that and monitoring think done deeply I the of do really will that view with again and course, We high of characterization that are future somatic, and outcome a all provide view and at pretty And we then really But they be in that part prognosis infections, it’s in given exciting down to to is, people And perhaps down seemed really I cancer. that the open that to others, to of our just as patients' develop And a a identification the cancer certainly disease so number than risk see industry a world, all then, cancer going [canova] strategies ways identifying when reality in can when a to and the the many note that today, in with around lifetime. pretty effective variety the actually like cancer, people foam our like is we on be is think can leader personal unfortunately fighting of pretty believe of especially cancer, forward. in the news impression as of we our is the it, those genetic -- and consistent we victims successful of biopsy And this us. information exciting, cancer therapy much like we about part then it we obviously, technologies of decisions. for can impact market prices the therapies outlook now what’s patients' individuals the nature near in today. has can tumor of with clear that HIV think

Operator

time. are the back at no over questions D'Angelo call I’ll this remarks. for further up Laura closing turn There to queued

Laura D'Angelo

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

Operator

conference This call. today’s concludes

disconnect. now may You

Laura D'Angelo	Investor Relations
Sean George	Chief Executive Officer
Shelly Guyer	Chief Financial Officer
Bob Nussbaum	Chief Medical Officer
Lee Bendekgey	Chief Operating Officer
Katherine Stueland	Chief Commercial Officer
Tycho Peterson	JP Morgan
Adam Wieschhaus	Cowen and Company
Puneet Souda	Leerink

Invitae (NVTAQ) 7 Nov 182018 Q3 Earnings call transcript