NVTA - Earnings call transcript Q4 2018

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Operator

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

Laura D'Angelo

operator, joining us you, earnings and and good for you call. Thank everyone. for XXXX afternoon, year-end Thank our quarter fourth

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

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

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

to in our Risk from press With hereof. our on review We any to speak cause the consider don’t Our turn United in you to you prepared the investments, of guidance our to legal that on additional the are cash XX, Factors and reconciliations, future the financial for that We that, To Principles XXXX, call burn. States among release. Generally with These materially results additional forward-looking for information will ended business September statements only Accepted GAAP, or 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

few market year, in discerning decade, one the investors answered test, new model, peers, achieve as life. everyone dismissed niche, last future to test spoken. by the on thought as five inefficient one report proven efforts genetic industries. from work. the other our new We're approach most that beyond XXX,XXX A out to in test and fragmented, vision genetics, tests per the naive created expensive in genetics that moving fundamental the new past single with albeit the When there have was our Over In now up world report involving a health can stages questions of across where pursued entirely incumbents a driving working. and to be an comprehensively tens we've that novel skeptical by approaches with model cost company, genetics this, has of amongst most thousands in we one To would personal the is been is And world, information experts years, entrants. all business our innovative we’ve started customers, dollars us was could platform. well an multiple available

patients highlight most price can last highest ago offer elasticity importantly, their information grow and We trajectory one and turn to in more have reducing and for enabling is volume, less we the have of We've to market genetic by scratching put to terms will that a alone, of in drive XXX market, the million revenue, XXX,XXX alone. tenfold of niche the of over demonstrated share, the have toward burn In the company OpEx, reduced results the are benefit. to demonstrated price quarter. COGS just that grown years over than approaches just year on us in use most We patients, people to affordable managing the quality to more providers, the our I call potential. people and our to fully while we the intend we than that XXXX number Shelly of for the now take the We've than payers will surface from traditional alike. samples long-term testing our planet. COGS, to growth business truly reach gain time and to high more profitability, challenging $XXX, compelling, than X dramatically rapidly and billions advantage samples increase testing, the the ability five to of financial day,

Shelly Guyer

over from XXX,XXX Volume growth you, year XXX,XXX indicator And metric, for of real fourth working. year, year an over accessioning posted reported approximately revised We model is pleased Thank increasingly given we our that accessioned in we have Sean. accrue approximately revenue. XX,XXX the of our bested continues business the year the guidance XXXX, be Billable samples samples. samples another the year best XXX% our relevant This in to all including is of quarter. growth. time tests that to previous triple-digit are

from late year. account as XX% well to of in markets, we uplift Volume as tests, In fourth was the which international quarter. we XXXX, programs. reported diagnostic across related with from total new biopharma XXX,XXX partner strong and XX,XXX experienced growing we areas approximately steadily the all billable testing volume an our accounts. about testing saw in reproductive, now old During the strong over Notably, for in volume

in the genetics based testing, quarters best our on space, grow of of of our increasing many to terms on traditionally in in and succession the the as importance XXXX diagnostic and quarter reproductive pricing, test has tailwinds the strategy guidelines seasonality, quality the one expect to of note and A new on payers. We companies fourth with our been of build.

in quarterly did years. same we to two We see the next expect past year seasonality as the

the growth. first second growth, produce seasonal third experienced The and declines quarters more the fourth while quarters in and robust

is success our next the revenue. volume, key indicator While indicator is the of leading

We continue to achieved XXXX, updated fourth revenue generated in over and XX.X the pre million year. in growth in early guidance. year pull quarter, through including exceeding XXX.X announced our improve and the annual we revenue XXX% of million We revenue our January revenue

in revenue habit, expect of to any XXXX. up is our upticks payments We due million quarter. In one-time in have the XXXX. Medicare payments the recognized we revenue Lynch syndrome we our fourth Medicare not additional would our tests bolus, from $X.X XXXX, Lynch Without one-time completed to been do As fourth from point have revenue. first experienced in when benefits half catch revenue out in this of for quarter for $XX.X the in million approximately payments the we

year, the million in one-time pickups. our revenue Medicare without the For would XXX.X been have XXX.X million

to from our improvements approximately collection which and from pay increasing rates due mix in revenue and typically payers, healthy modest pharma a see continue certainty. with steady XX% partners, Medicare, to including but third-party and of XXXX constituted We of institutional greater

to our I absent revenue one-time our would $XXX. affects quarter's third been This test $XXX revenue revenue should increased payments, average too. Again, average quarter. per And from approximately have $XXX per [indiscernible] the that Medicare the mention in seasonality test

X. in for last by cancer year's impact January XX% has also testing a rates seasonality First, from the PAMA direct but were beginning rates recall on our reduced revenue volume that

not $XXX earlier, XXXX, in we of of quarter and expect significant reduced this Finally, payments sample fourth beyond. that as quarter we XX% average year pull boluses so from the much representing over the mentioned COGS fourth success. the year. did In quarter in per another cost any to down an $XXX, to XXXX, from we a COGS reduction first of Medicare can we do one-time was quarter lever and

continue volume interpretation that still improvements in medical automation we and invest We reduce cost and COGS, related to from to we benefit other believe reductions.

new as fluctuate with will and balance features COGS per we costs content of that expect we the down sample. driving introduction However,

Our suite end front tests include the products their of cycle. more life of at

quarter, volume have The profit XXX% adoption. in screening introduction gross COGS, amount increase to increased gross we We demonstrating of our that's we adoption less profit prenatal COGS apply of working. term, profit newly increase an these is relatively our Gross In to model the our increase targets would the increased significant up $XX.X the may near health payments, COGS. year. our our payments, the Without would with of throughput in critical manage business generate have the XX% customary XX.X expenses one-time decrease previous until in is representing and we tests would gross profit the XX% the XXXX. which fourth the in for been of or XX% that expect have a This the million up was we a and the were test non-invasive million margin approximately for our fourth gross fourth In from margin XX% lever used stated gross year neared ago. fourth approximately margin long-term the is $XX.X million. reported gross for In XXXX financial our markedly and XX% XX.X and quarter. margin year Operating XX%. gross We the the business. fourth for the quarter, of profit for been one-time XXXX, go introduced efficiency practices year’s higher we was and million. XX% pleased IPS, until XXXX, the to gross Medicare quarter realize with test the in Medicare is from We without

increased in cost our and $XXX.X year the increase of versus scale for was the investments hired our XXX% the marketing headcount quarter volume additional increase on profit. For operating us in for The preparing QX launches expenses, full-year with business, charge and as million. down. which gross customer headcount XXX% new driving prepared we was selling and and took from improving our product $X an Operating investment. spent associated of of $XX.X revenue, in we impairment on primarily costs for and million, enabling of and over expense marketing our In quarter studies a We of revenue R&D. expansion. in year we an marketing G&A, XXXX, fourth incurred XX% is In and products, in increase excludes million experience, to focused an R&D, in selling

on Our $X.X extinguishment the was our expanded acquisition quarter. we deadline. prior of expense the benefit by was a associated and related quarterly new tax And net our line, agreement debt million put million place CombiMatrix income recorded in to with a impacted income tax loss $X.X this as also

this XXXX, operating spend growth to X the we our growth The anticipate overall rate in increase reaching OpEx foster enter will below our expenses we As be somewhat the year and XX% of beyond, XXXX. increasing patients. million

and personnel selling testing to launch of marketing would have second also XXX XXXX. volume but sales continue expect We've and rate the to already added initiated rate First, we sales to quarter invest patient growth the the exceed We will currently in generate force. growth only not in about our to in growth in XXXX.

in investments fourth rates. in similar our into R&D continue at the will quarter XXXX Second, that began

the we integration previous will in acquisitions line in As cost the [indiscernible], growth the we due continue to anticipate XXXX improve behind significantly now lower be in are growth, year, to the high of the structure, us. below commercial increase will And growth to we recent and enable quarterly spend channel. than rates our new G&A as in growth the grow but G&A the than We dollars which XXXX. finally, be rate which would that was lower and our expect our absolute expand with made or

XXXX, marketable from the onto our $XXX.X cash cash and almost flat million, equivalents, quarter. Moving XX, December totaled prior at restricted position, securities cash, cash,

and quarter, it taking take fixed rate, lower up in the with out the additional touches. to with debt million interest to old a replacing period and ability of our seven-year only a debt, we During funds multiple restructured $XXX debt

We XX% a cash our stated goals the press year. for The measure cash as our burn we XXXX achieved exceeding end the We of fourth original $XX.X million, good our XX% of and small that juncture, additional the cash levers payments. first was accepted in quarter. million anticipate for XX% We this benefited a reached collections as non-GAAP cash our of in can to the of early, the quarter a critical from Medicare business. reduction, quarter including payers the key goal full-year Medicare we have was XXXX yearend. payments the goal. this clean by first the from as quarter detailed control reduce we by the from shown to One our Lynch one-time at four the At burn, in $XX and quarterly we XXXX release year, quarter slate benefit

the make continue We've and creating works we've that new and we to in decision the continue where model ladder. and to point in market term We competitive reached invest advantage the capturing the have the our near drive proven can chosen the growth breakeven toward or potential.

anticipate We burn in investment we two the in of follow selling and controlled decrease these higher reflecting reset year quarter. go investments. the the down cadence lowers expenses and the early then will forward, will costs up Looking have as XXXX, early annual deliberate since of of and back first reap rates XXXX Collections in R&D our year that a the as half in marketing the our items ticket big will Medicare benefits in in the XX%. And on first occur quarters be

first and more growth the this the Our more bringing late year is costs full year, revenue than sales million. XXX,XXX effect Additionally, on expected quarter hit and aggressive revenue early to volume will generating in samples increase. The $XXX than R&D will guidance of goals year personnel our of impact and employees XXXX last our for

guide what is our sight. is within line As practice, we to of our

However, hard to from well This grow products, as and in an new reproductive guidance new flow. will patient we as predict includes channel. increase volumes does volume initiated exchange, introduce anticipate our quickly modest mix which will testing a it's as testing how reimbursement volume

foundation many expressed the this stage Medicare patient As of groups, be mistake. early interprets is the reflects January in it as coverage may to at cancer late medicine group that reimbursement Medicare resolved patients. testing the the contribution a including testing groups, societies, will this a indicated the you in germline that professional and cancer to optimistic that have have of cancer We're germline limiting of way that patients heard, Leading advocacy NCD, industry Invitae among CMS view population.

of our launches. an now are And from product optimism our Bob this We anticipate we our maintaining call announced the appropriate guidance I resolution because growth XXXX because of to turn regarding the recently issue. over will of

Bob Nussbaum

to they proud more than people very in are with the progress getting week just breast information women Data diagnosed them testing to year, available all testing States, revised a need to their be These call of are hereditary largely of cancer. guide need demonstrating genetic last a collaboration that limit of and breast we've for in with with the are showed a cancer. history we breast cancer on We're clinical genetic to recent for importance surgeons guidelines had Society based The offering or guidelines cancer. Every restrictive. be the of But genetic in generic only revised United TMP based designed X.X personal to generated that care. to with only all unnecessarily breast genetic patients American data were history for patients subset the million care fraction of breast the personal made testing announced family testing network. of guidelines on

that suggest from guidelines the who benefit Additionally, testing. genetic had patients testing updated previously may

reflection Oncology. decision Office since Clinical that specifically and expanded has state Supreme cost.” in competition patent The also a done Invitae has patient to is increase breast has every with lower access This the helped the for of cost every not cancer. but work cancer the availability in the the “genetic testing overturning results scope decision of the of The to Journal contesting woman only Our recently and increased with Court and for in guidelines lower direct published that XXXX. were the

found that testing practice guidelines, to new while inherited recent and to that a I'll catch In provide of other working cancers. prostate leading from years working time for would researchers today patients The counseling suggesting associated would place Invitae up with genetic shows prostate actionable the who various or patients prostate centers a cancer published to-date warranted. genetic can fact, genetic of cancer to of in cancer we're largest to for which note members, the analysis cancer indicate testing study cancer we're country's for guidelines family that showed that historically of Center in genetic the the genetic revised alter XX% utility for data Oncology, that receive patients testing take one set and According the is every clinical cancer with their clinicians missed Cancer with through walks risk cancers. patient regarding of data broader of testing study doors. management need should JAMA generate Similarly, higher variants with at carry Tulane variants of

number in we other for inevitable a we for hereditary exactly is continue oncology areas, broadening genetic As testing epilepsy be whom and data number syndromes, in develop will continue a offered example, the will the we genetic be we should grow, to that childhood, see for significant the areas publish same and benefit have to of can testing in true in support cover. sustained patients of be testing found we provide it who of cancer increase there all early that to patients from

we down, This available the high of has restrictive only to era that the do, technology prices and As should Invitae’s benefit number prices for in maintaining of the genetic clinical people benefit of end of have to ultimately highest will the quality so the artificially and marks And testing limit transparency we only impact everything the to approach responded. driven grow. when more. many the that be policies world testing continue full while

small We of from building X baby. there value alone, In than that for the and both percentage mother great the of and reproductive those of health benefit the are of genetic wellbeing now year more actively per pregnancies a our suite full health are out million currently US is offerings. and information the only

NIPS, genetic stages all early testing provide women's pregnancy patients access or to screening are now recent easier health launch Invitae’s affordable across and non-invasive with we of menu, to in life. With to genetic testing prenatal added the able of comprehensive

and at refer increased clear non-invasive counseling chromosome in result testing risk While opened genetic proactive is contrast, least in by and or not clear always screening as years of Invitae of up specific carrier which done decisions. some imbalances. genetic to positioned having refer is genetic genetic in follow grade testing. are panel NIPT, family or to a they to specific these present clinical diagnostic is and a prenatal as history caused or is screening positive we indication to of diagnostic test. certain number launched fetus. need that genes there's designed tested a data up affected be we is think should genetic certainty sensitive testing condition previously patient disorders provide intended diagnose the health further that be history the genetic and screening Invitae test or one testing. diagnostic carrying during but with recently In a six with important a of guide there a NIPS, women prenatal possible beginning new as with screening, about our comprehensive to prenatal genetic screening we preferably large to a those million whether screening offering, warrant mitigate for were the Women genetic fetus we to proactive of Prenatal whether ago, healthy for health genetic set did consisting information order believes more With testing, genetic clear before also for as completely with we much to proactive A would to contemplating our a with assess between family distinction offered it's diagnostic needed steps a next test without disorder about pregnancy, individuals are condition serve. to testing. their individuals diagnostic pregnancy testing, disease. for without X a had customers fetal personal offer our to or or We From the a know showing what at the well disorders to are personal either to that to strong who reported analyzed prevent

clinical guidelines. with to launch testing in continued initiated from allow able genetic increase when testing. channel of At to of have direct the genetic in a testing access limitations, testing, these quality patient anyone negatives experts to XXXX that false announced quarter high them cost, them the an all for ever the clinical access to genetic through and clinical same counselors, effort restrictive testing popularity, the consumer of new barriers, new testing, to the to provide to decisions highest We they the roadblocks time, many before seeking testing will stages confirmatory receiving turning consistently need. access order second by healthcare and been positives Invitae scarcity, it clinical the provider need the the test system. Finally, health menu, to in life. information than when that facing despite channel Invitae prevent from barriers they get genetic rates making higher of needed and This across often entire for both information about our including face seeking Too test grow patients hear for grade clinicians, at inform outdated information insurance our have and the easier the clinical health same genetic thrown patients to across patients obstacles consumers

could With for third access they by example, with of to obtain are a with but seek who present. disease, party suspect member of expertise time baby number cancer before to that with to people that reproductive the family undiagnosed or everyone. an tragic open incomprehensible hereditary born who families testing personally and personal expanded the for clinical them. pregnancy, find one keep carrier disease no channel payment the is a answers health, market will the growing to of couple seeking is it new of first about testing testing genetic include women data when risk an are I and for a of the Or not frustrated an having and to risk considering the or be close often supporting or because cardiovascular having available proactive broader not who screen disease wish condition. lack inability inherited relative their disease who day greatest of their limiting with patients more life their having family and genetic child immediate history in with options for learns utility be example, value For family to or this information, order severe than their understand a even of indeed

Sean George

you, Thank Bob.

trials of With customers. the industry wherein the to capabilities and recent creating continued patients additional clinical national network can remove Since and have system, healthcare information to to are to diagnosis barriers, physician network, hospital we so beginning menu expansion can get XX drug faster, developers bring sooner, enroll and our health we to more a added of our dedication we've excellence, researchers QX, the our bring therapies biopharma and from accurate bring market and value Together, provide in broader partners we who to partnerships. faster.

the capabilities information the in We our platform we in ensuring recap over summary, deepening our and I'll this commitment In operator remain look care And the the five mainstream medicine With health steadfast that, it. industry call Q&A. for the to now to the future, for better to our genetic within past we've to network everyone. to as we years. testing to broadening invest enters turn will of ability genetic continue demonstrated over

Operator

the first Peterson Tycho Instructions] comes [Operator line Your Morgan. from of question from JP

Tycho Peterson

also initiative? patient about can for testing you talk Hey, and maybe wondering, start, then NIPS initiated embedded thanks. guidance what's Sean, in the to if just

Sean George

Sure.

I health from slow assume like offering some anticipates our our space. in – a of don't to being going easy anticipating their development at entrenched the, really of direct a relatively guidance about in it and channel. say So really genetics and the said, for initiated it's NIPS both certainly known contribution that today known mostly patient this would is both that nothing nothing comprehensive of as is burn those, there With capabilities. or be offered in launched reproductive competitors We well, scale that

this anything but year kind initial really than volume advancing this anticipating the -- So keep as we view if there, of of everyone faster it's will some and we're see that. we days posted, really

Tycho Peterson

[indiscernible] claims what's Okay. and Can that? at accepting this embedded on then guidance And in point? they terms of still in you are clarify

Sean George

Yeah.

just I'll guidance. briefly go So on

are, we're change We on no guidance. this assuming the at point,

think be undoubtedly that think happens, other, general but there's we is go to into frankly and Lee able kind of can happening. depth the on kind picks change I up, in the of what's the to what from we the way or is to and think change, genetics the, over absorb we'd or one interest enough regardless the guidelines going be not more tailwind will details, here of point what happening, the more year

Lee Bendekgey

Sure. Thanks, Sean.

So Tycho, is that sample taken. is the of the Medicare service the date date

drawn, effect, So of assuming would that coverage in the it on remains currency applying foundation, that starting only today. and national samples interpretation that’s frankly the decision start to claims we based submit

the until the goes report the out basically, has expect we us seeing then end wouldn't of we get because then it bill. sample March, to to to So, and start and

explain all that working have industry with really are oversight of still that risk syndromes of well of responsibility the legislative we utility to imagine, a most CMS that is can committees the patients, the with along you have as is professional have based misunderstanding, So societies, recurrence. identify as that and the of to patients the this on the to hard folks metastasis time the because those we germline greatest is to groups, -- cancer they testing hereditary in as some are and advocacy the

in to is was this in of plenty be them the that a and and convince along the Bob stage research this lines is fact, and think other of moving patients direction. anything, we really the some the germline community primarily given testing that to evidence, in submit rest in can submit So just if a misunderstanding -- mistake to cover outlined, that they that we earlier value sure the the the of opportunities and we're the

Tycho Peterson

solely just on out that taking? then the given talk of to price? other market, maybe differentiate how And angles are Or just Okay. lastly on there the you can you're are it there, number in NIPS, vendors about is plan you

Shelly Guyer

Sure. Thanks, Tycho.

as providing technology. segment verify, announced standard that Sean NIPS market we mentioned, to going last is start are a utilizing is leading which customer to we So, luminous OBGYN that week, and

think more make the use, here done easier I the we've is it space what in for OB intend more difference big is that oncology the to And people. to is more and twofold. affordable easier to we One, access, in what space. accessible do

a the know, we've market that that so of big we open that's that strategy one deploy And and is differentiators proven up we can so first.

to comprehensive OBGYN products suite being offer is of Second, to office critical. an a able

being They on cancer proactive a that our something our offer does that And we is in pair bit to to to know NIPS then like occur testing we to help would able utilize. that carrier beyond quite able being to heard OBs. to build from differentiate. as with we've going believe is setting, able that there's that so be as going both So, offering is that cancer our well diagnostic OBGYN of us further screen that, something

we testing are we providing better a the in screening and approach the intend setting. genetic So to what ways is be those two believe that to OB

Operator

Company. line question Cowen comes next Schenkel the and of from from Doug Your

Unidentified Analyst

Adam is questions. Doug. taking on my Thanks This for

of those person of you percent many think reps can XXX your NIPS You what team sales force, selling you have cover? health know addressable do and productive products now this are how the market

Shelly Guyer

Sure.

genetics are well experts to oncologists the the as well reps, in setting to vast selling as as of majority OBs. the to cancer So them as XXX

serve way about able then but who on sell about and market OBs, the think testing through are who of is be pregnant ability having see channel, market this to mentioned, realistically, that significantly I start opening to be cancer direct through family or are in setting. the which we so And to Bob we're same we to that up our to are seeing channel really quarter. a going turning the majority and women focused being the the way up thinking second that women think open providing also Sean this, we're that in So on able those our as carrier

pregnancies the a OBs year, women see channel are who initiated opportunity there provide see testing as as we as both to our to to information and able through So channel the be we direct -- well through selling direct million genetic patient to the that screening. X the

Unidentified Analyst

and what's at commercial Thank favorable endorsement the today assume guys does your in the average your of term? issue, near more any And NIPS status kind you.

Sean George

been has gate. expecting week last blow I we beginning mentioned, to we announced of -- it the think we today are -- not right out quite and we're statuses expect commencing Commercial literally, and volume as I

to everybody As to about lately, And kind how risk coming seems what prenatal the changes would sense. we are appear of with screening, which probably along lot I screen with for it ACOG expanded the think guidance, it the like and think criteria for would expanding expand, out. of expect heard, considering we've else in recommendations I make non-invasive carrier a

of of payer well a to also, being genetic information which result -- very real see consider patient reimbursement. is one to the would as breadth growth that who other currently for may wait of we're will On get the outside offer and of as pay as from that, too which falls the we strategy of revenue about of to informs start payers hand, whether services finish, it, question what and her suggesting option third-party like is pay think I before that our risk probably however, categories to is a for a needed solid able the for excited get kind going woman

Unidentified Analyst

tax revenue million It Maybe if million guided and in I that a XXX you get in ago in. was one year X roughly to more XXXX.

in like do believe you expect hit mean, as well? the Thanks. still to XXXX. hit million Sounds mark revenue does achievable that XXX million -- also target What is customer X you that

Sean George

again, going. too answer think of The kind view we And to look, of want kind And year our our business is for also is a yes. has that for I million end, more we on, aspirational our X fairly changed. do think I put a always as to year. specific XXX not The and next where no, fine this short more million anything is point we’ll guidance view else, than to not think from call as this perspective

made kind in think point medical mainstream I we the that’s is is fact, the tipping think players a and a of to think around in factor decade, coming are that the genetics space of going In to coming And continue healthcare to of we've the the last view. the we come. of be is point very over here bit world that the into investment different as lot a a such, where important years to

So, playing way the out. view yes, I it think that still we’ll consider we

Operator

Souda question from from next of Leerink. Your comes Puneet line the

is line Your open.

Puneet Souda

billing on Medicare revenue sense Medicare us pricing make you could touch right you can the with your just a to in mix into hereditary both expected and now? PAMA one, visibility the I payer wanted first give us on a to and end? reproductive as for wanted contracts give decline commercial questions. sure, just maybe And you of So of coming,

Sean George

Yeah, absolutely.

Let's the of – And percentage Shelly kind the the kind on and I'll crystal will ball things. how of payment first, impact. is do of which payer the about the side then first, cover cover Medicare

Shelly Guyer

Medicare the XX% on days up. XX%. to one primarily quarter [indiscernible] and in as this traditional HBOC in in the quarters uptick So hit both and fourth We from nice probably opposed that did time Lynch, to to second the pick are X% volumes these year in more get like which XX% a

were And so last have quarter. in ASPs payers We our also third-party those us increase increasing. to did though helpful

And improvement. the so was it just Medicare not

three to a by HBOC And as have I XX%. for PAMA think as the we we New each reduces of did look of tune year to years. payments in decrease X, you the know, January XX% Year, as our our

the to So be collections to that able the through -- continuing with other able that believe to as move payers. those third payers and will all up have from make increase coming be on we'll year, an third for We that party other impact. do we

the Medicare side I think from it that's So and –

Sean George

Yeah.

On noting, rate those all have the we of on go I conversations, in some the $X,XXX. and of have contract and where lives still we still majority the now in commercial think this private covered is commercial, yet the to worth we the around contracted -- US, insurers, are discussing

checked $X,XXX, network hasn't understanding this the is kind what our testing is little more tiers to around have had kind of and and that for payers going many a new double rate and everyone, come some experience is of around, can that with of around the checked even payers. being contracts to offer pricing kind bit if We've in rates and So, come what coming forward, that years these kind it's what under the taken for now, the -- contract -- of changed. a

there. changing on a we front see So don't lot that whole

time, than would we it kind however the the actually seem payment I be thinking predict seem for exception think payers think the going those would is are should. to criteria that represented example, the but into data these expand Nussbaum take studies certainly to covered, deal deletion Dr. they -- imagine that to broader there seem We that very that for in over way of back data, coverage to the of its for pushing conversation we and one-offs is occasional difficult working for be with third-party and things testing, is way about data pulling much against these limiting, and of paying this or trend starts other to duplication longer testing. that very the begin when kind again, making

we on the necessarily aren't betting So that near term. in

Shelly Guyer

one probably I able side. are footnote positive from we on that would that in payers to the to give will that increase be is we The and seeing signs reproductive the Yeah. marketplace

And those are population. what newer those there's appreciation a seeing are an our payer’s into to can tests for contracts. we So mean that

payers, we new that that across so guidelines, are that help this also without positive we perspective. perspective uptick year And but will some from that many would of the even have in

Puneet Souda

declined a target COGS give needed steadily coming maybe NIPS -- about coming in already? here reduction -- of bit COGS with and of, sense term maybe where here sort time do see of and longer on you the we the just you you on sequencing me the board, And close consistently. for can a or let parts that's a sense do different should that, COGS XX% margin us touch you us term stack or think give term turnaround Can longer and the the you're a from is which as guys reduction think obviously, a near where how and COGS bioinformatics, gross to of the medical sample the move interpretation, have prep

Sean George

Sure. Yes.

as think what baked just key I we for. term the going And of a I’ll So, know, the we I handful an are think, turn COGS. you're with long you in things targeting you well cover answer yes, overall, there's gross it elements of as into as XX% again, at some of that start think get margins. management, can platform

from decline which introduction new offerings, new of COGS, of offerings, of levels, platform features, all our and consistent all across historical new kind So around start service we’ll bouncing rapid services, then, in course COGS. COGS away

margin still on So, the offering XX% entire gross COGS to We will platform and in COGS overall continue always we remain as focused the business the run across accordingly. view term. long

NIPS the which I little of side will think to. Shelly of then cover cover you ongoing efforts, point the a more into to some kind detail, go and can Lee

Shelly Guyer

during comments automation, from new have when briefly introduce the had we have volume have of my would we upward products, so products that and we down, mentioned pressure, but prepared our I that and upward. as traditionally all So, pressure anticipate a it do drive the cetera, savings new increased would et COGS COGS

we're So those in line sort we upward of bringing we used bring begin send our anticipate as to. the NIPS would on over to with should quarters, able out able be and of that of are and introduction this with likely time several we the back to costs an magic with sort have we process year volume that will down and pressure, do what as those

model will will we be that NIPS also introduction going a ramping That's costs new just patient us, some and that's up and have we on the have So for testing. initiated of that. to

volumes And tend we amounts to volumes, why to us cost in with hit lower volume. it per us higher don’t both early those Lee? just over until get se, And terms that I hand of efficiency that so to of those be with

Lee Bendekgey

also usual the are to a is in -- a and plenty we will we as you are single have of you stack. platform in a benefit as significant report there's list for about improved But -- on described time, time Puneet, And list in what things turnaround writing, which and question, our varying And XXX which of improve has the costs. that the in interpretation now of to as terms streamline typically cost COGS, that work intuited long our the and of Sean your turnaround -- in of lab lower improve them element might percentage particular, do things there biggest quality. COGS can of

save do one to years the ago, difference these, the could of days, it each So compared old whereas us we and would is a something of XX in couple only bucks.

that that things Now, to bucks, save grown we're kits in lab hasn't but and couple list doing the the will shorter. any save us will X us of a things bucks

Puneet Souda

over of of in -- to the are more how turning just Do the Bob expect can on, the their be and I thinking last any and one, term the Dr. initiative, maybe out about would do more And eventually avenues think a starting you patient later that? DTC type pay diagnostic towards longer Nussbaum here squeeze it from thinking if as own it in, you those patients then model payers patient the, contribution or term? that can longer lines converging elaborate can is along you on

Sean George

Yeah.

go I’d love into for actually So that. Bob to

volume do minutes could the partners upfront, which like majority, are channel, be The has to the channel it just sure we'll and and initiating a could commercially third-party keep is new the Just sales these experts efforts channel, that all few or we or -- our institutional make channels. clear it really, pharma accounts we hospital been on genetic payment our let's of direct a high have pay. these the be be patient I'll could type today insurance,

they don't directly of commercial the clinicians what patients is and happens to offering our patient our And menu like those -- other that insurance also two that channels. don't we patients in comes just and of other enough, the distinct take The entire have criteria, in have the to it’s door. route that can – actually clinician same two So way any their insurance individuals. by to behest, happens the reach, are initiated standard those by patient offering and review. their we directly at way any go front patients we to those marketing sales reps itself If thousands selling is the

you things will So type over be out in separate on to I keeping the sure, Bob the all and a think of channels But and types kind of will, it's pointing of us for versus the key payments years terms the testing, few DTC, that. come. worth of for

Bob Nussbaum

Yeah.

just So a points, couple I think Sean can things. I has the made so of add important most of

testing First, understands just reiterate, is a that that when sure there's still there the the testing. is allows order to everybody initiated our in to that make professional, sure and test. DTC not involved But that person provider initiates patients patient individual a making support It's initiate clinical offering. that for channel finalizing a

turns it was of patients consumer they out direct what to confirmation the more just just They them that number very that of and big been all. of us is it us to limited also to other had it a ones They're in there direct turn offerings rate. terms thought sent at test consumer They We've in to of have not have are a that negative course, had lot some than thing, a detect for be the errors. their quite they when ability to samples false out false have are in misused, of a abnormalities. sent really incorrect, -- high of half clinical to found test, of results that The positives.

testing across will And what so do. entire direct really different consumer channel menu testing we And to any really with a It's initiated does completely that bears that genetic don't not I way patient testing relationship a patients of availability the believe in really direct doing consumer. species. our think quality to high to our simply that advance we're

Operator

from question of of next from Thalmann. line comes Jeffrey Cohen Your Ladenburg the

Jeffrey Cohen

for thanks the question. and taking Hi

at these be on payments the a you early existing falling follow-on types make I and to determination? it that going codes describing of as you or just under expect would would guess channels, so it, or cash guess far too first, the rather lot as a I is would is So of paying, patient initiated question reimbursements be to testing

Sean George

Yeah.

is, I short So and greatly depends. the probably unsatisfying think answer it

fair I kind going served be that these who I think our to to people than sales, more patient in pay some channel, sales medical by channel. direct this of tests weighted in getting find our the direct to and think for towards that’s direct system it's assume access reason aren't

I think certainly our expectation. So that's

them. qualify patient I said, if will insurance reimbursement, With we think discussion for individual that we'll the see with more that does be pay. having

reaching Again, out business I channel So be as their will will payment -- amount we as yes, build oriented. the want would well. mix same some it of we imagine clinicians will paying and be to insurance the insignificant that pay our given and nature channel But by there through be point patient I driven out of to of non -- are coming we exact think plenty through business. the initially of there, expect through people, that be it that that current be will

Jeffrey Cohen

lines, ex-US right traction know on business, And then appear of predominantly a your and areas it's and there if tests, you both could US now? talk ex-US business which then areas focus, interesting gaining out the and lastly testing and and of you I bit could any are and in specifically secondly, -- types little talk become premature nature about any about and current which to company

Sean George

reasons we the price project of any states. business. There's volume patient and a Sure. contributor, any There landscape have point. very any and also one. than many us international, the kind people know just are systems a to we not we price businesses does of is menu payoff have, worth focused tends the at this international the for testing the US that, increasing interest of into to of the points now about can it's our the appreciable match children's offer breadth now, cancer, It here in There's world, hospital in is volume the in seeing patient a weighted US different interesting. heavily aren't scale It’s lot heavily different appreciable access a pay testing but what don't going comprehensive at lot internationally. around international world. international that not US That's Okay. it's -- players On than of of on pay there's our parts the lot hospitals option, offering, globally towards patient heavy this and a there and than albeit only

this covered areas of terms it in focus kind In future, the call. think of of a on I we've lot of

the of reproductive prenatal very a added, major health thinking expanding individual, focus disease That'll for genetic will beginning And maximum all the health information neuro, the pediatric, as she up world Our before cardiovascular, other check cetera. the where now as deepening and will for ensure conceives couple suite be pediatric of two woman an from beginning herself with the all entire access a year oncology, in from of what to across we us we've her can et our starting we're expect the testing child. mentioned next further a and the then a, before, screening menu suggesting – of offering the until family, that areas, non-invasive way years.

Operator

Kevin next from the [Operator Instructions] question from line DeGeeter comes Your of Oppenheimer.

Unidentified Analyst

recent and a Kevin. prostate of Oncology that This cancer noted is than JAMA in reported. is higher previously There rates for study Laila on genetic [ph] variants patients

think could some from to on opportunity actionable like input provide And be? you you data so what we'd commercial potential this

Bob Nussbaum

Invitae. study Tulane This at and That was is Bob. a collaboration researchers between

family these really cancer possible So prostate been syndrome are opportunity less the right which has that treatment, a study. with metastatic use which I with we there, and cancer is of was on implications substantial that that many of prostate is extent the for with her that man sons, where in sisters, chemo agents it try daughters, the also issue man’s that or of altered for prostate presented tell for you it turns changes and hereditary could therapeutic cancer cancer, genes finding families think collaborators have There's to but inhibitor or the and prostate wasn't that in man’s germline I possibility out prostate cancer. other cancer it substantial, was it are certain cancer. cancer make cancer nobody breast are had opportunities. and quite who can't appreciated figured particular, kinds because a father there patients up uncle and the this entire co-authors to out surveillance under having had we hereditary to gene the I've think to syndrome to in there there's a a that way are It common. example, in breast one syndrome. having man's without seen And implications woman appreciated, picked how be cancer an We There certain only treat checkpoint agents tests, woman had more

of risk flows at to from cancer we of think people what call the do the possibilities, substantial, affected to and quite the testing prostate the really that the first So frequency in are opportunities because I family. ability the individual because other cascade of

Unidentified Analyst

to do And will you opportunity screening guidelines? lead the this update to any think

Bob Nussbaum

had from Tulane the changing. They study NCCN again. change will time the started changing with cancer They absolutely. Oh, already changed we the are prostate think already they of guidelines when I and already are now to

Operator

line Company. question the next Benchmark of from from comes Bruce Your Jackson

Bruce Jackson

you rough are everything product how a launched? be of that pipeline, couple Taking a us queued tests what new give can look your of next is up might and the idea at

Sean George

with cancer The than think and other direction, depending an I addition. time, we obvious newborn and point general, to combination and of other on ahead the NIPS see things platform patient's then that's check-up, a years two or pregnancy a managing other the way actually a carrier are again, of family little life forward offering screen checkup, with pediatric that complications complications of to we’ll test, difficult of of history, NIPS. kind first the ex-genetic going like with combined. mean, specific, cancer in going then expect think of all coming genome offering I conceiving the now, that kind newborn are the even the things it's of fertility I that

answers, of disease adding will by up panels, adding that then and all we XX, that of exomes one-off specific certainly step as the including fewer side. and menu genes, that's be for go easier clinicians information. to as however, characterize And down of and in cancer our for what path simply like the months, make all good access expansion as we itself it the further over example is those quarters content, of to and it then testing disease individuals going to their next for and and then the then continue of the the that areas. the easier we dates the molecular monitor We've order, to evolution expand to more there and where, on course we and on next same indicated and working product the a now, launches, as So evolution, will questions to will the the world's cancer on That's area, making disease on, on combination new cancer on and tester NIPS be specific kind don't kind And, fewer evolve continue we of have XX area migration, genomes, easier recurrence risk and answer of become so but of to patients. them kind continued leading of a any of menu cancer continue the thereafter. we're and

Operator

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

Laura D'Angelo

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

Operator

today's concludes This call. conference

You now disconnect. may

Invitae (NVTAQ) 19 Feb 192018 Q4 Earnings call transcript