NVTA - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Invitae's Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Laura D'Angelo. you. Thank ahead. go Please

Laura D'Angelo

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

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

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

pipeline accordance differ could on company that our reimbursement remind refer statements within We our assume, accurately slated predict materially about you the of outlook. expense, date These and could future from integrate; on in results; to we supplement acquisitions, Securities statements various our several financial Before States, the our remarks things, in consolidated actual measures and information section United to products; expectations. are operating only net, make research titled forward-looking businesses we administrative, our constitute and any hereof. include The on in we in or like monitor well among statements It and statements other other non-GAAP and to cost the and to generally share marketing measures results focus business of Litigation begin, additional this our difficult operating infrastructure conclude general available Private and and we to settlements. or to therefore, thereof; is prepared most services, our press legal period. investment forward-looking expense, we you GAAP, in Reform our the of With are loss product factors to as that, that GAAP in this and manage Factors operations, the not the Risk from demand harbor of accounting earnings including net with the the our statements accepted for will call performance materially demand particular these don't business for consider Sean. our net in selling which that our principles I'd Act. prospects; financial To results provisions restructuring and current the opportunities; slide of actual investments, speak These safe encourage our development, you meaning differ for the to recent plans and burn. release cash our timing acquire; as additional historical, over non-GAAP cause that XX-Q services; and review and non-GAAP strategy; our of that profit, reconciliations, I and turn revenue, and the loss call including those plans market and per gross to our income future We deck. services; future,

Sean George

the genetic Thank medical the you, years, has margin is costs used Laura, in changing lot outcomes focus for are to of lower by information sparingly as and genetic business months; utility individuals we drive the on the served a around on mainstream one in past order where improve used genetics niche testing you a genetic one indication-by-indication for care, the In is Well, many information industry on healthcare few our to call. transforming the to again past the joining thank changed basis perhaps, us globe. which landscape and medical from has models relentless high especially broadly, test-by-test, a not. into billions market all

at-home and we develop to with capabilities, our customers' increase patients. remote continue our their essential leader enabling An steadily in support well of for professional telemedicine health improving front-end equation, this doing access as to to also invested so, in information. side As we've tackled when recently the to further early this workflows cost solutions education enabling clinicians transitioning solutions, genetic and as more we've

chatbot capabilities, the genetic can healthcare and in what information of played these in to all easier pushing Gia key accomplished be scaling role envelope has Our utilize making a settings.

also direct for This channel disease Canada services early quarter, in in carrier we as cardiovascular testing. pregnancy, cancer launched as well our screening and

from challenge to online hospitals and support the even to rather clinics very COVID are and remote will While further see bottom seeing to we new impact our ahead. regional them uncertainty the we around with to sporadic. globe, patients recovery with and be this continue and presently further QX appears COVID are transition still capabilities, our seamlessly our the and continues us better top that lines through reality. that to impact, somewhat how recover And to positioned customers can It

Invitae this and We to opportunity to cancer, broad mission precision waited front, combine pharmacogenomics screening team the biopsy, platform. changes ignoring the on don't with have entered [inaudible] work, trying markets visits get pharmacogenomics acquisitions earlier adding diagnosed profiling reality we up patient's they the the associated into adverse information testing In genomic Archer's need and of having networks office health signed while all battling of where YouScript, democratizing anywhere ahead. oncology. forces with information We of for can systems. cancer the both a whether than The and now solutions M&A a impactful perhaps agreement health on information thrilled chance discussions the to the early throughout cost system. has in prospect patients capabilities suite we're with day cost accelerate aspects providing the On or and is dosing our providing ArcherDX a events team getting understand a a integrate the and all feel personal the and full we essential to in life most and the and into the high need, a incorporating payers look treatment cancer level, to to profound for screening Invitae’s providers, providing June, drugs are molecular whether all of years we serve waste health that to us, announced adoption as closed integrated of years a best individualized comprehensive societal they of the of for greatest and and spending at it; it already in also information, avoiding the XX.X see broad to long benefit platform. that choosing pharmacogenomic with the and the quarter, tissue hospital durable people Genelex We've already the of best of way, has seen think, in hugely monitoring diagnosed come their definitive we We and liquid risk, profiling bring with a time that million major finally Invitae outcome. were

forward Over at promising the we teams the we've adding technologies to talent past push record flywheel, strategic many of worked great accelerates of to years, we've a billions our our mission Bringing realize strong the globe. and right right together patients as developed around right the mission. time as in track capabilities serve the with our

new highlight pragmatic turn quarterly our at executing capabilities similarities things mission, the healthcare, in our call teammates now forward technical financial over this the Archer. results. move fixing to with hard Given and look approach a I'll Shelly determined to to the transformational we next in to

Shelly Guyer

to into savings, early quarter of with full response hit But mentioned, access our quarter minds, second testing the year designed We improvements yield across and we of the monthly platforms. as COVID. took our in but to saw not remainder most progressed, Sean were immediate the burn quarter impact the were the to managing in to important crisis, numerous As actions the to early These our strategy we in by ensure our foremost in the that next. throughout metrics. we moves of long-term kept the objective provide quarter in

to during continued is two that Our growing end, competitor intent that quarter, a an acquisitions the we in genetics positioned with our announcing growing rapidly closing is year market. and the business was To ArcherDX stronger deal. deals the exit even as this on and

implications one-time these XX-Q, financials, I you Volume afternoon. the metric. remains on this to of appreciation key acquisitions a we touch which the impact gain to in refer some they various as complexities event, to While our I filed urge the full a financial will including changes of of

XXXX. mid-March We overall have pandemic accessioned to the the growth X% are hit impacts of than and an into XX% when first COVID-XX, volumes Previously, we through saw pleased second previous these Despite noted in April. clinical month of areas. recover in from more From we over quarter have year’s down we all July across each XXX,XXX quarter the seen in lows, the quarter. volumes volume and second samples were approximately the in

we of half to recovered peas mix levels from above year the the and or down volumes our pre-COVID to and throughout offerings slightly volume hereditary second with nicely, health and continue and back cancer neuron in by recovery. end trend July such reproductive quarter remained the have of the accessions second the CNP the of Overall, cardio cancer quarter. Our just billable resilient areas are as [ph] XX%

our billable reports we benchmark are we However, number an period. caution that on tests of accrue given express some important in shutdowns revenue regional as and continue. hotspots based Billable the a

a billable same reported we from quarter represented XXXX. increase XXX,XXX, which in of X% than more the This volume quarter

COVID-XX represented higher volume regions depending Volumes X% of recovery at quarter, historical our was than spread change. was our billable The versus impacted. under second trends. from driver volume of and in volume still billable were X% internationally, the to steady are primary are those just accession upon remained COVID Our for over this XX% volatile of from which the revenue. total International impacts our which

the smooth the lowest. experienced approach being our seasonality in how of the negative we year on at historically diversified look terms Our impacts will first of The helping of traditionally in We volume and to our COVID-XX global third our volumes, the volume. overall trends. volume with change is rest quarters

remained the in particularly third-party but we trends during $XXX ASP year. quarter the ASPs payers the ASP the period. in areas, expect the trends commercial the will change, diagnostic revenue growth pandemic of third-party to anticipate XXXX. of third more and billable in mixed generated improvement quarters a came and ASPs. is that this third CNP second from ASP as million quarter a to patients. reproductive our and discussion driven decrease expand amplified our this COVID In down see with $XX.X our product ASPs primarily quarters, from reimbursed increase our spread early but product just hereditary cancer with high partners is historical impact from steady to over our $XXX volume moved of and The mix our quarter in revenue in compared was continued, in from We offering XXXX, tighter Medicare primarily in last more increases significantly. quarter, billable months highly Consistent moderate our by payer million pharma continued as due to anticipate payers we performance, second an of both mix volumes in to was our third-party were of and largely tests Offsetting pharma continued tests. in fourth and down in to changes, be pharma revenue institutions, first accession our of compared volume on We XX% and this over quarter, strong, dropped several higher XX% quarter, including We cancer $XX.X realized for percentage same primarily the a which the pharma shift. of payments due decrease This this partnerships the which in

half peers expect the we our all ASPs to of volume an into We in year. and second see as the head growth increase across continued

we trend we have trend our that half to third during reimbursed July, discussed, seen to throughout any exceeds and our assumptions. latter into of mix the quarter, this back previously continuing and the hold As shift the current quarter, higher barring second product impact the test COVID this expect

reproductive will for uplift and these we reimbursements our Our offerings continue in tests. third-party see payer rapidly to expect to grow

slide affected CARES the second in any income and related acquisition items $X.X additional non-GAAP not the COVID business in anticipate Again, is the P&L which by and our expenses, tax Act, detailed comp a compare at this are and based this last acquired the one-time charges, and financials press payment primarily quarter, million under to release of is reconciliation the two to regarding we quarter payments. the as we've included in it items related included focusing numbers, on assets, on acquisition related the received Finally, you Act of other of allow other intangible or stock easier do income. CARES also the To in some benefits. fair adjustments future We under sets is quarter, related the Most quarter's charges funds income to line numbers. by related to non-GAAP understand to provided amortization value acquisition but end deck. and liabilities both today's post-combination table

second as the we business slide provided numbers, financials quarter filings. to the well of and results, forward. believe will release our discussion refer press relevant as on the in moving in the quarterly decisions are making for non-GAAP more depiction a the GAAP Our remainder of this the are of we table which we Throughout and the dynamics regulatory

to Investors also cash measure. We provide review non-GAAP non-GAAP are a encouraged the is reconciliations. burn, which

was by fixed semi increase $XXX increase higher direction to and was was Our of comp unexpected The this and not cost quarter, last to per revenue charges. our spread the from higher call. costs stock-based earnings quarter due second variable This volumes costs across, noted mix lower and XX% was in XXXX. of driven our changes sample

COVID-XX First we cost quarter, we on volumes, of workforce. significant to our approximately volume levels We in of capacity maintain $XX the from as we resulted first – accession our lower at the could whatever per most $XX levels result quarter. protect customer sample, compared of achieved had volume to meet to onsite ensure and throughout decreases needs the levels excess staffing when

focused up awarded area, and full the scale, mix sector and in more to and to of changes will most increases savings. NIPS performing established significantly quarter run higher the proportion second On COGS. of tests we of result see from to NIPS XX% is is $X employees we finally, transitioned projects year-end. will screens, Gross July as capacity fully with these volumes in before our our in quarter will discussed. reproductive on reprioritization The to beyond, were had costly are cancer tests. improved of scaling Second development tests and third a we past, we was reductions other as cost new with we margin What projects yield relatively to to And health bring COGS recent years the investment and them automation, COVID, the costs in the gross And cost third, quarter. stock-based response hitting like are grants as quarter we are and after through in cancer more product on lower during in bolus costs This of whereas of annual lead of tests that second a tests which begin compensation the was a was higher million proportionally utilized to factors of years profit less the XXXX. changes, has significant reducing due do our in-house, costs processing to returning.

payer First, revenue product mix ASP and shifts. from declines and

product our sample gross margin. mix in Second, to due billable an third, all per the which gap. increased increase accession And to volume cost impacted

we margin We towards the trend back our gross XX% year. expect exit as of target to

we with invest excluding Moving moderated million quarter first continue $XXX.X business multiple to in of for announced this as revenue the million to quarter. expenses, Operating our but to operating were compared quarter, second our cost the in expenses, acquisitions $XXX.X spent. operating

a monitor impact million annual which pandemic is starting totaling comp $XX to measures. over acquisition to second expenditures we highlighted netted resulted cost various a other and instituting with March on show COVID presenting. us back other our to against financial Cash flows in actually the adjustments statements the quarter and back OpEx. stock-based the have force we If quarter. reconciliation and on investments had the quarter, as quarter reduction this income calibrate $XX.X million to $X the took to new the million fair into saw this accustomed liabilities to will earnings appreciable to related million our to of spent note, been we of our item company an and this in and in actions fees $XX.X on We million. closely eliminate $XX.X at our testing mix future charges volumes value first significantly scale in charge non-GAAP call and the last. to on the the of pulling continuing than other cash of As reduction projects, acquisitions end related reality, in associated The our get slide on We’ve the initiatives grants last decrease adjustments stock and navigate our when focusing appropriate. other are provided numbers, the more due acquisition from to reduction burn, excluding one to would expense the personnel One expenses large the our by we Investors compared quarter,

to bolstered cash totaling in quarter, June $XXX.X equivalents, cash quarter, cash compared our which Moving in events Several occurred position. at and cash, our second were the million million important March position, XX, restricted XX. $XXX affected marketable to at securities cash the

$XX.X impacts the well June. quarter, to uncertain $XXX it’s given and funds First, raise late netted in as our million through prudent approximately liquidity first that in April facility in and we net of a closed ATM the million felt raised as via secondary enhance COVID offering

included of the we acquisitions terms position quarter ended a the on we cash. burn, of of of Genelex YouScript, of closed cash in in cash the with million. $XX.X outflows, $XXX.X quarterly cash million which Second, the strong use and Net

to up satisfactory we concurrently committed in more operations. with in a In quarter to recognized exit acquisition, the and the of beyond short-term a pipe combined committed yield are expected $XXX mentioned million the the savings proposed $XXX a includes and in XXXX to a XXXX. closing that allowing the both is deal. facility, they resulted have of the package, and of continue year. second expense into will cost making acquisition, with close subsection mentioned, the initiatives and a Changes third our subject customary conditions, burn some will credit the we acquisition close reduction million financing $XXX ArcherDX and million as fully to arranged to cash reduction cash debt in in equity have half, expected quarter, we and connection current the to As including I made modest close we Sean fourth significant The funding have impact are earlier in more reduction quarter second

hand quarterly realized be manage $XXX $XXX transaction final closes, up to than near million. Cash term approximately million at forward million on to when and annualized previously XXXX. year. our we still approximately would the for costs upon of We through past cash That expected impacts you acquisition expected cash burn, but transaction continue stated $XXX of the close goal with needs our an in early quarter depending to actively as or will cash the up will XXXX the expect million break late pro-forma above flow stepped the burn bump our total cover burn the activity our expect more COVID $XXX over even said

our will now provide the turn more to details Sean. We I over back quarter call. on will third call

Sean George

in our benefit. investing of customers further created customer's individuals that to our as geographies. adding as enabled Invitae the deliver many have a us genetic of customers; flywheel unconventional. their not as genetic approach the and to been services, technologies, advantage individuals and The that to channels, total serve use a to our experience, a cost equally differential effect has screens, our utilize Shelly. importantly, of genetic possible, you, through we content that information By set possible rapidly allows Thank straightforward, us much mission achieve has investment to current as can broad decade and platform delivering and improving to A information grow tests, number bit

a the We close to And the into positioned a across remains all the with routine and operator treatment to runaway The making of personalized merger anticipated forward call we and leader continue With uniquely monitoring most position genetics support the turn care. now and Archer, our genetics world that, the need cancer to healthcare. for clinicians adoption all. for in areas Invitae of Q&A. and patients advanced as are routine unmet mess to over I'll the we look with a their reality around to of accelerate

Operator

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

Doug Schenkel

you before taking back go bounce way my course did questions. see for the between seemingly a Hey, at for Sean, target it if track over kind original good rate It's basis. afternoon. remarks, it June indicated neighborhood, Thank was wondering and you line as somewhere a if the at Slide of the coming that you but the just to which year. to, look XXX,XXX in extrapolating. I point the on the year, you’ve your I those think XX, we samples of tests you've I'm out volume your XXX,XXX taking well nice that rate accession you above the of of were run do over quarter. for noted hit back kind for just were to like QX the numbers run over pandemic on again, chart seems If I'm that on got

you're any on any access helpful. whether to rate, levels and that obviously, annualized, would be back So target those commentary on

Sean George

Yeah.

actually XXXX XXXX year over off XXXX – over to growth as I our you was poised we mean, noted, a XXXX. increase think, for to the I the rate

looks encouraged sit recovery. by think top volume, today, we're the like to I the be as we line what

And the also we're there's depending on against It is the like think that any the also really recovery seems I be have don't in cautioning we region. extrapolation completely do even year. regions shut down. subsequently of volume of rest the re-shutdown, for kind We of clinicians noted see kind sporadic. temporal

closed. think adoptive of kind of that with really areas even in going on a and clients, learning adoption response our of lot I So there's a bit – have

the of which Ideally, there's quarter I out really just the right we but rolling see this, I it’s to of can't everything's based probably on coming think think quarter. there, get we'll week-to-week, would and as just – probably kind next it's you back would hard best think plays kind in So I tell. it us in as path, how to now, just assume get comes on it

Doug Schenkel

Okay. quick a on Maybe commentary. all that. I that And appreciate follow-up

think continued see growth you've in that in indicated your in but fourth Shelly I third to prepared the volume you and moderate remarks quarters. expect

Street for is little than looking that bit the quarter. more now seemingly right I a in fourth the think

So little building both and of confidence our what kind should until be of and we more tempering for a expectations off year-over-year sustained and in a said, clarity just we robust modest growth get QX Sean QX and more of recovery?

Shelly Guyer

Yes.

that's So a statement. I very would say fair probably

given So quarter, have the we've third that, we quarter more we in on now third visibility that right July. are seen and

to we out a hard indication it's little winter. bit indicated, depends but be a there, give domestically. of as countries. It international And little just Sean spotty. far that It depends really will various So tried that on to project

say So the I temper would and moderate word be would would use. I

Doug Schenkel

through have the an are complimentary more some success if how of to channel are much more probably on the on got pandemic? and direct chatbot impacts frame talked over originally had about have just Is little course the to quickly than more a thinking of about the tools to you more a forward driving efforts, in And that quarter? benefits of you longer And ordering telehealth on volume based quarter. in there any you way would initiatives anticipated going could of notable XQ? expected. one I suggest you topic; Have there Gia of what than Is sneak how these and the no initiatives impact really there been that Okay. evidence deferrable term these the pulled these saw bit the

Katherine Stueland

Gia strategy would one. is way. able that in clinicians the this pulled engage that deploying be it efficiently might to a terms I and with more with lining we're we've I'll that the certainly that Katherine. with it’s Doug, if forward something engaged say to offer, software a strong solutions silver introduction pandemic of that that. broadly And clinicians we that's Hey, get there of Most more take the really in

base, So maintaining account that of key new enables the to is team existing that on indeed get growth. really growing ways customer and see we one sales which customers, volume our focused our

this we future. we the us to of key that So stronger some that think think leverage in us strategy is it going forward commercial commercial pull is aspect the help really – develop a helps

Doug Schenkel

Thanks, Okay. again.

Operator

Peterson next comes from Your question Tycho JPMorgan. from

Tycho Peterson

start the ASP with Maybe thanks. outlook. I'll Hey,

I'm on You you is mentioned mentioned that the bit going think you couple about can kind quarter. a the look. quarters? I one this dynamics prepared see talk we mixed assume curious over the you to forward, just dynamic should little in of just And comments an evolving the the how next trough ASPs? pharma is opportunity

Shelly Guyer

Yes. start jump can then in. Sean and Why don't I

that. So, one, product mix really did change

perspective so that cancer from the there And changes cancer. are back is get we think do some of coming stronger. We paid for more

we in screen. that those as that see we up, more Two, reproductive expecting we paid talked increases also carrier that we about, by the frequently doing one. testing it that and – anticipate are the expect we will we be do will bring So in-house, will on

over mentioned, ASPs partners, I across quarter, So are we're think signed that Pharma this numerous that we reproductive for the as former We're into up. partnerships, partners. up translate so to XX expect and XXX. we've testing, we go stronger would seeing

So those under things, a more we're pay blocking side of as are $XXX million contract And and all the collection this parties the types things. third point. on have we to see tackling at continuing nearly just of

the So anything? things. forgot Sean, think are those I did I key

Sean George

that of – going on or mix kind mix impact the one experiencing would see. other the other, all will really how The all we anticipate. that's we are Again, those the COVID think not I is think or which – difficult to any ASPs that's of predicated kind improve improve No, is shift to throughout way the is year. the

what that's health everything would exactly a So reasons Shelly stayed the dynamic, if as was today, the – mentioned. for all reimbursement seems kind And reproductive understanding of odd. of we of it it of kind expect kind kind

carrier we're more when covered know well, screening, about million And anybody. network particularly we there. in with expanded than now over you're reminder, XXX deal lives NIPS the a Just in talking

on can't we As out now we – freight build we really can. whole full send that,

else anybody by is of see network, for stacking, but get games So is since had a see. – payer a are through we we which of we We've uplift bit payer And code that's of there. that great – to system. and straightforward, by is gene the do we which middle in upfront, traditional kind about expanded a carrier can't are tailwind does it we a a stacking payer, journey, that getting play screening, that’s everybody, kind

And of the so I have asked where from? the some does because see other of come that health a happening way Shelly what see Irregardless where it folks that, and out, that source dynamic change And that's Those know of is like mix are sources we what big major goes. other has it mix, the there. two just pointed we that's – the which then it's that happening. that's effect changes the reproductive depending

Tycho Peterson

And then been competitors. of Sean, at tough on area on a the the it's pharmacogenomics, for least one reimbursement obviously front,

talk a system attention payer networks front half paying But there? the profiling should traction on the just benefit in other of we and and payers the of bit and You momentum with and you talked little signed. year? back be the and And pharmacogenetics discussions incorporating milestones about providers can about major to you health the

Sean George

Sure.

dynamics can third-party think action where here than are Lee much talk Medicare payer think can closer the – I going, the to on much, about I we PGx. the and

Lee Bendekgey

Hi, Tycho. Yes.

that in to still were private lot that. this guidelines that, know, organizations the that of But of there – super are are of of beginning and a pretty and MolDx factors was trends of a AMP. number professional fact a basically pharmacogenetics. payer There evidence Palmetto including any a have there clinician the prescribing where an limiting to than quarter health an who program it lot foreshadower a an elements to today considered expected pharmacogenetics of a is industry. good CPIC, Medicare with like on and for generally may As seen now can clinician impact inappropriate work positive And defer you And PGx the there drug, mental in the rather came to LCD PharmGKB with additional to were is test professionals. do. starting There's out number a have order you

value-based trend, expect will to this important the private particularly be we health, care so focusing as population on payers continue an that are models. And

done recall, patients formerly and by multi Genelex the will real patients. on showing our was there YouScript impact on you at colleagues work were particularly older As pharmacy, who

those So relationship the get a and the as in to kinds the traction, to arguments in and of patient – where the of and systems on the of impact, we have particularly Sean – between little and beginning those trends ACOs, the is payer see an said tighter. kinds system health terms bit

Tycho Peterson

Thanks. And then on one just for the cash Shelly last burn. one

you Thanks. in the should makes you kind a But in of have much environment, Gia? you to pulling or make on additional Or what And that of You to around think do in current there? we catch-up investments. noted the earlier, third telehealth need do sense. Obviously, back quarter? then of kind how need Doug’s investments fourth question

Shelly Guyer

let Gia, where the I’ll get are Katherine question. to and So on and that, on we cash burn larger I'll then start

Katherine Stueland

out capabilities type. build clinician Gia to continuing per are We

OB provide Gia beyond able the our expanding the that being able we capability. to and, as testing right patient, right really identify to certainly help of and with have continue to tests towards and being So expand eye an all

all oncology, we clinical reproductive the health, So areas, see pharmacogenetics. that across

broad will she into our in moving of have baked functionality terms utility That's trends. current already really forward. So

take burn. So of it from here I'll in overall let terms Shelly

Shelly Guyer

transferring see we don't overall that folks to of in quarters. no, intended year. these the So later like that Actually, took an some actions later we burn is remind have benefits were to burn, I'd cash to of what and it

COGS. a on drive development the focus of would and that the Gia flip the where of these efforts, and example To and revenue, the further and would to changed is priorities we help getting us instance, some project volume that we on be all would for good experience projects drive side So customer out that. to of reduce that

those second you longer who will in over with in million impacts the see quarter will moving see be no reduction $X.X like don't time. forward. those immediately, those force, us for the you we So paid Things

that fourth quarter. through and So have not you'll doing third but savings the We're savings. anticipating the those those you'll again, have

some finish so projects. to more down take. we other projects. driving up were hiring slowing revenue, the go pushing and those then we And volume And combination talked down about, a the and for as that have of other wouldn't do back So that projects, people driving to into the the intended we ASPs, those as COGS, driving lot of off areas focus these we've near-term those and flow the

some a move point, don't as focus see forward. up making see to at we we be we continuing it So

But talked that think we the level the as say. exiting million that that burn, a be reduced still and something total talked rate point. $XX.X – the million, be up $XXX previous the year it million number, for burn million that and XX% on the be we that between and higher at the $XX let's So above year, of will exiting rate, indicated, about would before, the about, like we had year this indicated, $XX at much sort comparable the our that, than would anticipation over we

Tycho Peterson

Okay.

Sean George

outlook million million managing to, XX-month That's the let's post-deal, And or add let's just to why this. tried the there. million, $XXX through to drop what sheet our of, we've the as the measures, from a think out outlook there. continue of uncertainty on still to both, $XXX us and to, – balance this amount you that our acquisition and all It's it outlook for the assuming at pro $XXX by say, call accomplish see here whatnot talked look end end. the with operating our kind puts us million we when puts the the Yes. on fair the push pushing in about burn for of and plus higher told, three this we positive last why Shelly positioned anticipate we've flow we're business a is, the quarter forward company that of vis-à-vis years consider next pointed on That's out, the pushing especially a I cash little good But for the to $XXX feeling I year. bit uncertainty. we've and a forma what from so position And burn a it year, it, be of where in costs will think perspective

Tycho Peterson

the color. Great. Thanks for

Operator

comes Souda Puneet from SVB from question Leerink. next Your

Puneet Souda

Hi. Thanks, Sean, Shelly.

imply NIPS, First NIPS or platform? is bringing technology mentioned in Would you're Illumina this COGS a that that you you're improvement And you're still question the on here that for using what mean in-house singular expecting? July. does that

Sean George

Yes.

right the there. plan currently those pretty That's and equally running on we perhaps has good major cost technology. get that's importantly, the a And billing – So then core been patients. is through. able milestones getting Bio Illumina we've well clicking got would sometime in really the deployment least cost be year Singular enjoy still technology, next cases next deep of And done. that with first what the the And improvement can The hold. And to year expect are first freight to for we've full into in-house for was effort of but the reduction from move. take majority we development at that that

Puneet Souda

whole you the the how is Okay. genome in to on what capability that here as Can NIPS terms was sequencing. as adding NIPS to much remind well, volume? in it? And us part added of genome a And just strategy of you’ve then whole

Sean George

Yes.

like volume and genome the sequencing point is in time. of research we do this that most at in whole still collaborations is So

or – pipeline. the with are the day, And replace work in we hastening with had we With right to looking exomes collaboration to we're that genome collaboration But mostly once pipeline the intertwined – that's that forward genome the acquisition in can that and deployed we do what now of validation. Invitae any come. kind totally mentioned we months is is current quarters in whole

Puneet Souda

the – one changes, serving of the that the percent Can force Okay. sales and actually overall NIPS do stand? last remind I market the us you much you where then market what sales there on force. And versus deterred? after have is recent reproductive And how

Shelly Guyer

Puneet. Thanks,

about So we women's XXX really oncology of CNP and segments outside who supporting sales folks The on reps. are and team that our have majority smaller team. IVF health focuses with

folks those OBs. of on majority the So are calling

Puneet Souda

you. Thank great. Okay,

Operator

next comes Kevin Your Oppenheimer. from question from DeGeeter

Kevin DeGeeter

for guys. taking my Hey, Thanks question.

general at guess been regard least within of that the to accelerate, it, sort across yes, I or across that perhaps some any least payers other allow intermediate sort industry over market And lab more can thematically the and getting consolidation? from a you're United little of on impact a from on you hereditary the of might interest you just in part term structures related has with guess with of consolidation consolidation I of cancer. of over the sort separate of process just essentially stress a unchanged system experiments, comment thesis feedback in for how So is note, here COVID, the impacting consolidation year driven seeing at payer preferred and the a terms dislocation generally, hereditary are provider cancer

Sean George

operates the go mean the general definitely through the is is bit the thing, would been much outside of our I over on sense view think it, consolidation I that, I which Yes, of probably in can we industry COVID industry, is say for accelerating the this of up a public years, as eye. our picking the

and of going a get of up lately. bit flying right. you seems that I fire be think proposals only picking to Which brush around kind makes think to kind I and can a view deals a sense, that of little now. It's right of So to on kind

through consolidation, picking have you inbound far since it? kind can already to it. variety talk he – here our I payers more of a – of In can I discuss So from it. is it preferred the would as Lee from been general say And the up. explore know we of more and talk receiving to the looks Lee it's then point, accelerating as think is vantage like networks,

Lee Bendekgey

Sure.

payers ago of in work encourage number the techniques basically to you United which to their mentioned to to is labs. about patients try a the program, their a a of labs launching year identify of with a the use So and of handful and preferred preferred providers network lab announced as arsenal high-quality their intended

has and payers the basically some have the United effects I wouldn't of are dramatic, we far impact say starting what that these other encouraging has been more with techniques. to been see of perhaps noticed. there PLN So but with United experimenting

preferred payers are small a of are preferred in authorization, that put that small where we there networks, well preferred members which streamlined, that reward their co-pays for is lab a prior lower us forgoing is lab with we huge have as which as way handful for win. we using no so for clinicians example, And co-pays who have their providers. have And are are payers experimenting seeing steerage, payers or a they

wave a you a there advantage status, title that lab terms in that to growing the momentum. there as to is the And comprehensive an number use attractive does to lab well to a both volume as from It's but having of menu, in then certainly preferred Invitae that benefiting does quality seem of payers. that like they reinforce preferred very to test consolidation being like referred the very not high has we're is a yet, So, is above has. these seem trend be conversations for will sense that drive ours the techniques that tend it lab then lab be

Kevin DeGeeter

basis, at question if NIPS look and you Terrific. you point a magnitude earlier, just performing think is if that in-house? move for And a in-house, to terms second consolidated metric had were in then there opportunity some us of towards sort it's last COGS on in quarter of of the and to of can either sense get improvement one been magnitude about in just quantifiable we me, questions these of is, on to reduction or that sort how the the up for and trying that maybe following the revenue

Sean George

Yes.

got and some as price swing it payer three until of But detail dime more pay thinking it'd actually and it varies to running, different in about see good figures a at think kind weeks of COGS. patient think the think, as it's of we've institutional has what it right. pay. a quite maybe mix of at you're not line nickel think I every of a but all reducing for you it it's both, were, wait for kind way. at And, I bottom course, We like got it, a and days line, huge. significant, now, it be these when per some risk, few it's it's in at a we'd I told which least payer don't, that some $XXX of if significant top invest about time risk, and test kind There's plus

a mix want more, put is an actual early of tests, going to probably just of goes terms And a swing line So probably – the the again side. our to it where it impact is mechanics I meaningful. reimbursement of the in it. of top number put to be going be toward question line on kind we're final that's, to Shelly the payer on But in year. average it's why product that reproductive. all And see bit across kind about That's end little of think how of pointed the to out, that bullish whole what the that particularly that

Sean George

third going of to quarter the that's And take Yes. is both those.

have work through We those. to

thing in-house And month happens July, payments internal and what be to able have COGS, it and for get So same of in all just seeing systems service. to to that's of start brought back coming on, we see the middle weeks results, have the of for the date see to we it a the turn to those just out. we in those the if six before when comes we

have we'll impact remember the you. So on product but better we're the our each see I that don't we But individual on COGS time for would you'll reporting and the out quarter, break the anyway, ASPs. assume by third indications

Kevin DeGeeter

Appreciate color. again. Thanks additional the

Operator

Ladenburg from Jeff Your next comes Thalmann. from question Cohen

Jeff Cohen

Thanks I was taking related hoping somewhat which are comment. can and two, have I questions. you the for

with its inactions of learnings secondly, pandemic relation you talk tests, think which some the and of have lost? little then you backlog under bit actions of And about based engagement in would in are forward? could some about normal recently a June, going there May and and clinician or you or the bolus Firstly, could and those some is the continuation? April, been Or cases that conducted kind conditions on to about talk that,

Sean George

into for health majority think majority or comes of back but hard it's of through don't where the year With of by I that not say. reproductive genetic see, those what diseases it's said, going now guess. can from we that definitely to be pent of think demand to them back through. And see third lines there that front mode volume on will to it the I the is getting take is, some this reproductive right and sure. response. patients going will no carry you that come PICU of obviously test that XX% come back. over the experienced [indiscernible] say with the that last life tests, would of general other Yes, the some women is it be come the side dislocation what cancer we've clients way and – drop-off, that think, we're can pandemic, Katherine but I on clinician a their to now Hard all XX% a or are are up next of and talk probably disrupted up demand really other kind being next general, rate, dead. the in certain come course you've loss we're in going patient's that this be come the going those got regrettably In will disorders, can there's go first the and there months screens tests and Katherine trimester. XX% like to push kind somewhere But over ground into I That more think exact to exactly between effect, tests pent percentage of the helping in, kind And testing now of percentage to few experiencing you not more, kind in a list to NICU back. on got burn that side, that's thinking. they've we have we're When kind anecdotally is the wait and these clinicians. and know some inherited majority we'll the our There'll the year, NIPS, mean of I

Katherine Stueland

factors of of that have some the us reputation as include the reliable, the of in recover reliability, our really the now quality, volume that efficient being experience the for high secure durability patients. introduction clinicians. quickly really provide think we've helps terms helped the been to I clinicians built their with more relationships of a that and And able with telehealth that we've us

doing as clinician something think we're the the I the So we for to solutions, the signs other through it's can the done software where versus with able have clinicians more getting to goal they look that are and and experience be that Gia want becomes interaction going after interpreted, results future finding early the a patient than follow-up. tested further there that a and seeing clinician, conversation adopt efficient And having and really If in with future. in much efficiency a our our be for in test patient. meaningful come the a they're and already more to

well. the really reliability community a way very and clinical clinician, of visit the board, are testing, positive work for we'd utilizing based to with gets in their high-quality, across as signs the a that really shift they're to get So able now like it the on early able to that to before backbone patient be done be efficiency with so

Jeff Cohen

Perfect.

Okay. Those are for taking me, thanks for questions. the

Operator

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

Bruce Jackson

And Hi, you taking thank for good my afternoon. questions.

partnerships they're for partnerships, efficiencies? kind joining and they offer any you the new existing of programs, are were that scale testing Looking does give capabilities, these new programs pharma then at if existing

Sean George

indications, it's additions are the The that and for of partners partners. there answer that some is to then course first new a new for up mix, have and shown rehabs

with obviously a those And these are of on kind indications of pretty new wide pipeline. some of some partners drugs, additions new have

yes, in mix the the terms a efficiency of of the both answer. So is whole program, of absolutely. And

partners patients them, about at sign the up them in with to about easier of sign So more into the the can kind get for is the The patient the strategically better, is more of care expensive onto them it, this the basis. them, is to get a way gets cheaper in of platform these on enroll pharma less we this per take it clinicians easier is the and we partners think communicate easier it And trials. enter to the is everybody that for pharma our that that gets the touch – world faster, work. everybody to

awhile we've this again continues demand so, effect counting on pick it been that for is and to the And network side up.

Shelly Guyer

It response removes is, only think filling up the Yes, said end I up that tap building a access, opens that positive we seen would of revenue us clinicians. to that for really thing the then large program a brings Detect pharma of what in bring barrier able to to to Sean on Obviously patients I them. we've it network their so multiple partners from price consent, are be add opportunities which into then. we able with the multiple

going programs to think we look So continue be the important as we that kind of of sorts to ahead model. evolve we increasingly as those are

it of over time. network So does become effect more a

Bruce Jackson

can fund So then kind what extent off test second the dependent upon your the quarter, dynamic? when And Okay. during time women and cancer example, comment seek is with there actually a great. screening? business, and they dropped bit the mammography that to little for the of is pipeline out diagnosed has when a cancer on lag So get testing? like in between you maybe

Sean George

– of kind mean I across it's the board. Yes,

some testing And and more individuals would about as form and age then inheritance where whether like center, are less going and Some time they young on stage, it. preventive the kind albeit time. of center, getting whatever might simplifying order there of general those some the that perhaps same ever mammography is a Others and front-end an have high get a we aggressive we getting a risk settings it at where, and to this equation, routine information screening. getting they care of screened imaging the to I some who about the where be we're primary and of diagnosed testing three aren't it that tested believe screening their spent whether along is increasingly of by a perhaps an get test screening, – getting genetics radiology think decide whole to diagnosed there's all especially finding cancer four of way going health be at genetic finding, incredibly get of, the get form where as some kind we at be can actually then or with earlier it otherwise, are confirmed of women them this currently routine in or and thinking part

So essentially We as pointed for are this at time. men ovarian benefits or out, testing. the moving I all “forward the applies genetic And it prostate, of increased of of reasonable getting men hereditary frankly, that pretty but to significantly of think for increasingly see knowing we their all in XX% that's majority obvious understanding benefit given in breast volume with cancer. is kind women but risk cancer – cancers, this prostate tested really it we from cancer large do in had maybe is other that board, of think, kind surrounding just point as time no could across were” inherited prostate genetics background significantly I ever

we And think to come. years the another just be that's area will playing out dynamic same so in where

Bruce Jackson

Thank you much. it. Got Right. very

Sean George

Thank you. Alright.

Operator

next Your Ophir Capital Gottlieb question comes from from Market Laboratories.

Ophir Gottlieb

transformation guys. company? future and a that I a the we just digital recognized utility move, taking that increases and go question. let's roughly I to so permanent material Clear. the to maintained Gia retail impact the have profile conversations well. hope safe for are before is little and want Thanks Hey as say the the on company a surrounding everyone's on If so assume of grow, just a and a in deeper sort than continue for the margin they from is better SG&A therefore usage Thanks. well

Sean George

Yes, absolutely.

full So in as probably kind you our the – leverage from I've genetics reiterate it SG&A. move when is always is of operating is good, we've our market, to something have to on their what investment to that And a model people information work front-end – kind our – they billion used you the are behalf just where margin high it, going where current stop. they period, and genetic business low does volume it of X it, marketing not improving, niche all particularly move models in ration capabilities turned view about need need as view sales

of many model more sales leverage part absolutely. long that AI-powered a has and So anticipated in doubt including moving the key and and are that the capabilities to currently kind of ahead chatbot marketing things to up we've a no which it transition lot in and years to, a that there's exist. Gia And front-end come

Ophir Gottlieb

Okay. a Thanks lot.

Operator

call. question for and you Thank this that And today's last Ladies conference at gentlemen, was participating. time. our this concludes

disconnect. You may now

Invitae (NVTAQ) 4 Aug 202020 Q2 Earnings call transcript