Earnings call transcript Q3 2022

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Operator

Hello, everyone and thank you for joining the Invitae’s Third Quarter 2022 Financial Results Conference Call. My name is Darius and I will be the operator for today. [Operator Instructions] I now have the pleasure of handing you over to your host, Hoki Luk. Please go ahead.

Your line is now open.

Hoki Luk

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

Joining are CFO, Roxi us and Wen. Knight today President and Ken CEO, our

that timing the of remind Before and forward-looking operating pipeline Litigation stated not are product our our results, financial services, growth company’s therefore actual the to those provisions and products, future the that services within like strategic begin, Harbor vision including on Reform difficult our and to our expectations of our burn outlook. model, we for various results the call of I’d constitute meaning predict is historical, future statements Securities rate, demand remarks reduction and could accurately and business we about that from business make this Act. future and differ you Safe in the It Private realignment, materially

hereof. among any We investment, that company to future things, we other of to you only refer on of or conclude Risk don’t XX-Q, restructuring our expectations. information to speak for forward-looking most our additional differ performance in Statements could current that section titled recent statements particular acquisitions, business legal actual the materially assume, cause date additional Factors from settlements. the factors These results as

Today, you our to key access States, are release Generally available financials Accounting financial metrics monitor highlights, ir.invitae.com. including or which We quarter, of visiting within the non-GAAP plans, quarter. our statements includes the the As the company’s continued which by on Principles several and United to our which as results and the GAAP of concluding financial growth conference our the GAAP, guidance we call, and realignment consider can and to as in you prepared earnings we commentary execution review Roxi press updates slide you will in well our Q&A. in discuss today’s website of our and reconciliations section third listen release the supplement encourage at the you Investors deck. Ken encourage and QX portfolio, the available, Both consolidated metrics with have key To non-GAAP call of of Accepted to the appendix accordance press in with measures.

With over that, the I’ll call Ken. to turn

Ken Knight

Thank you, Hoki all joining for and thank today. us you

quarter Let me shows solid third start realignment execution our an against operational performance, with of overview plan. our which

to passion are We our continue mission deliver our our their for ability proud of appreciate and patients, team’s to future. and our

by of encouraged financial this We results are are hard and operational working quarter. the and

almost gross quarter for was was of in million, XXXX. gross XX.X% Revenue in margin, our with $XXX.X improvement margin with growing the paired and quarter the non-GAAP compared QX to in XX% further QX XXXX XX.X% year-over-year. XX.X% This in

forecast our to XX% full well achieve to on We non-GAAP gross track XX%. are of margin year

items to effort one-time $XXX $XXX in and revenues in help momentum in quarter revenues burn operating reduce exclude million will in we of is of XXXX. our cash burn XXX% the cost revenues XXXX. XXX% to reshape QX of to compared QX reduction non-GAAP cash the us compared XXX% reflected Additionally, in non-recurring This if our million to to and our to roughly QX our profile expenses has XXXX of good

the run-rate to $XXX reinforces Lastly, million and QX $XXX an in we The XXXX. will provide to full in deliver annualized how fully reduction burn for reduction an represents cash we reduction are year $XXX update the on approximately realized million million of cash later we burn in see on track burn that cash XXXX. from

completed and modifications as made workforce We necessary but reductions planned. tough have much the with decision pretty

and in reduce underutilized to office space. headway also consolidating have our footprint, steps made lab office We including

of September. our impacted all of to we the ex-U.S. end positively footprint, our improvement geographic business international non-GAAP margin. prior Regarding In in our exited gross QX, have the to consolidation contributed territories

And portfolio account. our including exiting our to steps IVF taken our offerings, and optimization pre-implantation other consolidate begun. we and have work products exiting has underperforming Finally, products for

to distributed at or kits our wind pursue not much on report more of point. to but divestiture this continue business, down that We

in track deliver cash So that of burn $XXX on million summary, reduction. we are to

to area, valued. turning Now, core Invitae in hereditary trusted the cancer, is product and brand

and compelling an We reimbursement. in policies, have in have and generated clinical coverage more guidelines to of that used we drive broader enormous amount data. changes And adoption resulting data consistent

recent Breast patients an cancer receive Society Invitae the of includes publication American contribution testing. in JAMA, genetic that Guidelines, most breast Our Surgeons all underscoring recommending

highlighted CRC cancer colorectal NCCN’s present. universal germline recently and in testing also expand decision advocating patients past all for guidelines to We for

as cancer testing patients low XX% Hereditary potential to under as being estimates with XX% of penetrated, tested. some is still

expanding addition product we We underway and intend initiatives In to to more and additional workflows adoption, keep to have momentum improve bring ease enhancements access use. of with and going to for education the workflows, support, pursuit non-genetic patients. experts, with the focus genetic counsel on points of outcomes a of very call best expanding are and in decision community for the our

business our powered disease we leverage call offering and is margin extend technology. it, offerings to this is above which proprietary is highest Monitoring our profile the into our goal our Personalized to product Cancer somatic offering well our with PCM, most Our minimal space. addition corporate or to revenue cancer our hereditary recent somatic is by a residual The average. And

addressable As There incorporated still that the to it’s The there billion in in and many cases for are $XX million it’s $XX of aware, survivors and early U.S. nearly MRD is XX into getting are billion cancer patient each are a new X over estimated year. the opportunity. you total massive is stages. market testing million care diagnosed somatic

is working clinicians, of and the horizon. through payers. And are key the further necessary with facilitate leaders use actively on steps to still opinion our clinical we Widespread engaging adoption PCM the

cancer goal treating our enable of to physicians to PCM other demonstrate oncology. utility oncology it be PCM advanced will continue to thus chronic patient to effort sooner, accuracy to to an In the and speed improving cancer to and into care precision of to is cost Our positioned the detect downstream move provide combine cancer insights the reducing outcomes. a disease, with and

and While we and a with arrangement companies reimbursement working growing fee-for-service medical conduct are biopharma and clinical generate are are us number trial supporting via research centers results, partnering to through of academic who we top revenue. options

over Moving segment created on this all average to expansion billion. to us a has for women’s meaningful we and TAM see recommending guideline risk, tailwind screening health, pregnancies, to including of $X with a

eliminated operational In and better changes our the practices exited COGS in revenue quality with as As implemented policy, we improved discipline continued contracting non-GAAP as aspects our performance, positive this underperforming gross into of part year. These business. deeply together of we expect have our our several from reimbursement have internationally. taken and U.S. next improvement channels shift, to have better in margins negative lower well factors women’s billing health

which expanded hereditary also sharpening panel are and includes women’s our into positioning, cancer and new we are testing. OB/GYNs product core health additional to tapping including surgeons expand channels, and We breast

On of the data bridging collection. our we growth and disease business, opportunities seeing are our side data rare testing and

of are researchers to disease capability data, relationships. this Our now to multiple testing business including biopharma combine area. emerging groups, us seeing advocacy and We to an gives evidence the real have phenotypic disease rare clinician and populations among patients, and world enthusiastic genomic and capability an partners access response hundreds in

a with to of platform natural world of are growth about treatment AstraZeneca, our and Praxis. data partnerships the the rare history excited who cancer. duct for IND epilepsy their data We used our research as of platform and recent We is real using support pediatric our with the application for bile

is management on outcomes high in positive While our is by clinical pipeline. part and approximately quarters genetic there and epilepsy of of product. half currently and as revenue, a scalable growth, to and opportunities help are genetic three epilepsy a of patients as health diagnosis findings our recent that of in adoption leads high By genetic demonstrate patients. many will way, based that testing, more margin segment changes testing a JAMA small our our business clinicians This data implemented the and reimbursement total in change improved

to for most will quarter. it financial I of that, highlights over turn With recent Roxi our

Roxi Wen

Thanks, including year. Network Data by NIPS, data growth year, Carrier year. products and prior network. million partners project follows. includes over $XX XX% was million other revenue over revenue third partnership selection the RareDx year. to offerings, reproductive XX% million germline Approximately, the therapy offered testing, generated of women’s Ken. $XXX the the XX% growth prior testing XXXX, and last $XX $XX including tests, a representing Patient from a the services data-as-a-service as the we XX% a the pharmaceutical health patient In growth oncology, management, and supported breakdown over and PCM approximately quarter from prior and Approximately our citizen from of This million grew other and over approximately

over the is prior the operating or prior year XXX% X,XXX quarter revenue a and gross of points quarter. the quarter basis revenue from million XX.X%, million XXX% was points margin of $XXX third XXXX $XXX the Non-GAAP XXX compared expenses revenue which from of of or was second XXX% prior in to year. basis improvement Non-GAAP and of of in

million on asset expenses, were presentation. operating As a in and result today’s benefits, from other we including items of excluded non-GAAP loss also realignment costs. more restructuring QX than disposal our other incurred separation plan, one-time $XXX of employee our and These expenses and

level. to And hold that our amount We our forward. July on further stated to call, on stable operating our expenses going committed figure call reduce first a plan we at by significant quarter that we

headcount, as nearly businesses quarter. Our of lab resulted and services, actions, third-party space, geographies well million from reduction and exiting expenses as including the certain prior in reduction operating $XX in office

We to to cost quarters take the our effect. three efforts our next over expect quarterly two additional as reduction reductions run-rate

securities XX, equivalents, with at Moving at $XXX million and million XXXX restricted XXXX. compared cash, totaled cash performance, to cash June marketable on $XXX September XX, cash

of position by compared went quarter. the cash million $XXX the second end Our down to about

approximately for flow $XX the inflow in for our facility, past the an was Adjusting $XX the total from beginning related realignment run-rate program be $XXX Excluding XXXX. for M&A $XX from one-time ongoing our cash the QX, at meaningful of business including million. related cash and ATM a items, to burn transactions, our approximately million million of compensation reduction to will $XXX million items million

a While and it shared with solve partners for we who our to not use find financing our options, a long-term intend we with to have are conversations our maturities. bad do continue the have solution vision balance to to constructive company ATM desire of nimble we sheet. Instead, our

is have over now, trajectory our and by direction we the effort close we place strategic realignment. right of million cash past into accelerated to the $XXX cash year and burn heading in our put the As by aided

that our portfolio consolidation performance continue more active on geographic consistent, will quality perspective offer fuel our Stepping focus to due QX business of top intended line are impact transparency on to The metric. this in growth accounts stable these and to higher be balanced and metrics our continue the efforts more a to the and growth, relatively a being partner to active despite revenues. headwind slight to

we patients to of sequentially. XX% number the share serve and prior the expand XX% are ones continue and However, roughly each for data available who year, over the to

found new product Our was previous vitality quarters. slightly from

As products represents the a X reminder, metric contribution revenue by over new a years. this trailing

in As in a in pullback resulting we that parts launches new product and communicated, XXXX, saw previously slowdown XXXX. number from of the

Revenue revenue measured on we the continued for higher broader as revenue. total our by of per patients patient, ordering has number efforts by have an the focused quality divided achieving increase period company

quarter. of seeing of one-time operational to those items. Cash improvement would in excluding been burn we items categories. as Cash all had a number continued percent have revenue quarter-over-quarter XX% one-time burn Moving excellence, this a in are

Moving margin and reaffirming gross are we our non-GAAP growth revenue to financial our targets. guidance, XXXX

and XXXX our low-double growth margin year of and full prior to XX% non-GAAP revenue XX%. year digits over expect be We gross between the

as of the trajectory factors operations low-double revenue the of be less full started project digit current the fact quarter into maintaining since rate our decision There depending first growth. we distributed revenue we chip that year and these based final some our previously consideration, Taking full first third For it’s than of our quarter our and alignment our communicated, timing have will impact in we mid-July. guidance the the on revenue also are our business. will decision regarding quarter

this Know between our this our realignment up $XXX at remained be burn, the to to $XXX $XXX to million. now and and expect $XX burn from cash we full million $XXX includes million, may improvement million led XXXX, guidance has Looking previous our year as guidance it million of previous that same cash activities, to guidance. cash burn amount

We you encouraged our progress are and team’s our deliver. our confidence by ability to-date in Back Ken. to to

Ken Knight

Q&A. for now will turn With the to we over Thank the that, you, call Roxi. operator

Operator

first Instructions] [Operator question go Morgan The ahead. from from Stanley. comes Please Tejas Savant

Unidentified Analyst

Gabriela Hi, Tejas Savant. this is Gabi on for

for preliminary labs with how just injunction them a that the forward? your impact recent of if volumes allowed NIPT residents we only about screening should would of to of was and granting requirement California preventing be I affect enforcing would that going perform California wondering from the So, contracting trisomy providers? NIPT if And think

Ken Knight

Ken, is that a obviously question. of not the that’s This Yes. supportive We direction taking. CDPH was were great

continues our we California State are with allow to in product, the of so it And which to us excited NIPS about. operate

And pregnant we women, guidelines the upside making so broadening but as of see and to of as it NIPS the expansion and see utility us. we more guidelines accessible nothing, for

Unidentified Analyst

the panels? what are you for terms in And was then terms in That seeing challenges towards business, carrier And hereditary shift screen just helpful. you. very a you adoption? your do what Thank of think of are broader cancer expanding

Ken Knight

expanded question carrier the of screen? Was

Unidentified Analyst

screen panels? carrier Expanded

Ken Knight

Yes.

have product here used carrier carrier screening. of an soon. complicated is for we of work more specific bringing some actually There utility screening underway expanded It’s type pretty a So, out expanded obviously diagnoses.

And to we that are we screening don’t going expanded the ordering is to there expect place pivot customers for But carrier. one our product. carrier is every of that so expanded see today a

future. we for have will our the the So, option in customers

Unidentified Analyst

you. Thank your Okay. I appreciate time.

Ken Knight

Thank you.

Operator

question Matthew comes Sachs. from next go Please Slater ahead The Goldman Matthew. from

Unidentified Analyst

of products the year. Could about [indiscernible] on through just in I you for last this half this Matt. sequential second on metric, product a talked Hi, which little the you on basis? is new is know vitality a lower new quarter, coming talk

update those would be any helpful? So, on

Ken Knight

Roxi, why one? take you that don’t

Roxi Wen

Sure.

is great destination question. acquired contribution either from revenue Just over products or internally developed you. Remind our last the the Thank years. new or few

first and the an launch does So, launches of products an – this We metric. product new on at as does some it you schedule have – of have launches and half did the indicated, implication that, the of timing and metric. that have is XXXX, providing slowdown guidance year, for this the XXXX recognize some metrics expect are this impact will on not and come an in. XXXX these of revenues those If we do we having indication part

Unidentified Analyst

Great. Thank that into reimbursements, you would is what but health, oncology women’s move on your helpful. could you additional And mentioned pricing as seeing you have to then are I and ‘XX. more in might and talk impact color driving be dynamics hereditary margins data you. in know which we cancer,

Ken Knight

Yes. Sure.

are the ability great with products, to seeing health that with women’s risk immensely. our Average been For we – helping have now all get reimbursement improvement players pretty in is guidelines expanded in almost our U.S. covered much the most major

have gross business, tailwind so And pricing seeing having some ex-U.S. in contribution made the about as decisions average our international I of and for marketplace. that’s payment benefit in preamble, are is expansion per test initiatives. that to our We a ex-U.S. said we providing my And positive our products. in NIPS margin

as working are So, seeing that we well.

those great and benefits from would have done be pricing to we I have pricing So, we needed from it. say changes standpoint, a done, where seen

think corporate it’s mean – said, is solid. as cancer have hereditary of it’s our staying I product And pretty For hereditary the performance average. margin I our been I gross pretty above well our our consistent. cancer,

so necessarily any pressure more what don’t we And marketplace. are see, downward the pricing we doing than in on

access We who provider to be to drive was more accessible the testing. genetic affordable, to continue trying

concerns pricing the PAMA our obviously is believe that’s part changes. for But about still some back solid. we in in been of So, were journey. pretty held now. that marketplace But There the some making

based and we so how market. cancer going see quality for policies internal upon we is overall, hereditary reimbursement to are revenue our the growing And of and

Unidentified Analyst

the for questions. Great. Thanks

Ken Knight

you. Thank

Operator

Marta is go Please Nazarovets Chase. Marta. ahead next The question from JPMorgan from

Marta Nazarovets

This taking for for you the Julia. on questions. Hello. is Marta Thank

and current mix? to how how Thank see do year some between relates what And XXXX? an you r given see beyond next health oncology, you. the you it mix As mixes impacting that women’s over do factors others, those mix are settling that evolving you Essentially, qualitative restructuring? the

Ken Knight

into say, I our – would I highest our product. cancer So, continue is And line highest have revenue it growth be revenue – product our will XXXX. product put, highest hereditary to simply as

wouldn’t material in is there I going occurring. And so mix to be that’s a say shift

are of our a revenue getting health, our for go-to-market are women’s we we the each running. for As adjusting of that tests are quality we higher

provide that’s in But expecting mix our to lift it shift into so to gross I going And XXXX. margin. not some our am significantly

our So, I to think XXXX hereditary more cancer and mix is be to beyond. going weighted continue towards into

Marta Nazarovets

have how quickly product was could MRD drive mentioned. the that you you of you. about then it. Got related And think the question advantages that? give what Thank Can of the Thank just competitive some that it existing penetration more do product? little second in market? And And us the bit you over a are detail you. to products

Ken Knight

Yes. how Sure. you the tumor product I we might recall, Again, itself. see we product. a with, start mean I have will specific

there is so And out that agnostic. are there products that are tumor

We we is which the specific have product. specific tumor patient that patient superior tumor provide and to the believe one. a and a the number That’s we a has, product, panel

early Our specificity will product top is market seen sensitivity data we of analysis going and have to that be and the our are of perform. in that how terms the

product. time now clinical going now have we we process we in got of period the in validity, and have are so And a of where are analytic validity we of done, our getting

product. the And that, be several expect we continue that our to have then And and validity we and the product are will we through as so clinical kind going we confidence show ultimately in the that our of to got out reimbursement. of getting are utility navigate to studies – there are of moving utilization

We this. out. how mapped well to So, the journey know is pretty do

or product, the getting are good are utilizing fee our we interest raging And reimbursement. PCM done. medical centers. in way clean the service in And going biopharma we our that’s we in And of to a are that up getting be commercial in our we arrangements for with until all meantime, get kind academic We revenue of opportunity to expect just the process product. and us for utilization a commercial

Marta Nazarovets

Thank Great. you.

Ken Knight

Yes.

it. We excited are about pretty

is, I billion was the are billion answering about the product. tam have we of I said still So, opening, hope, to you our there. the I I understand, $XX want very space $XX excited And MRD question to underutilized. sure in make it’s and as

the competing in in excited early, it’s be very and to so And space, we near that future. are

Operator

[Operator moment. questions registered have Instructions] no we at It this appears

to management team. going I to back hand the So, am

Ken Knight

you, thank everybody for call thanks us and Well, operator joining the on today.

the We remained about are Invitae team’s our we ability on our very positive have confident opportunities certainly for plan. and to in execute

appreciate your continued us and we joining all on for support thank call. the you So,

Operator

call. This concludes today’s for Thank joining. you

You now may disconnect lines. your

Invitae (NVTAQ) 8 Nov 222022 Q3 Earnings call transcript