DMTK - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen. And welcome to DermTech's Third Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this call maybe recorded. I'd now like to hand the conference over to your first speaker for today, i.e. Caroline Corner, Investor Relations, please go ahead.

Caroline Corner

operator. you, Thank third DermTech's earnings call. Welcome quarter to XXXX

within Dr. me not to Kevin and President Reform are today's Act forward-looking Sun, Securities fact All matters the are this on call John forward-looking call statements include of Chief will made Financial of This historical Dobak, meaning Litigation relate statements. Officer. of Private Joining Chief call the statements Executive on XXXX. Officer; considered and do that

to you be website encouraged time available DermTech will website the the are DermTech Form update results. on A are as or and future Relations statements to during described performance, as quarter uncertainties, for quarter today's made year today's on and call, assumptions, third XXXX, SEC DermTech's PM by Actual this additional by for differ XXXX. cause September is from release report of time. such under Also management's X, in XXXX projections of DermTech's latest ended most results Several DermTech's risks annual filings, over XX-K section based about statements Pacific XX, on required expectations materially includes which are DermTech such financial the press Forward-looking law. those with these applicable statements. DermTech's except of details differences XXXX, including press on recording the report obligation in no and results today. XX-Q to factors various SEC, and DermTech available DermTech's release X the November filings December contribute call undertakes Investor www.dramtech.com today, that XX, described change could with available recent Form the including quarterly are to ended the on review. are which subject factors, of and website may

like call to over the John. I'd Now, turn to

John Dobak

tremendous conference attended we Meeting today. the joining Caroline. This ago, few Conference in in Las of behind Dermatology the before. American But Thank conference genomics inroads into presence Vegas. of the A everyone Dermatology Not a weeks the technology and our session. general, Academy I that visible you seen in large that And in largest at dermatologic a Fall have only for plenary potential is at the thank DermTech the and was is was dermatology us have spring. Clinical care you, a level the second the not making showcased Annual

which her involves about patients. I of care. the improve how applications will in on walk an patient and dermatology how the improve and conference, dermatology, the about community share they who offering DMT about growing dramatically it first that, was her Test about With physician for Melanoma DMT DermTech and to This enthusiasm our melanoma. particular and me, before genomic halls atypical on our to moles a numerous it again As anecdote dermatology having had among assistant body or patient you with genomics a dermatologists a can concerns people story skeptical overheard signals try care. about bit history is discussions several the I own wanted lesions She industry it of

different. quarter She and melanoma study negative it, melanoma about She Many regular real even believer was in of highlights lesions situ. one user gene in the experienced some tested of of early continues enables concerns to companies mind. lingering procedures. lesions use and double as at the it and giving remained a and the and her over how early unnecessary One while third softness out This own significant later surgical the DermTech six to be test an melanoma DermTech our avoiding months checks. skin turned was no positive tests diagnosed become it detection peace her case has for stage retested negative, subsequently of

the Our and both rep declined Delta of pent-up Sales most external again pandemic access traffic and to growth to and patients. clinicians challenges soft. dermatology than and physician part demand included was of were for XX% vacation the by patient the variant pandemic for medical offices levels, wave less pre

So is harder this number to quantitate.

We on flooding due by the continues their fastest by country. an practice the the one Louisiana of We and territories our storm which to alone in as in drivers. Ida, moved experiencing least but that impacted more Louisiana, destroyed. Northeast in impact also were mature our against at also impact disrupted to business volume Hurricane growing extensive our our had southeast territories X% core our we across Ida customers continue estimate challenging of this factors, hurricane of to Despite external overall one QX, larger in execute impacted test had that the trifecta

volumes assay XX,XXX. approximately quarterly approximately year-over-year million, growing Our sample increased from to growth $X.X and $X X,XXX was with XXX% million from to healthy

the XX,XXX quarter, through have performed melanoma year the a in difficult team. year period tests third a with the environment optimally despite sub almost for XX,XXX almost commercial operating For versus last we same sized

essentially Our with at per $X million was assay $XXX to flat a sample. in ASP sequentially QX slight revenue increase

reps the non-invasive assay we ordering our penetrate and expansion, world the a training. can dermatology area territories have team This and for with them clubs ordering, that population And average a along has the modest field the see an of XX We patient with product development directors quarter underpins time and years over be and seven continue regional experience our test. with which sample have to buffer to increased despite we by our our proportion The launch we approximately future for split address and a new or We unique delaying external the class onboard and been to this to growth and months approximately XXX larger the experience. sales XX% build directors These XX,XXX flat did have revenue sales, XX record to reps. clinicians. two We we're taking undergoing reps, also an assay grew core environmental XX are currently was most years a this increase of as have growth. Medicare growth clinicians president to unique the drive salesforce sales due and classroom significant which of to macro in effort melanoma kept number revenue X,XXX. clinicians The new provide We to regional of sequentially, increase all about hamper as clinicians relatively against organization, in dermatology healthy sales pandemic. to past average now thoughtful dermatology levels the volume headwinds ideal completion infrastructure target and factors consequently, now professional XX winners, on nine of QX. X,XXX the

QX, We in and expect contributions beyond. to from the during XXXX kick new hires

year through reached approximately volume sample last XXXX we worst is this we optimistic and double us. now behind to that and hopefully expect our are full pandemic of trend commercial We scale, have and/or similar the over a year, continue accelerate will the

the our was melanoma who their accessing adopters. to have now positive of in the and will care Florida pilot the our train to primary to We success physicians with to interest that the of this The through first currently account network against of we and this the enthusiastic quarter, science the in our work approved test. medical in interest pilot participated and are and from in other that effort commence due wanted Due technology. the to team success sales development educate plan network XX of from Florida. our network access word-of-mouth physicians potential Another primary remainder this XXX is deploy clinics liaison pull approximately providers melanoma test of sales team we completion the to care providers. an reception pilot, to integrated to recent the the Through

another We care network also primary pilot are and in the pilot with Midwest two the complete to one in the quarters. hoping recently to next this expanded large

of pipeline infrastructure opportunities. develop of which primary personnel investing and in network care the marketing to begun have selling to networks, robust We a initiatives consists dedicated

will previously team have against the to a secured to sales we the we care We the And strategy most sell efficient primary discussed various to currently believe network's after commitment is reps focus dedicate have develop strategies into further to channel. to test network. entire this melanoma the commercially our expect foundation non Through product the initial we our and we Carcinome throughout build effort, as for available. introduce selling, cancer which care becomes skin primary melanoma

beta to telemedicine nicely test Our in market in Florida. progress continues

the app of are which pleased in the downloads, volume interest offering. with indicates We

expected As high. test per telecon and sold order were per initially acquisition costs

will costs with targeting decrease become the price digital and and our after optimize experience. we efficient and media more marketing these we customer However, social as

where telehealth this we to visit synergies is Find marketing a page. these by working and a to the With expand number states our encouraged option further are will are Find initial We by of our Doctor effort available. results gain providing the with Doctor patients expansion solution

a virtual to and our as order are further health of a or need partners both to will test million We customer through warranted. dermatology attracted visits developing smartest providers recently XX virtual established test. in the a insurers collection collection part skin provider US. brick-and-mortar. will the of and supervised DermatologistOnCall lesions is lives a partnerships dermatologic the to sample this health Under suspicious sticker technology a ecosystem this sent melanoma ecosystem clinician remote platform run expand telehealth helps our platforms our XXXX. keep as including using a a unmet telehealth lab especially with benefit our DermTech our employers. customer leverage board services leading DermatologistOnCall a dermatology technology dermatologist Building of which be with sample covered also and/ and to us care will for will service. agreement, tele in other virtual develop strategy DermatologistOnCall an access for online to contract address be An care solution picture and offer We review as the to and channel possible, important guided the positions sample submitted care, to beyond our will gene remote if DermatologistOnCall, certified provide provide

with will regional effective activity our that so plan business covered sales blues a created national multi with territories plan payer is lives large be recent expansion, groups QX Our our dates state with approximately on second impact recently million core And there revenue. new of robust. and fairly we This an not were X with agreements immediate signed year. remains with driver, this covers within

it new optimistic the will adoption in we're and However, awareness facilitate territories.

has we're We pairs see in importance The are payers TRUST and requested the quarters. the we'll the and additional optimistic educating coming published to progress the with of study that announce important with about results. data several we also other the been successful pleased contracts are published

of the is another see economic requested results in the also to publish are Optima study, reviewed We pairs ever working published to peer dataset that which form.

We approximately expect peer we in submitted lives estimate end. have paper and/or melanoma covered the to review million XX have before contracted for test. US this the our for year We now

our programs related to chain business there third are some to now sequencing new constraints development Turning product supply our cells. driver across development, flow

this in expect complete to have are or December it late worsen We has after introduction originally will available with an QX. in Luminate months. will affected; product for broader coming development a rush. of if the holiday resolve push when planned QX Luminate validation not the certain still the been the and in modestly for issue QX introduction We in marketing we

and broader a QX So affect for delay plans not this DTC effort next in does materially throughout our year.

performance currently aging. key with and driver product ultraviolet are to genes the cancer to the skin assess damage with associated photo ability its and We pleased of

XXXX the soon before as In have end, study manage patients We to is to chain program class we dermatologists. chain and direct the changes thus year to been model this about And is able to planned, to cohort, effort more to and to we rolling out model, any decisions. to this also the Carcinome validate the Luminate supply pending have progressing by the will supply targeted several sell to verification this pilot dermatologist completed program impact enrollment that effort to There validation resolved completion expected we plan the in our which be team. with need mid is acquire are need for class as complete, far. it would into guide commercial in a look verification variables issue. by we this broadly treatment understand selling pilot as

various board. enrollment therapy expect affected COVID on enrollment precision had factors in continues year percentage to effort to we our come dermatitis scale we in was by which the our more modest sites accelerate all And Lastly, for and have sites XX a study expect in atopic enrolling as already end. up increase will by We discussed.

Our contract Recently, the year. expect drug for engagement looking and into slowdown before from more development their due to trials to end have to have deploy was the activity companies contracts this quarter in platform light new our had programs, revenue COVID. inflammatory we again related to the we of some

the third reach one full the presented table quarters. long While DermTech for we pandemic entire delayed commercial challenges to scale many the across to related the with of is support us, is important an set reaching quarter ongoing for been the sales term growth US and milestone that has believe

And have infrastructure vision skin is and Our the make genomic lead we now health. revolution to in reality. this dermatology the to

call to turn to go the results. like over our Kevin to I'd over Now financial

Kevin Sun

to million QX increased to the for revenues for $X.X compared $X.X XXXX. in million of XXXX Thanks John. XXX% period same Total

revenue to million for period of of to same third quarter XXXX the million $X.X Assay XXXX. increased XXX% for the compared $X.X

improvements XXXX, second the our We XX,XXX quarter were period in of a QX to increase, in see could the approximately XX% XX% coverage XXXX, for actual flat samples quarter were still XX% the same XX% QX approximately of recognized to billable of having or continue and for in approximately the in represented and of year, meaningfully XXXX. than potential samples sequentially Medicare compared of XXXX. of the to prior revenue to compared compared the about QX quarter to third reported revenue. ASP broader for X,XXX is samples our Billable that be higher from assay pair

Our Medicare pandemic now proportion low recovering samples the from point. are

of clinicians Medicare our who penetrated clinicians in increase in a initial pandemic conditions. target ordering we approximately clinicians translates about approximately XXXX, of practicing of proportion unique additional be and to an for procedures or This total market our melanoma. to approximately X,XXX QX approximately in X,XXX With XX% penetration into of of the XX% diagnose or account compared surgical dermatology annual the XX% target compared during could concentration by total However, XX QX approximately XX% XX,XXX growth impacted future X,XXX dermatology in initial increase. sequential our and had ordering X,XXX market of to XXX, a high XX% clinicians We months, XX,XXX a clinicians. expanded of of of unique penetration of to dermatology QX the X,XXX last XXXX, XXXX,

number of in ordered in in and Our average with ordering QX QX, of remain quarterly strong per of utilization X.X unique or X.X in and average to samples tests billable XXXX. clinician compared X.X QX X.X QX XXXX, and

quarter decreased same rates higher utilization ordering with a the lower using utilization As XXXX. for added accounts since users potential compared melanoma as new increase XX,XXX still expect overall are slightly first of total to expected for overall third month sample Contract start less number clinicians. more when vary revenue order We per typically offset of the XXX,XXX period of to new XX% our and declined to XXXX our billable they test. did volumes as we

XX, and a million was Gross potential maximum current of $X.X had compared in of The XXXX, higher same for billable largely the QX XXXX. to in XXXX agreements. by revenue during we our contract sample margin driven of XX% remaining related of assay negative September X% to period for revenue margin of XXXX. As was increase gross QX

of to commercial and quarter including to the marketing XXX% the and third of headcount the million professional Sales QX million additional compared negative promotion. XXXX, for investment, $X.X marketing media, same XXXX period for X% due was additional direct-to-consumer teams XXXX, same $X.X primarily advertising and digital and to of compared period the XX% XXXX of to QX for for for increased XXXX. margin to gross Assay XX%, expense for of

for and expense cost reporting initiatives sales burdened to expect additional costs, $X.X the to clinical full XXX% our and due the Research to costs, related due in of expanded for increase of technology. increased compared as trial raise increase and We quarter expense recognize supplies. awareness salesforce The XXXX, to our marketing continue and lab marketing period was to of we of the XXXX. increased same to higher periods million Development our compensation $X.X the fully million third to primarily for increases

related and as million expense higher expense and increase compared stock-based XXXX, compensation $X.X higher XXX% continue to ramp to up expect to third We General administrative increased of of for development our costs efforts. audit for primarily we increase quarter $X.X million R&D costs. period to pipeline same higher the payroll to legal XXXX. and The and the due is

$XXX.X efforts implement cash direct-to-consumer Net of related net the XXXX same stock-based non We to a cash cash included of increase warrant million value $X.X third by a million for expect marketable expense the $XX.X million growth. in million of of compared the $X.X cash benefit to compensation our liability. liability, by loss non At benefit cash overall which offset end period which related fair non XXXX fair and to our $X.X and compensation cash to offset of administrative of was support included systems million our million $X.X the change continue quarter totaled of we equivalents, stock-based warrant cash, a non and general loss million. in to infrastructure of the value $X.X as of restricted for and securities of quarter third change the to

sustained, demand. travel our If has end we season between physician fall XXXX October. the lower we Delta early within We of continued some and some Ida, concerns November access are revenue week up could still nicely, revising have about and first lingering million of pent-up $XX.X assay and our are of million hurricane impact guidance due the the guidance range. trends mainly in the to November we saw prior And while our, $XX still full be with year holiday to picked the variant softness

our network we partnerships. And we our Our in trajectory drive we the growth the salesforce XXXX solid XXXX. revised beyond the to and believe telemedicine guidance similar beyond. to And infrastructure XXX% as primary expansion, XXXX. with can over of expansion care in have still represents about mentioned, in pilots efforts excited Florida XXX% and John continue our of of growth integrated built the believe progress we We're appropriate

the turn back questions. the I'll operator for Now, call to

Operator

our William first [Operator Instructions] Brian Blair. Now is from with coming Weinstein question

BrianWeinstein

the taking And Hi, for guys. Good afternoon. thanks question.

out, kind closing I start on we So just there. following thought of comment Kevin's up

I talking prepared QX keep a think remarks and stuff point, if going John everybody say impacting back drive think to this we over we you think thought of because QX about and just should trend And in that next that here, But can drivers a of aware and were doubling going forward we are you this in season, because as try were in some your how I that's and well into the XXXX, of 'XX expected about maybe I the continue that similar at across the about focus be on that of the heard the expected all trends really earnings year. this you some volume go key that you you to year, board.

thinking most to I I that excited and sure XXXX things that is growth the want the should we be you sort of I have you about the guess make opportunity. trajectory about So say and heard

JohnDobak

it will I'm sales of continue put to scale double effort extremely year. I is it. the will that sales just we approximately a positive that our and finally pedigrees believe got XXXX. of accelerate, Yes, that we that's have fantastic the terrific mean, just think I we as expect and said about They together. I our up rep. Because team, that year, achieved biggest next progress I this trend as that exactly driver salesforce to all we going We terrific dermatology be business come within success the sales channel. of And that's

I don't a the we what the we And utilization. they're And we're big generate to that. at do quite there's that care within We're further on this about on many also the certain think we'll of how know we networks. that know while reps upside number about need going that primary within we to making And over progress, push primary care care So what do. represents think don't primary what is against very optimistic to channel. channel. And call docs We dermatology utilization talked we'll think continue opportunity there. point, quite professional do a we rate as to

Brian Weinstein

about and then in Great. the order just the up of kind they one process woods that but go try involved And Can here the endorse to the talk my technology on to about have like looking the talked your in does it? one that care get of primary look salesforce in there's in like? to opportunity. what Florida, there, on sounds you neck of follow you bringing process Midwest, sell what on for And sort to and are and then just

John Dobak

really it's an as -- out starts executive starts out It level sale.

about So to in you a associated get go networks top. you at talked issue is to these money, at referrals that point lot cost real where really and a buy-in dermatologists some level, care we've them pain not And of have typically access. need of primary outside with kind the there's the the which executive

network. to they if those from understand the And call a to product. then patients obviously review which about what get feel see flow of really pilots, of So records. since all data. with folks been that to the off it And patient electronic look doesn't And to we we get live that the occurring. buy-in of within won't -- see to all going then hunt, medical and all the sort every test they number they primary of will overall like process to doctors and can successful, occur in the and These a about then that's ask primary license And the to interfere then a clinical the as test physicians level, day. that feedback review, physicians the need moves executive they their typically if where integrations pilot from good, that the stage offer or that a is it the goes they if for our some and has we the the care ability they care how traffic technology of you do looks also

that's And process that through will discussions network. and with were gone so integration we've we with Florida the with. the then proceed And that technology others in

Brian Weinstein

Yes, and there are to correct. several there, talking that you're

John Dobak

very We're nice of opportunities; somebody a do opportunities. who developing those focused discussions we executive initiating identifying robust solely a those the and at pipeline that have those opportunities developing very of on is nice, level. pipeline And she's

Brian Weinstein

one territories looking here one of quarter? that's the and here these then reps on and last get Okay, salesforce, first rollout start you quality me, that manage in on you can finally for salesforce you're road the the sort you the when how be if here just sort hitting ensure into numbers really of splitting of of manage going to going of high kind for squeeze the I in like that productivity do of is kind have maximum sounds they

John Dobak

spend now manage as a time the aware training a obviously, associated it doctors, big split, existing that. mentored best that into the those right hiring territory on contribution them reps is the really we sales really that subset But are quarter, reps doing we trained they're take they're feel really how factor getting in have just we QX the lot a to is up. to going in occur any started up. things territories, effectively. and they Yes, account the we to in splitting territories manage rep thing this then that is we're The we get starting and like look And of smaller their why a way by can And whole of the get distraction going. focusing that to to other with there's training. that's October. you're and sales And doubling sales effort, And that's of the and will when team going means you're is

all they QX all and QX behind should through in talking And be be that a it's hitting with go So scale and up be XXXX. to team disruption after the training going you occurs running we'll that this distraction the you're then through existing ground program occur about when in we'll mentorship And us. sale of reps. the

Operator

question next Company. Max is our And from of Masucci & Cowen

Max Masucci

and John questions. taking Kevin, thanks for Hey, the

in discussed two you've study, So can TRUST the your of of it what we results the great be with final how discussions. September, months like SKIN a radar. some been start data publication, great mid fraction hear on the your have only to to removed sure in about from see on would we're results in I'm early payers the published the received But

John Dobak

that You a But don't information. say do payers, get I like from solid. two this data, they provide had think and or lot them of is basically payers the we've feedback the think one they the data

to them, we're like why them with we teams getting test. and I something And in of couldn't say have going progress get the payers some behind very we're the know, understand that's opaque, make in over that we that's do process feel as general, we we'll are quarters. the an what to them guys the about exactly is edge. is we think a And lot audience But provide we're progress making educating with the information, they're them start you encouraging. that the thinking, you get payers, on you push the we're And the the always more think with before, hopeful coming clinical feedback, So of with we we're optimistic problem don't payer which and do test.

Max Masucci

expectations more Delta how of today sort range. bit ASP volumes for is two from ones in of breakout to impact we Kevin, of QX understand Great, I we low Delta we on, helpful the guidance sequentially, and end detail terms a variant the remains from see on prior could just around the first in a to maybe the of from regional your quick the just that now can bridge the for impacts Ida, get think it -- the would any be that that how trend even have to

Kevin Sun

previously territories. well and mentioned getting us to Florida, of there Yes, current that one in in good volume. of like that like of so the literally and and had sales good those of New still on big What in states, from states call Texas, really sample mentioned California, growing so large big a that for we up we South, able some volume the states the works a a but was the so before hired as York, model concentration our remain relationships various terms draw sunbelt bigger our was then the includes states was rep really that was the think a populations Louisiana states that big with tap. physicians find sample fastest interest demand We and as

ran with specifically Louisiana. so right Ida through And that

So prepared the one destroyed. customers gave the their largest remarks we our had practice was example of on

a salesforce There there the can lasting potential be these those us in these type that some the of say affect through that's though, example. we the for better covers again, situations, potentially some a entire to And are we future. have within why broader Northeast, south. we as would to expect, regional have will how rebuild. others because and QX, impactful because than to long little the impact. now up we So places is that just things in That goes essentially related are in bit one the that said, do within have recovered continued flooding say, Ida some the areas of expect That's being But and the factors hard it's it still it could ran well, beyond, hopefully US, less headwinds what QX Ida. is

ASP, then again, But within that's the trend sequential slightly, but that that's commercial expect contracts that'll hardest the say. territories, ASP we improvement definitively time, probably is it So board ASP a on to still that's it the growth, XXXX, are worry of QX. including do the both we we things really model, the improve again, coverage. improve just our through how kind from of But we covered within lumpy. much because we will one to Medicare we some help of is over if to within improve And of again, the perspective, drivers payers How to can it's proportions hard focused ASPs expect up get contracts, proportion rate one can be throughout on and help. as samples for and driving an covered ASP other key hard,

John Dobak

just Max, thing hearing similar about didn't pent-up hard was that add people I quarter on wanting September. would that had concerns to mentioned And get weren't -- hit about holiday. that seasonality, so vacation we is with the August and demand. the the got but through clearly if the the there us we we prior, for things We're we sure together to was vacation there fourth

now the fourth pause So these kids us may thing is because things but coming we're holidays rest it to in up, September the just thinking the to now with vaccinated to only some and that, want that about people right relatives, impact. was a so of worried timeframe. take the be visit of can forecast one we're an not thing driving that's have how are that just only just for that strong the that we all gives And quarter, the don't about know August,

at not guys happening the things what's lose you -- we on by conservative We why being look telling the And we with we're so thinking ground. don't rest really And just this about are don't how about. that want just that's credibility those quarter. of the we're to these

Max Masucci

to Is And off, it it fantastic. when QX is it next Curious channel. DermatologistOnCall, the for marketing off? makes or that does absolutely, south kick really kick beginning Yes, of the sense. at does do of access XX and patients then year, drive million officially maybe that ground partner with to when running opportunities kicks penetration the if can joint on that anything that you to there's depending hit off

John Dobak

overall in live to getting their lower But with but proportion. we to take really Yes, But so come we telemedicine that'll And virtual And that's network, DermatologistOnCall I is doctors, say now, through or dermatologist a a true Find on with moles Doctor suspicious that see something rest service now we're to a an doing with kind access it's would the is the covered are where some only atypical you be and we exposure efforts way will that that with where now, I Doctor patients get XXXX. training the there understand those can now think with starting that million page for their we'll we the we'll surgical of to folk that the XXX take our covered starting dermatologist proportion And have home; XXXX. kicking is benefit the benefit. now. are to up and the dermatology to biopsy, marketing tele that's visits care work were option page. lives of Right own time. would calling their to they going Find that proportion. that test increase to moles really quarter option a are be in have in a They're year a because throughout working assess that relationship of lives for as XX our to going then that offering in a and their the our going all

Kevin Sun

gotten And actually samples week. that that this we've of already relationship, our in partnership first from

right now it's And again, through going it's we're and contribute. so to though training protocols, help the even going as live

it'll very ramp for to take do it little will time relationship So we're John like bit what again, But and that a up. us. can said of optimistic

Operator

from is BTIG. of question Nam Ji next our Sung And

Sung Nam

sequential if I the impacts one there assay year-over-year, any is gross Kevin one Maybe margin, you questions. are was guys for time about also kind of driving for contributor especially year-over-year the taking margins, for there curious improvement gross seeing there thanks sequentially it's decline? there. what's Hi, the and Or for obviously. declined, year-to-date

Kevin Sun

Yes.

some growth. up obviously, had we So staffing that anticipation were additional impacted in growth, Delta of

COGS And costs it some perspective, additional say related from over a so fixed I'd variable headcount. had was we just flat QX, relatively some

within scientists high just in of they're biotech because San Diego. industry San the demand Diego, So

lab that within again, know costs. a because and future. variable find we'll go labs, get them the we near technology We're of impact in lab when of infrastructure, improvements the for some here in people, putting had also which members in the bit and little terms quarter will team so some good And scientists we'll need capacity their

really reasons. two main was that the So

Sung Nam

portion that's good making guys challenging market helpful. despite you, And with are environments. Got John of the you then Medicare the the test obviously, volume, progress

there just experiencing? to So are an you it's just is was you're effort of you're curious, incremental or or kind out essentially making end that figure market with trying population, trends that I'm if

John Dobak

that could contributing be Medicare gotten behind places that kind we But from as be to Well, because lives, has a more dermatologist, long, reasons staying exactly that could hard the put so living vaccinated, they they that's of were a proportion, it. are their the think away rising it's and to and we factor for like think population out the more so about factor.

We are population. that more broadly patient marketing to to test digitally,

for little improvements be continue So are exact but an to make seen a It's and that with number quarter reason we exact we're there this a focus helping it, hard on it. but to And us. put key going pleased every could now trend an bit. up. behind that it, we've to expect And

Sung Nam

me, flow hearing about chain Got sequencing just first constraints supply the you, on sales. for great. And then lastly time

a if hearing sense you normalize And was supplier, addressed, as have far you're as guys. wondering that the be might I when from if might of for anything when so that you

John Dobak

these many been Yes, And their we and and not onesies right only impact be trying something. outside tell, same twosies just hang things product, can't a the It's lead suppliers big Carcinome. orders even from mid validate they term it's now, again, with have reason. But to optimistic as resolved. maybe to go but despite getting down but that sale. services Los we they're up right that really it's that's they're XXXX, now, with quite got to for so sales. we're on I are as we've that's Luminate flow it will we an a And that when are And near what just just still just we're hard little sequencing it's come And us also the get slowed sure into too flow us, and extended don't where come been service from, services, our the bit chain -- times that contract Angeles to product by overseas, -- we're hopeful of just, a supply know they providers, at done hard not issue they're be poor having that kind work they or we stuck so will of as just possible tell We're really get say, they trouble those, enough. for the

JPMorgan wrote back maybe month ago and a flow sales, the analysts but I then experiencing we a this think started that. while with about Luminate challenge ago,

Operator

And Nowak our next question of Alex is Craig-Hallum. from

Alex Nowak

to existing Right, and really new waiting? strategy that good afternoon, new everyone. clinicians? to Are more the approach either the fully here where Is ancillary is with teaching anymore, to or resonating replace the conversation alternative sales about watchful refined clinicians DMT the biopsy think all and helping and you're a trying branding not the

John Dobak

Yes, absolutely.

messaging that's of can't about may help it the a away think tightened MSL reps, We've that to consultative it. up that been for And of just concern the you the sort selling your with going on general gone new our variety into out you the opens biopsy model a starting we've with the takes messaging refining cetera. existing I rolling reasons. hey, we're reps all that doctors and up better. that And with take the down new support, In much the but and out of to these messaging. lesions obviously conversation that sales et is, we've working to general, here biopsy. of we spent We're message hands sales general a marketing And lot time not that. here have the

we the part of those our think expect done off just that And things planning, as pay full of commercial a to refinement so things all those are team. we've strategies and commercial I now

Alex Nowak

about And to the inner more just rep here. understand center hoping

an there? you quantify initial from a does of volume So or users quickly consider new of I you how to more high just Unicode clinicians, go high mean, user many clinician are and customer? or samples the volume ordering out XX whatever And a how can these being

Kevin Sun

Yes.

that, again, we call to the it's varied. the nine two -- been three buckets start dabblers right. on We do their disclosed it's board And as mid lower higher various you really tier, yet. and the new how But utilization then the kind which first the say clinicians tied it's measuring varied to two months, to as the to the come quickly does which buckets, go tier from so they of in haven't experience, I'd one those breakouts buckets buckets, right, we've imagine is out and of months, can is they

these but think things, who's it's ordering access, seeing of And start opening, and these the things, as future, where gets the just acknowledging ramp putting super have not we and by timing and adopt good is the where we technology really bit the kind this to data pandemic can we're we they it. getting that in something eye use the by they muddied disclosing lo and has didn't have or get we just and environment a up starting they to all type that understand was little as clinician they for the will a of suspicious, and some the little It's just muddying if really they're more that now. that the right that repetition, something understood, don't test right back sure of right a make haven't them waters bit clean through the that's target make number out quicker. really pandemic cases, again, But use positive because the during really average tests. to that technology sure of behold, just the data trying the just So and things come COVID tiers ordering with clouded the use sort the had clinicians our buckets

Alex Nowak

team, new And even there then ROI customers? makes the and sales mid better sense. by Or term, would term maybe rather have see near you the that existing to up maybe incoming Yes, go them you out drum a clinicians? and try ramping no, do

John Dobak

be to also think rep doctors so one after existing pretty -- existing expect which sales and you're right. our him a going customers, going were Well, do is frequency with to some are we be that both, we new a sales that expect when to to to them And we bring heavy territory expect territory, in business. businesses larger reach. if before I territories in for split, two, the to per number XXX there bit reps go was mean, I there's territory, to, cover them for right the

XXX like to XXX Now territory, within to frequency and we're more down group. that adequate now doctors per reach which there's

is that we're of just existing customers. to focus both focus business expect with drive accounts. to them trying existing In pandemic customers, now general, our though, bring right? we So breadth, but in go to utilization deep, The new drive within

we to want as group And to that scaled broad pandemic is broad, we on users. drive to bring within as and can. we the group and on users that want we're that get then utilization broader time of users fully that many as starting over then Now go of we up wane,

Kevin Sun

so reps the brand Yes, really main territories. for half dropped half into or new a about probably new getting of of that, are

they're while doing of a on for the board. what just the new will be bit. to customers ordered ago So ordered and who a other some have breadth customers have for majority then a get expectation is And also of them might we haven't little

have type Because and much as stop again, where know they you front in repetition about even back order if potentially might get contact of to is frequency don't dermatology ordering. we with opportunity not side an us gives even or frequent it of it So just of specialty and them, a forget then them.

So do have reps we of their all to new those kind want efforts. of

Alex Nowak

example, clinicians? makes thinking just on here else then and help assets Connect, add DermTech how the lastly, technology for using meta that you thinking about And anything no, integrate generally that sense. infrastructure? dermatology you could to here are Okay, for add this strengthen that Just fully is other there on about, optimist

John Dobak

going right ordering that's for to that's We couple to important to that's with push rolling on been medical that the I records We're and guess now integration. the the and quarter think and quarters. more last out have Emma more streamline facilitate do a working we electronic piece every the clinicians going do of big We're test. very another well.

will that So continue.

and it's We house. we near focus do we've markets, of in things we pipeline more the a necessarily of job that And upside could we with we other our the want of get in that penetrating think to about of got a own represent ancillary We from -- a on just where lot bring to just haven't didn't And identified lot we important bringing the products done term more and lot any got to technologies before a work worry on distraction. have are to other that out we those today. need deep platform.

focus. our in we in. near bring term new have any And really So the anything plans don't to that's

Kevin Sun

they in Yes, have, in to addition the the networks we remarks, what various so prepared mentioned types integrated can John delivery use that of EMRs.

other so with pilots using of on though are And even currently EMRs. we're couple are different going integrating the that Emma,

then need to the that that And for to those so do that'll also us requisitions. help we the we'll integrations process grab on their and submissions appeal test to allow backend do records, will integrations have multiple will facilitate But the with the results. both phases, medical second EMRs of

Operator

our Lake And is of question next from Street. Flaten Thomas

Thomas Flaten

volume a pretty wondered taking imply end for second guidance just for fourth thanks the downtick the on substantial the Kevin, Hey, would question. low because in testing guys, I quarter. in the a

it of Ida like So flat. found if brakes, the just in it imply the the I keep pandemic, maybe some maybe low over rather say end kind there some we would that there business it of can some acceleration walk than kind lingering the just the through in but me of was shrink way. vacations, That what you sounded would quarter? conservatism third effects Can

Kevin Sun

Yes.

quarter, all again, September delta great. really cylinders. and was third July then We ones. before of were came was on the rocking out about came everything And QX, August came tough and in So and Delta about the

as back we has as in start we October again November, so little a was mentioned, up. picked November and bit choppy. And out But here October

flat from still we are now. QX, need where over to a get to so some And QX we acceleration

of the And the uncertainty we towards say to out, holidays, quite it we're around addition because in just why coming Ida. that's vacation the so plays environment, how of not sure

where So how for mean, the there's growing rebuild. takes we was right, Louisiana that one that long it And in who mentioned, our fastest me, to of territory customers was was that and fastest, territory. them, largest largest our practice -- example for excuse I knows that them what the one

South, impacts they're other other whether cleanup Ida the Florida of states of the around the Some it's well. as dealing or the in still with that, South, some

going a it's low to in just we that Johnson trying end, we we're think don't at on lose coming capture above in pandemic of want credibility right are So even reason, matter wave those again, any like though the Europe more the things probably kind even people Many another down with sure some another for that, might slow of being make even of just about conservative of now. variant, potentially fifth or we us things, wave the reading to and the think comes I us.

So be head the will it's indoors what people to say for approaches, and us hard impacts more. winter as

we're for is. range. low So things is unsure where we end we'll that's how ahead of be It's think It's that is, we just the conservatism again, that. it the bottom all plays really, think of really of out. just the it do really new the And

Thomas Flaten

assume of it. in doubling in either 'XX a is be of we you, And Can about I looking and Got that testing volume would that think over for John Kevin, as that then included Luminate volumes 'XX. forward, upside? just or not

Kevin Sun

Correct, yes.

Test talked trajectories we for about year, about exactly. next talking the DermTech Melanoma when So we're

Thomas Flaten

I of the timing you have timing one Optum it on didn't publication? and the then or thoughts prepared final And just one, a remarks, did catch during

John Dobak

the It'll is peer process. the review year be before one submitted can't control end, thing we the

see a what months. weeks, cycle in here to that review is. just, then it just we peer within couple Sometimes it and it have going publication, weeks, submit And takes the sometimes we the know couple few a should to, take a we're to can go we

of If it'll by suspect the year. of the there. not next be and year the end part first I So out the

Operator

you And in Ladies And showing further gentlemen, any today's participating and concludes I'm today's for thank not this conference. questions. program.

may a everyone. great You Have day. all disconnect

DermTech (DMTKQ) 10 Nov 212021 Q3 Earnings call transcript