Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to DermTech’s First Quarter 2023 Financial Results Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

to Kunszabo, conference Head like speaker to now Steve today, of would hand over the your I Investor Relations. ahead. go Please

Steve Kunszabo

Thank quarter first to call. Welcome XXXX you. earnings DermTech’s

President call our Sun, Financial Officer. John Joining and Chief are on Executive Officer; today’s Dobak, me our and Chief Kevin Dr.

considered Our will not historical on made this statements that do include statements. within the of meaning of forward-looking statements call Securities XXXX. Litigation are All to today relate facts matters Private Reform forward-looking the Act of call

may Forward-looking management’s today, projections factors, based subject are statements differ such that which statements and call, update future or of could in from including various except SEC. results uncertainties, press materially with made during release expectations to required this Several contribute those described change most today’s performance undertake by such are differences Actual over assumptions, recent filings We these as to our the and on risks and factors cause of time. in obligation as are described to no statements. law.

are quarter filings release available of call our be XXXX press today. our A later on and and website earnings today’s will Relations SEC transcript on first recording Investor Our website. available

me over let turn With that, to John. things

Dr. John Dobak

thank Thank joining you, Steve, you us. and for everyone

In Dermatology March, energizing or and we of attended our American AAD Academy most impactful annual meeting.

we incredible Our than XXX approximately generated and leads. with sales booth visitors traffic had X,XXX more

or practitioners KOLs Our booth healthcare leaders fixture was and opinion a the key event. also throughout for

independently forward. see customers is Our It’s to care integrated industry melanoma precision guided leaders into pathway. momentum dermatology by non-invasive at the being carrying skin genomics again AAD that vision demonstrated inspiring our and the

and by planning, move This a We was also team. two-year effort project our March. the marked in of our laboratory completed tremendous execution CLIA

what San We are and facility I’m our future. proud of state-of-the-art of a brings colleagues entire our that team means now this to one all in Diego location. DermTech’s together in

DermTech important for runway. Melanoma existing monetizing a execution, expanding demand energy Test Our sales priorities, around cash against the DMT, capital remain our aligned strong coverage few and or sustaining and

ahead goals. steadily are these pushing We towards

to First, reimbursed positive tests we’ve price selling or more taken exhibiting the average signs. steps stabilize ASP, volume generating including from are our

sequential We for test are $X.X our supported to revenue XX% encouraged the in million. the increase DMT ASP that

emphasize We programs. and electronic regional ordering experience, to DMT’s provider clinical continue enhanced healthcare billing customer training proposition our an services value of and including concierge test,

sales through pull and structured test our coverage, in volumes. Our currently reimbursed effort to additional to where ability exploring picked up are geographies volumes generate we’ve tactics maximize insurance is we to

more a to believe inflection best to top-line is continue way bring the point reach to We on commercial payers.

XX end We largest which approximately from governmental XXX a have broad roughly payers. nearly and breaks Advantage for as XXXX, lives provider. second Medicare national million in and of XX the million insurance the the mix the We added now commercial covered million down Medicare equivalent XX lives of regional and U.S. have since covered of million

recently payers also to with We’ve sign commercial in issued. positive where begun have coverage policies cases been agreements

a both Blues because with good test with having place, our becomes strengthen as connection the agreement we Plan major and our is in providers Carolina example. and available reduce policy Our in-network a contract North By benefit. access to further an an barriers announcement in insurance

Plans. and remains expect contracts added recently the regional the the of also Following targets. closely agreements Blues we we sign quarter, large behind line Overall, with to several many positive our for other pricing policies announced TRICARE in first long-term coverage in with we’ve

the coverage foundational and XX that national serves DMT. populations, alliance assay the policy issued Blues recently service addition, employer Plans accounts a of countrywide more insured self to positive the In than and a for

Operated with the Blues gain by additional Plan. national anticipate commercial Independent Locally and this served the platform. has and and Blues over bring finalizing members Association policies are it national we Furthermore, access we believe organization to plans many We could This of in substantial agreement influence to Of eager regional millions National contracts.

program. We on making Medicaid are which good Medi-Cal, also is California’s headway bringing

nearing includes a on that several solid long the and this process to DMT. for patient other getting volume already aligned of have forward further look by volume and in steps end several are procedural the We test Medicaid million with Medi-Cal’s improving the more on-boarding we pricing states. intend We XX than have We population already pursuing test for leverage average to access members. [ph]

important programs amongst the is that largest payers. to It are Medicaid remember governmental these

large, Our which effort provider the traction are well, gaining bringing on a as including delivery is conducting pilot. with IDNs we payer or nationally-recognized networks integrated successful

move to contract phase to the expect later negotiation in the We year.

a our As broad across of payers mix with heard, momentum strong remained organizations. you

nationally We negative two payers, closely this recognized reiterated achieve although weeks. with have work of a continue to in policies recent multiple We to win. coverage nationally recognized year them still payer opportunities

to related from Importantly, The influence favorable, we assessments independent outputs they being two looking by are assessments national the believe could performed positively economic these coverage. affordability and plans. groups are

the in advocacy One including is states. goes societies, payers individual of channels, chief professional with physician that visibility up and through our ways legislative efforts

in the note bills genomics XXXX. These insurance just access expected late are XXXX the improving a growing mandating of It’s coverage are that life-saving importance to bills, in testing to be recognize in of that biomarker genomic effective called multiple states potential and list to or important so latest states early tests.

payers technology. with also through healthcare assessors visibility has of our Additionally, improved independent

previously, policy already from manager received the a As benefits favorable the U.S. largest second in have lab noted we

evaluations the across favorable this care received also from and of settings. conducts payers. commercial quality improve assessment favorable effectiveness technology cost coverage healthcare We by We could influence non-profit believe all a recently a recommendation recommendation safety, technology well-recognized, that firm to

health been their the and economic economic validation the conducted large We were Optum for payer even adjudicating efforts the higher addition, for using pigmented has that the these DMT. In study. cost data independent study. already than robust regional own a from their discovered payer framework assessment the Optum This believe economic affirm clinical lesions published

negatively we a to X,XXX support should evidence a XXXX X X,XXX additional in is patients in provide TRUST with our of tested study positive study, of analysis designed initiated of add-on tested This discussions. lesions histopathologic cohort up TERT the assesses that includes payer also Our up of to to the diagnosis DMT the to the This test. one study with prospective X,XXX which and year. lesions follow for

XXXX. to to recently policies. payers top the their potentially us national line release with expect reiterated We may two results of second half that in negative if allow resulting the positive, data, reengage The

we’ve we’ve by DMT pleased progress we’re as made Overall, since coverage with nearly for end expanded the XXXX, and the of the XX%.

the quarter for track out volume well were of into total on and coming AAD, first we Our sales team executed also healthy sample the growth.

volumes. ASP However, progress. our versus which is reimbursed to factor driving shift strong our to with one Driving we preserve helps our have cash and ASP aligns This payer total focus test change runway. prioritization driving begun in volumes

taken DMT. an we’ve coverage steps we’ve to this the territories our concierge of we implement including have realigned for As support insurance infrastructure, example in the strategy, where services

have addition, focus reimbursed our we dissolved align territories certain to sales In on samples.

providers them with also increase mixed Further, allow samples. given recent we’ve the to team data covered equipped payer target reimbursed billable with our sales our to in lives,

accrediting Skin Fitzpatrick our stopped from recently lab organization. patients we based certain testing and guidance on Types samples Lastly, pediatric from

billable footprint. compared revenue. our additional we melanoma. plan to to XXXX relatively these incidence factors, reintroduce ASP working Due we continue with and all be expect want volume testing on and flat to our last these I sample extremely to We a to emphasize cohorts for patient to improvement operational are for for of but to savings year, optimize should preserve increase an organizational look that runway, cost cash low

we’ve drive bringing In made fundamental for on payers closing, great and executed the well progress demand DMT. to

prioritizing versus tests now demand reimbursed growth. generating We’re overall

the two payers hear to that from year. footing we ASP. test possible volumes and first capital in to reimburse commercial DMT and and expand with Substantially, energy be all We’re national later to still also the focused coverage aiming is our boost the best on expect on

We these runway to look capitalize important we going are forward. the and business believe steps our sustain as cash

of note, This working well may call, last As we something it late the my very a expect we you be announce soon. and are my enjoyed have successor I final on all. to and is, stages with if identifying earnings

more turn to a the review. that, financial call over With Kevin for I’ll detailed

Kevin Sun

I’ll Good for our summarizing I’ll Then operating cash up by wrap we’re Thanks, our how the and thinking runway recap afternoon, start by metrics first directionally key outlining XXXX profile outlook. financial and liquidity quarter. everyone. John. our targets. about

million, Billable changes but in XX,XXX. year-over-year X% adjustment to collection sample and sequentially. sequentially prior to downward dipped to volumes due in reported up a X% estimates largely year-over-year for were $X.X was quarter for XX% to XX% $X.X Test samples periods, due up first revenue the revenues approximately million

remain revenues fell the year-over-year $X.X progress quarter, first biopharma revenue on contract XX% in $X.X linked period. Contract revenue revenue. customers. million down uneven closely Contract the ago our X% up from revenue the primarily clinical the $X.X as quarter first lower sequentially. million was year approximately Total for to million was of trial Total to it’s during

Let’s more test drivers. closely our examine revenue

down going was commercial new and reduce additional adjustments, financial continue Non-contracted forward, trend more by but to billing up important It’s steps payers. in quarter, the continue as rates fluctuating would’ve delayed to are that quarter. financial update. these primarily Normalizing the to variability payer from parties. First, Medicare one their to payers sample quarters and for commercial where from all leading benefit be XX% still code need two due in to last recognizing payment to the could $XXX. first the cases contracting payments lag both coverage, awarded to been sequentially. downward year-over-year, ASP ASP due to expect quarter first non-contracted ASPs We in be administrative per XX% $XXX by higher year’s the taken we adjustment benefit or edit coverage remember for

approximately of quarter, unique from ordering With quarter. unique clinicians in penetrated total market we current X,XXX of -- up clinicians. during dermatology market X,XXX last the we’ve months, clinicians our had approximately XX X% ordering the target X,XXX XX% first fourth Second, the

average in our ordering year ordered of ago first or in the number tests was billable QX X.X and X.X unique quarter utilization samples the Third, in X.X quarterly per period. clinician average versus

proportion volumes was for Fourth, total to the of XX% compared year-ago XXXX. our the XX% first both DMT during and Medicare fourth of period quarter the quarter

of negative in to test Cost cost result X% a year-ago primarily reduction of in a $X.X the increase, million, expenses. margin The test The test lower of operating X% increase volume. was on primarily revenue next test gross of increased year-over-year revenue Focusing was due ASP. period gross was test from in the margin XX%. yielding

development expenses year-ago of quarter XXXX. by marketing to decrease period, line costs. lower were increase The lab headcount employee million, Research is $XX.X new $X.X primarily expenses and related and was flat our component was for and added XX% employee were clinical throughout study higher driven Sales the The for $XX.X G&A year. and from first compared previous largest essentially costs XXXX. due to million, building the which expenses this were million, for to OpEx costs. infrastructure compared costs XX% higher increased related the a

As first the same quarter John the based we’re a cash of period additional stock-based loss XXXX, Net stock-based which XXXX. non-cash was operating million of included included expenses $XX.X expenses in net demand million $X.X of for $X.X expense. compensation compared XX.X noted, of discretionary targeting savings compensation which to for loss and non-cash to million, million

our outlook to now for Moving XXXX.

related to volumes We last remains and but potential from difficult payments stabilized due to recent to XXXX delays has flat to forecast are expect we relatively wins, compared ASP starting additional ASP be during coverage coverage wins. DMT recent see to to year.

better we on factors. result, not a we have revenue visibility providing As guidance until these are

quarter million. lastly, cash review sufficient expected restricted equivalents, marketable additional we on cash, And revised operating Based had and of securities and profile and liquidity for end, balance XXXX. At we our the operations our through third have quarter we our $XXX.X cash a forecast, cash believe planned resources of efficiencies sheet. of

back things the to turn for operator Q&A. I’ll Now,

Operator

Instructions] from question will with first The Massaro [Operator Mark come BTIG.

line Your open. is

Mark Massaro

questions. for of La do you you’ll the be Hey, types taking Jolla. the characteristics I hanging CEO? Board and in missed, the you again, you guess, expected looking what to of in think guys. CEO? would mean, what great new the and share be be I next Thank out for John, you willing would was are it

Dr. John Dobak

Hey, Mark. Thanks for the question.

periods. the announce what I I’ll we comments the stick just prior our said and from candidate, now, with think, we’ll when and leave that to I final

Mark Massaro

Understood.

that another many a I for kind So, commentary bit savings? after source of in dissolved? were volumes. was through maybe And little the number to reps, love how allocated that walk total disrupted, the going can into reimbursed about or of dig a the Maybe of those to redeployed territories you territory were were would were us folks territories they is cost

Dr. John Dobak

We reps. had approximately sales XX

at can whole. way approximately might larger looking continue things the to a might just down the sometimes somebody territory with and We’re XX, that cut are we we merged and are in the territory merge we these or and we territory

are process. in days We the through still early this. It’s going

it just last have of few the We kind months. in recently started

at payers, and it really to right although know, So, as the money. in be yield non-reimbursed we as Anything way of we and that target revenue. better -- effective have our to may higher we doing start do volumes reimbursed that. that have And Kevin? footprint our think they now, broadened we this the not we fundamentally ASP. more to we to That’s are can cost best add, think total looking robust But you past, quite since a why samples. all this. ASP look more at tests should raise as And us to that’s lot a And of we’ve now go

Kevin Sun

No.

consistently Just we’ll and we optimize will runway. that we the to with the growth to growth, versus evaluate see revenue demand focusing strategy ROI help deployment as to overall by continue cash our a that execute do sales on ASP that necessary. and But and

Mark Massaro

know guidance. providing Excellent. revenue are XXXX you And I not

are think slightly being thinking volumes and be flat roughly revenue for year? ASPs up, we the aspirationally to is should reasonable are if However, it about up that

Kevin Sun

the would comfortable reasonable not be what would but That exactly guidance again, yet on assumption, we’re giving be. that

near And to of seeing the TRICARE the from procedural and the from are manager also implementation with some more recent with received. are we good benefit Blues wins us Plans payments date that key kind we payments of expected and policy regional allow should steps lab them We receive consistently.

until guidance more on We’re for definitive data just and we’ve ASP these give revenue not prepared the wins. to recent on rates actual got payment

Dr. John Dobak

of ASP Mark. got about kind with the forecasting. We that talked We last year, burned

wins numbers. do trends, so want that where guys you get those just year. recent that want the just we but last them the like seeing we we are And because the see before want trends tell to don’t we’re were payer anything and we think We do to just we see into to improving we

Mark Massaro

last one. Excellent. Maybe

You us two think say later large sooner? And QX payers could give advanced to in I Can that Is from hear for in those be hoping do sense about some you it or would are how you’re XXXX. that a talked timing? you of you discussions?

Dr. John Dobak

of put affordability out the is what’s a really more place. the in take The know closer reviews two analysis than doing happening second year, timing, timing their -- the the talked we sort half dive would claims payers, earlier into through because exactly of can’t What when that’s with other often say just these about that a happened we’ve the they’re is these taken I own year, which economic analysis deep and we they’ve their groups. different don’t from

and are what’s year. analysis national And with think And in of the half been so, be happening that’s favorable looking that difference really that we plans doing in there’s activity bit fair The these front. will on big influential. back -- the a these of plans they’re the that

looking final plans. forward output of than they affordability to things. we’re And and the those that’s do group So, analyses other what very influence might the different to

would coming we say, publications that have I some out. also think we

those that’s to And out go talked more trust impactful. re-look already think to always publications with We they of are new those And that payers study be And because back going -- that the we’ve get data. at data that and also are be published. coming things the get expect can done to going to we to.

Operator

from The question Street Capital comes with Lake Markets. Thomas Flaten next

Thomas Flaten

do were with perspective, Could bit? business? on correctly, the reps coverage, how understood this the revision for little or asking drill have for a trying it strategy maybe success particularly I judge ask a then into sending those Are you rate you’re to I from you territories what business, to Just you of Medicare kind If payer going force. experience the to field details with correctly. overlay given in geographies to the just understood Medicare? if that with do penetration dig good better you into that And specific

Dr. John Dobak

to test doctors doctors difficult. a to prepared are are in going we But use patient. identify, on mentioned with we payer coverages. So, that try have can That’s remarks, not our any I as get too the the specific payer that mixes to aligned

that, mix that’s -- current so, tactic. that our can go coverage. all can the more where force aligns payer data, we accounts those meaningfully. start we those now And have have And payer do to our now the We have with and wins, that with we sales do after

vast test usage the know commercial in commercial high payers. about proportion talked is our going payers, commercial commercial the in -- where it the think Medicare in significantly is as cohort of growing that because challenges challenge. know, like Our That’s I patients, we on we’ve use in but And to in majority doctors some we’ve the -- the quite like, to had the already used as same be of I younger having would we more don’t side. that’s it’s

and think we doctors, and targeting growth. by those, will going yield reimbursed the So, better after our covered that samples help revenue a ASP right

Kevin Sun

areas overall target we really in covered commercial efforts can use also, those as And to the well.

awareness, raise have concierge awareness. our -- and service. and reimbursed support be it could to that have things We’ve could they it between of areas coverage do programs So, the attendance the levels so and reconfigured have restructured conference already speaker be services raise to around that higher again,

areas covered ASPs. -- really commercial generate to just we really that effort the these entire on reps. go It’s it’s it’s focus sales So, would not better

Thomas Flaten

remapped super like between historically your of helpful. the productive the look what out diagram Got does curiosity, physicians most and it. territories? And That’s Venn

Kevin Sun

before, we’ve of Sunbelt along areas, in lot volume, stated are the as a our eastern seaboard. and then Well,

things And overlay. we’re going of and so, how process that through kind of now they in remapping seeing

So, those we’ve plan wins the the are announced volume York. the helpful. in or that got say, and a Carolinas, And have historical New in smaller and in New policies York, recent Illinois. Texas coverage good coverage we we which had we’ve then California older Obviously, of,

on most as we we’ve can -- Arizona as coverage through and that good recently process best right state have make So, ASP physicians historical it’s volume, we actually as as we’re going to another best coming the the start the drive as and announced and plans possible. board, sure more now efficiently target where

Thomas Flaten

me, one like increase sales and for then be And final cognizant there line base of pretty this marketing one for pronounced. Were sequential kind bonuses the anything a Kevin, we should that is in of spending two those or from new new a items? stock-based year, -- last G&A of, in and there, any compensation was this one-timers is

Kevin Sun

There were items time sequential some a basis. X from

cash lease goals it corporate four headquarters last have in under one did was the as be of QX bonus goals was have two was million, and that therefore $XX the on bonus as lowest we to to facilities pay be to are that month a burn accruing our for our is of XXXX. QX we’re not burn So, QX. over cash note different for facility. expense Also, And based outlay higher in million we those well. quarters, $XX move accounting adjustment last than and old where expired expense. book for compared can to in XXXX, bonus triggered important rules. Cash And will there in the the on our XXXX, revised new we as the a April achieve -- payments negative for now rent

commitment higher with to cash demonstrating again, So, efficiency. generated volume XX% burn, year-over-year, less XX% improving our we

savings align the forecast We’re and find additional updated going to to it’s our a throughout with year, reprioritization our operating plan. through and process

Operator

The next Daniel Instructions] question [Operator Cowen. from comes Brennan of

is now open. Your line

Daniel Brennan

Great. Thank taking questions. the for you. Thanks

question, I negative just the and So, wanted just the kind gross follow-up the OpEx. to last on margins of regarding

know kind through next like, it this plan year cash the currently as we OpEx gross in terms I the about kind can of for kind of is of stands assume? talked and third of margins you’ve year. positive what of So quarter yourself spending sustaining what getting

Just wondering look how XXXX. does for that

Kevin Sun

of we a COGS expected Yes. for we From main COGS couple basis, the previously reasons. near-term increase said that a to in

has laboratory, get new we into it’s larger As the laboratory capacity. a more that

absorbing so, that we’ll into to to per unit start And the capacity reduce COGS. obviously

inventories also at beginning supplies happen and We that around typically year. to test, had items the run of inflationary wages the the and

the be get So, that lab, as we will per throughout reduce efficiencies and our more volume cost plan with the absorption we unit can way.

again, year. and to the increasing ASP again improve the factor the focusing then, our going will this are be driving By it why margins, be -- ASP biggest overall which on demand it, gross to biggest is reimbursed And factor. the ASP is we

compared thus continuing we find last runway year In to for around said there. OpEx continue the OpEx terms to of But QX made guidance we progress yet. additional given we’ve we better And OpEx, we a down to that have from in previously the aren’t cash far we’ll are giving specifics find perspective, year. expect be and to OpEx slightly savings

Daniel Brennan

a lives, pricing look of sure Got zeros where months, different lives, go kind And you’ve covered next kind it’s sounds over in map million you thing get lot could got and do of the the you were if absent easy regions. are if the out mean, you successful you to kind guys States at payers? not lives, math. getting the and really those to XX United on to covered covered these if your like done like realistic -- But across where focusing you’ve where XXX like restricting of national What’s it. coverage if you map necessarily I’m I paid? it of

Kevin Sun

Yes.

received. outs as contracts our able we around be been have ASP targets maintain for and pricing Medicare maintain would to and As have much possible, long-term recently as of with that we a ASP, mentioned, is lot there in we to again as

and How it’s run. We Medicare we get are the hard still that favorable to towards the rate, say. on ability quickly our contracts long approached that now have to in do

on have the those do will on we volume areas focus the of are is we are got think first any give that, yet we’ve data we to out. try play the just we’re what not think but -- of and again to ASP ASP focus much and these where of we kind trends see know are that going as we we to to of the as going until guidance coverage, drive where possible, high So, areas some

Daniel Brennan

if point terms of much through I dilutive plan, further? if year. don’t unclear it just what cut you you the quarter how Is months the national are? far signed not or not vantage offering? further next mean, next like to. do from where highly gets in go Is And you Like, it’s away. to that cuts? contract get cash have third knowing our How are options the you it’s Just in of equity XX that the realized it can ASP leeway contemplating

plans. I’m contingency think those sure plans? So you have got How about contingency do investors

Dr. John Dobak

about the of lot general are of lives out a amount we’ve nationals. there And on across we there outside payer talked I’ll comment the tremendous momentum all of a call, just that broader that as mix. covered make a got

of of lives. most I So and grow are revenue about we can That’s runway. about, the that ASP, payer Medicaid we’re that that’s obtaining Medi-Cal group covered talked billable an national getting And There payers. momentum a have which a And of obviously to Medicaid. we there But a now, patients improve the get million can thing. finally XX will we and important we’ll lives, on the we like huge to coverage group focus the there, volume are covered in grow in we lot million, the number, the that of example want higher that those mean, samples, continue areas. already more because And those it’s win in XX cash and out payers. right? our

particularly lives are reimbursed can us focus ASP, grow that we get on those of to out a there as samples. So, help lot still that there

you have anything do to Kevin, add?

Kevin Sun

Yes.

cash preserve which would ASP, will mean, the focus first So the on I help improving runway. again, be focus

As the we expect the savings the targeting needed and as future, the deploy business cash mindful capital and equity as extending a demand our also it in operating relates additional capitalizing in discretionary to environment. cash mentioned, of evaluating in other and we’re current based in do the being runway. our we expenses, to options way while ATM thoughtful And we’re cost

Daniel Brennan

just your point John, ASP you maybe execute final on what’s even then realization to that opportunity a of the, and lot you. for here front one just there’s And though, as in of monetize

national the on since got up it bring from a like opportunity. them, But So payers, helpful, negative got are two this sounds you payers you that but decision national you’ve lot did the just of of securing and you you should have toward of how potential how these investors Like, the that payers one this trial not? trial as upcoming. is? think trial lever Like, pivotal this national do view outcome or

Dr. John Dobak

prospectively trial. designed Look, I It’s data trial. world it’s a very think, real and large is a it a

the first it that there a cohort study Some the retrospective trust there, but in be in was of will all prospective. case one criticism of of was this

high that -- that We fact So melanoma that negative in reaffirm that related believe will the high are down very the value we’re And will the in finding are lesions melanoma risk real world. it put criticism. to going those reaffirm also our we positive it samples. and predictive

do we it think is So, pay be payers will More publication important good. data that to. -- always that attention an will will

helpful. be do So think it I will

with frustrated our merits how opinion, key nationals of they data they that the at And data. we’re the and test. our -- In what purposely ignore look

also the used, think putting keep them. obfuscate to We front in mischaracterize more of and data got way the we’ve test they our is So they NCCN.

all They that delay payer to So, play all and it’s it’s these coming omission their think on mixes to we’ll tactic, part want going keep working to ultimately But hand bias. their like force we that right? clear But that to those of this is momentum broad with for up. their other board, this game.

the again, optimistic the we’re that ones, the so, I deep that’s fact differentiating a feature that’s other nationals really taking from the said, and a as on there. other are And dive very why we more think economics,

Operator

comes question next Stephens. from The Mason with Carrico

Mason Carrico

so updates And have you I’ll maybe two technology are here. give that the progress only that us that? any going talked asked, that EMR been on A in framework lot about about, today things one us integrations, to any solutions where there? strategy and how Thinking the help or guys understand has can you stands metric or ask or on

Kevin Sun

Yes, Mason. thanks. Hey,

EMR implemented having records of that EMR kind to of physician’s and we easily allows dermatologists. most integration, have that. a from the by integration physician that medical us offices of what we used the which more the to X And the get So, Phase of burden call is relieve do that’s the

obviously So more try plays of the appeals ASP. likelihood desire to into records to into and appeals. And our ASP and the where a higher can get, lays after we those go the better that of have file strategy we improving that success it more medical

appeals pressure Now is gives appeals. least that it. if they non-contracted opportunity the to payers, always us that these to win don’t on are those at And do puts appeals, we again, that with deal for something those it but have payers

that is all So, really of well. going

Mason Carrico

incremental the Do any what or national a Did are the Kevin. their for on they cite any Thanks that you can on And it. negative there looking decision? policies, specific that? who study us additional you Is provide color for? detail issued can they on behind there reasons behind they that? payers the give Got is give detail

Kevin Sun

a payer a meaningfully different data criticize to we most which of I they policy how this which before, to out is opposed at is update which for from that a it the data as mean, can look They really one the issued They’re policies. didn’t rule the frustrating the I it. and mean, the part. not pieces have, omit all the they’ve this online. They’re you that key shows we that out time that is thing that test complete is spent was test, comes mischaracterization in first in case, rule this melanoma, educating works. tend

tactic think a the we’re that’s on it’s are national data, this, can if just There’s that them. those wins, just the things more hang about going we oh, that -- delay more dealing force to say, So I is payer you will it. hand. tactic payers their hat your This did just to employ. it’s with nothing a often But

Operator

comes Nowak [Operator with Alex question Instructions] The Craig-Hallum. next from

Unidentified Analyst

did Thanks mean, lot’s to is ASP? model? year in teasing is but QX, ASPs kind these in what the This with those a increase that of still lives expect guess benefit XX those that additional since bit the we I for little sequential guess, questions. QX taking How at the XX added kind covered on there I here. of see from QX? Alex. much in And of should start A million asked, benefit from come for been needs I more million Chase the we lives of into obviously

Kevin Sun

it’s to being able related like, beyond starting around TRICARE, process of But whether expect QX. payers. I had some we coming to are not variability hit. hit very does get mostly things of us ASPs fluctuating it positive that. in do then that’s hard still all see again to give -- data many, VA to we But The minimal behind all signs in ready two quarter until payments these we is really get to we it’s to benefit And will many, take trend starting or are some work it’s non-contracted be this benefit. Yes. QX, really additional wins. going that all wins is expect looks it recent get again, see the that being volume. and and April those to starting Medicaid, commercial there to said, more the some like we mentioned, can payments throughout to a payer whether here, see ASP months the just able There in it’s what but from It’s But many are that just as QX. years monetize guidance forward many taken to -- up to we benefits And whether

of forward. as starting see are are hoping accelerate to here go to now. those it we And benefits We kind we

Unidentified Analyst

coverage negative generation little a kind strategy them color guess Yes. helpful. any Any payers those bit ask that I mean, of of there your of would two kind That’s different decision at be some way. maybe John, reaffirm informs to I that a point. that re-attack data maybe That feedback Kevin. from heard question fair, And makes you sense. that is there to and again,

Dr. John Dobak

really to that I that. wish want us any don’t one they could But we get do issues would us what’s study just they tell the put rest. to

what trial way talks rate that survival the explained no done them a done we tells they can area. And pathway to. trial. trying of it unreasonable, do plan justify I things current mortality it’s haven’t no They mortality Even aren’t some just we so have the to that saying never their has to are do think reason, In one prospective just matter we one. found is is allude about might a and have this is are there in a how trial they -- stage that XX%. early melanoma, us kind to to we mortality that position. find just But those they

that’s to any think don’t kind and in genomic do area realistic. we this very So, of There test. mortality in few trials tests are

that We wish think the of X in think find do we going that around could could we fact a do. don’t pushback we large study and We a the one TRUST prospective that’s some that happen. will study put prospective have is now, So, designed we has that TRUST seen a cohort, that it’s the and been the we to down had. that had cohort what cohort comments way smaller we’ve of now that study. chunk there retrospective But study, we always a the out

Unidentified Analyst

helpful. That’s Got it.

finer current for that levels. I point sounds model to I think like on want kind remains put increase. It of Kevin at a that just last in just one me. somewhat G&A the

fair of a additional that of to it? way payment that bit P&L. coming after a the get rent kind April kind relief little starting with of off put Is You

Kevin Sun

not find don’t we line more of but in giving specific in efforts kind alls on catch our guidance to fit I’d Again, to too is And any some try that G&A areas. will Yes. item, there just say other overall. help are savings cost

then we there line that is and life, certain really the obligation accounting again expense we cash we though, is even then have when things that’s think book start of you it rent expense life it’s later costs like the usage And outlay right? that have the that, expense, expense. are rent, most the cash I book by get than or to those spaces terms building, lease, as you’ve today a straight systems or that big kind got the and outlay. more more again, people utilizing XX-year certain to of piece difference related much specifically So of than allocated and taking around. between a understand increases cash the a over a But cash

overall So, to OpEx big metric we well. cash items on burn, get driver all the we that would working runway to regardless, are more savings of cash why and versus a them as in all is OpEx. and the line that’s But the say focus find improve of the

Operator

The last question comes Andrew William from with Brackmann Blair.

Andrew Brackmann

new specific Thanks. any incentives little more those be the here is this about specific. fun. moving and if luck. Maybe be of Can on how but could might in bit John, rep with asked been just been and to the in maybe shift somewhat, call, we talk change, best just this plan? changes a It’s maybe changing last start just you strategy it’s forward,

Kevin Sun

we driving reimbursed implemented the done the want growth. to on the to focus we’ve side the alignment Historically, And incentive to anything overall changing plan. and what samples, on growth. relevant on some incentivized make samples other forward as and is than needs haven’t drive good prioritization we’re But just structure But recently we incentive of the recently. implemented going the other ASP drivers of we’ve strategy overall Yes. just evaluate a what with we’ve sure And key well. there’s covered reps of demand the continuing

Andrew Brackmann

to Thanks. guys’ will as be to How more non-reimbursed shield where they those it in being more run maybe running when efforts upfront to trying those…? those get the to maybe then, And be of from you’re tests. or about lab, your away the thinking here we disincentivize actually funnel should relates a technical question actually that

Dr. John Dobak

from Well, even doctor’s I the wouldn’t to run mean, we’re a relation have just good customer if non-reimbursed, samples but they’re perspective. that going be order, at to the

way have I think physicians is to target that to payer talked better with more profile mix so that the trying increase reimbursement what we that a about, that aligns is approach we’ve our our samples proportion that -- don’t just not That’s with But, run to our customers. that provided. not form can’t of we are We that. good do tests want we’re covered just running.

Operator

for call. participating. conference Thank today’s you concludes This

You disconnect. may now

DermTech (DMTKQ) 4 May 232023 Q1 Earnings call transcript