ME - Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to 23andMe's Fiscal 2023 First Quarter Financial Results Conference Call.

As a reminder this call is being recorded. At this time, all participants are listen-only mode. After the prepared remarks, there will be a question-and-answer session. I would now like to hand the call over to Wade Walke, Vice President of Investor Relations to lead off the call. ahead. go please you, Thank

Wade Walke

Thank you.

Please forward-looking predictions which call call. of including We for time the future These applies entitled we encourage or regarding be forward-looking our management's are based investors.XXme.com reporting filings, refer available to periods historical of of is on for facts, performance. to event. on section this I website matters not find Also website to found the are Before solely be our the certain impact SEC webcast the discussion that for also website results on today everyone us. now statements a to can review earlier available may future limited statements press outlook statements. go issued replay information hours in after within release, are begin, release our that our will that A press quarter. financial to today's our which and that numerous factors XX SEC's made to but to you a the limited encourage please note during statements this our not we to

these reconciliation Important measures. on We certain our also found discuss non-GAAP earnings to may in our measures use be information GAAP of and US release.

Hillan, over Officer Joining to Q&A. us Kenneth on Therapeutics join and the turn to Chief Co-Founder; and Executive Schoch, now Anne. Wojcicki, today Steve Chief And are Chief our like us Officer; our call Officer our I'd our Financial call Anne for will

Anne Wojcicki

Wade. you Thank

last customers therapeutics to we customer to In our XX. reports pipeline glaucoma, number progress added the XXandMe+ our the now consumer products genomic This is we quarter, million new our quarter, fiscal and risk and reports continued business. our this During our over psoriasis make to grow which in developing health in our for the advancing base, of business, In over three health subscribers for genetic continued service we rosacea. genotype customers. XX brings first

provide basis goal a thanks to to information able or remains disease. genetic customers is preventing managing designed risk Developing our for consumer database business. customers priority the are of our insights better of with service for on for to research. our integrate health We high new our the size to consented genetic genomic into This our unmatched service care a regular health

past the that is variation Society is Dr. of and National Vice future. whose platform diverse to cardiovascular leadership Health. and Noura our Amy We aims years X Genomic Screening we a Genetics genomic served is of to the and recently Clinical of you Director most research of Counseling medicine. a was equitable, of Sinai. Director Translational implementation our XX at use therapeutics of of as leadership Health Institute near the trials. is in look over In Abul-Husn of area are medicine. care, the genomic two clinical the Genomic the our the drive Recently of hearing Counselors efforts, President genomics She founding in in backed new and program from and Mount Chief in happy School research, Genomic pipeline two Amy large-scale Institute forward Medicine genetics experience at screening, Abul-Husn Population with uncover Dr. in areas human genomic population Regeneron in She to clinical Genomics. delivery Director Genomic Abul-Husn and include in digital health genomic announce and implementation at them new critical human to our strengthen Genomic impact to has We the the leadership, medicine broad in Genetics Center professor create clinical genetic work Amy XX experience a technologies. and Program. President hired Geisinger important the the and of are to we populations bringing physician of of Health Genomic of previously data the scientist recently Medicine Genetic Health. Amy MyCode now hires Amy more who Division programs Medicine Icahn and of and of at Sturm of for the Program Sturm Phase was Counseling genetic than Genomic Director and Cardiovascular a our by to continue development population. most

discovery We also GSK. just collaboration started the of our target with exclusive fifth year

our therapeutics And GSK's of people Steve our will been very that, GSK out that novel with fifth a play the helping from discovering unique believe discovery for human genome. with demonstrates significant targets for the engine database financial further exercise come Our their We the for development. turn productive we our the to results value review in a new and has decision believe eventually drug collaboration quarter. year option benefit for the call to role to over I'll of

Steve Schoch

Anne. Thanks

XXXX by start We X% to a our overall with financial to are off with growing revenue consistent and expectations. fiscal solid performance

top lines continue to continued investment progress, our genomic priority progressing as genetically pipeline. of revenue as our developing existing therapeutic Anne service to health work continues on our in is be mentioned, While the validated a the

to exclusive into entered late the research GSK year as On potential we validated medicines. continuing we with to targets July work of our into side agreement. And fifth turn forward GSK genetically the new to of services look

of an January agreement in for that additional exercise our reminder, a right payment As fifth its the under elected to million. option collaboration year of $XX GSK for terms

our performance. Now financial first to us quarter turn let

increase June $XX year. over prior XXXX for of X% period three same XXth the was ended the million months revenue representing Our the an

research Lemonaid and services. our consumer addition First in partially quarter areas revenue was and increases revenue growth revenue. from These an to increase the were offset revenue in by the other Health due primarily of of subscription recent acquisition the lower of telehealth

for total the of XX% research Looking all substantially represented collaboration, GSK months was and services XXXX revenue composition the consumer which XXth revenue ended total June revenue, our at services revenue. accounted XX% approximately the of for three approximately from revenue of

was which $XXX the for research costs three-months carries mix profit same and to ended the in the to the a The of XXXX increased of with well months costs. These on XXXX year. decrease prior the labor expenses the XXth of lower period gross the over for and representing from company's to affecting decreasing primarily million, attributable GSK was were million $XX sales year-over-year the segment. primarily following same a The due adopt $XX XX% offset for expenses costs was acquired decline as period in increase marketing previously partially addition expenses development by compared by prior previous business. revenues, gross and cost June increases telehealth increased lower sales year. consumer Operating election GSK'XXX XXth cost the an operating in royalty three telehealth on to option the sharing overall June were million R&D the percentage the versus labor margin spend as program, program arrangement Our driven across for expenses services the the ended

higher the million three by at earlier. was loss June the Looking compared in net for prior same the XXXX of expenses ended net period bottom-line, for operating losses million. was months net primarily with the in The year $XX driven $XX noted the -- to loss increase XX

of was million. of the increase prior XXXX adjusted $XX EBITDA total same a details deficit $XX XXth adjusted for EBITDA, The the the reconciliations months compared the see how in June at mentioned increase a to in as expenses press was three ended EBITDA earnings primarily deficit look as year Now let's to deficit EBITDA release. million for please well we for Total operating our driven the corresponding period on define GAAP, adjusted in previously. by our adjusted

discussed and $XXX XXth gives adjusted year EBITDA which Looking the compared three an prior specifically for the driven deficit horizon Research business period months increase the of deficit We in The our telehealth the segment from quarter which by operating to acquired million for of the reflects us a longer-term June a impact period inclusion million expenses ended saw results. ample $X at Services million. ended of goals. higher the previously the on we in same was deliver $XX the with adjusted current our XXXX deficit cash, in EBITDA this to segment, Consumer in primarily for

therapeutics We be focus for a our we to opportunities. strive on advancing of as future our our growth represent both genomic continue in which of programs, activities disciplined all and execution advancing efficiencies on with development health services key the across

previous first with confirming were results I quarter fiscal are thus earlier, As and full our we expectations mentioned our XXXX guidance. year our consistent

deficit range the million note, impact company's Anne. in now, $XXX of guidance effects million back anticipated The costs. full included acquired general $XXX adjusted includes as on into consolidation I'll $XXX consumer loss this full in projected to of $XXX turn of the this in million. to of certain of range net the revenue range the reminder our current to overall and and the business to as a of is our well $XXX be As year EBITDA of $XXX telehealth the million over year business call million. a Of to inflation And million the the

Anne Wojcicki

highlights. fiscal Thank the team off a has reiterate made very progress year. to all the you, our I'm proud of few start Steve. To

to the grow database, customers. with its kind our of continues now over in XX genotype the world First million largest

making business. are into we of consumer with Lemonaid's integration telehealth good Second, business our progress our

a Fourth, target With started targets last, our our let's exclusive Third, to it and executing make with therapeutic we plans progress on continue are XX-plus fifth open service. genetic-based collaboration for with questions. genomic discovery. now up the we drug through of health to GSK. have And final further our that, year we discovery new offer

Operator

from Our with comes Tiago Credit first Suisse. question Fauth

Your line open. is

Tiago Fauth

taking for the thanks Operator, question.

this economics any of we can see on new when too that ago. the two I progressing telehealth initial how testing impact enrollment hear may provide things of beta the or briefly you how I side, for for Services. therapeutic and that can Genomic at Thank specific just data the might if just and on that or started to just love don't that's asset? future some business about unit provide I'm know you XXX a early And on that it's any Health to impact if learnings couple the So, like me. I months comment more moment? you. about any know talk curious would you qualitative

Anne Wojcicki

questions. Good Tiago. Thanks

-- owning I like ones and things a making we're is look are putting to of we're So, in And healthcare focused primary complete that protocols sure sure it only of the the we're are Genomic making price there's it thick of in it's how really what going is trained identified roll Health for terms like to the it building is lots the players currently together have on consumer of priority but that we the a experience obviously sort it right really what care, we how appropriately health we how that team. going think going of and we've one top Service we're to the the genomic it's of telehealth and that get providers out. really

for we we sure about thinking like that that appropriate Lemonaid those service we is did in execute can going of to you're that I and something person. for me continues first the the one So, be point what it that on we'll the how and that think able sure you when huge important like is be promising health potential pharmacy. it have something exactly make has initially we -- we say to I have everyone medications timelines terms of single the are of really -- a key pharmacogenomics don't of of is at kind when Noura what part genomic is acquired what has that do hiring about say And was but rollout. a takes to things Amy making going specifics to specifically Lemonaid fact have you look some just every very a and to see -- team when we're

leverage is sure we make and XX how get the all to customers can our right medication of million we that the access it empower people resources So, them. appropriately leverage for to can that

with are Noura meet and love Amy with will keep Health them. you following on as timeline for we some definitely to up Service and point spend to the on -- definitely being will time I'd the Genomic we able well individuals two as at more So,

So, me to for point let question number two, Kenneth.

Kenneth Hillan

Thanks thanks to for Yes, thanks XXandMe closely. Anne, your a XXX, we high interest obviously, follow in Tiago. continue priority. very It’s something

X Phase program earlier this year. trials for As you know, that initiated in clinical just January,

to early to continue What we for sites data. continue good have say additional make too open to enrollment. when So can would X it's really forecast still up progress, Phase we expect is to I

And -- specific X said, organization at we'd but team so too Jennifer share Phase data. continuing make, anticipate about development to able be the as I to Low XXandMe, Jennifer being and her leads early progress, to are it's when good

Tiago Fauth

it. lot. Got a Thanks No, on fair both questions.

Operator

next Grosslight Citi. Our with comes question from Daniel

Your line open. is

David Lebowitz

would Hello. Dan. about David for could in This Day question my and Prime you first be, of the strength is comment Lebowitz the quarter? second I on your be guess that would how recognized if in July, recent

Anne Wojcicki

Steve, do take you that? want to

Steve Schoch

take that. can I Yes,

guess kind and represented general that messaging we've includes playing out revenue the the reaffirming year how guidance that we I I'd our is start is So, with the see given guidance. of in

set we them that are progressing things first So, to guidance. to safe we where that out say as when overall expected

in have results. year so, little quarter, revenue it fell not last versus break this this course, mid-June, you a into don't but the And out Day you fell year July. have much year, way of might first sort because really fell early of Day sort in and year snuck June of would occurred timing-wise Prime -- And Prime the we not last that

So, it expectations over in consistent that those would would -- be all returned. And about expect reasonably reflected our time get forward be will how it's recognition. has revenue. which follow pattern, a of we for it But become to

David Lebowitz

actually of on for their on types testing, of steps to profile of include, respect the point Okay. and what steps. elaborate actually Thank how then for you I next beta might had beta for examination that could next patients actually these taking? this the time. over cases Could you with first as that those illustrate that. risk up nature far obviously, you've to you consultations for And program with genetic Lemonaid, comment could the us potential what guess, are cadence also, what ramp And as

Anne Wojcicki

all caught your think I I questions here.

to they're don't meaningful to test out want something the things clinical in the customers. that have people, AXc, find a on instance, can and product imagine and people really know chronic main a you what a you lot So, we and going going to next necessarily of testing for there team they're in behavior risk, diabetes, preventive they all can something hemoglobin so to. follow-up that APOLX People looking not things they BRCA that the be at your of And our there do, information can asked. that are variant substantial seeing people who need blood kidney And the of care have what do? there history you Type kinds. can should know People a hone doing one they're for are about can with there kind to a And X higher a of like specific basic can what able do? Alzheimer's history get that So have have kind to of you're start we not proactive do, what can like have some are variant very variant, advice we changes means, to the an Are say, Do can are of know a we what And you some think essentially get steps. area like I to lots is understanding questions that the disease, are we are more managing is I things deliver really high? that go -- you identifying be things of of it? can I'd people what that how point team there's customer and to of do? is APOEX that

out really are And the actually some have the that -- really edge knowing -- experts, health very what going higher risks? things specialists the of to you disease a to with able genomic about chronic genetic [indiscernible] them primary any knowledge, work tandem that be in about that having what kidney examples, risk. like specific care either really is is that or things to you find with is the in a with providers patient there to to And mitigate do how that for us latest be those I can manage what are allows to

update So, for question mean be have to us think be able I to we -- of don't we're we say, for you I the we plans definitely certainly have where next specifics. that and I your year customers What again? earnings. we want by more end on second enthused can would to was about be

David Lebowitz

program beta the ramping up. and of cadence On

Anne Wojcicki

lot I'd especially I are of complicated. doing are the when internal mean like right about a backend you Well we what the on technical of integrations, say on there's it, cadence now structure, think integrations

So having for imagine said you can there's of into of a by lot together. health some work genetic planning coming what I insights the think us And like infrastructure end I are we checkup. that year the better

David Lebowitz

And XXX. first data in type the update? actually of could see we last What question Thanks. one on

Kenneth Hillan

Anne, do to want me you that? take

Anne Wojcicki

Yes. Yes.

Sorry, it. Kenneth you take

Kenneth Hillan

sure. Yes

the I PK. think primary safety of I study and the is Phase about purpose

So updates on clearly you that. expect should

dose we a a or cohorts Phase may additional patients. I dose, think when patients those therapy to help that from perspective we've CDXXXRX we that Of that tumor – may there scientific evidence five help indications basis to you and end given some next. you about would in in that dose go where can escalation, of always at potential the be of course, terms see the the are previously may of think clues go-forward with selected We've pointing there's of from would be shared activity that plan something we perspective our to types oncology the dose that genetic

selected that And from PK I those forward first I about provide. think there all stage think a five have update would be when would into data safety then think to could getting move the dose that I and is we that So we cohorts.

David Lebowitz

taking for questions. much so our Thanks

Wade Walke

investors I platform. the come Say have Technology some that on retail in questions here from have our

so I'm to in this time. going point And ask questions those at

first the to first The with that question expected the major is have pharma joint product we when launch? is

Kenneth Hillan

you Anne, want. I can that take if

Anne Wojcicki

definitely. Yes

Kenneth Hillan

is is you from call. is that's we retail on that collaboration most only is the So in of thank the spoke This to side. development program program GSK The timing of timing GSK'XXX potential date. This that under the about too the advanced if from currently of come program Phase a speculate early launch course, study it's of any I. future really And successful.

thing now of GSK say publicly would The is continued I we've for development responsible as other program. announced is the solely this

And communicating so for their they’ll plans. be responsible

so And you refer just to I would updates Thanks. for GSK on future GSK'XXX.

Wade Walke

The next question are have you Ken. to areas what And you other generate we business? is your growth? where expanding do to Thanks expect

Anne Wojcicki

We that take areas. service in – of it number two one. the opportunities One, a health gives areas. at of us expand I'll look I in to genomic kind

the in we as from care providing one, ancestry the then real in being telehealth services interest well services follow-up allows that as So guidance, transition to with And and and health. being labs. us into associated expand genetics with see in pharmacy to with associated also genetics that

so I And think I opportunity. all of as that, see

think additional again. door -- research is for that to talked to does opportunity well to On and for expand care continue as we the than as the the GSK, services open the us the health real a is I of bigger grow. area seen always year about we've fifth services opportunity, ancestry, us

is post-GSK we what is with and a a services. going of that look thinking time world, like fair something that to are So about research spending amount

Wade Walke

data The collected? next largest ever any sitting into Thanks, plans therapeutics you're on the as DNA Anne. get to question,

Kenneth Hillan

I Anne, like. if can you take that

Anne Wojcicki

Yes. Great.

Kenneth Hillan

Yes.

latest Anne behind And immuno-oncology true genetic couldn't and more. at the foundation collaboration research. over XXME'XXX, heard now have of and It's largest development And indications. therapeutics really has resulted the made I world's as platform in those have also This in you in today, collaboration Phase in for you've hope, heard the saw significant segment XXandMe. this GSK. from I with the GSK asked the has clinical the programs, as already then, with as database we you who I candidates, progress have XX the we've business we both actually two So grow. really our person the in from continues product that database to been And being programs resource question come agree, for updates, GSK'XXX stages with

does database for and So moving opportunities molecule takes to take exciting the continue from provide beyond, be the database, Phase can the it's from an and time. going I It forms time about enthusiastic it into a patients. to but -- we what

Wade Walke

Kenneth. Thanks,

I exciting samples that of opportunity. next hackers? of DNA question, think the ensure all you The will keep it's can safe XXandMe from how an

Anne Wojcicki

structured top Great we is how Everything we protecting collect a question, choices database that really us. the from those how the with as that choice, inception to individual company that the been for the make about, been with as well are sample, and something sure how do priority since of empower can the we to has once has think them. everything to doing made we they've we

information separate So are structure instance, consumer. your various sure genetic the the terms we whether of personal you're opting within identifying you're the information, for of, controls in, making all and or power privacy of how whether the in sharing all your keeping from that database

vigilant for a remain about. that incredibly something it's So priority always we us, top

customers their night have we Chief choices. and day who sure can We to protect spends doing Security all a our making we Officer, are that and

Wade Walke

The countries Anne. is, months? we plans expand next the to to health Thanks, your in question have following do any you other have service

Anne Wojcicki

comes quite with XX get set selling but about that of regulatory and right We include of those countries, good in are countries, bit question. not already a its that evaluating restrictions. number. great does in another we a We're countries own all asking options. Each additional in actually, health always Also country now

countries. that So now, considering. we're those But really evaluating XX on maximizing right we're always and something it's focused

Wade Walke

next offering full Anne. start any you genome plans is, one analysis? have to The Thanks, do a

Anne Wojcicki

XX% from you -- additional substantially genome, look when a People the great also versus a whole a the you majority we what population is That when and XXandMe, what bit. learn talk get for customers more that but we are from are get it's at question genome going from you a to not anything of of expensive. get, individuals to quite whole

provider we a So family a definitely and specific it recommend them not are that individuals and services. for genotyping -- who risk we we But for health that a are we we or history they're the other that have for ideal can there's the have as we -- are that screen, and -- is array not do who have that believe looking phenomenal.

definitely about panels So considering in for us it radar. individuals we offer do think the that future our we're where are there genome sense? to on something and whole makes for Definitely opportunities always or staying

Wade Walke

become Thanks question enough you is Anne. financial one. The on to Do have next hand cash a profitable?

Anne Wojcicki

that turn you. I'll Steve, to

Steve Schoch

Yes. Always good question. a Thank you.

yeah, I that point would you we disclosed. So, two to mostly things

of in at cash we for cash. first And flow. So end operating which proxy the the our our $XXX that then reaffirmed is million EBITDA, we our we quarter disclosed also on have guidance adjusted

the look figures EBITDA $XXX adjusted those you range that two million. to when on $XXX so million at is And

Anne If what that our therapeutics. you average of working give will Kenneth that ability talked is it's and the you with balance, has period get of sense of of lot a the take execute things good cash consumer the kind of time on about at it portfolio and to us and look side that is on the reasonably runway can a a of that

Wade Walke

any recession cause US XXandMe troubles The year? for will in Steve. the Thanks coming the financial question is next

Anne Wojcicki

Steve, you again.

Steve Schoch

particular all thing main discretionary. the of our in service businesses, a the consumer mean, it among personal that genetic is I is Yeah.

choosing a a other So bit some more maybe buy. imagine kind you -- not in we severe increment of that they're businesses recession. could they're a to the little at consumers When of our independent at general recession look

have don't at any we've it. a how units experience so been with would when experience to sure. we in that's an really say volume we probably I greater say about a year. can't years have than for just few deep But think We don't a past this recession the So million at

Wade Walke

leadership any question planned coming last our the And changes Steve. there are in significant Thanks quarters? is,

Anne Wojcicki

of changes the for some people we some Well, next company. anticipating the today that us most announced I that -- been and kind think of pivotal this is for two having for important are of the phase recruiting I’ve and that leadership

nothing that are not be have Noura other there's thrilled So evaluating it's I us. strategic that always am any but announced need we and and Amy changes, we we -- have joining something talent to

Wade Walke

everyone for joining thanks and us today. Anne Thanks

portion I that of call. wraps our up think the Q&A

Operator

concludes program. This the

disconnect. a great You may day. now Everyone have

23andMe Holding (ME) 9 Aug 222023 Q1 Earnings call transcript