Invitae Corporation
Q1 2018 Earnings Call Transcript

Published: 10 May 2018

[Operator:]

Good afternoon. My name is Jessie, and I will be your conference operator today. At this time, I would like to welcome everyone to Invitae's First Quarter 2018 Financial Results Conference Call. [Operator Instructions] Thank you. Laura D'Angelo, you may begin your conference.

[Laura D'Angelo:]

Thank you, Operator, and good afternoon everyone. Thank you for joining us for our first quarter 2018 earnings call. Joining us today are Sean George, our CEO; Shelly Guyer, our CFO; Lee Bendekgey, our COO; and Katherine Stueland, our Chief Commercial Officer. As you listen to today’s conference call, we encourage you to have our press release available, which includes our financial results, as well as metrics and commentary on the quarter. Before we begin, I’d like to remind you that various remarks that we make on this call that are not historical, including those about our future financial and operating results, our plans and prospects, the focus of our business strategy, our plans to integrate and manage businesses we acquire, market opportunities, future products, services our products pipeline and the timing thereof, demand for and reimbursement of our services, and our investment in our infrastructure and operations constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act. It is difficult to accurately predict demand for our services and therefore our actual results could differ materially from our guidance. Our guidance on future company performance assumes among other things that we don’t conclude any additional business acquisitions, investments, restructurings or legal settlements. We refer you to our 10-Q for the quarter ended December 31, 2017, in particular, to the section titled Risk Factors for additional information on the factors that could cause actual results to differ materially from our current expectation. These forward-looking statements speak only as of the date hereof. With that, I will turn the call over to Sean.

[Sean George:]

Thank you, Laura, and thank you, all again for joining us. At Invitae, we're pursuing a clear mission and a big vision integrating genetic information into mainstream medical practice. It's a huge opportunity. We suggest in all seriousness and addressable market of more than 1 billion people in modern medical systems worldwide. And while many share with us the excitement of what genomic medicine can do for individuals and broader healthcare alike, we believe the best way to bring this forward is to do the hard work, the incredibly hard work of leading in currently defined segments of genetic testing being performed across many disease areas across all stages in life. We have historically talked about Invitae’s business in three related phases, genetic testing, genome network and genome management. Starting with aggregating and consolidating the traditional industry for genetic testing and on its foundation building a new industry in which we are the leader in the generation and management of genetic information as a key enabler of personalized medicine. For going on nine years now, we’ve relentlessly pursued this mission and business model. For at least six of those, we felt compelled to communicate our strategic decision making framework to customers, employees and long-term investors alike. For disclosure, this is not Invitae intellectual property. There are other technology-centered companies out there executing this approach, Amazon being one of them, and I suspect many more given a logical consistency the framework could bring to just about any industry. It's an unusual approach for our industry. So, once again I'll highlight that much of our thinking on how to grow a great company is the relentless pursuit of doing what is best for our customers. We are not growing for growth sake, but because our business model, the creation of a new network information management industry relies fundamentally on scale. But, this is a journey of many steps and the early ones are planted firmly in leading and consolidating key parts of the traditional genetic testing industry. In this effort, I believe the fundamentals speak for themselves. Out of nowhere relative to typical timeframes in this industry, we are poised to become the leading provider of inherited genetic testing services in the next 12 months to 18 months. We have invested heavily in our ability to provide runaway leadership for this transition across all of these areas and now, including proactive and preventive genetic screening as well as a women's journey through reproductive health. These investments are indeed paying off and are reflected in the financial results. Just as importantly, we are quickly becoming the partner of choice for companies in the broader healthcare continuum where our aligned interest in the patient and the value of their genetic information allows us to work together in bringing extremely valuable therapies to market faster. While these are early proof points of the value of a growing network effect, we can start to see what this new industry will look like. Its silhouette is becoming more clear as a massive, network driven information business. We're in coordination with other industry partners. We can make personalized medicine a reality for billions of individuals on the planet in a way of life for the next generation. But that doesn't mean the results are a generation away or even five years away. Based on our current trajectory in the evolution of the landscape we are driving, we see this network effect contributing to the growth of our business now and expect that impact to accelerate in the coming years. With Q1 behind us, we feel ever more confident in the business and as such are raising our guidance on volume and revenue for the year. We're increasing our volume guidance from 250,000 samples accession to more than 275,000 and our revenue guidance from $120 million to more than $130 million in 2018. With our continued gains in all-disease areas of medical genetics, the integration of CombiMatrix and good start nearing completion and our preparation for entry into the reproductive health market nearly complete, we can now clearly see real returns on our investments in these areas. As we have said before we will not experience inefficient reduction in COGS and operating expenses from the integrations until they are in full swing by mid-year. With our volume and COGS on their current trajectories and positive signs for the upside for reimbursement, the matter of dialing in OpEx with a variety of levers there in is straightforward. We can see sustained growth that going forward with a transformative shift in driving down the cash burn, we are confident that we can exit the year with a meaningful reduction of burn rate between 40% and 50%. With more than a $130 million available to us today, we have all we need to demonstrate the successful execution of our business model. With that I will turn the call over to Shelly.

[Shelly Guyer:]

Thank you, Sean. Our total accessioned volume in the first quarter of 2018 was more than 64,000 samples, which marks our 20th consecutive quarter of double-digit volume growth. This reflects a 150% increase in annual volume compared to the 26,000 samples accessioned in the first quarter of 2017, and a 22% sequential increase from the prior quarter. Volume continued to increase across all clinical areas including reproductive health in the first quarter. We are seeing the benefit of a larger sales force cross-selling more complete suite of products across existing accounts as well as growth in new accounts. Importantly, the volume was not even across the quarter. Accessioned volume was muted in the first two months of for the quarter due to normal seasonality and getting our sales force cross trained on our product offerings and March was particularly strong. This means that many of the accessioned in the month of March were not fully processed given turnaround times and that's we’re not billable in the quarter. Our billable test volume was approximately 59,000 for the quarter of 13% from approximately 52,000 in the fourth quarter of 2017. Given our adoption of ASC 606 under which we will accrue most revenue the billable test metric becomes much more important, thus we will provide billable tests not only in our 10-Q filings, but also in our earnings calls moving forward. For the first quarter of 2018, we've reported revenue of $27.7 million representing 169% increase over the first quarter of 2017 revenue of $10.3 million and a 9% sequential increase from the prior quarter. Note that this $27.7 million is our GAAP revenue under ASC 606, revenue growth continues to outpace our volume growth on a year-over-year basis. Revenue under former accounting ASC 605 was $27.6 million under $100,000 lower than revenue reported in the first quarter of 2018 under ASC 606. This is a non-GAAP measure. It is important to understand the impact of ASC 606on our business. Over the past several months, many investors have asked us to explain the impact of changing from ASC 605 to ASC 606. We hope that the attached schematic highlighting the difference between these two helps to clarify. We elected to adopt ASC 606 using the modified retrospective approach effective January 1. We now move from having about 30% of our revenue accrued in 2017 to nearly all accrued this year or approximately 95% in the first quarter of 2018. The only payer category that we still account for in a cash basis is PatientPay. Those patients who pay out of pocket normally upfront which is about 5% of our current revenue. This breaks down to $25.8 million in accrued revenue from test conducted in the quarter and approximately $600,000 in accrued other revenue, which is from our partnership relationships. The remaining $1.3 million was cash revenue from PatientPays. Compared to the non-GAAP revenue under the former ASC 605 rules we would have had significantly less accrued revenue or $11.1 million in accrued revenue from test conducted in the quarter. And the same approximately $600,000 in accrued revenue - other revenue which is not affected by the accounting rule changes. Cash revenue from test completed in this or prior quarters would have been a more significant $15.9 million. The major difference for the company in moving from ASC 605 to ASC 606 is the addition of a $11.2 million to accounts receivable on January 1st. This is the total amount we would expect to collect for test delivered in 2017 or before that we had not yet collected by December 31. The amount is large given that about 70% of our revenue was on a cash basis in 2017. Because we do not get to recognize this revenue, the cash collected in 2018 or in subsequent years on test delivered in 2017 or before, the change to ASC 606 will have the impact of reducing the revenue in early quarters of 2018, a one-time impact. Given that we generally collect within about six months, the impact should be greatest in the first-half of 2018. Should our collections succeed or fall short of this $11.2 million in ARR in the coming year, any pickup or reduction would be booked to retained earnings. But, our growing volume of test has the opposite effect of accelerating our ability to recognize revenue. We are able to pull into a quarter, all of the tests reported in that quarter multiplied by the amount we estimate that we will collect in the future. So net-net in the first quarter, we saw relatively little impact between the new ASC 606 and old ASC 605 revenue method and looking forward, we expect that our 2018 revenues will be positively impacted as we benefit from the accrual of the full volume of test billed in the fourth quarter. One final note on setting our expected rates of collection, since we do not have a long history of collections under contracted rates for multiple tests. We have been conservative in establishing the expected rates until we see improvement in collections or have new facts that lead us to believe that collections will improve. If our actual collections turn out to be higher or lower than our established rates in the quarter that we realize this fact, we will book the increased or decreased amount to revenue. There were no such true ups in this quarter but we would expect there to be in future quarters. We've provided a few schematics in the appendix of the slide deck that further highlight these details. Our average revenue per test across all categories of payers and test was approximately $460 in this quarter. This includes all test revenue and excludes other non-test revenue. We did not retroactively calculate this for 2017 revenue under ASC 606. We will track and report this metric going forward. It goes without saying driving up this collection rate continues to be a primary focus and we are beginning to see signs of success nine months after bringing our billing in-house. This quarter we demonstrated the impact of rapidly increasing volumes on our cost of goods sold. Average cost per sample was $279 for the first quarter of 2018, a reduction of over $40 per sample in one quarter or 13% sequential reduction. Compared to the first quarter 2017 we drove COGS down $80 per sample or 22% annual reduction compared to $360 in the prior year. Most of the savings came from lab materials and labor which directly benefits from higher volumes especially as we augmented more of our production processes. Our cost savings per sample was across all products. COGS reduction remains a continued focus throughout 2018 as we integrate several of our reproductive health technologies into our production lab in San Francisco by mid-year. We would expect additional COGS improvements. We view increases in our gross profit as a critical indicator that we are in the right track by driving up collection and driving down COGS to generate an ever increasing gross profit to cover the OpEx and other costs of running our business. Gross profit increased to $9.6 million for the quarter, a significant increase from gross profit of $1 million in the first quarter of 2017 and gross profit of $8.3 million in the fourth quarter of 2017. Our focus both on increasing our collection rates and continuing to drive down our COGS are designed to drive up our gross profit dramatically during 2018. Our gross margin was 35% this quarter, evidencing our continued progress towards our goal of 50% gross margin across the entire Invitae platform. This compares to a gross margin of 10% in the first quarter of 2017. For the first quarter of 2018, we incurred operating expenses of $46.1 million, a 63% increase over $28.3 million in the first quarter of 2017 and a 7% sequential increase over the prior quarter. This reflects the frontloading of some investments into the early part of the year, especially in personnel allowing us to scale the business to support our high volume growth expectations for the year. As we move through 2018 and beyond, we expect a slowing rate of investment as we grow into and further leverage this infrastructure we have put into place. To enable us to generate the volume growth throughout the year and beyond, we added to the sales force during 2017 by both acquiring Good Start and CombiMatrix and their experienced sales reps and also by hiring additional sales reps late in 2017 and early 2018. We now have over 110 sales heads, up from just about 60 in the first quarter of 2017. We also invested in their operations groups to allow us to scale throughout the year as well as improve our efficiency and reduce COGS. Specific benefits that will result include transferring our carrier screening and PGS test to our production facility in San Francisco and automating and streamlining many aspects of our production processes billing and other function. As Sean noted our integration and operating costs are expected to continue through the second and into the third quarter as we fully integrate last year's acquisitions. Our focus is on containing our CapEx growth throughout the remainder of the year which is within our control and a key component of proving that the business model is working. Keeping our OpEx growth below our gross profit growth will evident the tipping point in our business. For the first quarter, operating expenses included approximately $7.3 million in non-cash expenses. Moving to our balance sheet, there are two main takeaways, we are seeing in the quarter. The first is that we now have a healthy balance sheet with accessed capital totaling more than $130 million. We ended the first quarter of 2018 with $60.6 million in cash, cash equivalents and investments including restricted cash. This includes $20 million in debt taken down during the first quarter. We closed on an equity financing in early April which added $53.5 million in that proceeds. And we have an additional $20 million in debt available in the second quarter of 2018. The second key takeaway is that we continue to focus on meaningfully reducing our cash burn between 40% and 50% from today’s levels as we exit 2018. We had an operating cash burn of $35.1 million in the first quarter of 2018 excluding the debt financing and acquisition costs and the GAAP to non-GAAP measure. With that, I will turn the call back over to Sean.

[Sean George:]

Thank you, Shelly. So as you can see the pace quickens here at Invitae on top of an already exacting cadence and we are poised for an exciting few quarters ahead in which we expect to check through many key proof points for our business. With accelerating momentum on volume, reimbursement, COGS and result in gross profit combined with our ability to pull multiple levers on OpEx growth, we are confident that we can exit the year having driven down the cash burn by 40% to 50%, positioned well for any of the even further reduction into 2019. With a more than $130 million in capital available to us at this point, we have all we need to push through this important business transition. We also grow more confident in the unbound opportunity in front of us. With the infrastructure and capabilities we have built, we are now or soon will be the best answer, if the question is genetics at all stages in life. And in a short time, we believe clarity will come to all on just how important and pervasive genomic information will become in healthcare. A general trend that we believe will continue to support a rough annual doubling of our business for the foreseeable future. In the U.S. alone somewhere around 15% of the populations primary concerns in health are impacted by genetics in a major way. There are 4 million versus a year and over 300 million people who could otherwise benefit from proactive genetic information services. From one perspective that means we are currently about 0.4% penetrated into the molecular genetics market, 0.3% penetrated into the annually refreshing reproductive health market for which there are multiple opportunities per family and 0.001% penetrated into the proactive and preventive genetics market. From our perspective, we have a lot of customers to serve ahead of us. With that, I will now turn the call over the operator for Q&A.

[Operator:]

[Operator Instructions] Your first question comes from Tycho Peterson with JPMorgan. Your line is open.

[Unidentified Analyst:]

This is [indiscernible] on for Tycho. Congrats on the quarter, I just wanted to get some color from you Sean in terms of drivers of volume spent in the first quarter. I know, you said it was pretty board based, but anything, you can share beyond that would be fantastic?

[Sean George:]

I mean in terms of where the growth came from that’s the question. So you know 150% year-over-year, the volume came across all - all segments areas, so the cancer business is growing. Non-cancer continues to grow that non-cancer business, cardio, neuro, pediatric, metabolic, et cetera. Certainly in no small part due to the increasing engagement with biopharma partners. The reproductive offering continues to build strength and we see we sit here - as we’ve mentioned we see clear potential there, especially with the upcoming filling out of the expanded career in NIPT lines. And then, you know again with reproductive health as the integrations of CombiMatrix in good start, kind of begin to wrap up around the middle of the year. We expect to see the continued strength and growth in our reproductive line. So, really across all disease areas, I think you know, very exciting to us is that towards the end of this year, we will continue to run the hypothesis, but the breadth of offering is actually synergistic both on all of our - certainly on our operating expense side, but certainly as well as the commercial leverage side, it’s pretty clear we’re disrupting the market as it exist today and I think that all of, you know the growth across all of these areas is pointing. Our sign post us that we’re in the right direction.

[Unidentified Analyst:]

And then in the past you’ve talked about you know your gross profit and how that compares to OpEx and the possibility of you know, those two I guess your gross profit and how that compares to OpEx and the possibility of those two I guess trend lines crossing at some point between now and 2020. How are you - what's your updated thought process on that, particularly in terms of your goal of generating operating leverage and cutting your cash burn on a quarterly basis by year end?

[Sean George:]

I think obviously with a strong quarter, we're feeling more certain of that. I think that those - it's an inevitability if those lines cross given our current trajectory. I think with this quarter gives us some more confidence that's happening sooner. It certainly allows us with some visibility, particularly as these integrations start winding down towards the middle of the year between the volume, the revenue collections improvement the COGS improvement, those three give us a view to what kind of gross profit we can expect from said volume. The integrations are on track, give us a good handle of what our CapEx levers could be throughout the year and all of those combined give us confidence that we can get the burn cut in half as we exit the year.

[Unidentified Analyst:]

And then, one sort of longer-term question. There was recently an announcement from Geislinger and sequencing everyone coming in proactively so as to make health decisions based upon their genetic testing as part of routine preventive care. But on the other hand, I mean our channel checks seem to suggest that there so far has been pretty limited traction for “healthy” exome panels out there that you guys and some other labs offer. What needs to change fundamentally to drive broader adoption, is it just a cost issue or is there something else? And what exactly are you doing to drive that growth within those kind of settings?

[Sean George:]

I think fundamentally there is nothing preventing it. In fact I think this is why we're so optimistic about the next few years, what the next few years look like for this company. We've suggested for a while we're playing into a massive upward trend in the utilization of genetic information. Now, for certain, there is no doubt that the expansion of the market and increased utilization of these larger panels in exomes is being driven by lower cost. That is clear and obvious to us. I think, yeah, traditional channel tests I think are probably a little bit behind where places like Geisinger are, but it's pretty clear to us with the prices we can now offer everything from small panels all the way up to including exomes, particularly in the utility, some of it, the kind of the more core medical diagnostic uses of exomes, and then of course broad preventive or proactive genetic panels. This is going to become mainstream care. I think sooner than most anticipate, whether it's an exome or for example - which we offer, or for example our comprehensive practice screening of available for $475, which basically gives you pretty much anything that an otherwise healthy individual with no family history would want to know. Where it plays out in the future between those two, we think it’s probably going to be a matter of patient choice. And you know, but there's no doubt that the barriers are falling and cost being the primary one of those.

[Unidentified Analyst:]

Thanks so much, guys.

[Shelly Guyer:]

The other side of it is obviously being able to drive down the COGS so dramatically enables us to offer those at prices that are still viable for us as a business. And so, that's why we really look at the COGS reduction as being critical over the last year and in the coming year.

[Katherine Stueland:]

The only thing I would add is that we've spent the past several years really building a strong medical brand and we think that that’s going to translate very importantly into the broader adoption of preventive panels like those that we offer. So, we think that will help us provide a competitive advantage to Invitae.

[Operator:]

Your next question comes from Doug Schenkel with Cowen & Co. Your line is open.

[Adam Wieschhaus:]

This is Adam Wieschhaus on for Doug. Thanks for taking my questions. Based on your updated guidance, it appears you're guiding to an average revenue forecast of about $485 for the remaining three quarters, which I think is around $60 over the Q1 levels. Can you parse out the puts and takes behind that increase? Is that primarily due to the shift to ASC 606? Was it because of the increase in volume towards the end of Q1 that weren't revenue recognized yet or maybe some improved reimbursement that you see in the near term? Thank you.

[Sean George:]

I think that Shelly can walk through the pieces. At the beginning of the year, we had some single items that would affect how the year went on, on revenue. I can point to - I know for Q1, the answer is volume. That's the primary driver of our kind of confidence increasing revenue at this point. Shelly, do you want to walk through the other key factors that we’ll highlight as they evolve?

[Shelly Guyer:]

So, volume, number one. But, also in 606 as I noted in my prepared remarks, it was - we're conservative in setting those prices. We don't have a lot of history across all of the various tests and across all of the various payers. And so, I think it behooves us to be somewhat conservative unless we see a fact or circumstance changing moving forward. And so, over time as we begin to be able to increase those collections as we said before, we'll let you know when that happens. But, we're not going to preview that ahead of time. So I think, that's one very important place. I think, also we did sign very important place. I think also we did sign multiple partners this time around and they pay at a somewhat higher rate, one. And two, really help in some of those areas as was mentioned CNP et cetera are largely driven by our partnerships. And so, having just signed numerous partnerships and relationships in this past quarter, I think helps us too. And then obviously last time we talked about other ways that we would see pushing that forward and that would be if we were successful in advocating at Medicare to increase that rate. So I think all of those are the ones that we think have the levers to drive it over time. But at this point, we're only giving you what we can see directly in our line of sight and not predicting as we move forward where it could go.

[Adam Wieschhaus:]

You mentioned that volume growth is strong across all testing categories or most testing categories at least in Q1. Should we therefore expect incremental 25,000 tests that you raise your guidance to come through all testing categories? Thank you.

[Sean George:]

We don't see anything now that would indicate anything otherwise so I think that's our expectation as well.

[Adam Wieschhaus:]

And the last one from me is there's a annual CNS meeting occurring next month with several bracket codes coming up for review. Have you looked at that agenda at all? And if so, do you expect it to impact maybe your level of reimbursement or that of others in the space?

[Lee Bendekgey:]

And yes we keep careful watch of those as you would imagine. And no, at this meeting we don't see anything that we expect would have a dramatic impact on our revenue expectations.

[Operator:]

Your next question comes from Puneet Souda with Leerink Partners. Your line is open.

[Puneet Souda:]

One quick high level question in terms of I think it was addressed a little bit before but I think it was addressed a little bit before, but I just want to understand thanks for the ASC 606 comments, but majority of the revenue guide is largely due to the volume. Is it safe to assume that you have good clarity on the ASP as well for the rest of the year? And then, my second question is largely on exome. Could you give us a sense of the mix there and what's the turnaround time on exomes?

[Sean George:]

So, on the revenue guidance, again it's largely influenced by the volume that we've incurred to-date and I think as Shelly pointed out as those other - as the reimbursements with third-party payers as the mix changes as the CMS solution equation resolves, those are things that can and will help us, but we are certainly not counting on those until they happen. So, I'd like - again I'll consider increasing the revenue guidance pretty much a factor of what we can see by way of volume and our current progress in reimbursement so far. Then the question on exome mix is you know it's - it was pretty - it's one of the more recently launched offerings, and so it's obviously not a major driver along, but it is just growing - you know annually it's growing as fast as all of other segments. And I think, yes, about turnaround time, the turnaround time has been in influx. Exome is a little bit of a different beast than kind of some of these other panels and you know I think we're kind of in the - I’ve to get to check exactly what it is. Lee, do you know exactly what the …

[Lee Bendekgey:]

So, Puneet, I would say that after its initial launch, exome volume exceeded our expectations and as has been true for others who have gotten into the exome game. We've found that we were not regularly meeting our 8-week to 12-week turnaround time guidance that was starting to slip and so we actually took our paddle off the - in terms of promoting exome and we are still delivering it to existing customers, but we decided to take a pause in terms of driving exome growth until we got a little more experience, streamline some of our operations. And I would expect sometime in the second half of the year we will be to the stage where we will be driving that again and we will be comfortable that we will be at a minimum meeting and hopefully reducing the target 8-week to 12-week turnaround time.

[Puneet Souda:]

And then just the last one, in terms of the Biogen Sarepta, BioMarin a number of these guys that you have added those. How should we think about the cadence through the rest of the year? Thanks.

[Shelly Guyer:]

So we're pleased to continue to build our network of partners including both biopharma partnership as well as advocacy organizations. This is an area of great focus for us, clearly strategically it helps us pull forward the use of genetic testing. Historically it was used - it was relegated towards the end because of the high cost of the high turnaround time. So we're starting to see strategically a paradigm shift in the use of genetic testing. Clearly from a business perspective, it provides us with a really nice boost to volume, we get paid well, we get paid regularly. And so it's definitely something that we're going to continue to put resources behind. You know the selling cycle for those is a bit longer, for some of these are clinical trials, for some there are FDA approved therapies. So it's really hard to predict. But we are looking to continue to grow that network. I think importantly from a patient point of view, the relevance of this network effect is that we're able to get patients diagnosed as quicker we're able to connect them with clinical trials, the FDA approved therapies, research, advocacy and support groups. And so, this clearly is pointing towards a broader network effect that we're starting to see that that ultimately will help clinicians and their patients.

[Operator:]

Your next question comes from Amanda Murphy with William Blair. Your line is open.

[Amanda Murphy:]

And so, I guess a follow-up to that last discussion. So one of the things you have talked about is just kind of the access to data that you have, this is just even given the scale and then brought to the testing that you've been developing. So I just wanted to kind of talk about that over the long-term and how you're thinking about monetizing that asset. So obviously you've got some recent biotech deals and I think I ran into a couple that I didn't even know you had from a while ago recently. So maybe just broadly probably talk about that as a strategy and how you think kind of just data as an asset to you might evolve over time?

[Sean George:]

I think it’s a great question because it's certainly a part of network business we're building. I would say however the data is a standalone asset is something that we've always thought is a little - if not misplaced but I think it misses the opportunities that exist. So we consider the patients and their data, specific very exquisitely individualized health information data with a connection to that patient to the clinician who's taking care of them in the context of the disease. It's really that collection of pieces that is, we feel is the most valuable in the network that we're building. In the example of most of the pharma partnerships we run, it is access to those patients, their families, access to the clinicians, taking care of them, understanding an analysis of the data that they have, addition of additional data, oftentimes non-genetic data, whether it's family history information, other risk information, demographic and natural history information, individual, patient surveys over time, longitudinal either surveys up to and including self-reported clinical information as well as clinician reported information. So, all of that data is what we view as the really important asset of the network we're building. As I said, the data as a standalone asset we're not certain if all of that’s valuable in the context of what we're trying to accomplish. So, in terms of getting more patients diagnosed faster, getting them in touch with their - getting therapies to market faster, in the clinical trials faster, in touch with other people, with similar experiences or in touch with advocacy groups or research that can help them. That's where we think the value is. And we - it seems to be playing out. Now, with that said no doubt, the more data we have the better, which is why we focus on - we've always focused on generating more genetic information than needed to diagnose the question being asked. We've been built for many years and will continue to build out customer-facing platforms and workflows and applications that collect more information, family history, natural history, ongoing surveys, et cetera. So, we'll continue on all fronts, but really do consider at this point in time the value that the data represents is simply what our partners in healthcare continuum can do with it to improve life for our customers, and from there, we’ll stem all the - all of the important economics in the future that we think the network business can bring. Again, especially of late, I think it’s probably just important to make sure to put the fine point on it that you know, we do consider that the patient’s own and control their own individual data. And it’s not a sense shared or delivered and certainly not monetized without their expressed consent.

[Amanda Murphy:]

It seems like there’s been a lot of discussion around sort of the integration of genomic data with clinical data to your point. Is there a way that you can give us a sense and just in terms of how much? I don’t know, if patient numbers are the rate, but just thinking about the magnitude of scale that you have at this point, particularly around this kind of integrated data set , again not that you’re monetizing it specifically, but just you know just the values that are more broadly, is there a way to put a number on that. I mean is it - I don’t know if at every, every, every test is done or?

[Sean George:]

No, I think - you know I think, it’s actually I mean I think it’s something we probably should work on over the coming years, because if you think about it - it’s certainly number of patients served that’s kind of the first indicator and then whether or not we have an entire exome, genome, 400 Gene panel, you know what how much genomic data we have on them has certainly varies depending on the question being asked and it’s varied over time as we developed a platform. And then of course, how many come in with digitized family history, how much phenotypic information have we collected either directly from their medical record or is a part of the ordering process. And then how much how many individuals do we engage with and stay in touch and get more information in the future. You know, to be honest, those are - all over the map depending on the patient group and the disease area that we’ve been operating in. And so I’m afraid right now, there is no one clean, kind of you know number of genes. The patients time number of genes times you know of 16 categories of other data which ones we have. But I think it’s something, we will think about. I think it’s the right questions to ask about this data business this network business and I think, we'll be working in the future of what the right metrics to think about are, for sure.

[Amanda Murphy:]

Again, and just last one and maybe more boring, I guess is just around reimbursement. So there had been some discussions a little while ago about payer efforts to put in place more, I guess more stopgaps in the front-end to thinking about prior ops and things like that. So just curious on the latest there and also, and I'm sorry if you talked about this, but was there anything in terms - I know, you said there is growth across all types of testing, but anything to think about as it relates to mix in the quarter whether it’d be exome versus something else in terms of actual cash realized price, if you will?

[Sean George:]

Why don't we do the - let’s do reimbursement first and believe me in our daily lives, there's nothing boring about reimbursement. So we can answer that one. I would say, I think the efforts by various payers to really, I don't know what you call kind of clamp down on the prior op process or put tools and applications in place to facilitate the prior op process as was widely kind of publicized and discussed in kind of the Q - kind of fall timeframe last year. We have actually seen that die down. I think I can kind of - there were a couple of these tools that are rolled out pretty hastily and causing confusion, but in general, it’s kind of a part of the daily life of dealing with insurance companies. On the client, it clearly hasn't slowed down the volume. In fact, it actually has helped clean up a lot of the requirements. Once you iron it out, it actually helps you get paid faster. So I think it’s going to continue - It has and will continue to in a bigger way contribute to cleaner bills, more understanding of what we're going to get paid and hopefully faster payment. I think that's still yet to be seen. I do think - so on the one hand I think it's kind of - I think at this point in time, some of the early stuff - early choppiness there is behind us and we don't see anything other than the usual going forward. I think it's worth mentioning as a broader trend payer action in genetic space is definitely kind of there's more activity, there's more attention being paid. And I think we can expect more payer assessment of quality price. Some of the typical code stacking games that are played in our industry, there's definitely more attention in energy to clamp down on those. So, that's a general trend that we think the only thing we can kind of say about that is that it favors in network providers as opposed to outer network providers. And then, I think - then the question on the mix, again it was - it's essentially nothing material to report about the mix change. All of our segments grew even as we Lee mentioned we pulled back on promoting exome, still if you look at it annually, it’s growing as fast as any one of our other businesses and certainly in the early months even faster. So, there's no real material mix change, they're all growing at a rapid clip.

[Operator:]

[Operator Instructions] Your next question comes from Kevin DeGeeter with Ladenburg Thalmann. You may begin.

[Kevin DeGeeter:]

Just kind of following up on the activity with regard to working with world pharma partners, how do you think about going forward potential regulatory framework to if some of these programs go forward to potentially offer something you can to traditional companion diagnostic and how that may fall into your interaction with FDA.?

[Sean George:]

I think Lee can get the details on this. I think at the highest level, we always like to point out whether it's a payer, whether it's a pharma company or kind of a provider network. The answer to that is actually whatever they want. You know and I think that's the first answer. What kind of regulatory framework that our partner or customer would like to operate in is essentially it’s whatever they want. We can operate on all three. I think there’s against a broader question that will be available, Lee can give an update of our perspective at this point.

[Lee Bendekgey:]

I think you might be thinking of some of the announcements lately of foundation medicine being one of the more prominent ones. And as Sean says the first thing that we think about is you know what benefits our customers including our pharma partners. And we're pleased that actually the FDA has shown a disposition to be realistic and appropriate in terms of the kinds of evidence they're looking for to support a pre-market approval for our companion diagnostic. And frankly, we're certainly willing to do it if we have a pharma partner that is looking for a companion diagnostic to a company in therapeutic. On the germline side, it’s not clear that long term companion diagnostics are going to be that useful because if as we assume a comprehensive genetic testing becomes part of mainstream medicine, then by the time a doctor is diagnosing for example - or is making a prescription decision for a breast cancer patient, he or she in all likelihood should know whether that particular patient has a pathogenic BRCA mutation at which point a companion diagnostic to decide whether to administer a PARP inhibitor is redundant and imposes excess cost on the healthcare system. So long-term, certainly on the germline side, we don't see that as really benefiting patients or the healthcare system, but if that's something that a pharma partner feels they need, we certainly feel comfortable that we're in a position to generate the data and comply with the applicable requirements.

[Kevin DeGeeter:]

Terrific and then, just one more for me. At the time of some of the two acquisitions last year of - in the reproductive health area. One of the areas of potential revenue synergy that you called out was the opportunity to sell hereditary cancer more aggressively through the women's health channel. Now, can use just provide us an update there and maybe some metrics as thinking about how that component of any potential synergies from that high-set integration is playing out?

[Sean George:]

That's definitely one of the - of a handful of key objectives to kind of drive growth and increase profitability from those acquisitions which were large part of our move in the reproductive health. That was one of the primary ones. As we mentioned in the fall shortly after acquiring Good Start, one of the commercial relationships fell out for the provision of the expanded carrier screen and which is why we're working on filling that gap getting and expanding getting our own version of expanding carriers screen into the mix and in addition adding NIPT, which is kind of become kind of a table stakes in the reproductive health segment, albeit somewhat undifferentiated. Those two will give us the comprehensive, you know that’s the comprehensive set of offerings that we think then will be the right time to really test that you know kind of selling in reproductive health and having cancer coming along with it, selling reproductive health segment and having proactive genetic testing come along with it or in reverse clients that are proactive clients, clients that are cancer clients at the right time, at the right stage moving as into the reproductive - using that data to answer reproductive health questions. That’s the other direction we’d like to test that area to flow. I think again, until we have the expanded carrier screen and NIPT capable, it’s not you know we haven’t really been able to answer that question yet. We have seen cancer test growth in the reproductive health segment, but I think that’s just more of the matter of the - as we mentioned we’ve got the sales forces cross-trained into the year, launched in this year, the territories are out, hitting the higher volume reproductive health accounts. I think, it’s a natural thing you would expect to sell some cancer business there. But the real synergies between those three distinct efforts, we would expect to kind of start seeing by the end of the year.

[Operator:]

There are no further questions. I turn the call back over to Laura D'Angelo to close the call.

[Laura D'Angelo:]

Thanks everyone for joining us today. We look forward to catching up with you soon at our upcoming conferences.

[Operator:]

This concludes today’s conference call. You may now disconnect.