Invitae Corporation (NYSE:NVTA) Q3 2023 Earnings Call Transcript

Ken Knight: Yeah. I mean, there’s multiple efforts, levers that are driving that. Obviously, we made a decision, a conscious decision, really starting about 18 months ago that we were changing the commercialization, go-to-market from volume at all costs to a focus on growing profitable volume and so that’s step number one. And secondly, we’ve been really dedicated and focused on process improvement internally, whether it’s supply chain logistics, whether it’s our laboratory processes and efficiencies. Ana talked about our variable cost efficiency that has probably been about as impressive in terms of each quarter driving more efficiency in our operations, as has our gross margin expansion as well. So that’s a true sign of a focused effort there.

And then, I think our mix is also moving in the right direction. Some of the actions we took last year, exited territories and businesses that were just not accretive to our gross margin story. And so we made some hard and tough decisions, but I think those decisions are proven to be more right than wrong in terms of solidifying our path to profitable growth. So it’s really about being intentional about the quality of revenue that we demand for ourselves and then driving our middle part of the system in terms of the cost structure and variable cost and ultimately, those things together have led to some pretty strong performance and solid progress in gross margin.

Dustin Scaringe: Understood. Thanks for that. Within oncology, just wondering if we could get an update on your penetration efforts into the community setting, which you’ve called out in the past of the catalyst?

Ken Knight: Yeah. So I talked about our revenue growth of double-digit growth for hereditary cancer and Q3. And I’d say that what we’re finding is that the volume growth in the community setting is spearheading the growth in hereditary cancer volumes. And so we still are competing well in the NCI Center and the academic medical centers where the genetic experts are. And we’re still in there and we’re starting to grow that segment of our business. But we are seeing more growth in our kind of community setting, which is what we were expecting and what we were hoping when we talked about earlier that we wanted to expand our, where we operate and our call points and so that’s starting to prove with some positive momentum there.

Dustin Scaringe: Okay. Great. And then just one more from us, pipeline progress on PCM in a critical setting and expected timelines around that heading into next year. Thank you.

Ken Knight: And when you say, are you talking about, when you say pipeline timing for PCM, are you talking about, reimbursement or studies? I mean, can you be a little bit more specific? What is it?

Dustin Scaringe: Yeah. It could be studies, reimbursement, and commercialization of different indications.

Ken Knight: Yeah. It’s a good question. And so our efforts are starting to really focus in on, several clinical areas, tumor types, lung, breast, and colorectal cancer. We’re starting to get the data needed to pursue reimbursement. And so we’re expecting in early 2024, we’ll start to see that data come into fruition where we can start making our submissions to get support for reimbursement. We’ve gotten some indication from CMS already as to what kind of reimbursement levels they would support for our product. And so we kind of know what that target is going to be. And our study work that we’re doing is really being more and more focused on what’s it going to take to get kind of get the information and data needed to confirm the reimbursement path for our products.

And so I think we’re more aligned now than we’ve been in a while in terms of getting all of that together. And as we get into 2024, we’ll be able to give you a lot more clarity as to how we see that unfolding.

Dustin Scaringe: I appreciate that. Thank you, Ken.

Ken Knight: Thank you.

Operator: Thank you, Andrew. Our next question comes from Matthew Sykes from Goldman Sachs. Matthew, your line is now open. Please go ahead.

Unidentified Participant: Hi. This is Evian (ph) from Matt. Thanks for taking my questions. The first one, it was great to see the FDA market authorization on your hereditary cancer panel. Can you provide an update to your overall hereditary cancer segment since receiving authorization for that product?