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

Ken Knight: So, yeah, I mean, as I said in my comments, we’re — first of all, thank you for the comment about it. We’re extremely proud of what the FDA saw when they looked at our processes and our methodology. So far as what the next step is going to be in terms of commercializing it, the FDA authorization, market authorization, as a combination of looking at our development and our operational and our commercial efforts. So internally, we’re working through those to understand what the opportunities are. And when we are ready to announce a product that is commercialized with FDA authorization, we will do that. But at this point, we haven’t done that.

Unidentified Participant: Okay. Great. And then the next one, can you just talk through how you’re thinking about reallocating resources after exiting your PGX business?

Ken Knight: So, yeah, I mean, the PGX business for us was in many regards a standalone operation in terms of where the samples were being processed. And so, we basically exited that business and unfortunately those resources that were pretty much dedicated to PGX for the most part have exited the company.

Operator: Thank you, Matthew. [Operator Instructions] Our next question is from Rachel Vatnsdal from JP Morgan. Rachel, your line is now open. Please go ahead.

Rachel Vatnsdal: Hi. This is Nolan for Rachel. Given you’re refocusing on your profitability, can you talk a little bit about the growth plan for the data education network for the next few quarters, maybe two quarters. Obviously, there’s a lot of underlying factors going into it, but since you saw a decline quarter-over-quarter, can you just give us some commentary on how you think about that trending heading into year end and the gross profile on it? And then I have one follow up. [Technical Difficulty].

Ken Knight: Yeah. That’s a great question. I mean, as we think about it as it goes in the year end, we’ve obviously taken that into consideration when we look at our revenue guide. It’s actually been a good news story for us, in my humble opinion. We focused on moving from an unprofitable kind of a discount testing model for our sponsored testing program to one where we are being appropriately compensated for the work that we do. And so we were a little concerned that the volume was going to drop off significantly. And I think, what we found is that we can do both. We can grow it profitably and we can still continue to grow that business. So we’re less concerned about the downside path forward because we’re seeing the momentum coming back at the product.

And by the way, we’ve also developed some innovative products off of our data business that are also being well received. And so we see it as actually a rebounding business for us that’s got great correlation to our rare disease business. A lot of our data business is driven off of the patient odyssey that, pediatric epilepsy and pediatric rare diseases, adult rare diseases are going through. And so we think we have a good combination there. And we like the stability that we’ve gotten. And part of our path to 52.4% gross margins this quarter is that each of the segments that we’re in are performing better than they were this time last year from a gross margin standpoint.

Rachel Vatnsdal: Great. That’s super helpful and kind of right on where I wanted to hit next. Could you talk about maybe, if we’re expecting some potentially lower growth in that data or patient network segment, or maybe some lower gross margin segments in general. Do you think that that nine quarters of adjusted gross margin improvement that you’re seeing and hitting 52% this quarter, which was meaningfully above the street. Do you think that trend could sort of then continue? It is below the full year guide or above the full year guide, but it’d be interesting to see if that’s a potential swing factor upside to the next few quarters here?