John Kim: This is John Kim on for Mike. You mentioned that you’d actually be looking at the higher end of the adjusted EBITDA guidance. So I wanted to ask on the price and the mix. I think you’ve previously talked about the NGS contributing more than 60% of the increase in AUP last quarter. I’m wondering what that was this quarter. And looking at the 2024 guide and looking at that adjusted EBITDA, if you had any change in your AUP expectations? Yes, and I guess related to that note, and how much improvement you’re seeing in the revenue cycle. And I know you talked about that it’s a multi-year opportunity, but what sort of upside is left this year?
Jeff Sherman: Yes, and so in terms of the pricing question, NGS continues to drive over 60% plus of the AUP increase. And so that trend has continued. In terms of revenue cycle, I mean, we have kind of a lot of initiatives under that umbrella. We have what you would consider your historical kind of billing and collections, denials, management piece. We’re having success there. There is kind of conversion of tests from single panel to larger panel tests. That kind of falls under, what we would consider revenue cycle initiatives as well. And then, we have payer policy movements as well. So as state biomarker legislation continues to get passed, that’s long-term favorable for us. That’s going to take time to kind of matriculate through our performance, and getting payers to pay.
So and then finally, there’s the rate aspect where we’re seeing rate increases. And so, I would say we continue to have success across all of those. They don’t really start, or end in any one particular quarter. So I continue to see kind of a multi-year opportunity of seeing improvements there. And that’s really where the focus is on getting paid for the work that we’re doing, making sure we’re getting. We’re capturing the value of the service we’re delivering to our clients and their patients. And I think that the progress has been good, and we still see a lot of opportunity to improve more going forward.
John Kim: Understood. And sort of related to it, you’ve doubled the sales force. And now as that team transitions to the under warrant, you talked about expanding it further. How should we think about this additional investment in the commercial team? Is that going to be – what sort of impact is that going to have on the financial statement?
Chris Smith: Yes, I would say, look, all of our strategies are kind of built into our guide. So anything that we would do investing this year, are already built into the guide.
John Kim: Noted. Thank you.
Chris Smith: Thanks.
Operator: Your next question for today is from Mason Carrico with Stephens.
Chris Smith: Hi, Mason.
Mason Carrico: Hi, guys. You gave some color on this in a previous question, but to ask it more directly, for the ADx business overall, is this still a business that you believe can consistently grow double-digits? And if so, what needs to happen to get there? And how do you think about the timeline to return to that level of growth?
Chris Smith: Yes, look, a couple of things on that. I mean, I think we do believe that business can grow double-digits. But that being said, I think we’ve got to make sure from a commercial optimization perspective that we have the right strategies in place. And I think also, some of the newer tests that we’re bringing to market, I think, are going to help us significantly. So why, Neo Comprehensive 1.0 is a broad panel. I think getting our next gen big panel out there that’s going to be one of the largest, if not the largest on the market, is going to have a big impact as well as liquid biopsy. So, I think one of the things with the pharma, is taking these new products and presenting them as new products. And then I think the other piece is, when we came in and we talked a lot about the clinical business bringing in Warren, we talked about salesforce optimization.
And when you look at the clinical group, we were below best-in-class optimized sales force or effective sales force, is probably scoring about, what 60 on the Gardner scale. And we were well below 20. And I would say we’ve got a lot of things to lift that on the clinical side. You’ve seen those financial results. I would say – we did not go through that process on the pharma side, and we’re just beginning that now. So, I think kind of the same thing with allowing Warren to get his arms around this business and understand it. But the market’s there. So the question is not whether the market’s there. The question is for us to put in the right strategies, and execute to do it. But to be fair, it’s going to take quarters to get it going. I think we did make some good strategy moves on looking at optimizing the financials around that.
Especially around the gross margin, and closing some of those out of the country, or global sites, and cutting loose some underperforming profitable customers. But now it’s about the growth and getting it back to that growth mode.
Jeff Sherman: I think the other point is we have a relatively new sales force that has come on over the last couple of quarters. And so, I think there’s also the component of this, of just the natural ramp there. And I think we have built a comprehensive sales structure, support structure under Warren on the clinical side that, will now be really available for the pharma side as well.
Mason Carrico: Got it. I’ll keep it to one. Thanks, guys.
Chris Smith: Thanks.
Operator: Your next question for today is from Matt Sykes with Goldman Sachs.
Prashant Kota: Hi guys.
Chris Smith: Hi, Matt.
Prashant Kota: Thanks for taking the questions. This is Prashant on for Matt. Lots been covered already, but despite the increase sequentially in clinical revenues for this quarter, how much erosion of clinical testing volumes could have been attributed to winter seasonality? And then, how are you thinking about investments into digital pathology, across your business?
Chris Smith: So it’s two questions. So you want to talk a little bit about that? And then I’ll give Melody the second.
Ali Olivo: Yes. I think as Jeff mentioned in his commentary, we didn’t actually see a meaningful change in our demand patterns in quarter one. And actually, just from a weather perspective, maybe there was marginally more weather phenomenon in this year versus last year. But it wasn’t materially different. And as a result, we didn’t actually see as large a dip as what we have seasonally seen in quarter one. So we saw what I would define as fairly robust volume demand, across all of our modalities in the first quarter.
Chris Smith: You’re going to take it.
