Welcome to the NeoGenomics First Quarter 2024 Financial Results Conference Call and Webcast. [Operator Instructions] Please note this call is being recorded, and an audio replay will be available on the company's website. Kendra Sweeney, Vice President of Investor Relations, you may begin your conference.

Thank you, Holly. Good morning, everyone, and welcome to NeoGenomics First Quarter 2024 Financial Results Call. With me today to discuss our results are Chris Smith, Chief Executive Officer; and Jeff Sherman, Chief Financial Officer. Additional members of the management team are available for Q&A, including Warren Stone, Chief Commercial Officer; Melody Harris, Chief Operations Officer and President of Informatics; and Ali Olivo, Executive Vice President, General Counsel and Business Development. This call is being simultaneously webcast. We will be referring to a slide presentation that has been posted to the Investors tab on our website at ir.neogenomics.com. Starting on Slide 2, during this call, we will make forward-looking statements regarding our anticipated future performance. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to our most recent Forms 10-K, 10-Q and 8-K we filed with the SEC to identify important risks and other factors that may cause our actual results to differ materially from the forward-looking statements. The forward-looking statements made during this call speak only as of the original date of the call, and we undertake no obligation to update or revise any of these statements. During this call, in order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results. The non-GAAP financial measures presented should not be considered an alternative to the financial measures required by GAAP, should not be considered measures of liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measures in a table available in the press release we issued this morning. I will now turn the call over to Chris Smith, Chief Executive Officer of NeoGenomics.

Thanks, Kendra, and welcome, everyone. Thanks for joining us this morning to go through our first quarter financial results. As always, I want to begin with our mission and vision statements because it's what motivates our company and teammates on a daily basis. Our mission at Neo is to save lives by improving patient care. And before we get into the financial results, I just want to thank our teammates for everything they do every single day to make a difference in so many patients' lives. Now let's move to Slide 4 and get into the first quarter highlights. As you can see, we delivered another quarter of strong revenue growth, growing 14% over prior year to $156 million. Clinical Services revenue increased 17% to $135 million primarily driven by execution of the commercial strategy and increased adoption of our NGS products. The compounding effect of volume and revenue cycle management initiatives, including an AUP lift, enabled NGS growth of over 50% and now is approaching 30% of our total clinical revenue. As growth rates accelerate and NGS becomes a larger portion of our base business, the comparables will become tougher as the year progresses. Advanced Diagnostics revenue declined by 3% over prior year, in part due to macro conditions in the pharma sector and margin optimization initiatives from 2023. As a business, adjusted gross profit was up 19% to $71 million, and adjusted EBITDA improved 149% or $11 million over Q1 of last year to a positive $3 million. Now on Slide 5. I'm very pleased that the first quarter continues the trend we've seen since the fourth quarter of 2022 of consistent year-over-year improvements in revenue, adjusted gross profit and adjusted EBITDA. This is especially noteworthy as we did not see the typical industry seasonality in Q1, with…

Thanks, Chris, and good morning, everyone. I'll begin with a little more detail on our operating results for the quarter. As Chris said, we started the year with revenue experiencing double-digit growth over prior year. First quarter revenue was $156 million, a 14% increase over the prior year and higher than the fourth quarter of 2023. Revenue growth was driven by growth in clinical test volume, a continuing shift to higher value tests and improvement in revenue per test driven by business mix and revenue cycle improvements. Adjusted EBITDA improved 149% from prior year to positive $3 million. Q1 marks the sixth consecutive quarter that adjusted EBITDA increased from prior year as we continue to generate significant operating leverage on our revenue growth. Looking at Slide 8, Clinical Services revenue of $135 million was an increase of 17% over prior year, driven by an 11% improvement in revenue per test and a 5% increase in volume. The optimization of our sales force, along with the increased adoption of our NGS products continues to drive higher volume growth. NGS growth continues to be strong and is helping to drive revenue growth and earnings. Turning to Slide 9. Average revenue per clinical test increased by 11% over prior year to $447, the third consecutive quarter of double-digit growth, and represents an improvement for the 12th consecutive quarter as we maintain our focus on higher-value tests and revenue cycle management initiatives. As we shared with you in the past, NGS is a strategic priority and is approaching 30% of our total clinical [ revenue ]. The focused efforts of our sales team to penetrate new and existing oncology accounts and drive adoption of our higher-value NGS portfolio accelerated NGS revenue growth. Turning to Slide 10. Advanced Diagnostics revenue declined 3% over the prior…

Thanks, Jeff. I'm very proud of our team's first quarter progress, including strong revenue growth and significant improvement in adjusted EBITDA. In addition, we saw meaningful progress in the execution on our strategic priorities. We believe we are well on our way to becoming the leading cancer testing information and decision support company. The investments we have made in our teammates, labs, commercial organization and R&D position us well to execute through the next stage of our growth. And while it's still early days, we believe the initial read on the FDA final rule is favorable to our business. I'm excited for our teammates and our customers, but most of all, for the patients we serve on a daily basis. Thanks for your time, and we'll now open it up for questions.

[Operator Instructions] Your first question for today is from Mark Massaro with BTIG.

Chris, congrats on the strong quarter in Q1. So I heard some interesting commentary about -- I think that you're starting to evaluate M&A opportunities. And then I heard that you're planning to participate in the MRD market one way or another. Those are my words, not yours. But can you just give us a sense for maybe your confidence about RaDaR litigation? And then can you speak to maybe the types of things you're looking at? Are you looking at partnerships or potential all-out acquisitions? And just give us a sense for what you're seeing in the marketplace. It appears to me that valuations are pretty depressed, so maybe an outright acquisition could make some sense.

Yes, Mark. I'm going to hit it at high level, and then I'll let Ali kind of take it because she is our General Counsel but also leads BD. So she can hit it. But look, I think all along, we talked about that the first 12 to 18 months, we're going to be very internally focused on getting the house back in order and starting to put wins on the board. And that really does is really delivering double-digit growth and improving the operating earnings at a faster rate, and that's gone incredibly well. I think that now being said, we believe there are some interesting opportunities that we think strategically would help our mission and kind of vision for the company to grow. And so Ali took on the role of BD beginning of the year. We've hired -- we brought on -- built out a team there just to start to explore this. So I think we definitely see that as an opportunity, because we really think we're very uniquely positioned to kind of lead this oncology diagnostics testing business, right, from a reference perspective. But Ali, do you want to talk a little bit more about BD and then just touch on how we're feeling about the legal [ and inventory ] here?

So I guess we'll start backwards. So there's 3 pathways that we kind of alluded to in our prepared remarks. One is obviously the litigation, and we see that via the district court matter as well as our IPRs that were filed against both patents that are asserted by Natera. The other is certainly with our R&D activity and our continued development of tests, including MRD tests. And then the third being in M&A. And that could take many forms. It can -- you're right, valuations are depressed. It could take a full acquisition. It could also be tech transfer licensing, all of these things. And so all of these pathways are viable, and we're evaluating all of them.

Your next question is from Puneet Souda with Leerink Partners.

Chris, so first one on the clinical beat that you had. It's really great to see AUP continues to work. So congrats there. But you came in $7 million ahead of us and the Street number, I believe, as well, but you're not raising the full year guide. So just wondering where is the moderation? Is it on the pharma business or on the clinical side? I know you talked about a weaker pharma environment. Obviously, we're seeing that on the pharma side, but just wondering if -- what are some things that we ought to consider?

Yes. I'm going to let Jeff kind of hit it, kind of getting into detail. But look, but high level, you did hear me just talk about not only kind of the macro issues in pharma, but also kind of some operational challenges in that business. And look, we've -- I would say from a strategic perspective, bringing Warren over to lead that business, and I think some of the strategies that we've implemented in clinical around sales force optimization and our go-to-market have worked significantly well. And Warren grew up a lot in the pharma business, key roles at Millipore and being able to call on that. And so we think that's going to make a difference in the back half of the year. But as far as specific guidance, let me let Jeff kind of comment.

Yes, sure. Thanks, Chris. Yes, so Puneet, I think as we looked at guidance, we're only a couple of months out from giving our annual guidance. I would remind everyone when we started the year, our initial guidance was over $20 million higher than consensus when we started the year. And as we looked at our Q1 performance, we're about $6 million ahead of consensus in Q1. So we had a strong Q1 from an execution standpoint. We did not see the typical seasonal slowdown in clinical that we've seen in prior years, so I think that's a testament to our commercial teams and the execution we've seen, particularly on the NGS growth side. But we also have just put the pharma commercial sales team under Warren, so we do want to give Warren a little time to get his arms around it and look at the business. We have been adding sales reps there as well. So I think more of our expectation is ADx has been a challenge over the last couple of quarters as well as what's happened in the overall macro situation. So we want to give Warren time to get his arms around the business. And we'll look how performance happens in Q2, and we'll reevaluate guidance as we exit the second quarter.

Got it. That's helpful. And then just a quick follow-up on the FDA LDT rule. I mean thanks for your comments, and it's great to see the majority of the portfolio is protected here despite the rule. When you -- Chris, when you think about the next round of tests and the products yet to be launched, for those to go through the FDA approval process, how are you thinking about the cost? Do you think it raises the cost for those, even though that process is over the next 3 to 4 years? And maybe just talk to us at a high level, how do you see this FDA LDT regulation implementation playing out?

Yes. So look, I think the ruling was very favorable. I'll start by saying that. I think also just to say that, look, we're a Board member to ACLA, and we're kind of aligned that we don't believe it's medical devices. And so we'll see how that unfolds. But as far as cost and the impact to the business, one of the things that we did as a leadership team is everybody that we brought on has come from a regulated FDA environment. So the person that runs [ QRC ] grew up in only FDA regulated. So we started probably 18 months ago of putting the systems in place, including design control and new products. And so we've been going through that process. We've got 2 key products that are under development now that are kind of running through that process. And so while there's definitely going to be costs associated with it, we believe we can manage it in the day-to-day business. There won't be a significant change to our outlook or our forecast to be able to manage that business.

Your next question for today is from Dan Brennan with TD Cowen.

Sorry about that. Can you speak a little bit just to the core clinical business? Just wondering, ex NGS, kind of what you guys saw in the quarter. It looks like the results are okay there, and kind of how you're thinking about the progression of maybe volume and price as we look out into Q2 and beyond.

Yes. Look, I mean, I did mention in our prepared remarks that we did grow in all modalities, but Warren's here, so maybe I can let Warren kind of give you the high level piece of it, and then maybe Jeff kind of around more specifics in the detail.

Yes, certainly. Thanks, Chris. Dan, Q1 was a strong [indiscernible] as Chris said. And from our data, we feel that we continue to grow from a volume perspective above market across all modalities. And that really speaks to our sort of account penetration strategy that we have from a commercial perspective. Yes, we over-index on NGS because of the relative importance of that. But the overarching sales strategy does target on sort of account ownership, and we're seeing the benefits of that to all of our modalities. And we feel, based on the fact that it's sort of broad-based across multiple customers and across the geography in the United States, that it should be sustainable.

Yes. And I think I would expect a similar kind of flow of revenue, Dan, from a quarterly perspective, Q1 is generally our softest quarter. It tends to ramp in Q2, and Q3 are in a similar range. And then we finish the year stronger in Q4. So I would expect a similar sequencing of clinical performance this year. Yes. And I guess the last thing on that, Dan, remember, we went through a field expansion where probably over an 18-month period, we doubled the size of our field organization. And so I think what you see in this business, it really does take 6 to 9 months of time and grade to get flowing from a sales perspective, whether it's new products, new processes, new customers, new business. And so I think we're starting to see the benefit of that. And to a point where I think it's something we've got to continue to evaluate is kind of what we call feet on the street, and making sure that we have the right amount of coverage because we believe the opportunity is significant. And so it's about capturing it.

And maybe just one follow-up, just on the sequencing side. So the liquid test. So is anything baked into the guide for that? I know you said it's later in '23. Like is that a fourth quarter event? Just any more color on kind of what the impact of that being from a timing perspective.

Not expecting any material revenue from that in this year, Dan.

Yes. late. It's late in the year.

The next question is from Andrew Brackmann with William Blair.

Maybe on Neo Comprehensive, I think it's been just over a year since you launched that product. Can you maybe just give us a sense of the scale for that business and that product line? And I guess just related to that, any color you can provide on sort of success rate with cross-selling initiatives or sort of what accounts we're really seeing a lot of uptick in.

Yes, Andrew, I'll take it high level, and then I'm going to let Warren kind of get in the detail to it. But remember, we've talked a lot about this that from a heme perspective, we're a market leader in NGS. But from a solid tumor, we would have very low double-digit share. So we knew that when we launched kind of that product, but let me maybe have Warren give more.

Yes. Just a correction there, for Chris, we have low single-digit share in solid tumor. You said double digits.

I am so sorry. No, I was mistaken.

We have single-digit there in solid tumor. And one of the reasons why we had low single-digit share in solid tumor is [ effectively ] we didn't have this broad CGP panel. And as you correctly pointed out, we launched this in late March of last year, and we've done an upgrade on the product as well. Our penetration continues to evolve very, very favorably. We see it coming across in 2 areas. Obviously, our area of strength lies within the hospitals, and we're tapping into that opportunity. And we estimate sort of 20% of the market potential comes from the hospital side of things. And the balance of the opportunity is the community oncologists. Sometimes they're independent, sometimes they're affiliated, but that's where we have a lot of opportunity to grow in the community oncology space, because we have largely underpenetrated for lack of a portfolio. We see robust growth quarter-over-quarter in terms of volume within that space as well. And ultimately, this is one of the leading driver [indiscernible] to the 50% growth in NGS we spoke about earlier today.

Your next question for today is from Tejas Savant with Morgan Stanley.

So maybe just to kick things off, Chris. You raised your long-term targets to north of 10% on the last earnings call. Three years out, where do you expect NGS test mix to be in terms of your clinical revenue? It's about 25% today. Just given the growth you're seeing here, is there a scenario in your mind where over the course of those long-term targets, NGS mix could essentially be approaching 50% on an ex MRD basis?

Well, look, I think when you think of it, Tejas, and you talk about it over the time line that you mentioned, we will be launching other products along the way. So for example, we're really excited about this liquid product that we're going to be launching. So there'll be new products that will come in, but without question, we believe we have a ton of runway on NGS. I mean I think all the data that we see is that NGS market is probably only penetrated 30% to 40% and growing in the 20% to 25% per year. And so we think that we will get our share of that growth. And I think as we bring out even our next large panel, we think that, that will be a product that will make a significant impact in the market. So it's hard to say percentage-wise, but I would tell you, we're starting from a low base, especially compared to our competitors. If you look at Foundation, you look at Tempus, you look at Caris. I mean, these are companies that are probably doing high, high double digits of their business in NGS and solid, and we just haven't been. So we think there continues to be a lot of runway there.

Got it. And a quick follow-up on informatics, actually. Chris or Melody perhaps, I'm just curious as to your updated thoughts there on better monetizing your informatics offering. And on a somewhat related note, you've talked in the past of your products sort of moving towards more data-intensive formats, whole genome sequencing, whole exome, et cetera. As you trend in that direction, do you envision an additional level of investment that's needed to build the infrastructure to support those back-end analytics and so forth for those kinds of tests?

Yes, I'm going to let Melody kind of get into the detail with you. But now remember, she's only had it officially, I think, for like 2 weeks. But look, I think high level, we believe that there's opportunities, especially in these markets that are growing double digits, we need to invest in them. I think our view is that we think that the business in entirety, we talk about it being portfolio has the ability to grow double digits. And so I think Informatics is no different than our other businesses where we think if we invest the right amount, we can drive growth. But some of that has to do with product and strategy. And on that, let me kind of throw it to Melody to give you kind of some more color around that.

Yes. So 2 weeks I've been here, Tejas, on this project, so just looking at it and learning, but I do feel we have quite a bit of opportunity. We are only now, with our LIMS system, really transforming the underlying system such that we have the data structured for the back-end analytics that you mentioned. And as we get into new product offerings, with whole genome sequencing, with liquid biopsy, a lot of the magic of those products is in the back-end pipeline. And so we're already building that infrastructure for that, which then also lays the foundation for us for purposes of monetizing that in a meaningful way. And so if you think about data being the new oil, this means that we're going to have more oil production coming from whole genome sequencing and liquid biopsy. So the team's very excited about those new product offerings and what then that means for their product down the road from that.

And I think from an investment perspective, we are continuing to capture gross margin savings and efficiencies throughout the company and have several different work streams going towards that. So part of those savings, we can reinvest into things like informatics and R&D as well. So there'll be profit growth from that, but there'll also be some reinvestment from some of those operational efficiencies that we garner over the next couple of quarters and years.

Yes. And speaking of the LIMS, obviously, that's going to be a big cost savings to move multiple systems onto one platform, and we've talked a lot about the LIMS, but that really is the turbocharger for informatics growth. It's been very hard from us from an informatics perspective, on multiple LIMS systems to aggregate all that data and be able to have data scientists create the things that we needed. So the LIMS project, think about it almost as an R&D campaign for informatics. It's going to create that.

Your next question is from Mike Matson with Needham & Company.

Just one on the patent litigation. So with this hearing on March 29, I guess, what is the next step? And is it just the decision on your appeal? And what's the expected timing of that decision?

I'll let Ali take that.

Sure. So yes, what was appealed was the preliminary injunction. And typically decisions take 1 to 4 months, depending on various factors, including if there's a dissenting opinion, sort of who the judges are, whether it's precedential in nature. And so we -- we're about 1 month out. And so we don't really have greater visibility into the timing other than generally 1 to 4 months, with the 4 months being if it's precedential or has a dissent.

Okay. And then with the new liquid biopsy test that you mentioned, I mean, how does that fit with the prior RaDaR? Is this RaDaR kind of 2.0? Is this something that -- would you sell both versions of the test, assuming you get the preliminary injunction overturned?

So the liquid that we're looking to launch in the latter part of this year, it doesn't relate to MRD. It's really -- it's a liquid test. It's a CGP pan-cancer liquid test that we're launching, so that we're able to offer sort of concurrent testing opportunities with solid tumor and liquid biopsy.

Your next question is from Michael Ryskin with Bank of America.

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 multiyear opportunity, but what sort of upside is left this year?

Yes. And so in terms of the pricing question, NGS continues to drive over 60-plus percent 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 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.

Understood. And sort of related to it, you've doubled the sales force and now as that team transitions to be under Warren, 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 statements?

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.

Your next question for today is from Mason Carrico with Stephens.

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 time line to return to that level of growth?

Yes. Look, I -- 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 while 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, look, when we came in and we talked a lot about the clinical business, bringing in Warren, we talked about sales force optimization. And when you look at the clinical group, we were below best-in-class optimized sales force. Our effective sales force was probably scoring about, what, 60 on the Gartner scale, 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 is 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 underperforming profitable customers, but now it's about the growth and getting it back to that growth.

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 then 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.

Your next question for today is from Matt Sykes with Goldman Sachs.

This is Prashant on for Matt. Lots have 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 in digital pathology across your business?

So it's 2 questions. So do you want to talk a little bit about that first? Then I'll give Melody the second one.

Yes. I think as Jeff mentioned in his commentary, we didn't initially see a meaningful change in our demand patterns in quarter 1. And actually, just from a weather perspective, maybe there is margin [indiscernible] phenomenon in this year versus last year, but it wasn't materially different. And as a result, we didn't necessarily see as large a dip as what we have seasonally seen in quarter 1. So we saw what I would define as clearly robust volume demand across all of our modalities in the first quarter. You want to take this?

Yes. On digital pathology, we do have a couple of internal initiatives. We do, to some extent, employ a level of digital H&E and other circling methodologies today. But to really do it at our full production scale, we're not seeing digital path AI vendors in the marketplace that have the breadth of our menu. So we're trying to figure out ways that we would piece that together in a full-scale production method. So today, we've done it opportunistically in taking some of the higher pain points and digitize that. But as far as across the board, digital pathology solutions, we don't see that they're quite out there yet today.

Your next question is from Andrew Cooper with Raymond James.

A lot has already been asked, but maybe one more on MRD and the mention of sort of the various different pathways you could go down. Just would love kind of the high-level thoughts of how you think about the value of time from that perspective. And with the trial potentially starting in 2025, with the IPRs underway, the time line of seeing those through to the end versus potentially going another route where you could do something faster, even if it maybe cost a little bit more. Just help us think about how you balance those things as you think about what the next step should be to add MRD to the portfolio from a commercial point of view.

I think it's a good question. Look, we do have a lot of confidence in the legal strategy because I think especially the IPRs, and I think that's gone kind of under the radar through all of this because we're going through the natural steps, but those are now filed to see if we can get those patents overturned. And so look, I think from a RaDaR perspective, we like that technology a lot, and the team had already started working on the next-gen RaDaR product. So I think we're not abandoning that path. But I think that being said, look, we're a company that sells over 600 cancer tests, and we know that MRD will be a product that needs to be there. But our ability -- we have multiple NGS tests, so I think our ability to evaluate other options I think is just prudent on our part. And it's one of the big projects that Ali and her team are looking at. There's a lot of interesting innovative early-stage companies out there from a technology perspective. So look, I think we would do that. As far as timing, look, I think at the end of the day, you've got to remember, a lot of that product is still not getting reimbursed. I think Natera has done a good job of MolDx and getting coverage, but if you still look at the whole industry, it's pretty deep in colorectal, but not a lot of other cases. And there are some very good companies that are bringing those products to market in the next year or 2, which we think will only grow the market at a faster rate and help adoption, especially from a payer perspective. But this is still -- so it's such early days from MRD. I think it's almost like if you would go back with NGS, 10 years ago. And today, NGS is only about 30%, 35% penetrated. So we think that this is going to be a long gain with MRD, and we believe that with being the leading cancer company, that's going to be important to us, but it's also about being prudent in making sure that we have multiple opportunities.

Awesome. That's super helpful. Maybe just one more. In terms of some of the sales force commentary, can you just remind us from a numbers perspective sort of where you sit in that precision oncology versus the traditional sort of call points and then as well in ADx and maybe versus those numbers where you'd like to be end of year or long term to the degree there's material change there?

Yes. So as Chris said earlier, we've sort of doubled our sales force in the last 18 months, which ultimately means we now have an authorization [indiscernible] that's north of 100 on the clinical side. And if you think of allocation of time, et cetera, that we apply, roughly 40% of the sales force time is now focused on the community oncology setting, with the remaining roughly 60% focused on a more traditional core point with the pathology in the hospital. So that's really the breakdown with regards to the clinical side of things. On the pharma side of things, just getting my arms around it. Today, we have less than 10 people within our commercial organization targeting our pharma customers. And I think there is a real opportunity for us to make investments here, but not necessarily what I'm going to call traditional investments. I think there is opportunities to drive a much more sophisticated sales -- commercial strategy and sales deployment to support that. So I wouldn't just think about this as scaling a number of BDs. I would think about this in a much more transformational manner and different solutions that will drive better efficiency and reduce cost to serve. So I think investment's there, but we're 2 weeks out of the [ bat ], probably a little early for me to comment.

We have reached the end of the question-and-answer session, and I will now turn the call over to management for closing remarks.

Okay. Thanks so much, Holly. And everybody, thanks for taking the time to catch up with us today. As we talked about, it was a strong quarter, and we're pleased with the progress that we continue to make, and we'll look forward to catching up with you next quarter. Thanks, and take care.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.