Myriad Genetics, Inc.

Thank you for standing by. Your conference call will begin in approximately two minutes. Thank you. Greetings and welcome to the Myriad Genetics second quarter 2021 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Tuesday, August 3rd, 2021. I would now like to turn the conference over to Nathan Smith. Senior Vice President of Investor Relations and Treasury. Please go ahead.

Thank you. Good afternoon and welcome to the Myriad Genetics second quarter 2021 earnings conference call. During the call, we will review the financial results we have released today, after which we will host a question and answer session. If you have not had a chance to review our quarterly earnings release, it can be found on our investor relations website at investor.myriad.com. I'm Nathan Smith, the Senior Vice President of Investor Relations and Treasury. On the call with me today are Paul Diaz, our President and Chief Executive Officer, and Brian Rigsby, our Chief Financial Officer. This call can be heard live via webcast at investor.myriad.com, and a recording will be archived in the Investor section of our website. In addition, there is a slide presentation pertaining to today's earnings call on the website. Please note that some of the information presented today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's transition report on Form 10-K its quarterly reports on Form 10Q, and its current reports on Form 8K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. With that, I will now turn the call over to Paul.

Thanks, Nathan. Good afternoon, everyone, and thank you for joining us. On today's call, we will walk through our Q2 results, business highlights, and the significant progress we've made on our strategic growth and transformation plan since we last spoke at our investor day in May. First, I want to thank the entire MIRA genetics team for their hard work and the work they continued to put in to fulfill our mission to improve the health and well-being of all of our patients and the extraordinary effort that has gone into accelerating the execution of our transformation plan. Together, we are delivering on our commitment to empower every individual with the genetic insights they need to take control of their health and wellness. We are dedicated to improving access to the power of genetic testing and precision medicine, and we remain committed to helping healthcare providers better detect, treat, and prevent disease. This quarter, marked an important milestone in advancing our mission and executing on our strategy as we return to non-GAAP profitability two quarters ahead of our prior expectations. An important step towards our goal of delivering long-term, sustainable growth, profitability, and value for all of our stakeholders. We are pleased with our second quarter results, especially on the heels of a solid first quarter. enabling us to deliver stronger results than anticipated in the first half of the year. This quarter, revenues of $189.4 million increased 103% year over year, and we delivered 9% sequential growth. Diagnostic test volumes of 273,000 were up 8% sequentially, largely due to the strength in hereditary cancer, prenatal products, and our gene site tests and mental health. Average revenue per test was up 2% sequentially as rates continued to stabilize. Total operating expenses were $156.5 million and adjusted total operating expenses decreased $3.9 million sequentially to $123.1 million. Our gap operating loss in the quarter was $20.8 million with adjusted operating income of $13.5 million. We returned to non-gap profitability with adjusted earnings per share of $0.12, which improved $0.18 sequentially, two quarters ahead of our expectations. While progress towards long-term profitability will not be linear, as we enter the next phase of our transformation journey, we are confident we can deliver more consistent growth while maintaining our focus on our cost structure to deliver more sustainable profitability and cash flow generations. As communicated to our investor day, we remain focused on four strategic priorities. First, we are working hard to develop best-in-class quality, service, and accessibility for our products to accelerate growth and reach more patients of all backgrounds. Second, we are enhancing our enterprise capabilities to improve the patient and physician experience, rev cycle management, commercial capabilities, and innovation. We are expanding access to our genetic insights through new digital tools and leveraging our data to elevate and expand our core products. And finally, we are committed to disciplined execution on a key set of initiatives to fulfill our mission and drive long-term growth and profitability. Over the past year, and especially the last six months, we have made significant progress in our transformation plan to better deliver on these four priorities. Phase one and two are now largely completed. And as we begin to move into phase three, we will continue to work to build a culture focused on service excellence and operational execution, improving patient and provider experience, and elevating all of our products to their full potential. We're also working to fulfill our ESG commitments with a focus on prioritizing diversity, equity, and inclusion. We are quickly ramping up phase three of the journey, where we aim to further advance our commercial strategy, accelerate growth, and begin to increase our investments in R&D, new products, and M&A. As part of our commercial transformation, we have reduced our product, R&D, and technology projects by half and right-sized a number of territories and outside sales reps, which enabled us to reduce our cross-structure. portion of these cost savings were allocated towards increasing compensation for our best performing sales teams to minimize turnover and improve engagement. Over the next several months, we will continue to roll out our enterprise commercial and product brand initiatives, emphasizing the three pillars of our brand proposition. Improving patient outcomes and experience, delivering a frictionless experience for providers, and improving access and equity care for all. We are continuing to invest in new products and expand our reach. Yesterday, we announced MyRisk with Risk Score for All Ancestries, a major proof point on our mission to expand access and reduce the racial and ethnic disparities in our healthcare system. We are accelerating EMR integrations with external support. and a plan to double the number of integrations in 2022 to improve the customer experience. And we're improving lab processes from test order to delivery so we can deliver even faster results more efficiently. At the same time, we are implementing customer segmentation, revised KPIs, and improved processes in our commercial teams. We are launching a new unified portal by the end of the year so healthcare providers can automatically order multiple tests simultaneously with a single process. With the MyRisk and RiskCore launch, we are taking an important step to increase access to genetic testing. Now women of all ancestries will have equal access to a lifetime breast cancer risk assessment score and receive the answers they deserve about their breast cancer risk. In addition, We're increasing accessibility of our prenatal offerings with a cash price offering. And finally, Prequel and Amplify will offer women of all BMI classes and indices equal quality of care and high test performance. This work aligns directly with our mission, and our teams have been working diligently to ensure smooth execution as we look for additional ways to unlock opportunities for our patients and accelerate growth. This year, our commercial transformation is focused on implementing the first phase of our new commercial model while stabilizing our operations. And while we successfully reset our base of operations in the first half of the year, this has not been without some bumps in the road as territories were reorganized. That said, our teams are settling in and we've seen less disruption than we actually expected. Our teams are winning again, signing new customers, and earning back some customers that we had previously lost. Now, with the learnings from the mental health business unit, we're moving to optimize our commercial model across the rest of the enterprise and roll out our new product brand strategy. This journey started with Genesight and our efforts to reset mental health with a new sales model and digital tools. We are excited to see continued momentum in this business, which rolled out these programs roughly two quarters ahead of the other business units. Our sales team is focused on a tighter list of higher-value target clinicians, and our medical teams are driving depth with our highest potential users. This resulted in 2,700 new ordering healthcare practitioners and a 12% increase in ordering clinicians in the quarter, representing our highest number of ordering healthcare practitioners for GeneSight in two years, and we're doing it with a third fewer outside sales reps. The success with mental health gives us the confidence in the roadmap for the transformation that is now underway in oncology and women's health. Now let me wrap up with a few exciting developments that we think will be catalysts for continued growth. In mental health, GeneSight delivered double-digit growth for the fourth quarter in a row, and our reintroduction of ADHG Genetic marker and medication testing is bringing back lost providers with results exceeding our expectations. Our improved commercial approach and sales structure has allowed us to enhance our digital presence and drive growth with lower customer acquisition costs. As a result, we're able to increase our investment in data collection, medical record integrations, R&D, and technologies. In women's health, we continue to benefit from increasing support for genetic testing during pregnancy across the medical community, most recently with the American College of Medical Genetics and Genomics, which advised that genetic testing of carriers for 110 genetic disorders be offered to all people who are pregnant or considering a pregnancy. This expands from the prior recommendation for more limited carrier screening and only for certain ancestries. While recognizing that it will take time for some payers and providers to embrace the new guidelines, we expect both demand and coverage to increase over the next 12 months. We see the potential to further penetrate the general prenatal carrier screening market as well as better coverage and reimbursement extend. Prenatal momentum was solid with the business outperforming expectations driven by both ASP and volume increases. as a result of the continued success with Amplify, which further increases the performance of prequel for non-invasive prenatal screening tests. We're excited that Melissa Gonzalez, our new women's health leader, brings significant industry and commercial experience with a strong background of success to the business unit. We expect continued benefits from improved focus and execution of our commercial transformation in women's health in the coming quarters. Yesterday, the launch of MyRisk with Risk Score provides a breast cancer risk assessment for all women not previously diagnosed with breast cancer. Risk Score offers a breast cancer risk assessment score designed to improve patient outcomes and help minimize healthcare disparities. And lastly, we are on track to launch the next generation prenatal test combining prequel and foresight in 2022. In oncology, hereditary cancer benefited from stronger than anticipated volumes, as well as strong cash collections on orders reported prior to Q2. Hereditary cancer volumes grew 7% sequentially, despite considerable alignment changes to most of our territories and a significant reduction in our field sales force in April. We had our best quarter ever with tumor profiling volume growing 13% sequentially, which is above our expectations, driven by My Choice CDX and Polaris. We also continue to make progress in the evolution of our offerings and have had a positive response to our new branding and strong interest in our new product that combines germline and tumor profiling into one powerful solution. We are making steady progress across all of our business units, and our financial results are starting to show and provide us the momentum going into the second half of the year. I'll turn it over to Brian now, who will cover the second quarter financial results in detail.

Thanks, Paul. I am pleased to provide more detail on our quarterly results and business highlights. As Paul mentioned, we had another impressive quarter, reporting total revenue of $189.4 million, which increased 9% sequentially and 103% year over year. Our quarterly results benefited from higher than forecasted test volume, as well as $13 million in revenue from better than expected collections on tests reported in prior periods. Total test volumes increased 70% year-over-year and 8% sequentially. Importantly, our organic ASP was stable sequentially. We saw sequential improvements in cash collections for our hereditary cancer, pharmacogenomics, and prenatal tests in the quarter attributable to our focus on improved revenue cycle management and reducing zero pay tests. Lastly, we returned a positive adjusted earnings per share of 12 cents ahead of our expectations. During the second quarter, adjusted gross margin was 72.1%. Adjusted gross margin improved 70 basis points sequentially, driven by test pricing and molecular diagnostic revenue mix, partially offset by lower margin pharmaceutical and clinical service revenue. Total adjusted operating expenses decreased $3.9 million sequentially to $123.1 million. We remain focused on driving profitable growth and expect increased commercial leverage as we transition through fiscal year 2021. I would now like to discuss the revenue for our products, starting with hereditary cancer. Hereditary cancer in the quarter was $86 million versus $39.9 million in the second quarter of last year. Looking at the components of the change, total test volumes increased 101% and average selling price increased 8% year over year. During the quarter, revenue and selling prices benefited from better than expected collections on tests ordered in prior periods. On a normalized basis, average selling prices were up slightly. In mental health, pharmacogenomic revenue in the quarter was $22.6 million versus $8.5 million in the June quarter of last year. representing double-digit growth four quarters in a row. Looking at the components of the change, test volumes increased by 161% year over year, and average selling price was relatively consistent year over year. From a volume perspective, we saw total gene site orders increase 22% sequentially. I want to call out the mental health business unit hit non-GAAP profitability in Q2, allowing for increased investments in data collection and is operating at and above pre-pandemic levels. In women's health, revenue in the quarter was $67.3 million versus $30.2 million in the June quarter last year. Prenatal screening revenue was $29.4 million compared to $16.6 million in the same period last year. test volumes in the quarter increased 31% year-over-year, and average selling prices increased 36% year-over-year. On a normalized basis, excluding the benefits from better-than-expected cash collections on test order in prior periods, average selling prices were up year-over-year due to improved revenue cycle processes. Test volumes for prenatal also increased 4% sequentially. The outperformance was driven by continuing success with Amplify. We anticipate this momentum will continue with yesterday's announcement of the launch of MyRisk with RiskScore for all ancestries, the first and only hereditary cancer test offering a personalized answer for up to 100% of all eligible unaffected patients regardless of ancestry. In oncology, revenue in the quarter was $76.3 million versus $34.6 million in the June quarter last year. Tumor profiling revenue in the quarter was $29.2 million versus $10.5 million in the same period last year. Tumor profiling test volumes increased by 41% year over year and by 13% sequentially. The improvement in average selling price year over year was primarily attributable to the new Medicare LCD for the Polaris test in the tumor profiling category, which took effect in December of 2020. Sequentially, average selling prices were down due to non-recurring $7 million of back pay for Polaris that was recorded in the March 2021 quarter. I would now like to discuss our financial metrics for the second quarter of 2021. Adjusted gross margins were 72.1% and increased 70 basis points sequentially, driven by test pricing and molecular diagnostic revenue mix, slightly offset by increased lower margin pharmaceutical and clinical service revenue. We are continuing to look for ways to further improve efficiency. Total adjusted operating expenses in the quarter were 123.1 million compared to 99.2 million in the June quarter of last year, an increase of 23.9 million. On a sequential basis, total adjusted expenses decreased by 3.9 million, which was attributable to improved operational efficiencies as a result of our strategic initiatives. Given the continued unpredictability surrounding the COVID-19 pandemic and the impact it has had on the healthcare environment, customer behavior, and the ability to market test to physicians, we are not providing guidance for the quarter ending September 30, 2021 or fiscal year 2021 at this time. Moving forward, as we think about the third quarter, I would like to highlight a couple of points that are important to consider. First, our current quarter included $10 million of revenue from RBM that will not be recurring in the third quarter due to the divestiture closing on July 1. In addition, in the second quarter, we had $13 million in positive revenue adjustments related to cash collected on tests from prior periods. The benefit from the positive cash collections is approximately $0.13 contribution to earnings, and RBM had relatively no impact on earnings. I want to also remind investors that the third quarter is impacted by summer seasonality and may be impacted by the recent surge of the COVID-19 Delta variant. We have made progress on our previously announced divestitures. On May 28, we closed the sale of MyPath to Castle Biosciences for $32.5 million in cash. On July 1st, we closed the sale of RBM to Q2 Solutions for $198 million, and we remain on track to close the myriad autoimmune divestiture, including the vector test for rheumatoid arthritis by the end of the third quarter. These divestitures allow us to increase focus on our core business segments, which have the greatest growth opportunities. while also providing capital for investment in R&D, technology, and commercial efforts. We are approaching this reinvestment carefully in line with our goals to improve profitability and cash flow generation. We ended the quarter with $184.3 million in cash, cash equivalents, and investments, while using $50 million to pay down debt in the quarter. The balance outstanding on our revolving credit facility was $106 million as of June 30th. In July, the company paid down the remaining balance outstanding under its credit facility. We expect to receive $348 million in gross proceeds during the third quarter from the divestitures of RBM, which closed on July 1st, and Vectra in 3Q, which will strengthen our financial position and provide the financial flexibility to invest in the business and deploy capital as a means to enhance growth. I'll now turn it back over to Nathan for the Q&A.

Thanks, Brian. As a reminder, during today's call, we use certain non-GAAP financial measures. A reconciliation of the GAAP financial results to the non-GAAP financial results and a reconciliation of GAAP to non-GAAP financial guidance can be found under the investor relations section of our website at www.meri.com. Now, we're ready to begin the Q&A session. To ensure broad participation in today's Q&A session, we are asking participants to please ask only one question and one follow-up. Operator, we are now ready for the Q&A portion of the call.

Thank you. So, everyone, to register a question, press the one followed by the four on your keypad. You'll hear a three-tone prompt that acknowledges your request. If your question has been answered and you would like to withdraw your registration, press the one followed by the three. So, again, for questions, it's one of four. Our first question is from Sung Gi Nam with BTIG. Please go ahead.

Hi, thanks for taking the questions and congratulations on the quarter. So my first question, Paul and Brian, could you talk about your go-to-market strategy for your comprehensive genomic profiling platform that you're going to launch next year in collaboration with Intermountain Health? I'm just kind of curious if you have some early access sites in mind and also some whether you can leverage your current sales channels.

Yeah, thank you for the question. Probably a little early to talk about the launch, but we're on track, doing a lot of great work with KOLs. The team is really, I mean, one of the things that we've insisted upon, and we were talking about this earlier today, is a better go-to-market with our new product offerings. up and down the organization. You know, we are really excited about this opportunity. We think it provides a differentiated experience for providers. It's one of the things that we've talked about that the ease of use is important. And so bringing the different tests together into one product offering and one easy or better to understand report reconciled by us, we think will be really compelling. And so we're excited about that. But we're a quarter or two into next year before we launch. We'll probably be able to talk more about that early next year.

Yes. And Sanjeev, the only thing I would add is just referencing the channel. I think there has been a little bit of confusion by some We'll offer this broadly across our entire oncology footprint across the U.S., not just within the markets that Intermountain serves. So it will be an opportunity for us to leverage our commercial channel broadly.

Gotcha. That's helpful. And then my follow-up is I was wondering if you guys might be able to provide any updates in terms of the progress you're making on the private payer coverage side for Genesight. Great to see a nice rebound there in that business. Just kind of curious what kind of progress you're making there.

Nothing material to report. You know, we've had some recent successes, a couple of blues plans. But again, I think embedded in our sequential results here that we are making progress across the provider community, particularly with primary care folks and nurse practitioners. who in the context of the mental health crisis in America are really looking for solutions like this. And so we're excited just to be part of the answer to that mental health crisis. But the team continues to make progress with several payers and we have some new evidentiary endpoints that we'll talk about next year in terms of some studies which I think will accelerate that use. We're seeing broadly a lot of excitement about GeneSight, you know, from all aspects of our business.

Great. Thank you.

Sure. Thank you.

So, again, for questions, it's 104 on your telephone. Our next question is from Andrew Cooper with Raymond James. Please go ahead.

Hey, thanks for the question. I guess maybe first – kind of into the nitty-gritty a little bit on the P&L, but also at a higher level. The $13 million you called out in terms of improved collections, you've talked a lot about making changes in the revenue cycle. Is there something we should think about being sort of sustainable here? Is there a change to how you think about what you accrue? And how do we think about these rev cycle improvements continuing to flow through the model, continuing to flow through the top line? and then eventually sort of getting lapped. Just help me think about what the trajectory and benefit from that looks like beyond just 2Q, I guess, is the question.

Sure. Thanks, Andrew. I'll take the question. Yeah, I think the answer is that we would expect to see ongoing positive impact from the initiative that we've launched around our revenue cycle. I think we provided some data on this slide that showed 4 million of positive impact in the December quarter and 13 million last quarter and 13 million this quarter. And so we expect that there will be some portion of that, maybe not 13 million, but some portion of that that will absolutely be ongoing and recurring and ultimately impacts our accrual process and our accrual cycle. there's a bit of a tail on this in terms of, you know, as you showed and demonstrate experience relative to the sales, the collection. But I think broadly what I would say is, you know, it gives us a lot of confidence as we think about our, you know, three to 5%, you know, sort of price decline that we've talked about over the next couple of years in terms of the success that we've had. And I think we'll continue to have, you know, as the project, you know, continues, I mean, we're, we're, really kind of in the early innings of it, relatively speaking, and would expect to continue to see improvement over time.

Okay, great. And maybe just to follow up, thinking about the commentary around seasonality, around potential COVID impact, is there any flavor you can give us for what the month of July has looked like in terms of has there been any pressure in the back two weeks or anything like that to think about just in terms of pandemic impact?

Nothing particularly to call out. Just like everyone, we're anxious about what's happening in America today, and we've got to take some extra precautions, even as we were sort of moving to a hybrid model. But July and August are vacation times, and people are getting out, and so that's our normal seasonality. And I think we should all be cautious about the Delta variant and how it plays out over the next several months. And so that's really all we wanted to remind investors. This is our seasonably softest quarter. And, you know, we've got a real crisis going on in America today that we should be mindful of in terms of expectations.

Okay, great. I'll stop there. I appreciate the questions.

Thank you.

Next question is from Matt Sykes with Goldman Sachs, and that line is open.

Hi, Matt and Brian. Thanks for taking my question. How are you doing? I just have a high-level question. So the growth at Genesight was impressive, and obviously, as you pointed out, the first one to really start to see benefits from your commercial approach. You know, how easily can we extrapolate the changes you made in the commercial approach at Genesight to the other areas? Are there certain parts of the Genesight market or that mental health market that might not be easily extrapolated in terms of your commercial changes that you'll make into women's health and oncology, or can we read success there as something that is just a matter of time as you roll that out into other areas?

Yeah, I'm not sure if I extrapolate the 22% growth, but Matt, you and I talked about this several weeks ago. We're very excited that our team is embracing change. The dislocation around sales territories and all that is behind us. The oncology and women's health teams are in this week, actually, for business reviews and meeting with the sales managers. People are fired up. We're winning customers back that we had lost. We're winning new customers, and we're just starting to roll out the segmentation work that Bain is helping to facilitate. So, again, the mental health business is a couple of quarters ahead, and as we had committed to that we believed and that we were going to be able to manage through this change without significant disruption, and that's kind of what has happened. At the same time, we've become more productive, and our customer acquisition costs are dropping, which allows us to invest in more digital tools. So we do expect that particularly in the women's health group, but even in the very competitive oncology space, that will continue to gain traction in the back half of the year in terms of growth. It will continue to see growth in hereditary cancer. We're very excited about the early progress in tumor profiling and the new offerings there that we just spoke about a couple of minutes ago. So as you and I and Brian spoke about several weeks ago, we do think building the platform and now extending it over the entire enterprise will prove to be successful and accelerate growth in the second half of the year. And, again, none of these things that we are doing are novel in American business. These are things that other companies have been doing for a long time, and, you know, our team is embracing those changes.

Thanks for that detail, Paul. And then just quickly, just, you know, a good quarter from MyChoiceCDX. Could you just talk about the volume trends there and what's driving that?

Well, we've had tremendous success in Japan in particular there, but MyChoiceCDX is a really differentiated product. And again, it'll help our combined offering, our tumor profiling and germline test that we were talking about earlier. That's a big piece of why we think that'll be differentiated. And we're really starting to think about new opportunities for MyChoiceCDX and other companion diagnostics in focused areas So we would expect to, we'll be talking more about opportunities and companion diagnostics, you know, next year.

Thanks very much, Chris. Next question is from Derek DeBruyn with Bank of America. Please go ahead.

Hi, good afternoon. This is John on for Derek. I wanted to ask, about the gross margins as you guys have completed two of the divestitures and as we look to see the other divestiture happening in the next couple months? How should we think about the gross margins going forward?

Yeah, thanks for the question. You know, I think, you know, I would highlight the forward look that we gave in terms of improvement of gross margins 100 to 150 basis points over time takes into account the fact that we would be divesting those businesses, which for the most part, we're at lower gross margin rates than our core. So that's sort of factored in there. I don't know that there's a lot more than I could add. We were happy with the 70 basis point improvement that we saw in the current quarter sequentially, but that really only was impacted by the MyPath you know, acquisition or divestiture, which was relatively small. But I think in general, I just think of it as, you know, still being on that trajectory of 100 to 150 basis point improvement over time.

Gotcha, gotcha, gotcha. And then, yeah, the new MyRisk with the risk score, that sounds like good news, but In terms of the impact on the hereditary testing demand, is there anything material that we should note?

Yeah. Look, I think, as we talked about previously, MyRisk is one of the most accurate products in the marketplace. MyRisk, with risk score for all ancestries, really differentiates the product and gives as we've talked about, all women insights into their risk around breast cancer. And so this is really about an enhanced market positioning for MyRisk, which you get risk score for all ancestries with MyRisk. And it's another tool or arrow in the quiver of our sales force to grow hereditary cancer. And we believe it's going to be an important one and accelerate growth in the back half of the year going into next year. It just further differentiates risk-core and provides socially a responsive answer to making genetic testing and precision medicine available to people of all ancestors, not just people of Eastern European descent. So that just broadens the field of play for us, if you will, and rightly so.

Gotcha. Thank you.

Sure.

Next question is from Jack Meehan with Nefron Research. Please go ahead.

Thank you. Good afternoon. I was hoping, Brian, you could break out of the 13 million of out-of-period sales, how much were in hereditary cancer testing? And do you think this $86 million is a good number to grow off of moving forward?

Yeah, thanks, Jack. Yeah, let me give you a little bit of the detail on the out-of-period. So of the 13, I would sort of characterize it as about six was related to hereditary cancer, about five was related to prenatal, and about one was related to gene site. There's some rounding in there. It doesn't come right to the 13. But as I said earlier, you know, on the call, I think there is some portion of the, you know, the 13 that is sustainable because we're continuing to make improvements in our process. And we would expect to continue to make progress over the back half of the year. I don't know that I would say that it would all, you know, be recurring in terms of the entirety of the 13. So, you know, somewhere between 80 and 86, if I were to use the math I'd given you, would probably be the right way to think about it.

And just looking at the aggregate hereditary number, you know, if I look back two years ago in the June quarter, put up 119 million of sales, 86 million this year, obviously encompasses the pandemic period. You know, do you think that this business has started to level off and can grow or, you know, is there, you know, some other theme at play?

Yeah, I think so, absolutely. And that's what we said it would do. I mean, I think if you look back at 2019, especially this quarter, I think we were still in the midst of some of the reset relative to pricing. And what we've said is that we've now sort of seen stabilization and in our sort of average ASP and, you know, certainly been supported by collections. But I think with stable pricing and then that hereditary cancer volume number grew about 7% to 8%, you know, in the quarter across women's health and oncology, you know, I think that's evidence of the fact that the business, you know, can grow from here.

And the only thing I would add, Jack, is, you know, we're even more confident in the numbers we talked about the investor day, our ability to grow top line 8 to 10 percent, inclusive of continued pricing declines of 3 to 5 percent, and our ability to improve gross margins and manage our OpEx. And there's tremendous leverage in our operating model. And now we're at a point of inflection that, quite frankly, ahead of schedule that we can really turn our attention to accelerating investments in R&D, new products, and all the things that we would hope to do to accelerate growth even beyond the 8% to 10%. But we absolutely believe that we can continue to grow hereditary cancer and our other products within the product categories and meet those objectives that we set out.

Great. And if you don't mind me asking one more question on hereditary, I'm sure we'll see when the 10Q comes. It seems like you've been putting up kind of steady growth in international markets. This has been something you've talked about for a long time as an opportunity, but it seems like, you know, over the last year or so, it's finally really started to kick in. Can you just elaborate on what geographies you think this is resonating and how much durability that trend has?

It's principally Japan, but we're excited about the repositioning of our international operations. We see more opportunities and increasing more opportunities with more pharma partnerships. So, again, it's all part of the overall opportunities we see with Polaris and our other products as well, where we're making great traction. So, again, we're excited about our future. We've reset our base of operations, and I think we've demonstrated the ability to drive from the top to the bottom line you know, growth and profitability. And as Brian talked about, you know, we're debt-free. We're generating cash flow. We're going to end up the year with a lot of dry powder to invest going into next year. You know, you can do the math in terms of, you know, it's $4 to $5 per share potentially. So we've got a lot to be excited about.

Thank you, Paul.

Thanks, Jeff.

No further questions from the phones.

All right.

Well, thank you for our – this concludes our earnings call. A replay will be available via webcast on our website for one week. And thank you again for joining us this afternoon.

Yeah, thanks, everyone. Appreciate the support and participation today. And, again, a big shout-out to our teammates who really made this quarter happen. So thank you all for listening in today.

And that does conclude our call for today and we thank everyone for participating and you may now disconnect.