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spk08: Good afternoon and welcome to the invitee third quarter 2023 financial results conference call. My name is Carla and I will be your operator for today's call. We will have a Q&A session following your host's remarks. To register your question, please press start followed by one on your telephone keypad. If you wish to revoke your question at any point, please press start followed by two.
spk06: Thank you, operator, and good afternoon, everyone. Thank you for participating in today's call. Joining us today are President and CEO, Ken Knight, and our new CFO, Anna Schrank. Before we begin, I'd like to remind you the various remarks that we make on this call are not historical, including those about our vision and business model, future financial and operating results, future products, services, our product pipeline and the timing, expectations of future growth, reduction in burn rate, and discussions with our stakeholders. and operational improvement in cost reduction efforts. Certain points we make will constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act. It is difficult to accurately predict demand for our services, and therefore our actual results could differ materially from our state outlook. Statements on future company performance assume, among other things, that we don't conclude any new business acquisitions, investments, restructuring, or legal settlements. We refer you to our most recent 10-Q and 10-K, in particular to the sections titled Risk Factors, for additional information on factors that could cause actual results to differ materially from our current expectations. These far-looking statements speak only as of the date hereof. To supplement our consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States, or GAAP, We monitor and consider several non-GAAP measures. We encourage you to review our GAAP to non-GAAP reconciliations, which are available in the press release and in the appendix of the earnings slide deck, both of which you can access by visiting the investor section of the company's website at ir.mbj.com. Today, Ken will provide an update on recent events and operational news during the quarter. Ana will cover the financial details and key metrics, as well as our 2023 guidance. We will then conclude the call of Q&A. With that, I'll turn the call over to Kim.
spk01: Thank you, Hokie, and welcome everyone who joined us today. Q3 was another productive quarter for us, where we met or exceeded consensus estimates and key performance metrics. Our pursuit of higher quality revenues and lower unit costs resulted in continued gross margin expansion. We have improved our non-GAAP gross margins for nine consecutive quarters. and hit 52.4% this quarter, which represented a 250 basis point sequential expansion from Q2 2023. Operational improvement efforts and expense control have resulted in a reduction in ongoing cash burn of approximately 60% in the first nine months of 2023 versus the same period last year. We are on track for our full year 2023 cost reduction commitment. Revenues for the quarter were $121.2 million, an increase of approximately 4% year-over-year on a pro forma basis, and an improvement from the second quarter, which saw roughly 1% pro forma growth. Rare disease led the way with 44% year-over-year revenue growth, followed by women's health with 21% growth. Oncology saw a 7.5% year-over-year pro forma decline. influenced by lower fee-for-service revenue as we work to rebuild that pipeline, and impacted by commercial insurance payment headwinds for hereditary cancer. Oncology did see a 3.3% sequential revenue growth from Q2 2023 and was bolstered by an 11% volume growth for hereditary cancer in our U.S. market on a pro forma basis. Regarding the commercial payment headwinds, we have devoted significant resources to tackle this issue to improve payment collections, and we are seeing progress. In the second quarter, we reported a negative impact of approximately $5 million to the revenue line, and that number decreased to about $2.2 million in Q3. We believe that we are going to continue to see positive results in the fourth quarter and into next year. We are encouraged by these improvements and also recognize there is still much work to do on our journey. Today, you will see going concern language in our 10Q. Since our realignment in July 2022, our entire team has been executing on the initiatives and actions needed to improve the health of the business. Those efforts have been productive and will continue. We are creating plans that will, over the next 12 months, further reduce operating cash burn and improve the company's liquidity. This is a top priority, and we are actively engaging with our stakeholders in seeking constructive feedback and solutions. Our board of directors has formed a special committee to focus on addressing our capital structure needs. With our board, we are exploring a number of options, which could include raising capital, addressing our debt, selling certain assets, and continuing operational improvement and cost reduction efforts. Moving to slide six, I want to highlight a few of our recent wins. In the third quarter, we secured the first of its kind, SBA authorization for our common hereditary cancer panel. We are proud of this accomplishment, as Invitae was able to establish a new category of device based on our technology and methodology. We submitted a de novo application in 2021 using this panel as an example of a methods-based approach to validation. It was a voluntary submission, and our goal was to guide the agency's understanding through the submission and review process. As such, the FDA worked closely with us to review the test and our supporting data, which led to this market authorization. Meeting the agency's stringent requirements is a testament to our product and to our labs, processes, and quality. Importantly, this decision sets the bar for expected performance and the associated data required for future regulatory approval of similar products. As for the next step, our teams are working through the implications of offering an FDA authorized assay as it relates to our operations, development, and potential commercial benefits. We also believe that this decision serves as a proof point that we will remain very well positioned should the regulatory landscape surrounding laboratory-developed tests change in the future. In the third quarter, we also reached 4.4 million patients served across a diverse spectrum of clinical areas. Of these patients served, 64% are available for data sharing. We continue to believe that this breadth of patient data will further strengthen our variant interpretation capability, and we are well positioned to provide the highest quality of clinical interpretation at an industry-leading scale. And as I already mentioned, our efforts to improve revenue cycle management and cash collections also continue to gain traction during the quarter. Finally, we recently had an exciting update in which we received clear approval on our submission for our enhanced personalized cancer monitoring assay. On to slide seven. The enhanced PCM assay is expected to benefit our customers and patients as well as our business. And all migration steps required for the chemistry and internal processes have been completed seamlessly. We are running the enhanced assay going forward And here are a few of the benefits. We have reduced the number of steps in the PCM workflow, increasing capacity and lowering the burden of materials and labor costs. The process now lends itself to automation, enabling scale and supporting our future growth. From a performance perspective, we were able to lower our limit of detection, potentially improving lead times. This enhanced assay is able to achieve the same sensitivity as the prior version with less cell-free DNA, enabling us to test samples that may have previously been rejected. As part of the submission, we have also validated whole exome sequencing as a standalone comprehensive genomic profile to permit reporting of tumor profile, enabling us to add new products to our oncology menu. And finally, We are confident that the enhanced chemistry addresses the primary matters arising from the ongoing Natera litigation, providing us an even more differentiated solution. Overall, we continue to have strong confidence in our ability to operate, and most importantly, our ability to continue offering PCMs to pharma partners and patients as we rebuild our fee-for-service pipeline. Longer term, We continue to see synergies between hereditary germline and somatic products. Study after study concludes that the combination of the two datasets results in superior decision-making in cancer care. Our ability to do both types of testing on one platform anchors one of the most comprehensive offerings for a physician and patient considering treatment options for cancer. Before I hand the call over for the financial discussion, I'll note that we have added some fantastic talent to our executive leadership team since our last call. Over the past few months, we announced the appointment of Robert Geigle as our chief commercial officer, Anna Schrenk as our chief financial officer, and David Sholovar as our incoming chief operating officer. They each bring extensive and relevant experience. And I'm confident that they will deliver long-term value to our team. And with that, I will turn to Ana to discuss the financials. Ana?
spk07: Thank you, Ken. I'm pleased to be here to discuss our fiscal third quarter results, which as you mentioned, reflect solid progress toward our goal of reducing cash burn. Revenue decreased 9% to $121 million. primarily due to the exit of certain product offerings, including the RUOKIT and IVF products and certain international geographies as part of the realignment we announced in 2022. When excluding the impact of those exited businesses, revenue increased approximately 4% year over year and was roughly flat from last quarter. Looking at the revenue breakdown, oncology, including hereditary cancer and fee-for-service TCM testing offered to pharmaceutical partners, generated $62 million. Women's health, including carrier testing services and noninvasive prenatal screening, generated $27 million. $23 million was generated from our rare disease business, including neuro, cardio, pediatrics, and other testing products. Data and patient network revenue was approximately $9 million. This includes our sponsored testing programs, data management, and a number of data partnership projects. As I mentioned earlier, pro forma revenue increased approximately 4% year over year and was roughly flat sequentially. We also exited our PGX testing during the third quarter, which did not have a material impact on revenue. For your reference, if we exclude PGX revenue, our third quarter year over year and quarter over quarter pro forma revenue growth would have been 40 and 30 basis points higher, respectively. Looking at the details of our revenue composition, oncology revenue of $62 million improved sequentially, primarily due to higher fee-for-service PCM revenue this quarter compared to last quarter. Compared to approximately $67 million of oncology revenue a year ago, The year-over-year decline was largely attributable to reimbursement pressure on hereditary cancer testing, as well as weaker PCM revenue. As Ken mentioned earlier, we are working diligently to build back our pipeline. Women's health grew 21% to $27 million, led by our carrier screening product, as well as continued improvements in APT. In our rare disease business, pro forma revenue grew approximately 44% year-over-year, driven by continued penetration of neurodevelopmental and pediatric panels and testing for rare cardiac conditions. Our data and patient network business declined by about $2 million year over year, primarily due to our focus to drive more profitable sponsored testing programs. Moving to slide 11, third quarter non-GAAP gross margin was 52.4%, which improved year over year compared to 45.9% in Q3 2022 and sequentially compared to 49.8% in the second quarter. Third quarter non-GAAP operating expenses were $122 million or 101% of revenue. While OPEX is still higher than we want, our continued cost control measures resulted in improvements compared to OPEX of $150 million in the third quarter last year, which was 112% of revenue, and $158 million, or 131% of revenue, compared to Q2 of 23. On a GAAP basis, we incurred restructuring, impairment, and other costs of $877.3 million related to impairments and losses on disposals of long-lived assets net. We ended the third quarter with $265 million in cash, cash equivalents, restricted cash, and marketable securities, compared to $596 million at September 30, 2022. We can proudly point to nine quarters of non-GAAP gross margin expansion. In the third quarter, the margin expansion was due to improvements in revenue management, successful efforts to drive costs out of the system via supply chain, and other operational and process efficiencies. Third quarter ongoing cash burn, as defined on slide 13, was approximately $64 million. This represents an improvement of 41% compared to the same period last year. The increase in sequential cash burn this quarter includes the impact of approximately $5 million in a semiannual interest expense payment, approximately $4 million related to a contract renegotiation, another $4 million in acquisition-related payments, partially offset by around $3 million resulting from improved ESO. As Ken mentioned, we are actively assessing the operational and liquidity measures necessary to address the going concern language in our 10Q. We are working closely with our stakeholders to understand the options that can help extend our cash runway and optimize our current balance sheet. Currently, we have sufficient liquidity to operate as usual and continue to service our customers, partners, and financial obligations as we chart the path forward. Our third quarter key metrics are on slide 14. Revenue per patient is measured by total company revenue divided by the number of ordering patients for the quarter. In the third quarter, revenue per patient was $474 versus $459 in the prior period. This improvement was based on stabilized hereditary cancer payments, as well as the company's billing and collection initiatives. Variable cost productivity continued favorable performance in the quarter, As we found efficiencies in our cost of goods sold that helped to drive higher margin cash burn as a percent of revenue picked up in the quarter for the reasons we mentioned on the prior slide. We are reaffirming guidance and anticipate 2023 revenue to be in the range of 480 to 500Million dollars. And non gap gross margin in the range of 48% to 50%. In 2023, as a result of the voluntary repayment of our term loan and the related prepayment penalty in the first quarter, reported cash burn will exceed ongoing cash burn. We are reaffirming our ongoing cash burn guidance range of $220 to $245 million, which as a reminder was adjusted downward after the second quarter. Our cash burn target represents more than 50% improvement from 2022. Before I hand it back to you, Ken, I just want to say it has been great getting to know my colleagues here at Invitae the last few weeks, and I look forward to meeting and interacting with many of you going forward. Ken?
spk01: Thanks, Ana. To summarize the Q3 results in today's call, we are reaffirming our full-year financial guidance. Non-GAAP gross margin expanded for the ninth straight quarter. Increased resources and efforts to improve payment collection are showing progress already. And we achieved two regulatory wins with the FDA authorization of our hereditary cancer panel and the CLIA approval on our submission for the enhanced PCM assay. As we look to close out 2023, our operational performance continues to improve. Our team is focused on the things in the short term that we can control. and we are committed to addressing the challenges that remain as we determine the best path forward in order to achieve our mission to serve many more patients ahead. Operator, I'll now hand it over to you for questions.
spk08: Thank you, Ken. If you would like to ask a question today, you may do so by pressing star followed by one on your telephone keypad. When preparing for your question, please ensure your device is unmuted locally. And if you wish to revoke your question, please press start, followed by two. Our first question today comes from Isabelle Krug from LeanRank Partners. Isabelle, your line is now open. Please go ahead.
spk04: Hi, guys. This is Isabelle from LeanRank Partners. This is for earlier with the announcement for the chemistry enhancement, the MRD test. Could you perhaps maybe speak to how this helps address the Natera IP and litigation concerns? And if you don't mind clarifying if these are the same .
spk01: So, Isabel, this is Ken. I'm sorry I was having difficulty hearing you. I think your first part of the question was relative to the enhanced PCM assay and how it addresses the Natera litigation. Obviously, there's still ongoing litigation with that. In terms of specifics, I'm not going to be able to go into a lot of specifics about the differences between the chemistry and how it differs from the patents that are under dispute. But we are confident that the enhanced chemistry and the process changes we've made, knowing what those that the items on the dispute were, that it disappropriately addresses it.
spk04: That was helpful. The second part to my question was whether the redesign was planned for the commercial assay as well, and if we can expect to see that.
spk01: Yes. So the assay, the enhanced assay is our assay that we're going to be operating in going forward. And so as we prepare for commercialization of our PCM product, our MRD product, it will be based off of the enhanced assay. Thank you.
spk08: Thank you, Isabel. We will now take our next question from Dan Brennan from Cohen. Dan, your line is now open. Please go ahead.
spk00: Hi, this is Tom Stephens on for Dan. It was more a question on the guide. So, you know, clearly you reaffirmed it, but that seems to be in some sequential acceleration. So I guess if you could talk through some of the puts and takes kind of behind that, and then I've got one more follow up.
spk01: Yeah, so we're seeing, you know, we talked about already that we've seen the sequential growth already taking place, especially in our hereditary cancer business. We talked about double digit volume growth quarter over quarter. And so we expect that that's going to continue. And then the combination of the work we're doing on our collection and reimbursement, our average payment per test, gives us confidence that the fourth quarter will continue to have sequential growth in revenue. And, you know, we talked about our rare disease business and how it's doing on a pro forma basis year over year and, you know, 40, 44% revenue growth in women's health and 21% revenue growth in hereditary cancer with double digit volume growth and getting better quality revenue. we have a lot of confidence that the revenue guide that we have is what we're going to be able to achieve.
spk00: Great, that's helpful. And I guess just kind of jumping off that, kind of stepping back, as you have these conversations with your stakeholders, have you settled down to a kind of revenue growth rate you feel is sufficient to kind of potentially meet
spk01: know cash band requirements and and credit requirements going forward without getting into a lot of details i mean i think i must respect the process as we're working with our stakeholders um our stakeholders are asking the right kind of questions and i think we are providing them sufficient information to the responses to those questions and so um you know they I am confident in the process and the relationship that we have. We're working together. They're asking good questions. And we're determined to continue to map a path forward for our company to continue to build upon the work that we've already done. I just got to say that, you know, the work we've done to this point is a representation of just the dedication and the grit of ambitions in our company. The team has worked extremely hard and we've made some tough decisions and we've been able to execute extremely well. And so that goes without saying that, you know, our team has really delivered on what we set out to do for 2023. And we like our momentum going into the last part of the year.
spk00: Great. Thanks very much. Thank you.
spk08: Thank you, Dan. Our next question comes from Tejas Savin from Morgan Stanley. Your line is now open. Please go ahead.
spk09: Hi, this is Madison on for Tejas. Congrats on the quarter and thanks for taking the questions. Maybe just firstly, within ecology, I was wondering if you expect the delayed payment from the commercial insurance payers to be resolved by year end. It sounds like it is improving. Or if you do expect any spillover as we think into next year. And then can you kind of quantify the impact of your guidance at the midpoint for this year and then what impact we could be seeing in 2024?
spk01: So I'll say to you that the work that we've done in terms of addressing the commercial payer challenges that we have, we're seeing that that's starting to materialize. But we actually believe that the full year benefit of it won't be seen until we get into 2024. So the good news is that the progress we're making, we are confident is durable. And we'll see a full year implication of it next year. And so your question about the implications on the midpoint of the revenue guide, is that what the question was?
spk09: Yeah, just like what's baked into the guidance range for this year at the midpoint. What kind of headwind?
spk01: Well, I'd say that we expect that we'll, you've seen really quarter after quarter our top corporate level average payment per test has improved. And we're expecting that that's going to improve for Q4 as well. That's informing our confidence in the revenue guide. We are also seeing improvement in growth in the business in terms of volumes. And so that's baked into our confidence into the guide as well. And so it's a combination of growing more volume as well as increasing the quality of our revenue in terms of average payment per test. And those two things together is what gives us confidence in our guide.
spk09: Okay, that's really helpful. And then maybe just one follow-up. I realize you spoke a bit about the special committee being formed to improve the company's capital structure and, you know, kind of the different avenues you're contemplating there. I was wondering if you could give any more context on the pathways you're exploring and maybe an expected timeline that we could be seeing some of these initiatives implemented.
spk01: Well, I mean, I think the first of all, I would say that our board is extremely supportive of our company and but As we looked at this, the board was willing to have several of the independent directors to dedicate more time, if you will, to really specifically focusing on, you know, the capital structure of the company and helping guide us in our way forward. And so that, to me, is a good sign. You know, timelines and things like that, it's a little premature to try to signal that. But I would say to you that the commitment and the time that they're putting in, we all are operating with an appropriate level of urgency associated with mapping the next path for Invitae. And, you know, when we set out last year, I'm reminded that we said we were going to be focusing on a few things. One was to kind of stabilize the business and execute on the short term. And then we talked about growing profitably, which we're doing. And then we talked about really mapping out a path to be able to drive investment into the future of the company. And so I think this is where we are in this phase between steps two and three. And our board and special committee are really there to help us with that effort and direction.
spk09: Got it. Okay. Thank you. Really helpful.
spk08: Thank you. We will now take our next question from Andrew Brackman from William Blair. Andrew, your line is now open. Please go ahead.
spk03: Hi, this is Dustin on the line for Andrew. Thanks for taking our questions. On gross margin, good to see that continue to trend up over many quarters. Wondering if you guys can talk about the leverage driving that and where it can end up over time.
spk01: 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. You know, Ana talked about our variable cost efficiency that has probably been about as impressive in terms of each quarter driving, you know, more efficiency in our operations as has our gross margin expansion as well. So that's a true sign of, you know, a focused effort there. And then I think our mix is also moving in the right direction. You know, some of the actions we took last year, you know, 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 proving to be more right than wrong in terms of solidifying our path to growth, to profitable growth. So it's really about, you know, 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 costs. And ultimately, those things together have led to some pretty strong performance and solid progress in gross margin.
spk03: 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 as a catalyst. Yeah.
spk01: You know, so I talked about our revenue growth of double-digit growth for hereditary cancer in 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.
spk03: Okay, great. And then just one more from us, pipeline progress on PCM. in a critical setting and, you know, expected timelines around that heading into next year. Thank you.
spk01: And when you say, are you talking about, when you say pipeline timing for PCM, are you talking about, you know, reimbursement or studies? I mean, can you be a little bit more specific?
spk03: Yeah, it could be it could be studies, reimbursement and commercialization of different indications.
spk01: Yeah, yeah, it's a good question. So, you know, our efforts are starting to really focus in on, you know, several clinical areas, tumor types, lung, breast and colorectal cancer. We're starting to get the data needed to 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.
spk03: I appreciate that. Thank you, Ken. Thank you.
spk08: Thank you, Andrew. Our next question comes from Matthew Sykes from Goldman Sachs. Matthew, your line is now open. Please go ahead.
spk05: Hi. This is Evian for 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?
spk01: So, yeah, I mean, as I said in my comments, 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, it's 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.
spk05: Okay, great. And then the next one, can you just talk through how you're thinking about reallocating resources after exiting your PGX business?
spk01: 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, you know, unfortunately, those resources that were pretty much dedicated to PGX, for the most part, have exited the company.
spk08: Thank you, Matthew. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. Our next question is from Rachel from JP Morgan. Rachel, your line is now open. Please go ahead.
spk02: 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 patient network for the next few quarters, maybe two quarters? You know, obviously there's a lot of underlying factors going into it, but, you know, 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 growth profile on it? And then I have one more.
spk01: Yeah, that's a great question. I mean, so as we're thinking about it as it goes into year end, we've obviously taken that into consideration when we look at our revenue guide. You know, 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've found is that we can do both. We can grow it profitably, and we can still, you know, continue to grow that business. And so we're less concerned about the downside path for it, 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, you know, 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 a gross margin standpoint.
spk02: Great. That's super helpful and kind of right on where I wanted to hit next. Could you talk about maybe, you know, 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, you know, hitting 52% uh this quarter which was meaningfully above the street do you think that trend could sort of then continue uh you know it is below the full year guide or above the full year guide but um it'd be interesting to see if that's a potential swing factor or upside to uh you know the next few quarters here yeah i mean so the the way we're thinking about it is that um
spk01: You know, there is some mix dynamics that still might play out for us as we finish the year. And so there's a little bit of we have to see how our product mix lands in Q4. So we have revenue and then we've got product mix that kind of contributes to how we see gross margin. At the same time, I'd say, look, I think we are, we're not satisfied with, you know, a gross margin of 48 to 50%. We know that we have great products, and we provide tremendous product and service to the healthcare community. And we have this determination to make sure that we're being appropriately rewarded for those efforts. I think our gross margin determination and effort is far from being concluded. And so as we start mapping out what we think 2024 will be, we'll start to guide that. But at this point, as we think about finishing up this year, there is just get some puts and takes in terms of model, in terms of mix and things like that, that we're navigating through. But at the same time, we like the progress we're making, and we're pretty darn confident that we can continue to expand it into the future. Awesome. Thank you so much.
spk08: Thank you. We have no further questions registered today. So with that, I'll hand back over to Ken Knight for final remarks.
spk01: Well, once again, thanks, everybody. Appreciate you joining us. We appreciate your continued interest in us as well as support and look forward to talking to you again next quarter. So be well. Thank you all.
spk08: This concludes today's call. Thank you for joining. You may now disconnect your lines.
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