23andMe Holding Co. (ME) 2022 Q3 法說會逐字稿

Good morning and welcome to 23andMe's fiscal year 2022 third-quarter financial results conference call. As a reminder, this call is being recorded. (Operator Instructions) I would now like to turn the call over to Wade Walke, Vice President of Investor Relations, to lead the call off. Thank you. Please go ahead.

Thank you. Before we begin, I encourage everyone to go to investors.23andme.com to find the press release we issued earlier today reporting our financial results for the quarter. A replay of today's webcast will also be available on our website for a limited time within 24 hours after the event.

Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to, management's outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section entitled Forward-Looking Statements in our press release which applies to this call.

Also, please refer to our SEC filings which can be found on our website and the SEC's website for a discussion of numerous factors that may impact our future performance. We also discuss certain non-GAAP measures, important information on our use of these measures and reconciliation to US GAAP may be found in our earnings release.

Joining us on our call today are Anne Wojcicki, our Chief Executive Officer and Co-Founder; Steve Schoch, our Chief Financial Officer; and Kenneth Hillan, our Head of Therapeutics. And now, I'd like to turn the call over to Anne.

Thank you, Wade. We've made significant progress on both our consumer business and therapeutics efforts these last few months. The mission of 23andMe is to help people access, understand, and benefit from the human genome.

We pioneered a path for people to get direct access to their genetic information and learn important information about their ancestry and health. With over 12 million customers who have signed up to join the 23andMe community, there is an incredible opportunity to introduce a new type of primary care that is based on one's genetic risks.

We have heard from our customers that they often take their genetic information to their physicians, but they don't know how to integrate this information into their care. We have the opportunity to further help our customers benefit from the knowledge about their genome by providing a genetics-based primary care service for our customers.

I am thrilled that we got the opportunity to acquire Lemonaid Health this quarter as it opens up the door for us to enable our customers to get genetics-based primary care from healthcare providers who are trained on our report. I look forward to talking with you more about this service as we prepare to roll it out.

As part of our mission to help customers benefit from the human genome, we continue to pioneer new health and ancestry reports. Recently, we received FDA clearance for a direct-to-consumer genetic test on a hereditary prostate cancer marker, further expanding our ability to provide individuals with direct access to impactful health information that can help them make important life decisions.

We also launched two new health reports for our 23andMe+ members. 23andMe+ is our premium content subscription service that provides subscribers with new reports and features through the course of their membership, giving them even deeper insights into their health.

With our database of over 12 million genotype customers and billions of health-related data points, we are uniquely positioned to provide our customers with these health insights. The new reports include a nearsightedness report and a severe acne report.

Finally, we added new ancestry analysis for our customers. This new analysis includes additional insights into some customers' indigenous genetic ancestry from North America and ancestral connections to 25 African ethnolinguistic groups.

On the therapeutic side, we advanced our first wholly-owned therapeutic program into a Phase 1 clinical trial. 23ME'610 is our second immuno-oncology drug to enter clinical trials following our CD96 program, and marks an important milestone in our goal to find new medicines for patients with serious unmet medical needs. We look forward to continuing to advance our pipeline of more than 40 programs across a range of disease areas, addressing targets that we have validated using human genetics.

We were pleased to see GSK, our key collaborator in therapeutics, elect to extend the exclusive target discovery period of our collaboration for a fifth year. So together, we can continue to discover and validate novel drug targets using our proprietary genetic and health survey database. Under the terms of our collaboration agreement for this one year extension, we will receive a one-time payment of $50 million.

Our collaboration with GSK has been very productive, and we believe the decision by GSK to extend the collaboration further demonstrates the value of our unique database for discovering novel targets for drug development.

Our mission from the beginning has been to help people access, understand, and benefit from the human genome. I'm excited about the reports we launched, our progress on therapeutics programs, and our acquisition of Lemonaid Health. All of these will help our customers benefit from the human genome. And with that, I will turn the call over to Steve to review our financial results for the quarter.

Thanks, Anne. With the closing of the Lemonaid transaction in November, we are now in full swing planning the integration of our personal genome service with Lemonaid's telehealth services, which include online access to healthcare professionals who can offer e-prescribing, pharmacy, and testing services.

Our ultimate goal with this integration is to provide genetics-based primary care at scale for our customers. This unique offering would enable millions of people to learn about their genetic health risks and to partner with medical professionals to take preventative actions to potentially live healthier lives.

As part of the integration, starting this quarter, Lemonaid Health's financial results are incorporated into ours. We are also updating our financial guidance for the current fiscal year to reflect the inclusion of telehealth operations into our consumer segment.

We are pleased that GSK continues to find value in our collaboration and, last month, opted to extend the exclusive target discovery period of the ongoing collaboration. Under the terms of the collaboration agreement, GSK will pay $50 million for the extra year of exclusivity, representing a doubling of the annual payment during the previous four years.

We believe that using our database to genetically validate targets for drug development has the potential to increase the probability of success and could ultimately lead to substantial economic upside for us in the long term if the resulting medicines are successfully commercialized.

Recently, we announced that we had made the decision to elect the royalty option on our joint immuno-oncology program with GSK targeting CD96. Prior to taking the royalty election, the CD96 program was advancing under a 50-50 cost and profit share arrangement between 23andMe and GSK. Now with our decision to elect the royalty option, we will be eligible to earn tiered royalties up to the low double digits if the program is successfully brought to market.

This option allows us to retain economic upside if the program is successful, while curtailing further development costs as the program advances into large late-stage clinical trials. This option provides 23andMe with greater flexibility to allocate more capital and resources into the advancement of additional exciting programs within our therapeutic portfolio.

Now let me turn to our third-quarter financial performance. Our revenue for the three and nine months ended December 31, 2021, was $57 million and $171 million respectively, representing increases of 3% and 10% respectively, over the same periods in the prior year.

Third quarter revenue growth was primarily due to the addition of two months of telehealth revenues from the recent acquisition of Lemonaid Health and higher subscription revenue. These increases were partially offset by lower personal genome service or PGS revenue, primarily due to the shift in a promotional channels partner's event, which occurred in the second quarter of fiscal 2022 as compared to the third quarter of fiscal 2021.

Nine-month revenue growth was primarily driven by higher PGS revenue, subscription revenue, and the addition of two months of revenue from the telehealth business.

Looking at the composition of our revenue, consumer services revenue represented approximately 81% of total revenue for the three and nine months ended December 31, 2021. Research services revenue, which was substantially all from the GSK collaboration, accounted for approximately 19% of total revenue.

Our gross profit for the three and nine months ended December 31, 2021, was $27 million and $86 million respectively, representing a 7% and a 19% increase over the same periods in the prior year. The three and nine month improvements were driven primarily by revenue increases in telehealth services and subscription services as well as lower lab processing costs and, in the case of the nine-month period, increased PGS revenue.

Operating expenses for the three and nine months ended December 31, 2021, were $124 million and $271 million respectively, compared to $71 million and $191 million for the same periods in the prior year.

The increase in operating expenses was primarily attributable to increased sales and marketing expense consistent with the seasonal promotion activities of the PGS business, therapeutics-related research and development expenses, onetime transactional costs associated with the acquisition of Lemonaid, and the incorporation of Lemonaid's ongoing operating expenses as we integrate telehealth into our business.

Looking at the bottom line. Net loss for the three and nine months ended December 31, 2021, was $89 million and $148 million respectively, compared to net losses for the same period in the prior year of $45 million and $117 million respectively. The increase in the net loss for the three and nine month periods ended December 31, 2021, were primarily driven by higher operating expenses as noted earlier and, in the case of the nine-month period, offset by changes in fair value of warrant liabilities of $33 million.

Now let's look at our adjusted EBITDA. For details on how we define adjusted EBITDA, please see our earnings press release. Total adjusted EBITDA for the three and nine months ended December 31, 2021, was a loss of $64 million and $121 million respectively, compared to a loss for the same periods in the prior year of $25 million and $65 million respectively. This increase in total adjusted EBITDA deficit was driven primarily by the increased operating expenses mentioned previously, excluding one-time transaction costs.

Looking specifically at adjusted EBITDA for the three and nine months ended December 31, 2021, for the consumer and research services segment, we saw a loss of $32 million and $33 million respectively, compared to losses for the same period in the prior year of $2 million and $5 million respectively.

The higher current period adjusted EBITDA deficit in this segment was driven primarily by the previously mentioned increase in sales and marketing expense as well as the impact from inclusion of Lemonaid's telehealth results.

It is important to note that quarterly adjusted EBITDA for the consumer and research services segment will have seasonal variation, just as the consumer segment top line does, and will be further impacted by the timing of our media spending pattern, which has varied over time. For this reason, we focus managerially on our full-year adjusted EBITDA performance. We continue to work towards economically efficient growth for the consumer and research services segment over time.

We ended the quarter with a strong balance sheet, including $586 million in cash, which provides us substantial capital for advancing our strategic objectives. In the third quarter, we paid approximately $102 million in cash consideration as a part of the acquisition of Lemonaid Health.

Now let's turn to our updated guidance. Our guidance will include the impacts that we expect from the inclusion of Lemonaid's telehealth business into our results. We are increasing the projected range for full-year revenue for fiscal 2022, which will end on March 31, 2022, from a previous range of $250 million to $260 million to a revised range of $268 million to $278 million. This increase in projected revenue is primarily due to the addition of telehealth services to our consumer business.

We are decreasing the projected range for full year net loss from a previous range of $210 million to $225 million to a revised range of $205 million to $220 million. This decrease in projected net loss is primarily due to the favorable effect of the warrant fair value adjustment following warrant redemption in December, offset by the inclusion of five months of telehealth operations, integration costs, and merger-related transaction costs.

We are increasing the projected loss for our consolidated full-year adjusted EBITDA, with the range moving from a previous range of $143 million to $158 million, to a revised range of $148 million to $163 million as we include net losses from our telehealth business, which we expect will be partially offset by other beneficial effects in our operations. Now I will turn the call over to Kenneth Hillan to provide us an update on our therapeutics progress.

Thank you, Steve, and I'm pleased to report on the progress we're making on the therapeutics front. The therapeutics business was established with the goal of improving the productivity of drug discovery and development by starting with human genetic information. Research has shown that genetically validated drug targets have at least double the probability of success in becoming medicines.

Our team uses the genetic information from our database to identify drug targets that have the potential to address areas of high unmet medical need, and then generates the preclinical data and the product candidates for drug discovery and clinical development.

We recently advanced 23ME'610, our first wholly owned program, into the clinic. And 610 is an exciting example of how we are translating our data into investigational therapeutics. This is an antibody that targets the CD200R1 protein, which is known to be an important regulator of both T cell and myeloid cell function.

CD200R1 was initially identified as a promising immuno-oncology target from our proprietary genetic immuno-oncology signature. We discussed this program in some detail at the virtual R&D day event last month. And if you're interested in learning more about our CD200R1 and 23ME'610 program, you can access the presentation on our investor website.

Recently, as Anne said, GSK decided to extend the discovery phase of our collaboration by an additional year. This is a testament to the collaboration's productivity and success in identifying and validating new targets for drug discovery and advancing product candidates into development. In less than four years, we have jointly identified over 40 therapeutics programs and have advanced an immuno-oncology antibody, targeting CD96 into clinical development.

GSK's decision to extend the exclusive target discovery period of the current collaboration for an additional year demonstrates the conviction they have for our collaboration and the value our platform provides in identifying targets and advancing new product candidates based on human genetics.

The CD96 program is a prime example of the potential value 23andMe brings to drug discovery and drug development. We were able to genetically validate the CD226 axis, which includes CD96, with our proprietary database. This validation, combined with the Phase 1a data, makes us hopeful that targeting CD96 will have the potential to provide cancer patients with a new medicine in the fight against cancer.

Our decision to take a royalty option for the CD96 program was based on several reasons. First, we believe GSK is well positioned to independently move this program forward because of its leading portfolio of antibodies targeting the CD226 axis. Second, this decision allows us to strategically deploy capital and resources as we advance our portfolio of therapeutic programs at 23andMe.

We believe that the growth of our database, combined with our advanced computational and drug discovery capabilities, will continue to yield valuable insights and novel therapeutic opportunities. Now let me turn the call back over to Anne.

Thanks, Kenneth. I am excited about the progress we've talked with you about today and even more excited about what we have coming. As I look forward, I see us rolling out genetics-based primary care that can deliver personalized, prevention-oriented, genetics-based healthcare at scale by integrating telehealth services with our personal genetic services.

We also have on the horizon our next-generation polygenic risk score reports that will incorporate lifestyle factors to improve risk estimates, and we will continue to advance our therapeutics pipeline of over 40 programs addressing targets validated by human genetics. Now let's open it up for questions.

(Operator Instructions) Tiago Fauth.

Tiago here from Credit Suisse. Thank you so much for taking the question. Congrats on the progress. A couple of questions from me. So, I appreciate you guys including the Lemonaid impact to the guidance. That kind of gives us a sense for current revenue contribution.

I'm curious if you can comment on the potential growth of that revenue base, either relative to comps in the telehealth business, or in any other way that can help us get a better sense of the growth trajectory. And/or if there will be any other indicators [of value] made available quarterly so we can kind of track the performance of that business segment.

I understand that it's pretty early on and that there's certainly an integration aspect of it. But to the extent that you guys can provide any detail, that would be helpful.

And then just one follow-up on the therapeutics. And that's related to the opt-out and I think folks kind of understand the rationale on opting in for a royalty instead of spending the 50-50 on the R&D side with GSK. It's a hard question to answer probably, but is there a way to kind of estimate the ballpark of the investment you would have to make by having to pay for 50% of developers in such a broad program?

And how will that kind of inform your decision going forward? Is it going to be more -- you're more likely to keep the 50-50 in smaller indications, larger indications? How does that kind of play out?

Yes. So I can take your first question and maybe I'll let Kenneth kick off the second one and I can chime in if it helps. So, on Lemonaid, we are -- in our disaggregation of revenue, we're going to give you the quarter. And so, that's going to be in a 10-Q that we file tomorrow. You'll see that that number is around $7.5 million or $8 million.

And our guidance gives you kind of a look with five months of Lemonaid. So, that number I just gave you is for two months in the quarter. And our guidance gives you a sense versus prior guidance of the uptick we expect, as we said in the script, largely driven by the addition of Lemonade to the revenue base.

And I would say, we -- they are growing. That part of the business is growing. We'll be disclosing that as we go along. We won't disaggregate our guidance into the pieces.

And I would say, the other thing is that there is some very fundamental planning going on that, Paul Johnson, who runs the Consumer business now, is leading, that's really delving into how this consumer experience is going to evolve, and how the genetics business and the digital primary care business are going to come together and sort of how that's going to affect a lot of things related to the economics of our business.

And so, it's something that's just going to play out over time and we're not -- we're just not going to disaggregate for now. I'll let Kenneth start out with the CD96 decision. There are a lot of capital allocation issues in it and others, so I'll let Kenneth take that.

Yes. No, thanks, Steve. And Tiago, maybe just to kind of reemphasize what I said during the call earlier, is that I think in the first place this is a place where we've got a lot of confidence that GSK is well and able to move this program forward in immuno-oncology.

The second thing is that we -- it really is we're working with a portfolio and we're looking to maximize the return on investment. And how we make those decisions and choices today I think will change and evolve over time. For example, as our cost of capital hopefully drops over time, we may be prepared to invest in more programs as we move into the clinic.

But I don't think it's about is it going to be just small indications or big indications. If we really felt there was an incredible opportunity to maximize return on investment, we would definitely want to continue investing in a program and working with GSK. But it will really be on a -- program by program, we'll make those decisions, but it will be in the context of an overall portfolio where our goal is to maximize that return on investment. Steve, I don't know if you've got anything to add?

No, no, that's good.

Daniel Grosslight, Citi.

Realizing that you won't actually book most of the revenue until the fourth quarter, can you comment on how kit sales this holiday season compared to last year's and perhaps a more normalized holiday season, specifically around the number of kit sales and the ASPs this holiday season versus prior years?

Yes, I wouldn't say that we're going to get into any of that detail specifically. What I would say first and foremost is that the way that the year is playing out from a kit sales point of view relative to the guidance we've been giving and how all of those kit sales will make their way into revenue and deliver that guidance, I would say we're pretty much exactly where we wanted to be, thought we would be.

And so, it's playing out pretty much according to that plan that we started out guidance with this year. So, as you look at the guidance and you look at -- particularly when you look at the second-quarter guidance before we had Lemonaid in there, you could see that we expected there to be growth versus prior year. And now with Lemonaid, that's gone up to I think 10% to 14%, when you do the math.

And within that, I'd say we're about right where we thought we would be based on the plan that's behind that guidance, and that's about what we can say. I would say the way we went about -- the promotion activities in the holiday season had a lot of similarities to last year; we kind of went about it much the same way. And so, nothing radically has changed in the way that we've executed the year, and the results are giving us about what we expected.

Okay. Have you seen more adoption of the health aspect of the kits versus ancestry, if we were to look just at a breakdown of percent from just ancestry versus health plus ancestry? Have those trended more towards health plus ancestry? And then can you comment on the subscription attachment rates you're seeing?

Yeah, I would say on the latter, we're pleased with how incoming customers are taking the subscription. And so, as we noted in the script, the subscription is starting to really matter to gross margin. It's kind of moving the needle a little bit on an all-in revenue basis against our big base. It's not that material, but I think we're happy with it.

And we'll probably have more to say at year-end about kind of where that's come in the year in totality, but I would say we're really happy with the growth that that's seen. As to mix, yes, we don't really talk about mix. We lean -- as you know, everything we do promotionally leans into the health side and we continue to push that. And I would say there's nothing radically different about mix as we've gone through time either. It's in a fairly stable range.

Got it. Okay. And then going to the Lemonaid acquisition, I appreciate you breaking out that revenue for us. Can you break out the EBITDA contribution this quarter for Lemonaid? And then it looks like if I just annualize the change in EBITDA for the five months that you have Lemonaid this year, gets me to a full year Lemonaid number of around negative $12 million in EBITDA. Is that kind of where it's at right now?

Yes, we'll be providing you a little bit of information on Lemonaid in the 10-Q in addition to the revenue that we've given you. We'll share the net loss associated with it, which I believe was about $8.5 million. And so that will be in the 10-Q.

Okay, that's helpful. And then last one, just on the therapeutic side. I understand that you have (technical difficulty). On the therapeutic side, I understand that you evaluate each project based on ROI. But can you give us a sense if you're really going to cut back on R&D spend in the near term, meaning the next 12 to 18 months, because you no longer have to shoulder 50% of the CD96 program? Or will you just be reallocating some of that spend to other programs in the nearer term?

I would answer that (multiple speakers) no, we will --.

I mean, maybe I think one of the reasons that -- we looked at the amount that we could capture with the royalty in terms of the total value of the CD96 program, and we felt good about that without having the capital exposure of large, long, complex trials moving forward in combination with multiple molecules.

But we really are excited about the P006 program. It's fully owned. So, it's a great example of exactly where we want to be investing our capital at 23andMe in terms of therapeutics program. So, we're very fortunate and blessed that we have many opportunities with which to deploy capital. So, we definitely see significant long-term value and upside over time and continue to make those investments. So, Steve, feel free to chip in.

Yeah. And we give you all the time, and we'll do the same thing this time. In the 10-Q, we give you kind of the composition of R&D between the consumer business and R&D. And what you'll see, if you've been following that along, that the rate of growth of spending on the therapeutic side of R&D has been noticeably much higher than the average of that total line.

So, more and more and more of that R&D line is being accounted for by therapeutics and that's very intentional on our part. And we see it as just a major driver of building value and future revenues. So, you can expect that to continue to happen.

And redeployment of that stream of spend when we decide to take the royalty option on something like CD96 would be a natural thing for us to do. As you know, we have tens of programs that we can potentially put money into, so there's no lack of alternatives.

I'm showing no further questions in the queue. I'll turn the call back over to Wade Walke for any further questions.

We have some retail questions that have come in from our Q&A platform, and I want to take the time to answer some of those top questions today. The first question is what plans do you have for the massive amounts of data collected and how do you translate that into shareholder value?

I can take that, Wade. That's a great question and something that we have been thinking about since we started this company. There's really two elements with this. And I look at it on the consumer side as well as on the therapeutic side. There's a real opportunity for us to continue to deliver valuable health and ancestry information back to our customers.

And we've seen that over the years that our customers, they appreciate, they value, it's meaningful for them. So, delivering that information back to them on their health is something that we will obviously be able to continue to do better and better. And we've made the commitment that we are looking at how we're going to use our data and integrating these additional data sets, like wearables, to be better and better at risk prediction.

On the therapeutic side, the more data we have, the better we actually have insights and we're able to develop novel therapeutic targets. So, as our data grows, there's a tremendous opportunity on therapeutics of what we've seen with GSK and our over 40 programs. And we are enthused with the fifth year extension with GSK.

But also quite enthused is the post GSK world where we will be able to be independent. And we spend a fair amount of time thinking about what are all those different ways that we will be able to really make sure that we are maximizing value from all of that data that ultimately will benefit our customers in the world at large.

Great. The next question is actually a compilation of about three questions that were related to the same topic. And it is what are your plans for future growth, product expansion, and expanding research and development efforts into new products?

Yes. The Lemonaid acquisition was a key component of how we're thinking about growth in the future. And we see that our customers are engaged with the genetic information, they want it, but they really want to better understand how to apply it to their life. So, we are big believers that there is an opportunity to pioneer a new type of healthcare world, which is based on your genetics, and really focused on prevention.

And so, Lemonaid is a key component of how we're starting to think about growth in the future. And I just also want to call out the pharmacogenetics opportunity, which is leveraging the reports that we have today, that have gone through the FDA that can help our customers understand what is their genetic risk -- or their genetic variant and how that impacts various medications they might take and be able to integrate that in with the Lemonaid pharmacy. What was the second part, Wade?

The second part was expanding research and development efforts into new products.

Yes. That goes along with some of the things I was talking about before in terms of starting to look at all of the data we have, and there's an incredible opportunity with all the new types of data collection that is happening. So, whether it's your heart rate variability or your steps or EKGs that are coming on various devices, there's a lot of opportunity for us to start to incorporate this into our reports.

So, what we really think about, just to the high-level summarize it, is being the best at risk prediction and really being able to be the best people that can look at a number of different data sets -- or amass all this data into one where we can actually give you that best risk prediction. So, that's really where we're highly focused on the consumer side.

Great. The next couple of questions are more on the financial side. The first one is what are the two or three long-term revenue drivers that the team is most excited about?

Sorry, was Steve going to take that? Sorry, can you say that one again?

Sure. It's what are the two or three long-term revenue drivers that the team is most excited about?

Sorry, I had you on mute. I was starting to talk and I --.

Yes. Steve, do you want to take that? Or do you want me to?

Yes, I'll take that. Yes, pretty straightforward. We're talking a lot about Lemonaid and where that's fitting into the future of the consumer product. And I think the way to think about that is that the addressable market that we're going to be accessing as we move from just the personal genetics business and research services, which drive our revenue so far, going into the primary care world and its addressable market is enormous relative to our earlier addressable market, so that's a big driver.

And on the therapeutic side, we're putting all this investment on the therapeutic side and we fully anticipate that that will drive future revenue as those programs move into becoming products, and either we're taking our profit participation in those or we're taking royalties in those. So, that's a really profound opportunity as we move those along. So, those are going to be the primary thing.

And then I think the other thing, and Anne has talked about it before, is there are other ways, when we talk about our mission of benefiting from the human genome, this data platform probably has other ways that we could work with partners -- not only earn some return for ourselves on the investment in the platform, but bring those insights out and bring those to customers to help them live a better life. And so, I think there are other ways that we're going to find to do that.

Great. And the next question is -- what are you doing to make 23andMe profitable?

Yeah, this goes back to a little bit of our more recent history. We started to bear down on the current portfolio of revenue earning business as we began to bear down on getting that towards cash flow breakeven. And as you know, if you follow our filings, when we moved from fiscal 2019 through the end of fiscal 2021, we moved the consumer business, which is where we really put that focus, from around an $85 million adjusted EBITDA position to above breakeven. We were about $12 million or $13 million to the positive last year.

As we bring this big new piece of business into our midst, and we begin to go through that again, we're going to focus on customer-level economics like we did before. We're going to increasingly look at lifetime value relative to acquiring those customers. That business of digital primary care and associated pharmacy, et cetera, give us a much better platform for recurring revenue, and so that's going to be a big part of it.

And then I think the other way to think about efficiency here, and Paul talks about this a lot, is kind of a -- this would be very much a product-led plan that we put together and not relying as much on marketing and more leaning on investing in product innovation and having to be product led. And both of those things will, I'm convinced, do their magic over time as we get going.

Thanks, Steve. The next question is -- do you see a merger with a pharmaceutical company part of your vision?

We don't -- we're always evaluating options. We do not have anything top of mind that we're strategically thinking about. But we're always -- as a responsibility to shareholders, we're always evaluating options that do come our way. But it's not part of my strategic vision.

Okay. The next one is -- are there any plans in partnering with healthcare providers and insurance companies?

Also, a great question. We always look at this. And I think it's something that -- obviously most companies in healthcare are working with healthcare providers and insurance companies [in a] more traditional system. Part of what is very unique and different about 23andMe is that we are direct to consumer. And because of that, our incentives are really aligned with our end customer.

I am a big believer that there is an opportunity that's entirely outside of the existing system, meaning the reimbursement in the traditional healthcare world, to provide a new type of care for individuals.

And for that reason, we are not actively exploring any insurance relationships right now or more traditional type of partnerships where it's something -- we're always evaluating and [needing] but not something that I really look at because I think it would deviate us from our mission of being direct-to-consumer and really always doing right by our customer.

And our next question is -- do you have any plans to expand to Europe?

We do actually sell in a number of European countries. We have health and ancestry in some and ancestry alone in many. Our samples are processed in the US and we are not in every country in Europe largely because there's different language requirements or different regulatory requirements. But we do have health and ancestry in a number of countries as well as ancestry only in even more.

Thanks, Anne. I think with that we'll wrap up the Q&A session and I'll turn it back over to you, Anne, to wrap up the call.

Great. Thank you. Well, I appreciate everyone participating. We appreciate the questions that come in and we look forward to engaging with you at our next call. Thank you so much.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.