Invitae Corp (NVTA) 2017 Q2 法說會逐字稿

Good afternoon. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to Invitae's Second Quarter 2017 Financial Results Conference Call. (Operator Instructions)

Kate McNeil, Head of Communications and Investor Relations, you may begin your conference.

Thank you, operator and good afternoon, everyone. Thank you for joining us for our second quarter 2017 earnings call. Joining us today are Sean George, our CEO; Shelly Guyer, our CFO; Lee Bendekgey, our COO; Dr. Robert Nussbaum, CMO; and Katherine Stueland, our Chief Commercial Officer.

As you listen to today's conference call, we encourage you to have our press release available, which includes our financial results as well as metrics and commentary on the quarter.

Before we begin, I'd like to remind you that various remarks that we make on this call that are not historical, including those about our future financial and operating results, our plans and prospects, the focus of our business strategy, our plans to integrate and manage businesses we acquire, our proposed acquisition of CombiMatrix, market opportunities, future products, services, our product pipeline and the timing thereof, demand for and reimbursement of our services and our investment in our infrastructure and operations, constitute forward-looking statements within the meaning of the safe harbor provision 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 guidance. Our guidance on future company performance assumes, among other things, that we don't conclude any additional business acquisitions, investments, restructuring, or legal settlements. We refer you to our 10-Q for the quarter ended March 31, 2017, in particular to the section titled Risk Factors, for additional information on factors that could actual results to differ materially from our current expectations. These forward-looking statements speak only as of the date hereof.

With that, I'll turn the call over to Sean.

Thank you, Kate, and thank you all again for joining us. At Invitae, we are pursuing a clear mission and a big vision: integrating genetic information into mainstream medical practice.

It's a huge opportunity. We suggest, in all seriousness, an addressable market of more than 1 billion people in modern medical systems worldwide. And while many share with us the excitement of what genomic medicine can do for individuals and broader health care alike, we believe the best way to bring this forward is to do the hard work of leading in the current genetic testing being performed across many disease areas, across all stages of life.

Invitae is building a business for the genomic era, in which comprehensive genetic information and services are an essential and integrated part of medical care. To achieve our mission, we have charted the course for growth that requires first establishing a leadership position within the current testing market, from which to build a more comprehensive offering.

As the financial and operational results of the second quarter clearly demonstrate, we are well on our way to achieve this goal and well positioned to lead from here.

Starting in 2017, we became convinced that our base business is on track to become a runaway leader in diagnostic pediatric and adult-inherited disorders, making it the right time for us to accelerate our strategic plans for growing our business.

We began selectively adding content and capabilities through valuable industry partnerships and strategic acquisitions. This is true for our acquisition of AltaVoice, which contributes to our growing network of patients, and of CancerGene Connect, which contributes to improving our customer experience in our base testing business. And we found 2 such companies in CombiMatrix and Good Start that, in combination, enable us to deliver genetic information to inform health care decisions at every stage in a patient's life.

This is a transformative moment for Invitae, for our industry and, importantly, for the patients we serve. When we started this company, we were building towards this exact moment. We have invested in an industry-leading platform, providing medical interpretation at scale, and can now rapidly add content and expand our genetic testing capabilities.

These acquisitions provide the foundation for one company with one integrated offering, serving all patients at any stage of life. We are confident as we look to integrate Good Start and CombiMatrix into our business, and the basis for this confidence is rooted in the momentum we saw during the second quarter of 2017.

We're well positioned to achieve our 2017 revenue guidance. We accelerated growth across all clinical areas, leading us to increase 2017 volume guidance and are on track to generate positive cash flow by the end of 2018, and remain so, with the addition of Good Start and planned addition of CombiMatrix.

To cover the details of the quarter, I will now turn the call over to Shelly Guyer, our recently appointed Chief Financial Officer.

Thank you, Sean. It was a great quarter, as our base business performed well. As we initially reported last week, we continue to see strong growth in volume. We accessioned approximately 30,500 samples in the quarter. This reflects not only year-over-year growth of approximately 140%, but also our 17th consecutive quarter of double-digit sequential growth. Importantly, volume growth was seen across all clinical areas. As a result, we increased our full year volume guidance to 120,000 to 130,000 samples accessioned.

In light of the recently closed acquisition of Good Start Genetics and in anticipation of the integration of this business in the coming months, we are also taking this opportunity to provide you with some baseline numbers for this business. During the second quarter of 2017, Good Start accessioned nearly 9,500 samples.

We continue to make progress with payers and now have more than 203 million contracted lives. We have signed contracts with all but one of the major payers and have been steadily layering in remaining regional private payers. A key focus for 2017 is adding state Medicaid contracts. And as of the close of the quarter, we now have 16 in network. For the remainder of the year, we will continue to round out this coverage and begin to integrate payer contracts with Good Start.

Last quarter, management provided detailed insight into the reimbursement trends impacting revenue growth and noted that we expect that our efforts to operationalize these contracts, signed in the latter part of 2016, would result in significant revenue ramp in the second half of 2017. As you can see by the more than 150% year-over-year growth and nearly 40% sequential growth in revenue, that lift has begun.

Revenue was $14.3 million in the quarter, including about $700,000 in nontest revenue. Looking ahead, we expect cash pull-through to continue to improve as a result of continued progress in operationalizing contracts as well as efficiencies achieved by bringing our billing operations in-house during the second quarter of 2017. These improvements, combined with strong first half results leave us well positioned to achieve our full year 2017 revenue guidance of $55 million to $65 million. For the second quarter, Good Start recorded an estimated revenue of $5.2 million.

Breaking this down on a per-report basis, which we calculate using the current quarter test revenue against the prior quarter's test volume, you can see our revenue collected per report delivered increased to $563. While we expect this number to improve going forward, it will continue to vary from quarter-to-quarter as we introduce new offerings, like exome, and until we have fully operationalized all of our major payer contracts.

As a reminder, this metric is imprecise as it matches the volume of tests from one period and revenue from the next. Only when we accrue all of our revenue will there be a true matching of the period in which tests are processed and revenues are recorded. This will occur in 2018.

Our cost structure and scalable infrastructure remain a key competitive differentiator. COGS of $345 per sample in the quarter represent an improvement of approximately 30% year-over-year and about 4% from last quarter. As we continue to roll out new content on our platform, including the recently launched exome test, and as we begin our integration of Good Start, the product mix may affect continued cost reductions.

The increased reimbursement during the second quarter dramatically improved our gross profit, which increased from $400,000 in the first quarter to $3.1 million in the second quarter of 2017. This represents a gross margin of 23% of test revenue.

For the second quarter of 2017, Good Start achieved gross profit of $1.6 million, representing a gross margin of 30%. We expect it will take up to 3 quarters to improve Good Start's gross margins as we integrate production operations, which we anticipate will result in an overall improvement in gross profit and gross margin for the combined company. We remain confident in our ability to reach our long-term target of 50% gross margins across the Invitae platform.

In the second quarter of 2017, operating leverage has continued to improve. We incurred operating expenses, excluding the cost of test reports delivered, of $31.9 million, of which about 36% were research and development expenses, 39% were selling and marketing expenses and 25% were general and administrative expenses.

Of note, a large contributor of the jump in OpEx was stock issuance. For the second quarter, operating expenses included approximately $9 million in noncash expenses, including $6.3 million in stock-based compensation expense, an increase of $3.1 million from the first quarter, which resulted primarily from the vesting of certain RSU grants. Significantly, our operating expenses only increased 33% year-over-year compared to 140% growth in volume, evidence of our operating leverage.

Last week, we closed on the pipe financing to strengthen our balance sheet and to enable the acquisition and integration of Good Start Genetics without drawing resources away from our rapidly growing base business. The $73.5 million offering, which netted approximately $68.8 million, adds to the $80.4 million in cash as of June 30, 2017. We have -- also have an additional $20 million in untapped credit in our existing facility.

But we are equally focused on reducing the cash burn. Our burn this quarter was $21.1 million compared to $23.4 million in the first quarter, a 10% reduction quarter-over-quarter. We have noted previously that we expected that we would bring the burn down, starting in the second half of the year, but we began to experience this reduction earlier than anticipated.

While we anticipate the cash burn related to our base business to continue to decrease, integration expenses will likely increase our cash burn over the next 2 to 3 quarters. Longer term, we believe that the acquisition of Good Start and the proposed acquisition of CombiMatrix will contribute positively to cash flow, allowing us to reach cash flow breakeven by the end of 2018.

Thank you, Shelly. In summary, we believe that we are winning the race to scale and we are uniquely positioned to change this industry for the better. Having recently taken some bold steps to do so, we can now apply our business model and industry-leading capabilities to serve patients and their families across all stages of life.

With that, I'll now turn the call over to the operator for Q&A.

(Operator Instructions) Your first question comes from the line of Doug Schenkel from Cowen & Company.

I want to kick off with, I guess, a high-level question on the pending acquisitions. I guess, from an in-separation standpoint (inaudible) involves the effort and the experience of folks that are involved. I just wanted to (inaudible)

(technical difficulty)

Operator, we have a hard time hearing that question. Can we just confirm whether it's our side or was that universal?

Mr. Schenkel, if you could just speak up and repeat your question, that would be fantastic.

Really, the question is just on integration team, who's leading that effort and if you can just provide some details on the folks who are involved in terms of their backgrounds with acquisitions like this?

Sure. I'll give this to Lee. Lee is newly filling in the COO seat. He's also leading up all the integration efforts and operationalizing of our acquisitions.

Doug, so first of all, just a point of clarification. The acquisition of Good Start did close at the end of last week and the CombiMatrix acquisition is anticipated to close in some 2 to 4 months, so probably by the end of Q4. So we've already gotten started on Good Start, and Combi to come. We have, in each case, an integration lead, who -- their names won't be particularly meaningful to you, but they both come from production/operations backgrounds. One of them has spent almost all of his career here. The other one started her career at the Broad Institute. And so they have deep operating experience and -- so those are the leads. And I guess I will be straightforward with you and tell you that our approach to integration and tracking integration progress is one that Sean has brought with him from his days at Invitrogen when they were buying about a company every couple of months. And so it's -- we feel like it's a pretty tried-and-true approach that we're taking. And we've got leads who know our organization well and know production well.

Yes, I certainly know that Sean was there for much of what was done during the Invitrogen and Life Tech consolidation phase, so understood. That's helpful. Maybe if I could just follow up with a couple of financial questions on the quarter. The first is, I guess, related to guidance. In 2015 and 2016, I believe you did 64% and 62% of total volume in the second half of the year. Your guidance, I think, implies that you're going to do 57% of tests in the second half. Maybe it's just a function of the company becoming a bit more mature and the fact that you had a really strong first half. But I just wanted to see if there was anything else there that we should be thinking about as we update our models?

No, I think with -- upgrading the guidance, I think reflected the really strong first half of the year we had. And I think we don't want to get too far ahead of ourselves now. We're now integrating 2 companies. We're trying some new things in the industry by way of rolling out new service offerings, streamlining our current interactions with customers, patients, payers and now biopharma partners alike. And as such, we just want to be measured in how we guide people on this business. It's incredibly rapidly growing. And with that much scale and volume now, we just want to be measured and sanguine about it, albeit fully confident in our ability to hit.

Got it. And then, I know you noted that the exome launch did have an impact on cost of goods sold in the quarter. I believe you indicated that was the case. You made some nice progress with that in play anyway in terms of cost per test. I guess my question is, would it be possible to quantify how much the exome launch impacted COGS in the quarter?

Yes. So we made a comment that it actually didn't have a huge impact in the quarter. I think the comment was that, going forward, new offerings such as exome will, new offerings especially including the recently acquired offering from CombiMatrix and -- I'm sorry, from Good Start, and then the -- what we expect to close on CombiMatrix toward the end of the year, that's going to start to buffet the COGS one way or the other, off of our kind of traditional march on our current adult and pediatric panel testing. With that said, going forward, right, we continue to expect to reduce cost of goods out of all of the testing across the entire Invitae platform. The way that we do the testing and the way we're integrating all of these capabilities into our production line, we will be talking into the future, in the foreseeable future in terms of total platform COGS. So we won't kind of be ascribing x dollars to exome and x dollars to panel and x dollars to carrier screening and x dollars to, et cetera. It's just the way that we're putting this together, it will be -- it's really a target across the platform.

Doug, this is Lee. I guess I would just add that we still have a long list of opportunities to reduce COGS. But it is definitely the case that now we're getting into the range where each of them probably only accounts for a handful of dollars. A really big win might be $20. And so now we're looking at, as we see the uptake on our exome offering, it will definitely, as the volumes grow, have the potential to exercise counter-pressure. And so I think what Shelly was maybe wanting to suggest that the product mix could affect further COGS reduction. And we'll just have to see. We're kind of in uncharted territory right now with the exome.

And my last question and I'll get back in the queue. A simple one but probably one that's very much on everybody's mind as we think about updating our models tonight. You did increase volume guidance for the year. I don't believe you provided pro forma revenue guidance for the year. I recognize that you did provide a lot of useful information on the recent run rate at Good Start. But would you be willing to comment on how we should be modeling things from a pro forma standpoint at the top line?

Yes. No, at this point, I'm not going to combine the 2 views for a pro forma view on the year. And then also worth noting on the base business, even with the move in the window on volume, because of the days payable in the space, its impact on revenue is pretty minor, so we didn't bother tweaking with the revenue guidance that would be associated with the increase in volume.

So at least on core guidance, we should still view the $55 million to $65 million target that you provided last quarter as still being intact?

Yes, I think that's the right range. And like we said, just the way that the revenue comes through, that that's probably appropriate for now.

Your next question comes from the line of Tycho Peterson of JPMorgan.

Maybe I want to start with kind of what the combined sales footprint's going to look like. I know you talked about the 100 combined reps last week when you announced the deal. Curious on -- this relates to genetic counselors. Obviously, that's been a core strength for legacy Invitae. How much of an advantage is that as we think about adding these other assets and pushing into family health?

Yes, so I'll let Katherine go through kind of the current -- as we're talking publicly about the plans, keeping in mind of course the CombiMatrix deal hasn't closed, but I think we'll talk about it kind of looking at rounding out the end of the year, going into early next year. As for the genetic counselors, before Katherine gets into that, I would just offer the approach with for the genetic counselors, I think, has served as a good model for us. And I think what we're expecting now with the immediate leadership position in the IVF space, we view the reproductive endocrinologists and the OBs, and the MFMs at some of the higher volume kind of leading clinics, where a lot of the key opinion leaders are, represent a very similar set of clients as the core geneticists and genetic counselors do in a lot of the adult and pediatric-inherited disorders. And as such, we're ready to kind of wash, rinse and repeat the same market approach we have in the past few years in this new reproductive health continuum. But for the details, I'll let Katherine cover where we're heading.

Sure thing. So as we think about the sales forces, at the moment, Good Start is going to continue to operate business as usual. And upon closing with CombiMatrix, the anticipation is that come January 1, we'll have a single sales force of approximately 100 folks who are out there with the broadest test menu possible. And so, the thinking there, rather than splitting the sales force into specialty sales forces, is that they will become genetic specialists who are able to go into health systems and hospitals and clinicians across the country, being able to provide our breadth of test menu depending on what the clinician may be trying to answer for their patient who's in there. The sales force will be further supported by our inside sales team, which will enable the field folks to focus really on new client acquisitions, and maintenance will be really managed through our inside sales team. So that's the way that we're thinking about the focus next year. What this importantly is going to enable us to do is really further provide a pretty compelling offering into the OB/GYN sector, which hasn't been a focus for us, aside from opportunistically, to date. And so that's an area of this acquisition that we really are excited about. We believe that this sort of sales force approach is one that our team and the other teams will really be excited about moving forward in better serving clinicians.

Okay. So then is it fair to say that just having this enhanced connectivity with the OB/GYN channel really will help drive incremental growth in BRCA volumes?

Absolutely. Absolutely, that is an area that I said, historically, we haven't focused on. But it is a segment of the population that is continuing to grow. It's an area that is continuing to drive quite a bit of the HBOC market. And so this is one area that we think is going to benefit our core business as well as the complement of the additional test menu that we think is going to be able to grow as well.

Okay. And then as it relates to Good Start, Sean, I know you had a question last week on the Roche dynamic with the co-promotion agreement, and I think you acknowledged you had recent contact with them after the deal was announced. Can you maybe just talk on, on a go-forward basis, how important you think that is in terms of driving the growth at Good Start?

Yes, so I think our approach to it, at this point -- again, it was only recently that we knew enough to start planning for certain. So our approach has been keep those lines of communication open and keep that momentum behind that relationship, and then we would evaluate. We are a relatively small "feet on the ground" sales force, and partners is a key part of our strategic flywheel for growth. And I'd say at this point in time, we're going to anticipate continuing that relationship, working with them on the further details with a little more certainty about what the coming years look like. But honestly, haven't had enough of a detailed conversation to say anything more than that except that we're going to be in touch with them and start hammering that out, posthaste.

Okay. And last one, with Good Start closed, can -- I just want to be clear on guidance for the preferred test volume guidance. Does that include the contributions from their volumes for guidance or not?

No, no. Yes, good clarification. The increased volume guidance was just on our base business. That's our kind of adult inherited and pediatric-inherited business, not including the acquisitions. Again, on a pro forma look, I think we'll in the coming quarters, we'll start incorporating those into expectations going forward.

But we did provide you with the second quarter number of units, some Good Start, so that you could begin to factor those into your models.

Our next question comes from the line of Puneet Souda from Leerink Partners.

A couple of questions here. Just briefly on, first of all, let me start with the biopharma agreements and the collaborations you've had there. I just want to update and get an update on that segment, where do you stand? How many more do you have? And what's the progress? And how should we think about the second half?

Sure. I'll let Katherine take this one.

Yes, we've continued to make progress adding some partners and expanding our existing partnerships with biopharma companies, specific names, for various reasons, we're unable to share at the time but we have made some progress there. I would say it's continuing to pick up momentum, mainly thanks to the test menu that we've been able to expand. And we're just starting to put some more resources behind really being proactive in terms of reaching out to biopharma partners. But for the most part, it's all been incoming interest. Just to recap kind of the approach to date, it's been supporting clinical trials, supporting access programs for FDA-approved therapies and then patient identification through our existing database. And so we're really still going through a phase with biopharma companies, where we're able to get in strategically and work with them to figure out how to best partner to either accelerate clinical development or help patients get diagnosed sooner and connect them to potential therapies. So we're continuing to make a lot of really good progress there. Mainly, we've been focused on the rare disease segment. I would say as we look to the future, another great area of opportunity, of course, is oncology. But thus far, it's been very steady and successful year-to-date. And we continue to expect some more partnerships coming in throughout the course of this year.

Okay. Got it. And a quick question on the reimbursement front. You've done, I mean, obviously, a good job last -- second part of the last year and continuing onwards in getting the contracts, and especially on hereditary cancer. So now with the reproductive health into play, a lot of this business is patient pay, so I'm just trying to get a sense from you as to your current organization, how we can pivot some of that to gain a little bit more reimbursement on those fronts and get payer adoption? Are there some parts of the market that you think will largely remain patient pay and some parts that will -- in the reproductive health that will shift a little bit more towards the payers?

Yes. I think, in short, in reproductive health, the trend has been from a lot of patient pay in the past, with only really kind of carrier testing in the most highest-risk cases being covered for broader diagnostics and screening. That is clearly changing. It's clearly changing rapidly. Our understanding is a big source of that is self-insured employers pushing for broader reproductive benefits, which makes a lot of sense to us, given the absolute importance of genetics. It's a pretty fundamental part of a stage in life. So we actually expect that to continue. With that said, the other interesting thing is the dynamic is changing in the industry in terms of when people are getting screened, how many people are getting screened, how many women are getting carrier tests that aren't pregnant, which used to be almost all of them and now it's moving up in time. The number of IVF cycles that are including screening as a process. All of these things are heading in the right direction for that space, and we think, again, the reimbursement will follow. And I think what's even more interesting in this space is that patient pay is leading -- is indeed leading it along the way.

The other thing probably that's worth mentioning is that in some segments of these product lines, the evolution of clinical guidelines is leading payers to better reimbursement. So for example, Combi has a rapidly growing business in products of conception. And they're -- with the recent ACOG guidelines, there are a lot of payer policies that are now paying as a matter of course, if a woman miscarries twice. And so as couples and individuals are waiting later to have children, this is becoming a growing problem, and the payers are reimbursing for that kind of testing quite regularly. So between the evolution of some of these policies and our own existing contracts, where we think we have the opportunity to add some of these tests to our contracts, that is an opportunity on the revenue side for us, apart from growing volume and apart from reducing COGS to improve gross margins over time.

And just one last one. Just a brief question on COGS. I just wanted to understand. You're being obviously successful in reducing COGS so far. Trying to get a sense of, in the hereditary world, the COGS reduction that you can potentially have in medical interpretation. I think we have looked at COGS reduction in different parts of the segment. But can you give us a sense of what's the opportunity there and how can that work? As well as if you can give us a view -- I know you are upgrading instruments in the second half of the year, how much of the help can you get from that -- those upgrades?

Well, I'm taking the second one first, the transition to Novaseek, that as you say, we have started that right now. We're basically just running exome on Novaseek. We will, over the next 2 to 4 quarters, complete the transition to Novaseek. I think the way to think about it is that our pure sequencing cost right now constitutes about 25% of our COGS stack. And that's just the sequencing alone, it's not sample prep or interpretation. And we think that the total switch over to Novaseek has the opportunity to take 40% to 50% off of that 25%. So somewhere in the 10% to 15% range is achievable, we think, from the Novaseek transition. On the interpretation and sign-out side we're -- there's a lot of work to continue to streamline, to deliver better quality information to our clinical team. And of course as we learn more, we get better. Volume helps. We've seen more and more variants. And we're investing in all kinds of technologies to supplement and institutionalize our collective knowledge in terms of the heuristics that these professionals apply to what they do.

Our last question comes from the line of Amanda Murphy from William Blair.

Just actually a follow-up to that last point. In terms of the variant analysis component, so you've obviously talked a lot about that and efforts to automate components. I was just wondering if you could help us think about, whether it be exact numbers or not, but just even magnitude of what that cost you now. And then looking forward, I don't know however many years, what that might cost you in the future, what kind of factor-fold reduction are you thinking of over time?

So right now, the interpretation and sign-out part of the process probably looks more like 40%. On average, over time, we assume a sample prep is about 1/3 of our COGS stack, sequencing is about 1/3 of our COGS stack, and interpretation and sign-out is about 1/3. Right now, interpretation and sign-out is the tallest pole in the tent, and so it's a particular focus. I think, over a period of time, which things always take a little bit longer than we'd like, but I certainly think that, over time, we could maybe take 1/2 of that out.

Okay. And is that -- I mean, like you -- I guess, you just talked to the point around just doing more volume and therefore getting the benefit of that in terms of data. So how would you frame the magnitude just in terms of -- obviously, you talked a little bit about that point, but also you talked in the past about software development, and things like that. Is there a way to think about, I don't know, not even...

Yes, I mean, I think I understand what you are asking for. And Bob, feel free to jump in because I know Bob and his team are looking at more advanced approaches to this. But we used to talk about our infrastructure for variant interpretation and sign-out as a Bloomberg Terminal for medical geneticists. And we moved, I think, considerably beyond the system that aggregates and presents in dashboard format the relevant information. So in cases where we have seen a variant or have seen a variant that is structurally similar to the variant, we are now in a stage where the classification is presented for review and potential reconsideration by the scientists doing variant interpretation. And the report language is presented so that the process of actually classifying the variant and writing the report is increasingly automated, based on what we know. And importantly, it ensures a level of consistency across all of our team and across all of their variants that is not only a cost-reduction effort, but it's a quality and brand-enhancing effort. We've also spent a lot of time and, I think, there is a paper forthcoming on this subject, involving the efforts that we've gone to, to take the ACMG variant classification guidelines and make them much more granular and much more quantifiable. It's out, Bob tells me. I guess I'm a little behind the time. And so those are the sorts of things that we do to reduce the time that, for example, a scientist has to spend weighing different pieces of evidence and determining how they impact his or her decision, and also, again, to sort of ensure uniformity across our whole team and from day-to-day and variant-to-variant and team member-to-team member.

Got it. And how -- do you know how often you see a new -- a variant that you haven't seen before? Is that daily, weekly? Just -- is that -- just how often does that happen?

I'll let Bob give some more color on that. But yes, it is a daily occurrence.

Got it. Okay, and then, Shelly, I just had one quick one for you. So in terms of the accrual dynamics, I was just curious if you had -- and I'm sorry if you said this, I don't think I caught it. Just wanted to get a sense of what your thoughts are around shifting to accruals over time, what that looked like this quarter. Is it still -- I think you're just accruing Medicare, I believe? And then, if you could also help us out with what the prior period cash number was in the quarter.

So the accrual basis, you're correct that it is Medicare, but it is also some of the institutions that we bill. So it is not most of the third-party payers themselves, the Uniteds, et cetera. And I think that will probably take us until the beginning of next year and the new rules, the rev rec rules that are kicking in, for us to move in that direction in a significant way. For this quarter, the amount that's accrued versus cash basis...

So the accrual would include -- would be the patient pay, the institutional and the Medicare, which probably, off the top of my head, probably amounts to around 30%, maybe as much as 35% of the total revenue number would be the accrual. But I don't have that number right at my fingertips, Amanda, I'm sorry.

There are no further questions at this time. Mr. Sean George, Chief Executive Officer, I turn the call back over to you.

Well, thank you again, everybody, for joining us. And we look forward to catching up with you soon at upcoming conferences.

Thank you. This concludes today's conference call. You may now disconnect.