Andrew Brackman

Andrew Brackman asked about BillionToOne's process and philosophy for setting guidance as a newly public company, particularly regarding conservatism. He also inquired about the opportunity and impact of the EMR investment, driven by customer conversations, and the expected realization of its effects.

Answer

Oguzhan Atay, Co-founder, CEO, and Board Chair, explained that the company has operated like a public entity for years, with conservative projections often leading to outperformance due to unmodeled tailwinds like ASV growth. Ross Taylor, CFO, added that Q4 guidance brackets expectations. Oguzhan Atay further noted that EMR investment, while costly, will accelerate adoption in large health systems, opening up about half of the prenatal market where ease of use and EMR integration are critical.

Andrew Brackman asked about BillionToOne's process and philosophy for setting guidance as a public company, including the level of conservatism, and the anticipated impact and opportunity of the EMR investment (Epic for Aura implementation) on the business, particularly for health system adoption.

Answer

Oguzhan Atay, Co-founder and CEO, explained that guidance has historically been conservative, with ASV growth often providing tailwinds not fully embedded in projections. Ross Taylor, CFO, added that Q4 guidance is a reasonable bracket of expectations. Atay further elaborated that EMR integration, while taking nine months, is expected to significantly accelerate UnityToOne adoption in large health systems by removing a major impediment and opening up about half of the prenatal market.

Andrew Brackman asked about Veracyte's strategy for choosing annual indication expansions for its True MRD platform, considering competitive markets and existing channels, and the company's appetite for M&A to round out its care offering given strong cash generation.

Answer

CEO Marc Stapley explained that True MRD indication expansion prioritizes markets with inherent advantages, such as existing channels (e.g., MIBC due to urology overlap), and aims to cover the entire care continuum. He noted that Veracyte's whole-genome approach is a differentiator, and most MRD markets are not yet well-penetrated. Regarding M&A, Marc Stapley stated that while cash generation is strong, the primary focus is internal investment, and M&A opportunities are diligently evaluated but the company remains disciplined.

Andrew Brackman from William Blair requested a more detailed breakdown of the 110 basis point margin expansion in the diagnostic segment, inquiring about the specific drivers and future considerations regarding price, Invitae's impact, and underlying operational improvements.

Answer

EVP and CFO Julia Wang attributed the 110 basis point diagnostics margin improvement primarily to strong organic demand and the performance of Invitae, which annualized in August. She also cited Launchpad Initiative savings and slight weather favorability offsetting typical wage increases and initial dilutive impacts from in-hospital lab management agreements. She expects Invitae to remain a tailwind in Q4, with overall margins moderating due to seasonality.

Andrew Brackman inquired about the 110 basis point diagnostic segment margin expansion, asking for a breakdown and considerations for future trends related to price, Invitae, and underlying improvements.

Answer

EVP and CFO Julia Wang detailed the 100 basis point enterprise margin expansion, with BLS up 20 basis points and diagnostics up 110 basis points. Diagnostics margin improvement was primarily driven by organic demand and the strong performance and annualization of Invitae. Launchpad Initiative savings and slight weather favorability helped offset typical annual wage increases and mixed impacts from in-hospital lab management agreements. She expects Invitae to remain a tailwind in Q4, with overall moderation due to typical seasonality.

Andrew Brackman inquired about Quest Diagnostics' expanding partnerships with cancer screening players, the broad opportunities these present, and how the company balances these distribution partnerships with potentially developing its own in-house testing.

Answer

CEO Jim Davis stated that Quest Diagnostics partners when it doesn't have an in-house test for a market segment, such as early-stage cancer screening. He cited partnerships with Grail and Guardant (for their blood-based colon cancer test), where Quest integrates the tests into its menu, handles collections, and sends samples to partner labs. He emphasized that these partnerships enable physicians to order through Quest, leveraging its IT integration and collection network.

Andrew Brackman inquired about Quest Diagnostics' expanding partnerships with cancer screening players, the broad opportunities these present, and how the company balances these distribution partnerships with potentially developing and performing such testing internally in the future.

Answer

CEO Jim Davis explained that Quest Diagnostics partners with cancer screening players when they do not have an internal test for that market segment, citing Grail and Guardant Health Shield for colorectal cancer as examples. He noted that these tests are integrated into Quest's menu, allowing physicians to order them, with Quest handling collections and IT integration, while the tests are performed by the partner labs. This strategy enables Quest to offer a broader menu to its physician base without direct internal investment in those specific tests.