Veracyte, Inc. (VCYT) Q4 2016 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen and welcome to the Veracyte’s Fourth Quarter and Full Year 2016 Financial Results Conference Call. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now like to turn the call over to Ms. Bonnie Anderson, Chief Executive Officer and Chairman of the Board. You may begin.

Good afternoon, everyone and thanks for joining us today for our fourth quarter and full year 2016 financial results conference call. Joining me today are Keith Kennedy, Chief Financial Officer and Chris Hall, President and Chief Operating Officer. This is Keith’s first earning call with us and we are delighted to have him on board. Before we begin, Keith will take us through the Safe Harbor statement.

Good afternoon, everyone. We would like to remind you the various statements that we may make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements include statements regarding our future plans, prospects and strategy, financial goals and guidance, product pipeline and other statements that are not historical facts. Management’s assumptions, expectations and opinions reflected in those statements are subject to risks and uncertainties that may cause actual results and/or performance to differ materially from any future results, performance or achievements discussed in or implied by such forward-looking statements and the company can give no assurance they will prove to be correct. Those risks and uncertainties are described in the company’s filings with the Securities and Exchange Commission in addition to today’s press release. Prior to this call, we announced our fourth quarter and full year 2016 results which are available on our website, veracyte.com by clicking Menus on the top right corner of our website and clicking through to our Investors landing page and then press releases. We also released a financial presentation which I will reference later in the call when I cover our financial results. You may find the financial presentation in the same Investors section under Events and Presentations. I will now turn the call over to Bonnie.

Thanks, Keith. Good afternoon, everyone and thanks for joining us today. We are excited to recap a year of exceptional execution in 2016 and highlight the momentum, plans and expectations for our business in 2017. We have just completed our fourth quarter consecutive year of at least 30% annual revenue growth since becoming a public company. And as you have seen from our recent press releases, we have made significant progress in advancing our thyroid and pulmonology franchises, which we would expand upon today. At the beginning of 2016, we committed to our investors that we would measure our success for the year using three key metrics: Afirma growth and reimbursement expansion; Percepta coverage decision by Medicare; and the launch of our third commercial test for idiopathic pulmonary fibrosis, or IPF. Here is our scorecard. First, Afirma growth and reimbursement expansion, our original 2016 annual revenue goal was $59 million to $63 million. We exceeded our expectations closing the year at $65 million in revenue, a 31% year-over-year increase. We set out to achieve 2016 Afirma Gene Expression Classifier, or GEC volume in the range of 24,000 to 25,500. We reported 23,237 Afirma GEC tests for the year, 3% below our range, but resulting in solid volume growth of 20% year over prior year. In terms of reimbursement expansion for the Afirma GEC, we believe our execution and progress were exceptional. We expanded the total number of covered lives by $15 million to nearly $225 million as of March 1, 2017 and the total number of people covered through in-network contracts by $25 million to over $155 million today. In April 2016, we secured an agreement with Blue Cross and Blue Shield Association’s internal group purchasing organization, CareSource to accelerate in-network contracts and overall reimbursement for the Afirma GEC among Blues plans across the country. Our strategy worked. We now have more than 70 million Blues covered lives for the Afirma GEC, including over 20 million gained in the first two months of 2017 as well as 20 million Blues lives now under contract. Lastly, in September 2016, our scientists presented data at the American Thyroid Association Meeting showing the potential for our next generation Afirma GEC, which combines RNA sequencing and machine learning to significantly increase the number of patients with benign thyroid nodules who could avoid unnecessary diagnostic surgery. Data revealed at the meeting showed our ability to maintain the Afirma GEC’s high sensitivity and negative predictive value, while increasing the test specificity above the 50% mark today. We are excited to transition this enhanced Afirma GEC in 2017. Second, Percepta coverage, we aim to achieve a Medicare coverage decision for Percepta by the end of 2016 and we exceeded our goal. In September and October of 2016, Veracyte received three draft Medicare coverage decisions through the MolDx programs for Percepta’s use in lung cancer screening and diagnosis. Two of these policies are now final and scheduled to go into effect this month. Upon finalization of the third draft policy, Percepta will be covered for over 35 million or nearly two-thirds of the 57 million Medicare beneficiaries in the United States. We also made significant progress in building our library of clinical evidence for the Percepta classifier with data demonstrating that our test in fact helps change clinical decision-making and reduce healthcare costs. Data presented at key medical conferences in 2016 included two clinical utility studies at the CHEST Annual Meeting in 2016 showing that use of the Percepta classifier led to a significant decrease in physician’s decisions to perform diagnostic surgery or other invasive procedures in patients being evaluated for potential lung cancer. And data presented at the American Thoracic Society, or ATS meeting, which suggested the Percepta classifier’s ability to both be cost savings and cost effective to the healthcare system at a reimbursed rate estimated at $3,200. Third, the launch of the Envisia Bronchial Genomic Classifier, are tests for IPF. In October 2016, we launch the Envisia classifier at the CHEST Annual Meeting. The Envisia classifier helps improve the diagnosis of IPF among the 200,000 patients who present each year in the United States and Europe with a potential interstitial lung disease, or ILD. We believe the Envisia test is the first commercially available test to help patients with suspected IPF securing accurate diagnosis more quickly and through currently available processes and without the need for invasive surgery. We also made significant progress in building the clinical evidence for Envisia. At the International Colloquium for Lung Airway Fibrosis and at a private event at the CHEST Annual Meeting in October, we unveiled clinical validation data from our prospective 30-site double-blinded BRAVE study, which demonstrated the ability of the Envisia classifier to accurately identify with an 88% specificity usual interstitial pneumonia, a classic diagnostic pattern whose presence is essential to IPF diagnosis. We closed out 2016 with great momentum. We have got three commercial genomic tests now that targeted $2 billion market and an expanding pipeline for sustained growth. We exited our co-promotion agreement with Genzyme in 2016 and expanded and began integrating our sales team to sell across our Afirma and Percepta product lines in 2017. At this time, I would like to address two important executive leadership promotions, which we announced yesterday and which we believe will best align our business to meet the growth objectives, transition our business to profitability and importantly allow me more time to work with the leadership team in pursuit of the continued evolution and growth of our company. First, we have appointed Chris Hall as President and Chief Operating Officer with expanded responsibility for Veracyte’s day-to-day business and operations. Most of you know Chris and are familiar with the critical leadership role he has played in developing and guiding our commercial enterprise and operations since joining the company in 2010 as Chief Commercial Officer and being promoted in 2014 to Chief Operating Officer. As we enter our next phase, I am focused on sustained profitable growth I can imagine no better person to lead the execution of that corporate strategy. Additionally, we promoted John Hanna to Chief Commercial Officer. He will oversee sales, marketing and managed care for Veracyte reporting to Chris. John joined Veracyte in 2011 leading a very successful managed care strategy and has served most recently as Vice President of Marketing. He has been the key driver of our efforts to build clear value proposition for our genomic tests which is leading to broad physician adoption and health plan reimbursement. I am thrilled to have John leading our commercial efforts and look forward to introducing him to many of you. Finally, at the corporate level, we have recruited Kevin Gordon, the former Chief Operating Officer of Quintiles Transnational Holdings to our Board of Directors. I would like to thank Brian Atwood for his incredible service to the company as Director and Chairman of the Board since Veracyte’s founding. Now, Brian stepped down in December of 2016. His significant positive impact on the company will continue for years to come. I would now like to turn the call over to Keith to review our financial results for the fourth quarter and for the full year of 2016.

Thank you, Bonnie. Good afternoon everyone. I plan to speak about our fourth quarter 2016 results, our fiscal year 2016 results, the strength of our balance sheet and liquidity and we will conclude with a few observations. As I have mentioned earlier, in addition to our earnings release, you may find our financial presentation on our website at veracyte.com under Investors and then Events and Presentations. First, highlights for the fourth quarter are as follows. Revenue of $18.3 million increased 30% over prior year quarter. Afirma GEC reported volume of 6,313 tests, increased 13% over prior year quarter. Our revenue less cost of revenue as a percentage of revenue or gross margin was 64%, increasing 800 basis points over prior year quarter. Total operating expenses of $21.9 million were flat to prior year quarter. Net loss of $4.4 million improved 45% over prior year quarter. Net loss per share of $0.14 improved 52% over prior year quarter and cash burn which is defined as net cash used in operating activities and purchases of property and equipment was $4.7 million, a 33% improvement over prior year quarter. Moving on to our full year results, highlights for the fiscal year 2016 are as follows. Revenue of $65.1 million increased 31% over prior year. Afirma GEC reported volume of 23,237 tests, increased 20% over prior year. Our revenue less cost of revenue as a percentage of revenue or gross margin was 61%, increasing 400 basis points over prior year. Total operating expenses of $93.9 million increased 13% over prior year. Net loss of $31.4 million improved 7% over prior year. Net loss per share of $1.09 improved 16% over prior year and cash burn was $32.2 million, a 3% improvement over prior year. Next, our balance sheet and liquidity remained strong. At December 31, we had $59 million in cash. Our ending accounts receivable of $9 million had no age receivable older than July 1, 2016. In addition to our $25 million in interest bearing debt at year end under our credit agreement, we may draw an additional $15 million through June 30, 2017. And in November 2016, we raised $32 million in equity, which contributed $0.78 to our net book value per share. I would like to make a few additional observations. Based on past collection history and a growing number of contracted lives, 86% of our fourth quarter revenue was accrued compared to 58% in prior year quarter. In 2017, we expected over 90% of our revenue will be recognized in the quarter tests we performed and results reported. The majority of cash based revenue that we recognized is from tests preformed prior to the third quarter of 2016 which we expect to be substantially collected by the third quarter of 2017, effectively completing our transition of full accrual accounting for our thyroid test. And though we expect the transition away from cash based revenue to accrued based revenue to cause a short-term drag on sequential revenue, we believe the comparative year-over-year growth rates will remain strong. I will now turn the call back over to Bonnie to discuss guidance and corporate milestones for 2017.

Thank you, Keith. 2016 proved to be a pivotal year in which we now have three commercial products within span of 6 years. We remain on track to generate revenue from all three of those products and to generate positive operating income by the end of 2018. We would now like to set the stage for how we will measure our success in 2017 with the momentum we have coming into the quarter and end with a very brief statement on guidance. In 2017, we would define our company’s success using these four metrics. Number one is revenue growth. Revenue growth will be how we measure the effectiveness of our new integrated sales and marketing structure to drive adoption of both Afirma and Percepta tests. Number two is reimbursement expansion. Number three is evidence development. The continued development of scientific and clinical evidence for our genomic tests serves as the foundation for guideline inclusion, payer coverage policies and test adoption. And number four is financial discipline, as we proceed on our pathway to profitability. For guidance, we expect to achieve the following results in 2017; annual revenue in the range of $76 million to $84 million and annual cash burn of $25 million to $27 million, an improvement of 16% to 22% over prior year. We have strong momentum towards our goal to early in the year. In addition to the tremendous progress with Blues plan coverage for the Afirma GEC and Medicare coverage for the Percepta classifier. We signed an agreement last month with Quest Diagnostics, which we believe will help us to further accelerate Afirma growth. Through this partnership Quest will offer the Afirma GEC to its physician customers across the country who can refer patient samples to Veracyte for genomic testing when initial cytopathology results are inconclusive. We believe this partnership will complement our expanded and integrated sales team. We also have some exciting news early this week with the publication in the journal of the National Cancer Institute of new data suggesting the potential for the field of entry technology behind our Percepta classifier to enable one cancer detection using a simple non-invasive nasal swap test. We look forward to advancing this research through product development and validation towards becoming a commercially available test that expands upon the important benefits of the Percepta and further improves lung cancer screening and diagnosis. Further, we look forward to sharing new clinical evidence backing the use of all three of our genomic tests at upcoming medical conferences in the second quarter. To wrap up, we are delighted with the accomplishments and results that we have delivered to-date and extremely excited about our future. We started 9 years ago with a rather simple idea, if we could advance the use genomic technology to resolve the critical problem of diagnostic uncertainty and position our tests at the right point in the clinical pathway, then we could help patients avoid unnecessary surgeries, enable doctors to make more informed patient care decisions earlier and take costs out of the healthcare system. We have proven with Afirma that our approach works and are executing our playbook in the field of pulmonology. We believe we have a winning strategy and a significant growth trajectory as we begin to set our sites on profitability. We have another epic year ahead of us and we believe we have the right team in place, first mover advantage and a large addressable market in which to execute. Thank you for your time and attention today. I would now like to ask the operator to open the call up for questions.

Thank you. [Operator Instructions] And now the first question comes from the line of Puneet Souda from Leerink Partners. Your line is open.

Yes. Hi guys. Thanks for taking my question. Bonnie, again a good solid quarter, Chris congrats on the position and glad to have you onboard, Keith with the team now, congrats to John Hanna as well. But overall let me ask starting around a bit around the Quest agreement, could you describe the mechanics of that agreement and more importantly how do you think this will add to the penetration going forward and especially into the second half and then beyond, how should we think about that and overall potential adoption of the test, it seems like it should accelerate from this point onwards, help us calibrate that there a little bit?

Yes. Thanks, it’s Chris. So we are really excited about the Quest relationship for several different reasons. I mean first of all Quest is AmeriPath subsidiary has always been a major player in this space. And it’s a great validation of what we are doing to have quite frankly the largest lab company in the county partner with us and work with us on that. So that was excellent. Secondarily, one of the things that we have learned in this commercial journey is that the single biggest reason that physicians like to use their cytopathologists is the trusted relationship that they form. When we evolve their model in 2014, they are really focused on their direct business. We saw a tremendous growth there because local physicians were using their local pathologists and having a great relationship and they could integrate to GEC into that. And so our relationship with Quest is the ability to offer their clients the GEC connected with the cytopathology services. And they are a major player through their AmeriPath subsidiary. And we think that’s excellent. Mechanically their reps will be focused on promoting that to their customer base and servicing and selling those customers. And we will be involved knowing who those people are. But from our standpoint it’s really an amplification of our efforts because their field force will be out there talking so and etcetera which just continues to have more feet on the streets talking about the product etcetera. And we expect that the product will be implemented as we come through the end of the second half or the second quarter of the year. So we expect to see increasing acceleration of the GEC as it goes into the Quest system. It always takes a little bit of time to get it integrated into their kits and their labs, etcetera. And we are starting that implementation journey now and we will continue that through the spring and then we expect – we expect to see some really nice traction from it this summer. So we are really excited about it.

Okay, got it. And then a quick question Bonnie on Percepta world, just wanted to know with the final [indiscernible] in place and already you have significant experience here with Afirma, how are the conversations proceeding in terms of the pricing with the payers and overall how is your sense of penetration in Percepta now at not only having Afirma experience onboard, but overall now having a lot more coverage and confidence behind it?

Well, I think we are entering the year at a great place. I mean as you remember we did get to about 43 sites under our pilot commercialization waiting to get that Medicare coverage decision and with two of those MolDx policies now final, we are sort of often running. We are still negotiating on the price and expect to have that done by the end of Q1 with the policy going into effect this month as well last March – last months of the quarter. So, the teams are cross-trained. We have a group of Veracyte specialists that are teed up to carry both products. We are well positioned in all the regions where coverage has been the team, that’s where we will be starting the journey. And we are pretty excited about it. I think there is a lot of enthusiasm, but as all products in their first year of adoption, it will take some time to get all the kinks worked out of that process and get this into the pulmonology suites and start to get samples coming in the door, but it’s a really great place to be. And I think the early enthusiasm is quite positive.

And then just quickly on those early sites what’s been the feedback so far from those sites and could you give some color on that?

The feedback has been very positive. As I mentioned, the data that are emerging around how physicians are using the test and the validation that we indeed are positioned at the right point in the clinical pathway to be able to keep low and very low risk patients for lung cancer out of the process of additional invasive procedures, including surgery is definitely unfolding and the recent data that’s been spoken to shows that can be upwards of 40%, 50% of those patients that come through the workup funnel. So, I think we are very pleased that the product is positioned very well following the inconclusive bronchoscopy and that because of the data that’s been – the evidence that’s been built and published behind it, physicians show a lot of confidence in using the test in the test results to make that clinical care decision. And of course that’s the validation that we need to be confident that we will be able to drive success, because if we can avoid those surgeries and patient care has improved and physicians feel they are able to make a better decision and payers win in the back end. That’s the recipe for success. That’s Veracyte’s strategy.

Got it. Thanks guys. Thanks for taking the questions.

Thank you.

Thank you. And our next question comes from the line of Bill Quirk from Piper Jaffray. Your line is open.

Great, thanks. Good afternoon, everyone and congratulations on new titles for Chris and John. I guess first question is I guess trying to get an idea about the relative contribution from Percepta in 2017?

Yes, I mean, we actually made the decision. This was a point in time to pivot given an overall revenue number for guidance and naturally what we are going to focus on. As I said and as Chris mentioned, we got a number of things including Percepta sort of teed up to accelerate in the back half of the year. And those opportunities are sometimes hard to predict exactly where that will end, but we are focused on driving continued revenue growth with the portfolio of products. And as that unfolds, you will see the historical data and be able to track to that for future.

Okay. And then on the LCD that’s still in draft form, Bonnie, maybe you can just elaborate on that and obviously given some of the moves by CMS is that going to constantly challenges for you guys or maybe you could even speak to the extent you are hearing, but any timing around a resolution. I mean, it seems like a bit of a silly process in terms of what CMS is doing, but yes, just wanted to get your thoughts?

Yes, it’s a really good question. I think we are pretty confident actually this is going to get done, Chris.

Yes. I mean, we have been monitoring. The CGS and Palmetto are the two that have finalized the policy. And we are waiting for Noridian. We expected Noridian to lag, because Palmetto takes the lead in doing these and then Noridian puts them, it goes along typically with the Palmetto final policy and so we expected it to lag and haven’t been surprised at all and we continue to watch and optimistic that the final be posted soon. That set them and I think we are cautiously optimistic about how the process at CMS will unfold and continue to watch it. And I think having the new CMS administrators soon to be confirmed, it looks like that’s probably a good thing to clarify any of the policy issues there and we are optimistic that this will move forward pretty quickly.

Okay, got it. Thanks a lot.

Thank you.

Thank you. And our next question comes from the line of Bryan Brokmeier from Cantor Fitzgerald. Your line is open.

Hi, good afternoon. So, revenue was solid in the quarter, but volumes are a little bit lighter than expected. Was there a one-time impact from accrued revenue that was recognized in the quarter that was previously cash revenue like the $3.5 million in the third quarter?

No, if you look into the investor deck specifically on the income statement, we broke out and it’s also in our SEC statement the accrued revenue and cash revenue. So, once we report out at GEC, it either is in the accrued revenue it’s an accrued revenue GEC or it’s a cash based revenue. So, we don’t move money from one GEC into a different bucket. It’s just a matter of the cash coming in a majority of our GEC’s reported starting in Q3 were in the accrued bucket. And so the cash collected from the first half of 2016 and prior that is being collected, because we collect essentially over four quarters. So, the amount of cash that you see is declining as there are no – those GECs are no longer being reported as cash based revenue and upgrading that drag.

Okay. And so the volumes themselves there was light in the third quarter as well what you distributed to the seasonality and anticipated that there will be a bit of a pick up in the fourth quarter which you didn’t quite see, can you provide a little more color around what that impact was and if it had anything to do with the F&A volumes and sort of what percent of GEC only of the F&A volumes were GEC only?

Yes. So we did have actually about a 10% pickup in the quarter which was about the Q4 pickup year-over-year from last year and the GEC only reported volume was about 27% of the total. So you will be able to triangulate the numbers when you go into the filing and see how we get to those and year-over-year GEC only grew 33%. So still very, very strong growth on the GECs. I think December had a little bit of a low, mostly coming actually from the cytopathology side of the business that is typical when we get to holidays and vacations and that was what it was. But the GEC only which is still the primary driver of growth was very strong and the quarter was still the highest quarter volume we have ever done in GEC business. So we are pretty excited with the results for the year and look forward to continuing that growth and with the V2 [ph] product coming along and our deal with Quest we have a lot of confidence that on the back of the payer contracts and everything we are doing with the Blues that we are positioned really well to continue to accelerate that in 2017.

Okay. And the agreement with Quest, do you expect that to besides impacting your reimbursement coverage, it also should be more focused on the ambulatory market where you are a little bit less penetrated than where there isn’t as much GEC only, correct?

That’s right. This is really intended to give them the market leading product to take their cytopathologists that are pulling in the cytopathology samples to do cyto today. So it’s very complementary with what we are doing with our expanded sales team and I think kind of with a really good timing to enter this kind of deal because this is very complementary with the rest of our sales models.

Okay. And just lastly, I have been told that docs often don’t adopted a new diagnostic test if I suppose Afirma is not really new, but a new test for them to use, if it isn’t widely covered because they don’t want to offer the test to some patients and not to others, of the ten new Blue Cross Blue Shield companies that recently added Afirma to their coverage policies, how many of those are the largest or maybe the second largest plans in their regions. And then given that, would it be safe to assume that you could see a good acceleration in the market adoption because of the increasing coverage?

Yes. I mean it’s Chris, absolutely and some of those plans actually dominate their states like Alabama is I mean I think the combination in Alabama Blue Cross, Blue Shield and Medicare together accounts for almost 90% of the market share in that particular state. So a lot of those states have very high Blue Cross Blue Shield penetration. But I would note that for us and this is kind of we think about this as a sales funnel, if you will. Coverage is the first step and it’s the on-trade you get the contract done and the dynamic you are referring to is getting the cover, the product in network, because that’s really the pressure that physicians feel. There are certainly some coverage issues, but they feel a lot of pressure from insurance companies not used non out of network or out of network plans. And so getting the product covered and then getting it into network is our formula. And then we believe we see the pickup when we get it in the network. So that’s the journey we are on in and those ten plans set us up nicely to execute now the coverage or excuse me execute the network agreements and then push down on the physicians to make sure that they know they can order it without having to worry about being out of network in that regions.

Okay, thanks a lot.

Thank you. And our next question comes from the line of Amanda Murphy from William Blair. Your line is open.

Hi, congratulations on a good quarter. This is Aurko in for Amanda. Couple of questions, the first one was around the expanding sales force and how do you expect that to have your plans changed following the agreement with Quest and how do you expect cash burn to look over the coming quarters in terms of trajectory?

Yes. I will let Keith comment on any of the cash burn commentary he wants to give. But I will say that we have definitely made significant progress since we ended the fourth quarter and layered in more sales reps. We have probably increased the number of folks in the field by 30%, 35%. We expect to be at the end of the Q1 calling on, talking to physicians in all the different roles we have had. We are really determined to make sure we have enough capacity in the field this year to be able to drive the business that we need to push the business to the next level. And then the Quest we think is additive to that and our reps will inevitably get involved in some of the details on logistics, etcetera and helping the Quest reps is that will help us as much as it helps them. But certainly we continue to grow our group out and continue to push forward and we made tremendous progress doing that so far.

On the cash burn question, we tend to have our best quarter in the fourth quarter and our lowest burn and then we pay bonuses in the first quarter and tend to have our highest burn. And we have guided to the year of $25 million to $27 million and a 16% to 22% improvement.

Got it. And then a separate question all together this hasn’t been brought up yet, but the Anthem potential contract, I would like to – I was just wondering if there is a new shift up version from a GEC could include that conversation on how you are thinking about that?

No. We actually believe that will be somewhat of a transparent transition because the products are going to show a lot of commonality on the key data which is a negative predicted value in identifying the nine patients. We continue to be confident that we are going to move Anthem over the finish line here. I think our confidence has even increased since these 10 plans slipped just a couple of weeks ago to coverage. So we are on it and the day that we can announce that we will be happy. That will kind of close out the list on coverage.

Yes. We are – like we are – we have said that as they fall, we get even more confident. In general Blue Cross, Blue Shield plans want to operate in a manner that’s not that similar from each other. And having these many plans fall towards the end of the year, I think it gives you an indication that the organization as a whole is covering the product and the only remaining large plan it’s not as now Anthem. So we feel like we are really well positioned this year to get that in the rear view mirror.

Great. Thank you.

Thank you.

Thank you. And our next question comes from the line of Paul Knight from Janney Montgomery. Your line is open.

This is actually Carolina on for Paul Knight. On the introduction of the next generation Afirma GEC this year, do you – could you share more details on how you are going to introduce the test, if you are going to operate first through a select group of institutions or is it going to be a complete replacement of the [indiscernible] test? And also if you can comment on any [indiscernible] that you have in mind or at least like the period will it happen in the first half of year or second half?

Yes. We have not given any specific timing. We have said we expect to begin transitioning our clients to new version of the test this year. And I think any more detail than that would probably be providing more competitive information than we really want to provide at this time.

Okay, thank you. And just a quick second question is regarding the deformation of the private payment rates for Afirma, have you completed the process deformation of the payment rates of Afirma for CMS I mean?

The current CMS rates for Afirma will remain at $3,200 for ‘17. We will be submitting data this year to tee up for the payment rates which we expect to be published by end of the year and going effective for ’18. And we have seen no real pick-up in that process moving forward. So we are pretty excited to have that stability ahead of us as well.

Okay. Thank you.

Thank you.

Thank you. [Operator Instructions] At this time I am showing no further questions. I would now like to turn the call back over to Bonnie Anderson, Chairman and Chief Executive Officer for closing remarks.

Thank you all for joining us today. We appreciate your ongoing support and look forward to updating you on our progress in the future. Thank you.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone have a great day.