DermTech(DMTK) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Test revenues for Q1 2023 were $3.4 million, a 3% decrease year-over-year but a 27% increase sequentially [61] - Average Selling Price (ASP) was $192 per sample in Q1 2023, down 22% year-over-year but up 25% sequentially [62] - Net loss for Q1 2023 was $31.3 million, compared to a net loss of $30.1 million in Q1 2022 [65] - Cash burn for Q1 2023 was under $22 million, the lowest in the last four quarters, compared to over $26 million in Q1 2022 [90] Business Line Data and Key Metrics Changes - Billable sample volumes increased by 24% year-over-year and 2% sequentially to approximately 17,800 [61] - The proportion of Medicare in total DMT volumes was 23% in Q1 2023, compared to 24% in the same period last year [70] Market Data and Key Metrics Changes - The company added approximately 35 million covered lives since the end of 2022, bringing the total to approximately 126 million covered lives in the U.S. [42] - The company is making progress with Medi-Cal, California's Medicaid program, which serves over 12 million members [45] Company Strategy and Development Direction - The company is focusing on improving ASP and generating more reimbursed test volumes, shifting away from total test volume growth [56] - The company is targeting additional demand-based and discretionary savings in cash operating expenses for 2023 [65] - The TRUST 2 study is expected to provide additional evidence to support payer discussions, with top-line results anticipated in the second half of 2023 [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for ASP improvement and the impact of recent payer wins on revenue [72] - The company is not providing specific revenue guidance until there is better visibility on ASP and payment rates from recent coverage wins [72] - Management noted that the economic assessments being conducted by affordability groups related to national plans are looking favorable [47] Other Important Information - The company has completed its CLIA laboratory move, which is expected to enhance operational efficiency [39] - The company is working on a plan to reintroduce testing for pediatric patients and certain Fitzpatrick Skin Types [55] Q&A Session Summary Question: What are the characteristics expected of the new CEO? - Management indicated that details will be shared upon the announcement of the final candidate [74] Question: How many territories were dissolved, and what is the impact on sales reps? - Approximately 5 sales reps were reduced, and territories were merged to focus on reimbursed samples [75] Question: What is the outlook for revenue given flat volumes and ASP increases? - Management suggested that it is reasonable to expect revenue to be slightly up, but definitive guidance is not yet provided [77] Question: What is the timing for updates from the two large payers? - Management stated that updates are expected in the second half of the year, with favorable economic analyses being conducted [81] Question: How does the company plan to achieve positive gross margins? - The company plans to improve gross margins by increasing ASP and achieving better absorption of costs in the new laboratory [93]