Earnings call: Renalytix reports Q3 results, optimistic on KidneyIntelX

Renalytix, a healthcare company specializing in kidney disease diagnostics, discussed its third-quarter financial results and strategic developments in a recent earnings call. The company reported a revenue of $535,000 for the quarter, a decrease from the previous year's $724,000. Despite lower revenues, Renalytix has successfully reduced its operating expenses by 40% to $6.5 million and ended the quarter with $4.7 million in cash.

The KidneyIntelX diagnostic tool is expected to receive a final local coverage determination (LCD) soon, which is anticipated to drive comprehensive insurance coverage and test usage across the United States. Renalytix has also raised $13.5 million through a registered direct placement and is actively engaging in a potential acquisition process due to the value of their KidneyIntelX product.

Key Takeaways

• Renalytix reported a decrease in quarterly revenue to $535,000 from the previous year's $724,000.
• Operating expenses were significantly reduced to $6.5 million, a 40% decrease from the prior year.
• The company raised $13.5 million through a registered direct placement.
• KidneyIntelX diagnostic tool is expected to receive final LCD soon, which could enhance test usage.
• Renalytix has launched FDA-authorized KidneyIntelX.dkd and is focusing on sales growth in the US.
• The company is involved in a formal sales process after being approached by a diagnostics company.

Company Outlook

• Renalytix is optimistic about the draft LCD for KidneyIntelX and its inclusion in international clinical guidelines.
• The company anticipates comprehensive payment throughout the US once the final LCD is issued.
• Renalytix is focusing on controlling operating costs while growing test volumes and revenue.

Bearish Highlights

• Test volumes have decreased due to the transition to full commercial pay with Mount Sinai.
• The company is not expecting the VA to be part of its plans in 2024.

Bullish Highlights

• Renalytix has secured contracts with major healthcare groups such as Texas Blue Cross Blue Shield and Illinois Blue Cross Blue Shield.
• The company has reorganized its sales team and updated marketing materials to support growth.
• There is a strong belief in the market adoption of FDA-approved KidneyIntelX.

Misses

• The company did not provide an estimated timeframe for achieving cash flow breakeven.
• Specific details regarding conversion rates or the number of tests expected to be ordered by doctors were not disclosed.

Q&A Highlights

• Renalytix is working on simplifying the ordering process and providing better access to phlebotomy services.
• There is no timeline for an update on the ongoing strategic review.
• The company is fighting to maintain a test price of $950, but the average price received is in the mid-800s due to insurance complexities.
• Renalytix is not currently offering discounts on their tests despite the trend of heavy discounting in the PCP channel.

Renalytix (ticker: RNLX) remains focused on the potential of their KidneyIntelX product as a transformative tool in managing chronic kidney disease. The anticipated LCD and guideline changes, coupled with strategic sales and marketing efforts, position the company for potential growth in test usage and insurance coverage. However, the company faces challenges in patient identification and the complexities of insurance reimbursement. Renalytix's optimism is tempered by the absence of a clear timeline for achieving profitability and the intricacies involved in the ongoing strategic review and potential acquisition process.

InvestingPro Insights

Renalytix (ticker: RNLX) has been navigating a challenging financial landscape, as reflected in the recent quarterly earnings report. To provide additional context to the company's financial health and stock performance, let's take a closer look at some real-time data and InvestingPro Tips.

InvestingPro Data indicates a market capitalization of $46.01 million, signaling a relatively small player in the healthcare diagnostic field. The company's revenue for the last twelve months as of Q2 2024 stands at $2.41 million, with a concerning decrease of 36.65% in revenue growth during the same period. These figures underscore the revenue challenges mentioned in the article. Additionally, the gross profit margin is notably thin at 6.31%, which may hinder the company's ability to turn a profit in the near term.

From an investment perspective, the stock's performance has been notably volatile, with a 1-month price total return of -32.71% and a significant 1-year price total return of -74.11%. Such volatility can be a red flag for investors looking for stable growth. The InvestingPro Tips echo these sentiments, highlighting that the stock has taken a big hit over the last week and has fared poorly over the last month. Furthermore, analysts are not optimistic about the company's profitability for the year, and it's worth noting that Renalytix does not pay a dividend to shareholders, which could be a factor for income-focused investors.

For readers interested in a deeper dive into Renalytix's financial health and stock performance, there are additional InvestingPro Tips available, offering comprehensive analysis and insights. There are 11 tips in total, including observations that the company operates with a moderate level of debt and that short-term obligations exceed liquid assets. These insights can be particularly valuable when assessing the company's ability to manage its financial obligations.

For those considering an investment in Renalytix or seeking to understand the full picture of the company's performance, using the coupon code PRONEWS24 can provide an additional 10% off a yearly or biyearly Pro and Pro+ subscription to InvestingPro. This offer can unlock a wealth of information to help make informed investment decisions.

Full transcript - Renalytix Ai Plc (RNLX) Q3 2024:

Operator: Good morning, and welcome to the Renalytix conference call to review Third Quarter Fiscal Year 2024 Financial Results. [Operator Instructions]. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Peter DeNardo of Capcomm Partners for a few introductory comments.

Peter DeNardo: Thank you, Olivia. Thank you all for participating in today's call. Joining me today from Renalytix to provide formal remarks are James McCullough, Chief Executive Officer; and James Sterling, Chief Financial Officer; and Howard Doran, President, on hand for our question-and-answer session. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. Examples of these statements include without limitation, the potential benefits, including economic savings of KidneyIntelX, the commercial prospects of KidneyIntelX, including whether KidneyIntelX will be successfully adopted by physicians and distributed and marketing our expectations regarding reimbursement decisions and the ability of KidneyIntelX to curtail cost of chronic and end-stage kidney disease, optimize care delivery and improve patient outcomes, trends in our market and potential benefits of government policy change, the impact of COVID-19 and other world events on our business. Our expectations regarding product development, strategic partnerships and collaborations, reimbursement decisions, clinical studies and regulatory submissions, our business strategies and future growth, including plans, expectations and opportunities for financing operations and revenue projections and guidance. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our annual report on Form 10-K that was filed on September 28, 2023, with the Securities and Exchange Commission. All forward-looking statements made on this call are based on management's current estimates and various assumptions. Renalytix disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 15, 2024. I'll note that due to regulatory restrictions under the U.K. Takeover Code, when we can and cannot share up this time about the formal sales process. We are limited in the comments and information we can provide today. But suffice it to say that if there is material news to disclose by any developments, we will provide updates transparently as required. I'll now turn the call over to James McCullough. James?

James McCullough: Thank you, Peter. Good morning, good afternoon. We have experienced a productive beginning to the 2024 calendar year. On February 8, Medicare contractor, National Government Services issued a draft local coverage determination or LCD for KidneyIntelX. This follows an over three-year process, including two-year -- two hearings submission of extensive outcomes, utility and regulatory data and a significant volume of claims submitted to Medicare, which have now been reimbursed. We expect the final coverage determination to be issued in the near term. On March 14, KidneyIntelX was included in the final international clinical guidelines for chronic kidney disease known as KDIGO. Guidelines are followed by doctors, hospitals and insurance payers throughout the world and are a critical milestone for establishing broad use of an advanced diagnostic tools, such as KidneyIntelX. Also, in March, we disclosed the formal process for the company. after receiving an approach from a large, well-capitalized diagnostics company. Since this approach and no potential acquirers have now joined in the discussions, while restricted on what we are able to say, we expect the sale process to be competitive given our substantial regulatory outcomes data and reimbursement achievements and now the inclusion of KidneyIntelX and clinical guidelines. In March and April, we completed common stock equity financing rounds, which extended our runway and provide us with further optionality to maximize shareholder value, whether it's a stand-alone business entity or as part of bigger business enterprise. In April, we officially launched our FDA-authorized KidneyIntelX.dkd product version and are now receiving commercial test orders. This will rapidly supplant the original KidneyIntelX laboratory developed test or LDT. KidneyIntelX.dkd pricing remains the same at $950 per test, and we have established broad insurance reimbursement on the distinct CPT code for KidneyIntelX.dkd in the clinical lab fee schedule. We have been steadily reorganizing the company through expense reduction and a hard turn to focus on sales growth, culminating with the appointment of Howard Doran to the position of President at the end of April. Difficult changes were made to conserve cash by optimizing our organization on sales with a year-over-year headcount reduction of 50% and an overall OpEx reduction of approximately 40% year-over-year. That is close to a 60% overall expense reduction from peak, and we continue to look at near-term options for further expense reduction without impairing our ability to grow revenue. Renalytix has now become a sales and marketing play into a wide-open market with 14 million diabetic kidney disease patients in the United States. The global population of diabetic kidney disease patients is much larger. With many companies now reaching epidemic disease levels. We are in discussions with potential international distribution partners to reach these patients now that KidneyIntelX is FDA authorized and in the international clinical guidelines. Towards the end of 2023, we hired and trained a small direct-to-physician sales force in the United States which has just completed the first full quarter of operations in March. The sales force is composed of experienced performers in the diagnostic industry, and I am pleased to report that we are already seeing a change in the breadth and volume of individual physician test order. The new sales force has achieved a 33% increase in direct to primary care test order rates quarter-over-quarter, a growth ten, which, while early, we are seeing continuing into the current fourth fiscal quarter. In calendar 2024, we have implemented a series of ordering process improvements around the FDA product launch, which took place in April. Specifically, we have improved our customer-facing offering to ease physician ordering and increased patient access to blood draw services. Our market focus is on a limited number of territories such as New York, where there are large populations of patients with diabetes and kidney disease and where we have achieved comprehensive insurance coverage for KidneyIntelX. These territories pose the best near-term opportunities to foster adoption of KidneyIntelX while accelerating test sales. We believe FDA authorization in combination with the local coverage determination if and when issued and clinical guidelines inclusion, makes KidneyIntelX the only choice for preventative precision medicine prognosis in this large chronic disease population. Finally, we have received several questions regarding FDA's April 29 published final rule on laboratory-developed tests or LDTs. While we felt the final rule was more full than language proposed in the original drafting, it is clear that diagnostic testing is entering a new era of tight regulation and exacting standards that will require everyone launching an advanced innovative test such as KidneyIntelX to consider the significant capital investment and long-time lines required for a full FDA review process. By achieving FDA authorization for KidneyIntelX. This has increased the high barriers to entry around our business and technology. Particularly for diagnostic technologies that address very large markets such as chronic kidney disease and are capable of setting new clinical standards of care, we believe FDA regulation is becoming the default pathway to achieve comprehensive insurance reimbursement. Without regulation, very difficult to get paid in the future. We believe our decision to invest heavily upfront in real-world outcomes data and a full FDA de novo review process were the right ones and add significantly to the franchise value of KidneyIntelX.dkd and the KidneyIntelX artificial intelligence enabled platform technology. I will now turn it over to James Sterling, our Chief Financial Officer. James?

James Sterling: Thank you, James. Hello, everybody. Today, we issued the financial results for the third quarter of fiscal year 2024, which ended March 31. Our GAAP financials were filed today on Form 10-Q. Figures I will discuss here are based on our GAAP financials and quoted in U.S. dollars, which is our reporting currency. For the third quarter, we recorded revenue of $535,000, compared to $724,000 for the third quarter of the prior fiscal year. As a reminder, the prior year comparative period included tests that were performed under the original $6 million contract with Mount Sinai, which has since concluded. Tests at Mount Sinai has since been run under a standard commercial billing model. 806 tests were processed during the quarter, of which 82% were billable. Encouragingly, testing locations continue to diversify away from what had been largely dominated by a single hospital system with tests outside of Mount Sinai now accounting for nearly half of the total, up from about 30% 18 months ago. As James stated, we're experiencing increasing test order capacity from our direct-to-physician sales force and expect the FDA de novo authorized version of the KidneyIntelX test onboarded with other health system providers in calendar 2024, following its official launch last month. Last quarter, we reported that NGS resumed consistence Medicare payment for tests under individual claims review, allowing revenue recognition in that quarter of 318 tests built to Medicare in 205 tests from earlier periods. Payment from NGS has continued on a consistent basis. Operating expenses for the third quarter were $6.5 million on a GAAP basis, down 40% from $11 million for the prior year period. This reflects the significant actions we took to lower operating expenses, including a 50% reduction in headcount as well as vendors reductions. Certain of these steps followed our FDA de novo authorization, which allows us to focus spend on the sales and marketing organization. Through the efforts, we have reduced our cash burn under $5 million per quarter, which is 40% lower than the fiscal second quarter and half the level of a year ago. Net loss for the third quarter of fiscal 2024 was $7.7 million or $0.08 per share. This was down 36% from a net loss of about $12.1 million or $0.14 per share for the third quarter of fiscal 2023. We ended the third quarter with approximately $4.7 million in cash as of March 31. This does not include the approximately $6.4 million net proceeds from the second tranche of the March pipe financing nor the $1.5 million from the registered direct placement announced last month. We raised aggregate gross proceeds of $13.5 million in those financings. We continue to explore ways to carefully control operating costs without impairing our ability to grow test volumes and revenue. Operator, we can now please open the call for questions.

Operator: [Operator Instructions]. Now for question coming from the line of Dan Arias with Stifel. Your line is open.

Dan Arias: Good morning, guys. Thank you. James, what's been the feedback from clinicians and payers on the guideline changes and the LCD? I mean, it seems like as much as anything else that's taken place for you guys, those should be what moved the needle on test usage. So, can you just talk to how you see the impact of those changes. I'm sure the answer is they're going to be tremendously helpful. But what I'm really looking for is some discrete details on just where you expect to see the changes first as a result, to the extent to which they might change? And if they're not going to change what the remaining sticking points might be for those folks at the stakeholder level? Thank you.

James McCullough: Yes, it's a very good question, Dan. We continuously update our communication with payers, including national payers. And obviously, we're in the final stages of LCD with the milestones. And that includes, obviously, FDA. It includes updated outcomes data. It includes the draft LCD, which is a significant milestone and then, of course, guidelines. So, we've had a continuous stream of updates going out to the payer community. I'll give you one anecdote. We talk to the CMO of a major insurance plan who said with guidelines that's checkmate. So, we expect that with the issuance of a final LCD, we've crossed the threshold for comprehensive payment throughout the United States. I can't see a reason why given the health economics data, the benefits of KidneyIntelX third-party real-world usage of KidneyIntelX, which now been published on outcomes, this thing makes a difference not only in kidney health as measured by slope, but also in diabetes, as measured by HbA1c. So, this is advanced preventative medicine. It works. It works very well. for a variety of reasons. And it's working at a time when there are a whole sequence of new drug therapies, which are quite eccentric including SGLT2 inhibitors, GLP-1 agonist. And how are you going to figure out which patients are at risk early on to be able to prescribe these drugs. So KidneyIntelX sits right at the heart of the whole health economics equation in precision medicine, which includes early identification, diagnosis prognosis, therapeutic treatment and really is the gateway to controlling cost and outcome, and that has been evidenced now extensively in outcome studies. And that's one of the reasons we got put into the guidelines. So, I do think we are very well positioned in calendar 2024 for comprehensive insurance coverage. And so far, the feedback has been very good. There's never any guarantee, but we do feel that we're in a very good position. And the other thing I'll point out, Dan, is we're doing this in a very short period of time. It's always difficult when you get here because people want to see sales ramp. People want to see building of the business. But the reality is that to be able to produce longitudinal outcomes data, get through a multiyear FDA de novo marketing process, get into the guidelines and start a commercial organization in five years is a very short time line. So, 2024 is going to be very interesting in terms of knocking through the rest of the insurance coverage.

Dan Arias: Okay. Yes, I certainly hear you on five years being short at the corporate level, as you can imagine, investors less short for investors that time line is. So, I mean, to that point, 800 tests during the quarter, which is down from 1,000 or so last quarter. I think that was down from 1,300 the prior quarter. When, very simply, when do you think we reverse trend and stay up on a test volume trajectory. And along those lines, to OJ's point, on non-Sinai volumes that aren't coming from Mount Sinai. Can you just talk about where we are with Wake Forest, St. Joe's, Utah, et cetera? Is there a point where just in aggregate, those getting off the ground should start to be meaningful on a quarter-over-quarter basis?

James McCullough: I think it's this year and the reduction in total test volume is a function of us switching over to full commercial pay with Mount Sinai. This has been frustrating for me. Mount Sinai Health System is a fabulous partner. It is quite complex operating in that environment. That was our first launch customer. And as you know, we did that under a very specific environment with a defined contract to make the jump from that defined early-stage contract under IRB control to a proper commercial testing has been a challenge. We think that, that is starting to work out now. And the interesting thing for me is we've now added the important optionality of growing direct-to-physician sales and Howard will talk about that in a little bit. But the direct-to-physician sales is very much a bright light, and that is under our direct control. We also do expect to be seeing value coming out of the Atrium Wake Forest launch and we do expect to see other groups coming on board. And I'll make one statement. It's been quite a balancing act to reorganize the company. It's like flying an airplane slowdown and go down, difficult to achieve. We're now getting through the final stages of that where we've substantially reduced the operating burn reorganize the human resources platform, brought new people on board like Howard and a new sales force, which is now has one quarter under its belt. So, I would expect that we're going to see a leveling off and an increase without forecasting in testing volume activity. And most importantly for me, the breadth of the testing volume activity. So, we're not just wholly dependent on Mount Sinai as a single-source customer. And that place in 2024.

James Sterling: Sorry. If I may add, James, the numbers, Dan, that you had listed were total tests, including nonbillable study tests. And we curtailed the study test quite a bit. After the terrific data after the 12-month point and also a great opportunity to save some money. If you looked at just the bill tests, the decline is a lot less dramatic than what you indicated, mainly flat more or less. And so, I just want to make that important distinction. If you just look at billable tests, it's a much better picture.

Dan Arias: Okay. That's helpful. James, since you brought it up, James mentioned in a non-forecasting way that he thinks volume should be able to ramp here in the coming quarters in a forecasted way, would you agree with that?

James Sterling: Yes. Well, I'll stick to a non-forecast, Yes. So, there's certainly a path for volumes to be increasing and the work that Howard is doing, particularly in the primary care, independent primary care side is pretty exciting. So, some nice growth there.

Operator: Our next question coming from the line of Randy Baron with Pinnacle Associates. Your line is open.

Randy Baron: Hi, good morning. Can you guys hear me?

James McCullough: Yes. Good morning, Randy.

Randy Baron: I have a couple administrative questions and then two broader ones. Just really quickly, it was encouraging, at least for me to hear, that more bidders seem to have come out in this process since the initial unsolicited inbound in March that you got. Understanding the constraints that Laura's put on you, is it fair to say that, that process potential acquisition is active and ongoing.

James McCullough: So, it is active, and we are restricted, so I won't comment specifically on the process. But I will say that it is not every day. In fact, it's quite rare that you find a product service like KidneyIntelX that addresses such a large market -- in the case of the United States, it's about 14 million is with diabetes and kidney disease that's wide open. And that has a price attached to it of $950 per reportable result, which gives us a very significant margin. And which has been derisked on the regulatory front, we are largely derisking on the reimbursement front and is now in the clinical guidelines. And again, the data, which is so important, which we've invested heavily in, which has allowed us to get insurance reimbursement and get in the guidelines and get through FDA is very good and affects not only kidney health but also diabetes health. So here, you have a singular product and with the new look from FDA on laboratory-developed tests and the expense associated with doing this, the barriers to entry are very high. for a blood-based biomarker-driven artificial intelligence-enabled in vitro prognostic. So, this really is the only precision medicine preventative solution at the front end of this huge disease funnel. And we are not surprised that, that would attract significant interest from multiple players, not just in the diagnostic industry. Obviously, we have to continue with our sales and marketing effort, and we want to increase the optionality here. Strategic partnering is an option. Acquisition is an option, all of which allow us to address the significant market. But this is a product that is rare to find. So, we're not surprised that this process would be competitive.

Randy Baron: Great. And then, OJ, just an administrative question for you. You guys did a couple of a series of raises in the quarter. What's pro forma cash today?

James Sterling: We reported $4.7 million in cash on March 31. I don't want to -- I haven't in the past given a spot cash balance during this call. So, it won't change the policy now. But $4.7 million of cash on March 31, and that does not include the $6.4 million from the second tranche of the pipe nor the $1.5 million from the registered direct. So that $4.7 million figure was from 45 days ago. So that should argue with enough information to do your estimate, but that's the detail that I can provide now.

Randy Baron: Okay. And then just two really quick broad questions. Howard, I guess this is for you and James. It was interesting in the script talk about the breadth and volume of test changes at the direct-to-physician level. I missed the number. I think you said 30% or 33% growth. But can you just talk broadly about what you've done on sales and market activity, what did the reorganization to align our commercial activities, how many salespeople do you have now, et cetera?

Howard Doran: Thanks for the question, Randy. Yes. So first and foremost, we pretty much have retooled the entire sales team from what it was last summer. We actually have four members of the team that actually are legacy that have been with us since between 2021 and 2022. We have three additional folks that are remaining from our training class that we had this past August. And we brought in 3 new folks, as we discussed on the last call this December. So, their first time in the field really was this January of this current quarter. So big change is just the first that we have. And just as we talked about on our last call, that these folks come with -- the new folks come with strong diagnostic background. Half of that group comes with nephrology experience in their past. So, they know the big practices, they're able to get into some of the, et cetera. And just the general nephrologists that are practicing that are very supportive of our efforts, but also assist us with going out to the PCPs with the recommendation because they're part of the referral patterns. So, having folks that can knock on those doors, in addition is also helpful. We've taken a look at our marketing materials. And I just think one of the biggest triggers is having the one-year outcomes data that came during this period allowed us to really complete the story. We have a very -- we have a test that's very simple to understand what it does, obviously, it gives you the low, medium and high-risk test results for the patient. But now the first question of PCP or nephrologists for that matter, what's going to ask is, what do I do with this information? Is it actionable? And now that there's a lot more tools in the toolkit from a standpoint of what you can do therapeutic wise up for these patients. There's a lot of choices. So clearly, we are seeing evidence in our outcome study where, in the high-risk category, for example. There was a 61% increase in patients that were being put on institute. So, we've answered the question is, what does the test do? Is it actionable? Yes. And then again, the third thing that we're highlighting in all of our materials or what are the outcomes? And there's really five distinct things when you think about it that we're really highlighting and referencing right now. One is just are the clinical betterment of the patient is one is, James mentioned a moment ago, GFR. So, when GFR flattening of the climate curves, that means kidney function is being withheld or being the decline in kidney function is actually more stabilized is what I mean by that, which means it extends the runway to potentially further negative outcomes. So, it's a much -- it's about a 50% reduction in the lowering of that GFR result that is causing that assistance. When you go to UACR, which is a measure of kidney damage, we're also seeing a reduction in UACR based on the medication. So, kidney health in general, the progression of the disease is slowing. So that's very important. And then three additional factors, all eGFR measures. One is because we're doing new ACR testing in the combination with our test. That's a HEDIS checkpoint. 1/3 of patients in this study also saw a -- treat and their blood pressure down to 140 over 90 back to normal range. That's a HEDIS dysfunction and also lowering A1c, we've seen statistically significant in our high risk and intermediate risk patients, that also is a HEDIS reduction. So, there's three distinct quality measures associated with HEDIS as well as improvements in kidney health there coming out of our -- out of this outcome study. So that was really sort of the last piece of the story that we didn't have. And that's been incorporated in a much tighter simpler message for the clinicians to understand. So, I would say those are the two biggest variables, new team with broader experience coupled with better data and a very streamlined approach on the advantages of KidneyIntelX.dkd.

Randy Baron: That's great, Howard. And then my last question, and I'll go back in queue. This is, I guess, James, for you. Dan clearly touched on the importance of the LCD. It sounds like an event. To my knowledge, when I looked, I didn't see any negative comments in the open comment period. So, when do you expect finalization to happen? And what are the implications?

James McCullough: Yes. The National Government Services has until September to issue. They could -- that's the standard time frame. We could see it sooner than September. The implications are significant, especially in combination with guidelines. These processes are not easy at all. They take a long time. There's a lot of data production required, especially when you're innovating in an era, there's been nothing before you. So really, prediction early of chronic disease risk is a difficult thing to do. And we saw this with FDA, the level of proof and validation required to get through these government organizations and to be able to declare risk with accuracy early and do it in a way that it's simple for a primary care physician to interpret even though there's a lot of technology back end. This requires a significant amount of validation, a lot of data, a lot of process. Getting Medicare coverage in such a large population is going to be a major event for us and not easy to replicate. And I think, the comments I'm hearing I'd give you one earlier on is that you really enter a new paradigm when you are in the guidelines and you've got this longer Medicare coverage in place. and with the health economics data with a clear advantage of KidneyIntelX in terms of preventative medicine, I don't see a case why an insurance company does not cover KidneyIntelX. And for progressive thinkers, I don't see a case why insurance companies don't educate physicians on the benefits of using KidneyIntelX. Everybody the insurance company wins, the patient wins, obviously, we will win. The government wins because they're spending an inordinate amount of money on patients that fall into dialysis, which published in JAMA last year, first year alone for dialysis cost treatment for kidney failure is over $200,000 a year. And everything is a time and a place. We have the drugs now that are available. Insurance coverage, they have very good data. And pharma is now out educating with us on the importance of diagnosing kidney disease, especially if you have diabetes. So, the equation now become very simple, right? If you have diabetes, you have to be diagnosed for kidney disease. Do you have it or don't you? And if you have diabetes and kidney disease, you have to understand your risk because we know the top 10% to 15% of patients at high risk by KidneyIntelX have a greater than 2/3 chance of experiencing an event, a significant decline in kidney function or kidney failure over the next couple of years. The bottom 50% and patients regardless of stage and grade, you can be moderate stage kidney disease. But if you're at low risk by KidneyIntelX, you are highly unlikely to progress. So, this is not a marginal equation. This is a very strong to me, a black and white equation at the front end of this huge disease funnel, and we can now, for the first time, rapidly and in an easy way for primary care physician to determine who should be treated and who's really at risk and who's not. So, everybody benefits with KidneyIntelX and the payoff comes very quickly. because the cost of not catching people early is so significant. So, we can eliminate a whole lot of suffering across millions of patients and a whole lot of cost. This really is the paradigm for how you manage chronic disease and not to go too much further, but this is the issue that we all face in clinical medicine going forward. How do we manage chronic disease? Because you can't treat everybody, populations are too large. And if you don't have prognosis early, accurate early prognosis, accurate early risk assessment, early lost the war. And here, we now have an FDA approved, beautiful outcomes in the guidelines. And now with an LCD, the equation is really complete. And we've achieved what should be now the standard of care around the world. for early-stage prognosis in this big disease state. So, I do think the LCD issuance is a key and critical validation. And is going to help start to move the clinical community towards adoption.

Operator: And our next question coming from the line of Mark Massaro with BTIG. Your line is open.

James McCullough: Mark, we can't hear you. Maybe you're on mute.

Mark Massaro: Sorry about that. Can you hear me now?

James McCullough: Yes. Now we can hear you.

Mark Massaro: Okay. Thanks for taking my questions. So, you guys got into final KDIGO guidelines two months ago. And in the past, you've disclosed metrics like number of commercial payers, number of Medicaid contracts, I think roughly 40 private payers and, call it, 35 state Medicaid contracts. Do you have an update on the payer coverage that you have today? And in the last couple of months, has there been any movement towards engaging pairs in a greater capacity? And maybe could you just remind me who you have, obviously, you've made some reductions in headcount. But do you have a team of folks in front of commercial payers at this time?

James McCullough: Yes. And I'll take that last question. The headcount reduction has obviously been painful. And we have ended up with what I think is an efficient access group, which is the group that interactional payers. We have also -- we have a third-party billing group that we've been working with for a while now, who has taken on more and more of the burden, administration burden because as you get more and more payer contracts, there's a larger administrative burden that goes along with maintaining those payer contracts. And so, we've been able to find a more efficient mix there. And again, as I said originally earlier on in the call, this is a dynamic process. So, I've learned an awful lot about how do you create comprehensive payer coverage. It's very difficult, right? Because you have different peers with different ideas of value-based care. Different ideas of health economics, different drivers. There are early adopters and late adopters, there are national payers, they are local payers. There's Medicare, Medicaid. This is an incredibly complex equation and it requires an enormous amount of data and proof. And I think, for example, for us to be able to get contracts like Texas Blue Cross Blue Shield, which covers over 8 million members in Illinois Blue Cross Blue Shield, which I believe covers over any numbers, EmblemHealth care in New York City. These are very sophisticated groups. They look at the data and require a lot of diligence before they issue a coverage determination, especially for an advanced diagnostic test like KidneyIntelX. Many of them are now requiring outcomes data. not just utility data, and that requires time, a time function, which is a significant investment. And there's no shortcut. Many of them require FDA. Otherwise, you're deemed to be experimental. So, we've been very fortunate because from the very beginning at Renalytix, we had this dynamic up. We knew this was going to be an uphill fight to get this, and we've all died on the hill of reimbursement. And if you can't get hit you have a big research product -- project, you don't have a business. So, we knew from the very beginning, we had to generate outcomes data. We made the choice to go through FDA. And all of this, of course, was focused on getting to the guidelines as well. So, it has been a continual update process. Having been put in the final guidelines is a major help because we are no longer experimental. Nobody can say, "Oh, you're just a laboratory-developed test." Now we can point to a whole sequence of major payer decisions and draft LCD, guidelines, FDA outcomes that I cannot see a reason why a health care insurer especially with the risk exposure to chronic kidney disease and diabetes, right? This is not just -- we're not screening people here. These are patients walking into a primary, a very busy primary care physician office with a complex disease, multiple complex diseases that could represent a significant short-term actuarial risk. There's no reason, no logical reason why you shouldn't end risk of that patient. And we're now talking about adding very expensive drug prescription to the table. So, prognosis, precision medicine prognosis, which is KidneyIntelX which can be utilized by the primary care physician. This is key, right? It's got to be very simple. It's got to be rapid. It's got to be very actionable, which is what we spend a lot of time and money figuring out and having it regulated. This becomes critical to managing the disease and all of the downstream suffering and all the downstream expense, it becomes critical to the health equity equation in the United States. And I'm pounding the table here because this is the solution for managing chronic disease, getting in early at the primary care level and understanding risk. From there, all of the clinical decisions can be made. And if you don't understand risk, and we see this now in the real-world data, physicians are not understanding risk without KidneyIntelX, and we see the consequence. Today in the United States, still 50% of the people who enter hemodialysis, do it through the emergency run. We're still having crash catheterizations. We're now prescribing $1,500 a month cycle biologic into patients who may respond or not, who may not be high risk. So, unless you understand where you are in the risk spectrum, unless you understand the ability to characterize the disease and you can do it in a very simple way, which is not easy. Then you can't control it. So, the LCD is a significant event for us we're continuing to update the payer landscape. I don't have all of the numbers in front of me, but a lot of them are listed on the website and we do issue 8-Ks with material events. I do -- I would like to see national payers coming on board. They're spending an awful lot of money that they don't need to spend on late-stage kidney disease. If they implement KidneyIntelX across their systems, it is now abundantly clear that preventative medicine goes in place and you start to prevent progression and you get a much better characterization on these huge populations that you're now ensuring. So, I think we're in a win-win position for 2024 to knock off the rest of the insurance coverage.

Mark Massaro: Okay. That's helpful. And certainly, it would be great to see the LCD go final by September or sooner. I know in the past, you talked about a potential opportunity to get an NCD, the national coverage determination. Is that still a pathway you guys are looking at? Or is it really just more about getting the LCD and just going from there?

James McCullough: It still is a possibility. We are speaking with CMS, we are speaking with FDA. But I think for all practical purposes and LCD finishes the game for us. And just to remind everybody, National Government Services is the Medicare contractor that is going to issue -- that has issued the draft LCD. And as long as we process samples in our New York laboratory, we can now bill at $950 to national government services and get paid. We're being paid now under a convention called ICR, individual claim review. It's a little bit cumbersome. So, the issuance of an LCD again, will be another incremental smoothing into the clinical pipeline. But we can take a sample from any Medicare beneficiary, anywhere around the world as long as we process that sample in our New York laboratory, we can build Medicare. So, a final LCD means that we can service the entire Medicare population with KidneyIntelX.

Mark Massaro: All right. That's great. Last question for me, Howard, I appreciate the update on the commercial organization. It sounds like there are approximately 10 people on the sales force. Do you expect to stay there this year? I understand that cash burn and capital is something you have to keep your eye on. But yes, should we expect you to stay flat at 10 this year? Or is there potential to add to that? And then if there was no rate limiting factor with capital longer term, what -- how do you see a healthy sales force? What would that look like in a couple of years?

Howard Doran: Sure, Mark. Yes. So, you're correct. We are currently at 10 in regards to what we have today. We are always looking at opportunities that we're opening doors with now as far as access to larger groups. And we have a couple of things that we're working on currently that if those came to fruition, we would be adding potentially 1 or 2 folks. At the end of the day, though, what we're really trying to prove out is what's the productivity that we can see in the new -- with the new team in its first year. So that's really the measuring stick that we're paying the closest attention to. But yes, we would be in very small opportunities. We'd be still cautious and deliberate because of the spend but there are a couple of inflection points that we want to maximize that would not be able to be covered by our existing team. So, we will -- certainly, as those come on board, we certainly will talk about those, but that would be the adds. I think what we have as far as the markets we're in, as we've discussed before, we follow the actual need, markets that have a high penetration rate of type 2 diabetics with chronic kidney disease, overlaid with very favorable managed care. Those markets right now for us are Ohio, North Carolina, New York, Florida, Texas and Louisiana. And so as much as we've been talking about the LCD and additional reimbursement. Those are just very strong markets for us across the board, strong from a standpoint of need, strong from a standpoint of having the managed care contracts and programs that we need to be successful within those. So, from an expansion standpoint, yes, it would -- it would be a lot of still looking at opportunities that have those same characteristics, right? We want to go to places first where there's a tremendous need coupled with who has the best reimbursement. And look, I've had sales organizations of many sizes. Obviously, the number that we would put in the field and deploy would be the type of funding we have at the time. So that's a little hard to answer that one hypothetically without discussing if you had X dollars, what would you do? I could be more direct there. But just, yes, we want to expand. We want to continue to raise. We know we can drive results now at the PCP level, and we want to be -- to magnify that over time. I just couldn't give you a firm number as we sit here today, other than a couple of additional adds that I foresee over the next couple of months, most likely do some other events that we're working on.

Operator: And our next question coming from the line of Yi Chen with H.C Wainwright. Your line is open.

Unidentified Analyst: This is Ashton on for Yi Chen. Thank you for taking my questions. First question is, what are the hurdles for wide adoption of the test in the VA system? Also, what is the estimated time frame to achieve cash flow breakeven?

James McCullough: So, the VA system took me to school. I thought that when we had a general services administration contract, which we still have, which is important, by the way, for also retaining the price point, right? One of the great lessons in reimbursement is if you come down a price or you negotiate a lower price to somebody else, you never get it back. So, having the general services administration lock in the price of $950, which obviously covers the VA system and having CMS also cross walk to a $950 price, that is the price point. And we have not backed down on that price point, and that retained the margin and the value for the addressable market. But the VA system, I think we substantially overestimated. We're overoptimistic on what we're able to achieve. We had national support, and we really view VA going into it as one entity. And it turns out there is something like 170 different individual sites in the VA. Many of them operate differently, and it became incredibly complex in that system to roll out an advanced prognostic like KidneyIntelX. There were many ironies inefficiencies. And we over hired to go after VA, and we had to do a complete about face. I still think it's a fabulous market space. There are over 100 -- I'm sorry, there are over 1 million diabetic kidney disease patients that are veterans who we should be taken care of, that would benefit from KidneyIntelX. And at a future date, I want to go back in to the VA and integrate because I do believe it's an important market space. And I do believe we can come from a top-down approach and gain traction. But again, in this capital markets environment, which I've never experienced before. I've never experienced such a derating in a sector. And I never thought that we would have such limited access to the capital markets. We had to drop the VA effort by and large. So, I do not expect the VA will be part of our plans in calendar '24. If conditions approved in calendar '25, we'll go back in. But we've learned a few lessons there. It's one of the reasons we've reorged around Howard and his experience having been very successful with broad diagnostic launches, including in cervical cancer and other areas. And we're now focused on a limited high-performing sales force in very specific regions where we have high insurance coverage, large with diabetes and maybe a large clinical provider working alongside us. It takes you a while to figure out the model that's really going to take off. Where does adoption come in? This has been an ongoing question and look at it in two lenses. One, we are still a young company, believe it or not. We really didn't launch KidneyIntelX in force on a commercial basis until just over a year ago. And we are just in April launching the FDA approved KidneyIntelX so last month. And diagnostics is the worst business, and it's the best business. It's the worst business because you've got to cross all of these mountains. FDA, Medicare reimbursement outcomes data and now guidelines. You got across all of those things before a very conservative and qualified clinical infrastructure. says, okay, this should be ready now to use as a standard of care. We've now crossed all of those things, and this is where I believe diagnostics becomes a very good business because the barriers to entry are very high behind us. The deeper I get into diabetic kidney disease, it becomes even more clear how significant a problem this is. And not only is it not going away, but it's growing. And we've got to do something about it. And the something about it is you got to know early what your risk is. I came out of the prostate cancer world. And the analog is very clear. When do you want to know you have cancer as soon as possible because it changes your treatment paradigm, it changes your outcomes, you're suffering and it changes the cost. The same is true with kidney disease. All of us on the phone are eventually going to start to lose kidney function as we get older. The question is, does it matter? For most of us, it doesn't. But for a significant percentage of us, it's going to matter a lot. And the sooner we know, the sooner we can treat it. And we have drugs to treat it now. We didn't five years, six years ago, not like SGLT2 inhibitors and GLP-1s. So, there's no rational reason why, to me, with a FDA-approved precision medicine prognostic product that is now in the guidelines and is paid for by insurance that this is not set up for broad adoption. And it's a matter of time, right? The capital markets isn't giving us much time. And that's okay, but things change. Interest rates will eventually come down. and investor sentiment will change. So, for us, it's one foot in front of the other. We have a very focused, high-performing sales force that is going into very specific regions. We're not boiling the ocean. We've learned an awful lot over the last couple of years about what the messaging is to the physician, who was ordering KidneyIntelX. And that messaging right now is very clear. "Hey, doctor, we have a tool which goes after one of the major complications in your diabetes patients." And it's FDA-approved. We accept all insurance. It's in the clinical guidelines. So, it's guideline standard of care. And here's what happens when you use it. Not only do you improve your kidney disease, but you improve your diabetes patients, health. So, the rationale is very strong. It's comprehensive. It's data-driven. We've invested heavily in the data, which has now put us in a good position to drive adoption incrementally. We've got to watch the cost. That's critically important. But we've got the right team in place, we have rightsized the organization. So, we're not burning a ton of cash for a Medicare-reimbursed clinical diagnostic company, services company. Our operating burn is actually quite good. And now we just got to keep our nose down and put one foot in front of the other. And I think the adoption will come. I think it is a function of time at this point. The LCD is going to help when the final was issued. That will raise visibility again. And now the question is how do we maximize shareholder value? And that comes down to optionality. And optionality comes in the form of a competitive strategic process. It comes in the form of runway, which is a function of equity capital. So, we want to have a long runway as possible so that we can run a competitive process or we can continue to grow the business on an incremental basis. We have a number of significant opportunities in front of us in 2024 in terms of additional hospital partners, additional areas where we can roll out. And it's a very powerful message when you walk into the primary care and say, primary care physician and say, this is a simple actionable solution, which is covered by insurance and FDA approved and in the guidelines. So, for the first time, we are in the position where we have checked all the boxes. And I cannot believe that adoption will not follow. Of course, we have to prove it. And I think now that we've built a direct-to-physician sales force of high performers under great leadership, Again, that provides us with additional optionality to prove out the business model.

Unidentified Analyst: And next question is what is the estimated time frame to achieve cash flow breakeven?

James McCullough: Yes. So, we're not going to answer that because that's a forecast, which is not what we're going to do. But certainly, our breakeven point is much lower than it was.

Operator: [Operator Instructions]. Our next question coming from the line of Bobby Dimmer [ph] with BM Capital Partners. Your line is open.

Unidentified Analyst: I want to tailor this towards Howard, it's kind of building on what you're talking about here, but you had 806 tests that you reported in the quarter, you said that 82% of those were billable. So back of the envelope, it takes us to 650 billable tests. Of that number, how many of those were system driven and how many of those were sales fee driven?

Howard Doran: So, we have about 40% of that number, Bobby, is the actual PCP sales and the other is Sinai roughly.

Unidentified Analyst: Is Sinai -- do you have wake in that mix? Or is it just Sinai?

Howard Doran: Just Sinai.

Unidentified Analyst: Okay. And is that the mix that you expect to go forward with, 40-60 salespeople in the system?

Howard Doran: No, I would actually expect that in not too distant future that PCP would be the largest bucket of our business, right? We'll have the enterprise accounts, and we'll have PCP. But in the future, I would expect PCP to be the largest chunk of our business volume.

Unidentified Analyst: Like, slipping those [indiscernible]?

Howard Doran: I would hope to do even better than that, but yes.

Unidentified Analyst: Okay. And kind of looking at growth trajectory here. If you've got kind of 40% of those is PCP, salespeople driven that's call it, -- just lower 300 tests, just use that number. You have seven salespeople that have been there for quite a while now since August. Where are we looking at? So how are you looking at those salespeople who have been around and getting to, say, 1,800 tests out of those salespeople as opposed to 300 tests out of the salespeople?

Howard Doran: Yes. So, I would say a couple of things. One is, at one point, we had a much larger sales organization, correct. So, the three people that were called legacy earlier actually have three very productive territories that they're the right profile of folks that we obviously wanted on the team. So that's that first group. The group has started in August, again, it's still fairly new. So, we've got a couple of quarters under their belt. And then, of course, we had three new folks that started in December who this past quarter it's their first. So, what we have as far as the new team is we've got one data point, right? We've got the quarter that we're talking about now. We alluded to in our comments in the original script that we anticipate this quarter to be similar in growth rate this past. And beyond that, that gives us our second data point. At that point, I'll get a look at what's occurring, momentum, et cetera, to start thinking a little bit more broadly as far as further down the line. But for right now, I'm focused on this current quarter and not necessarily four quarters or five quarters out depending on growth rate to hit the numbers that you're talking about. So, I just don't want to make a projection on a data point of one. I want to get this current quarter under our belt, take a look at it. And I think I'd be answer that a little bit more definitively next call.

Unidentified Analyst: So, you're marketing these seven salespeople and the new three salespeople in the same bucket regardless of how long they've been operating and doing their -- working on our sales channels?

Howard Doran: No, I wouldn't necessarily say it that way. I'm just saying that we are looking at trajectory of what it takes with a slightly different profile of person and different background set and what they can do and how rapidly can they do it. And we didn't expect really anything for the first month or two. So, what we're really looking at is only a few months of data on particularly the new folks and seeing where that trajectory is going. To date, we're very pleased with it, and I expect it to continue to be better over time. But I just think it's too early. Even again, with the folks starting in August, they're relatively new. We've made some changes, et cetera. I just think you're asking me a question that's a little further out than what I'm comfortable projecting to you today.

Unidentified Analyst: Okay. I mean just because James was talking about just a runway, right, because the market, I think, is going to have to see sales volume here pick up.

Howard Doran: And I think we will have catalysts that will allow that to be better upon time. I just -- again, with the team settled -- we're happy with what we have today, we have one quarter under our belts with that group. And I will feel a little differently as far as more future discussion once we conclude this quarter. That's all I'm trying to indicate to you.

Unidentified Analyst: All right. One more, if you don't mind. What do you expect the conversion rate to be for getting in front of doctors?

Howard Doran: For new doctors per quarter?

Unidentified Analyst: Yes, new doctors per quarter and then once you're in front of those doctors, what are your kind of conversion rates are you expecting?

Howard Doran: Yes. So, I would say, if I was going to just take a step back, and if you were going to ask me, what's the thing that surprises me the most on a positive. I would say that our clinical message now is very tight. And giving a clinician to say that they're interested in the test, I'm not going to call it easy because it's not. It's still hard work. But the message is very sound and it holds together and they get it. The most challenging part is patient identification. So, it's then being able to go into their patient data and finding, all right, who are all my type 2 diabetics, who have probably stage with chronic kidney disease and who has the clinical features that we need to actually in our test. That's the biggest barrier to broader adoption. And it's a slower process. It takes a lot of handholding and it's not yet a sticky business. We are working on ways to make it more sticky by making ordering simpler, providing better nephrology access -- excuse me, providing better phlebotomy access and taking some of the barriers that have been pushed us on in the past, but the most important thing is getting them into that rhythm of an identified occasion before they come in for their next checkup. That's the biggest challenge. So, our adoption it's definitely different than it was in the past. We are seeing an uptick on how quickly the document closes today, the test they start ordering over the subsequent months. We are definitely seeing a change of behavior there. But I think we can even have a bigger inflection point as we continue to hone on a very simple way for them to identify these patients. And when they have them identified, we will definitely see conversion ramp changed, I think, quite a bit.

Unidentified Analyst: Okay. And final, I'll let you go. I'm trying to gauge how much of a 14 million TAM we can expect analytics to capture. And if you have 100 just using round numbers, if you 100 new PCP presentations. How many of those doctors do you expect? Or do your salespeople, are they being expected to convert to actually order a test. And those who have ordered a test, what's the -- how many following tests is the expectation going to be for those salespeople out of that particular doctor converse?

Howard Doran: I mean that's just a granularity that we've just chosen not to disclose yet. I mean, again, we're really -- we're looking at all the things that you've just described, right? What I'd like to do is get another quarter under by a belt to be more definitive. Again, it's a green team that we're doing some good things. But you're asking the right questions and you're asking about the rate measurements and that's just not a granularity that we're ready to go to.

Unidentified Analyst: Well, I appreciate your time.

James McCullough: I think it's important to note that there are a whole sequence of incremental changes, which come together to reduce the resistance in the clinical pathway. Obviously, patient identification is one. One of the things that Howard has brought to the table is a sequence of incremental improvements. So, I referred to this in the script reading. But for example, the physician order requisition sheet. We revised that in a compliant fashion, and we revised that to be now FDA compliant with the FDA product launch in April, but the much simpler procedure from what we originally had and that's a function of experience in the real world. Increasing phlebotomy access, absolutely critical. And these are mundane things, but collectively, they add up to reducing the resistance in the pathway, which lead to better adoption. So, we've now significantly increased the access of patients to blood draw stations across the country. And that took us a while to figure that one out. But all of these changes add up, and I believe will be reflected in the adoption cycle. Howard, I don't know if you want to add anything to that?

Howard Doran: No, I think that's right. What we're really trying to do is make it easier to do business with us, right, and really improve the customer experience. And the more that we raise that, back to your question then, we can start thinking about deeper penetration and so forth. But we have streamlined a lot of processes because, again, we are a send-out test, right? So, we are disruptive to their workflow to utilize this, which there's -- other companies are in the same boat. So that's not a negative. It's just -- it's a reality. And it takes some work and it takes some strong relationship building to keep that pedal on those until they hit their rhythm. And once they hit their rhythm, then things can happen more systematically. But there's a lot of touch points, particularly in the early few months, an innovation in an office that needs to be a couple of times a week. So back to your question is, we're still measuring a couple of things that you were referring to, but I just don't think we have enough time to give you an answer that I would feel highly confident in. So that's a lot of the learnings that we're still doing. But yes, a lot of profit process improvements are going over very well. I mean just a simple. And just to point out what James is talking about a better -- easier to use form. Well, if it takes three minutes to fill out the old one and going to take about 30 seconds to do the new one. The office thinks very favorably towards that, right? I mean it takes them less time, and we're asking them to actually add time to what they're already doing it during their day. But more importantly, our testimony requires three clinical features now. It used to require seven with the LDT. Those are seven results that someone in that practice had to go look up and put on to our test requisition form. Now they only have to go get three and those three are actually very commonly used. So, it's a real easy lift to ask for those. So, there's a lot of little things that may not sound that big to you. But when you're out there and the clinician, it's big and important to them, and we're addressing them one by one. So that just, again, it goes back to what you're asking is will that help us ramp this business faster? The answer is yes.

Operator: Our next question coming from the line of Jens Lindqvist with Investec. Your line is open.

Jens Lindqvist: Just a couple of quick ones for me. First of all, on the pricing, the $535,000 of revenue you reported for the quarter, I mean, that translates into just over $800 per billable test, which is quite a bit of that $950 from Sinai is committed to paying under that new commercial agreement, which has been in place through this quarter, if I understand it correctly. So, could you just help me understand that dynamic, please? Is the there to be some pretty heavy discounting in the PCP channel? And is that something we should extrapolate going forward? So that's my first question. The second one is on the strategic review that is ongoing at the moment. I appreciate you can't say too much about it. But could you provide some form of indicative time line here? Because I mean just you can review, I guess so, determine for how long potential acquirers are allowed anonymity, et cetera, that the takeover code. So when can expect some form of update in terms of whether you would pursue an M&A route or a different strategic for commercialization? Thank you.

James McCullough: So, on the strategic option, again, we're limited in what we can say and I'm now becoming familiar because this is a U.K. convention. And it was impressive to me under the U.K. convention, how seriously the takeover panel, it takes approaches. And if there's a lift of a strategic interest in the company, then you have an obligation to let the market know. And so, we were -- this was a little bit more than a with regard to us and the unsolicited approach. So, we had an obligation to announce. The advantage of announcing is, and again, I'm not an expert, I'm not a lawyer, so please take this with an element of grain of salt. But now that we have announced it creates a much easier process to talk to additional players without disclosure requirements. And so, the process will take its own life. I don't know the time line. People that are looking at this include large company players that have long time lines and leads. And obviously, the more sales that we accrue in that process, the better it will be. So, taking a little bit of time is not a bad thing. But again, and I don't want to say any more, but we do expect the process to be competitive and will continue to move along. And ultimately, what happens, I don't know. But again, it goes back to maximizing the shareholder value and creating optionality in what is an incredibly difficult market right now. In terms of pricing, and then OJ will cover this, the price is $950 and we do not discount that for all intents and purposes. We fought hard to achieve CMS pricing at $950, General Services Administration price at $950. That is our price and we will not compromise. However, within the complexity of the insurance infrastructure, not every test ultimately gets paid. This is standard invention. So, we would back and then OJ, you correct me, on average price going forward of somewhere in the mid-800s.

James Sterling: So right. So, the math you're working out Jens is not the result of any discounting. So, it's 806 total tests, 82% are billable. So, 662 billable tests and every one of those is recognizable right away because some of them are covered by insurance that we don't have a contract with. Many of those do ultimately pay. And if they don't pay the full $950, we do appeal those, et cetera. So, the difference you see there is just a result of that timing. So about 80% of that billable testing volume is immediately recognizable that goes into the revenue line. The rest ultimately, at least some of the retro collect over time.

Operator: And I'm showing no further questions in the queue at this time. Ladies and gentlemen, this concludes today's conference. Thank you all for your participation, and you may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.