NeoGenomics, Inc. (NEO) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us here at NeoGenomics for our 2023 Investor Day. It's great to see so many faces in the audience today and signed in online. We're looking forward to sharing some details about our mission, vision and strategic priorities with you today. You'll be hearing from 5 members from our executive leadership team, and we'll conclude the day with a Q&A session. Before I turn it over to Chris Smith, our Chief Executive Officer, I want to highlight our safe harbor and non-GAAP financial measures disclosure. And before we kick it off, I would like to show a quick video of what it means to be a teammate here at NeoGenomics. [Presentation]

Good morning. Listen, we thanks so much for being here. I'm Chris Smith, CEO of NEO. And I love that video. It was not meant to be a recruiting video for the folks in the room. But I do want to share with you that as we've kind of gone through a transformation, we'll talk a lot about that today. We really believe it starts with people and culture. And one of the unique things about Neo is that we have multiple labs all over the United States, and we also have a field organization. This was actually a video we did for the recent global sales meeting. And we have the sense that people at corporate every single day or in the lab go to work for the field who supports our physicians and patients, but it only works if the field shows grace to the folks that are inside the company. And that kind of brought it home. So rather than creating a whole new investor video, we decided just to give you a taste of kind of what is going on. I get a kick off today, and I want you to know that we thought about when this meeting was going to occur when we wanted to have Investor Day and -- there was a lot of discussions, let's do it in August, but we wanted people to attend. So rather than waiting till August. And then we kind of tried to decide when a big Northern storm would be moving across the United States for this week. So look, again, thank you. I know it's not an easy place to get to, but -- we appreciate you being here, and I think we've got a nice agenda for you throughout the day. I'm going to run through the agenda real quick as we kind of think about it. I'm going to give a quick kick off and just a little introduction as we start to think about this business and where it's moving, then I'm going to be able to turn it over to Warren Stone, who's really going to talk about the commercial excellence. I think one of the things that we believe is a huge differentiator for us is the breadth that we have, not only from a lab perspective, but a field. And we're very unique in the sense that we have an oncology salesforce now and really a pathology. And Warren is going to talk about that as well as the operational side of what we call our base business or our core business. We're going to then transition to Melody Harris, who's our new President of Enterprise Operations. I think one of the things that's exciting about Melody joining the company is we've actually put IT and big data in there because it is end-to-end process when you think about lab ops. So I think you'll get a great flavor what we're doing there. We'll then move into Advanced Diagnostics, which really is about innovating the future and Vishal Sikri will share that with you. He's kind of -- if you haven't met Vishal, he grew up really in the oncology business and is leading that business where a lot of the R&D sits. The business units have focused on some of the new innovative technologies as well as Pharma and Informatics. Jeff will come back and talk a little bit about the financials and give you the 5-year guardrails. I think one of the things that we talked a lot about was being able to give investors a sense of where is this business going and how we're going to get there. I kind of joke that Jeff's one slide is probably why everybody is here, we could have probably done a Zoom call. But I think you'll get a sense of how we've started to really look at the business and think about it to be able to give you -- again, and I'm calling it guardrails as you think about moving forward. And then one of the exciting things is that Vishal is going to do a webcast or a Zoom with a physician who has a lot of MRD experience, being able to talk about MRD, it's placed in the marketplace, but more specifically, where will RaDaRs to place to be. Finally, we'll come back into an overview of Q&A. Now I will say after each session, we will take a few questions where we want to have a Q&A at the end of the day. And then I think most of you know that we do have a lab tour for those that want to be able to have a chance to see our new lab. The team did a fantastic job of building -- this building in a state-of-the-art lab, and it will be a great sense for you to be able to go over there and see a little bit more detail on one of our labs. Look, I want to start out with this slide the mission. If you've been on our earnings calls really starting in Q3, if you've shown up at a customer presentation or if you were at the sales, I mean, the first slide that we really ever talked about is the mission slide of the company because, as you saw in that video, it's really why the people who work here come to work every single day. And I joke that you can go anywhere and make money, but there's very few places where you can change the world and the chance of being a part of that. And I think the second piece is it's really the vision of the company and how do we become the leading not only cancer testing company but really around information and decision support. And as you kind of go throughout the day and you hear these slides and you think about things, bringing this mission to life for us has really become an important part of how we think about the business going forward. So look, we are the leading or a leading oncology diagnostic company. When you think about what are the reasons why we are that. There's many factors that kind of go into this. And whether it's the breadth of our menu and over 600 tests, it's the number of labs that we have across the United States. We talk a lot about redundancy. I think some people don't realize how important that is, but we made the decision for good or bad to put our first -- our corporate office in a hurricane zone and our other big lab in an earthquake zone. So for us, redundancy is really important. And we probably never saw that being as important as when the hurricane hit here. And literally within 24 hours, the ability to shift the business and keep meeting customer needs. We have over 2,200 teammates across the things. Obviously, I mentioned 2 distinct clinical sales forces. So there are a lot of reasons why we are positioned well, including now driving innovation. This gives you a snapshot of who our leadership team is. And I do want to take a minute just to recognize them. I have several -- there are several of the execs here that show up here. Now to be fair, like even starting with my picture, one of the things we ask everybody to do is make sure you have a picture from 15 or 20 years ago. So we can show it, but for the team -- for the -- actually all of management that's inside, not just the executive team, would you guys mind just standing up real quick so people can see who you guys are so it breaks or -- and look round of applause. I mean the team, it's is a great group of people. And then we're also really blessed to have 4 or 5 Board members here. I think it's actually 5, and they're kind of sitting together in the back. And same thing if you guys wouldn't mind just saying hello. And Lynn Tetrault, who's our Chairman, is here as well. So thank you Board for being here. Great to have you. So let's start to talk a little bit about how we're thinking about the business. And again, these are a lot of things, especially the group in here understands and knows. But obviously, cancer testing is large, underserved and growing market. And when we look at it, I think we look at it kind of in 3 big buckets. We kind of look at it first in the kind of the diagnostic testing. And I would say this is where cancer testing kind of grew up, which just continues to be about a $9 billion market. Now while it's only growing a couple of percentage points, it is a significantly large business. Therapy selection, I think a lot of times being spent here over the last 5 years, especially around NGS. And I think it's incredible that today it's only -- it's less than 20% penetrated. But a lot of the statistics are talking about how -- by 2027, it's going to be more than 50% penetrated and there's that continued shift in a really therapy selection. And Vishal will spend more time talking about that today. And then MRD, really where RaDaR sits. And really, I think the future of where testing moving, it's only 1% penetrated. But a lot of estimates, you see anywhere from $16 billion to $35 billion market opportunity. We really believe it's right now about a $20 billion market opportunity as we go out in these outlying years. So it's a big, big market. When you pivot and start to think about our Pharma business, the top 30 companies will spend over $150 million on R&D. So the opportunity is there. And I kind of joke that, look, when you go to work for a business, you want to go into an underserved growing market where you have the ability, from a franchise perspective or differentiated to make a significant impact. And I think this really brings us home. When you think about who we are, we think that we have a very unique position in the marketplace. I think there's obviously large reference labs, the Quest, the LabCorps of the world that are profitable, but they're slow growth. They do have thousands of tests and they have a very diversified focus. And on the other side, I think you have some of these niche oncology companies that really, today, a lot of them are unprofitable, while they're growing fast. They have a very limited menu and they spend a lot on R&D. We believe we kind of enjoy a unique position right down the middle in the marketplace. But we have the ability to have mid-teens profitability and to grow in the high single digits to low double digits. We have over 600 tests, and we continue to drive innovation into the marketplace. So as you think about this big opportunity, how are we thinking about the business going forward as we kind of move into 2023? And first, it has to start with momentum. And as I share with our team, whether you like it or not, momentum is a very real thing. When it's going down, it's real but when it's going up. And one of the things that was really nice last year, we continued to build momentum throughout the year, really even moving into Q4 where you can see where we grew the revenue 10%, and you can see this continuous improvement in gross margins. So we have momentum kind of coming in to '23. So then it's about how do we set up the organization to be able to maximize on that opportunity. And as we went through the business, we really thought about there were 2 kind of unique kind of arms from a commercial or go-to-market perspective about driving demand or what this demand cycle is. And the first one was this Clinical Service business. And when you think about the Clinical Service business, this is really where I would say our core or our base business sits. And again, Warren is going to come up and talk about this in a little more detail. And what sits in there is really our ability to own kind of the distribution channel in the community hospitals, in particular, with pathologists. Now that's an area where we've been strong for several years, as you guys probably know it's kind of where Neo grew up. I will say that over the last several years, there's been a huge rise in the influence of oncologist on being able to order and be involved in the process. And so I think we are a little bit behind there, candidly, as a company. And so if you go back and you start to think about where NGS and some of these things started to move, we're a little behind last year. We started in the second half of the year, starting with about 20 reps calling on the oncology side. And you'll see, as Warren gets up and talks, we're accelerating that to really create a 1:1 ratio or this pod effect inside the marketplace. It's also where we have things like customer experience in all the aspects that engage with our customers every day, which we believe is a differentiator for us. Like -- you can go anywhere and get a test. The question becomes what's going to be some of those differentiators. And we think one is you have to win on customer experience, okay? You have to win eventually also with patient engagement, which also sits in here. And Rachael Malmberg is not here today, but Rachael is a Stage IV cancer survivor leads that group and has a lot of passion about how do we engage that patient early on. And that's just with the launch of RaDaR, that's really where we're spending a lot of time. And as we go through Warren, he'll mention it, but maybe we'll get into more detail later today. And finally, you heard me talk about this is decision support. So how do we help clinicians or physicians decide as they're going through the process from a testing perspective, which ultimately may lead to what trials folks are going on. And as you may know, we bought a company called Trapelo a couple of years ago, which really is the base of how we're going to build out that decision support. So all that kind of sits over here and think about it in this Clinical business. We also have the oncology diagnostics based business. And Marcus is in the back of the room, our SVP, who runs that business for us. But that's really about how do we continually drive improvements in that base business. So flow, cyto, FISH, some of the new innovations, a lot of it focused operationally, but some of it also commercially. As you kind of move over to the right, and this is really where there was a pivot for the company. As you know, that we acquired Inivata about 18 months ago. And one of the things we didn't do initially was integrate that business. And I'll talk later in my slide presentation about how we've now begin to integrate some of that business. But the great thing about that acquisition is it gave us access to true innovation in RaDaR. And when you think about RaDaR as Vishal gets up and talks and as you get a chance later to do some Q&A sessions with a physician, it really was from an MRD perspective, a product that's going to eventually make a huge difference at all stages of cancer. We had to drive innovation. Now I think there was a lot of discussion when that acquisition happened. Is Neo going to be the company that kind of is growing in the mid kind of [ teams ] profitability? Or is it going to become more like some of these niche companies that's chasing kind of R&D? We actually -- or technology, we actually believe you can do both, but it's about how do you balance it? And how do you pace it? How do you manage it? So sitting over in Vishal side, we took that whole Inivata. We carved out G&A, and we've rolled it now into the rest of the company. But it really is -- think about it as our R&D engine, especially in Cambridge now, where we have a lot of our innovation going on. And I see Dr. Shashi Kulkarni, who's in the back, who is our Chief Scientific Officer today, who really helps lead that kind of effort. It's where those business units now sits. So think about people -- one of the things we've moved to is business units. So we have someone that runs therapy selection and someone that runs kind of liquid biopsy or the MRD side of our business. And these are folks who kind of own the business from not just marketing but from the beginning to the end. So they're involved in all aspects of driving that business. And finally, it's where we have the Pharma service and Informatics sales forces. And I do want to spend a minute there because I think we really view as Pharma as a tip of the spear as we start to try new innovations to market. So one of the reasons a lot of people have asked, why do you have such a strong quarter in Pharma in the fourth quarter where we grew 41%? A lot of that was driven by the introduction of RaDaR to a lot of pharma companies because they move first on a lot of these innovations and products. So it's important that, that business sits over in the Advanced Diagnostics because they're sitting right on the front side of the business with innovation and R&D in those perspectives. And then the other one that sits over there is Informatics, which we think is a huge opportunity long-term. As we continue to work on big data, we capture a lot of data points every year, but it's about how do you package that data and sell it back to pharma companies so they can utilize it when they think about the business. So we felt really strong from a kind of a demand cycle perspective, but the problem was kind of underneath it. So how do you support that growth? And look, we used to run the business strictly with Lab Ops that kind of sat in its area and was, I would say, very siloed, candidly. And IT was over kind of in a different group. And as we thought about the business and as you get to know Melody, we really felt like we had to have that end-to-end process. And so what we did is we created enterprise operations with the ability to support both those 2 business units. And if you look at it, just so they own the end-to-end process and really focused on turnaround time. So even our medical group sits in there over there. So the physicians that do the final end of our process because if you think about that, it's hard to turnaround time if you don't have the final component of turnaround time because that used to be a group that wasn't in the Lap Ops, so we pulled that in as well. It's also where we have the data infrastructure and the strategy. And then it's where we're going to focus on obviously driving operating leverage. And as you think about our business, when you look at the 5-year guardrails when you look at what happened in the fourth quarter, you really start to see our ability to get leverage on this business. So now it is how do you do it, right? So we set up the organization. We did this reorganization, which I'll talk about. You probably saw us talk about that in the earnings when we did this reorganization in Q1 to put these business units in place. So now it's about how do you think about the business. And the way that we really think about it when we get into these 4 strategic pillars, it's all around the patient. So we're serving about 540,000 patients a year. And we really felt that by the way, if we do the things that need to be done, that by the end of 2028 in that calendar year, we could treat 1 million patients. And look, when you think about a business and you think about a mission-driven company, it's not about what the share price is, right? I mean I can tell you that you walk through the lab today, ask anybody what our share price is, no one knows what it is. And a matter of fact, we took it off the Internet site last year, like we used to have it on there, we don't have it. What we do have there now is a counter of the number of patients that we're helping every single day because that's what really helps the organization think about why they come to work every day. And you probably read the book by Simon it's all about the why -- people don't buy what you do, they buy why you do it. And one of the great things here is that, that mission is really here. So it really starts with how do we treat these patients. And then it's about setting the mission and the vision to get this long-term sustainable, profitable growth. It's not about 1 quarter, but how do we consistently brick-on-brick deliver results to our shareholders that continually improves the business. So we started with what we're calling 4 strategic pillars. And I think the way you want to think about this is really for the next 3 to 5 years, this is how we're thinking about the business going forward. The first thing we have to do is we have to grow the core business, but we can't just grow it. We got to grow it profitably. That's that business, that base business or the core business that has been here. So that's the first pillar, how do we profitably grow that? The second one was, look, we were probably behind a little bit from a technology perspective. So you have to accelerate Advanced Diagnostics. You have to have new products coming to market. Now that being said, we're not going to be the company that goes and spend $100 million on R&D right? Just because we think eventually, there will be an opportunity. It's about how do we utilize the resources and better invest in what those opportunities are and Vishal will talk to you a little bit about that. The third one is all around our people, people and culture. And again, I think they're the greatest asset of the company as a team, as our people. So how do we make sure from a culture and a people perspective that we recruit the best people, that we retain them, that we train them and create opportunities. And culturally, how do we get rid of silos because this is a company that used to have silos partly because we did 4 acquisitions in about 5 or 6 years. So it was natural. So how do you create just one Neo? And finally, it's about driving value creation. And candidly, we don't talk about it just driving shareholder value creation. We talk about stakeholders, how do we drive value creation for teammates, for customers, but absolutely shareholders. And I can tell you, our belief is we obviously go to work for shareholders every day and our patients, but we start with our patients. And our belief is if we do the right things in an underserved growing market, we ultimately are going to create shareholder value. So it starts with these kind of 4 pillars. And as you think about the business going forward, as we think about in presenting to you over the next probably 3 to 5 years, these pillars won't change, okay? It's really kind of how do you execute on the current mission and the vision of the company. And then what you do is you start to break it down into bite sizes, okay? So now we're moving into 2023. So as we moved into '23, and you know that you have these 4 strategic pillars, what is it that you have to do from an execution perspective. Because to be fair, when you look at Neo and some of the challenges that we went through for a couple of years, the strategy was pretty right. A lot of it came down around the execution. So it really becomes about execution. And the first one is around how do we profitably grow that core business. And this is where you'll see the time spent really in '23 and '24. First of all, we have to grow volume. As most of you know, we lost market share really kind of in '21 and early '22. And so how do we get back to that? Again, Warren will talk about this, but in Q4 was the first quarter in probably 24 months, we won more than we lost on accounts, right? So first of all, it's okay to bring in new accounts, but you can't have a hole in the bucket and have it go out the other side. So the way you grow volume is you grow market share. So how do we get back to growing market share? And how do we drive the NGS mix? Because remember, it's that $9 billion market that's growing very rapidly. Really, you could argue the growth rate, but, let's say, 20% to 30%. And it's only 20% penetrated, and it's going to move to 50% penetration. So how do we as a company drive that NGS adoption? So that's a huge initiative in the field. The second one is about, look, we didn't have enough field people. Now I'm not saying that we want to be like some companies that have 300 people out there. But to be fair, we probably had about 70. And so we needed to add people. So we're going through a rapid expansion of adding commercial people in the field and really in these 2 field organizations. And finally, it's about, look, you've got to improve turnaround time. If you're in a service business, we talk about here, if it's 1 day, it matters to that patient and their family. If we tell somebody we're going to deliver and Warren will talk about this, our new Neo Comprehensive, if it's a 10-day turnaround time, then you know what, it's never 11 and 8 is better than 9. And the way we really start to talk about it is if it's you or if it's your family member, you're literally sitting on pins and needles until you get those results. So how do we constantly improve turnaround time? And fortunately, you'll see when Melody gets up and talks about that because that was an area that we were challenged with. And we were able to make quick gains. And it's one of the reasons, candidly, we had a very good, I think, Q4 because we started winning on turnaround time. I think it's the reason that we gave you very good guidance, I think, for 2023 is winning on improving turnaround time. The second one is, okay, it's great. You got to accelerate Advanced Diagnostics. Everybody in the industry probably knew that, but how are you going to do it over this 12- to 24-month period. The first one is we had to launch innovative products. So -- well, you'll see throughout today, we launched really 4 products, but primarily the Neo Comprehensive, which got us competitive in the NGS in solid tumors. Now remember, we are probably still the market share leader in heme. NGS, that was an area we continue to have a strong position, but we were behind in tumor. We didn't have a product that was competitive. So we had to bring out a competitive product, and we just launched that product in Q1. The second thing is there was a lot of debate in this industry that you wait until you get MolDX to launch RaDaR. And I'm sure today, there's going to be some questions about that, right? What are you going to do? How are you going to grow market share? But we felt that there was so much demand, especially from clinicians because of the sensitivity of RaDaR, especially in things like breast cancer, that it was like wrong to not launch it. Now I can tell you, a lot of you follow companies in medical device, and I kind of grew up there. I've never waited to get CMS approval to launch a product, right? Get the product on the market, get it in people's hands, get early adopters to use it, create a third-party payer strategy and start knocking down lives, right? It's not just about for Medicare. So that's how we pivoted that strategy. Let's get it down with the market. Now Vishal will give you some good insight today on what are you doing with MolDX or Medicare, but you had to launch that product. The second big bullet and again, Vishal will talk about this was the Pharma business we had lost profitability on that. So we had to rethink about how do we do that Pharma business. So we want to grow it, but we want to grow it profitably. And so how do you do that? So the Pharma business is incredibly important. And the final one was begin to think about this whole data strategy. So you may be collecting more data than anybody in the industry. What are you going to do with it, right? How are you going to -- how you're going to package it, how are you going to extrapolate it? What's the data scientists think about? So developing that plan and beginning to implement that really in the latter part of '23 as we move into '24. And then it was about driving value creation. And these, I think, are really key points. Like look, we had to improve productivity and efficiency. I think the Catalyst program, which was introduced in June of last year, was really that first step. It had a lot of impact on improving operating efficiencies. The second one is, look, we had to manage the G&A spend. It was just too big. And as you probably know, and I'll talk about this in my first quarter takeaways. Look, we reorganized and took out about $25 million of annualized costs. Look, we had to consolidate some of these businesses we had acquired from a G&A perspective. But rather than just dropping it to the bottom line, which we could have done, then we would have been sitting here in 3 years talking to you about, hey, where is the growth? So what we decided to do is very strategically invest -- reinvest a lot of it. So when we talk about expanding the commercial salesforce, when you really think about where we were with a long-term Medicare strategy from a clinical trial who is RaDaR, right, you got to keep working on clinical trials to bring a lot of that was reinvested there. And that's how we set up this kind of brick-on-brick growth process. We had to get better at automation. So I would say that we do automation in a lot of areas, but we feel like there's a significant opportunity for us. So how do we enhance automation and digital? And that -- again, when I talk about what the strategic focuses are for '23, it really is like when you come back and see us next year, some of these may stay, but you'll start to see some new initiatives as we start to execute on these. And then the last one, which is the one of the biggest opportunities that I saw when I came in was this whole thing around revenue cycle management. How do you get paid for the work you do? And I can tell you for us, as a company, I think that has to be a core competency if you're in this industry. You have to think about payer relations, how do you get paid for the work to do? How do you manage revenue cycle management? And that is a key initiative to drive profitability because if you've already done the work, it's how profitable capturing that is 100%, pretty good profit. So we had to do that. So I want to kind of think about -- so we've laid these out, so what happened in Q1. Now I wish we were sharing earnings today. I'm sure that a lot of you will be dialing in a couple of weeks as we talk about Q1 earnings. But I did want to give you some nonfinancial things that we can talk about from a business. So the first thing is we did launch those products and it's going incredibly well. The other thing is we had -- we continue to have good turnaround time improvement. So we improved 17% turnaround time in Q1. And you may think that, that's not a lot, but that was on the back of 36% improvement in turnaround time in Q4. So we are improving that turnaround time. Now obviously, as we get higher, it's going to be harder to get big numbers, but it's important that we see this consistent improvement in turnaround time. One of the things I was excited about, look, this weekend, we hosted Relay for Life here for the [ county ]. And again, this is back to that mission and bringing the community into the partnership. Warren and the team grew the salesforce by 22%. So we're starting to get that expansion. And finally, I mentioned this, we went ahead and we were able to identify and we [indiscernible] about $25 million of annualized costs. So the key takeaways to think about it as we kind of go throughout the day, look, I think we're incredibly well-positioned to capitalize on this market opportunity. We do have a very, I think, a winning strategy in a very unique position in the marketplace. We've now been able over the last 6 months to assemble a world-class team, but we also have 2,200 teammates that are truly committed to the mission, and that goes a long way. And look, I think we're well on our way to serving 1 million patients. So I'm not going to do Q&A on my portion. Now we're going to go ahead and move to Warren and then we'll start with Q&A following Warren. So thanks for your time and Warren, come on up.

Thank you, Chris. Good morning, everybody, and thank you, Chris, and thanks for the opportunity to talk to you about delivering operational and commercial excellence within the Clinical Service Division. Chris did a nice job sort of teeing up a little bit what I'm going to talk about and also maybe what the responsibilities are from a Clinical Service Division perspective. But fundamentally, there are 2 things that ultimately we look at. It's really around portfolio management of the core. And secondly, it's around patients, customer and commercial execution with regards to the Clinical Service business. So that's really the scope and what a lot of my presentation today will cover. So the priorities for 2023, there's 4 of them that we're looking at. First of all, it's around commercial execution; secondly, it's portfolio optimization; thirdly, customer experience; and lastly, revenue cycle management. And I'll take a few minutes today to go through each of those in a slightly more deeper dive. So starting firstly with the commercial execution side of things. As we look at the market and Chris touched on this, we look at the market from a segmentation perspective in 2 ways. We've got the hospital and academic centers. There's roughly 6,000 of them in the U.S., of which 1,000 of them are teaching hospitals. And this is an area where Neo has traditionally been very strong. We've also got the community oncologist practices. There's about 950 of them in the U.S. and roughly 5,000 oncologists. And this is where, ultimately, where there is an area of opportunity. And we've looked at these 2 segments very clearly. And what we've come to notice is that the buying drivers or the pain points, the needs of these customers actually differ. And because they differ, we've taken the decision to have 2 distinctly separate sales organizations, 1 sales organization, which supports the hospitals and the academic centers, and the other sales organization that supports the oncology practices. So in terms of the hospitals and academic centers, we have what we call a Territory Business Manager, a TBM. This is a geographically-based sales resource, which ultimately calls on your pathologists, your oncologists, your lab directors, and they sell the entire portfolio that Neo has available. So the 600-plus products that Chris was referencing. So that's their focus. The [indiscernible] oncologist side of things, which is the area of growth for us, and we'll touch on it as we go through the presentation, this is where we have the precision medicine manager. And ultimately, they're an overlay in terms of the deployment of the TBMs, and they really call on the oncologist, the pathologist, the interventional radiologists within these community oncology settings. From a portfolio point of view, they largely focus on precision medicine portfolio. So things like NGS would fall within the InVisionFirst-Lung, RaDaR would fall into their focus. But they also have the opportunity to sell the entire portfolio. And there are certain parts of the portfolio that are more relevant than others. For instance, our proprietary COMPASS offering, which is ultimately, it's a comprehensive single order requisition to diagnosis solution for difficult-to-diagnose [ heme ] malignancies. So it's something that crosses very nicely between the 2 segments. So very clearly, because of the different needs around these 2 segmentations, we have 2 separate sales teams, which are basically skilled in terms of the specific needs of those customer sets. We then bring this together in sort of a pod structure, and Chris mentioned this as well. And really the regional director is kind of [ agree ] that brings this pod together. So they have numerous PMMs and TBMs within their region. And their role is to actually ensure that these resources put the correct sort of regional and account plans in place that they've got the right territory tactics and they maximize the opportunity within their region and ensure cross collaboration between these resources and other resources that are available within the Neo organization to execute the strategy. And I think very importantly, these are resources that are out in the field, but we can't do it without really strong support from a back office perspective within Neo. So we have 2 key functions here. The first one is what we'll call client success or customer success. And this is really a team that's focused on ensuring the effective onboarding of new clients. They also help us to address clients, which we deem as highly vulnerable. I'll talk about this in a moment to help them through sort of some difficult service patches and also to reduce the administrative burden. And then we have customer service. And this team is really -- it's a back-office function that offers both proactive and reactive to support to our target customers. So from a strategy perspective, how do we execute? And I think this is important, and Chris touched on the [ back ] analogy, and I'm going to use it again. So first and foremost, there's 3 pillars to our growth strategy from a commercial execution point of view. First and foremost, it's around protecting existing customers. So certainly, in the hospital setting, we have a large number of customers that we have. And what's imperative is we [ detect ] them, protect them and retain them within our organization. And we have various levers and tactics that we use. One of the most effective is by setting up interfaces between ourselves and the clients because that creates stickiness. The second area is around expand, and this is around expanding share of wallet. It's going to existing customers that already have relationships with Neo and enhancing the amount of actual revenue or tests that they send to Neo. And we do that by obviously making use of our broad portfolio of over 600 products, but also seeding the new products that we've launched in Q1 of this year to these existing customers. So it creates another form of revenue stream. And then lastly, it's around winning new customers. Obviously, this is the area that's harder. There's a higher expense associated with winning new customers. But ultimately, it's obviously a strong way for us to effectively grow as well. And if you think of the strategy as sort of a bucket which is full of water, ultimately, there is a hole in the bottom of the bucket. It's difficult to ensure that we retain all customers. But the idea is to retain as many customers as you can. So you restrict the size of the hole in the bottom of the bucket. You continue to fill the bucket by expanding your share of wallet with our broad portfolio as well as winning new clients. And actually, the inflow in the bucket. And as long as the inflow of -- into the bucket, it is greater than the outflow, we grow. And as Chris said, volume growth is critical because we have a very large fixed cost leverage within our operations. So the more volume we can grow drives more revenue, and it ultimately drives more profit. And one of the reasons we saw a strong turnaround in Q4 was because of effective execution of the strategy. Ultimately, we lost fewer clients in Q4, and we did a good job of executing against the expand and the win part of the strategy. So Chris mentioned the resource investment. Ultimately, we've already invested about 22% from an incremental resource perspective. By the end of the year, it will be 32% increase in resources from a commercial perspective. And that's really around expanding coverage and enhancing execution. And this is our sort of commercial flywheel. I want to take you through the sort of 4 elements that make up this flywheel. So first and foremost, it's around downstream marketing. And this is a team of people that's really there to establish campaigns around our strategic areas of protect, expand and win so that our commercial resources in the field can actually execute against that strategy. So developing a strong set of campaigns. The second area that they would look at is around creating demand, and this is through generation of leads. And it can be through traditional leads like going to a trade show like ASCO or [ COA ] but it can also be through new digital means, leveraging the website EDMs, web calls, et cetera, that generates a rich source of leads. But what's important here, it's not about dumping a large volume of leads on the commercial organization. It's establishing marketing qualified leads so that when that lead arrives with the sales organization that's already warmed so to speak. And ultimately, what that does is it helps us to fill the pipeline. It helps us with pipeline velocity, which ultimately helps us to grow faster as well. The second area is investment in physical on-the-ground field sales resources. And Chris said, by the end of the year, our target is to get to a 1:1 ratio between our TBMs and our PMMs. And ultimately, this is going to increase coverage, particularly in the community oncology setting. And really, the goal is around competitive takeaways. We want to execute the third pillar of our strategy, which is around winning new clients because that's where we get the accelerated growth from that's where we drive incremental volume, and that's where we get the fixed cost leverage from. The third area is around client success and client services. The one thing I'll just touch on here, which is very important is, historically, we've seen that we haven't done a sufficient enough job in terms of offering that premium first experience to new clients. And as a result, the stickiness was lacking. So that's why we actually introduced client success as a new function within the organization to ensure that any new clients that join us actually have a fantastic first experience with Neo. That first experience then drives kind of loyalty and stickiness and they tend to stay with us. And then the last area where we are making a significant amount of investment is around commercial operations. And this is really a team who is fundamentally charged with driving productivity of our commercial organization. That's ultimately how they're measured. It's how much more productive is our commercial organization today than a quarter ago, a year ago. And how do we do this? We do this by enabling our commercial team with digital tools and analytics. Today, what you would find is many of the sales organization is out there. They're identifying their own prospects. They're qualifying their own leads. They're [ shifting ] through data to find their biggest opportunities. And we can automate that through a rich data set, which we have available internally because of our experience within the marketplace, our large portfolio and our large customer base, but we can also augment that with a data set that are available externally. And the combination of those 2 can provide very targeted analytics to our commercial team, which will help drive their effectiveness. It will ensure better use of time and will ultimately increase their win rates. So moving on to portfolio optimization. So just again, from a portfolio perspective, we look at it across 2 areas from a heme point of view and from a solid tumor perspective. And from a heme side of things, this is traditionally where Neo has been really, really strong. And ultimately, we are the market leader within the heme side of the business, both in terms of some of the traditional modalities like flow and FISH, et cetera, but also from an NGS perspective, where we have more than a 25% share. If you think about that from a strategy perspective, our strategy is we want to protect those customers, we want to expand share of wallet. That's ultimately what we're going to do. And we're going to do that by leveraging the one lab value proposition in terms of our very broad portfolio. And then this proprietary compass offering that I spoke about earlier and naturally a continued focus on NGS because I think it's clear to all of us that's where a major growth opportunity is for us in the future. On the right-hand side, it's really on the solid tumor side of things. And it's not like we don't have access at all. If we exclude NGS, this is an area where we are still one of the leaders from a solid tumor perspective. But we recognize that this space is moving very quickly in terms of an NGS perspective. And up until recently, it's been an area of weakness from a portfolio point of view. We've spoken to the oncologist in the community oncologist setting, I've gone to see many. And it's unusual that you go and see a number of clients and they all provide you with very similar feedback in terms of what's important to them. And outside of clinical utility, which is a given, it's kind of table stakes, what they're asking for is a fast turnaround time, and I think that's intuitive because they want to provide patient care as quickly as possible. They're looking and ultimately for a frictionless experience, an easy ordering interface and a really intuitive report. This is what they're looking for. And those are key sort of, I'm going to call them buying drivers or decision drivers in terms of where they send their tests to. So with that in mind, what our strategy is, is really to expand and also to win. And we do this in 2 ways: leveraging the additional resources that we're investing in already and will invest by the end of the year, particularly in the community oncology space, which is largely a solid tumor market as well as leveraging our new NGS solution. And Chris touched on this that we launched in March of this year. So talking about that solution. So here it is. Ultimately, it's 2 products. We launched this in the middle of March, so just over 2 weeks ago and 2 products that we have available from a solid tumor perspective. First and foremost, Neo Comprehensive. It offers a very competitive 10-day turnaround time. It's a pan cancer product. It's got 517 genes in its DNA and RNA. In addition to that, we've got DNA, RNA lung. And what's critical about this product is it has a reduced sample specimen need. And this is critical from a lung perspective because very often, it's difficult to get sufficient tumor. So the less tumor you can actually need to run the analysis, the more important. And here, we actually need as few as 10 slides to be able to do this. So first turnaround time, that's critical. But we believe what we've created here is more than a product. It's actually a solution. And we developed this based on feedback from the oncologist community. So it starts with a very simple and easy ordering interface. So here, we've leveraged the Trapelo technology that we acquired 2 years ago. And we've created an oncology-specific -- oncology-specific ordering interface, which has been designed by voice of customer. It's very slick. It's simple, it's clean and it's really focused on solid tumor NGS. It also using NCN guidelines and FDA guidelines has also got sort of test requisition support. So it actually prompts the oncologist what would be the right test to order in a certain situation. We've also created a streamlined report. And ultimately, this is again based on voice of customer feedback, but the critical information around diagnosis and treatment is above the fall. It's in the first half of the page. It sounds kind of intuitive to do something like that, but I tell you it's not common practice to be doing those types of things from a report perspective. So we've tailored this report around the needs of our oncologist. And that report is also available in this ordering platform the near access. And then largely, we've also created NeoSeek. And this is another unique opportunity for oncologists, which allows them to interrogate their patient set to really identify potentially new treatments or clinical trials that have come available that are relevant to their patients since they've offered the treatment program previously. So it allows them to kind of self-serve and be empowered. So we feel that this is a very competitive offering that we've brought to market and it really does go a long way to deliver a simpler, better and faster solution for solid tumor NGS. Continuing down the portfolio optimization side of things. We have, again, more than 600 products, and it represents a huge opportunity for us in terms of driving growth, both on the top line and the bottom line. And we've identified 4 areas that we're going to focus on. First and foremost, it is really around doing a gap analysis and filling some gaps. Secondly, it's about identifying opportunities to improve margins. Thirdly, we want a rationalized portfolio and largely, we want to look at targeted opportunities. So maybe just looking at some use cases, et cetera, for each of these to try and make it tangible. So in 2022, we identified a few gaps within our portfolio that we've brought to market. And these are our non-NGS solutions and 2, for example, FOLR1 and PD-L1 are 2 products that we brought to market in 2022, which helped to fill some gaps. We also want to improve margins, and we do this by upgrading all the products. So we have a number of products that we run today or a number of tests that we run today, which run on a Sanger technology. It's an older technology. We can upgrade those tests to a PCR-based technology, which will increase clinical utility. It will reduce turnaround time. It will reduce the [ pendency ] in the lab. And ultimately, with that, it will help to drive improved margins. And again, some examples here, EGFR, which is a fairly substantial one. BRAF, KRAS are some examples, which are taking place as we speak. Rationalizing portfolio, I think this is maybe an area which hasn't got as much focus in the past because I don't think anybody likes to eliminate portfolio because it has a volume and revenue impact. But the reality is we have some products which are carrying a lot of weight. It's driving operational complexity for Melody. And we believe by addressing those products that will actually allow for greater operational efficiency and therefore, it will help to drive improvement across the entire business. The other area is we have a lot of bespoke solutions, whether it be a total test or maybe some of the documentation, et cetera, that we make available around the test. And what we've seen is volumes decline against these bespoke solutions over time. And really, we're faced with the opportunity of either eliminating that product or substantially increasing the price to make that economically viable. And these are the trade-offs that we're going through. And then largely, we want to target new opportunities. So again, we've got a number of things that we're evaluating at the moment. International sponsored testing programs is one of them in the process of putting one together as we speak. Enhanced germline testing is another area that we want to focus on. And then lastly, pediatric oncology is another space which offers attractive potential. So moving into customer experience, and Chris said, we'll win on customer experience, and that's something that is really close to my heart as well. The fascinating thing is I've gone out to see customers, whether it be in the hospital setting or the community oncology setting, world classic sort of customer experience with the oncology space actually hasn't been determined yet. There's different peers out there that do certain elements well, but there isn't a holistic solution that people kind of see as the North Star. And from a Neo perspective, we're going to create that North Star. And it's so much more than turnaround time. Turnaround time is critically important. It's an operational criteria. But in order to ensure that experience, that stickiness and leverage that as a mechanism to win new customers to execute on our strategy, we need to differentiate on customer experience. And we're going to do it across a number of pillars. First and foremost, it is around customer service and customer success, strong back-office functions. As Chris, this is a differentiator for us. Not all of our peers have this available. And we're shifting more from a reactive mindset here to a much more proactive. So understanding the needs of our clients, anticipating their needs and proactively providing them with the information in order for them to effectively run their practices. Online sample tracking, their ability to track the status of their samples. So their registered nurses or the admin staff can make informed decisions in terms of scheduling around when patients should come back in. Portals. We have so much information available for our customers today, but we don't have an effective means to make it available to them other than dumping a whole lot of information on them, which they wouldn't know what to do with. So we are in the process of establishing portals because this is a way for us to structure this data around the specific needs of the customer and allow them access to this valued information so that they can run their practices much more efficiently. But when you do this in a portal environment, you can really tailor it to individual customer needs, which will become is an increasing ask that we faced with today. And secondly, it opens up another sort of channel of communication between ourselves and our customers. Decision support. Very clearly, when we speak to our oncologists in particular, the feedback that we get from them is that this space is moving really, really quickly. They cannot keep abreast with all the different treatments that are available, the different clinical trials that are available, and they need help and support from a decision perspective. We're going to make that available using our Trapelo technology. And then lastly, it's around self-service. 8 out of 10 clients that I see talk to me about the need for self-service. It's a wonderful opportunity for us because clients want to self-service, which is great for us. We need to make it available to us to these clients, and that will create a massive efficiency and reduce our cost to serve within our organization, and therefore, it will improve our profitability. And then lastly, I want to talk to you about revenue cycle management because this represents a significant opportunity for us. And it's largely a bottom line opportunity. And we're doing sort of -- focusing on 3 core areas here from a revenue cycle management perspective. First of all, it's around denials and patient concessions. So in the past, our billing process was at the back end. So a sample would arrive and we would run the sample and then we would go through a sort of missing information billing process. But the reality by then is the shippers sort of sale. We've already incurred the cost. We've already used the capacity. And if there is any kind of missing information or anything, we've probably lost the leverage through that process. So we've actually already moved that upfront to ensure that we can address any missing information. And if we want to, we have the opportunity to pause testing until we have that detail. The second is we are in the process of partnering with providers to try and ensure we have pre-authorization, again, to do this prior to running the sample so that if we're not going to get authorization on this particular test, we can take a decision as to whether we continue to run it or we hold the sample. Again, a practice we're not -- we weren't doing up until very recently. And then lastly, we want to enhance our online ordering capability. So roughly 50% of the test requisitions we get today are digital or online through different platforms. And unfortunately, those platforms don't ensure that all of the patients and billing information is complete before it's submitted. So that's a change that we're driving to ensure that any electronic requisitions that we received actually are complete. So that significantly increases the probability of getting paid and reimbursed when we have complete information. We want to improve reimbursement. And one of the biggest areas where we want to improve reimbursement is around a molecular testing. Today, third-party payers, unfortunately, do not reimburse molecular and NGS well, which is somewhat of a contradiction because that's the space which is growing faster. So we have to be working in this space using health economics to prove to these third-party payers that it is the right thing to do to reimburse for molecular and NGS. So that's really a big focus. We also have many opportunities in terms of to reposition with third-party payers in terms of how they reimburse for tests. A lot of the strategy in the past has been around what is Medicare pay and that becomes the benchmark. We believe through health economics and clinical utility, we are able to prove that certain of these tests actually command a higher value, and we're systematically moving through a menu of tests to do that today. And then although we have a very, very strong in-network third-party payer regime, there are still third-party payers, which are not within network. And obviously, this is leakage from a reimbursement perspective. So we're continuing to contract with these out-of-network third-party payers. And the more we bring on a contract, how that will increase reimbursement. And then lastly, around strategic pricing. This is again an area that wasn't necessarily well utilized in the past, and it's something that we started to do much more readily in 2022 and continued in '23. But ultimately, we want to enhance the pricing for non-covered tests and uninsured patients. So kind of what's our strategy there? How do we position ourselves? We are in the process and have deployed annual price increases for our products, and we've seen good stickiness and uptake here. So we have pricing leverage. And then lastly, we're increasing our analytics from a pricing perspective to understand how we are positioned in the market relative to our competitors and relative to reimbursement rates so that we can increase pricing leverage. So in summary, I'd like to leave you with these 4 takeaways. First and foremost, sales and commercial investments, analytics and execution will drive continuous and sustainable growth. New products and portfolio optimization offer a meaningful upside potential for us, both on the top line and the bottom line. Neo will define what best-in-class services within the oncology space with near experience. And lastly, revenue cycle management will offer significant bottom line leverage. So thanks for your attention this morning. As Chris said, we will take a couple of questions if there are any, and there will be a larger Q&A session at the end as well.

Yes. So we're going to -- let's kind of focus a little bit online, but on Warren's presentation, so we'll take maybe 10, 15 minutes' worth of questions and then we'll kind of continue to move on. We have a roving mic if you just want to raise your hand, and Warren and I will work through these.

Yes, Chris, Puneet Souda, SVB Securities. So great presentation. But overall, when you think about the 2028 number, $1 million, can you sort of talk about how much of that is share gain versus product indication expansion, cancer population, obviously, new drugs are coming on the market. So that expense indication. So maybe just talk to us about sort of how do you sort of get there? And it seems like there's a lot of market share taking here that you're implying.

Well, I think -- and again, obviously, I mean, you guys can think about how to work back, I think, into the number. I think that it started probably with a point in time of what was important to this company and also, I think, what was the opportunity in the market. And I would say it's all -- it's a sum of the parts. So Jeff will give you some guidance or some guardrails on the 5-year plan, but it really includes all aspects of that. I think listen, we had to start winning on chair. I think look, we grew 10%, for example, in Q4, right? So we grew above like what I would say kind of that market. And I think if you think about it, we think the market is probably around 8%, you got to grow faster than the market. But I would say some of it is moving share. I think some of it's bringing new innovations to market. So for example, RaDaR, we think that's a huge opportunity for us. And remember, that's continually testing a patient. I think one of the nice things is we really have not looked at this business probably as a lifetime patient value, like if patients continue to come, you get tested -- MRD opens up that huge opportunity. Now we're obviously as a whole industry learning -- as we go through that. But I think it's bringing new innovations to share for our new innovations market. I think revenue cycle doesn't help with the patients, but it obviously helps with revenue. But again, I think the way to think about it is a sum of the parts. And then Jeff will give you a little bit more on that.

Great. And just a quick follow-up on the reimbursement and the payment side, the mix is heavily towards hospital payments today. Just remind me what the mix is today versus commercial there versus Medicare? And sort of how does that change as you work towards this plan?

Yes. So we don't disclose. I don't think specifics on that. I don't know, Jeff, how we have talked about that. I don't want to be sensitive to what we've talked about in the marketplace.

[indiscernible].

And in our models, we've built a kind of decreasing -- a little bit of decreasing over time and more going to third -- some third party.

So more third parties than Medicare.

No, I said a little bit over time moving to third party, I think -- or think about Medicare or a third party as opposed to building the hospital. One of the things about our business, we build a hospital directly, they pay us as opposed to us having to go through the billing process. As already starting to work models, but you wait until the end of the day.

Maybe one for Warren here on the turnaround time, a big point of focus in your remarks. When we talk to sort of some of these other comprehensive sort of testing providers, Guardant, for example, talk to 6 days, foundation is around 10 to 12, [indiscernible] is probably a little bit sort of overlapped. So 10 seems to be sort of in line with all of those other competitors, the [ intense ] sort of incumbents on the NGS side of things. So how do you view that in terms of the differentiation? And is there anything you're doing on the time required to acquire the sample because that seems to be the larger sort of like bottleneck in the workflow?

Yes, I think that's spot on. So I think your assessment in terms of the [ market ] landscape is probably fairly accurate. It's not a constant though. It tends to move. We've publicly with 10 days. And ultimately, our strategy is to sort of underpromise and overdeliver on that. So that will be the first comment that I would make there. Secondly, you're absolutely right, though. One of the biggest challenges with regards to solid tumor is acquisition of the tumor and that, in many cases, it's third-party retrieval. So we have enhanced. We did have the sort of third-party tumor collection processes in place. We've actually enhanced that and actually baked this into our CRM, [ SFDC ] tool to actually enhance that and track it. We've actually, in this year seen a 1-day improvement, which doesn't seem like a like, but as a percentage, it's significant in terms of our specimen retrieval speed. So that is as important as actually the cycle time of the actual task because you could see up to 10 days in some cases with regard to the specimen retrieval.

And. I think Warren talks about the 10 days, but over -- I mean, underpromise and overdeliver. And I'll say we went 2 weeks on the market, 3 weeks on the market, but we're beating that number.

We're beating that number meaningfully.

Probably more of some of the competitiveness you're talking about.

I think our strategy is really to try and publish turnaround times as this is our kind of worst-case scenario that we're looking to achieve. And let's like we said, underpromise, overdeliver.

Okay. Any another question? I saw a lot of hands a second ago.

Mark Massaro, BTIG. So a couple of questions. The first is on the salesforce. So I heard -- congrats on the 22% increase. Just to clarify, was the baseline 70 reps? Because like, I think over the years, I think I've heard 90, 100, maybe had some attrition or some management turnover. So is that right that the 22% lifted off of 70?

Yes. I think the way to think about it, we need to get to about 100 by the end of the year. And I think you can think about that. I mean I think you take 100, you split it by 2, figure out pretty quick what there was on the TBMs, right? So that's kind of been the way we've run the business in the past. I think I publicly disclosed, we did 20 really in the second half of the year. So you can figure out how many we wanted to add on the oncology side. I will say one of the great things right now on our commercial side, a lot of the companies are laying off reps. I think we have a huge opportunity to be incredibly selective with people that already know the sector and already have the relationships, but change. So I feel pretty good. I don't know if you have anything else...

I'll add. So I think, obviously, a number is one aspect, how many do we have? I think the other thing to think about is how effective are they? It's of no value having a large sales team, which is only 20% productive. And I didn't actually mention this, but we ran a study with regards to our organization, and it's a study that Guardant kind of has publicized, which is around commercial maturity index.

You want to talk about maybe when you ran that?

Ran that as I started the -- started within the organization in Q4. And ultimately, on a 5-point scale, we came in around at 2. So we have a lot of room to sort of grow from a commercial maturity perspective, which really speak to the use of digitalization, targeting and driving efficiency. So I think you're going to see a meaningful increase, as I said, 32% by the end of the year in terms of heads. But what you're also going to see is a massive increase in productivity by us more effectively targeting those resources to where the biggest opportunities on what work needs to be done.

Yes. I think the last piece around the sales is, I think it's also what's the perfect number. And look, as you go out to the 5 years, how do you split territories, when do you split territories. Look, our belief is most of our competitors call them both call points. And we think, look, you have to go deep in these relationships, and it's much harder to go deep when you're in 2 different [indiscernible]. But being in purchasing in a hospital is very different than being in oncologist office. So we believe that the 2 distinct field organizations allow us to go significantly deeper on relationships. I think we've -- I think a lot of people underestimate the importance of pathologists, especially in MRD where you got to -- still got to get the tumor. So where is your relationship with pathologists, how are you going to get the tumor for some of these companies that are very oncology-focused. And so we believe that -- and as we're getting more and more effective, that's going to be a big differentiator.

One last quick one. So congrats on the launch of Neo Comprehensive, which I believe is a tissue panel. And I haven't heard anything about a blood panel. Maybe can you clarify if that is something in development? Obviously, we've seen blood CGP grow, I believe, faster than tissue. So just curious what timing might look like and/or if it's on your RaDaR? With respect to RaDaR, obviously, it's a blood-based MRD test. So I'm just curious where the blood CGP would come in?

So when -- as I say, you're setting up the show.

You're setting up the show. I think one of the other products that we did launch -- of the 4 that Chris mentioned was a myeloid 2 panel. So that was also launched in the first quarter of this year. So that's already started to address that. But that tees up to show really, really nicely. So maybe we'll pause that question for a little later.

Alex Nowak from Craig-Hallum. To expand on the oncology and pathology side of the business, you expanded the salesforce. You both opened up talking about how the oncologists are becoming a lot more important. But I was hoping you can kind of ground it a little bit like let's take Southwest Florida. How is the salesforce being changed here in this field where you now have this new sales team calling on the oncologists, you're calling on the pathologists historically? And let's take a Stage 3 cancer patient, breast cancer patient, how do they now flow through the channel? How do they go through the oncologists, work with the pathologists to get the sample, get RaDaR, et cetera, et cetera?

I think South Florida is a great one model as a little case study. So Warren, you want to walk them though, which you guys have done recently here?

Certainly. So I think prior to the end of 2022, the way we would operate is, we would had a relatively small precision medicine team and they would have a separate regional director. And in Southwest Florida, we probably would have had 1 -- actually not probably would have had 1 precision medicine specialist that would cover the entire geography. And big concentration, some of our largest customers are in Southwest Florida to be specific. So it was just really a demonstration of underpenetration. Today, as I stand, we have 3 precision medicine oncologists. So we've significantly increased our penetration with regards to the PMM sort of targeting the getting an echo here. Sorry, let me stand here, targeting the oncologists. So I think that's the first very clear delineation. Something that I haven't spoken about here we've also introduced an ASR, which is an associate sales reps, not going too much complication. But this is kind of an overflow capacity -- where we see more work coming in and Southwest Florida is an excellent example in terms of our growth where we supplement or augment resources with this developmental role that we have within the team. Southwest Florida, again, one of the unique opportunities that we offer as our own logistics fleet here as well. So maybe when we do the 2, you won't see them because they'll be out on the road, I guess. We have our own logistic fleet that actually collect samples Florida, we do the same in California where our AV site is, as an example. So that allows for an additional sort of intimacy and stickiness with our customers as well. So that's really how we're building our strategy. It's around increasing the touch points. It's increasing the intimacy with our clients in Southeast Florida. At the same time, the Territory Business Manager, which has been calling on the hospitals and academia, that team hasn't reduced in size. That's being sustained. And both of these teams now, the PMM and the TBM are now under 1 leadership. So we have our regional director that lives up in the Tampa area for Southwest Florida that's actually coordinating this sort of playbook for Southwest Florida, where are we targeting, what are the activities that we're focusing in on, et cetera.

I do want to make one clear [indiscernible] that would probably be South Florida when we talked about 3. So think of Orlando South, it's not 3 precision between Southwest and Fort Myers. The business opportunity is there, but it's not.

Sorry, it's big catch. Thank you, Chris.

I don't know that we got you get all the way to your question or did.

Maybe I [indiscernible].

Yes, I think that's...

Well, I think -- yes, so again, it depends on what the situation is. Are we in a hospital setting or is this an independent oncologist, et cetera. But it definitely varies. If you're in a hospital setting, there's a very strong collaboration between pathologists and oncologists and they pretty much work seamlessly. And today, our primary point of contact would still be the pathologist in that particular setting. And a lot of the coordination actually is driven between the pathologist and the oncologist. If you're in the community setting, it's very different. This is where our interfaces with the oncologist and we would then interface to the hospital pathologist to collect the sample in the case of solid tumor. And this is the sample achievable process that we spoke about, leveraging our internal resources and our salesforce platform.

Yes. And I think two things on that. One is collecting the sample. We do believe 1 day is huge. And I want to come back to, we have to -- every single day, I think it's someone who has been told. I will have your results next, right? You can't miss that. That's table stakes yet. I think you can't miss the date. The second thing we really have been talking about the [ share ] number. So this collaboration of partnering together. They share a number and they're paid on -- RaDaR -- if you're a -- I mean, a pathology rep in the hospital, you're also getting paid on RaDaR. Even though the primary salesperson is oncologist to create this flow because there's so much cross-selling opportunity. So I think I'm getting pulled with yes. Okay. We're going to move -- if you got a question that's kind of focused on, we'll come back at the end, we'll have still have time for Q&A. So we're going to turn it over to Melody.

Good morning. I'm Melody Harris. I'm President of Enterprise Operations, and tomorrow is my 4-month anniversary here at Neo. So pretty new, not quite the newest though, you'll get to talk to him later. And I just really brought in, as Chris talked about, lab operations. I have been in operations before coming to Neo. And when Chris and I started talking about the role, I thought lab operations seems a little siloed. So separate for me, Chris and the team were really thinking about how to bring that together and have someone really responsible for driving turnaround time and really owning costs behind the operations. And so you have to really bring all of that together. And that's what I was really brought in to do. So as we think about the approach that we're now taking the integrated approach, obviously, starts upfront procurement inventory, we have our equipment that we need to purchase. We have our reagents that we need to manage. We need to be doing that in a discounted volume sort of way. And then the heart and soul of our operations remains the lab. And so that's certainly what we focus a lot of our effort on every day, but then bringing in the medical services piece because, as Chris mentioned, that's the back end. And these are the folks that are really touching our customers, our pathologists who are talking with other pathologists and oncologists and really interpreting those results and helping them serve the patients. But underneath that is a lot of foundation that makes all of this tick and new. One of the new things that we've brought in is an Operational Strategic Agility Group, which is really think about continuous improvement, and I'll talk about them a little bit more. Well, instead of thinking of just IT as an underpinning, our IT groups were also fairly siloed and we had all of these acquisitions that had come in. We have some amazing technology, but it was siloed and not talking to each other. So we're really now thinking about that. It's not IT, it's really technology and digital services that underpins the entire operation. It really sets the stage for us for the future. We've brought in quality and regulatory, and we're working hard. Those 2 were separate and we had separate groups that were living in these different acquisitions. We're now bringing that together into a single system and driving lean methodology into our quality system as well and really adopting agile development so that we can move more quickly. And then facilities obviously underpins all of it where we are and making sure that we're getting capacity and leverage off of our footprint. So where are we focusing for '23, we're really looking at optimizing the web. We're really looking at optimizing our workflows in the lab and across other aspects of operations, focusing on our people, as Chris mentioned. And then when I personally get very excited about is around digital transformation. So starting with lab optimization, I was lucky to inherit momentum. Chris had talked about momentum and the folks here before me, primarily led by Lynn Tetrault, our Board Chair really started project catalyst that some of you have heard of. And while we're not reporting on that separately anymore, it gave me initiatives coming into this job that really delivered some momentum coming into Q4 and now into Q1. So we've focused on things around automating and digitizing the lab. We've had productivity increase in some of our network analysis. We're digitizing our stains, and we're uploading to our network, which I'll talk about in a moment. We started optimizing our footprint, and we are working on our equipment capacity strategy. Chris talked about the hurricane that hit here in Fort Myers. So redundancy is incredibly critical to what we're doing. And we've really started to plan for that redundancy. Redundancy then reduces our downtime so that we're able to pivot and move. And one of those important advantages that we have when we have a hurricane in Fort Myers, we can pivot and move so quickly because we've built our system on a network basis, and I will come back to that in a minute. Importantly, these initiatives really gave us momentum in NGS. And I'm thrilled that it continued into Q1. So Q1 year-over-year in our Neo-type NGS, we have a 46% improvement in our turnaround time, and we've had improvement of 22% for our other NGS. And overall, as Chris mentioned, we had 36% for fourth quarter improvement year-over-year in turnaround time and carrying 17% into the first quarter. So in 2023, we're going to continue that momentum. We really focused on automating and digitizing the lab and a couple of examples that we've got here, and you'll see some of these on our tour today. We started with an AI application around automated karyotyping, which allows us then to take analyst time out of their days previously, they would circle it. move it manually and organize the chromosomes themselves. Now with the touch of the button, we're actually able to do that through AI with human QC on the back end of that, but we've experienced a 29% increase in productivity in cytogenetics as a result of this digitization. It also then by digitizing, it's allowing us to upload to our network, and I'll come back and talk about the network more in a bit. You're going to see on the tour that we're using automated liquid handling that we're bringing into our molecular business. And in our California labs, we've actually started validating for 2D bar coding, which allows us to be even more hands off with these machines. That's obviously improving turnaround time and increasing our productivity. So by doing these efforts through the year, we're really increasing our throughput. We're importantly improving quality and safety for our patients, and we're getting that operational leverage that we've talked about. And then we're also really feeding and this network strategy is incredibly important for us. So let's talk about our network. I don't know that my map is showing well there. So imagine a map of the United States up there. It's showing on my screen. I don't know why it's not showing on that one. But we have the dark blue ones are where we have our network labs. And we use the word lab because there is work going on there. They are CLIA-certified -- but this is really analysis that is done and enabled because we have a network strategy. This differentiates us in the marketplace because most people just build all of their employees around their production lab itself. But we were able to pivot so quickly from the Fort Myers hurricane because we were able to shift the actual spot of the sample processing, but keep all of our employees who are doing the analysis in Nashville or in Chicago or in Tampa, who were unaffected by the storm. So the network strategy is incredibly important for us. The light blue are where we have now our full production labs or wet labs, and that's where we run the sample itself. And then here in Fort Myers, that's our headquarters. And because it's a new lab, you'll see that we're actually just validating much of our automation here in this lab. In order to increase that operational leverage that we talked about and better use our network, we actually consolidated wet labs as well. So we consolidated into Fort Myers, the portion of our Nashville operation. We moved the wet lab here to Fort Myers, you keep it as a dry lab or an analysis lab. So that's why you see it as a dark blue. Singapore was a wet lab, roll, Switzerland, we have a wet lab. We're consolidating all of that into our U.K. lab. So better leveraging that footprint. Moving to workflow optimization. And I think if you did a word cloud for us today, after you hear all of us speak, I think one of the larger words in your word cloud would be data. And we really are leaning into this and really modernizing not only how we're delivering for customers, but how we're running our own business. And so we've started this group of operational strategic agility here in the operations team, and it's really incorporated a Six Sigma team into the operations group. We're driving continuous improvement. We're holding people accountable through metrics. We've developed real-time dashboards for purposes of managing the business. And then it's giving us insights into understanding how we can simplify and standardize our business so that we can continue to operate in that network function. But if I'm doing things differently in Fort Myers, it makes it very hard to pivot that work to Houston or to California. But if I standardize that through my metrics and analysis, I can understand that I do it the same way everywhere that we are better able to leverage our entire footprint. And then we are also using our metrics to understand our staffing and our capacity to really meet the needs of the customers at the time that they need it. So if they're taking a biopsy and that hits us at 4:30 p.m. on a Friday, we can look at where that volume is coming in and we're actually making staffing changes to meet that volume regularly analyzing that volume and regularly updating our staffing accordingly. Turning then to our talent. Our most important asset are our people, and we're really going with a three-pronged strategy. And you guys are pretty steep in this sector. And so you know I'm sure you hear this from most folks in the sector. COVID made the competition for talent in this space really hot, and that continues. And so we've had to be strategic about recruiting, developing and retaining our talent because it is very competitive out there. So from a recruiting perspective, we've partnered proactively with local universities around our 3 major wet labs, and that would be in Houston. We've partnered with MD Anderson in California. We've partnered with Mount San Antonio College. And here in Fort Myers, we've partnered with Florida Gulf Coast and Kaiser University. So that we're helping -- we're partnering with them in order to create content for that training. It gives us a flow of candidates and it's also certifying our employees as they come in the door. So it's been a great partnership. And when we do the tour a little bit later, you'll see some of our training areas. Some of that is for our own employees and then in those partnerships. So training, training, training is critical to getting these folks in the door. We're also conducting a large company-wide market compensation analysis to make sure that we're seeing competitive in salaries. From a development perspective, back to training. Many of our lab ops employees go through our continuing education program. We've got our own internal group called Neo U. And we do our own certifications, in-house certifications with our employees so that we can move them through and really foster their careers because a good leader, a good manager always wants their employees to grow and succeed. So Neo as a company has actually taken that on, and we're helping our employees grow, get those certifications and hopefully stay here at Neo. We're also undertaking serious leadership development because, as you can imagine, when companies grow quickly, people get thrown into new managerial roles or jobs they don't necessarily have the skill set to be able to handle that. So we are actively -- proactively helping those employees really develop those leadership skills. And that all then leads to the third point, which is retention. So growing them is important, but to do it in a method that they know where they're going. And so we're developing individual tailored career plans for our employees so that if you come in the door in logistics in NeoGenomics. Your manager will be helping you understand that you could then move to [ accessioning ] and then you can then move into FISH and start getting your certification as a technologist in FISH, and you could continue to then move up the chain. And we've seen that over and over again from our employee surveys, this is what they need, and this is what they want for us in order to stay with Neo. We're seeing, as a result, consistent and continuous improvement in our turnover in the last 12 months. That's come down, and we're very pleased to see that. And then the last thing we're working on, and you're sitting in a prime example of it right now is that we're modernizing our facilities to provide better space for our employees so that it just brings a healthier and happier working environment. So this is the part that I can speak out on and I can spend a lot of time talking about everybody on the team knows I get excited, and I'll talk on forever and ever and ever about digital transformation. We to bring the lab forward to do the workflow improvement that we've talked about to enable Warren and his customer experience, to enable the [indiscernible] and the innovation engine that you're going to hear about, it requires digital transformation. And I talked about how we've really been siloed. And importantly, our data is siloed. We have systems that don't talk to each other. And so how are we tackling this digital transformation? We're really putting it in 4 different buckets. And first and foremost is we have to stand back. We have been firefighters, really good firefighters, actually. And we've developed a piece of software in a very quick period of time in order to solve a problem. But then a year later, we find out that, that software then needs to talk to another piece of equipment that we've just brought into the lab, and they don't have common data structures and so they can't talk to each other. So we're standing back and saying, "All right, let's imagine the lab of the future. And let's imagine what we need all of that data to do and let's design those blueprints, let's make that." And we've started that process of full end-to-end enterprise architecture, fully modern tech stacks in order to start rebuilding the plane while we're flying it. So we'll be building end-to-end data connectivity from salesforce at the opportunity layer, all the way to payments, EMR connectivity and all things in between. This is what we're building and designing. This is the backbone for automation and making sure that we have modern technology that can work with all of this automation, bring all of that data in so that we can leverage it both for our own analytics, but eventually for either monetization through our Informatics Group and later and importantly, product development. This system will be agnostic to data inputs because you guys are very smart about this space, you know where it's going. So today, it's taking all of our H&E data, it's taking our NGS data. It's now taking our Neo Comprehensive data. And tomorrow, it will take whole-exome data and whole-genome data and then proteomic data and then single cell data. So we're making this agnostic so that we're future-proofing and being ready for what that data future is coming. The next stack is really around data and analytics. It's a simple thing. But if one system has data birth that starts with months and then date, then year where you have another system that works on the English system, and it goes with day and month and year, you've just created a data disconnect. And that's one really simple example. We have hundreds of thousands of data disconnects that we are now working and re-architecting that so that all those data definitions are common, so that our database is truly a connected, powerful database. We're enhancing sample tracking, as Warren mentioned, and this is going to help us in so many ways because we are then able to use that for analytics to drive efficiency and to serve the customer. We're getting better insight into our supply chain, and we're obviously driving better cost transparency. We're moving to broader and wider cloud deployment. This is going to reduce cost for us. Importantly, it reduces security risks and disaster recovery and business continuity risks. It gives us the better opportunity for quicker new deployment as we move to a new site either a dry lab or a production lab. And importantly, as we start thinking about moving international and the data restrictions that we have in various international markets. And then all of the big boys in the cloud world, they have wonderful tools and analytics that we're going to be able to bring to our business. And finally, we're really focusing in the same vein that Warren talked about on the enhanced customer experience. So we're improving online ordering with portals. We're bringing in expanded user platforms, and you'll be seeing that we're finally architecting mobile strategies so that our customers can access this information on an iPad or a phone. We're improving the reporting, as Warren mentioned. We're enhancing the user interfaces for the customers, and we're enabling that customer self-service. But this digital transformation is more than just about fixing the lab, improving the lab or improving customer service. It's also really about the future. And this is really basic at what I would call big animal pictures for you guys. You guys understand this really well. But these are sort of the basic components and building blocks of what a big data precision oncology company needs to be thinking about. So first, you have to have access to the samples. And obviously, Neo has that. Then you need to be thinking about a high throughput data source. And today, that's an NGS service. And again, tomorrow, that's going to be a multi-omic assay. Then you have your AI/ML layer, where you're applying artificial intelligence and machine learning. And then ultimately, you've got precision decision support tools that sit on top of that. And all of that feeds your database. So you have a basic biobanking strategy in order to layer your data over time. You can rerun those samples as the new technology comes out, and then your database just continues to get richer and richer and richer. And so we're really building this infrastructure, but it's not just infrastructure. I really want to focus on the AI piece for just a minute. We have started to employ AI strategies in our lab, and we continue to pilot those on a regular basis. You can't really be in the space and not see AI pop up all over the place. It's -- we've got some cutting-edge folks who are really doing some cutting-edge decision support and other things. And that's obviously where we're going to move in the future. But artificial intelligence needs something in order to not be artificial. And that is data. And this is where when I thought about coming to Neo, this is where I got so excited because Neo has the data. And so if you think about what Chris said about the number of patients that we're serving, when you think about it in the context of data, we generate a really conservative basis, super conservative basis, hundreds of clinically relevant data points per patient. You start adding whole genome to that, you're talking at least 20,000 data points per patient, per sample that you run. So 100 is conservative, right? And these numbers and where we're serving patients today, that's 100 million clinically relevant data points from an annual basis. We grow our database faster than anybody. And not only are we growing it and RaDaR continues to help us grow it, but RaDaR brings a new dimension to our data that artificial intelligence love, and that is longitudinal data with relevant outcomes that we can tie to those longitudinal spot. So the advantage is that this is bringing us and what Neo has as a competitive advantage is our data. So what do we do with our data today? As you know, we have an informatics business. Vishal is going to go into that more in depth. So we're enabling Pharma research and development with our data today. This is real use of our database today. We're licensing that data for algorithm training, we are part of the creation of the AI frontier because they come to us because we have the data. We're also doing clinical trial matching, and we are realizing that competitive advantage that we have in just the way we conduct our operations because we can upload things and do it on a network basis instead of having to have pathologists and analysts around the wet lab itself. But in the future, then as we continue to build out this architecture that I talked about, as we connect all of the data better, as we grow the database, -- and as we get more longitudinal effect of our data, we also then can start monetizing that data for more use with pharma for real-world evidence generation. So Vishal is going to talk a bit about product innovation, there's lots of product innovation that we're going to be able to do off of this product innovation and leads to IP generation and ultimately creating data standards that are out there in the way oncology data is reported and thought about and Neo can be at the center of that. So key takeaways for today. We've really worked hard to integrate our operations end-to-end because it's all connected, lab operations to IT, to software, to facilities. It's all connected. And we're now thinking about it and running it in an integrated fashion. We've already started to see strong results from those catalyst projects and some momentum that gave us and the continued automation and digitization that we're doing in the lab. We're going to continue to focus on lab automation, workflow analysis and really focus on our talent recruitment and retention. And importantly, we're working on that digital transformation to really leverage our data advantage into the future. Thanks.

Okay. A couple of just quick housekeeping or general questions. We're not going to take a formal break because we're -- the physician we're bringing in is in surgery, and so we're trying to do a time. If you need to break, bathrooms are right there, just ask you to kind of get up and go, but -- or during the Q&A session, but just to let you know we're not going to take a small break. So let's take a few questions.

Andrew Brackmann, William Blair. Melody, great overview. Great presentation. So I think it hits the mark on sort of where the puck is headed in terms of lab and AI sort of infrastructure here. But I guess as we sort of sit here today, can you maybe just sort of talk about what Neo needs in their own infrastructure in order to sort of drive those future uses of that data? What's in your control? And how do you sort of think about those time lines to get to those future uses?

Yes. So I think, first, what I felt when I walked in the door, what we needed was really that end-to-end enterprise architecture. We were really missing that global plan of what -- where we wanted it to go where we thought the puck was going to be. So that's a big piece, and that's wholly in our control. I think another piece that I would like to add to the team over time to help me both operationally and then I know Vishal and Shashi are working on it from the R&D side is really around more bioinformatics and being able to either bring that in or partner with someone to make sure that we are doing that analysis on our data ourselves. But I would love to have that just operationally to be able to deliver that a little bit better. That's mostly in our control, but frankly, that's a relatively competitive space to get good bioinformaticians. So partnering may be the stronger strategy for us there. But other than that, it's a matter of timing and planning and controlling our cost spend around this. And so I think building that data future is really all within our control.

Yes. And maybe, Andrew, another way to think about it, and you heard me talk about like that $25 million when we went through the rework and we're reinvesting it. And I would say the way that we're thinking about it, the folks you're seeing today is a team and strategically together, we make where are we putting those investments. So like one of the things that came up but commercially you're behind, right? So Melody and finance and look hold hands and say, okay, rather than doing this today, let's add the field. Second point is, I will say, Inivata, we actually got some of that bioinformatics. But the challenge was it was just in Cambridge and focus very much on RaDaR. It really wasn't a Neo. So I think how do we expand that...

Yes.

Alex Nowak from Craig-Hallum again. First of all, when you think about lab consolidation, is there -- you mentioned the 3 that you consolidate this time, is there any additional consolidation you'd plan on in the future? And then the second question is really around Enterprise Operations is now its own segment. How are operations handled prior to project Catalyst. If you maybe walk through where the organization was, how it was set up, how it was managed previously versus where we are now?

Yes. Maybe take a couple of that, and then I'll have Melody follow kind of come in behind that. Look, I think we announced that we closed Singapore and our lab in Switzerland. I think that was a pretty quick consolidation because I think it's -- we had labs really probably prematurely. So we pulled the European into Cambridge. Cambridge is getting expanded. I think we have -- a couple of things about Cambridge, great talent pool. Inivata or now Neo has a good brand. In Cambridge, great, we have a great relationship with the university. So I think pulling Europe into Cambridge was a key strategy. We continue to believe Asia, especially China is a big growth opportunity, but I think it's how do you do it. And so I would say, look, I would look there. I think as you saw on the map, a lot of dry and wet labs, I think there's a reason why all those were put in place and Melody talked about the network. So I'd say there's nothing right now on the -- kind of on the footprint of the plans. I will say Houston expansion would be almost more than the consolidation and how do we expand in Houston. If you go back, I think, look, one of the challenges you acquired Clarient, you acquired Genoptix, you acquired Inivata. A lot of those labs were kind of created and run very siloed. So I wouldn't say there was this integrated approach from an enterprise operations perspective. And I think that's what put a lot of pressure on the P&L, candidly, is just the cost infrastructure, right? And you can't have -- and we talked a lot about this when we do the G&A change, you can't have -- it didn't make sense to have accounts payable in Cambridge, if we have an infrastructure here. So I think you saw a lot of that, I would say, on the operations side is procurement. If you think about things like procurement, individual site directors. So I think pulling it all under one umbrella and creating kind of this 5-year plan as we start to think about it, really became kind of key for where we wanted to get. I don't know, Melody, if you had anything to say.

Yes. I neglected on my map slide that didn't show the map to really talk about the Houston expansion. So we're really excited about that. We're focusing a lot on our molecular business in Houston. Houston is a great market for us because it's a nice intersection of obviously where the customers are because you have so many major cancer centers there. And then we also have a really nice talent pool there that's at a lower cost of living structure than, say, in Southern California. So Houston expansion is a big piece in a change of where we're moving.

Thanks, Melody, Puneet here. So just wanted to clarify. So as we think about Houston, other sites, Southern California here, would you have NGS and sequencing? How are you distributing that versus FISH versus cyto versus heme versus other products, traditional sort of when you bring about operational efficiency through that sort of there's the turnaround time factor because of geographical location, but at the same time, operational efficiencies because you have the right people on one group. So help me understand how you're doing that?

So I'll give you an example. So one thing to think about is we want to do things in 2 places, right? So from a redundancy perspective. So today, we only do RaDaR in Raleigh-Durham. So the reality of that RaDaR will be brought up in Houston, right? So we have a second site. So I think we take a lot of that from a redundancy perspective. I'd say the other thing is cost of test and profitability. So if you think about some of these older generation tests that are less profitable, doing those in California, it doesn't make as much sense as doing those in Houston, Texas where we get arbitrage when you think about it. So I would say a lot of that piece is going into the planning and expansion in Houston. Houston has primarily been a pharma site, not really worried about reimbursement with pharma. That being said, because it was a really large clinically, we were leaning heavily on here and on the West Coast from a clinical perspective. So having that site in the middle part of the United States, I think, is going to make a big difference on the clinical side of the business as well. I don't know -- I think that got to your question.

Yes. So it's really dependent on where you're getting the most operational efficiencies from geographically, just...

And being close to the customer. Like a lot of people could argue why don't you just do it one place because, look, it does cost more. But I think in this business and especially where we are, I think we get a benefit, a, you pick up a day or 2, just even with a FedEx overnight, right? But the other thing is, I think, for us, we think redundancy is important because of looking again if hurricane hits or an earthquake, of course, we chose Houston, which is a hurricane zone. I don't -- I'm trying to convince someone in Denver, Colorado, but no one's joined that club yet..

We're doing that closely.

Melody, one for you on the data piece. So you mentioned RaDaR will obviously, by definition, will be longitudinal data. But how much other longitudinal data do you have at this point in your database? I mean, presumably, the RaDaR pharma piece of it is all longitudinal. And then second, can you give us a sense for what portion of the data has outcomes associated with it as well because that's been a huge point of focus for discovery-based use cases?

Yes. So we actually -- we don't disclose either of those pieces. That would be a pretty competitive information. But we do have outcomes associated today. And we do have a limited amount of longitudinal information today as we know we have some repeat business on the same patient. So we don't disclose the specific amount.

Got it. Okay. And then this sort of ties to something that Warren mentioned in his presentation as well around strategic pricing, including enhanced pricing for noncovered tests and uninsured patients. And you mentioned sort of cost transparency. I mean one of the tools that's being used by a lot of these CLIA labs is capping patient out-of-pocket expenses, particularly as we get into these new indications where reimbursement can be spotty and has prior off and whatnot. So can you just talk us through that? I mean is that a tool you'll be leaning into heavily as you launch these new tests? Or on the other hand...

Do you mean, capping out of pocket or...

Yes, exactly.

Look, I think at the end of the day, I think that in this country in treatment of cancer, 99% of the time, there's a way to get things covered, whether it's through patient support functions sort of things. So I think we have to use a game that -- with RaDaR, I will say, and we're not going to go in a lot of detail today from a competitive perspective, but Vishal is introducing a private pay price that I think is incredibly competitive for a person to pay. And I kind of use the analogy if you kind of see me walking around, not looking great today, I'm not going to over too much detail into my health, but I ruptured 2 disks about 10 days ago, and I went to get an epidural. And the day before the day -- literally, one of these things, like you'd start crying if I told you the whole story. So my physician says, look, here's a deal, I don't think you get your coverage in time, it's going to be private pay. Now needless to say, fortunately, he would be say $100,000, but I was going to write a check for that because it was a very realistic for what I need at the time. Now good story to the end. I show up at the surgery center the next day. We've gotten coverage. But I think, look, we're going to definitely be private pay, but I think the ability to have this as a differentiator and a core competency of the company, I think people have underestimated in this industry. And when you look at the leadership team when we talk about it, I think one of the challenges that Neo got into, it wasn't running the company for the next 20 years. I think it was a shorter-term thing. We've intentionally, I think, brought in the team who have been there and done that. And I talked about this when Jeff started. Jeff has never been with a company that made a widget, right? He came from the service industry from payor relations and paying. I think when you think about Melody, grew up at Qualcomm, which is very data specific, but then moved into molecular. And so I think for us, it's about how do we do kind of all those things. I don't think it's just about saying, we're going to cap the payment. I think, look, just like everybody, we need to be paid for the work that we're doing. It doesn't take away from our mission, but at the end of the day, we should be paid for the work we're doing this kind of the philosophy.

Tom Stevens, TD Cowen. So just to go back to that kind of data piece and clearly, it's a big focus of investment for you guys. Have you given any time lines on when you really expect to see returns there and how much that $25 million you're already plowing into it? Because it feels the crux of your kind of operational strategy.

Crux?

Yes.

Yes, look, I would say absolutely a lot of time is going into that in a big investment. So Greg -- is Greg in the room.

Greg Sparks, yes, he is.

Yes. So Greg Sparks, the guy sitting behind you is our new Chief Technology Officer, starts today. So we try not to grab him at the break. But look, I would say strategically, a lot of those pieces of the plan are putting place and dollars have been allocated. And I think one of the ways that we think about our business is that we do not do a full allocation of the budget at the beginning of the year, we create what we call a contingency fund, and that's pulled aside and each quarter, dollars of that contingency fund are allocated into those things. So Greg, I'm going to give -- we'll give him at least a week. But I think part of the reason he's here is to kind of create that. Now I think Melody had the early days. But I think you'll start to see some of it really in '24. Part of it is a new LIMS system candidly. And I think the way that we were thinking about the business was very different a year ago when we were thinking about LIMS than it is today. And so that's one of the reasons he is here. And I think that LIMS system will be a key component of capturing. And I don't know if, Melody, if you have...

I agree with that. The first piece that we're starting with once we complete the overall architecture will be the LIMS system and really redesigning that so that we're driving better efficiencies there, but that data -- overall data end-to-end connectivity because LIMS system obviously sits at the heart of everything that we're doing, but it has to connect to SalesForce on the front end and our ERP system on the back end to be able to deliver data back and forth between the EMR. So that LIMS system carries a lot of weight for us, and we want to make sure that, that's an investment And you'll see us tranche that over time. LIMS systems are not something you spin up in just a couple of months. So that's something that you'll see spend going on that definitely into '24 and probably even into '25.

Yes. And I think it's then when you get a return on that investment. So I think one of the things that we're really focused on is how do you build this to $1 billion business, but it's also about how do you have sustainable long-term growth, brick on brick, right? So could we invest $50 million today into that? Absolutely. Would that be the best decision for 2 years from now? Probably not because we need to deliver. I think for Neo right now, it's about -- you heard me say something, we got to get the house back in order and deliver. But I think because of that, and I think because of this collaboration and the ability to manage the operating expense as a whole, we're able to invest in the...

Well, I guess in terms of the actual redundancies you might be taking out on the operational side as a result of this new system? Have you sized at all? Or is that again, an ongoing process as you build the thing?

Yes. I would say it's an ongoing, not reorganization, but investments in doing that. And especially why one of the reasons we built this thing, like I said, I call it the contingency fund to be able to do those things. I'm looking at [ Kender]. We're going to keep going. We'll come back to some questions after Vishal. So Vishal is going to come up and do Advanced Diagnostics. And look, one of the things that I love about Vishal, I think a deep -- having someone run this business with a deep understanding of the oncology market, not only just where it's but really where is it going and having a vision for how does this business be here. So Vishal, I'll turn over to you.

All right. I'm stretch here, so almost there. All right. So I'm going to talk to you a little bit about the Advanced Diagnostics Division and why we decided to create this division. I've been at Neo now since May of last year. Background is molecular biology and worked for both IVD companies and LDT companies out there. As Chris mentioned, heavily in the oncology space, that's been my background from the start. So I love this space. Main reason why is because it keeps on changing. And that's what's really nice about it is that we have to innovate as a company if we want to keep abreast of anything new that's happening and that's what's why we decided to form the Advanced Diagnostics Division. So the division itself has 5 -- 7 major focus areas, okay? So we'll talk a little bit about each one of them, but I'm going to focus primarily on 4 of the 5 for today's talk, but you'll hear a little bit more over the next year in particular and the other ones also. The first one is on therapy selection. Mark asked the question earlier. We launched Neo Comprehensive, yes, that was in the solid tumor tissue space, but we also launched, as Warren mentioned, our myeloid panel. So we'll -- that's all falls within our therapy selection focus area. We have a liquid biopsy MRD focus area. This looks at RaDaR as an example, would be perfectly what would fit in here, but also looking at the next-generation products, more liquid biopsy-based products InVisionFirst-Lung is our first one that we have launched last year, but continuing on that journey as to what is our next product profile look like for liquid biopsies for therapy collection. Our Pharma services. This -- Neo has had Pharma Services for the last 4 to 5 years, and this is an area we continue to see good growth. What's really nice about the Pharma Services portion of it is that we do have a commercial team that's tied to it, which actually goes out and sell services to pharma that we can take advantage of and actually look at what's happening in the pharma side because pharma usually thinks 5 to 10 years ahead or diagnostic tools that you can use as part of their drug development process, and we can tie that all in into our R&D pathway. So that's why really love the pharma area being part of this division. And Melody touched on this, right, the data that we collect and we generate. There's a huge opportunity here through our Informatics commercial team, packaging that data in a de-identified manner and licensing that out to pharma. And we'll touch a little bit about what we're doing on that. Altogether, we put R&D here because, ideally, you can take all of these other 4 areas and tie that back to R&D and generate our next-generation products, which then feed into both our pharma customers and our clinical customers in the near future. So you always see it starting off with the pharma and then moving into the clinical in the mid- to short -- mid- to long term. Supporting all of this, the first time ever, I think we -- as somebody asked about outcome data, we actually now have a clinical programs team. This is relatively new for the company, but we felt that this is something we needed as we launch our next-generation products to do clinical studies to help support the clinical generation so that we can actually use it for reimbursement purposes, guideline purposes, but also help generate outcome data, which will help support the cells and the clinical side of things. And then we have a client engagement team. The client engagement team is basically customer-facing primarily here to the pharma side of the business, where both Informatics and our Pharma Services. The goal of this division is to really focus on the product road map, not just for tomorrow, but also for the next 3 to 5 years and look at where the market is going, so we have a strategic marketing team tied to this, looking at the full workflow from an operational perspective, but also from a product perspective and looking at where the market will evolve to so that we can generate those next-generation products for both Pharma and Clinical. So let's talk a little bit about therapy selection. Warren talked about how we're the market leader in the heme side. Just to give you a subset of that, if you just look at leukemia as an example, we are the market leader in leukemia with over 52% market share. Now if you look on the right-hand side, what you see is that on the solid tumor side, we are behind, very behind, okay? A lot of opportunity for growth with 4% market share right now on the solid tumor. Why is that? Chris mentioned this in his talk. NGS is something that we did not necessarily invest in, in the past, and that's where a lot of the investment has gone in over the last couple of years with the launch of Neo Comprehensive that occurred in a couple of weeks ago. And our focus has been on single-gene testing in the past, and we went to smaller panels. We went to smaller NGS panels, as an example. But now with Neo Comprehensive launching, we basically are where we think the market is, but we're not going to just stay there. And that's the key point is that Neo Comprehensive, with this launch, we are actually at where the oncologists felt that we had a gap in our menu. GMB is an example that which is part of the clinical guidelines and we weren't offering it. Now we're able to go out there and sell that to oncologists and help them understand why it's needed as part of their clinical practice. So we see this as a $5 billion opportunity from a market that's only 18% penetrated right now and look at what's happening in this space with the drug approvals. You had a lot of the drugs that were being approved on the metastatic side, and now that's moving to the adjuvant setting. And as these drugs get approved in the adjuvant setting, that market need for therapy selection is also going to grow. So you're going to see that NGS, which is primarily focused heavily right now on the metastatic setting come earlier and earlier in the treatment pathway and you'll see that expansion occur even in the therapy selection space. We do believe that our products are not just from a spec perspective, they make a lot of sense to what the oncologist needs, but how we sell it also makes a huge difference. And going back to Warren's talk, the PMM team is a new investment for us as a company, but we felt that, that was absolutely needed to go out there and go talk to those oncologists because it's the oncologists that are ordering these panels. And it's important that we're able to get those requisitions in and then use the TBM team who have those great relationships with the hospitals to go get the tissue from the hospitals. And that's what makes us very unique in having these 2 sales teams out there. We're able to get the orders in and then we're able to get the samples in at the same time and get that testing done so that Melody and her team can execute on that. And with the turnaround time, obviously, 10 days at table stakes as we've already talked about. But I think what you will see that the improvement that we continue to see on our turnaround time, it's going to matter because it does matter to cancer patients and oncologists tell us this all the time. I do want to touch really briefly on the clinical decision support. Oncologists are busy. And you will see that we'll talk to a surgeon a little bit later today. But if you go into any oncology office, they are -- have patients that are lined up, and they need to look at these reports and basically understand the report and decide how to treat their patients in the right way. Our clinical decision support tools that we have are going to help the oncologists with those treatment decision-making that will help them guide their patient journey in the future. So if you look at where we're going in this therapy selection market, we've launched Neo Comprehensive, it's a targeted panel right, big targeted panel, but still a targeted panel. What we're heading to is whole exome sequencing. You'll see that and whole transcriptome sequencing. You'll see that come out in the first half of 2024. And then we're also looking at whole genome sequencing. Mark, to your question on liquid biopsy, that's where I see it first. And I will probably see that as more in the second half of 2024. We think that we can get a lot more with whole genome in the liquid biopsy space and the price is coming down on whole genome in particular. We think that's the better opportunity for us to be in with the liquid biopsy side of things. Expand access. New York state approval. Obviously, New York is a huge market. We're going to continue with our new testing to get New York Department of Health approval, but also looking at setting in processes for FDA approval for our products. This is relatively new for Neo going for FDA approval. And this is a request we get from our pharma companies a lot with our assets like RaDaR. So RaDaR was developed under design control, okay? So that allows us to partner up with the pharma companies and go out and get their FDA approval. And as you guys may remember, it did have breakthrough device designation when we approached the FDA a couple of years ago with that. And when we look at whole exome sequencing, whole transcriptome sequencing, in particular, we will develop those under design control so that we're ready, if there's any changes to the regulations and anything else, we're ready to partner up with anybody that wants to and like a pharma company and take those products through the process. And then, of course, increase relationships. While we've been heavily focused on community-based setting, as we go to oncologists in particular, there's a huge opportunity in the number of oncologists that we can serve in the academia setting. And that is an important one because oncologists in academic setting are really interested in our next-generation technologies in particular, like whole genome, like whole transcriptome. So we're in heavy discussions with that with these people out there to say how can we partner up and how can we basically build our business and grow our market share accordingly. So let's talk about RaDaR. Chris is telling me that's all you guys want to hear about. So let's talk about RaDaR. So market size, $20 billion opportunity, growing rapidly, 1% penetrated. There's a lot of opportunity here for a number of companies that have entered this space. What are the things that I do want to stress is that we continue to build our clinical evidence with RaDaR, and we'll go through some examples of that. We have publications on breast cancer, head and neck, lung, melanoma, bladder and so on. And the approach in the past with any new technology that you put out with any new application that you put out, you've got to show the proof of concept first, right? So that's where the emphasis has been for us showing the proof of concept that this actually works. Now comes in, okay, great. Now how do you commercialize it? And that's where a lot of the focus has been. And one of the things that we're really focused on is this technology itself as to it is 10x more sensitive than majority of the other MRD tests that are on the market. And I think this is really critical because what does that mean? This is from a report that came out in April of 2022. The yellow gold line is Signatera, which is Natera's assay at 16 variants. The black line is the Exact Sciences TARDIS assay. And the green line, which I'm not sure what happened to it, but it's the Inivata's PCM test. In the blue -- light blue line, that is our sensitive -- our LED at 16 variants and on the dark blue is the RaDaR sensitivity at 48 variants. So what does this show? All right. What it shows that we are able to detect much smaller amounts of DNA -- tumor DNA compared to the competition. And when we did our studies, we're basically saying that we're tenfold more sensitive and 100% -- with 100% specificity compared to the competition. And I think this is really critical because when we talk about the sensitivity, sensitivity is important to detect something earlier. Specificity is important to make sure that what you're detecting is actually accurate. And I think this with 100% specificity is absolutely critical because it reduces the chance of a false positive result. And when you start to do multiple time points on the same patient to get that longitudinal data, specificity plays just as big of a role as sensitivity does in the long run. So simplistic graph, okay? Very simple just for illustration purposes. Imagine you have a patient coming in with curative intense therapy like surgery as an example. You can catch it with imaging, the tumor burden is high. ctDNA levels in the blood and breast cancer are high. Let's take that as an example. But you have all of this area below imaging that they cannot detect because imaging is a very insensitive method to look at small amounts of tumor burden, the sizes of the tumor that's there. So one of the things that we looked at was what would -- what does the tenfold more sensitivity mean in this example? Other MRD tests with an LED of 0.01% still would not be able to detect this patient. This patient has disease. But with RaDaR, because of its tenfold below more sensitive, we are able to detect it much earlier compared to the other tests on the market. And I think that's the key point here. And you guys like Kaplan-Meier curve. Everybody know what a Kaplan-Meier curve is? Let's go through it. Kaplan-Meier curves are basically survival curves, okay? What you have is on the blue line is ctDNA not detected with RaDaR. With the green line, the ctDNA detected with RaDaR. And what you want to see is a good separation between the two, which basically shows you that your assay is performing. If you didn't have that separation, it means that it's a really [ sh***y ] test... Okay. Sorry. So in breast cancer, we have a lot of data that's been generated to show that it works really well as a risk stratification tool. And this is the publications that have come out over the last couple of years. But it's not just limited to breast cancer. With LUCID, LIONESS, NABUCCO, SAMBA, we've been able to show that the RaDaR test works on a pan-cancer basis. And this is the data that we continue to build on. And we have a number of abstracts and publications that are coming out in 2023 that will just support this, that we are a pan-tumor test, not specific to just one type of cancer out there. So let's talk a little bit more about tenfold more sensitive. When we look at our data, in breast cancer, we found 25% of our samples had ctDNA levels below 0.01%. Head and neck, 31% more samples that had below 0.01%. Non-small cell lung cancer, 36% of samples were below 0.01%. We were able to catch all of them with our test. And what does this mean -- wrong side? What does this mean from recurrence perspective, from a clinical perspective because that's what matters in the end. We are -- in early stage breast cancer, we're able to detect 12.9 months before imaging. High-risk early-stage hormone receptor positive breast cancer, 12.4 months before imaging. Lung cancer, 6.6 months. And head and neck 5.1 months. All this matters in getting that patient to the right treatment correctly the first time. The longer you wait, the more difficult that it is to catch that disease and treat that patient. So in 2022, we had 3 key studies come out. The TURP study was in breast cancer. The head and neck study was in Lioness, was in head and neck cancer and then LUCID was in lung cancer. The TURP study clearly showed that we were able to identify MRD for distance recurrence metastasis 12.4 months before imaging. The LIONESS study, which actually got an award, which we were able to show that we were able to detect ctDNA with RaDaR with 100% clinical sensitivity. And the LUCID study, we were able to show that we were able to detect MRD prior to clinical progression at least 215 days before imaging. All of this is building the clinical evidence that we use for reimbursement purposes, guideline purposes and also getting this in clinician's hands so that they can order the test. ASCO, we have 4 abstracts that have been submitted and over 7-plus publications that we expect to come out in 2023. So you'll see that over 2023 when those get released. AACR is just now coming up in 2 weeks, next week, 2 weeks. There's actually an abstract in there comparing the RaDaR technology to other MRD tests out there. I can't show you the data. It's under quarantine until the start of AACR. But once that comes out, you will have access to it on our website, we'll post it. But it's very clear that the RaDaR technology does well. So commercialization. So we did launch RaDaR couple of weeks ago when we launched Neo Comprehensive. We had a very nice launch that's why we think it's going very well so far. We have -- we're selling directly through Clinical and our Pharma sales channel. We'll talk about the Pharma side in a few minutes here. We do have commercial initiatives in place to drive adoption. I want to make sure you guys understand we're not going to be that company that's going to give away hundreds of thousands of tests. That's not us, okay? We're making it. We have a clinical evaluation program. We have a patient self-pay price. We're going to go with a very measured approach when we launch these products. And we will take our time, making sure that we're doing it the right way without just burning through. We're going to build our clinical evidence. We continue to do that, as I mentioned, over 7-plus publications, but our clinical programs group is already looking at the next 5-year pipeline as to what are the next applications that we go in, where are the other cancer types that we go in and designing studies to help support that and working with investigators to help do that. So in 2023, we have 3-plus MolDX submissions that are planned. We're also working with private payors. Some of you guys may have seen the news that Blue Cross Blue Shield of California started to reimburse for MRD tests out there. So we're in discussions also with private payors out there. And we have submitted our breast cancer MolDX application to MolDX in late Q1. And then in 2024 and beyond, we do think the way MolDX and other reimbursement agencies will look at this. It's going to be a little bit different. Right now, everything is application by application specific. I think there's an opportunity here to go for a broader pan-cancer reimbursement. And I think that's where we're seeing the shift occur now that people are getting comfortable with MRD. So our focus is more on looking at pan-cancer approval of 2024 and 2025 and beyond. Let's talk about Pharma. A lot has changed in Pharma. We talked about sites consolidation, right? I think this is one of the biggest things that's changed within the Pharma division is that we've actually started to look at more on what are our high-growth areas and investing in those and taking into account profitability of our Pharma division. So if you look on the left-hand side of your screen, basically, you got molecular, RaDaR, companion diagnostics, multiomics. These are all areas where we consider high-growth areas for us with high margins also associated with it. Now you obviously -- we are still going to offer anatomical pathology, immunoassays, flow and so on. I mean we can't be in oncology and not offer IHC. That's just the nature of our business we have to offer it. But we've got to also make sure that we're pricing things properly to Pharma. And that has never been a major focus for us. So we're actually spending a lot of effort, and we started that in 2022, and we saw the value of that actually happen with improved profitability as we went into the fourth quarter of 2022 and again going into 2023. We're heavily focusing our attention to the top 30 pharma because we feel there's a lot of missed opportunity there that we have instead of just trying to get every single type of business out there. And also, we're looking at being a lot more on our CDx opportunities because we get approached by pharma to help with companion diagnostics building. And we like that actually because what that allows us to do is that when the drug gets approved, our test is then approved, which then Warren and his team can take and then sell immediately to oncologists out there. So there's a lot of opportunity for us on the companion diagnostics side that we're going to spend efforts on. We're also rebalancing our pharma portfolio. If you look, this is like a rough chart showing you where Phase I, Phase II, Phase III and what we call validations were and how we looked at this. Well, what happened during COVID? A lot of the Phase III clinical trials shut down because the patients were not going through the oncologists and they weren't getting put on clinical trials. So what we saw is it's more of a flattening effect, a moderate growth effect for Phase III, but we saw increases in Phase I and Phase II, which we did that a little bit on purpose, too. We wanted to actually rebalance our portfolio. And this is something that we're spending a lot of efforts on to make sure that we have a nice balance of Phase I, Phase II and Phase III. While Phase III will have a more, I would say, higher margins associated because we can charge a lot more. But when something like COVID occurs, you see a huge slowdown occur. And there's consolidation also in the pharma side that you guys are well aware of. So we're seeing more and more samples come in right now in the Phase I and Phase II, which is exactly where we want to be because one of the things that we're focusing on is what we call batch-based retrospective sample analysis. What does this mean? It means that clinical trial is already done. Samples are already available, and they're looking for testing are there ways -- broader ways to look at getting more from that sample. As we launch our Neo Comprehensive, whole exome, whole transcriptome, whole genome, that's the opportunity for us to go in and get a lot more value from that sample that's already, by the way, in our freezers from the pharma company or they have it in CROs that are stored, and we'll be able to go and take advantage of those samples. Focus on high-margin growth modalities. We talked about NGS, we talked about RaDaR, multiomics. A lot of data is going to be generated out of this, too, so which can be used by the Informatics team. We will continue to have a broad menu. I think this is really important. I get asked the question a lot as to whether we're going to get rid of modalities? The answer is no. I think we're going to be very strategic about it, where we offer it from basically a site capabilities perspective. We may consolidate those modalities in certain areas. But we will continue to offer them, but make sure we're pricing them properly. And then again, building our companion diagnostics launch pipeline. We got a lot of interest, as Chris alluded to this already in his talk, Q4 of 2022 was a great quarter for Pharma. A lot of it was driven by RaDaR. We had huge interest from Pharma. As you guys have probably seen the FDA has come up with guidance on ctDNA testing. And how we are seeing the interest on Pharma right now is around 3 areas: clinical trial and recruitment; potential surrogate endpoint. Those are discussions that are going on with the FDA by the pharma companies also, but also looking at balancing study arms as a whole. And with RaDaR with its tenfold more sensitive compared to the competition, we do believe that we're very well positioned out there. And again, as you'll see at AACR, one of the pharma companies did do a comparison of RaDaR versus the competition, and they're going to show that data at that time. So we have an integrated portfolio. These are examples of our customers who have used our services in the past. And if you look at the total spend that's there for in R&D by just these top 30 pharma companies, we're talking about over $152 billion, okay? Not all in oncology, but a majority of it is oncology. And that's where we believe that there's a huge opportunity for us still to offer an integrated solution to pharma in early-stage, mid-stage clinical trials when then leading to commercialization after the drug is approved. Informatics. I love this area like Melody because there's so much potential for growth for Informatics within the company, and we're just starting out. And that's what became very clear to me once Informatics moved under Advanced Diagnostics. So one of the things with Informatics is that we're focusing heavily on growing a team, which is a small sales team, but targeting directly to pharma. And the Informatics team today is focused on pharma, which is different than the pharma sales team, which is more pre-commercialization, Informatics team is post commercialization, post approval of the drug. So it's a little bit different approach. And the reason for that is based on the product portfolio that we have and the data that we have. So there's going to be more focus on getting pharma clients right now. We're right now, I would say, 15 of the top 20 pharma are using us for in one form or another with the Informatics side. We, of course, plan to expand that. New products with expanded data. As we launch whole exome, transcriptome, even with Neo Comprehensive, we're going to be generating a lot more additional data that we can package in a de-identified manner and license that to the pharma companies out there. And of course, as Melody said, AI is going to be a key part. We work a lot with the AI companies. The example that she showed is actually one of our companies that we have worked with and that we've been able to use our data to help come up with the algorithms. But that is something we should be able to do ourselves internally also. So with the bioinformatics team that we have in Cambridge, we're able to take those resources and utilize that to come up with AI-driven algorithms that we can commercialize also, but also use them internally to improve efficiency within the company. So for informatics for the growth drivers for me, it's very clear. I mean we were selling before to aggregators who were then selling to pharma, we've gone direct. We don't use aggregators anymore. And we have seen huge value of doing that. We're also looking at our additional product launches that are coming up and how do we utilize and package the data in the right way so that we can get more value out of it and then expand our partnerships with both pharma and AI companies. So if you look at the 4 areas that are there, right, pharma, for me, drives everything that helps and goes into R&D. Why pharma is because, as I mentioned, they're looking 5 years out. They're looking for technologies, for tools and everything else 5 years out. So we get an insight as to where the clinical world will go to. That goes into R&D. R&D develops the products, which then goes into clinical and back to pharma. And then Informatics takes all of that data and finds a way to package it all together and license it out to other companies like pharma or AI-driven companies. So it's a very nice combination because each one of them feeds the other. So key takeaways from my side. We launched Neo Comprehensive in late Q1. It's going well. And with RaDaR launch also in late Q1, we're going to see a nice uptick, not just in taking -- from a revenue perspective, but also from a market share perspective. The changes that we made in the Pharma Services Division in second half of 2022, we're starting to see the value of that and improved profitability for the Pharma Division. And we'll continue to tweak them and make those changes so that we want to make sure that we're returning to double-digit growth within Pharma. I would say Neo historically has not been known for that innovative company for developing R&D products that are more next generation. This is something that we are changing. RaDaR was just a start to that as we look to where we feel that the future in liquid biopsy and tissue-based testing will be, we will see a lot of products that will come out in this space. And then I strongly believe that RaDaR will be a key differentiator. Yes, there's other MRD companies that are out there. But as we generate more data through our clinical programs, it's going to help differentiate us for longer-term revenue growth. I'll take questions.

Okay. I think probably for this group probably more information than we've shared with RaDaR in the past. So I chose may be a lot of questions. So we'll go ahead and open it up and do some questions.

Andrew Cooper from Raymond James. Vishal, just maybe quickly, I think the conversation around the data you need to make MRD standard of care is sort of evolving. How has that changed? What do you think you need to show to have that happen in one cancer type, pan-cancer? It seems like it's more than just, hey, here's the lead time versus imaging, what do you think about that?

Yes. So I mean, it is evolving, right? And I think this is a key part. So in the past, I would say it's been really application by application. But we're seeing that go on a pan-cancer perspective. So we're seeing that evolves like if it works in this cancer application, we can use it for others, like the bladder cancer publication that we just had, right? It showed that if you can actually show that you're not detecting ctDNA, you can avoid surgery. And that applies, concept applies in other areas like neoadjuvant setting and other settings, too. So we're seeing that movement. It's going to take time. There's nothing happens overnight in our space, right? And especially, it depends on who you're talking to. Oncologists will take a little bit longer. Surgeons, we find the adoption rate will be a lot faster. So this is a balance that we're working with, but our clinical programs group is heavily involved in that and looking at it from a road map perspective. I do think that from 2024 to 2025 perspective, we're going to see more pan-cancer-type approvals versus individual applications.

Yes. I think the other thing that's helping is that there's other companies moving, right? When I think if you look at Natera and particularly a lot of other companies are coming here, and that's helping, I think, to build it. It's not just we're out there pioneering.

We're all doing it together. I mean this is the reality. When you are at 1% penetration, you have to do it together. Not one company can do it by themselves because that's a huge money drain. So all of us are working in different ways to bring the field back up.

And maybe just a quick follow-up on that. With that in mind, how do you work with Warren? How do you -- can you give some details on how that really works to operationalize not having hundreds of thousands of tests that are burning when you launched in 4 indications and sort of the balance there between volume versus covered volume when we're sort of in this interim period?

Yes, yes. So the good news here is that we are all very close. Warren's team and my team works very closely. Melody's team and Warren's team and my team work very closely. So as we launched RaDaR, as an example, we actually have put in strategic marketing within the divisions itself. So this team basically helped launch RaDaR within the Advanced Diagnostics Division, pass it on to and even launch strategies worked very closely with Warren sales team did all the training for our Warren's sales team to basically go out and set the direction for how to position RaDaR out in the market. So this is like a handoff period. Usually, Warren talked about, does it happen overnight? Does it happen over a month? We see this like a 6- to 12-month process that we'll continue on as we launch new products because that's needed, especially as we get into new areas. Our clinical programs group is also heavily involved in the training of the sales team at the same time. So it's very much a partnership that we have with each other and it works very well. And we've already shown the proof of concept with the RaDaR launch.

Yes, I was going to say a combination of white board and boxing gloves is a good way because, look, it is a partnership, and I think, look, iron sharpens iron, and I think -- but our view as a leadership team is we have to push and that's the right balance, right? Because you could say, the salesperson is going to say, look, let's give it away. And is that -- look, it doesn't mean that we don't do a clinical evaluation program because we are. But it's a finding that happy medium working together.

Dave Delahunt with Goldman Sachs. So you mentioned the TAM for MRD is around $20 billion. We agree it's a really large opportunity. Some other companies have used numbers around $10 billion to $15 billion. Could you tell us more about how you get to that $20 billion number?

So we looked at it from an application perspective, cancer type perspective, and the range is anywhere you can go anywhere from $10 billion to $35 billion. And for me, I'm the way -- I look at this is that it's not well defined yet and because it's continuing to grow. As we go into different cancer types and the value that you see, I mean, you can do it in -- MRD can apply neoadjuvant, adjuvant therapy selection, surveillance. So as that continues to grow, you're going to see the TAM increase accordingly. So $20 billion is based on what we know today, but I do think that it's going to grow beyond that as the applications increase.

Yes. And I think also look at less than 1% penetrated whether it's '15, whether it's '22, it's a big market that's incredibly underserved. And I think having a technology that has a clear differentiator and sensitivity, especially in those type of cancers where that's important, very different in colorectal, for example, and breast, I do think that will be key, but look, big market.

I didn't show you any colorectal data on purpose because really, it's very easy to detect ctDNA in colorectal as shedding rates are very high. Where it does matter is in the other cancer types.

Just a quick one on kind of how you see kind of pan-cancer reimbursement evolving and kind of what do you see is the evidentiary base that's going to be required for that? Because that's -- I mean, it's a big call. And so I guess, what gives you confidence that will happen in '24, '25? And why is RaDaR advantaged by that?

Yes. So you're already seek it with the private payors, by the way. So that helps give us confidence that they're already thinking like that. The medical directors at these private companies, insurance companies like Blue Cross Blue Shield, they're already -- the press releases that are coming out are showing pan-cancer approval. So that gives us confidence that, that's where the reimbursement is moving towards. We have had discussions also with the local insurance companies like MolDX and so on. But also, I would say from an FDA perspective, right, as we start to see these tests going through the regulatory pathway, we're going to see more and more of this pan-cancer type of concept come out and because these tests get reimbursed for on a pan-cancer basis.

Alex Nowak from Craig-Hallum again. You mentioned you didn't show the CRC data, but can you expand a little bit on what the team learned going through MolDX for the first time, MolDX coming back and denying the application, how you can take those learnings implied to breast? And what gives you the confidence that breast will get across the finish line?

Yes. So we did learn a lot, right? I mean I think going through a MolDX process, there's always learning that's associated with it. It's never a slam dunk, let's be honest, never slam dunk with MolDX. We talk to a lot of advisers who are involved in MolDX and they go, okay, join the club, right? So -- but we do learn through every single time we do this. And with colorectal, in particular, we looked at how we presented the data to them and what data we had generated also. The biggest difference between MolDX submission for colorectal versus our breast one is that the breast data is our own generated clinical data. It was at an ASCO publication, ASCO poster presentation, there's a publication associated with it. So -- and we've had the discussions with MolDX and showed them our data and tried to explain as to where we're going to, right? In colorectal, it was a data set that we had access to, but I'm not -- I would say that it was strong enough, I think, to submit to MolDX, but we did learn that there were some gaps after they reviewed it. And that's why we're basically saying that we're going to generate additional data for colorectal and come back in the second half.

Mike Matson, Needham & company. I apologize for my voice here. But I just wanted to ask about do you -- are you definitely planning to get FDA approvals for any of the RaDaR indications? And what do you think would be needed to do that? And then, I guess, second part of the question would just be how important would be with a sort of larger randomized controlled trials, be hundreds or thousands of patients or something like that, either for the FDA or just driving clinical adoption of the test?

Yes. The way I would answer this is that we have developed a product under design control, okay? So we have the opportunity to go to the FDA and do those clinical trials ourselves. I prefer more to do it through a partnership with a pharma company because that's where we see a lot of interest and pharma is really interested in these MRD tests because if they can get the detection and the approvals for their drugs earlier, that basically then have a test that can be used immediately. So that's where the pharma partnership becomes even more critical for a test like RaDaR, and I think that's probably the faster opportunity.

Yes. I think the other thing is for the first time, we hired a global head of regulatory and quality. So that's -- we -- obviously, quality has always been really important. But I think the way we thought about regulatory has changed significantly, that comes very much from that background. So I think there's also has been a pivot in the last 6 months, the person has started actually is Sean Bundy. He's in the back of the room if you want to grab him at the break. So I think there was a big pivot there knowing that where the FDA is moving on test and the ability for us to be able to get that done.

Vishal, one for you on that point you made on 25% to 36% of samples having ctDNA levels below your limit of detection 0.01%, I think.

No other competitors below...

Little detection. That's right. So can you just give us a sense for how big and robust those studies were? And then I have a quick follow-up.

So those were based on the studies that were shown. So there are pretty big studies associated with them. They've been shown at conferences through posters, publications and so on. So the point being here is that the sensitivity does matter in the right cancer type. That's the point, right? So as we look at everybody who was asking us about colorectal, colorectal has this application for sure. But as we go into breast cancer, lung cancer, head and neck, it absolutely matters to have a much more sensitive test. And that's where we think RaDaR does help in identify those patients.

Got it. That's actually really helpful. And then are you sort of looking to do any specific studies around establishing whether that tenfold lower limit of detection could lead to improved outcome, particularly for these cancers because I think at some point, from an investor standpoint or perhaps, it does feel like megapixels on a digital camera and so both from the point of view of helping you with the marketing of the test, but also in terms of physician credibility and patients. When can we expect to see that kind of data?

So we're starting to roll that out already. So we've had -- because of the data that's been generated, we've been getting a lot of interest from investigators and so on. So we're already starting to roll those out. Again, we're going to take a very measured approach. It can get very expensive very quickly, as you know, right? So we're focusing our attention on cancer types where we feel that we can add the most immediate value to show that. And as we move from then like a breast cancer application then to a pan-cancer, we're able to apply that by showing the outcome value in this. And in some of the cancers, we can do it relatively quickly. So if we focus on like just as an example, in neoadjuvant setting, we will be able to get data much quicker than waiting 5 years or 10-year outcomes as an example.

Yes. And I think it's too about a rightful shot. So I don't want you to think that we're -- oh, gosh, they're back to -- all they want to do is do profit, I don't want you to think that we're investing, but I also think it's about a rightful shot, and I don't know that we were that way. I think it was more of a shot. So strategically understanding why are you doing the clinical trial, what are the outcomes you're trying to prove in developing that rightful shot because I think we know -- look, I think there's a lot of data that says a equals b and b equals c, so a equals c. But I also believe that for longevity and sustainability, we have to have the clinical trials and then come back it up.

Vishal, thanks for a solid presentation. So how do you think the penetration is going to sort of play out among for RaDaR for -- among the academic medical centers versus sort of community setting at this point of the market. Obviously, Signatera has educated some of that population base. But what is -- what do you think how that plays out? And then in terms of reimbursement, I just want to make sure, ultimately, Medicare reimbursement, it will continue to remain the largest chunk here for some time. So is there an opportunity for ADLT through FDA route or it's -- can sensitivity get you there? And just -- I think the sensitivity point is important, but I think, as you know well, clinicians are going to look at clinical outcomes and what that eventually yields for the patient.

Yes. ADLT, we've looked at it, too. And I think there is opportunity with ADLT. We're looking at multiple options on how to get there. So I think that is something that we are looking at. The differentiating factor is that, does that -- will that allow us to qualify for an ADLT status. In terms of adoption rates, I mean the reality is that Natera has done a good job at educating the market. And that's not a bad thing for us. It means that we don't have to start from scratch, right? I think the big thing is that we have to be a close follower here. And that's where we are right now with our launch in particular. And if we look at our sales team, they are heavily focused right now in the community-based setting. So we will see adoption in the community-based setting because of that. But we're not abandoning the academic setting also because we know that MRD for example, is ordered via the academic setting. So in the larger hospital systems that are out there. So we're taking a two-pronged approach here, but I do think that the adoption rate will probably be initially higher in the larger hospitals, but you'll see that go through the community-based setting very quickly. And we're seeing that impact. Oncologists, when we talk to them now, they are educated about MRD. They're not yet educated to the degree as to what are the differences between the MRD test out there.

Okay. Thanks, Vishal. All right. We're going to bring up Jeff and talk a little bit about financials, and then we'll come back to some Q&A.

Good morning, everyone. So you heard Chris kind of lay out the vision and the strategy. You heard Warren talk about our commercial go-to-market approach or expanding the sales force. You heard Melody talk about how we're taking all the tests we're getting, we're optimizing. We're using data and going to be using more effectively. And then you heard Vishal talk about the future. and what we're doing to invest and how RaDaR is going to be a part of that. So now I want to give you kind of an overview of what we think this all means to the financial performance of the company. So first, I want to just reiterate what we said for 2023. We expect to grow revenues 7% to 9%, that's $545 million to $555 million. That's going to be driven by clinical volume, getting revenue per test increases, revenue cycle improvements, NGS revenue growth. On the advanced diagnostics side, it's legacy pharma. It's an informatics revenue growth and it's RaDaR revenue growth. That will lead to adjusted EBITDA growth of minus $27 million to minus $22 million. So that's a 40% to 50% improvement over 2022. That's about a 500 basis point improvement in adjusted EBITDA margin, and that's after taking into account that we are reinvesting, as Chris noted, quite a bit back into the business. So we're going to see gross margins improve. We are getting operating leverage on the OpEx line as well from the costs we have taken out -- and we're expecting to burn about $50 million to $60 million in cash in 2023, and I'll talk about liquidity and capital structure. In a few more slides -- so that's an improvement of roughly $34 million over 2022, if you kind of back out $12 million that we received from the sale of a building. And finally, as we said in our fourth quarter call, we do expect to be -- deliver positive adjusted EBITDA in the fourth quarter. So a few other things for 2023. We've talked about the $25 million in annualized cost savings from the reorg, that was really focused on the [ gene in ] areas. We really didn't touch our lab operations. We're expanding the sales force to actually investing dollars there. Melody talked about the geographic footprint rationalization. Warren talked about our revenue cycle initiatives that are going to help drive revenue as well. And I think there's a focus for continued productivity across the organization. And one thing, I've been here probably the least of the executives that present today, almost 4 months as well. I think 2 things that the executive team bring in -- or 3 things, our passion, a sense of urgency and accountability. And I think the approach of, we think we can grow and be profitable and a balanced, disciplined approach with rigor is really kind of the rallying cry of the executive team. And as Chris said, it's not just for making profits or getting profitable in the next quarter. It's really how do we position the company for long-term sustainable growth and how are we taking that balanced approach. So we're taking some of those cost savings, and we're investing in the business. You heard Warren talk about the sales force expansion, really focusing on optimizing on the oncology side, selling more of the NGS product mix, lab optimization with our Houston expansion, bringing us more capacity long-term capacity planning. Again, as this volume grows, how are we going to manage that from an operational perspective and workforce investments and, well, how do we attract and retain staff. We are investing in 2023 for RaDaR, CMS and MolDX approval. We're investing in clinical trials as Vishal just talked about. And we're continuing to invest in R&D for proteomics, multi-omics and molecular as well. And I think -- but again, a focused approach, how do we take that R&D, commercialize it and turn it into products that can help drive long-term sustainable growth, and we're making technology investments. Those investments are focused on automation, how do we drive efficiency and big data in analytics. Just to reiterate the operating metrics that we talk about and report. We're reporting our clinical volumes. We're reporting revenue per test. We have seen good, consistent performance in our revenue per test increasing. We've got 7 quarters in a row where that's happened. On the advanced diagnostics side, we've got pharma, we've got Informatics revenue and RaDaR revenue. And then just our margins, adjusted gross margin, adjusted EBITDA margins and our capital investments cash burn and cash generation. So in terms -- before I get to the kind of the 5-year plan, just want to tee it up a little bit. So we have taken an approach of talking about kind of our base business, which includes RaDaR on the pharma side, but excludes RaDaR on the clinical side. And really, the reason for that is we've talked about today is it's going to take time to get MolDX approval from a reimbursement perspective to get commercial reimbursement as well for RaDaR in the clinical setting. And so I think we'll look to refine that over time. as we get more data points and have more confidence, we certainly think our products are very competitive and we're going to capture our fair share of the market, but we're not going to be putting it into our 5-year plan today for those reasons. So let's get into our 5-year projection. So we grew 7% to 9%. We're saying we're going to grow 7% to 9% in 2023. We think we're going to do that over the next 5 years as well. And that includes NGS growing at 20-plus percent a year. So as the market continues to move in that direction, we think we're going to be growing and capturing 20-plus percent year-over-year growth on the NGS side. As I said, our base business is defined as our current state, which includes RaDaR and our pharma side of our business, but does not include guidance for RaDaR in the clinical side. So that will be upside to our forecast over time. We're expecting inflation of 3% to 4%. We do think we can offset that, some by automation and operating efficiencies. And there is a big focus on how do we achieve operating leverage. I think the fourth quarter was a very good example of that. We saw $12 million to $13 million of revenue growth over Q4 of last year and about $9 million of adjusted EBITDA growth. So pretty strong conversion of revenue to adjusted EBITDA. And so there's a lot of focus on how do we achieve operating leverage, both on the gross margin side and through OpEx and on the adjusted EBITDA side. So we are expecting adjusted EBITDA to improve each year. We are expecting to achieve positive adjusted EBITDA by 2024. And we expect to achieve adjusted EBITDA margins in the mid-teens by 2026. And if you go back, really pre-COVID, you go look at 2016 to 2019, the company was achieving adjusted EBITDA margins in that range. We did the acquisition of Inivata. It was burning cash. We had a lot of noise from COVID. We had some operating challenges. And as Chris said, executional challenges. I think now the focus for us is how do we get back to the operating model that the company used successfully in the past, but also investing for future growth. And we expect to burn $30 million to $40 million in capital expenditures per year and really not burned, really investing $30 million to $40 million plus in capital expenditures, which will help drive innovation and growth as well. So I just want to talk about liquidity for a moment. So as I said, we burned roughly about $89 million in 2022, excluding the $12 million that we got in proceeds from selling one of our buildings. So we ended the year at $438 million in 2022. We expect to burn $50 million to $60 million in 2023. and we expect to achieve the cash flow positive by 2025 and thereafter. And so from a capital structure perspective, look, we have very good, cheap, efficient debt right now in our capital structure. So I was really inherited a good capital structure as I think about -- as I looked at the financial profile of the company coming in, so we've got $200 million of convertible notes due in 2025 and another $345 million due in 2028. And I think executing our plan will give us a lot of flexibility to manage the capital structure and continue to invest for growth. So I think we're -- we feel very good about our liquidity today and looking out over the next several years. And I think as we look at our plan and achieving our goals, we'll be in a very good position with a lot of flexibility to really deal with the capital structure as we see fit at the time. So key takeaways from a kind of overall financial modeling perspective. We saw improving financial trends and throughout 2022, we expect those trends to continue in 2023 and beyond. Operating efficiencies are driving improved profitability, we really are focused on growing top line and making sure that we're seeing a follow through at both the adjusted gross margin and adjusted EBITDA line and then continuing that virtuous reinvestment cycle into the business. Those investments are also helping to fuel innovation and growth. And really, the opportunities as you look at the TAM that we saw from the clinical side and from the advanced diagnostics side in the RaDaR side, there is a significant total addressable market here. We believe we're going to grow and capture a fair share of that market growth, and we're going to be able to convert that revenue growth into bottom line improvements over time. And then finally, clinical RaDaR at this time is really upside in terms of revenue, adjusted gross margin and adjusted EBITDA. And as we look to refine that over time, we'll get more data points, but as I think Vishal demonstrated, we believe we have a very competitive product, which is really going to help drive future revenue growth and profitability as that adoption curve really comes into play.

Okay. Thanks, Jeff. Just -- I think also a couple of points. It's interesting. I want to set calibrate a little bit like I think -- and you've heard this from I think, Warren, but -- and Jeff and I have talked about that, look, I think we think it's important to do what you say. And I think that you -- as you've gotten to know us, I think the ability to promise and deliver is important to us as a company. And look, we kind of talked about that in Q3 and Q4. And we kind of talked about this 8% kind of growth. And I think that's where we kind of calibrated it. I do want to also say, look, there's no meaningful revenue in the business in this year's guidance for RaDaR. And I think you -- I think everybody kind of knew that, but just wanted to circle that back. So let's take a few questions. We are in the process of trying to get Peter teed up, but we're going to take a couple of questions, and then we'll come back afterwards with Jeff.

Maybe just on the sort of top line here, that 7% to 9% growth. I think you sort of hinted on it on the Q4 call, but -- maybe can you talk about some of the assumptions between volume and pricing here, especially as you move more into NGS, how that might impact the legacy testing menu, any trade-offs there?

Yes. Do you want to.

So we clearly think moving into those higher value tests are going to drive component of that revenue growth. We saw some of that actually in the fourth quarter. So I think we're focused on getting pricing from our base business. I think as the mix starts moving more to higher intensity tests and NGS, that will drive some as well. We're not breaking out specifics, but it's certainly a component as we -- and we really -- as we did the forecast, we did it by modality. So we really have a pretty good view on modality and what we see in pricing by modality as well. So I think you'll see a little bit slower pricing growth in some of the historical clinical normalities. But we still think we have opportunities there. We think we have opportunities to drive revenue cycle improvement. And then the shifting mix to the higher intensity NGS will drive some revenue as well.

Yes. And obviously, you've seen that shift in mix, right? I think we said, I think it's 7 quarters in a row compared to the prior quarter, where we've seen a lift in AUP. We have question that's built into the model, obviously, compared to volume.

That is a question here. So just a follow-up on RaDaR. So clearly, the clinical size out of the long-term guide. How would that impact your kind of operating leverage outlook if that is included? And kind of what do you see as a mature gross margin for that business?

Yes. So we're not saying what the gross margin is just in the specific RaDaR business. I think you can figure out -- like I think look, we spent a ton of time on this. And we're to draw line what kind of the level. So you know that we've already started to submit to MolDX for disease states. We're already starting to roll out in commercial payers. So I think from a modeling perspective, I think you're going to have to take that because we're not going to go out and give any guidance around that. I think if you look at the market, a lot of people are talking about what -- when they get an individual disease state, they talk about x million lives in this disease state. I think what you'll see is us talk about that, when we come out with approvals, but we're not going to give gross margins or give you like guidance on RaDaR. I think you've got to think about how does that impact on the business in light of what's going on in the marketplace, we realize that, that's a significant opportunity. So look, we're trying to be sensitive. We want to give you guys. I mean I think you're getting a lot of color today, but we're also sensitive on the things that we're going to talk about.

Makes sense. And then just a follow-up on the kind of earlier slide on revenue cycle management. I mean how sustainable a tailwind do you see that being in kind of in dollar terms? What does that really mean for Neo given it hasn't really been an area of focus for you guys at all?

Yes. Look, I think it's -- we see the biggest opportunity probably over the next 2 to 3 years, but we do believe it's sustainable coming out of 3 years. Like I would say it's gets listed as a 23 focus area we see is '23, '24, as we're moving into '25, just because of the way the market is moving. So think about the bigger piece of that coming probably in late '23, '24 and in '25, and then just getting kind of incremental from there.

Yes. And I think as we increase the rigor in the business and just look at modality and product line profitability both by modality and by client, I think we can refine our approach to pricing. But I just think an overall strategic approach of our costs are going up, we should be getting annual price increases is one. I think the revenue cycle initiatives, as Chris said, we believe they are multiyear. It's just an area where we can continue to get better at. And then from a managed care pricing perspective, just having those dialogues I think talking about our value proposition as well, we think ultimately will help us in reimbursement over time.

Just a last brief 1 on just kind of the capital structure. So is that '28 [ Convert ] coming up and look like that might get refi further down the line. How do you look at being aggressive on M&A, if it's all in the out years, as you get your kind of tech infrastructure up and running? your [ market ] infrastructure up and running? How much flexibility do you see in your capital structure? And kind of what would you be willing to do with it?

Yes. So I'll answer 1 way and then maybe I have Jeff talk about, look, I think at the end of the day, our first thing was look get the house in order. I do believe look, organic growth is important, but we believe non-organic growth is important as well. So I definitely think, from an M&A perspective, we will be opportunistic and look for those opportunities. I think we feel pretty good about where the capital structure is going to be coming out. I mean we're saying that we're going to be adjusted EBIT positive in Q4. So I think, look, for the right opportunities, we believe that we can do the things that need to be done. Do you want to talk more about '28?

Yes. I think I would just add to that. We execute on our plan. We become cash flow positive in 2025 and beyond, it gives us a lot of options. So I think we're focused on providing ourselves options and we'll have plenty of options to deal with both the 2025 and the 2028. And I think at that point, a strategic acquisition will be looked at differently and how we can add to the growth and how we can integrate it. And I think we can learn, we will have some -- quite a bit of lessons learned on just the recent integrations we've done from the legacy acquisition. So I think all of that will just give us flexibility and give us the options to have if we see a strategic acquisition that makes sense.

Okay. Because of timing, I'm going to turn it back to Vishal. Look, we're going to have a lot of time for questions at the end, but I'm going to bring Vishal back up and get Peter on the line, and we'll go from there. Thanks, Vishal.

All right, guys. So it's Peter on Yes. All right. Great. So guys, it's a pleasure for me to welcome Dr. Peter Beitsch to -- for a short Q&A here. Peter has been using MRD test as part of his clinical practice from the start actually since he is one of those clinicians that I have seen come and adopt new technologies very quickly and utilize them as part of his clinical practice. And a little bit about him. He went to medical school at University of Texas, Southwestern Medical School in Dallas, and also has been trained at MD Anderson and John Wayne Cancer Institute in California. He's been in private practice now. He's the CEO of Dallas Surgical Group. And have been doing that since 1994. He treats both melanoma and breast cancer patients where his focus has been. He's held multiple positions in national surgical societies, including was the ex President of the American Society of Breast Surgeons and one thing that he has done, which I really liked about him is that he's the Co-founder of the targeted medical education group and leads all their research efforts. What does this mean, basically all the clinical trials, he gets the clinicians all involved in helping with these clinical trials that help change outcomes. And one of them, which was very recently was the universal cancer testing, genetic testing registry, led to a paper in the Journal of Clinical Oncology and help facilitate the change in the national genetic testing guidelines. So very well respected out there and we thought we would give him the opportunity for him and I just to have a Q&A and talk a little bit about MRD testing and a little bit on RaDaR since we have just launched it. So Peter, I don't think you've ordered it yet, right? We just launched it a few weeks ago. So I wasn't sure.

Yes. So no, I've ordered all the boxes and stuff that we need to ship stuff and I've communicated with my pathologists. It's going to -- there'll be a bit of a change. I've been ordering MRD elsewhere, but now it's going to be going to RaDaR. And so we just got to get the logistics in place before you are probably doing it because you don't want blocks and slides going all over the place without any...

I'll drive it to you tomorrow.

Yes. There you go.

All right. Thanks, Peter, for joining us. We appreciate it very much. And this opportunity to just talk to you about MRD testing in general. MRD testing is not in the guidelines yet. So how do you use it? And what's driving you to use it?

Yes. So I guess I am an early adopter of many things. And the guidelines tend to be sort of probably rightly so. They tend to be months to really years behind what's happening in the real world. And I always like to say to my colleagues, "guidelines are for follower, you guys are leaders" and so the people that are ordering now, me, in particular, I use it in a variety of settings at the moment, mainly in neoadjuvant setting for breast cancer treatment. So it's -- it has several important aspects of MRD in the neoadjuvant setting. The first is whether you can find it at all in the blood before you start treatment. There -- it's not exactly clear, but there's emerging data that even with your test, which is very sensitive. If you can't find it, that may be a good prognostic feature. So there's more to come on that data. But on the high route ones that we're really giving chemotherapy for mostly the triple negatives in the HER2 RaDaR is excellent at finding it. So that's good right off the bat. And then you treat it with neoadjuvant chemotherapy and then you want to get a test right before you operated on them. and see if there's any circulating tumor DNA at that time point, that's a prognostic time point. And if it's -- if you're ctDNA negative, that's an excellent prognostic factor. And in fact, even if they find a small amount of tumor in the surgical specimen at time of lumpectomy or mastectomy, but your ctDNA is negative, those patients do just as well as if you had a pathologic complete response in the breast. So that time point is very important. I like getting wood in the middle and maybe in the future, it's probably going to be several in the middle because I think that is going to be where we're a tailoring therapy to the ctDNA. And what I mean by that is chemotherapy is fairly standardized, and I won't say cookbook, but I will say cookbook where you get in a neoadjuvant setting, what you say, triple-negative cancers, you give them four cycles of adriamycin and Cytoxan 3 weeks again and then 12 cycles of Taxotere 1 week apart. And there's really, I think, excellent data out of I-SPY trial showing that if you give adriamycin and follow their MRD or their circulating tumor DNA, there are some patients where it doesn't go down at all and then you give them Taxotere and it falls to 0. And there are some patients that immediately go down to 0, and it stays at 0 with the following -- with the treatment that follows. And so you can envision in both those scenarios, tailoring therapy, like if you're not responding at all to the adriamycin or Cytoxan after, let's say, 2 cycles, so you can switch to the other treatment to see if you can get a response there. And all -- and conversely, if you fall to 0 then why give them another potentially toxic therapy, at least it's a neurotoxic wouldn't you get neuropathy from that. And so I think it's going to both tailored to appropriate therapy and hopefully deescalate therapy. And that's just in the neoadjuvant setting. And then immediately, if you have it -- if you're ctDNA positive before surgery, you want to check it after surgery and see if surgery fixed it. And if it's still positive after surgery, then I think those people really are at high risk of recurrence. And they're definitely the ones that need adjuvant therapy, that scenario where you operate on somebody and they check their DNA postoperatively. That's really found fertile ground in colon cancer surgery or adjuvant treatment, whereas if you are -- after surgery, if you can't find ctDNA in their blood, they do not benefit from additional -- from chemotherapy at that point, adjuvant chemotherapy. But if you find it, you do benefit, and so you can envision the postop test being very important for deciding on treatment or not in the adjuvant setting, which adjuvant means after surgery. And then once you're done with all that, I'm just starting to get into this phase, which is monitoring for recurrence. And I think for sure -- well, actually, I was going to say, for sure, the high risk ones, but really even the low-risk patients, ER positive that are low risk, maybe on endocrine therapy for 5 or 10 years. They still recur in fact, but they recur late. So we'll probably be monitoring them forever because they can recur 10-20 years later. So the monitoring phase is really going to be a huge market, I think, mainly because patients want to know. They're always waiting for the other shoe to drop. They're always nervous that their cancer is going to come back. You can imagine. And they're always saying if they're really a high risk, I tend to get imaging although that's outside the guidelines, but it's very reassuring to patients, if you have a high risk [ cover ] from the patients. But now -- and they always ask, is not there a blood test for this? I've heard my other friends that have had breast cancer getting the blood test. Well, those are the previous tumor markers, and they're not very good at following patients over time for -- looking for recurrence. But now I tell now we have a blood test actually that's very accurate at finding whether your tumor is back or not. Now, there's been a lot of pushback from medical oncologists, especially in this monitoring phase because they don't know what to do with the results. Well, the data is strong that MRD testing will pick up recurrences 6 months, 9 months, 12 months before the actual imaging recurrence occurs or clinical recurrence or symptom recurrence. But that's just a resolution of imaging problem, right? Our imaging is not as good as our MRD testing. It can find very small amounts of disease. And then the medical oncologist will say -- "Yes, but why do I want to start treating them when they have this very small volume, I have done imaging." Well, I get -- the argument that I give back to them is regular breast cancer treatment where you go to surgery first and then you give them adjuvant chemotherapy afterwards, the only reason the moment we give adjuvant chemotherapy is these large trials that show that adjuvant chemotherapy in certain patient subgroups has improved survival. And -- but with no evidence of the disease on imaging. And so they have microscopic metastatic disease, i.e., they have MRD-positive disease, but not imaging-positive disease. And we know that chemotherapy works in that patient population. So I think the medical oncologists are going to be the last to sort of come on board with this. But I think surgeons get it. I think patients get it quite frankly. I think the patients understand this, this is not a -- it's not a super complicated issue for them. They get it. And I think they're going to demand it maybe more the medical oncologists are ready for it. But I think the surgeons are going to be bringing it up, and I think the surgeons are going to be bringing up a tumor board. One of the reasons I like registry trials and clinical trials in general is if you say you order the [ trial ] and you put the patient on a clinical trial, even if it's just a registry trial, then they really don't have an argument because the patients -- you're gathering data on those patients. And we do need more data. I'm not saying we don't. We absolutely need more data on this. And we're going to be getting it. I think the RaDaR MRD test already has some really strong data in the monitoring setting and metastatic setting and neoadjuvant setting. So -- but we're going to be gathering more and more, mostly small studies. Now we're going to be doing bigger and bigger studies. So this is an exciting time. This is the future. This is revolutionary. This isn't an evolution. This is a revolution in how we care for patients.

No, I agree. I mean I think as we look at how this will -- I mean, you covered actually, it's interesting all the different stages of a cancer patient's journey from neoadjuvant to adjuvant to surveillance to monitoring, right? And I think this is where the application where MRD can be used, it's going to just expand as we go into the different cancer types. It's going to be we're going to see -- just like we do a typical, we used to do CEA as a typical blood draw test. This is going to be part of our clinical practice definitely going forward. There's other MRD tests, Peter, that are coming on the market. How do you see them? What do you look for when it comes to the comparing one versus the other?

Yes. So there's -- well, there's a big divide up front on how you actually make the test. There's a way to just take off the shelf, bits of fragments of DNA and make an MRD test without actually looking at the patient's tumor. That's tumor...

Agnostic, yes.

Agnostic test. So that is -- I don't really like those tests. They're available. They're easy, right? You can pull them off the shelf and start doing them right away. It's hard [Audio Gap] we're going to take your tumor, and we're going to look at the DNA of your tumor, we're going to make a fingerprint of that tumor. And then we're going to be looking for that in your blood to see if there are little -- these fragments of tumor DNA in your blood and it's a fingerprint specific to you. People get that immediately. It's not a hard concept. But I think that's the key. So the first -- number 1 is you got the tumor [ report ] and then it's how many fragments of DNA do you want and there's some that are 14 or 16 and then RaDaR is, I think, up to 46 or 48.

48 variants. Yes.

48 variants. And so I think more in this case is better. It increases sensitivity, in fact, I think the data I've seen on RaDaR. It's a tenfold more sensitive test than other tests available. So that to me is super important. I want to know that if the tumor is still in the [indiscernible] of the cancer, still in the patient that you're going to pick it up. And then I also want to know that if the test is negative, it's negative, there's no tumor in the patient. So I think that it really has to be tumor informed, and then it needs to be very sensitive and specific. And at least the data I've seen on RaDaR, it looks pretty impressive. So...

How much do you think the patients are aware of these MRD tests when they come and see you?

They're starting to ask about it. Now they don't necessarily know exactly what that means, but they are seeing blood test for cancer in the late literature. There was just an article on -- in the BBC on the colon cancer study that they're doing in the U.K. And that was just in the regular BBC news that I read every day. So it's becoming more widespread knowledge in the general population. And they are starting to ask for it. But even if they are unaware of it, which I think most patients are still unaware of it, they immediately get the concept when you talk to them about it. And then I often give them a copy of the report, and that's -- I've seen copies of your report, it looks very straightforward, which is fantastic. Some reports are a little overly complicated. But I like the patients to have them. It's a very visual thing that they can see, particularly in neoadjuvant, it's wonderful to see it -- ctDNA is there and it falls to 0 before surgery. And that makes them super happy that chemotherapy was worth it. There's not really long lines outside the medical oncologist office to get chemotherapy, not that they want surgery either. But certainly, chemo is tough on people and it's over many months. So it's -- that's a tough like. So -- but it's becoming more widespread comment commonly, certainly among like medical colleagues. They get it. They're anxious to start utilizing it, I think, for the most part.

So as part of the TME group, right, I mean, you obviously have interacted with a lot of other clinicians out there. What percentage do you feel are getting it with your interactions with the group?

Yes. Yes. So I would say the TME investigators really fall into 2 groups. There are tip of the spear, early adopters, and they're already doing it and they're doing it on everybody, all their patients. And then there are some that in the investigator group that want to start a study or registry and then that gives them cover. And these are all kind of local political issues, all politics is local. So you have to deal with your -- the system that you're in and the medical oncologists that you deal with and the patient population, I guess, has some influence on that too. So there's really 2 groups. But I would say at the moment, MRD is still woefully underutilized and it's really just the early adopters that have really taken it on. That's probably 5% of people that are investigators that are widely using it. So that's called opportunity. I think this is an open ocean of opportunity for companies to fill in the MRD space. And so it's good that you're launched and get some kits, let's get going.

Yes. I'm going to open up for some questions if you guys have any for Peter.

I'm not hearing anything.

I'll repeat the question.

So the question is really on your comment on tumor-agnostic versus tumor informed. Can you just elaborate on -- is it sort of -- do you expect better sensitivity from tumor-informed versus tumor agnostic? Is that why you prefer the tumor-informed approach? And secondly, in terms of the comment you made around a broader panel being better than a narrower panel. I mean, there are others out there who are talking of perhaps 1,000 panel as well. So how would you sort of stack that up versus 48? Just trying to get some sense around why 48 is enough yet broad enough in your mind.

Yes. So it always -- well, it makes common sense to me that if you're going to make a fingerprint of a patient's tumor, use their tumor. So that is more laborious, takes longer, but to me, it's going to be better because it's the patient's tumor and more sensitive. Now is 16 as good as 48, but I think the data shows that it's probably not. I think more data will be coming, but it seems fairly clear to me that it's not as sensitive as it should be. Now -- so would 1,000 be better than 48? Well, at some point, the number is somewhere in between 16 and a 1000. But I think you -- and I don't know the basic science of this, would have -- maybe Vishal does, but you sort of adding more doesn't add any more sensitivity to it, but it adds more complexity to it, the test. So I think 48 is probably the sweet spot. Other companies are using that number right around 50. So I know there is some data out of the U.K. again that 50 is just as good as 200. So where it's going to settle. I think it's probably going to settle right around 48, 50, 46, something right, if that seems to be the sweet spot so.

It's also a cost issue, right? I think how far do you go, right? I mean, I think that's just going to be balanced out. We'll have to see how that plays out. Mark?

I have 2 questions for you. First is on test interval. I think I heard you describe at least 3 or 4 tests that you would like to use. Can you maybe repeat the particular instances where you would want to see an MRD results? And does that differ from colorectal to breast? Because I know in colorectal, we have CEA and that's 4 times a year. But maybe in breast, it's another interval. And then my second question is, there's been a test on the market for a long time. This is the Oncotype DX breast test commercialized by Genomic Health initially. Do you see MRD testing potentially being competitive to the Oncotype test to determine likelihood of chemo benefit in for breast cancer?

That's a great question. I'll answer number 2 first because that's a fascinating question. I hadn't even thought of that. But yes, absolutely. If you operate -- let's say, you operate on a patient first and then do an MRD and it's zero. It seems like you'd be fairly hard pressed to give them chemotherapy, right, even if you're Oncotype DX is over 25. And so I never really considered that a competitive test, but I think you're right. And if you look at the colorectal space, like you did, Colon generally now a days vast majority almost all get operated on first, and then you do an MRD test, a ctDNA test. And if it's there, they benefit from chemotherapy. And if it's not there, they don't benefit from chemotherapy. So that's sort of analogous to the Oncotype DX, right? If the colon started that way, and Oncotype DX started a different way. So it's -- I think it will be a long time before it supplants it, but that's a great question. That would be very interesting to study that. Now let's go to interval. So lets -- we'll talk about breast. So for breast, if you're going to get chemotherapy, the momentum is to give it upfront in a neoadjuvant setting before you operate. And then so the time points there at the moment, the most important one before treatment, before surgery. But I think we will be tailoring neoadjuvant chemotherapy to the MRD test very soon. I'm hearing that, that is [indiscernible] that may be one place where they will change the [indiscernible] earlier. And so you're going to be getting it you can -- I think the bare minimum would be after 2 cycles of each of whatever you're giving them. And -- but it'd be nice after every cycle, right? If you don't respond after one cycle, you would give them another cycle. But then if the MRD is still positive, there's still ctDNA there, why keep knocking your head against the wall, switch them to a different chemotherapy and see if that takes the ctDNA to zero. And so I think we haven't figured out the interval in neoadjuvant setting, but I think fair minimum before treatment after 2 cycles, midpoint when you switch between AC and Taxotere and then presurgery and then after surgery. Now in the -- and you could also envision like you brought up in the -- if the patient has residual tumor when you operate in the surgical pass, they tend to get additional treatment, which is called adjuvant treatment, after surgery treatment, adjuvant treatment. And you can envision that ctDNA monitoring and if they're positive after surgery, then you monitor that during adjuvant therapy because you're not going to have imaging to monitor, right? So -- because it's just not going to be sensitive enough. So the MRD probably is sensitive enough and you can envision tailoring adjuvant therapy instead of what you do now, which is you give them one year of treatment or you give them 2 years of capecitabine if its triple negative, but you may tailor it to the ctDNA. If it's positive after surgery, you start the adjuvant chemotherapy. And when it goes to zero, you stop, right? I think deescalation is a great thing, and it's the very -- everybody wants that is a thing right now. Everybody wants to deescalate. And what that really means is treat properly when you need it and don't -- when you don't treat when you don't need it. And trying to figure that out is not always easy. We just -- we set a treatment of a year after surgery for chemotherapy or 2 years for capecitabine oral chemotherapy in a study. But that's a study of 1,000 people on this arm, a 1,000 people on this arm. That's not individualized. And so we will be more individualizing treatment based on things like ctDNA or MRD testing. I think that's fantastic, and that's the way it should be. It's an N of 1, 1 equals 1, not population-based treatment but individualized treatment. And so okay, interval for testing. So for -- I think it's based on zero science, it's going to be probably every 3 months in the monitoring for adjuvant chemotherapy phase. And then probably every 3 months for the next 2 years after that, it's a 3-year total in the high-risk patients, which are positive and triple negatives and maybe Luminal Bs. And then -- but the ER-positive patients you're going to follow for a -- or you're going to follow and the other one is wrong, you probably stretch the ER-positive patients out every 6 months and hope that you pick it up early enough that are still micrometastatic and you're treating a small volume of disease. I think if you ask most of medical oncologists, they would agree with the phrase. It's easier to treat small volumes of disease than large volumes of disease. I think that's a tenet of oncologic care. And so finding MRD-positive patients that you treat when they don't have imaging positive, which isn't the standard right now. But that's the way I would want to be treated is going to be the future. And I don't think it's too far off. So that's a long-winded answer of saying it, we're going to be doing it a bunch in the neoadjuvant space, and we're going to be giving it every 3 months after surgery. And then maybe that stretches out to 6 months at say, 3 years or so. Does that answer your question?

It did, Peter. Thanks I know we've got one more question, and I know you have to jump. So season between surgeries that way.

Yes, Peter, one simple question. What matters most to you in CGP side or therapy management? Is it the data, the ease of use of ordering, reimbursement, sales or access clearly, data matters more to you right now for MRD. But what matters to you more on the CGP side? And when do you think that dynamic then plays out for MRD.

That's a complete genomic profiling. So you're looking at all the genes of the tumor. That what you mean? Okay. So I love the concept of finding how to treat a tumor by looking at the tumor, the genes that are driving it. So that makes common sense to me, and we're not quite there yet. We have good treatments in most cancers. We don't necessarily need that yet. So -- but you're going to -- if you're getting an MRD test, NeoGenomics is going to have the tumor there, and they can do a CGP. And if you look at a competitor, when they -- when I first started ordering ctDNA, it was check that box and then, oh, you want germ line, check that box, oh, you want complete genomic analysis check that box. Ease of ordering was super simple and they use the same tissue for all that. So you maybe -- I don't know -- I think it's still just 10 slides and 4, 5 microns a slide. And you -- so it's ease of ordering logistical ease at my path lab and then a report that's readable and the data is going preferably tumor targets that are either well established or that there's a trial associated with it. So it's more -- that's sort of more in the metastatic world at the moment, Stage IV patients. But I think it's coming for earlier-stage patients. And ultimately, we're going to be -- it's going to be N of 1. You're going to take biopsy of the tumor, and you're going to make a fingerprint of it, ctDNA monitoring and you're going to be looking at the drivers in the tumor itself, and you're going to be treating based on those drivers so.

So we have one more.

I got time.

Okay. All right. Thanks, Peter. I appreciate it. Thank you. All right. Hopefully, that gave you guys a snapshot of an actual user been ordering MRD now for the last 1.5 years, 2 years out there. So we've been talking about the report. That was one of the things that we learned when we looked at the competition, in particular, the report makes such a huge difference, not just from a CGP perspective, but also then with an MRD perspective. What do these guys want to see on the report. So we actually designed a report with a lot of input from the field and that's what we've released now. And we kind of see the value of doing it that way.

Okay. Thanks, Vishal. And obviously, Peter got the memo about a little bit younger picture. So hey, so what we're going to do for about -- I think we've got about 20 -- I'm going to pull this aside because if I do this, I'm not -- I'm not going to say I must stand -- we've got about 20 to 25 minutes, I think, before we schedule the tour. And so what we thought we'd do is just kind of go to general Q&A, making sure we get all your questions when we get to about 12, there's 2 options. So one is taking a tour, there's also box lunches in the back. If you go on a tour, don't worry, you can still get a [ Panera box ] when you come back. I also just want to share, we have a lot of leadership team here, and I'm happy -- I'd love for you to meet the team. I will tell you that we feel incredibly blessed with the team that we have. I'm going to ask you, especially from an analyst perspective to be sensitive on what you ask. And if there's a specific question, please come to myself if it's financial, to Jeff. Priya is back there, who's the Google of building the financial model, do not ask her a question, she's off limits, if you want to ask about MRD, that's great. But I would love you guys to have a chance to meet the team. So we're going to stay around with lunch in the Board and what you're thinking. So we want to be a little flexible whether you want to go on a tour or not, okay? And the tour, I think we're shooting for around 12-ish. Okay. So on that, we'll open it up.

All right. Great. I was hoping to continue the financial discussion, Jeff. With regards to the base business, it was mentioned that, I think in a prior presentation that the core cancer market is growing in this 5-ish percentage range. You have NGS in your financial model growing 20% plus, and that's due to whether you're moving from single gene testing to NGS or converting test NGS. So am I correct in saying that 7% to 9% when you put it all together, that doesn't include any sort of market share gains or how to think about market share gains in the financial model of 5 years.

No, I think we are thinking about seeing volumes improve over time as well. So I think it's a combination of volumes improving, and we looked at it by modality. But you will see -- again, you'll see some potentially slowing or -- and then cNGS growing as well. And then we did it from a revenue perspective, a price per modality as well and what we thought was going to happen there. And you will see some. I mean there are still some pressures on pricing from CMS perspective as well. So you'll see that's factored in as well. So there's pluses and minuses. But I think it's a fairly detailed approach by modality, trying to take into account all those factors.

Yes. And I think if you look at that diagnostic business or kind of that older like a business. I mean, there is data out there that talks about going 1% to 2%, right? So I do think we've got to move share there as well. There's a lot of accounts that we're not doing what I would call the general run-of-the-mill cancer testing. I think that's one. Two is the percentage of business of NGS inside the company. So look, we've never gone out and kind of disclosed what percent that was. Look, I think we're very strong on. We were behind on solid, and you can kind of get your arms around how much runway do you have as that starts to grow as a larger percentage of a business if the pick number 1 to 3 or whatever that base business is an NGS is growing at a much more rapid rate. And that's why I think we've talked about this on the earnings call, whether we gave an NGS number or not, that would be fair. Look, in our view, we have to grow that number beyond 20% every year. So I think that's something we'll continue to talk about because we believe that, that's where the opportunity is. And so we internally have to do that.

Thank you. Just one, I want to make sure we're sort of crystal clear on the LRP as well. just in terms of RaDaR, not including clinical mix sense, I think, on the revenue side, but in terms of the OpEx, when it's the R&D, the PMM that you've talked about hiring, I just want to make sure we know what's included there in the LRP? And then if you could give us a sense for sort of the ramp in the contribution margins we think about year-to-year to get to the out year, is it pretty ratably over the course of the period? Or just how do we think about what you're assuming in that?

Yes. I think over -- I think it will be reasonably ratably over the period. I think we'll see improvements each year. We'll continue to invest each year as well as we go through the process. And I'm sorry, the first part...

First part was just in terms of RaDaR OpEx, the PMMs you're adding, the R&D necessary to support the clinical launch even if the revenues are not in that base number.

Yes. So I would say it's in our base in 2023. We said we're both investing in MolDX. And so I'd say most of that investment is really -- is going to be in our base number. We will have some incremental investment over time as well. as we get in the out years. But we will start having some revenue coming in from those as well. So I wouldn't see it being hugely material to the bottom line perspective as this increases over time from our base model.

Yes. I think the other thing to think about is having a dual sales force in every territory. And I think the question, Mark, is what is and on the territory. So I would tell you by the end of the year, the OpEx is built -- to put built support 100 people 50-50. If our revenue opportunity is growing at a faster rate, we will absolutely increase our spend in adding field people. And I will say that, that modeling has occurred. I think the question becomes as we start to understand the impact on to very separate sales forces in a territory. So use South Florida, right? One, PMM was covering it now 3. Like who's to say that number is not 6. And I think at the end of the day, we're going to base that on the ability of dollars generated by new sales reps and how long it takes them to be running. And I think in this business, look, there's 2 models. One is you could argue it 6 months. I would argue it's faster if you're coming out of that industry in that same territory. And I would tell you that, that's kind of our goal. We're not going to hire someone not in the industry and move them to a territory that they never lived in. right? I mean, then -- and it's 3 years, hopefully, right? So I think there is this modeling on splitting territories and accelerator group, but look, we have to prove that in the model, and we'll come out and be pretty transparent. I would say that's one of our goals is how do we be as transparent with our investment community as possible, knowing at the same time, we got to keep running it in front of the business. So I think that's going to be the real question mark. And then I would say additional clinical trials how broad you go, right? So what's the end of the trial, how many patients, what's the cost per patient, how many sites, RRBs, et cetera, on RaDaR.

So on the 7% to 9% and the NGS growth of 20%, what is the -- if you could qualify what is the AUP growth that you're assuming in the long-range plan or anything...

Yes, we're not putting them out. You guys got to do some of the work. I mean, otherwise, I just have you guys all grab the elevator. I think, look, you've got to do some of the modeling, we have to run our business. We're in a highly competitive world. But I do think you've got to -- we're trying to give you guardrails to give you some indication, but I think you got to model it. We improved gross margin we're going to get leverage on the business. We're telling you we're going to be in the mid-teens and '26 in the base business, right? Let's jump into '26, what's happening with RaDaR, what's happening with MRD. We have a lot of Peters out there, you can get pretty excited.

Got it. And then just overall, when we think about sort of -- Jeff, when we think about 9% or just slightly north of 9%, sort of what's -- when -- what takes you there? And versus the 7% number, what doesn't happen that you end up at 7%, just given the number of forces in this market?

Yes, I think I'll start and Warren and Chris and then Vishal can jump in as well. I think we're adding sales reps, right? So its effectiveness and what's the ramp on the sales reps that we're adding, I would say, is one point. The effectiveness of our pricing strategies would be another, the effectiveness of our revenue cycle are we really capturing more of that revenue for the work we're doing and not being paid on. So I think there's upside on all of those and then capturing market share. So it's effectiveness of the rep, we capturing market share as well. And I think on the lower end, it would be kind of the reverse of some of those things, maybe not as much pricing, maybe not a slower ramp or maybe not capturing as much market share as we expect. But as I said, I think there's a lot of rigor and discipline among the executive team and holding each other accountable to achieve those results. So if we're investing the money, if we're going to expand the sales force, then we want to see the payoff from that. And I think we're investing in [ pharma ] advanced diagnostics. We want to see to pay off on that. We're investing in automation efficiency, how are we tracking that. So I think that -- holding each other accountable and making those investments and then tracking the results is the rigor, I think, will continue to deploy as we look at how we're spending our money.

Yes. And I think from a team perspective, Look, I think the worst thing you can do is underestimate your ability to drive revenue because you won't invest, right? And that's something we've talked a lot about. Like when do you invest because if the opportunity is there, let's use the field. I think the opportunity is there to continue to expand the field candidly. But if you don't believe in the opportunity or see it there, then you're going to be slow to invest because you're going to try to manage the EBITDA. And I think that's where we believe that this is pulling on the levers and Jeff talks about the rigor of the team building and understanding that or understanding when you split territories and like how much market share do you need, Melody, what how good is the product, right? Where are we on turnaround time? What -- I think Warren talked a lot about the things that his team has done to make it the best delivery experience. And if that's going well, we're going to be moving share. I don't know if you want to...

I think you covered all the key points. I mean I think the only element that's out there is also maybe wasn't mentioned, just what happens from a reimbursement perspective in their sort of window and particularly as it relates to Molecular NGS. As I said earlier, the third-party reimbursement is not great yet with regards to NGS. And the more work we can do with those payers to improve reimbursement, the closer we get it to the 9%.

Just one more around the build-out of the labs for Houston, for example, is that going to have all the same testing capabilities that the Florida and the California labs have. What's the CapEx requirements to build that out of a big chunk of the $30 million to $40 million? And then a final question is just on MolDX, they're obviously -- or molecular reimbursement in general is much more favorable in certain geographies. So how are you thinking about where to position your molecular tests across the 3 different big labs that you have?

I'll start on the CapEx maybe. So we did -- we spent about $29 million, $30 million last year in CapEx. We did say for this year, we're going to spend $30 million to $40 million. So certainly a big piece of that increase in CapEx that we're expecting in '23 relates to the Houston build-out so.

And yes, we will be duplicating our test menu in Houston over time. It will take us into '24 before all of that is live, but that is our plan.

Yes. Look, I think if you're offering it in 2 locations, you are being strategic in which location are you offering in first. So the reason that we went to MolDX is because that product is in Raleigh, North Carolina and not today in Houston, Texas, but once our reimbursement is established in Houston, Texas, we can manage through it. So look, I think there is some strategy in there.

I wanted to ask about the international opportunity kind of mentioned in the past in a few times, but just wondering if you could talk about what markets you could potentially go into and what the business model look like? And then is any of that included in the 5-year plan?

Yes. I think it's a really good catch. Look, I would tell you that the 5-year plan has the business where it is today. So it does not include international expansion. We do believe there's a huge opportunity for us as a company. I smile because it's a daily conversation with Vishal and Warren. I think the opportunity in this country right now is so great that I think the focus becomes a few. And I think for us, as a new management team, I think the idea is like let's start executing here. But we do think that there's a big opportunity from an international perspective. But we just -- we have not -- that's not in the base.

And would that be sort of with the same type of model of lab-based where you do the testing yourselves or ...

Yes. Look, I think there's 2 categories. One in pharma, we're kind of already there internationally, but not. I would say that we're very limited in that. But look, I think in clinical, that would be our goal, right, to control kind of the experience as opposed to partnerships. I think it depends on the countries, whether we're in emerging markets or developed markets, what's the reimbursement you acquire your way in. I would say we're very early days and have some of those discussions, but we think that's an opportunity.

Thanks, guys. So it's great to see the MRD business boost Pharma Services in Q4. I know you've alluded to how it drove what I perceived to be the majority of the growth. So that's great. I'd love if you comment about what the pharma services growth rate is without RaDaR. And as I look back over the years, from 2018 to 2021, you grew between 28% and 37% annually in pharma services. So that was like growing like clockwork. I'm just curious if you've done a postmortem on 2022 because there are quarters where we heard different inputs like taking longer to convert the backlog or retrospective sample changes or are pharma pressures in biotech. So frankly, it's hard for us to understand what that underlying pharma services growth is in the next couple of years. And do you think that we can kind of go back to the good old years where we're growing 25% to 30% plus?

Yes. I'll take a quick one and I will let Vishal to take it. Look, I think some of that business was not profitable, and you heard Vishal talk about profitability. And I think there was a very deep focus on bookings, whether we're ever going to recognize that revenue or not, it's why we stopped reporting bookings in Q3. I'll let Vishal talk specifically about Q4 because it wasn't just RaDaR. But I think part of that was rightsizing that business with the right leaders in place. And so maybe you can take it from there, Vishal, talk specifically because I think you made a huge impact on that business as you've come in and picked it up.

I mean we looked at that business as a whole, right? And I think to Chris' point, yes, we can definitely go to 28% to 30% year-on-year, but it was -- a lot of it was not profitable. So when we look at 2022, in particular, we wanted to make sure that we had a menu that would be profitable in the short to midterm and long term in particular. So I think for me, it's not just growing 30% year-on-year is to make sure that we're doing it in the right way. So I -- without RaDaR itself, I mean I'm very comfortable that it will be in double digits, right, single, double, high single, low double at that point where we are right now. But I do want to make sure that as we have consolidated our sites in particular, there is going to be some impact on that. But a lot of those international sites were not profitable. So, it's going to be the balance in the short term.

Yes, sure term but loss potentially for a long term. And you want talking about fourth quarter because I don't think it was just RaDaR.

No, it was not just RaDaR. I mean what we saw was a heavy uptake by pharma on RaDaR in fourth quarter. So actually, I would say the fourth quarter for the numbers that we had, a lot of that was not RaDaR, but it was driven by showing the value of RaDaR coming out, which we'll see obviously in 2023.

Yes, we said right now, it was over 300% year-over-year Obviously, an informatics was over 40% as well. So it was really strong across the...

Yes. And even some of our other tests, you had a good quarter.

Yes. Good NGS uptake also from pharma in the fourth quarter so.

Great. A couple of quick ones, and I promise I'll stop. I heard an interesting comment from Jeff. I think you used the word proteomics, which I thought was interesting, got Melody sitting next to you. I guess could you elaborate here? Because obviously, there's a lot of interesting stuff going on with big data in the proteome. And is there -- am I maybe...

I wouldn't have said that without [indiscernible]

Yes. So is there an opportunity for you to kind of dig into this database that you've collected and maybe, Melody, some of your experience with SomaLogic perhaps looking at the proteome to try to monetize some of your big data assets.

Do you want me to take it?

Yes, you can.

This is part of the thinking that I have around our Biobank strategy, right? So if we are keeping the right samples because the proteomics is a very hefty little molecule. So we have to keep the right samples and not go crazy with costs. But that's exactly the thought. And I don't think it's just proteomics despite my old company who believes proteomics was all things. I think that it's a multiomic approach, and then we're going to be looking at single cell and spatial and other things along the way, right? So Vishal and Shashi are really driving that. I think Jeff's comment was driven more to what are we doing on the R&D front of that. And so this is not in commercial planning at all. There's nothing around a proteomics strategy that's in the 5-year plan. This is really around the research strategy that we're taking.

We see interest coming from pharma right now, that's nice about it, is that we're getting that interest from pharma. So we'll evaluate that and see how we build it out.

Obviously, premium [indiscernible] instruments from that. I was wondering how you guys are incentivized and how that's maybe changed in the wealth management team.

Yes. Look, Ali, I think I can disclose that, Can I? I want to make sure about how we went from what the percentage was in performance. I can -- can I disclose it or not? Okay. I think I'm okay here. So look, I would say, by the way, Ali is our GC and is amazing, she's more than GC. But I think the way to think is -- I can be direct. There was not a performance hurdle in equity, just to be straight up. And I would tell you that we and the Board felt that, that was not appropriate, and that's changing kind of going forward. When we all came in, we knew we were signing up to deliver performance. And I think that's probably the biggest component that I would say is a difference is adding a performance hurdle into equity. Okay. I got it, yes. All right.

And then I would just add some more financial metric that mentioned. A greater proportion on the management is in plan towards financial metrics versus personal goals, personal performance.

Okay. This is kind of our last time together. So any questions. Look at how we are in time so feel expect there. So I know that at least you have a tour going. Okay. Look, we won't be formally back together as a group. So I really want to thank everyone for taking the time to come down and spend some time. Hopefully, you've got at least some more insight into the company. We do Q1 on May 8. And on May 8, obviously, we'll give you some more insight. But look, obviously, we're incredibly excited about the opportunity. It's like a lot of us were here. And hopefully, again, you get a sense for that and you get a sense for the teammates as you kind of walk around what we get to do every day. So guys, do you want to come up and introduce yourself and kind of since you're going to be spending a little time with this group, come on up. So I am going to ask you guys to stay in the group and don't kind of wander off. It's not because we're worried about your safety if you just...

We do worry about their safety.

We do worry about their safety. Hey, [indiscernible] do you want to come up and just introduce yourself and talk a little bit about your role and like how you got here and -- because I think it's great. Can you remind us for 2 minutes. I didn't mean to put you on the spot.

All right. I'm the on site director at the headquarters facility here and how I came to NeoGenomics, I started here about 13.5 years ago, I actually went to the training program that we have. I graduate from the University that's right down the street here, [indiscernible]. And I went through the [indiscernible] NeoGenomics organization and now on site director.

Yes. So it's great, and thanks for joining us today and being with the group. Okay. So we're going to take a break here. Gillies is tall so he can identify and keep looking. If you want to be going on a tour, then to go first towards the back towards the elevator. And I think a couple of our execs are going to go with you guys. So have a wonderful tour, you more than welcome and grab your lunch before you go if you need to do it. For folks that are not going on the tour, there's box lunches in the back. And again, look, we just thank you guys for being here and spending time with us. And you safe travels everybody, and we look forward to seeing you soon. Be well.

Everybody, just so you know, there are box lunches you can take them before or after the tour, and we do have 2 shuttles going to the airport, if you're heading there at 12:30 and then 1:15, 1:30.