Genoptix Inc. Q2 2009 Earnings Call Transcript

| About: Novartis AG (NVS)

Genoptix Inc. (GXDX) Q2 2009 Earnings Call July 30, 2009 5:00 PM ET


Tina Nova - President, Chief Executive Officer & Co-Founder

Dough Schuling - Executive Vice President & Chief Financial Officer

Sam Riccitelli - Executive Vice President & Chief Operating Officer

Marcy Graham - Senior Director of Investor Relations


Charles Rhyee - Oppenheimer

Brendan Strong - Barclays Capital

Amanda Murphy - William Blair

Bud Leedom - California Equity Research

Robert Willoughby - Bank of America


Welcome to Genoptix Inc second quarter 2009 earnings conference call. (Operator Instructions)

I would now like to turn the presentation over to your host for today’s call, Ms. Marcy Graham, Senior Director, Investor Relations. Please proceed.

Marcy Graham

Thank you and welcome to the Genoptix quarterly conference call to discuss operational results for the second quarter and first half of 2009.

Joining me on today’s call is Dr. Tina Nova, Genoptix President, CEO, Dough Schuling, EVP and CFO and Sam Riccitelli, EVP and COO. This call is also being broadcast live over the web and will be available for replay through Thursday August 6th, 2009 on the investor section of our website at

Before we begin, please note that statements made today including statements about guidance, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements.

Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by any forward-looking statement.

Any non-GAAP financial measures presented during today’s call should be considered envision to and not as a substitute for the information prepared in accordance with Generally Accepted Accounting Principles.

For reconciliation of GAAP to non-GAAP financial measures discussed today, please access the GAAP reconciliation and supplemental material page of the investor section of our website. For information about the risks and uncertainties that Genoptix faces, please refer to the Risk Factors section of the Genoptix Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on February 26, 2009, and the Genoptix Form 10-Q for the quarter ended June 30th, 2009 filed with the SEC earlier today as well as any subsequent filings with the SEC.

Genoptix assumes no obligation and expressly disclaims any duty to update any forward-looking statements to reflect events or circumstances after today’s call or to reflect the occurrence of unanticipated events.

Now, I would turn the call over to Dr. Tina Nova, President and CEO of Genoptix. Tina.

Tina Nova

Thank you Marcy. Welcome everyone and thank you for joining us on today’s call to discuss our performance during the second quarter and first half of 2009. Our distinctive physician directed approach to testing and diagnosis continue to drive an increasing demand for our services in the second quarter.

As we further expanded our customer base, which grew to a record 1250 physician customers up from 1200 in the first quarter and 850 just one year ago. These new customer additions were responsible in part for the continued improvement in case volumes.

As we managed approximately 14,200 patient cases during the second quarter. A 52% increase year over year. This brings our case total for the first half of 2009 to more than 27,000, an increase of 58% from the approximately 17,000 patient cases managed during the same period in 2008.

Once again, we have successfully executed on our plan to expand our reach, and the resulting growth in physician customers and case volumes spurred an increase in revenues this quarter. Which were up by approximately, 63% from the second quarter of last year, while revenues for the first half of 2009 increased approximately 69% over the same period in 2008.

Our average revenue per case was sequentially flat at approximately $3000, but increased by 7% over the first half of 2008. Recent increases in case volumes are partially attributable to our successes in new markets, and our ability to gain share by introducing community physicians to our high quality service offering.

In recent months, we have seen our growth initiatives take hold in larger markets, specifically in the Northeast metropolitan areas, where we have seen a rapid uptick of our services.

We plan to improve our penetration in key markets by increasing our visibility with additional sales representatives and exceptional quality of our service offerings. The opportunity to better serve community physicians extends to the development of constructive payer relationships as well, both contracted and non-contracted.

We continue to add managed care specials to our staff to facilitate building new alliances, while continuing to deepen existing relationships with commercial third party payers. We are proud with the level of expertise we offer their physician providers and the growing number of patients they entrust us with, and we look forward to becoming a preferred laboratory provider with their networks.

We are also working to provide additional diagnostic solutions for our primary customers. Offering more to the community Hem-onc by helping them solve their medical dilemmas through our physician directed case management.

Earlier this month, we took another small step in providing additional testing capabilities for our physician customers by adding B-RAS to our offering. A companion test to K-RAS that is used to determine the most appropriate treatment for colorectal patients by minimizing false negatives through increasing sensitivities to more accurately predict patient response to specific cancer drugs.

We are seeking new ways to invest in opportunities that will support our growth in the coming quarters, further positioning ourselves as a leader in hematology and oncology testing. To that end, we recently built a team of high level business and corporate development professionals to pursue additional collaboration with pharmaceutical companies and acquisitions or in licensing of businesses, products and technology.

For example, we currently provide specialized testing services through collaborations with selective pharmaceutical companies. We expect these collaborations to grow over time, and believe they will improve our financial performance, name recognition and reputation in the field, and they potentially provide us with early access to new technologies available for commercialization.

It is our intention to take as much care in the consideration of appropriate investment as we do in every other aspect of our operations. And we will act only on those opportunities that we believe will contribute to the value of our business and build value for our shareholders.

Lastly, in recent weeks, there has been much discussion about potential changes to the physician’s fee schedule put forth by CMS in their annual proposed rule. Based on historical activity around this issue, the final rule could be quite different from the proposal as it now stands. We are actively working with laboratory trade organizations and lobbyist to ensure our industry as well as our specific business is appropriately represented in the important considerations around this issue.

Regardless of the outcome, we will continue to effectively manage our business and maximize our performance by delivering what we believe to be the highest quality diagnostic services on the market. As we stated before, we are targeting a long term gross margin in the mid to high 50th percentile beyond 2009, with operating margins in high teens to low 20th percentile. An the assertion that has not changed, despite the discussions taking place in Washington.

I will now turn over the call to our CFO, Dough Schuling to discuss financial results for the second quarter and the first half of 2009. Dough.

Dough Schuling

Thanks Tina. The second quarter and first half of 2009 remarked by our continued growth on all fronts, from revenues and strong cash collections, to net income and EPS.

More specifically, revenues for the second quarter were $45.3 million, bringing total revenue for the first half to $84.5 million, including a benefit from changes in accounting estimates, resulting primarily from strong cash collections related to prior periods, totaling $5.1 million from the first half. With $3.7 million recorded in the second quarter alone.

These positive changes in accounting estimates are related to differences between the actual collected amounts and our original revenue estimates for services rendered in prior periods. Which resulted in gross margin and operating income improvement. Ultimately, adding approximately $0.12 and $0.16 to EPS for the quarter and half respectively.

The second quarter adjustment primarily related to non-contracted peers was magnified by favorable policy changes by our Medicare administrative contractor relating to local coverage determinations more commonly known as LCDs.

Gross profit for the second quarter was $28.5 million or 63% of revenues, an increase from $16.6 million or 59.7% during the same period in 2008. For the first half of the year, gross profit increased to $52.3 million or 61.95% of revenue, up from $29.7 million or 59.3% following the first two quarters of 2008.

Gross margins for 2009 were elevated due to the recognition of out of period revenues, which added approximately 3.3% to our reported performance for the quarter and 2.5% to the half. As we look to the remainder of the year, we expect gross margins to settle in the upper 50th percent range, reflecting our planned investments and facilities, additional hematopathologist and laboratory personnel through the remainder of the year.

Operating margins were 29.6% of revenues for the second quarter and 27.9% for the first half of 2009, up from operating margins of 18.6% through the second quarter and first half of 2008.

This improvement was due in part to the benefit of the changes in accounting estimates and the operating expense leverage we gained associated with our 69% growth in total revenue for the first half in the year as compared to the same period last year.

Investment in our facilities and infrastructure including the addition of mid-level management personnel in all functional areas of the company throughout this year, is expected to hold operating margins in the mid 20% range for the full year 2009.

When taxed at a rate of 43.1% for the second quarter, net income was $7.9 million compared to net income of $5.6 million in the second quarter of 2008, when we retracted a rate of 5.1%. For the first half of 2009, net income was $13.8 million on a tax rate of 43.6%, an improvement over net income of $10.6 million for the same period of 2008 when we were taxed at a rate of 3.7%.

EPS for the second quarter was $0.44 based on $17.8 million weighted average common shares outstanding. This compares to EPS of $0.32 for the second quarter of 2008, which would have been reduced by approximately $0.13 if taxed at the current rate.

Diluted EPS for the first half of 2009 was $0.77 based on $17.9 million weighted average shares, up from EPS of $0.60 on $17.5 million shares, in the same period last year, which would have been reduced by $0.25 if taxed at the current rate.

At the end of the first half of 2009 the company’s total cash, cash equivalents and investment securities were $126.7 million, up from $107.1 million at the end of 2008. The increase was primarily the result of cash generated from operation of $19.6 million in the first half of 2009.

Accounts receivables were reduced to $21.4 million at the end of the second quarter, down from $246 million at the end of the prior quarter. We anticipated this improvement, which was also reflected in our DSO as it was primarily related to policy changes by our Medicare administrative contractor.

We ended the first half of 2009 with DSOs of 54 days, down from 67 days at the end of the first quarter, and ended with a bad debt provision of approximately 3% of revenues. Purchases of capital equipment for the first half of the year totaled 2.3 million and related primarily to facility expansion and purchases of laboratory equipment and technology necessary to support our continued growth.

Lastly, the company is proud to have achieved an important milestone this past quarter, having fully reversed our accumulated deficit after becoming profitable just two years ago.

For more details on our operational results, I would like to turn the call over to our head of operations, COO, Sam Riccitelli. Sam?

Sam Riccitelli

Thank you Dough. Our performance in the second quarter was the product of exceptional execution. As we balance the use of organizational resources with our commitment to providing the highest level of service to our customers. It is our practice to first ratchet operational capacity, following-up with incremental additions to ourselves, then additional increase and then operational capacity, always taking us to the next level in our growth cycle.

We worked this way to balance each function of the organization, so none is overloaded at any given time. And most importantly, we can maintain our exceptional quality standards and service levels for our customers.

Due to this continuing paradigm, we were able to effectively manage our operational and financial growth objectives throughout the quarter, while fundamentally maintaining a constant level of sales representatives and Cartesian hematopathologist, without compromising the quality of our offering.

At the end of the second quarter we had 26 hematopathologist on staff, later adding four more and increasing the current size of the Cartesian Medical Group to 30 physicians keeping us on track toward our goal of housing approximately 37 physicians by year end.

Though our sales hiring efforts were at equilibrium in the second quarter. We are moving forward on our plan to add new sales representatives in the coming quarter, bringing up closer to our goal of approximately 85 representatives by the end of 2009.

We have said in the past, that average productivity expectation for each of our field sales representatives was in the range of around $2 million in annual revenue. Recent performance reflects the benefit of enhancements made to our product offering and infrastructure. As well as our progress in forging ever deepening relationships with our customers, increasing the effectiveness of our sales efforts.

Based on what we’ve seen in recent quarters, we believe a range of around $2.5 million annual revenue is a more accurate target per sales person, and one that is ultimately achievable on a regular basis.

Improvements in productivity and the addition of the new sales representatives are helping to drive increases in case volumes, but our growth initiatives extend beyond hiring quality personnel.

It is becoming increasingly important to purposefully prepare for and manage our expansion and we are putting the people and processes in place now to build scalability into our operations, as we grow in the future.

We continue to add efficiencies to our IT systems, most recently developing automated screening applications, with enhanced user interfaces for our hematopathologist. This process enables us to streamline case load distribution. And provide the centralized repository for compiling orders and tracking testing staffs. Making our systems more scalable as we grow and volumes increase.

Additionally, our software development group is further customizing our laboratory information system. Tailoring logistics and accessioning processes to allow faster throughput, and improved turn around time in the lab by reducing manual workload requirements.

On the customer services front, our team members have recently expanded their roles, providing support to the sales representatives and managers within their newly assigned territories. By dividing responsibilities geographically, each customer services professionals teamed with a designated sales representative in their area to assist in focusing on client retention, bringing a high-touch approach to more frequent customer interactions.

Also in the second quarter, we signed a lease on a new 44,000 square foot facility adjacent to our current lab in Carlsbad, California. The plan laboratory expansion will begin later this year and improvements are expected to cost approximately $8 million in total. $4 million of which would be spent in 2009 and $4 million in the first quarter of 2010.

The new building will house additional lab and office space. We are planning to incorporate green technology within the facility. Reps would most note the new space will also enable further process and efficiency improvements that are currently in development.

As we consider our performance at the end of 2009, we are revising our expectations to incorporate our second quarter operational results and our exceptional cash collections, a benefit that flows directly through to the bottom line. We now expect revenues for the full year 2009 of between $175 million and $180 million dollars. Up from our prior guidance of approximately $170 million to $175 million.

Our growth is expected to result in net income of approximately $25 million for 2009, up from a prior estimate of $22 million, which now assume the tax rate of approximately 44% for all of 2009, down slightly from 45% as previously expected. EPS is expected to be between $1.40 and $1.45 for the year, up from a $1.20 to $1.25 as previously estimated on an approximately 18.1 million shares outstanding.

In consideration of the new lab expansion, we are forecasting total capital expenditures of $8.5 million for the full year 2009 including, approximately $4.5 million in maintenance capital. This will be used primarily for cost associated with supporting operations and our expanded lab facilities, including new equipment as required to reach our goals for the years ahead.

Now with that, I will turn the call back over to Tina.

Tina Nova

Thank you Sam. We achieved a lot in the first half of 2009, completing another quarter of strong financial performance, while executing on our operational goals.

Thanks to the efforts of our growing team. We will continue to provide some of the best customized diagnostic solutions and quality integrated services on the market for many quarters to come.

We are now ready to take questions. Operator, please open the lines.

Question-and-Answer Session


(Operator Instructions) Your first question comes from the line of Charles Rhyee with Oppenheimer. Please proceed.

Charles Rhyee – Oppenheimer

Thanks for taking the question. Just, first question is really around the sales force, if I heard you correctly there wasn’t any net adds to the sales force this quarter. Can you give a sense within that? Was there some hiring as well as some attrition in that number or is it either there wasn’t any ads and maybe give some color on how that might have contributed to that this quarter?

Tina Nova

Hi Charles, thank you so much. Now, it was really that we decided to slow down on the hiring, we had done a lot of hiring at the beginning of the year. We felt like we could get through the second quarter. We knew that we were going to be hiring a lot of doctors in the summer, and in the third quarter, because that’s the seasonality if you will, in hiring hempaths, that’s when they get out of programs, that’s when they tend to go to new physicians, and we wanted the sales ramp to be in line with the hempaths ramp at the same time.

So we tend to hire stronger in the beginning and the end of the year with our sales, and then the doctors as we said, during the middle of the year. We just wanted it to match up.

Charles Rhyee – Oppenheimer

Okay, is it fair to think that you have already identified candidates for the sales force in that sense? Are you continuing to meet with people or is it something as a ramp as we move on?

Tina Nova

Oh, absolutely. We have actually already hired people that will be coming online, and will be in our August training in about a week. And we also have several hempaths that have been hired that will be coming in the rest of the year.

So we tend to go, we will go towards the doctor when gave guidance on before with the reps around 85 by the end of the year and with the MDs being around 37 by the end of the year, we are on track for that.

Charles Rhyee – Oppenheimer

Great, and then maybe a question for you Dough. Obviously you guys do great generating cash here, and if I am not mistaken about 25% of your market cap is in cash. Any sense, you know, I know you talked about looking for opportunities in license technology and things like that. Any other things that we should think about in terms of the use of that cash?

Sam Riccitelli

Charles, this is Sam actually. There is nothing really in the near term that we have planned for the use of the cash. But we all need to be cognizant of the macro economic environment that’s out there and you know, opportunities do come across our desk, it’s impossible to predict when those kinds of things will happen, and to contemplate going out to the public markets now or even to the debt markets to find capital, to take advantage of unexpected opportunities or to help fund new business strategies or even to weather some of the things that might be coming out of DC given, all the things that are going on relative to healthcare reforms and making sure we have the liquid assets available to meet the needs as they arrive.

So, there is nothing really in the short term that we have planned for those money, but we do recognize the seriousness, and the amount of money that we are managing and the trust that our shareholders have given to us in being stewards for that cash. We believe the approach and the strategy that we are deploying today is the best way to create long term shareholder value.

Tina Nova

Charles, one other thing, as I mentioned in my part of the script that we have started a business development corporate strategy group within the company that where we have added some very strong personnel in the last couple of quarters. And so that is just really ramping up and so we are expecting to see some very exciting things out of that group as well.

Charles Rhyee – Oppenheimer

Okay. Thanks for the comments guys.


Your next question comes from the line of Brendan Strong with Barclays Capital. Please proceed.

Brendan Strong – Barclays Capital

Hey good evening. Nice quarter once again here. I was actually curious if you could give a little bit more color around the physician fee schedule, maybe just first off and I know that things can change between here and the final rule. But based on your review of the proposed rule, what type of percentage changes do you think you guys would be experiencing in terms of the RVU change?

Dough Schuling

Sure, Brendan this is Dough. As it relates to the proposal, and specifically with the RVUs and again assuming that all other factors such as, the conversion factors stay constant, we are looking at approximately 4% reduction on that Medicare piece of business.

Again as a reminder, about 40% of our revenue comes from Medicare and then of that piece, that 40% piece, 90% of that is reimbursed on the physician fee schedule. Again, our calculations as it relates to the CPT codes that we bill, approximately 4% reduction.

Brendan Strong – Barclays Capital

All right. That’s very helpful. Thank you. And then the other real big question out there is, is there any impact on your managed care business as a result of that? I mean, is there any color you can give around that?

Dough Schuling

The out of network payers they uses you, like we know use a variety of inputs and metrics to determine reimbursement rates for our services and for non-contracted peers. Certainly, based on our historical patterns we do not expect to see much impact on our contract of business based on the proposed changes RVUs.

Brendan Strong – Barclays Capital

That’s great. And then maybe just a last question, you mentioned earlier you guys are looking forward to being contracted at some point with managed care organizations. Are there any things that are getting close at this point, should we be looking for an announcement some time over the next couple of quarters?

Dough Schuling

As we have said before, we are always in conversations with the managed care organizations on regional levels and so at this point in time we have nothing to announce, and at some point in time and this company’s evolution as we’ve said before we will become contracted and it’s really a matter of time, just a matter of negotiations and just the timing if you will, so nothing to announce at this point in time.

Brendan Strong – Barclays Capital

Great. Thanks a lot.


Your next question comes from the line of Amanda Murphy with William Blair. Please proceed.

Amanda Murphy – William Blair

Hi, thank you. Just a few questions here. The contractual adjustments picked up quite a bit in the quarter, it sounds like that’s primarily the LCDs, I’m curious with the suspension of CMS as MUEs, how did that impact P&L this quarter relative to last quarter?

Dough Schuling

The impact as always to the MUEs there is still uncertainty around that mandate, and with the discussions around 20 markers certainly as we have historically recorded revenue, we have been, you know, more on a conservative band and so we have continued to look at the MUEs, and looking at the revenue related to flow cytometry in a conservative way of looking at 20 markers from a recognition standpoint.

Amanda Murphy – William Blair

So, because they were reimbursed, is that correct, in the second quarter?

Dough Schuling

The pick of that, let’s go back to the pick up first of all, the change of the county estimates, that was primarily related to the LCDs as I mentioned in the script. And that, you know, really came from an issue back in September of 2008.

Yes, to your question we received reimbursement in the second quarter for a lot of that, and that was retired, the LCD, if you recall, and prior to that there really a number of line items, the entire line items were not being reimbursement. So, we did see a bit of pick up in the second quarter and the reimbursement relating to the LCDs.

Amanda Murphy – William Blair

Got it, okay. Then, in terms of your guidance increase, what is there something that, that exceeded your expectations or what was driver; was it the pick up in the adjustment or…

Dough Schuling

We are increasing our guidance in consideration of the additional auto period revenue collected in the second quarter as well as the potential for further thoughts of adjustments in revenue through 2009.

Amanda Murphy – William Blair

Okay. And then last question, I don’t know if you are breaking this out at this point. But, can you give us an idea of what percentage of your cases are solid tumor at this point; I’m guessing it’s probably still pretty small.

Dough Schuling

Yeah, it’s still a small, very small piece of our business and we are not in a position to break that out at this point in time.

Amanda Murphy – William Blair

Okay. And, is there anything that surprise you as you moved into that market in terms of, I mean imagining it’s somewhat different than the hem path side, so whether it’s competitive landscape or, you know, the customer base, is there something that surprise you?

Tina Nova

You know Amanda, nothing really surprises. I think the great news is the reason that we really started offering that was because it was very driven by her customers, and it just really continues to deepen the relationship that we already have with them, and really helps, you know, continue the relationship we have with them for our core business. And so, no, there was nothing surprising.

Amanda Murphy – William Blair

Okay, thanks very much.

Dough Schuling


Amanda Murphy – William Blair


Dough Schuling

This is Dough, I just wanted to clarify your question as it related to the changes in counting estimates, just making your I understood your question. Again, we booked $ 3.7 million of changes in accounting estimates in the second quarter. I just want to be clear that only about a $ 1 million of that is related to the LCD issues that I was discussing earlier.

Amanda Murphy – William Blair

Okay. So, should we still think about those kind of declining over time, I think that’s what you said in the past.

Dough Schuling

Yeah. The basic changes in accounting estimates, certainly that’s where we would expect it go as we are getting experience with our non-contracted pairs. Again, I have to get kudos to our billing and collections team. They have just done a phenomenal job, we had a 19% more personnel here in the first half of the year, and just really pleased with our cash collections in that area.

Amanda Murphy – William Blair

Okay, thanks.


Your next question comes from the line of Robert Willoughby with Bank of America, Merrill Lynch. Please proceed.

Robert Willoughby – Bank of America

Sam, I guess to the $ 121 million in cash and no debt you are fairly pessimistic buy in the economy here, I hate to see what’s coming that you are afraid of. But, either here or there I guess, but I guess when we gave the initial guidance for the year of a $1.15 there were some concern that my cost expectations for you were too low, and you are really kind of spot on before we thought you would be from a cost standpoint.

I mean is there something we are spending on, I mean your sales force goals are the same, your docs goals are the same, I mean what cost has been flown through the income statement that you might have been anticipated earlier in the year?

Sam Riccitelli

I’m not, Bob, we are not so much indicating the differences in cost so much as it is the benefits from the changes and estimate, that’s really what, you know, that’s the surprise for us, because obviously we can’t predict how well our billing and collection team is going to do above and beyond the revenue targets that we had already recognized; they have done a fantastic job.

I’ll just echo again what Dough has already stated that the team is just performing beyond all of our expectations and that showing up at the top line and those dollars go all the way down to the bottom line and that’s what is helping the performance for the quarter that you have seen and that’s what’s brightening our outlook for the next two quarters.

Robert Willoughby – Bank of America

Okay, and as it relates to the incentive comp payment that you ultimately receive, I mean is that target moving higher as well, I mean the goals that you have to hit, are you guys still being paid on the initial estimate for the year?

Sam Riccitelli

Well, you know, the goals that we have set internally that all of our team is, every employee in the company benefits from it in some respect, don’t necessarily exactly match the numbers that we share externally as you would probably expect. So, I don’t think it’s prudent to comment really any further than that.

Robert Willoughby – Bank of America

Okay, thank you.


Your next question comes from the line of Bud Leedom of California Equity Research. Please proceed.

Bud Leedom – California Equity Research

Hi, good afternoon. Thanks for taking my question. Again, another nice quarter there. I was just wondering, I know this is still very small piece of the business. But two quarters in now just to – if you could provide an update on the initial up tick you are seeing with K-RAS and EGFR?

Tina Nova

Hi Bud, thanks for getting on the call. As I mentioned a little bit earlier, you know, we never expected this to be a segue from the main part of our business. The main part of our business is still, you know, hemato malignancies and bone marrows, and we were just adding this, something else to offer our physicians.

It’s going well as planned, and as you remember the reimbursement for these technologies is in the hundreds rather than the thousands of dollars, and so, if ASPs are ever materially affected by this we will bring that up and we will break that up, but at this point they are not.

But we felt the need to add more genes, and as you know, the next gene in the K-RAS stream is B-RAS mutations and the combination of K-RAS and B-RAS give you more information needed for the therapeutic decision that you would make in colorectal cancer, and again, helping to solve medical dilemmas at our custom.

Bud Leedom – California Equity Research

All right, okay. Then, just maybe further penetrating the sales questions you have been asked, I was just wondering in terms of opportunity you see in the market in terms of qualified individuals and from an experiential basis, are you seeing a significantly higher quality of sales people out there, and if so, would that may be not make you want to push the needle a little bit more in terms of hiring. Maybe you can just comment on what you are seeing out there right now.

Tina Nova

Sure. I think what we are really seeing right now is the number of people that have been laid off and that are unemployed, and so, the number of resumes that we have received in response to any position we have advertised for Genoptix is up about 2X over what it was last year at this time. And again, I think that is the state of the economy, but I also think it’s a reflection on how well Genoptix has done and the people want to be, you know, part of our company.

We are very, very picky about the people that we hire, we put them in every department, we put them through a tremendous amount before we select who we are going to hire and we are always looking for the best and the brightest in that far end of the curve if you will, of people with great talent, and we don’t want to just hire sales reps; that’s never been our mantra, it still is not, and plus we need to keep that important balance of sales rep, doctors, people in the laboratory, client services, billing, HR, everything; quality, that balance is real important, you never want to get one group out of balance from that.

Otherwise, it’s not working and running as smoothly as we like. So, no, there is not reason for us to add more sales reps because there is more people out there, it will continue to be the way we have outlined it for the year.

Bud Leedom – California Equity Research

Got it, got it. Okay, and then just a quick housekeeping question. Dough, any change in outlook on the auction rate sub you have there?

Dough Schuling

No change at this point in time.

Bud Leedom – California Equity Research

Great, thanks again.


Your next question comes from the line of Scott Gleason with Stephens. Please proceed.


Hi, this is Travis for Scott. You have actually answered all of our question, thanks.

Dough Schuling

Thanks Travis.

Tina Nova

Thank you, thanks for being on.


This concludes the time we have for question and answers. I would now like to turn the presentation back over to management for closing remarks.

Tina Nova

Thank you guys for joining us today on the call and for your continued interest in Genoptix. If there are any further questions about the results or even like additional information please feel free to contact me, Marcy Graham in the industrial relations department at 760-930-7127. thanks.


Thank you for your participation in today’s conference, this concludes the presentation. You may now disconnect. Good day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to All other use is prohibited.


If you have any additional questions about our online transcripts, please contact us at: Thank you!