On November 8, 2021 Coherus BioSciences, Inc. ("Coherus" or the "Company", Nasdaq: CHRS), reported financial results for the quarter ended September 30, 2021 and highlighted recent achievement of key milestones toward potential near-term expansion of the commercial product portfolio (Press release, Coherus Biosciences, NOV 8, 2021, View Source [SID1234594715]):

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ACHIEVEMENT OF KEY MILESTONES DRIVING NEAR-TERM COMMERCIAL PRODUCT PORTFOLIO EXPANSION

Successful UDENCYA on-body injector clinical trial is expected to enable 2022 submission of a prior approval supplement to the UDENYCA BLA.
FDA accepted the BLA for CHS-201, a biosimilar Lucentis (ranibizumab), and assigned a target action date of August 2022.
FDA review of the BLA for CHS-1420, a biosimilar Humira (adalimumab), is advancing toward the target action date in December 2021.
FDA accepted the toripalimab BLA for advanced nasopharyngeal carcinoma and granted priority review with a target action date of April 2022.
Positive esophageal squamous cell carcinoma Phase 3 clinical data is expected to enable submission of a toripalimab BLA supplement in 2022.
Positive progression free survival data (PFS) from the CHOICE-01 Phase 3 clinical trial evaluating toripalimab in non-small cell lung cancer were presented in September. A final analysis of PFS and an additional interim overall survival analysis are expected by early first quarter 2022, after which Coherus and partner Junshi Biosciences plan to discuss a potential submission of a BLA supplement with FDA.
THIRD QUARTER 2021 FINANCIAL HIGHLIGHTS

Net product revenue, consisting of net sales of UDENYCA (pegfilgrastim-cbqv), was $82.5 million.
GAAP net loss of $38.5 million was driven by lower net product revenue and increased R&D and regulatory expenses to support the development and regulatory submissions of toripalimab and biosimilar pipeline product candidates.
Non-GAAP net loss was $26.6 million, adjusting for $11.9 million in stock-based compensation expense.
At September 30, 2021, cash, cash equivalents and marketable securities were $468.7 million.
"With three BLAs currently under FDA review, and positive clinical data expected to enable submission of multiple additional applications for marketing authorization in 2022, we are making rapid progress toward our goals to diversify and grow our commercial product portfolio," said Denny Lanfear, Coherus CEO. "UDENYCA continues to provide strong funding for Coherus as we invest in our pipeline and prepare for a succession of anticipated new product launches in 2022 and 2023."

THIRD QUARTER 2021 FINANCIAL RESULTS

Net product revenue, consisting of net sales of UDENYCA, was $82.5 million and $113.6 million during the three months ended September 30, 2021 and 2020, respectively, and $253.2 million and $365.4 million during the nine months ended September 30, 2021 and 2020, respectively. The decreases were primarily due to a decrease in the number of units of UDENYCA sold during the three and nine months ended September 30, 2021, as well as an increase in discounts and allowances during the nine months ended September 30, 2021.

Cost of goods sold (COGS) was $21.3 million and $9.0 million during the three months ended September 30, 2021 and 2020, respectively, and $45.5 million and $26.0 million during the nine months ended September 30, 2021 and 2020, respectively. Until the first quarter of 2021, Coherus sold inventory that was manufactured and expensed prior to the approval of UDENYCA in late 2018. This inventory was depleted in the first quarter of 2021, and COGS now fully reflects per unit acquisition cost. Additionally, COGS for the third quarter of 2021 included a $5.2 million write-off of inventory that did not meet Coherus’ acceptance criteria. UDENYCA COGS also includes a mid single digit royalty on net sales payable through the first half of 2024.

Research and development (R&D) expense for the three months ended September 30, 2021 was $54.1 million compared to $38.9 million for the same period in 2020, an increase of $15.2 million which was mainly the result of higher development and regulatory costs in support of the advancement of pipeline product candidates. For the nine months ended September 30, 2021, R&D expense was $312.3 million compared to $98.1 million for the same period in 2020, an increase of $214.2 million which included the $136.0 million upfront license fee paid to Junshi Biosciences in 2021.

Selling, general and administrative (SG&A) expense for the three months ended September 30, 2021 was $39.9 million compared to $32.0 million for the three months ended September 30, 2020, an increase of $7.9 million which was primarily driven by increased commercialization expenses to support UDENYCA sales. For the nine months ended September 30, 2021, SG&A expense was $119.7 million compared to $101.4 million for the same period in 2020, an increase of $18.3 million, which was primarily due to an increase of $10.7 million in stock-based and other compensation expense and an increase in UDENYCA commercialization expenses.

Net loss for the third quarter of 2021 was $38.5 million, or $(0.49) per share on a diluted basis, compared to a net income of $27.9 million, or $0.33 per share on a diluted basis for the same period in 2020.

Non-GAAP net loss for the third quarter of 2021 was $26.6 million, or $(0.34) per share on a diluted basis, compared to non-GAAP net income of $39.7 million, or $0.47 per share on a diluted basis for the same period in 2020. See "Non-GAAP Financial Measures" below for a discussion on how Coherus calculates non-GAAP net (loss) income and a reconciliation to the most directly comparable GAAP measures.

Cash, cash equivalents and investments in marketable securities were $468.7 million as of September 30, 2021, compared to $454.4 million at June 30, 2021.

2021 FINANCIAL OUTLOOK

Excluding the upfront payment made to Junshi Biosciences in the first quarter, Coherus projects full year 2021 R&D and SG&A expenses in a range of $370 million to $400 million. R&D spending is focused on development, regulatory and other activities in preparation for the potential launch of toripalimab, as well as manufacturing-related and regulatory activities for CHS-1420 (Humira biosimilar), development activities for CHS-305 (Avastin biosimilar), and additional presentations of UDENYCA. Increases in SG&A spending in 2021 are primarily driven by marketing activities and headcount to support UDENYCA and the potential launches in 2022 of toripalimab and CHS-201 (Lucentis biosimilar).

This financial guidance excludes the effects of any potential future strategic acquisitions, collaborations or investments, the exercise of rights or options related to collaboration programs, and any other transactions or items not yet identified or quantified. This guidance is subject to a number of risks and uncertainties. See Forward-Looking Statements described in the section below and the section titled "Risk Factors" in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 to be filed with the Securities & Exchange Commission on November 8, 2021.

Coherus is planning to host an analyst day event in January 2022.

Conference Call Information

When: Monday, November 8, 2021 starting at 5:00 p.m. ET

Dial-in: (844) 452-6826 (Toll-Free U.S. and Canada) or (765) 507-2587 (International)

Conference ID: 1838568

Webcast: View Source

Please dial-in 15 minutes early to ensure a timely connection to the call.

On November 8, 2021 Cerus Corporation (Nasdaq: CERS) reported that William ‘Obi’ Greenman, Cerus’ president and chief executive officer, and Kevin D. Green, Cerus’ chief financial officer, are scheduled to participate in the Stifel 2021 Virtual Healthcare Conference on Monday, November 15, 2021 at 4:40 p.m. ET (Press release, Cerus, NOV 8, 2021, View Source [SID1234594714]).

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A live webcast of the events will be available on the Investor Relations page of the Cerus web site at View Source A replay will be available for approximately two weeks following the completion of the event.

On November 8, 2021 Celsion Corporation (NASDAQ: CLSN), a clinical-stage development company focused on DNA-based immunotherapy and next-generation vaccines, reported that Khursheed Anwer, Ph.D., executive vice president and chief science officer, will be making a presentation on the company’s GEN-1 interleukin 12 (IL-12) immunotherapy program at the Cytokine-Based Cancer Immunotherapies Summit being held in Boston on November 30 to December 2, 2021 (Press release, Celsion, NOV 8, 2021, View Source [SID1234594713]). Dr. Answer will also be participating in two panel discussions.

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In his presentation, Dr. Anwer will be discussing how local delivery of IL-12 without significant systemic toxicity is feasible with a non-viral gene therapy approach that involves administration of an IL-12 plasmid with a synthetic DNA delivery system (GEN-1). Dr. Anwer will also be discussing how weekly intraperitoneal administration of GEN-1 yields durable increases in IL-12 and IFN-g, and why repeated weekly administration of GEN-1 in combination with standard chemotherapy remodels the tumor immune environment to favor immune stimulation over immune suppression.

"Dr. Anwer’s presentation and panel discussions will highlight the strength of our GEN-1 immunotherapy program to some of the nation’s leading immunologists," said Michael H. Tardugno, chairman, president and chief executive officer of Celsion. "We look forward to interacting with attendees at one of the first in-person medical conferences we will be attending since the COVID-19 pandemic began."

Dr. Anwer will participate in a group panel discussion on November 30 at 7:40 a.m. Eastern time titled, "What Do We Know & Where Do We Want to Go?" and in another panel discussion on December 1 at 11:30 a.m. Eastern time titled "Side Effects – Mitigating Against Hypotension + Fever With Immune-Stimulating Agents (NK Cell Engagers, PD-1s, Cytokines, T-Cell Engagers) = Cytokine Release Syndrome (CRS)?" Dr. Anwer’s presentation, titled "A Non-Viral Gene Therapy Approach to IL-12 Delivery for The Treatment of Cancer," will be delivered on December 1 at 8:30 a.m. Eastern time.

About GEN-1 Immunotherapy

GEN-1, designed using Celsion’s proprietary TheraPlas platform technology, is an IL-12 DNA plasmid vector encased in a nanoparticle delivery system that enables cell transfection followed by persistent, local secretion of the IL-12 protein. IL-12 is one of the most active cytokines for the induction of potent anticancer immunity acting through the induction of T-lymphocyte and natural killer (NK) cell proliferation. The company previously reported positive safety and encouraging Phase I results with GEN-1 given as monotherapy or a combination therapy in patients with advanced peritoneally metastasized primary or recurrent ovarian cancer, and recently completed a Phase Ib dose-escalation trial (OVATION 1 Study) of GEN-1 in combination with carboplatin and paclitaxel in patients with newly diagnosed ovarian cancer. GEN-1 in combination with neoadjuvant chemotherapy is the subject of the ongoing Phase II OVATION 2 Study in subjects with advanced-stage ovarian cancer (Stage III/IV), with enrollment now exceeding 75% and full enrollment targeted by the first half of 2022.

On November 8, 2021 Cellectar Biosciences, Inc. (NASDAQ: CLRB), a late-stage clinical biopharmaceutical company focused on the discovery and development of targeted drugs for the treatment of cancer, reported financial results for the third quarter ended September 30, 2021 and provided a corporate update (Press release, Cellectar Biosciences, NOV 8, 2021, View Source [SID1234594712]).

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Third Quarter and Recent Corporate Highlights

Announced the completion of the Part A portion of a safety and tolerability study of iopofosine I-131 (iopofosine) in combination with external beam radiation (EBRT) in relapsed or refractory head and neck cancer. The investigator-initiated study is being conducted by the University of Wisconsin as part of a Specialized Program of Research Excellence (SPORE) grant awarded by the National Cancer Institute (NCI).
The study objective is to determine if combining iopofosine with EBRT can reduce the amount or fractions (doses) of EBRT required, which has the potential to diminish the number and severity of EBRT associated adverse events.
Preliminary data suggest that iopofosine is safe and tolerated in combination with EBRT for relapsed or refractory head and neck cancer.

Awarded a peer-reviewed National Institutes of Health (NIH) Phase II Small Business Innovation Research (SBIR) grant of approximately $2 Million from the NCI. The grant will support the ongoing global pivotal study and clinical development of iopofosine in Waldenstrom’s macroglobulinemia (WM).

Announced collaboration with BBK Worldwide to provide new concierge services for patients participating in Cellectar’s clinical studies. These services are designed to improve patient’s and their caregiver’s access to high quality care and innovative treatments for their cancer.

Announced commercial manufacturing and supply agreement with Evergreen Theragnostics, a global radiopharmaceutical contract development and manufacturing organization (CDMO), to provide long term commercial supply of iopofosine and clinical study material for the company’s pivotal study in WM, as well as for the ongoing Phase 1 and Phase 2 clinical studies.
"We remain highly focused on driving our pivotal study of iopofosine in Waldenstrom’s and in parallel advancing the ongoing Phase 2b clinical study for late line, hexa-drug refractory multiple myeloma patients along with our two Phase 1 studies in pediatric and head and neck cancers" said James Caruso, president and CEO of Cellectar. "Our collaboration with Evergreen Theragnostics expands our manufacturing capabilities to help reduce the risks inherent in single sourcing of drug supply and provides the capability to scale supply for future studies and potential commercialization. The recent deal with BBK Worldwide will allow us to more efficiently serve our patients and remove barriers to study participation as we continue to develop iopofosine in WM and other oncology indications. With $40.3 million in cash and cash equivalents as of September 30, we are supported by a strong balance sheet that will fund our expected clinical and regulatory milestones into the second half of 2023."

Third Quarter Financial Highlights

Cash and Cash Equivalents: As of September 30, 2021, the company had cash and cash equivalents of $40.3 million compared to $57.2 million at December 31, 2020. Cash used in operating activities was approximately $18.1 million during the nine months ended September 30, 2021 as compared to $10.1 million during the nine months ended September 30, 2020.
Research and Development Expense: R&D expense for the three months ended September 30, 2021 was $3.9 million, compared to $2.7 million for the three months ended September 30, 2020. The cumulative R&D spending for the first nine months of 2021 was $13.2 million as compared to $7.8 million for the first nine months of 2020. The increase in R&D expense year-to-date in 2021 was primarily a result of start-up costs for our WM pivotal study, clinical project costs and general research and development costs offset by a decrease in manufacturing and related costs.
General and Administrative Expense: G&A expense for the three months ended September 30, 2021 was $1.9 million compared to $1.2 million for the three months ended September 30, 2020. The cumulative G&A spending for the first nine months of 2021 were $5.0 million as compared to $3.7 million for the first nine months of 2020. The increase in G&A expense year-to-date in 2021 was primarily a result of an increase in professional fees and insurance, personnel costs and stock-based compensation expense.
Net Loss: The net loss attributable to common stockholders for the three months ended September 30, 2021 was ($5.8) million, or ($0.10) per share, compared to ($3.9) million, or ($0.15) per share, in 2020. Net loss attributable to common stockholders for the nine months ended September 30, 2021 was ($18.2) million, or ($0.34) per share, compared to ($11.5) million, or ($0.69) per share, in 2020.

On November 8, 2021 Castle Biosciences, Inc. (Nasdaq: CSTL), a company applying innovative diagnostics to inform disease management and improve patient outcomes, reported its financial results for the third quarter and nine months ended Sept. 30, 2021 (Press release, Castle Biosciences, NOV 8, 2021, View Source [SID1234594711]).

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"The Castle team achieved another quarter of strong growth in revenue and test report volume, despite the diagnoses of cutaneous melanoma being down by approximately 16% compared to historical pre-COVID third quarter 2019 levels," said Derek Maetzold, president and chief executive officer of Castle Biosciences. "From the onset of the pandemic, we made the strategic decision to accelerate investments in our growth initiatives, including the expansion of our commercial team and our R&D programs – both for our commercial and pipeline tests. And as a result, we have seen excellent progress across our key priorities. Our body of evidence supporting our tests continues to grow, with consistent data further demonstrating the potential of our tests to provide valuable, clinically actionable information to clinicians and patients. We doubled our dermatology facing commercial team in the second quarter of 2021. They were fully trained as of July 1, 2021, enabling the promotion of all of our skin cancer genomic tests in all U.S. geographies. The team grew their experience and territory knowledge in the third quarter, and we expect them to continue toward optimal productivity, which we believe takes about two quarters.

"Further, we identified two additional areas of strategic growth that we believe complement and diversify our existing business and align with our focus of addressing indications with unmet clinical need to improve patient care. The first was our acquisition of myPath Melanoma, and more recently, the pending acquisition of Cernostics, Inc. (Cernostics). We believe Cernostics’ first-to-market TissueCypher Barrett’s esophagus (BE) test addresses an unmet clinical need in BE, as it is designed to support improved risk-stratification treatment plans by objectively and accurately predicting progression from non-dysplastic, indefinite for dysplasia and low-grade dysplasia BE to high-grade dysplasia or esophageal adenocarcinoma. The TissueCypher platform also has the potential to answer clinical problems in additional gastroenterology areas and other diseases.

"I am proud of the Castle team, the consistent execution they deliver on our initiatives, and the impact their hard work and dedication has on the lives of patients, which remains our focus. We look forward to furthering our position as a leader in the dermatologic diagnostic space and continuing to build the company with innovative technology that has the potential to accelerate our impact on patient care and thus drive value creation for stockholders."

Third Quarter Ended Sept. 30, 2021, Selected Results

Revenues were $23.5 million, a 54% increase compared to $15.2 million during the same period in 2020. Included in revenue for the period were revenue adjustments related to tests delivered in prior periods. These (negative) positive prior period revenue adjustments for the quarter ended Sept. 30, 2021, were $(0.1) million, compared to $1.5 million for the same period in 2020.
Adjusted revenues, which exclude the effects of revenue adjustments related to tests delivered in prior periods, were $23.6 million, a 71% increase, compared to $13.8 million for the same period in 2020.
Total gene expression profile test reports delivered in the third quarter of 2021 were 7,727, compared to 4,779 in the same period of 2020:
DecisionDx-Melanoma test reports delivered in the third quarter of 2021 were 5,505, compared to 4,404, in the third quarter of 2020, an increase of 25%.
DecisionDx-SCC test reports delivered in the third quarter of 2021 were 934, compared to 57 in the third quarter of 2020 (DecisionDx-SCC became commercially available on August 31, 2020).
myPath Melanoma and DecisionDx DiffDx-Melanoma (Castle’s comprehensive diagnostic offering) aggregate test reports delivered in the third quarter of 2021 were 913.
DecisionDx-UM test reports delivered in the third quarter of 2021 were 375, compared to 318 in the third quarter of 2020, an increase of 18%.
Gross margin for the quarter ended Sept. 30, 2021, was 77.9%.
Adjusted gross margin for the quarter ended Sept. 30, 2021, was 80.9%. Adjusted gross margin is calculated as net revenues (GAAP) less the sum of cost of sales (exclusive of amortization of acquired intangible asset) and amortization of acquired intangible asset.
Operating cash flow was $(6.1) million, compared to $(3.0) million for the same period in 2020.
Adjusted operating cash flow was $(3.0) million, excluding the effects of certain COVID-19-related government payments, unchanged from the same period in 2020.
Nine Months Ended Sept. 30, 2021, Selected Results

Revenues were $69.0 million, a 52% increase compared to $45.4 million during the same period in 2020. Included in revenue for the period were positive revenue adjustments related to tests delivered in prior periods. These positive prior period revenue adjustments for the nine months ended Sept. 30, 2021, were $4.1 million, compared to $0.2 million for the same period in 2020.
Adjusted revenues, which exclude the effects of revenue adjustments related to tests delivered in prior periods, were $64.9 million, a 44% increase, compared to $45.1 million for the same period in 2020.
Total gene expression profile test reports delivered in the nine months ended Sept. 30, 2021, were 19,876, compared to 13,028 in the same period of 2020:
DecisionDx-Melanoma test reports delivered in the nine months ended Sept. 30, 2021, were 14,693, compared to 11,986, during the same period in 2020, an increase of 23%.
DecisionDx-SCC test reports delivered in the nine months ended Sept. 30, 2021, were 2,245.
myPath Melanoma and DecisionDx DiffDx-Melanoma (Castle’s comprehensive diagnostic offering) aggregate test reports delivered in the nine months ended Sept. 30, 2021, were 1,758.
DecisionDx-UM test reports delivered in the nine months ended Sept. 30, 2021, were 1,180, compared to 985, during the same period in 2020, an increase of 20%.
Gross margin for the nine months ended Sept. 30, 2021, was 82.4%.
Adjusted gross margin for the nine months ended Sept. 30, 2021, was 82.7%.
Operating cash flow was $(16.2) million, compared to $10.3 million for the same period in 2020.
Adjusted operating cash flow was $(12.7) million, compared to $0.1 million for the same period in 2020.
Cash and Cash Equivalents

As of Sept. 30, 2021, the Company’s cash and cash equivalents totaled $363 million.

2021 Revenue Guidance

In August of 2021, Castle Biosciences raised its guidance for anticipated total revenue in 2021 to $89-93 million. The Company believes it will meet the guided range.

Third Quarter and Recent Business and Clinical Evidence Highlights

In July and August, the Company presented evidence on its family of skin cancer tests at numerous in-person, hybrid and virtual medical conferences, including American Head & Neck Society (AHNS) 2021 International Conference, Society of Dermatology Physician Assistants (SDPA) Annual Summer Dermatology Conference, DERM 2021 and 2021 American Academy of Dermatology Association (AAD) Summer Meeting. See the Company’s news page for more information.
In August, the Company announced that it had been awarded a five-year U.S. Federal Supply Schedule (FSS) contract from the Veterans Health Administration (VHA) for its DecisionDx-Melanoma gene expression profile test. The VHA is a component of and implements the healthcare program for U.S. veterans through the U.S. Department of Veterans Affairs (VA). The contract became effective on Aug. 15, 2021, and provides greater access to DecisionDx-Melanoma for veterans being treated through the VHA, the largest integrated health care system in the U.S., as well as active-duty service members and their families seeking medical treatment through the Military Health System (MHS). See the Company’s news release from Aug. 24, 2021, for more information.
In September, the Company announced that it received approval from the New York State Department of Health for its proprietary DecisionDx DiffDx-Melanoma gene expression profile (GEP) test. DecisionDx DiffDx-Melanoma is designed to provide an objective and comprehensive diagnostic offering to aid dermatopathologists in characterizing difficult-to-diagnose melanocytic lesions. Castle previously received approvals in the state of New York for its other GEP tests, including DecisionDx-Melanoma, DecisionDx-SCC, DecisionDx-UM and DecisionDx-PRAME, as well as its next generation sequencing panels, DecisionDx-CMSeq and DecisionDx-UMSeq. See the Company’s news release from Sept. 16, 2021, for more information.
In October, the Company signed a definitive agreement to acquire Cernostics, an Illumina Ventures company. Cernostics specializes in spatial biology and artificial intelligence-driven image analysis of tissue biopsies. Its TissueCypher Barrett’s Esophagus Assay is the first precision medicine test designed to predict future development of high-grade dysplasia (HGD) and/or esophageal cancer in patients with BE. The acquisition would expand Castle’s estimated U.S. total addressable market by approximately $1 billion. The Company expects the deal to close before year-end 2021. See the Company’s news release from Oct. 19, 2021, for more information.
In October, the Company presented data on its suite of dermatologic cancer gene expression profile (GEP) tests, as well as presented a poster describing the study design for its inflammatory skin disease pipeline initiative at the 2021 Fall Clinical Dermatology Conference. See the Company’s news release from Oct. 22, 2021, for more information.
In October, the Company announced that the DecisionDx-Melanoma integrated test result (ITR) now includes i31-GEP for Risk of Recurrence (i31-ROR). Designed to improve the precision of treatment plans for better patient care, the i31-ROR predicts patient-specific five-year outcomes for melanoma-specific survival (MSS), distant metastasis-free survival (DMFS) and recurrence-free survival (RFS). See the Company’s news release from Oct. 28, 2021, for more information.
In November, the Company announced the publication of a novel algorithm that integrates the DecisionDx-Melanoma test with clinicopathologic features (i31-GEP SLNB) to determine sentinel lymph node biopsy (SLNB) positivity risk in patients with cutaneous melanoma. The article, titled "Integrating 31-Gene Expression Profiling with Clinicopathologic Features to Optimize Cutaneous Melanoma Sentinel Lymph Node Metastasis Prediction," highlights the development and validation of the i31-GEP SLNB algorithm and demonstrates improved prediction for sentinel lymph node (SLN) status compared to clinicopathologic features alone and a very high correlation comparing predicted versus observed SLN positivity rates of 0.999 (1.0 is complete correlation). The study was published in the peer-reviewed journal JCO Precision Oncology. See the Company’s news release from Nov. 5, 2021, for more information.
In November, the Company announced the launch of its inaugural Environmental, Social and Governance (ESG) report, detailing the Company’s related policies and metrics. See the Company’s news release from earlier today, for more information.
Conference Call and Webcast Details

Castle Biosciences will hold a conference call on Monday, Nov. 8, 2021, at 4:30 p.m. Eastern time to discuss its third quarter 2021 results and provide a corporate update.

A live webcast of the conference call can be accessed here: View Source or via the webcast link on the Investor Relations page of the Company’s website, View Source Please access the webcast at least 10 minutes before the conference call start time. An archive of the webcast will be available on the Company’s website until Nov. 30, 2021.

To access the live conference call via phone, please dial 844 200 6205 from the United States, or +1 929 526 1599 internationally, at least 10 minutes prior to the start of the call, using the conference ID 256168.

There will be a brief Question & Answer session following management commentary.

Use of Non-GAAP Financial Measures (UNAUDITED)

In this release, we use the metrics of Adjusted Revenue, Adjusted Gross Margin and Adjusted Operating Cash Flow, which are non-GAAP financial measures and are not calculated in accordance with generally accepted accounting principles in the United States (GAAP). Adjusted Revenue and Adjusted Gross Margin reflect adjustments to net revenues to exclude changes in variable consideration related to test reports delivered in previous periods. Adjusted Gross Margin further excludes acquisition-related intangible asset amortization. Adjusted Operating Cash Flow excludes the effects of cash activity associated with COVID-19 government relief payments to healthcare providers.

We use Adjusted Revenue, Adjusted Gross Margin and Adjusted Operating Cash Flow internally because we believe these metrics provide useful supplemental information in assessing our revenue and cash flow performance, respectively. We believe Adjusted Revenue and Adjusted Gross Margin are also useful to investors because they provide additional information on current-period performance by removing the effects of revenue adjustments related to tests delivered in previous periods and acquisition-related intangible asset amortization, which we believe may facilitate revenue and gross margin comparisons to historical periods. We believe Adjusted Operating Cash Flow is also useful to investors as a supplement to GAAP measures in the assessment of our cash flow performance by removing the effects of COVID-19 government relief payments, which we believe are not indicative of our ongoing operations. However, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies, even when the same or similarly titled terms are used to identify such measures, limiting their usefulness for comparative purposes. These non-GAAP financial measures are not meant to be substitutes for net revenues, gross margin or net cash (used in) provided by operating activities reported in accordance with GAAP and should be considered in conjunction with our financial information presented on GAAP basis. Accordingly, investors should not place undue reliance on non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of this release.