DISCLAIMER: Today’s Advertiser helped make the production and delivery of this episode possible, for free, to you! But the themes expressed by the guests do not necessarily reflect the views of Inside Reproductive Health, nor of the Advertiser. The Advertiser does not have editorial control over the content of this episode, and the guest’s appearance is not an endorsement of the Advertiser.
Is vertical integration inevitable?
That’s the question we explore this week with Louis Villalba, CEO of TMRW Life Sciences, as he dives into the consolidation and current business climate within the fertility space.
Tune in to learn about:
The 5 ancillary services of the fertility space (And how they make the distinction between vertical and horizontal integration)
The argument against concentrating these services (Like risking new buckets of liability)
The argument for concentrating these services (The sweet spot to acquiring a related service)
Backward integration vs Forward integration (Move closer to raw materials or toward end patient consumers?)
A breakdown of the recent major lawsuits in fertility (And what those would look like in a vertically integrated fertility space)
Speculation on when we could expect to see antitrust regulation in the field
Louis Villalba
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TMRW Life Sciences
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Twitter: @TMRWLifeSci
Transcript
[00:00:00] Louis Villalba: What this does is it shows you, as we have obviously a lot of natural, you know, you know, kind of consolidation in our space that's occurring with private equity, as the buyers become more sophisticated, what you see is actually a lot of focus on how do we continue to control more of the patient, you know, experience, if you will, and then how do we monetize, you know, those, you know, those efforts in terms of providing other services that we outsource.
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Announcer: Today's advertiser helped make the production and delivery of this episode possible for free to you.
But the themes expressed by the guests do not necessarily reflect the views of Inside Reproductive Health, nor of the advertiser. The advertiser does not have editorial control over the content of this episode, and the guest's appearance is not an endorsement of the advertiser.
[00:01:14] Griffin Jones: Can you just be a fertility clinic anymore? And I don't even mean, can you just be an independently owned fertility clinic anymore? I mean, like, even if you're a large group, a network of fertility clinics, multi state, multi lab even. Will you be able to get away with providing lab and clinical services only, or will you have to integrate into other verticals?
Vertical integration is happening in the fertility field. It's not just kind body. It's not just recharged capital in Southeast Asia. I suspect with these massive capital firms like KKR and Blackrock entering the fertility field that we are going to see a lot more vertical integration. And so that's why I brought in my guest, Luis Villalba.
Lou has recently been promoted to CEO of Tomorrow. He was the CEO of Geneo Biomedics, and he's led commercial divisions for a number of different companies in the space. To make the distinction between vertical [00:02:00] integration and horizontal integration, Lou lays out. The five main ancillary services in the fertility space.
This is from the point of view of the fertility clinic, safety and technology, storage, lab, egg banks, which I'm guessing you would just say gamete banks and surrogacy services. He talks about the buyers like KKR bringing a new level of sophistication to their approach to controlling the value chain. Lou makes the argument against concentrating ancillary services.
And he makes the argument for it. In the argument against, he talks about the risk of a headcount and new buckets of liability. I push him a little bit about what the strength of a balance sheet means. How relative is it in the time that we're in now where capital is starting to tighten up versus five years ago when seemingly anyone could get a loan for a low amount of money, for a low amount of interest.
We talk a little bit about major lawsuits that have been recent like The chart ink lawsuit from the Pacific Fertility Center failure five years ago. What that would look like in a vertically integrated fertility field. With regard to the healthiness of the balance sheet, Lou talks about the healthiness of gross margins for fertility networks.
What's the good end of the range? What's a poor end of the range? In the argument for Lou talks about the sweet spot for where it makes sense for a fertility company to acquire a related service. I asked him about backward integration moving closer toward the raw material versus forward integration moving closer towards the end.
patient consumer. I ask him about what tomorrow is up to. Lou gives his opinion on if it's a five horse race among the largest fertility clinic networks, what will happen next in that dynamic, like consolidation between horses two through five. I named some companies and I asked Lou to tell me who he thinks are the front runners right now.
And then finally, I asked Lou to speculate on when we might start to see some antitrust regulation happening. in the field. We've seen a little bit. There's more integration happening. Politically, there might be an appetite for trust busting on the populist waves of both the left and the right, according to my amateur political analysis.
And Lou gives his thoughts. Enjoy this episode about the inevitability of vertical integration in the fertility space with Lou Villalba. Mr. Villalba, Lou, welcome to the Inside Reproductive Health podcast.
[00:04:02] Louis Villalba: Thank you, Griffin. Happy to be here with you.
[00:04:04] Griffin Jones: I'm happy to have you on because you and I have gotten to know each other over the past few months.
But recently we were at a meeting and when you and I were just having a side conversation about vertical integration, I was like, stop, this needs to be, I need to be recording this. It needs, I got to get this into a podcast episode. And I want to ask you all sorts of things about vertical integration, about specifically what's happening in the field of how necessary it is, when it backfires, how, how people go forward and backward.
But let's maybe start with just how you would describe vertical integration and ancillary services and introduce the theme for us.
[00:04:43] Louis Villalba: Sure. Sounds great. And I appreciate it and appreciate the, uh, the discussion. So if we look today in terms of ancillary services, and let's say, for example, we focus on some of the larger IVF networks in the U S a lot of these groups have taken a look at, you know, kind of You know, bringing on into their operations, what I'll [00:05:00] call five different components.
One is safety and technology. So anything they can do to automate their existing platform on a day to day basis. Second would be storage. Obviously as storage, you know, is some people outsource. Some people have actually started to manage directly on their own. Then obviously you have genetic labs, which is a very big, you know, important part of the day to day business.
As we see networks starting to own their own labs and integrate and actually acquire some of the labs and services they were using, then you obviously you have egg banks and you have surrogacy services. So these are generally the five major components of ancillary services that most networks are concentrated on.
And not only networks, but if the single providers are large enough in terms of scale, they would also benefit from, you know, concentrating on these types of components.
[00:05:45] Griffin Jones: So, are some of these, would some of these be examples of horizontal integration? Like, I guess it depends on where you are in the journey, right?
Like, because if you're a, if you, if, if it's third party IVF, then I suppose [00:06:00] that having the egg bank and the surrogacy services as a part of the chain would be vertical. But how do you distinguish horizontal versus vertical in this case?
[00:06:12] Louis Villalba: Yeah, it's an important question, and we'll just take a quick step back.
So if you look, for example, at like innovation fertility, it's prior to their, you know, merging with U. S. fertility, and you look, you look at the services they were offering, I think they were, you know, a lab focused, you know, network, right? That, you know, basically took on, you know, a lot of different aspects.
They had storage, they hired actually a sales team. led by some, you know, highly qualified, you know, talent to go out and sell their genetic lab services, their storage services and amongst and amongst other things. And they were looking to expand that as they went into their merger. So time will tell with us fertility, what they choose to do.
So if you compare that to vertical or horizontal. you know, integration, you can make the case that if it's their own existing, you know, kind of physicians [00:07:00] that they support, that would be more of a horizontal. If they take it out to other, you know, entities, we could, you know, we can talk about virtual integration in terms of, you know, those types of services.
But I think first and foremost, what this does is it shows you As we have, obviously a lot of natural, you know, you know, kind of consolidation in our space that's occurring with private equity. As the buyers become more sophisticated, what you see is actually a lot of focus on how do we continue to control more of the patient, you know, experience if you will.
And then how do we monetize, you know, those, you know, those efforts in terms of providing other services that we outsource. Now, there's obviously like all good things in life. There's a lot of execution as you continue to offer more services that's required from a network perspective. And if you think of day to day care versus bringing on additional services, it brings on a different set of circumstances that you have to execute to provide that patient experience.
[00:07:56] Griffin Jones: So when you say buyers are becoming more sophisticated, you're not talking about the fertility patient and consumer, you're talking about the business to business buyer, the buyers purchasing clinics, clinic networks, and fertility companies?
[00:08:11] Louis Villalba: So I would say we have, we have sophistication increasing on both sides, okay?
And I would say that obviously the buyers are becoming more sophisticated. You look at KKR's acquisition paying two and a half billion dollars for, you know, for Evie RMA, that is, you know, that's a major player. There's no larger private equity group in the world. That's probably going to get into private equity or excuse me, into IVF outside of a BlackRock, let's say something of that nature.
So what does, you know, a purchaser. of that, you know, kind of bandwidth bring. It brings a level of sophistication that is different than, you know, in terms of how the business has actually grown. I always love to point out we're 44 years old in the world in terms of the oldest IVF baby, right? And so this business was, you know, this industry was built on the backs of a lot of great healthcare providers that, you know, established IVF to where it is today.
And that attention continues to multiple or multiply. in terms of the buyers that are coming in to the space now. So we see progenies of the world going directly to the patients, right? They go to employers, they offer benefits that creates a, you know, a level of sophistication that, you know, takes them, you know, a middleman out of the equation.
And now you see these types of, you know, providers starting to influence patient treatment patterns, right. In terms of where they go, what types of services are offered, what things are covered. You know, we see obviously a lot of. You know, you know, if you look in my opinion, if you look at a Massachusetts or an Illinois and you look at the mandates that have been approved in those states for some time, that's the future of IVF in the United States to a certain extent, okay?
We're going to see that type of coverage continuing to expand as it should and provide more coverage to, you know, to patients because we know that, you know, currently right now there's nowhere near enough treatment for the amount of demand that's in the market today.
[00:09:56] Griffin Jones: So do you think a lot of the drive towards vertical integration is coming from the investor side?
Is this part of the investor thesis now? Is this, how much is it coming from operators that feel like, well, I just simply need to do this in order to complete the rest of our business plan versus investors coming in with is part of their thesis. And it is, is it, is it part of almost every investor's thesis now?
[00:10:22] Louis Villalba: Think that, you know, every investor is going to look to obviously maximize their investment, right? And how do you do that? Do you do that by controlling more ancillary services, you know, and increased profit? through providing, you know, or controlling that type of the business. And there's, you know, there's a great debate that goes on.
There are some networks CEOs that, you know, would, would, you know, argue that concentrated on ancillary services is not the right way to increase profitability. And, you know, in an IVF network, actually seeing more patients as a way to actually increase profitability is, is what some would say. Others would argue and say, look, this is the best way for me to control quality.
This is the best way for me to control safety. And yes, for controlling those things, I probably will realize a better profit. Okay. And I, you know, in terms of, you know, where they will call the sweet spot from a risk and profitability equation. I think it's a lot of that depends on scale. So once you reach a certain size and you're obviously, you know, your volumes obviously support these types of investment.
These make it natural sense for some businesses to, you know, to take on this type of service, but it doesn't come without risk. Right. And anytime you actually perform an additional service for, you know, for patients that comes with an execution, you know, responsibility that's on the back end. And let's look at, for example, at genetic labs.
All right. So genetic labs obviously have grown tremendously in the last, let's say seven to 10 years. Okay. You look at where things started with PGS and you just follow the natural equation, you know, to where we are today with PGTA, et cetera. And what you'll see is a lot of, you know, networks now, once they reach a certain size, taking on their own genetic labs.
Okay. So in terms of, you know, the responsibility that comes with providing, [00:12:00] let's say, a genetic test, the results. There is an enormous professional liability that you don't have as a care provider, but you do as a genetic lab operator. And so these are the types of considerations that I think people go through and they have to look at, you know, what type of, you know, professional liability insurance do I need to carry outside of my malpractice insurance to perform these types of services.
[00:12:22] Griffin Jones: Okay, so there's a couple different ways, I want to, I want to, I'm making some notes because I want to dive back into risk. I want to talk about controlling the value chain to best ensure the patient experience. I want to, to first start on asking you to steel man the argument that concentrating And on ancillary services, not the best way to increase profit, but that to just focus on patient volume is, whether that's your position or not, I'm just asking you to steel man it.
What's the argument there?
[00:12:54] Louis Villalba: So one of the most expensive parts of, you know, of any services business is headcount. And the amount of headcount required to provide additional services actually increases your expense level, right? So on the, on one end of the equation, you're going to argue that my top line revenue is going to increase, right?
Because I'm now going to bill out and enjoy the profit that I was outsourcing to a genetic lab, you know, previously. If I manage that responsibility on my own. So the other part is going to be, you know, when you look at any IVF clinic in terms of a network or a well run business, the, you know, the general P and L statements of an IVF clinic are going to range.
And if, you know, unfortunately the low 20 percent when things aren't going well to probably low 40 percent when they're run close to perfectly. Okay. So if that is your range, 20 to 40 percent in terms of your profit, and you're going to reinvest that back into. offering additional services to your patients, you don't have a lot of runway for margin of error.
So if you take on a responsibility, for example, like storage, and you actually go out, you acquire a facility, you make the investment, you actually are bringing on additional risk now because you have an outsourced facility where you're storing some of your most you know, precious, you know, kind of resources of any IVF, you know, network.
And then you are going to manage that on a day to day basis with additional headcount. Okay. On, you know, in terms of managing that responsibility. So those types of risks you manage, obviously in your clinic, one way, when you outsource to a different facility that you're running, okay, that you're eliminating risk, you're actually bringing on additional risk to yourself, but more importantly, you're actually increasing your expense level.
And so that relationship between risk and reward is an important equation. When ancillary services comes up for clinics to consider, because if we said, for example, you know, your revenue per patient's going to increase. If you concentrate, you know, just on the patient experience within your own clinic versus, you know, managing outside services.
I think that's an important distinction any CEO would want to think through as they make a decision on, you know, managing things directly versus outsourcing.
[00:15:00] Griffin Jones: If the trend of vertical integration really continues and the number of fertility clinic groups that remain unintegrated gets smaller, do they have to have a really strong consumer brand in order to...
Maintain that niche and not be in all of the other verticals.
[00:15:26] Louis Villalba: Yeah, it's important to think about this. All right. So your, your patient experience is obviously, you know, in the journey is created by so many different interactions, right? It's the interaction from when you walk into when you sit down with, let's say, you know, nurse before you get to the MD.
Or in some cases where embryologists do speak with patients that, you know, they have those types of interactions. You bring in ancillary services and let's say, God forbid, you have a bad experience with a genetic lab. Okay. Where does that brand reputation get hit? Does it get hit on the, on the clinic or does it get hit?
for the genetic lab. If it's an outside service, it's going to go on to the clinic, you know, generally, because that's where the direct patient experiences. And so I think that, you know, the, you know, the, the ability to build a, you know, a strong brand in this space is, you know, encompasses all of those points of interaction.
And so the more that you're obviously, you know, focused on the things that you can do to increase your brand awareness and create a good experience, the better off, you know, your interactions with. Patients are going to be, and that's going to be the strength of your brand. The quality of the people that you partner with is going to be the strength of your brand.
Okay. And I think that's, you know, what will eventually, you know, rise to the surface in this, in this equation, as people, you know, look like in all types of, you know, of businesses. You know, the more points of execution you have in any equation, the higher risk you have, right? And so if you want to bring on, you know, additional, you know, points of execution into your care model, you have to realize that you're going to need the management involved and the expertise involved to execute against, you know, those responsibilities.
And I think that the attraction of the profit is one part of the equation. The execution of the quality is, is extremely important because that involves safety, which at the end of the day, we're all most focused on.
[00:17:14] Griffin Jones: Well, let's go to a different industry for a second where safety is less of the concern and it isn't as serious as what.
People do in this field, but we were just in California recently, and I don't eat fast food normally, but every time I'm in California, Lou, I just want In N Out Burger. And, uh, so last time we were at PCRS, and I'm getting In N Out Burger, and I start, I'm really curious about the company, and it's a three billion dollar company, Lou, no franchises.
Owned almost entirely by one woman. Now, granted, she's an heiress, it was her grand grandfather, I think, and then her father and her uncle, and her uncle didn't have heirs, if I remember the story correctly. But, this is a three billion dollar company. No franchises. Highly profitable. I haven't really dug in, but I don't, I don't think a ton of vertical integration.
I think, I think they mostly occupy their spot. Contrast that with McDonald's, let's say. And you know, I think McDonald's might, their parent company owns a bunch of shares of Coke and, you know, and, and, you know, they probably own the distributors or at least some. Parts of the distributors that for their suppliers and they own the potato farms in some cases and, or at least independent contract them like they do.
And, and so who would you, would you rather, would you rather be, would you rather own In N Out burger in that situation, or would you rather be the equivalent level shareholder in terms of capital at McDonald's and why?
[00:18:44] Louis Villalba: Yeah. Yeah. It's great. It's a great scenario. And I love the in and out story. You know, a long time, California, it's a, it's, it's just a fantastic, I think, you know, example of, but one family that controlled the entire, you know, evolution of that brand starting out, you know, obviously it was a Southern California based business.
They knew they had a high quality product. They have been enticed along the way. You know, you can imagine every year with their growth of someone to come in from a private equity side, acquire this, scale it, you know, nationalize it. And, you know, from that, create it into a worldwide brand. But what they, you know, what they figured out early on was, you know, obviously there's, you know, there's always more than one route to success, right.
And their route to success was going to be about staying as a high quality brand. And so not to say that other brands aren't. High quality, but they definitely have stayed a higher quality brand, which is why they have such a cold following. And whenever they, you know, their distribution centers in terms of where their products go out to the different stores, those have been very geographically selected.
Right? So there're only a certain number of hours on a truck, you know, from the distribution point to actually the point of, you know, service and I. I believe that model in healthcare has some, some similarities, right? So we, first and foremost, we have, you know, we want safety and we want success, right? And success in my mind is quality in this.
And so what we want to continue to do is we want to build obviously points of care that deliver the highest success and the highest safety and the best patient experience possible, right? Everything encompasses into that patient experience. That's why. The patient referral in our business is still by far the most effective referral, no matter how much money, technology, artificial intelligence we spend in trying to control, you know, patient pathway, you know, patient referrals still drive, you know, a majority of a lot of our business.
And we know in terms of the number of diagnosis, you know, versus the number of treatable patients, we've got a lot of room, you know, for continued growth in this, in this business. Quality is, I still, in my opinion, going to be one of the most important things for us to build IVF worldwide in terms of its reputation.
We need to continue to support high quality providers and high quality standards.
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[00:22:22] Griffin Jones: You give very tangible examples of what In N Out does, but also what other people do.
So I think if people do want to maintain that route, that thinking of what those, what those indicators of quality are and truly investing them as necessary, as opposed to just saying, Oh, you know, we've got a good reputation. I don't think, I don't think that's going to come. I think quality has to be a measurable strategy and in that situation, at least I suspect it does.
I want to have you. Dealman, the, the, the case for controlling the, the value chain, but before we do that, is there also a strategy that can be applied if you don't control the value chain that you can pit vendors against each other? Like, I'm thinking of what happened in, what seems to me to have happened in genetics.
Like, you, you have the fertility networks and they're driving down the price, having all the genetics companies compete with each other. And so that seems to me like a cost saving strategy that might, that might not be duplicable If you also own that vertical, or am I missing something?
[00:23:32] Louis Villalba: No, you're not missing anything.
So, look, there are only, you know, when a patient walks through the, you know, the entrance of a clinic and actually, and arrives for care, you know, call it whatever. There are 30 unique events for you, for example, to drive, you know, revenue on a patient, right? There's a, you know, so there's screening on the front end.
There's, you know, there's diagnosis, there's obviously pharmaceutical treatment, and then you actually get into, you know, obviously, you know, trying to, you know, produce eggs, right? Those sites or, or do a sperm analysis. So then you get into your laboratory process, right? And within your, what we'll call your case rate, all of the, all of the fees that are associated at case rate are, are to cover.
everything to let's say a blastocyst production, and then a transfer, right? A retrieval and a transfer. And so when you take, you know, in terms of the number of steps that are in a case rate, and you say the value that's been assigned, you know, to that, you know, to that case rate, then the only thing you can do on the back end of that is sell additional screening, additional storage, you know, additional services, you know, you know, to patients.
And that in terms of what, you know, the ability for them to kind of increase the revenue per patient, that's where people are, are, are evaluating, evaluating, obviously, where are the options there and under our current, you know, care paradigm today, it's a pretty strict protocol in terms of how you can actually increase revenue in a, within an IVF clinic.
Other people are trying to expand that, you know, let's say that, you know, kind of. care, you know, option, meaning that they're not just going to do reproductive health. They're going to do gynecological services, right? So that gets into well, woman visits that gets into more of a general maintenance of, you know, of, you know, of a female health life.
And that is where they're trying to say, look, we built this infrastructure. We want to drive more, you know, patient volume through this infrastructure. You know, women's health services actually can encompass not just reproductive care. They can also, you know, encompass, you know, gynecologic care. And so that's where I think.
You'll see, you know, in terms of the, the focus continue to evolve. We'll see this now. It hasn't succeeded. People have tried it in the past. Was it too early? Was it not the right design? Was it, you know, and let's say for example, you know, geographically, you know, not, you know, not, you know, kind of aligned in terms of, you know, with patient mindsets.
There's a lot of factors that go into expanding, obviously, you know, patient care. But I think with the level of sophistication that is now coming into IVF, we're going to see some successful models that expand the, you know, the care continuum.
[00:26:01] Griffin Jones: Is there something to be said about the timing right now that impacts the risk that you started to talk about?
You talked about both legal liability, which we want to talk some more about, but you talked a bit about financial risk. Is there a risk, especially now, of being over leveraged if you're acquiring other companies and other verticals and maybe three years ago it would have been fine because if you started to stretch out your runway you'd just borrow some extra capital at a very low interest rate and now that Interest rates are higher.
It appears that lenders are getting a bit tighter. A couple of the big lenders like Silicon Valley Bank and Signature have gone under. And I suspect that we're going, there's rumors of, of, of a couple, you know, of a bankruptcy or two or a mass layoff or two in the pipeline. When it, when it happens, we'll report on it.
Right now, they're just rumors, but I, I think that some of them will happen because of the climate that we're in. What is, What is the timing that we're in right now due to vertical integration that might otherwise happen in the fertility field?
[00:27:07] Louis Villalba: Right. So the businesses that, you know, have weaker balance sheets obviously are not in a position to go out and acquire ancillary services or invest in ancillary services because they're obviously, you know, They're financing their current levels, you know, of debt if they, if they have them.
And so that puts them obviously in a more conservative position in terms of looking at, you know, building these types of, you know, of care, this type of service, you know, for their, for their patients. What that does though, is it means the independent providers that obviously specialize in these types of ancillary services, the strength of their business, obviously.
starts to rise to the surface. And then what you'll see in competition, as we've seen, obviously in the genetic screening world, and you'll see in the storage world, you'll see in, you know, and obviously the surrogacy services, not to the same extent, but definitely at some level and egg banks, you'll see, you know, obviously the force of competition, people will negotiate.
You know, the strength and the size of some of these organizations will mean that they're going to pay, you know, they're going to actually save money in terms of, you know, providing these types of services through a third party. And they'll leverage that, you know, to increase their profitability on a per patient basis by not carrying all the expense of actually hiring headcount, investing in technology, all the things that are required to, you know, to deliver these types of ancillary services.
They'll approach it, you know, in the, what I'll say, the good old fashioned way, which is their core competencies is what they'll focus on. They'll outsource the things that aren't, you know, important to their, you know, are central to their core competencies and rely on high quality partners to deliver that level of care.
[00:28:39] Griffin Jones: Our business is trying to improve their cash position right now so that they could, they can still continue a vertical integration strategy, even if capital tightens up.
[00:28:50] Louis Villalba: Yeah, I would say, you know, you have obviously a lot of private equity buyers that are coming to space and everyone in the private equity world has a, you know, a longer, you can say a shorter or a longer term, you know, strategy, and that's to monetize the assets that they've required.
Right? So the way that you monetize, obviously, is you have the balance sheet. You know, be as strong as possible. And then you're either going to go to the public equity markets or you're going to roll them up and sell them and a bigger, you know, to a bigger consortium that has a longer term vision. I think some of the big players in this space that have come in have a longer term view.
Okay. I think a lot of the initial private equity that we attracted and that the reproductive health actually is experienced in the last, you know, we'll call it three years is a shorter term view. It's something in that three to five year time horizon. I think the bigger players actually look at things in a 10 year time horizon.
They're not as, you know, reactive to market conditions like we see today, where some of the, you know, the, we'll say the smaller players, you know, they have to return on the funds that they've committed and they actually have to show, you know, obviously returns to the shareholders that they're providing for.
So this will benefit us, I think over time as we mature and we get in longer term, you know, relationships with bigger providers that have long, you know, longer term views.
[00:30:03] Griffin Jones: Whether the strategy and the outlook is long term or short term, the strength of a balance sheet is still somewhat relative, isn't it?
Relative to if, if, if there's money that can be easily borrowed or, or. Received some other way versus it looks like things are tight. Not only are capital markets tight, but also our AR is starting to age out more. It was at 45 and now it's at 60 or now it's closer to 90. And so, so what is like, what is the strength of a balance sheet have to look like nowadays?
[00:30:38] Louis Villalba: Yeah. So I think, you know, in a, in a services model where you see, again, these, you know, these kind of general, you know, returns, you know, in a high quality, you know, IVF clinic, you'll see, you know, you know, close to kind of a, a low forties in terms of gross margin. Okay. And then let's say in an underperformer, you can see something as low as, you know, as 20%.
So if you think in terms of that's your gross margin and what you have to invest in and what type of investment you're going to attract into a business like that. People are going to want to see, obviously, they're going to want to see that your balance sheet is improving over time, that you have growth in terms of, you know, the services that you're providing.
So we, you know, we have a lot of what I'll call the central, you know, checkpoints that can, you know, acquire and attract investors into the space. What a lot of it kind of comes down to is now what is the management skill set to execute and show improvement in terms of the profitability of these businesses over time.
And so that strength actually has to come through and, and, you know, what we'll call higher quality, you know, performance and that performance now is, is, is starting to be looked at, you know, under a different lens because you have seasoned investors that actually. you know, hold these, you know, groups, obviously accountable to the, you know, to delivering the results that they expect.
Now, that's not always an attractive, you know, comment within healthcare. And I completely understand the reality is, you know, medicine is a business. Okay. Our, of course, our job is to provide the highest quality of care. And one would argue if we provide high quality care, the business will sort itself out.
And I think that's very accurate because if we're doing the, you know, the right thing in terms for the patient, we're going to this market. And there's plenty of growth. Plenty of greenfield in front of this space for everyone to appreciate, you know, in the years, in the years to come.
[00:32:20] Griffin Jones: So you talked a bit about the risk liability and one example that you gave was, well, if you're in just in the clinical vertical, for example, you have your malpractice liability, but then if you go into a lab vertical, a storage vertical, there's other liability that you have.
What other examples are there in terms of legal? risks that people need to consider when they're moving into other verticals.
[00:32:48] Louis Villalba: Yeah. So, so kind of the two categories fall between professional liability. Okay. And personal liability. Right. And so professional liability, you're an MD or an embryologist, you have a, you know, you have your normal set of standards that you perform, you know, on a, or steps you perform on a day to day basis.
So those are covered generally your malpractice policies. And because, you know, that that's what's designed to cover. that part of your day to day job. When you start to, you know, expand the types of services that you offer, for example, something in genetics, you start to actually take on, you know, providing a result, right?
And a result that people are going to continue to, you know, make clinical evaluations against and make more importantly care decisions against, right? And so when you look, for example, at the accuracy of the test results that you provide, obviously, you know, if they're the lower the, you know, the accuracy, the more risk there is in terms of the type of guidance you provide.
You obviously include all types of fair balance statements saying something's 97, 98 percent successful or predictable, but guess what? That still leaves you a little bit of a window, you know, of risk there. All right. And so that isn't risk that if you are outsourcing, you carry, you carry it from a malpractice standpoint.
Okay. But you don't carry it, you know, directly as a professional liability perspective. And those are the types of, you know, important, you know, considerations that. Any network or any clinic needs to think through if they want to expand, you know, into ancillary services, you know, for example, in storage, you know, if you actually have, you know, let's say, for example, you know, 10, 000 patients on one site that you're storing from a legacy inventory, and you have some type of tank failure, which unfortunately happens from time to time, where does that risk fall?
If it's in, you know, if you're providing. That service on your own versus outsource. The answer is it falls everywhere, but it's going to fall to one side more. Okay. If you're actually, you know, so to speak, holding the bag on that, you know, directly, and that is, you know, that's an important consideration, I think, as people get into this and some of the sophisticated buyers now are obviously forcing, you know, some of these networks to actually look outside, you know, to use third party services, you know, for these, you know, these ancillary steps that are involved in the business.
[00:34:59] Griffin Jones: You're making me think of the recent Chart, Inc. settlements. So, Chart, Inc. was, I believe, the manufacturer of the tanks at Pacific Fertility Center. I don't know if they also were for the Cleveland Clinic as well, but, you know, so, I think patients sued Pacific Fertility Center, Pacific Fertility Center sued Chart, I think patients sued Chart directly, then Chart.
Went and I believe one of their suppliers was Extron and so they're, they're suing Extron. So either that doesn't get to happen if you're vertically integrated because you're just being sued at all of those points. Or, or is it like the McDonald's example where it's like that one little vendor that, because they're not, no one's vertically integrated and absolutely.
Everything, right? Like even Amazon still buys some things from other people. And so does that, if you're in that type of situation, does that put someone in a position where it's like, okay, this is how the, you know, it was 90 percent through our different verticals and maybe 10 percent through this supplier that we have, but we're going to squash this supplier in a legal battle and make it seem like it was 50 percent their liability.
Is that something we might expect to see?
[00:36:10] Louis Villalba: I think, you know, the trial lawyers are always, you know, you know, very focused on going towards the deepest pockets wherever they're, they're positioned. So if there is a path to, you know, get into that party in the equation, they will find it and they'll, they'll naturally end up there.
You know, you bring up a good example in terms of the equation that's involved, like for any finished product, there are, you know, generally a consortium of, you know, of, you know, just different providers that, you know, all, you know, have their contributions to a finished product. The quality piece that comes out in the back end of that in terms of who is responsible for checking that, managing that, those are always a central point of where most of the liability is probably going to, you know, fall on the shoulders of, but that's, you know, that in terms of a physician's office or an IVF clinic is, you know, is why it's, there's so much risk for them in this type of ancillary service.
And so I think what, you know, for example, what we learned in the Pacific fertility case is that, you know, not only did we, you know, we have, you know, a long list of people that are, are going to be, you know, kind of subpoenaed in this, we also learned another important thing that the technology that's involved today.
They're that was involved in at that point was completely inadequate in terms of identifying the problem, right? The alarm systems that set up now are set up to be reactive. They're not set up to be predictive and where we need to shift in these types of ancillary services where I think most of the providers are currently doing this.
is they actually have things that predict, they monitor things like LN2 consumption, they monitor oxygen, they monitor temperature, they remote access into these systems because they watch them 24 7. And that's the type of focus that we need to improve the quality within reproductive health because that's the trust that patients are putting in us in terms of building, you know, this, you know, uh, obviously service into something that's extremely, you know, high quality.
[00:37:59] Griffin Jones: Well then let's shift to that quality argument about controlling the value chain. So we've gone through the cons of integration and the potential risks and the pros to perhaps just focusing on patient volume or focusing on one piece of the vertical as opposed to integrating. Now let's talk about the pros and steelman that argument.
If controlling the value chain ends up appearing to be totally necessary in the next five to ten years, why might that be?
[00:38:26] Louis Villalba: So I think, you know, there's every business has what we'll call a sweet spot, just in terms of the, you know, the amount of, let's say, kind of strategy, technology, headcount investment that you have into a business, that investment's actually going to help you, let's say, for example, maximize your quality, maximize your return on investment.
Figuring out where that intersection is in every business is, you know, is a critical part. And I think that, you know, if you look in terms of the healthcare services model that we're involved in, you think of the number of headcount that's involved within an IVF clinic, you can think about, you know, the administration side, think about the lab, you know, in terms of embryologists, technicians, et cetera, think on the MD side.
And then as you add different ancillary services, They're going to have to add headcount to manage those responsibilities. So, you know, there's a volume that at a certain point, it's going to make sense. Right. And then there's an argument that says until you reach that volume, or if you have to increase your headcount to a point because the volume is so large, then, you know, you have to ask yourself.
I have buying power. Am I better off doing this and managing this internally under my own roof? Or am I better off negotiating a very competitive deal with a high quality provider? And that's the trend that's in front of us. And that's what I think we'll see, you know, in the next two to five years, we'll see this.
And we see the negotiations right now. There's, you know, discussions underway at this point for all the networks to actually band together. to have, you know, competitive purchasing agreements with some of the major providers of this space. So it's naturally occurring. I think it's just part of the maturity of reproductive health.
And we'll continue to see this evolve. I believe strongly over the next few years.
[00:40:00] Griffin Jones: What about those vertical integrators that seem to have no sweet spot? You said there's a sweet spot that makes sense because it has got, but then you look at like Tesla and it's like, man, he's buying. Everything. You look at Amazon, it's okay.
Now they got the cloud services. Oh, and they have Whole Foods. They've got that distri distribution. Now they're in content creation so that their products are everywhere. So that you're not leaving Amazon, you're, or you're not going to Netflix, you're not leaving Amazon. You're staying, you're watching your videos in Prime, buying your products in Prime.
Oh. by the Washington Post, too, just because, you know, it can't hurt to, it can't hurt to be in D. C. when you're playing at this level. And so it seems so I know those are like the top of the top examples. But do you how likely is it that we'll see someone in the fertility field that doesn't seem to have that sweet spot?
They're like, we're going to be in absolutely everything that touches the patient.
[00:40:58] Louis Villalba: So, you know, I, you know, there's so much execution, right. And the examples that you just provided. So for example, on Amazon, we look at where Amazon started and, you know, the argument was, it's never going to be a profitable company.
You can remember that, you know, for many, many years. Right. But what, what did they do? They continued to grow their top line and they can. Tended to consolidate, you know, against their original foundation in a step-by-step fashion, right? They didn't grow into the company. They are today, just overnight to several years and several years of high quality acquisitions, several years of high quality management of a business.
And it built a brand, a brand that people trust. And so, you know, how do they control the American, you know, the worldwide consumers buying behavior. Now they're seen as a high quality provider and they have a trusted brand, right? So I think same thing applies to Tesla in a big way, right? They were, you know.
You know, pioneers in the EV market, but they also had a premium brand to begin with, right? Who didn't aspire to have a Tesla, you know, let's say back in like the 2007 to 2010 range, when they were more scarce right now, that's a common brand. People see it around, they see it everywhere and it, you know, and they've created different price points to bring different levels of the market in.
And what are we continuing to see in terms of reproductive healthcare? Some will argue that obviously like, for example, in the U S we have, you know, we, in terms of cost of treatment, we've created a market that only, you know, treats a certain segment of the market. And so we have other entities that have come in, for example, like a kind body that say, our mission is to create, you know, is to improve access to care.
We want to do things at a lower price point. We have these efforts now to go directly to the employers, to the progenies of the world, right. to manage the cost associated, you know, with treatment. So we can encourage, you know, companies to invest more in reproductive, you know, reproductive healthcare and treatment.
And so all of these things I think are, are growing, you know, our industry right in front of our eyes in terms of who's going to consolidate them and who's going to maximize. I think you look to some of, you know, the recent acquisitions that have, you know, have taken place when you attract the names of like a KKR, their longterm view.
Obviously has a long term strategy. And if you look at the brands that they're buying, I would, you know, I think one could argue there are some higher, high quality brands. So I would look, you know, at those types of buyers to see who's going to kind of set the, you know, the strategy for what pieces are going to be rolled up and at what time, because.
there's, there's a lot of consolidation still in front of us, but you know, the foundation in terms of the number of clinics that we have that are available today to treat patients, I believe that number is going to continue to increase over the next few years.
[00:43:28] Griffin Jones: So we might see it from the behemoths that are coming in like KKR and maybe BlackRock will too and some others are who, who, who do you suspect is in the lead right now?
So, you know, you mentioned us fertility, we'll see what, what. They, they end up doing, it's, I might guess kind body, you know, from just what I can see in terms of they got clinics. I don't know if they still do the mobile testing, but they had that. They've got the employer benefit carve out. They've since gone into a third party.
I believe they acquired a gestational carrier agency. The one is escaping me right now, but so, and, and I think they expanded EOS when they bought VIO. So they're, they're more in a third party. So I might guess them who's, who's. Charging ahead. And who are the front runners right now?
[00:44:14] Louis Villalba: Well, if you look in terms of volume size cycles and who has control right now, it's, you know, us fertility control is obviously a majority of the market from that perspective.
You start to go down the list from there. And I think there's some arguments that if it's a five horse race and you have one that's in the lead right now. Horses between number two and number five, if they consolidate together, you're going to have more of an equal parity in terms of volume and size.
And I expect that those are the next moves that we'll see in front of us. Okay. I mean, you look at groups like Pentacle that, you know, have been high growth in terms of the number of acquisitions that they've made over the last few years now with valuations actually coming down to a more respectable level and a more competitive level.
I think that the ones with the strong balance sheets, we're going to see them continue to accelerate their acquisition strategies. Over the next 12 to 18 months, because prices are more competitive than they were, you know, just 12 months ago. And in terms of, you know, what shifts in the business strategies for some of these networks, I think that there's a tremendous amount of evaluation going on right now about what is the next natural extension for their care paradigm.
to add, you know, to offer to this patient group. And I think that, you know, we have success rates, obviously, that are, you know, continuing to improve year over year. Some might argue that our live birth rates aren't, you know, accelerating. This is a complicated field to succeed in. I think everyone knows that, but I think in terms of like the number of blastocyst embryos that we're producing on a day to day basis, I, you know, those percentages, you cannot argue it.
They've improved dramatically. Okay. There's a lot that goes into that, but you know, starting with the blastocyst embryo is obviously a great place to start in terms of long term success for reproductive healthcare. So I think we'll, we'll continue to see, you know, that the trust and the quality of the market improves year over year, which will be a natural, you know, extension to bring in more people in for treatment.
[00:46:05] Griffin Jones: Is this integration necessary in order to actually be able to implement a lot of the innovations that are happening because I see all these solutions coming in and some of them are probably they're not going to win their duds and they maybe just be features but some of them seem it's like oh I can really tell I can see the value in that but they're still having a hard time gaining adoption for whatever reason, and often it just has to do with the variance of workflow.
So even if you have an MSO, you've often pasted those different clinics together. They've got different workflows and often it's, it's just not the same as like I, I had the CEO of Indira IVF from India and he said, I hired 250 Uh, OBGYN physicians, I train them on fertility, meaning my company does, and I make sure they're all younger than me.
So they all do the same thing. And so it's a lot easier to implement a lot of some of these scale innovations and the workflow, the variance and workflow is one of the things that, that seems to hamper is, is this vertical integration necessary in order to be able to, to get things in? Because there's a lot of.
things. It's like, man, you really do automate. You really do reduce that level of work that people have. But in order to implement it, it's an add on for, for where people don't have capacity. So is, is this necessary in order to be able to implement the rest of the innovations?
[00:47:31] Louis Villalba: Yeah. So, you know, I think that if we think in terms of the, you know, the meeting that we attended out in Napa together, the, one of the great debates is around, you know, I practice evidence based medicine.
Okay. And so everyone's looking for evidence in terms of how they make decisions. And then I think what's equally there for a lot of people are people who are looking at the cost of, you know, the different decisions that they make. Okay. And so in terms of looking at AI technologies and where they are today, if you went to someone and said, I'm going to give you higher quality information.
Do you think you're going to be able to have a better chance of success? Okay. I did. Short answer is going to be yes. Right. Because people are qualified and you know, part of the decisions that they make are based on the information they have. So you know, this whole, you know, great debate on what, how much data you need to obviously, you know, kind of make, let's say a clinical decision.
I think kids is a very important part of this equation and the value of that data that you provide is what people are obviously thirsty for and they're thirsty, you know, for an advantage. Right. Right. So you'll see. you know, some people obviously get on the front end of the equation in terms of, you know, of, of acquiring, let's say a technology before the middle of the market will adopt something.
Right. And so the early adopters, like if you look at an AI, you look at time lapse imaging, you look at single step media. I mean, you know, there are a lot of markers that you can look at, but the, you know, I think one of the more interesting things that, you know, from a behavior standpoint. is, you know, you are not going to get what's called a standard of care where you're treating 51 percent of the addressable market with anything in a short period of time.
It's just, there are so many, you know, and factors involved with changing people's behavior around different things. And they can be business related. They can be behavior related. They can be control related in terms of you're on a network and your protocols get set and you're going to follow those.
Which, you know, in the Indira equation, you know, they're doing a great job of setting a standard that they want their, you know, their groups to follow. I think the hardest thing to do in medicine is change behavior in terms of if you want to try and do it fast, because the faster, you know, you push. the harder that they resist.
And that's just the natural, you know, kind of ebb and flow of our market. I do think, you know, um, from a society standpoint, we're continuing to set practice guidelines around very, you know, very important things with innovation and how you present and offer those early innovations to patients. If people see things as an advantage, you know, certain groups are always going to, you know, obviously maximize that they'll take advantage of it.
Then certain patients are going to be attracted to it. Okay. And if it's gone through [00:50:00] a regulatory process, which in most, you know, aspects it has, because if people are making clinical decisions, they've had to take it through an FDA clearance, they've had to take it through, you know, some type of, you know, it has to adhere to CLIA lab regulations, something of that nature where things get.
you know, unfortunately inconsistent is if they don't have to follow those types of controls, then one could have an argument about, Hey, how did you, you know, get to offer this to patients? Right. Because if we look, you know, in terms of today's, so let's say for example, you know, of the 450 plus clinics we have in the U S Most of them, you know, probably are doing things, you know, that don't have a lot of FDA clearance because they weren't required to do that.
Right. They have CLIA lab regulations, but, you know, on a day to day basis, they've created their own SOPs, their fine running labs, and they adhere to those types of controls.
[00:50:48] Griffin Jones: If this happens and someone is kind of driving it at the vertical level, I'm just picking on KineBody, I'm not saying it's them, but Gino has of course said that vertical integration is part of their thesis and touching all the parts of the value chain is part of their thesis, and so let's just say it's them and they, you know, And.
own EMR, own pharmacy, own everything for those that don't, does that force them to, even though they're not integrating as businesses, they have to have more in integrative features that so that does it force the pharmacies that are left, the EMRs that are left, the scheduling softwares, et cetera, that are left to have to communicate with each other in order to, and have more interoperative functionality because otherwise it would, it seems to me like it would be a cheetah against a.
[00:51:43] Louis Villalba: Yeah. Right. So there was definitely a, um, a level of efficiency with automation, right. And offering a complete, let's say, you know, offering in terms of, you know, from pharmaceutical through, you know, let's say delivery of a, you know, of a healthy, happy baby. And so if that is in terms of your longer term, you know, care strategy, the pressure on the business is to.
Did you know, is to demonstrate that they can manage that at a, in a cost effective way, right? So there's a rush to control all these different steps. What we haven't seen yet is the importance, you know, kind of, you know, output on the back end, is it more cost effective or your outcomes better, you know, all of the things that are generally going to drive, you know, longer term investment, longer term strategy.
I think it's a natural maturity cycle that we're going through, you know, as an industry, and I think it's the right normal thing to do. I think the question will become, all right, so what are the most important, you know, steps in my business? What steps do I need to control to provide the best experience for my patients, meaning, you know, and hopefully delivering healthy, happy babies and what's really rolled up into that.
Okay. And, you know, and that's, you know, that is, I think left to be determined just in, you know, in terms of where we are, you know, as an industry, but I think that it will be highly competitive for the next several years as the great race, you know, kind of continues for that, that type of control.
[00:53:03] Griffin Jones: Do you think that we'll start to see more backward integration, so forward integration, meaning I'm, I'm a fertility clinic and then maybe I acquire, you know, an OBGYN or, or some sort of referral source, I'm getting closer to the end patient and backward being go, go back to the raw material, you could go all the way as far back to the raw materials, but just in that direction, whether you go that far back or not.
Will we see more backward integration?
[00:53:35] Louis Villalba: I definitely think we will. There will be some groups that will look, you know, in terms of the, of the backward review lens mirror, and they'll, they'll go, they'll probably be ones that I think. As we naturally go through this process and we see where success is on the front end, they'll look at, you know, what can the back end of the equation be?
And does that give me any, you know, strategic advantage over those that are offering, you know, things on the front end? If you can contract with the patient up front, Then you control the pathway in terms that they follow, right? And that's what some of the benefit providers have done a masterful job of, okay?
They, they have, you know, in terms of the patient, their points of care, if they're going to be established to their network, then from a competitive standpoint, you're then, you know, you've plugged them into your equation, right? You have to naturally manage them through the process, but you have control at that point.
[00:54:25] Griffin Jones: Will we see tomorrow buying a fertility clinic network, will we see tomorrow buying a Hamilton Thorne or...
[00:54:31] Louis Villalba: No. So at this stage, you know, I think, and I, you know, if anything, I've learned in 30 years of business, you know, try to do, you know, do one thing, do it well. Okay. And be the best at it. Right. And that sounds, you know, cavalier, but it's the honest to God truth.
It's, you know, we obviously built a technology platform or the only company that wrote It's own, you know, operating program. I'd be F. O. S. It's proprietary to tomorrow. The first step was to automate, obviously the storage component of the business and bring as much digital, you know, kind of chain of custody, you know, protection to that side of the business as possible.
We're obviously in the midst of. You know, of launching this in the U. S. Now, and what's quite interesting is normally when you launch new technology networks aren't generally the first adopters, they have bigger operations and they're generally you succeed with them later in an equation. But for tomorrow, it's been the it's it's inverse.
It's the opposite. And so the obvious question is why? And I think that there's more of a strategy to manage the risk side of this business from a higher level. And they see obviously also from their buyer standpoint that they need better digital chains of custody and better you. You know, trace traceability more importantly in this side of the equation and who's got the best platform to do that.
Obviously, tomorrow's got, you know, very established FDA cleared system. And so that's been the natural pathway that we'll follow. And I think that automation in the, you know, in the lab, it's definitely a path that will continue to go upstream with. We think that there's a lot of ways to, you know, to obviously improve, you know, the day to day lives of, of laboratories.
And we're. Concentrated on going upstream to deliver that we have our partner and conceivable. Obviously our founders from tomorrow, they're creating another lab automated company that will probably, you know, be a nice, you know, development house for tomorrow, you know, based services and products in the future as they continue to innovate on that side.
[00:56:17] Griffin Jones: Do you think it's inevitable for those behemoths that we were talking about before, like if you're KKR and you're picking up your EVRMA for three and a half billion or whatever, I don't remember how much it was at that time, but, and you see it working, it seems like if you really believe in assisted reproductive technology as part of your thesis and that company is profitable in your portfolio to me, then it seems like, yeah, let's go out and get a storage company.
Let's go out and get, let's get progeny. Well, it would be hard to take progeny off of the market, but let's, let's buy a, if not Hamilton Thorne, at least try to get them to sell us one of their brands. Is it, is it inevitable to see backward integration with the behemoths coming in?
[00:57:01] Louis Villalba: Yeah. So consolidation is, you know, is obviously part of the world.
I think, you know, to run a medical device company versus to run a healthcare services company are very different, you know, kind of management skills. And it's obviously they fit under the same therapeutic area, but they have very different business models and there's usually very different skill sets that succeed in managing those types of businesses.
I think that, you know, what we see in a lot of other industries and within medicine is you see people, you know, consolidate where it naturally fits. And then you see them obviously partner where it doesn't naturally fit. And I think the naturally fit part is where our space is still going through the evaluation of what really fits under, let's say, a healthcare services model and what really fits under a medical device or a pharmaceutical model.
And that's where, you know, that's just, you know, kind of the natural growth that we see in terms of reproductive health. I think it's the right focus. And more importantly, I think what it will do is it'll help deliver high quality care. And we'll continue to attract, you know, obviously the trust of more people based on the higher quality of care that we'll provide.
I think that, you know, for example, the, you know, the Hamilton Thorns of the world, they, you know, there's continued demand for them to innovate, bring more technology to the market. I think the partnerships between industry and healthcare services. You'll see, for example, innovation funds of a lot of the large networks now, like U.
S. Fertility, Pentacle, for example, they're all going to have their own types of innovation funds, and they're going to make investments into the technologies in the early stages that they see will benefit their day to day care, you know, management. And so that, that's, I think, what's been lacking in the past, and we'll see that as a very, you know, important component of the future, you know, of care and IVF.
[00:58:41] Griffin Jones: You're not a lawyer, but I want you to speculate a bit because all of this begs the question of when we might start to see antitrust regulators come in. Do you know of, can you speak to any red flags of when, when they would come in and how likely it might be?
[00:58:56] Louis Villalba: Yeah. So look, I think that we saw our first signal of antitrust in this space when Cooper, you know, was focused on acquiring the assets of Cook for the women's health business.
And antitrust, you know, obviously, as they mentioned in their, in their public disclosures, they had some reviews that they had to, you know, they had to go through. They just made an announcement in their last quarterly hearings that they're no longer pursuing that, you know, that acquisition. So I think that that is the first signal in terms of we have the attention of the regulators in this space.
All right. And ones would argue that now, you know, over 50 percent of IVF cycles are now controlled by IVF networks. Okay. So we reached, let's say a milestone that, you know, people are going to start to pay attention in terms of the consolidation of clinics. You know, there, it does seem that there's general momentum in those directions.
So you know, I'm not going to, you know, speculate that I know anything more than that. I could point to Australia as an example. So Australia actually. As a competition authority got involved, I think close to seven years ago when they reached a 50 percent kind of milestone in their market comparably. And they basically, you know, have not allowed, let's say the big three to consolidate any more of the market to protect, you know, some independent, you know, offerings.
So I think it's, you know, we are starting as again, as young industry, we're starting to lobby a lot more. And I think we're starting to help, you know, a lot of edgy, you know, kind of. You know, different government officials understand the importance of reproductive health care. We obviously have declining fertility rates in this country and every major G7 country for that matter.
So the, you know, the importance of actually supporting reproductive health care can probably never be more important. All right. So what do we do with that as an industry and as a specialty in terms of how we, you know, utilize that momentum within Washington to support, you know, the continued expansion of this service.
[01:00:37] Griffin Jones: Lou, I didn't, I deliberately didn't even go too deeply into the, the five core pillars of the ancillary services, the safety and technology stores, own labs, the egg banks, the surrogacy services, because I want to have you back on. I wanted to use this episode as painting the picture of, of what's going on in vertical integration.
I would love to have you back on in the fall to go more deeply into these. And unlike the director of the hangover movies, my sequels are always better. Lou, Lou Villalba, current CEO of Tomorrow, and congratulations on that new post, by the way. Thank you so much for coming on the Inside Reproductive Health podcast.
[01:01:16] Louis Villalba: Thank you, Griffin. It's a joy to be with you and appreciate the kind remarks. Thanks very much.
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