Good day, ladies and gentlemen, and welcome to the Quarter Three 2008, Bio-Reference Laboratories Conference Call. My name is Robin and I will be your coordinator for today. At this time all participants are in a listen-only mode. And we will be facilitating a question-and-answer session toward the end of the conference. (Operator Instruction) I would now like to turn the presentation over to your host for today's call, Ms. Tara Mackay, Investor Relations Coordinator. Please proceed, ma'am.

Thank you. Good morning and welcome to Bio-Reference Laboratories' 2008 third-quarter earnings conference call. Bio-Reference Laboratories is one of the largest, independent regional full-service laboratories in the country with focused marketing capabilities in the areas of genomics, oncology, correctional health and physician office pathology. Leading us on the call today will be Dr. Marc Grodman, President and Chief Executive Officer and Sam Singer, Chief Financial Officer. Some of the commentary made in this presentation may relate to future results and events. Statements regarding the company's revenue and earnings guidance are based on the company's current expectations. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties including general economic and business conditions, future regulatory requirements and mandated pricing reimbursement, the service, customer and geographic market mix of any particular period, the company's ability to effectively manage its operating costs and collect its receivables in a timely fashion, on the level of demand for the company's products and services and on the company's ability to manage its supply and delivery logistics in such an environment. Additional discussion of these and other factors affecting the company's business and prospects is contained in the company's periodic filings with the Securities and Exchange Commission. I will now turn the call over to Dr. Marc Grodman, President and Chief Executive Officer.

Tara, thank you very much. This was a very solid quarter. We're very proud of our results. We've worked hard to be able to keep our eyes focused on our goals and be able to execute on our goals. I think we've been pretty predictive in what we've been trying to do and I think we've fulfilled the promises these we've made. I'd like Sam Singer to go over some financial reports. I'd like to make some comments and answer any questions. Thank you. Sam?

Good morning, everyone. During the third quarter of our fiscal year 2008, which ended on July 31, Bio-Reference recorded net revenues of $77,776,000 the highest quarterly net revenues recorded by the company. Compare to $65,961,000 in the third quarter of the prior fiscal year, an increase of 18%. Gross profit on revenues for the current quarter was $38, 606,000, representing a 50% gross profit margin. The third quarter of the prior year, gross profit on net revenues was $33,494,000 representing a 51% gross profit margin. Earnings per share on net income after taxes were $0.34 per share in the current quarter versus $0.30 cents per share in the prior-year quarter. Patient count for the current quarter increased to 1, 042,000 from 953,000 for the prior-year quarter, an increase of 9%. Net revenue per patient for the third quarter just ended was $74.11 compared to $68.08 per patient in the same quarter of the prior fiscal year, an increase of 11%. On July 31, 2008, working capital was $57,317,000 an 18% improvement over the $48,747,000 that we’ve reported on October 31, 2007. Our day sales outstanding on July 31, 2008 was 108 days. Our net revenues were $219,834,000 for the nine-month period ended July 31, 2008, representing a 22% increase over the net revenues for the same nine-month period in the prior fiscal year. Our gross profit on net revenues for the current nine-month period was $106,428,000 or 48%, compared to the prior fiscal year of $90,211,000 or 50%. The number of patients serviced during the current nine-month period was 3,055,000 which was 13% greater than the prior year comparable period. Net revenue per patient for the nine-month period just ended was $71.36, which was 9% greater than the prior-year comparable period. Earnings per share on net income were $0.74 per share for the nine-month period just ended as compared to $0.67 per share in the prior year. And I’ll turn the call over to Dr. Grodman.

Sam, thank you very much. This was a very solid quarter. I think it was a very outstanding quarter for Bio-Reference. We saw continued growth across the board in all of our segments, but especially in our GenPath, which is our cancer and GeneDx, which is our genetics or genetic testing divisions, where we've been focusing our investment over the last few quarters. This investment in infrastructure, supporting technical, professional and sales initiatives, was necessary when we made them at the time to ensure the continued growth and to take advantage of opportunities that presented themselves in the marketplace. We're pleased with our current quarter and are pleased with our growth rate of 18%. The solid growth we enjoyed was fueled primarily from growth in these areas, from GenPath and GeneDx and that's evidenced by an increase in our revenue per patient from $68 to $74, in the comparable periods. GenPath returned to the strong growth we've seen in the past, over 35%, even though it's still early in the sales cycle for the extended sales efforts that we implemented. Our expanded sales force in GenPath has enabled us to increase market share and expand their markets into more areas of the country. GeneDx once again demonstrated extraordinary growth and we're just starting now introduce new testing platforms to make genetic testing more accessible to clinicians. Given these results, it's not surprising that in this quarter percentage of revenues, which are attributable to esoteric testing, rose to 48% compared 44% in the prior year. We've now annualized those changes that occurred in the New York clinical market and we've continued to sustain strong growth in that business segment. Growth in this area could have been somewhat higher, if general economic conditions had been better during the period. Gross profit and revenue for the quarter was just shy of 50%, compared with 51% for the same period last year, consistent with the infrastructure investments we made earlier this year. However, it should be noted that having made those investments, we've been rather disciplined in controlling expenses and will continue to be until growth justifies further expansion. Direct employee-related expenses were virtually flat from the second quarter to the third quarter as we’re essentially all cost of services for that period, including our continued investment of about $500,000 per quarter in R&D expenses related to the development of new testing platforms. We demonstrated the leverage on all SG&A expenses as they increased to a bit over 11% compared to an 18% increase in net revenues. And we’re, in fact, slightly lower in real dollars than the immediately previous quarter. Sales and marketing expenses rose for the quarter 28% over the comparable quarter last year, consistent with the investment we've made this year and remains about 9% of total revenues for the quarter. As we stated earlier, most of these investments in sales and marketing were made in GenPath and in this particular quarter in GeneDx. We believe, we’ve stated the growth and potential in our genetics unit must and will be leveraged and for the first time we’re utilizing a dedicated sales force. While we remain aggressive in seizing upon any opportunities for us in the marketplace, we don’t expect any extraordinary expenses to occur in the near future. Bad Debt was basically flat at 13% of revenues. DSOs were 108 days at the end of the third quarter compared to 114 at the end of the same period last Year, consolidating the gains we've made in the immediate previous quarter. We continued to do a good job of collections or a better job of collections. Cash flow from operations for the quarter exceeded $7.3 million, more than double that for the corresponding quarter in the prior fiscal year, while free cash flow was over $4 .7 million. By far the best cash collection and cash flow the company has ever demonstrated in the quarter. I’m not going to be the first to suggest that studying success of profit and loss statements is comparable to looking at mountain topography. In most quarters, we’ve attained a slow and steady growth symbolic of this sort of progression. But in reality, improvement more often takes the shape of reaching periodic plateaus with growth catching up to increasing expenses or vice-versa. Sometimes you slide back, possibly due to changes in the market conditions. Maybe investments in new opportunities were due to events, sometimes out of your control. I've learned that the key is not just sliding back, it's what you do about it, how you respond. The recent growth we have experienced in the market opportunities afforded us recently have required and did require investment. We did so, but we followed with a period of disciplined controls. Our results in this quarter demonstrate that. The reality is that we have invested in growth for some time and we’re entering a period of where we believe that the payoff for those efforts is not far off. We are seeing excellent results from our investment in GenPath. We have expanded our test menu by introducing important tests that the hematology/oncology market needs to provide state-of-the-art personalized medicine. We’ve introduced a new series of pharmacogenomic test and we’re introducing a new industry leading reporting solutions that will continue to enhance our reputation as a premier laboratory for hematopathology and oncology. Our science is superb. Our professionalism is unmatched. But most importantly, more physicians have chosen us for their cancer-testing needs because of our outstanding reputation. We’re introducing our second generation of our women’s health initiative this week, an initiative which has been over a year in the making. We will be offering a new suite of affordable test panels and tests. That we believe will have a huge impact on the ability of physicians to provide better, safer and more efficient health care and address the need for more thorough testing of sexually transmitted infections, an underappreciated area that deserves more attention. Women’s health is a critical initiative for us, forging a bond if you will, between GenPath and our regional capabilities, often expanding the limits and borders of our regional services. On a year-over-year basis, GeneDx increased revenues by 70% for their current fiscal quarter. And we’ve now begun offering Cardiome Dx, a series of genetic test for cardiologists. The first one specifically testing for Hypertrophic Cardiomyopathy, a not that rare genetic condition of enlarged heart. The demand for and the interest in this test so far has been extremely high. As with GenPath, the keys to our success are outstanding science, superior educational and clinical support and affordability. With the introduction of our Cardiome Dx test offerings, we’ve begun making genetic testing available to the clinician. It’s a market, it’s a vision that we have expressed for quite a while, that we’ve invested in for a long time and that we will begin to see the fruits of these efforts. This was one of our stated goals when we acquired GeneDx two years ago and will continue to believe that the achievement of this goal will have a huge effect on the way medicine is going to be practiced in the future. This is in addition to the strong increase in our rare disease testing which has been the hallmark of GeneDx and the continued acceptance of GeneDx and other microarray services around the country. GeneDx has long been the laboratory of choice for geneticist. We believe that our new Cardiome Dx genetic test offerings and other significant genetic tests that we will begin to offer directly to clinicians in the coming quarters will allow us to achieve that goal. The playing field has evened in our regional northeast base. And we've continued to take advantage of the opportunities presented to us. We've seen steady growth and we’ve been able to extract good leverage in the cost structure of acquiring the steady stream of new business. In all areas in which we compete, our franchises have never been stronger. In mid-July, we announced authorization for a stock buyback of up to one million shares. At the time we believed that a stock purchase at the then-prevailing stock price was in the best interest of our shareholder. At the time of the announcement, we repurchased approximately 20,000 shares prior to the commencement of our quiet period in anticipation of our earnings release. In the future, we will weigh purchase in light of other opportunities available at the time and will act accordingly. We've expressed in the past a vision, a vision of Bio-Reference as a number of franchises that share infrastructure but has the ability to act quickly, opportunistically. It's a new, growing, exciting market. We've done that. Our position in the northeast regional marketplace is clear. Our infrastructure, our capabilities here are clear. Our position as a laboratory of choice in the hematology / oncology office is clear. Our ability to provide new testing platforms that will be evidenced over the course of the next year, the type of tests that we can go with and introduce will be clear to all those who see it. And what we've done in genetics and what we are doing with the wonderful group of people we work with at GeneDx has been clear and will be even more evidenced by what we do in the future. In all areas, this has been a strong quarter. And more than that, I think it's been something of a validation of all the efforts that we've made in other times. Thank you very much for being on the call and I'm happy to answer any questions.

(Operator instructions). And your first question comes from Robert Willoughby of Banc of America Securities. Please proceed.

Hi. This is Aaron Gornin for Bob today. Just a question on the bad debt, can you comment on the current level and where you see that going forward?

Our level, we said it was about 13%. So, once we into get into basis points, it's somewhat a little bit above that. Bad debt is a function, we believe, of payer mix. The more times that you have a patient, who's responsible for the bill, you're going to have higher bad debt and our mix of businesses has not really changed. We've been rather consistent between 13 and 14% for quite a long period of time. I don't see the level of the change, because I don't see our demographics changing. As I say, this is a function of demographics. Patients don't really pay their individual laboratory bills in good or bad economic times. And I don’t think that's going to really change. So, I don't see the levels as being very different historically in the future as what they've been historically.

Okay. And secondly, on the sales and marketing expenses, do you see that level of spend tapering off as the investments play out or do you want to maintain that for a period of time?

You know what, as I said in the comments. We've made the significant increase to investments. I think that we are kind of, where we are. I don't see an extraordinary increase going forward. It's going to be up to us to leverage it. It doesn't mean we are not going to be looking to hire more people, of course it doesn't mean that at all. But the huge increase that we had. I think that we did and now it's going to kind of be business as usual from this point on.

Okay, great. Thank you.

Thank you very much.

And your next question comes from Art Henderson from Jefferies & Company. Please proceed.

Hi. Thanks for taking the question a very nice quarter. Marc, could you talk a little bit more about the R&D expense that's you're putting into the GenPath and GeneDx divisions? Is that science related or hiring related? Could you just elaborate on that a little bit?

Sure. You know, what we pride ourselves about is to go in and have a sense about what tests doctors are going to use. You can have a lot of people who go around in R&D and will think about what tests doctors should use. But I think the key is to what they're going to and that's what makes laboratories such a wonderful organizations, is that we try to anticipate those need. Once we've invested in both in GeneDx or GenPath, what we think are going be new platforms, new kinds of tests that will answer questions that doctors have. In the case and what we've invested in is not only new platforms, but is sometimes a very expensive goods that go along with doing this testing, not only validation but doing some of the research and actual academic studies to be able to go in and see if these platforms in fact work. It also means that people you have who are dedicated to go in and get these platforms up that are not generating dime one of revenues. The example of which is very much as in cardiology. You know, I've had and I've talked about the need of doing testing for certain cardiac disorders. We believe that one of the big disconnects is that when doctors or geneticists think about ordering tests,they order for specific mutations. The problem is that when you have certain multi-gene pathology of where there could be multiple genes that may cause a problem; you can't test for each one. Because you may have five different genes that will give a result and maybe the one that is the most uncommon may be the most dangerous. So you need to test for all. But that isn't the way that genetics has been done. So what you need to do is to find a new cost-effective way to test for all. So what we did was we found some of the best people in the area who know these diseases well, brought them on. We looked for platforms that will allow us to not test for mutation, but test and look for the entire Genome and then just look at those areas that are in question and then be able to go in and validate these new platforms and bring them into clinical use. A different paradigm about how one looks at genetic testing. Those things all cost money, but there will be a sales force now that will go in and over the next year or two, make these tests available to cardiologists. With more information and more background, both for the physician and the patient alike, than what's ever been afforded before. In cancer, we think there are a lot of new platforms that can yield even more information. There is no kind of cancer, no kind of disease maybe disease maybe that better exemplifies personalized medicine better than leukemia and lymphomas, of which there are multiple changes that people have and multiple types. And each one may have different treatments and may have different prognosis. And the more information we can provide to these incredibly educated and current physicians, is to provide them more information so we've looked at different kinds of services to go and provide more information on what's available in normal platforms. That means bringing on new platforms, doing testing, doing the R&D on those and getting to work with some of the best people around that we can find in the country to go in and comment, and see if we can validate the findings that we had that these are useful platforms in the future. And when we introduce them, provide a whole series of information and education for the clinician about how to use them. So it's really going in and seizing upon either our existing base, or existing capability and providing new testing. And we've worked on these for years. And we're just to the point now over the next year whoever going to be able to do that. Remember, when we do this, we've often said doing new platforms, finding new testing areas is not, you know, we're not a drug company. I'm not saying, oh my, this is going to be good for $0.03 or $0.04 a share. What it does is build markets. What it does is build credibility, it builds markets, and it builds franchises. And helps to grow the business for everything else that we do.

Okay. That's very helpful. And do you, you know, obviously you made a great acquisition with GeneDx. Are there assets that are available like that out there? I know you referenced, maybe using your cash instead of share repurchases for other possible things. I assume that could include acquisitions. Are there comparable assets like GeneDx out there or is most of the growth in genetic testing going to be developed under the hood the way you're describing?

I mean, obviously, we’re looking for these all the time. I mean, there are items or things that we're looking at now. We look for them all the time. I mean, you're right, GeneDx was a wonderful acquisition because it truly was a merger of ideas and people and developing the same goal and a testing area where the time has come. But we look at things at all times and I don't know. I mean, there are some that have some interest for us, some that we can develop, some that they can develop with some of the assets that we have. When I think that we do have, I think people may not, will look at us and say, here's a company doing around $300 million and not necessarily appreciate the kind of scientific staff that we have and the kind of capability. If you look at the last year or two years, three years, you see the capability and the kind of level of sophistication that we've introduced in these markets that will hold up against anyone. And one of the things that we have is that when we looked at these acquisitions, we know what we can bring to the table. We have to manage that versus the value of what it does. We're very aggressive. We look for them right now. And if there's one that can do what GeneDx did or even half of what GeneDx did, we'd do it.

Okay. That's helpful. One last question, I'll jump back in the queue. You talked a little bit about the economy in your press release and in your statement today. You also mentioned annualizing your movement into the New York market in a more pronounced way. When I look at the patient count and I see where it was last quarter, this quarter, is that slight decline, is that mostly economic related or how should I be thinking about that?

It would be that, what we're hoping is that we move back into the mode of where we were a year ago, a year and a half ago, whereby we grew by building mostly in our investment and in specialty work. The regional business grew. It grew steadily. It did not have spectacular gains. But it was able to continually grow at a reasonable fashion, still higher than what our competitors have been able to show in terms of growth. But a lot of the growth was really keyed off the specialty testing. And I think that what we see here is a result of that. The growth really came much more in GenPath and in GeneDx. That the level of growth certainly after the changes that occurred with managed care changing, you know changes that occurred, disruptive changes last year, have somewhat slowed down. And I think there was and as I said in my talk, it did appear to be volume-related changes related to the economy. People not going, I think that there were some people who did some work on looking at physician office volumes and that they were down over these last few months, I really believe that the double whammy of the economy, but mostly of the cost of gas really affected people going to the doctors. And we heard it anecdotally and I think it's been substantiated. And I think it had a few points, not a lot, but I think it had a few points when you grow 18% it is less of a factor then if you grow at a much lower rate than that.

Right.

But I think that it did play a role.

Would you say that your GenPath and GeneDx divisions are less economically sensitive than the routine testing?

Yes.

Okay. All right, that it. Sorry.

If you really think about it, you do a lot of business in people going to a doctor. When you're worried about a rare disorder that you've been working at with geneticists at a hospital, that you've been concerned for a long time, economic changes are worried about whether or not you have this rare condition. If someone has leukemia or lymphoma and they want their medication, they got it through flow cytometry or flow testing, to see if the leukemia is coming back, they not saying times are tougher, they better not go out and get this right now.

Right.

So for this specialty work is far less economic, I think that it's a reflection of the office visit. And that's where it's really had an effect. And that's why I think that we've seen it more in the regional business. And that’s why we’ve been able to, the fact that our growth comes from the others has shown that we’re still able to have a higher revenue growth and the patient growth was a little bit lower than where it would be.

That’s very helpful. Thank you very much.

Thank you.

And your next question comes from Amanda Murphy from William Blair. Please proceed.

Hi, good morning.

Good morning.

Hi, it seems that you gained a lot of traction in the hematopathology market. Can you talk to how your marketing strategies have changed, if they have, in terms of when you’re having discussions on hem/onc?

Sure. First of all, I really should say that it was your report that talked about volume changes in the physician’s office that I thought was very, very good and right on. I didn’t want to give you credit with someone else on the phone. But I mean we talked about volume decreases in a lot of the physician offices. I think that we’ve had a superior product. I think that we have the reputation of our pathologists and people and often it’s said by those who -- you ever have a tough case and you use GenPath, you’ll continue to use GenPath. I think that a lot of the issues that we had were one not of testing or professional capabilities but we needed more people. I think as I’ve said before, that we simply needed to increase our sales staff substantially and cover more areas of the country and be more aggressive and then do the sales that we’ve done before, which is new testing, the fact that we do all of our own tests in house. Now, we develop a lot of tests in house all the time and the reputation and the ability of our pathologists. So I think it’s getting our message out. I think that as we now are looking to develop even newer platforms to bring to this market, we’re going to have an increased advantage. I think our pharmacogenetics program that we now currently introduced and which is really specialized for oncologist, we’re going to have a much better reception. But if a lot of the creative and professional things that we’ve done in new test development that we’ve done that has always done us in good stead. What we needed were simply more people, more focus and more areas of the country covered. And I think that we’re beginning to see effects of that.

Would you say that the growth then is coming more from expansion into new areas and sort of adoption by new provisions versus increased test by…?

Yeah.

Okay.

No. I think that it’s definitely getting more business, more samples from more people.

Okay. And then also, you talked about the opportunity to expand geographically in GenPath. Can you talk about that opportunity a little more and help us understand exactly what the opportunity is?

Well, it’s really, without divulging any competitive issues. It’s a question of, you know, when you deal with a smaller subset of laboratory business and when you’re dealing with a specialized area, you can put someone on every corner. But for specialized work, sometimes it’s not that cost effective to do that. So there gets a point, how many people go into Florida, how many people go into the Mid-Atlantic area, how many people in the Southwest and the Midwest. So I think it’s just a question in a new area that you increase your sales force to cover areas and have them do that more efficiently because in some areas of the country. You’re going to have a lot of people in Florida, a lot of people over in New York and New Jersey and in the Northeast. But you have other areas that require a lot of traveling and the more people you put there, the better you’re going to be. So that’s what we’re really talking about, having more areas and more territories that people will able to go in and handle.

Okay. And then on the GeneDx side.

Yes.

You talked about pharmacogenomic tests; you talked about the cardiology test. Can you remind us what your strategy is there? Where are you focusing? Is it on the diagnostics side or is it on the guiding treatment side?

Sure. GeneDx overwhelmingly is, where their reputation is, as the preeminent laboratory, GeneDx laboratory, that does DNA sequencing. This is the gold standard, base pair by base pair for rare disorders that no one else does. In that regard, they have a reputation among geneticists who refer most of the tests to them as being the laboratory, if you will, of the gold standard for diagnosis of these very, very hard to diagnose areas. Now superimposed upon that, we begin to go in and brought in some wonderful people to work with microarrays, which are genomics screen, if you will. And we introduced that last year and that was very often used in areas of constitutional diseases where you are doing a screen. You’re not doing base pair by base pair, but you’re being able to look at a genome to be able to see if there are any areas, we see many more problems, anything beyond balance translocations. That is often used in constitutional problems, often used in areas of mental retardation. It’s very often used in areas of developmental delay in children. And that is a market which has been very, very important and emphasized strongest people and parents that will be able to go in and get a diagnoses if it’s possible. In that regard, we grew. We’ve gone from zero last time in the second quarter and built a whole new business, which is a national business, superimposed not only among our existing customers but upon new customers. Superimposed upon that, we introduced a new array, really for autism It’s been said that it may be 15% of autism, may in fact have some abnormalities. The number will change as there are going to be more and more arrays that are done for these cases. And we’re now introducing that, with a direct sales force that will increase that business. Superimpose that, we have been working, as I mentioned before, when Art asked the question, on a whole new platform of whole genome sequencing. What we call next generation sequencing, of which we’ve taken I think a leading position, whereby we try to change the paradigm that instead of going in and saying, please go in and sequence this mutation. We change the question and saying, okay, if you have this clinical condition; tell us what mutations the person might have. And that’s what we started to do with cardiology. And we’re going to be looking to expand the areas in cardiology and we’re going to be able to do it in new areas. So GeneDx really has a threefold initiative if you will, which is the gold standard DNA sequencing of various disorders, the microarray services especially for developmental problems and lastly we call nextgen sequencing, which is really changing the paradigm of the question, which is this is the problem, tell us mutations that the patient might have. And that’s where we focus and we think those are important areas for the future.

Okay. Just one last question.

Sure.

Sort of related to the economy issue. Do you see, as more dollars shift to the consumer, do you see that changing fundamentally in your ability to collect from patients, I guess utilization trends going forward?

You know, I don’t know. I think that anything that does move things more toward the patient will have an effect. I mean, I think, that will have it. How fast that occurs and how fast that occurs and the kind of plans that we deal with, I don’t know. I think that a number of years ago when there was a threat of co-pay for Medicare, I don’t think there was any laboratory provider who thought that if Medicare recipients had to go pay a 20% co-pay on all the lab work, I don't think was any of us believed that we would collect that money. So I think that the more you move to the individual the worse that it is. How fast that occurs in terms of laboratory services and about how fast new programs would go in and affect that, I’m not sure that would happen. I’m not sure how fast that’s going to happen. But the more the patient’s responsible, the higher the bad debt.

Okay. Thank you.

Amanda, thank you.

And your next question comes from Balaji Gandhi from Oppenheimer. Please proceed.

Thank you. Good morning. I just had a couple of model questions. Can we get depreciation and amortization expense for the quarter?

I don’t think. I can certainly give it to you but I think I put it out in a release. I'll look at my -- hold on, depreciation, the Q is going to come out tomorrow.

Okay. I’ll wait.

Can we give it to you tomorrow only for the fact that I don’t want to put out a release that I said it to you and I didn’t (inaudible.)

Understood. We can wait a day. No problem.

Yeah.

And then --

But I will tell you that I can certainly go and say that the difference in the different quarters were really not very different at all from last year.

Okay. And then you talk about esoteric as a percentage of your revenue consistently. I mean, any way we could get us handle on percentage of volume or patient volume?

Yeah. You know what, we really have resisted going in and breaking out the different segments. Because for us, it’s very difficult, because there’s so much cross selling. You know, as we’ve talked about before, over 10% of our business is correctional health. That’s being done in an area just for Prison Health Services. And there’s a reasonable amount of esoteric testing that resides within that area. But that is neither GeneDx or GenPath.

Got it.

And there are areas within GenPath that we doesn’t really count, but we get regional businesses, routine business as well, from a larger area. So it’s because of that reason whenever we’ve kind of looked to say how we could break it out differently, we’re just afraid of being more confusing. We have said in the past, however that GenPath represents somewhere around close to 40% of our overall business. And we have said in the past that GeneDx represents about 6% growing.

And you did give us the growth rate for GeneDx but not GenPath. I don’t believe in the release. Can you give us that? At least a range of…

Certainly, can you repeat that?

That the growth that you’re seeing in GenPath?

Yeah. That I’ve said, as I said in here what we’ve seen the growth in GenPath itself is over 35%.

Okay. Okay. Great. And then maybe just two kind of bigger picture questions?

Sure.

One is with respect to capital structure, now that you’ve gone through this period of the changes going on in the New York market and integrated some acquisitions. I mean, any changes to your views on how much debt you’d be willing to put on the company if any at all and as you grow it et cetera?

Yeah. We’re pretty risk averse and pretty averse to debt by and large. I mean we went through the period where we looked at some acquisitions last year that would of increased the debt. There are no strong lines that we refuse to cross if the deal was worthwhile. But by and large, we’re pretty risk averse.

Okay. So, it would basically take an acquisition to do it, as opposed to doing it for the sake of doing it and looking for opportunities? Okay.

Yeah. We just really kind of don’t go that route.

Okay. And then last question is, you know, we saw the acquisition that Labcorp made at the Stanford Laboratory?

Yeah.

Maybe just want to get your thoughts on that and opportunities going forward maybe with academic medical center type of laboratories out there. I mean, maybe that could be a good fit for you, given your GeneDx et cetera?

Yeah that’s interesting. You know, when we looked at that, I mean the interest I think that they had over out there was, I know when we’ve looked at that was this hematopathology business, which they kept, which we would had a very significant interest in.

Right. It would have given you West Coast, right?

Yeah. We But they kept that.

Okay. Got it.

And what they were willing to sell was the routine business in the area.

Okay.

So, your question is absolutely appropriate. Because it does kind of dictate what we have in our head.

Got it.

I’m not going to rule out the fact that we would go do acquisitions within our market or in the routine business, they just have to make a lot of sense to be able to do it. But academic institutions per se, if there were areas where they did areas of specialized testing and that we could go in and add to it, we would be very anxious. And we have looked at things like that.

And is that a unique situation or do those types of deals present themselves?

I think what happens is that there are lot of people whom the history of the role of the hospital in the clinical laboratory business has been rewritten every two or three years. You know the big deal, its not going to be a big deal. They are going to be major players. There are not going to be major, it goes back and forth. I think what happens is that, when the markets change and reimbursements change and the market opportunities may change that they often go in and out of business and present opportunities. There have been many times and you’ve seen hospital laboratories that compete in the outreach business become created and others sell. We’ve seen that recently with some other transactions. And they can often happen at the same time.

Right.

So, I wouldn’t predict that one way is right or not. It’s the circumstances of time that make it good or not. So I don’t think there’s any rhyme or reason to it.

Okay. Great. That’s helpful. Thank you.

Great. Thank you.

(Operator instructions). And your next question comes from Sam Morrow from Tanaka Capital Management

Marc. It’s Graham. How are you?

Hey, Graham. Good, how are you?

Good. Just in the DSO’s, what is the DSO level for esoteric? And does that give us some hope that the DSO’s can come down overall (inaudible.)

Yeah. We don’t really break them out separately for not. I mean both of them have challenges related to insurance mix, in the mix of business. I mean and we don’t break them out one over the other, we don’t do that.

Yeah. I’m just wondering at what point, if you do analysis, does it make sense to get more aggressive on collections especially if you are providing superior product?

Let me tell you, in -- we do -- there is.

The risk of being...

The lot of the laboratory , it almost does not matter, how special the testing is.

Okay.

And it still relies on the physician and on him being fearful that he’s going to lose his patient. You got to be careful. I mean, we’ve had examples. It’s kind of interesting, we’ve had. And we look at some people who are self-pay, who do not have insurance and who run up huge bills in esoteric areas in testing. And these people have nothing and they are dying of cancer and you’re stuck. And you go to the doctor and there’s a limit to what you do and the doctor gives you a lot of business. And there’s a limit of what you’re going to do with them and they truly are bad debt. So it’s a limitation of the laboratory business. I don’t know whether no matter how powerful and these are people who are getting testing for leukemia’s. I don’t know if there’s ever going to be a test. Maybe there is some new ones that people are coming out saying that this is so important that if we don’t pay, we’re going to in get you because remember the underlying paradigm of laboratory testing; everyone gets the result before the bill is sent out. And I think about where the bad debt would be in a whole lot of areas if you delivered the goods into possession, before the bill is sent. So it always remains the hardest part of our business.

The other thing is just in terms of the GenPath growth drivers and adding new product. How much of the growth is from new product?

This is growth that we’ve had right now is new business.

As then new customers?

New customers.

New tests. How much of that is from new testing?

Overwhelmingly, it’s new customers. Overwhelmingly, the thing about with GenPath to this point is that a lot of the new tests that we provide, the new pharmacogenomic tests or new molecular markers that we do. As I mentioned before, we don’t look in the laboratory as new tests to go in and say, gee we’re going to make money on this new test. These are more tests to be able to get more physicians to use us, to show that we have the capability, to show them that we have the sophistication to go in and meet their needs.

At some point, these new batteries and new tests that you’re offering will be wearing on incremental growth and like that?

Yeah. They will be. But overwhelmingly, the one thing about with laboratories do is that we often add on new tests for what kind of whether you can find a marker. Whether patients with certain kinds of leukemia will respond to certain kinds of drugs or resistant to certain kind of drugs.

Right.

So a lot of these differentiators that physicians like and they want to use you because you’ve developed them may not be big drivers. But they help you go in and gain business. Now, when we go in and develop new platforms like we’re doing now with GeneDx and like we’re doing with GenPath, those are kind of different. But those are different kinds of new tests. When that comes up, we’ll see what effect that really has. Because most of the development has been tried -- the development of new tests has been to make the physician practice better. And in so doing, try to get more business.

Now these more focused tests that are lower priced, I think…

Not lower priced. I’m just saying is that a lot of them you may not do enough for them to go and drive the P&L. But you may do enough of them to be able to go and gain more business.

When do you see the SG&A or S&M expense going down ,may be closer to the 8% that it used to be …

I don’t know. I mean, we've said before, nothing stays what they are forever. Our other SG&A expenses in this quarter was, I believe, the second lowest that we've had in the last, I don't know, maybe forever. Maybe it was only supplanted by the fourth quarter of last year. Meaning our other SG&A leverage has been substantial. In terms of sales and marketing, our sales and marketing historically, we got down to as low in the fourth quarter of 2007, We were down to under 8%, which itself is one of the lowest numbers that we've had for a long time. And what happened? We felt that we were losing ground and we needed to go increase it. These things as I mentioned before, they're not just go in and they're not mountain charts. They go in and they have plateaus. We at sales and marketing, about three years ago, when there were changes virtually in the hem/onc office. Right before, there were flow changes that went up to close to 10%. And we scaled it down overtime. So what happens with is that, it's not an end goal. You know, we pay people handsomely as small labs often do. We reward people for keeping business, which is why we don't loose business. Whether we're at nine or 8.5 itself, it is not the goal as whether we need to be able to achieve a growth in the overall profitability that we need for the company. So we go up and down depending on market condition depending on where we are at the time.

The women's health side…

Yes.

What is that now as a percentage of the business?

We haven't broken out women's health specifically as a percentage of the business. I mean then we wouldn't go in and do it. It has been an important strong initiative for us. It essentially increased our growth overtime to increase our percentage of esoteric testing. And the new part of the new initiative, we’re looking forward to go in and fuel our growth going forward. But we don't breakout specific initiatives in volume.

Thank you. Keep it up.

Okay. Thanks.

I appreciate it.

And your final question comes from Michael Moss from Stifel Nicolaus. Please proceed.

Congratulations, Marc, on a great quarter.

Michael, thank you.

One question I want to ask you, is a little off the beaten track. There's a small west coast gene company called Genoptix, which are making claims that they're eating into your markets and taking customers from you as the basis of their growth. Would you comment on that, please?

Let me think about this answer. No. Look, we do very well. We do not lose we have not loss market share in GenPath. We’ve only gain only market share, we are very comfortable with what we’ve done with the professional services that we provided. And I think that we're very strong and growing. And our numbers show that. So I wouldn't comment on specific competitors. But we've done very well. And we're proud about what we've offered to physicians.

Would you comment on, are you saying that you are not losing any customers to them?

I'm saying that we have maintained our market share and we're growing our market share, period.

Okay. Thank you.

Okay. Thank you.

I would now like to turn the call back over to Dr. Grodman. Please proceed.

Thank you very much for your participation in the call. And I’d look forward to speaking with you at our year-end call in the not too distant future. I wish you all good day. Bye, bye.

Ladies and gentlemen at this time, this concludes your conference. You may now disconnect. Good day.