Asher Dewhurst - Investor Relations Nancy Lurker - Chief Executive Officer Graham Miao - Chief Financial Officer Dennis Smith - Former CEO, RedPath Jeff Smith - Former Chief Financial Officer

Scott Henry - ROTH Capital

Good morning. My name is Stephanie and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Asher Dewhurst, you may begin your conference. Asher Dewhurst - Investor Relations: Good morning, everyone. This is Asher Dewhurst with Westwicke Partners. Thank you for participating in today’s call. On the call from PDI are Nancy Lurker, Chief Executive Officer; Graham Miao, Chief Financial Officer; Dr. Dennis Smith, former CEO of RedPath; and Jeff Smith, former CFO of PDI. Earlier this morning, PDI issued press releases covering the acquisition by PDI through its wholly owned subsidiary, Interpace Diagnostics of RedPath Integrated Pathology and financial and operational results for the third quarter ended September 30, 2014. If you did not receive the news releases and like to be added to the company’s distribution list, please call my office at 443-213-0503. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risk and uncertainties regarding the operations and future results of PDI. I encourage you to review the company’s filings with the SEC, including without limitation to the company’s Forms 10-K and 10-Q, which specifically identify risk factors that may cause the actual results or events to materially differ from those described in the forward-looking statements. In addition, certain non-GAAP financial measures, specifically adjusted EBITDA, which management uses to measure cash flow of the ongoing business will be referenced on this call. The content of the conference call today or time-sensitive information that is accurate only as of today’s date, November 3, 2014. The company undertakes no obligation to revise or update any statements to reflect the events or circumstances after the date of this conference call. With that said, I would now like to turn the call over to Nancy Lurker. Nancy? Nancy Lurker - Chief Executive Officer: Thank you all for joining us on the call today. This is an exciting time for PDI as we have taken a significant step further into molecular diagnostics. In addition to updating you on our third quarter performance, I would also like to take the time to provide you some detail on our RedPath announcement and offer an overview of our molecular diagnostic portfolio and the markets we serve. We recently were able to meaningfully advance our Sales Services business with two new significant wins. We expect to finalize the contracts on those wins in the coming weeks and should see them contribute approximately $40 million of revenue over the course of 2015. The first contract is a CSO contract and should generate revenue of up to $60 million, $25 million to $30 million of which we will – we estimate will be recognized in 2015. The second contract is a full product commercialization contract for a medical device. This piece of business is a very similar structure to our first Interpace Biopharma contract. Our Interpace Biopharma division as you will recall is a full fee-for-service offering through which we manage everything from the marketing strategy to pricing and distribution to managed care activities and more. This contract highlights our expertise in fully commercializing devices, drugs and diagnostics. This second contract can generate an estimated $70 million in revenue over the next 5 years. We believe $10 million to $12 million of that will be recognized in 2015. Within our core CSO business, revenue in the third quarter was $29.2 million. We have realized a significant portion of our pipeline with these two wins and we continue to anticipate a solid 2015 pipeline going forward. As you all saw today, we announced the acquisition of RedPath, a molecular diagnostics platform business, which help physicians better manage patients at risk for certain types of gastrointestinal cancers through its proprietary, PathFinderTG platform. This is a transformational acquisition for PDI and of course Interpace Diagnostics. It will establish us as the pioneer and leader in the upper gastroenterology cancer diagnostic market. The transaction provides us a growth platform in the diagnostic oncology space. Particularly in GI cancer and combined with our Asuragen asset acquisition in the third quarter, a growth platform in endocrine cancer as well. It will also afford us additional infrastructure and a laboratory hub to advance our vision for a full commercial oncology molecular diagnostics offering which will provide value to physicians and shareholders as well as better diagnostic options for patients. RedPath state-of-the-art CLIA-certified lab will become our gastrointestinal center of excellence and will process all of our gastrointestinal oncology tests, which includes pancreas, Barrett’s and biliary related tests, but more to come on that. The PathFinderTG Pancreas test will establish us as one of the leaders in the pancreatic oncology testing market, which we believe today is an approximately $350 million market and growing. We have the only molecular genomic test in this field on the market today, despite pancreatic cancer resulting in nearly 40,000 deaths per year, representing the fourth leading cause of cancer deaths in the U.S. PathFinderTG Pancreas has CMS reimbursement of $3,100 per test. As you know obtaining Medicare reimbursement is a key step for ensuring product utilization. Additionally there is a substantial unmet need for our highly effective diagnostic test for pancreatic cysts. PathFinderTG Pancreas is a revolutionary test which we believe is significantly superior to current diagnostic options in identifying patients with pancreatic cysts who are at high risk for harboring pancreatic cancer. To discuss more about RedPath and the science behind its platform and tests, I would like to turn the call over to Dr. Dennis Smith, former President and CEO of RedPath. Dr. Smith is the board certified pathologist who recently served as CMO for Ameripath and is the Board member for Immucor, Ameripath and Clarient. We welcome his expertise and guidance and are privileged to have him on the call with us today. Dr. Smith? Dennis Smith - Former Chief Executive Officer, RedPath: Thank you, Nancy. Our merger with PDI enables a much broader commercialization of RedPath’s proprietary PathFinderTG platform by leveraging PDI’s deep commercial expertise and infrastructure and by adding the other resources needed to expand the market penetration of RedPath’s tests. PathFinderTG platform uses advanced algorithms to interpret panels of DNA abnormalities and mutations in the context of other clinical laboratory test results to accurately stratify our patients according to risk of cancer. RedPath’s Board certified pathologists translate the results of PathFinderTG into clinically meaningful and actionable patient management guidance helping physicians to resolve complex diagnostic dilemmas in patients who have lesions with potential for cancer. Our first application, PathFinderTG Pancreas is performed in our Pittsburg based CLIA certified, CAP-accredited laboratory and is reimbursed by Medicare. It has now been used in about 20,000 clinical cases. The test determines risk of cancer and pancreatic lesions. Recently results of The National Pancreatic Cyst Registry, an ongoing 10-institution clinical study and patient registry that examines the ability of PathFinderTG Pancreas to determine the malignant potential to pancreatic cysts were published in Endoscopy, a highly regarded peer reviewed journal looked at as the leading international periodical appeal to gastroenterology. This landmark study shows PathFinderTG Pancreas is the most accurate clinically validated test available for determining risk of malignancy in pancreatic cyst. In contrast the current standard of care results in overly cautious surveillance and unnecessary surgeries on patients with pancreatic cyst, the majority of which are typically benign. PathFinderTG Pancreas can thus improve patient management of patients with pancreatic cysts by increasing confidence that clinical observation rather than surgery is more appropriate in majority of patients. In fact a benign PathFinderTG diagnosis has a 97% probability of benign outcome with follow-up with the follow-up periods of up to 8 years. PathFinderTG can also guide surgery decisions when necessary due to high risk cancer. In fact PathFinderTG’s too high risk diagnostic classifications show 31-fold and 76-fold increased risk of cancer that is correct, 31 times and 76 times increased risk. We at RedPath have traditionally focused on GI tract cancers. We currently have two additional GI tests under development. One of these tests evaluates the risk of patients with Barrett’s esophagus, a common upper GI condition, will progress into esophageal cancer. The other one is designed to assist the risk of cancer in patients with biliary tract obstructions. Clinical studies on these assays have been published in peer-reviewed journals and additional studies are underway. Because our platform, PathFinderTG technology, this goes to around proprietary laboratory methods and comprehensive assessments of DNA, genomic instability, we are able to perform accurate risk assessments for variety of cancers, not just GI tract lesions. These future tests will be of significant interest not only to gastroenterologists, but also other medical specialists, especially oncologists and pathologists. Our proprietary know-how and patents further complement our patented platform. Our trade secrets for evaluating clinical specimen, they have poor quality and are of limited quantity are particularly valuable because such samples are extremely difficult to evaluate our other diagnostic methods. Our work is also resulting of large biobank samples that can be used to support other research and development efforts. Finally, I am very excited that I will be staying out of PDI for a transition period and will be joining the board as an observer to provide ongoing assistance. We at RedPath look forward to working with the PDI team to make our joint vision of the future molecular diagnostics a reality. I will now turn the call back over to Nancy. Nancy? Nancy Lurker - Chief Executive Officer: Thank you, Dennis. That was very helpful. While RedPath is recognized across the industry for its science, the company has not been able to reach its full potential due to capital limitations that kept them from ramping up their commercialization efforts and hindered the development of clinical data that was needed to market their tests. Our transaction is uniquely timed and that RedPath has just generated a substantial amount of supportive data and we intend to meaningfully increase sales force and marketing activities. The combination of RedPath’s strong science, coupled with our commercialization engine, should lead to an inflection points of the test and drive growth of the product. In order to drive that growth, we intend to leverage our extensive commercialization infrastructure and double the sales team by early 2015, while continuing to add resources over the course of 2015 as we track product uptake. Specifically, we plan to leverage and expand our strategic account executives, who call it, hospital systems and integrated delivery networks, managed care account executives, who call it commercial payers, and our MS sales who call it leading physicians and scientists in their communities to educate them on the science of PathFinderTG Pancreas as well as miRInform. This is just a small sampling of the type of infrastructure that we are able to leverage within PDI and IDX. Additionally, in terms of our pipeline of new tests, we expect to launch a test for Barrett’s esophagus in late 2015 using the same platform technology, the PathFinderTG that was used to develop PathFinderTG Pancreas. Also a test for biliary tract cancer has been validated and additional clinical studies are underway. During our due diligence on RedPath, we conducted market research with both key thought leaders and community-based upper GI physicians. And now, I would like to share some of the results of that research with you. First, physicians are frustrated with current diagnostic tools for pancreatic cyst. They estimate that between 15% to 50% of their patients with cysts, using current diagnostic tools, lead to inconsistent or inconclusive results. Second, conducting pancreas surgery based on inconclusive test results, which is a common practice due to the high mortality associated with pancreatic cancer. These tests carry and surgeries carry a risk of mortality and severe complications in and of themselves. Physicians wish to avoid pancreatic surgery on indeterminate cysts if they can get better diagnostic tools to help them rule out benign cysts and a risk stratified for cancer thus aiding and avoid unnecessary surgery or surveillance maybe more appropriate. When physicians were shown a blinded profile of PathFinder pancreas, their interest in using the test was very high due to its higher accuracy over current tools increasing from 70% to 90% and it’s high 91% specificity and disability to determine true benign and avoid risky surgery. They see the value in PathFinder pancreas for the 15% to 50% of their patients who have indeterminate pancreatic cysts. I would now like to take a step back to talk about the changes we made at PDI over the past year and to provide you an overview of our Interpace Diagnostic portfolio. Interpace Diagnostic has made tremendous progress over the last 12 months and given today’s announcement, I thought it would be helpful to review our product portfolio and our pipeline of new and innovative products. Including the RedPath assets we now have an established presence in a large and underserved thyroid and pancreatic oncology markets and we are operating in two state-of-the-art CLIA certified labs. The first in New Haven, Connecticut will house our Endocrine Center of Excellence and process all of our thyroid tests. The second in Pittsburg, Pennsylvania will be home to our Gastrointestinal Center of Excellence and will process our pancreas tests and further GI tests. As a review of our thyroid assets, on the market today we had miRInform which improves preoperative diagnostic accuracy and helps doctors characterize the malignancy even if on a microscopic level the result of a patient’s biopsy sample and indeterminate. The test currently generates approximately $2 million in annual revenues and we believe the market potential is approximately $350 million. Before year end we anticipate upgrading miRInform to a next-gen sequencing platform and renaming it ThyGenX. In addition during the first half of 2015, we also expect to launch a microRNA thyroid test. As for miRInform we have secured all the Asuragen account business. And in the six weeks that our sales representatives have been in the field we have gained additional accounts that could generate up to 100 tests per month. Recall that both the American Thyroid Association and the NCCN recommended doctors consider the use of molecular diagnostic tests such as miRInform for indeterminate thyroid cysts. In future calls we will also discuss key performance metrics that we will be tracking for our business performance as for example payer coverage. Regarding our pancreas tests and pipeline, PathFinderTG pancreas is on the market currently and is the first and only integrated molecular test for the diagnosis of cancer in pancreatic cysts. We also believe this represents a $350 million market opportunity. As I mentioned earlier, we expect to launch a similar test for Barrett’s esophagus in late 2015 and a test for biliary tract cancer in the future. These two tests combined represent a market opportunity of over $2 billion. One of core competitive advantages is our ability to leverage our robust PDI commercialization infrastructure. As an example, I just mentioned that we won a major contract to fully commercialize a device marketed to physicians. The core of what we have done for the past 25 years is taking complex products to market, so we have extensive experience in what it takes to be successful. We are now leveraging that knowledge in molecular diagnostics where we only asset and we will take full advantage of our robust go to market infrastructure to commercialize these new tests. In summary we have made significant progress in the quarter and recent weeks subsequent to the quarter. I am very optimistic about our future. We were awarded two major contracts that are in contracting stage in our CSO business. The use of PD1 is expanding and strengthening our CSO business and we expect by early 2015 PD1 will be utilized over 700 sales representatives. Additionally, we have now attained critical mass in the Interpace Diagnostic business through the RedPath transaction and we have established the presence in the thyroid and pancreatic oncology test markets. Lastly, I would like to take some time on the call today to introduce you to our new Chief Financial Officer, Graham Miao, who was appointed to the position effective October 20. Graham brings over 20 years of combined financial and healthcare experience and a unique skill set having spent time in financial and operational leadership positions in the pharmaceutical, biotechnology, medical devices and business information industries. Most recently, he spent three years as the Executive Vice President and CFO and later interim Co-President and Co-CEO of Delcath Systems, a publicly traded specialty pharmaceutical and medical device company. We are very excited to Graham join the PDI team and look forward to the contributions he will make to our company. Jeff Smith, our Former CFO is joining us one final time on these calls to review the third quarter’s financial results. I will now turn the call over to Jeff for some brief comments. Jeff Smith - Former Chief Financial Officer: Thanks Nancy. I would like to start by saying it’s been a pleasure serving as PDI’s CFO over the past 8 years. I truly feel that PDI is very well positioned for growth and that the strong blend of business, finance, and particularly relevant management experience and science background that Graham brings to the CFO position will enhance the company’s ability to achieve growth. With that said, let me provide some brief detail on third quarter results and the RedPath transaction. Third quarter revenue of about $29 million, while lower than last year, was in line with our expectations. While Sales Services revenue of about $28 million was $2.5 million lower than last year as delayed new contract wins were not sufficient to offset the natural expiration or reduction of certain contracts, we were able to maintain approximately the same level of gross profit at $1.4 million. Marketing Services revenue of $1 million was about $300,000 higher than last year. And due to a planned internalization of a product commercialization contract by our client at the end of the second quarter of 2014, product commercialization revenue was $2.7 million lower than last year. Overall, third quarter gross profit was about $3.7 million, a decrease of about $1 million compared to last year. Most of this decline was due to the planned internalization of the product commercialization contract team. Sales Services gross profit for the third quarter of about $4.1 million was essentially the same as last year. Marketing Services gross profit for the quarter was $250,000 lower than 2013 due primarily to cost associated with rightsizing the workforce. And product commercialization gross profit for the third quarter was $750,000 less than last year due to the planned internalization of the sales force in this segment as of June 30 of this year. Total operating expenses for the quarter were $8 million compared to $6.7 million last year. 2014 includes about $2.1 million of investment costs related to our molecular diagnostics strategic initiative, including cost associated with the RedPath and Asuragen acquisitions. Excluding these costs, total operating expenses for the third quarter of 2014 were $5.9 million, $900,000 lower than last year. The net impact of changes in revenue, gross profit and operating expenses is a net operating loss of $4.2 million for the third quarter of 2014 compared to $2.1 million last year. In terms of liquidity and cash flow, adjusted EBITDA which you know is our non-GAAP measure of cash flow from ongoing operations, was a loss of $3.3 million for the quarter due primarily to investments in our strategic initiatives and lower gross profit from the planned contract internalization. Cash and cash equivalents at the end of the third quarter totaled nearly $27 million, down $19 million from year end. This net use in cash was primarily due to investments in our strategic initiatives, including the acquisition of assets from Asuragen and increases in working capital needs. We now estimate that year end 2014 cash will be $21 million and $23 million, including the acquisitions of Asuragen, RedPath as well as the funding from the company’s financing arrangement announced today. In terms of guidance for the full year of 2014, we anticipate revenue in our core business to be in the range of $120 million to $122 million down year-over-year as a result of the timing of CSO bookings. We expect an operating loss in the core business in the range of $7 million to $8 million and adjusted EBITDA from the core business of a negative $2 million to $3 million for the full year. Most of this is attributable to the timing of new wins and the product commercialization contract internalization. Incorporating RedPath for the remainder of the year, we expect total company revenue to be in the range of $121 million to $123 million and total company adjusted EBITDA in the range of a negative $12 million to $13 million. The majority of this negative adjusted EBITDA is due to investments in our diagnostics strategy, including cost associated with Asuragen and RedPath acquisitions and planned expansion of selling and marketing efforts for both. Before I turn the call back over to Nancy, I would like to briefly review the financial terms of the RedPath transaction. RedPath is currently generating approximately $10 million in annual revenue. The majority terms of the deal include a $12 million upfront cash payment, issuance of $11 million non-interest bearing four years subordinated note to the shareholders of RedPath, up to 1 million PDI shares issuable only in connection with the successful introduction of Barrett’s esophagus test and future revenue base payments and royalties. From a cash standpoint, we would like to point out that $11 million subordinated note carries no payments until the fourth quarter of 2016 and then is repayable in equal installments over the life of the loan. In connection with the acquisition, PDI also secured a $20 million six-year term loan from SWK Holdings. The term loan provides for interest only to be paid for the first two years with equal quarterly amortization over the last four years of the loan. One final note on the RedPath deal, the acquisition will be accounted for as a business combination, which as many of you know requires us to consider estimates of future possible contingent payment including milestones and royalties in valuing the transaction as of the acquisition date for accounting purposes. With that said, I will turn the call back over to Nancy. Nancy Lurker - Chief Executive Officer: Thank you, Jeff. Before we open the call to question I wanted to again say how very pleased I am with the progress we are making. The commercialization contracts we announced today are big wins for our core business. And today’s RedPath acquisition further demonstrates PDI’s commitment to becoming a leading oncology molecular diagnostics provider. We look forward to updating you on our progress as we commercialize these tests in the coming quarters. And with that we will now open the call to your questions. Operator?

(Operator Instructions) Our first question comes from Scott Henry with ROTH Capital. Your line is open. Scott Henry - ROTH Capital: Thank you and good morning.

Hi, Scott. Scott Henry - ROTH Capital: Obviously, a lot of information so I am just going to try ask a couple of questions as I get arms around it, for starters Jeff that $121 million to $123 million for 2014, is that everything, is that total revenues of the Sales Services plus everything else?

Yes, it is Scott. Scott Henry - ROTH Capital: Okay. Then I guess I am just trying to follow a couple of levers here, so the base Sales Services business based on the contracts you have added would you expect that to grow in 2015 is that a – I mean it seems like a very comfortable statement but I just wanted to get your thoughts?

Yes, we do. Yes, Scott we very much expect the business to be higher next year. Scott Henry - ROTH Capital: Okay. And then looking at RedPath from what I can tell you, you are going to add about $1 million in revenues this year and EBITDA is going to decrease, let’s see it looks like about $9 million, so the question is what’s the timeframe for that acquisition to turn breakeven?

Well, Scott, this year there is a lot of just acquisition related costs so that’s – that accounts for a lot of what you heard about adjusted EBITDA for this year. And the reality is that as Nancy said we expect to significantly increase the sales and marketing effort and all other things related to commercialization. So next year while sales clearly will be generated from the acquisition we do expect a loss next year and then in 2016 will be the time that we would expect this turn accretive to our earnings. Scott Henry - ROTH Capital: Okay. And I guess this is somewhat of an awkward question, but I think a relevant one, given that in the past couple of days we have seen some interest in the company from other strategic players, how do you factor in that interest into your company as potentially being taken out versus putting more capital to work, how do you balance those events?

Yes. So Scott I will answer that question. So up until Monday of October 27, we had never heard of Digirad other than our former Board of Director who also resigned on Monday, October 27 from PDI and he was and remains a Board of Director of Digirad. Given that there were no terms put forth and as further proof that we do not consider this a serious offer, they publicized their letter to us in a press release before any serious negotiations were held with PDI. So, let me just say it again, PDI is not for sale. However, should a real offer be presented that has specific terms that reflect the value of PDI, including, but not exclusive of our leading CSO position in the marketplace, the RedPath and Asuragen acquisitions that we believe we have created, was significant value and we would also believe those are not yet reflected in the stock price today. So, it is business as usual as far as we are concerned. Scott Henry - ROTH Capital: Okay. And as I get my arms around RedPath, I mean it looks like you are going to pay about $25 million for this company, could you tell me how much capital has been invested in RedPath since inception just so I can get an idea of the assets you are buying – you know where the value creation?

Yes. Dr. Dennis Smith, I don’t know if you can answer that question?

Yes. Nancy, it’s just short of $20 million, about $19 million total capital. Scott Henry - ROTH Capital: Okay, that’s helpful. Then I guess let me drop back into the queue and I may jump back on with other questions, but thank you for taking them all.

Okay. Thank you, Scott.

Thanks, Scott.

(Operator Instructions) Our next question comes from John Kreger with William Blair. Your line is open.

Hey, guys. This is Matt in for John. Can you just talk a little bit about the thyroid and pancreatic diagnostic test you guys bought? And what I am sort of getting at is, what are some of the other competitive products out there, right now and I am sort of getting at Veracyte, because I think Veracyte also has a pretty good product with thyroid?

Yes, that’s correct. So, to our knowledge right now, Veracyte is the main product on the market in for the molecular diagnostic testing of indeterminate thyroid cysts. Their test, Afirma, is what we call a primarily a rule-out test. It’s very good at ruling out benign cysts for further surgery. The other test that is smaller is a test called ThyroSeq that is a molecular genetic marker test, which is somewhat similar, but not identical to miRInform. Let me just reiterate, if those miRInform and it will soon be called ThyGenX, more test used for if you suspect malignancy or if you have malignancy to run those tests, because they give you a better sense of do you really have malignant markers and if so better characterize what type of malignancies you have. Right now, if you look at the total market size as I mentioned that market is around $350 million, not dissimilar from the pharmaceutical industry, where you have a very large market, there is plenty of room for multiple players to gain meaningful share. And we do believe that our malignant genetic assay, miRInform and is again soon to be called ThyGenX, which will be run on our Next-Gen Sequencing platform, which as you know is really state-of-the-art. And through that, we will also pickup a substantial number of additional markers to characterize for physicians. But this area is still really in the early stages of being developed and is not anywhere near being, close to being penetrated by these molecular diagnostic tests. I mean, we certainly believe that this is a right field for growth. There is a very clear place for that miRInform and as I said soon to be ThyGenX. And then further in 2015, we also expect to launch a microRNA test, which will help to further classify indeterminate cysts. And it’s a combination of both those tests that we believe will create a winning formula in the marketplace.

You said it’s in the early stages of being developed, when do you anticipate you guys being ready I guess?

Well, miRInform is on the market now.

Right.

ThyGenX, we expect to launch by the very end of 2014 this year on the Next-Gen Sequencing platform. And we expect in the first half of 2015 to launch our micro-RNA test.

Okay. And also sort of a capital structure question, you guys have done a lot of financing here, what do you – I mean, do you guys feel that you have the financing in place to be where you need to be over the next 3 years?

Yes. The only other thing that we would probably consider is just any – something to help us with working capital if the business develops the way we hope.

Okay, thank you.

There are no further questions in queue at this time. I will now turn the call back over to the presenters. Nancy Lurker - Chief Executive Officer: So, thank you very much for your time today and I appreciate the interest and we look forward to updating our shareholders and investors on future calls as to the progress that we expect to be making with our Sales Services business, our PD One app as well as obviously our new molecular diagnostic businesses. Thank you very much.

This concludes today’s conference call. You may now disconnect.