OSUR - Earnings call transcript Q1 2022 | OraSure Technologies, Inc.

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Operator

Good afternoon, ladies and gentlemen and welcome to the OraSure Technologies First Quarter Earnings Conference Call. [Operator Instructions] Later, we will conduct a question-and-answer session. I'd now like to introduce your host, Scott Gleason. Mr. Gleason, you may now begin.

Scott Gleason

Paul. Thanks, welcome first and call. 'XX OraSure to afternoon quarter Technologies earnings Good Scott and Communications. CFO the of I'm Interim and SVP Gleason, Investor Relations Presenting OraSure with for me is Dr. today our Chief Gagliano, President our Solutions. Officer; Nancy President Molecular Diagnostics and Interim Lisa Cathy our of Nibauer, President Weber, of and Executive

As today's on found our being Relations website. webcast recorded along the recording be a the webcast slide can reminder, with presentation is and accompanying the Investor

with certain you discussed and begin, this know to registration in forward-looking including the and earnings statements, profitability, should could Actual statements product its other SEC development share SEC reports contain we filings, Before its performance, more markets, statements, call or year including and company's XXXX, filings quarterly be results Form shipment Form and that different. regulatory approvals, respect results on performance, per fully strategies. ended expenses, revenues, that and significantly the may XX-K its loss Factors plans, report could expectations annual filings. XX-Q business financial on affect XXst, for other December are its our

turn based today. forward-looking this on to obligation to With provide complete are should keep call after call. forward-looking events information information to the the Although to to The over of that, statements in company mind any Dr. statements undertakes management circumstances Gagliano. forward-looking update statements future as prospects, available that I'm reflect or about help listeners solely no pleased to

Nancy Gagliano

Molecular progress importantly, remainder increased throughout robust government our From thank the record substantial positions on process. this scale-up call improve OraSure delivered today. perspective, us demand we the footprint excluding products, well for our the Scott are it year. to efficiency quarter, made and our rate revenue year-over-year. anticipate InteliSwab Molecular I end Solutions InteliSwab for also double-digit business. believe the our Good This a the manufacturing working evening. the strength more once of important test And the through Solutions Perhaps Thank you, everyone with our to our up and at demand is year-over-year COVID-XX a Diagnostics joining calendar to Diagnostics well. for both and businesses and growing we continue year. continue continued this of you, quarter. as XX% commercial expand core This of the again that XX% highlight we revenue grew of demonstrates year-over-year, to

improving Board know, search I Interim the InteliSwab ensure and Directors As of Board appointed was in process the production conducts the as by continuity, to CEO you most scaling to business on permanent CEO. with of of strategic as tandem process and recently a focus alternative its for the

and well which role. for techniques. about as our care areas in Our taking, the sample ends underway of the easy-to-use of market have up collection potential simple, identified company and permanent well ability as CEO Regardless we search innovative high-quality of to optimistic the create value point candidates of remain we home highly leader number a is path test, and and be reliable a

improved place to on unit. to pleased that, business profitable a programs the focused our on of execution number to over turn remain growth we organization, to call in With Diagnostic an I'm and structure an cost as Additionally, profile. margin long-term Lisa our update driving and improve with provide

Lisa Nibauer

by quick Nancy. of on overview business, like core update I our progress first Thanks, a an with followed our would diagnostics InteliSwab. to provide

year. grew quarter, revenue Diagnostics the the versus million $XX.X last unit XXX% overall was For first business and

effect of growth, year. headwinds and in CDC year. the lapping Melinda of most for the This growth much Bill and -- represents QX HIV especially was the business While HIV international in was addition the last the light of the diagnostics of in HIV global our of this Program grew driven XX% to versus Together by InteliSwab, our business from of InteliSwab strong QX which Let's most Stop excluding sales our prior Gates OTC subsidy,

due grew core diagnostic returned increased primarily work to more Our in quarter QX government excluding as versus our last and year. people revenues employee of the the domestic drug testing business, to InteliSwab grant gains X% in US from

US. are estimated Our affected announce domestic September CDC the directly Together In-Home specifically CDC the year-over-year HIV XXth, revenue the lapping million $XX were start of a shipped to test has HIV regard, our due issued Stop solely year's to OraQuick mass the In recently to for last by disproportionately that and Let's grant HIV HIV an where kits XXXX. declined QX award notification that opportunity self-test persons pleased of we This in to of mailing consumers. HIV Program, date

Given States, early partner's last successful bidding sales year on the strong OraSure and could and pilot would QX FDA-approved is the several OTC from XXXX that a from We HIV self-test the the this program this lead believe quarters continuation we in late of XXXX. of only represents to benefit HIV to expect award via in United execution. its

where the opportunity recent on is the health the diagnostics as we program which a can given opportunities, also potential prior well cost and sizable testing tests. outreach US take easy as the a communities. substantial Bill diagnostic as business to an the our grew the XXXX. and for of low use the program role disease and cost testing products, even existing provide US, disease year basis Outreach this versus wellness given see this believe utilize with savings have testing of for Gates the economics And XX% model. other OraSure's public government international health direct-to-consumer in direct expiration in to same more or the the of this testing the and June diseases volume other Outside subsidy benefit faster such also versus by Melinda highest for as quarter grew believe testing of COVID-XX initiative, tests a prevention. area strong model We along could of business future need major area testing We targeting new an for demonstrate a

international year. subsidy, Diagnostics XX% grew this of impact the prior versus Excluding

strong Our partially new expand into is the strategy the market. of product reflective in reach international to our first international of quarter our growth

As pre-sale in American allow origin. we regions our unable of access certification, which second we half certification to the a this reminder, countries, Latin of to Thailand in will XXXX, and received the register us from the country product Asian were without

the In into we addition, in countries, in UK, including our the HIV France, retail where self-test pharmacies. quarter will be year, Germany, six of early available this Portugal, launched Spain test and European the first

garner will our international to self-testing HIV our importantly growth they world contribute for help While with these proprietary increase initiatives believe we take to self-test. and time access HIV fluid the traction, oral around

InteliSwab discuss progress was operational quarter, Now and I our significant. in would which like the to

reminder, a was this integrated the of Diagnostics into start leadership at year. As the operations unit business under my

hired than reduced early were a greater steps. for methodical InteliSwab, approximately prior significant several key have As to Health improvements January significant Lean In This for the X% to Six quarter, antigen expertise consulting used scale-up less firm during progress scale identifying in from April Institute previously by fourfold between of approach, than scrap program quarter. production an the we major RADx which team rapid deep with announced, improvements. QX, issues due National all we efficiency Sigma operations bottlenecks areas and test. the and XX% These made increased of entails in manufacturing and resolved

manual we causing inside First, our the assay uncovered that test strip was scale-up of handling the stick challenges. contained our

have production card We and completely. automated procedures changed since our assay

We change and step process measure and where while optimize determine the mapped the assembly and changes systems These turn then next improve to we assembly rate-limiting striping minute the vision to machines. car we output. limiting settings in-process setting per improved the automated scrap. assay also output, and to our reducing our robotic Second, on on step part

In to and We continue in opportunities there our went the optimize early proud market, more further NIH the we improvement team I government significant contract meaningful the commercial and as RADx was that these for and improvements. of into these driving am exceptionally process. procurement find changes work team manufacturing

sense many rates our the scrap and early from listed by than XX% January declined we well. were in less Beyond to in on and you goods as above changes a changes waste how these quarter, capacity, X% reduced of material To approximately for give scrap our focused late also finished rates the efficiency significant March.

While is for continue there we improvements that our in room to processes. significant believe we have made progress, continued

benefit contract our structure and which R&D products. process, further manufacturing in shipping, continuous Defense can our longer-term the and We automated, further highly efficiencies opportunities to created garnered lateral products all investment improvement, plan, logistics operations market believe with have a and efficiencies through of detailed of a of flow our sales we aggregate, margin sold outlines goods drive innovative in optimization Department cost equipment years and strategically improvement profitability associated the have and new gross will of key improving for and capital view cost our and dramatically unlock in global to is our design. improvement given can utilizing important, advantages through marketing our that site vision workflow In as we We packaging new efficiencies reduce automation process redesign, segments. coming structure cost areas including

need us, to quarter, year announced demand for as lower InteliSwab Department The they continue to out several of US consistent between and procurement continued support of the through ongoing surges. our enables the part Services Human ongoing contract. as InteliSwab periods to testing. This formerly shipments told they and This provide has the even have programs, continued which even to we in Health government plan helps buy

commercial We are grow our continue to InteliSwab. also footprint for working to

tepid will Omicron both see commercial in high distributors. infection surge testing levels the in this a commercial somewhat until have levels business seen inventory come we coronavirus at surge and we or the Consequently, remain believe and down. inventory Following winter, another we customers until reduction

in new We of garner InteliSwab the also data continue accuracy phase support to to variants.

our with studies variants all Omicron concern. virus Lab Mountain at variance Institute initiated using required and detect evaluate ability to emergency Rocky SARS-CoV-X test National the Health, to this our authorization, live other OraSure of of As use

and conclusion, to detection and highly all InteliSwab this a data NIH progress multiyear profitability. did against in substantial original our efficiency made of the the that are on Wuhan published begun studies to are and of with our focused Omicron levels all as at similar up, cost strain. now optimize the structure have to variants process detection the manufacturing Importantly, concern other improve virus variants. limit indicates it The InteliSwab In scale journey with detects variant in we quarter improve of of our

discuss to as the are continue With business of turn settings We believe Molecular is care to empower care that, home front for to our role test and to excited health patients. opportunities that growing the strongly to easy-to-use by pleased of over I us system Cathy in call and unit. our Solutions in the point evolves am

Kathleen Weber

Thank you, Lisa.

Nancy note, versus our Molecular started mentioned, year business core a on the QX plus 'XX. Solutions XX% As sales strong with

of well Importantly, we saw addition existing growth as as in new customers. customers, the

Our initiatives, order our customers saliva strong patterns their XX%. blood some type was a kit shortage driven driven segment, a by population genetic commercial by due and risk health tube accounts. which growth This and blood-based combination testing some to genomics growth was of resuming sample test for the to customers by key supplementing as grew changes

major As kits quarter, of timing our a we are molecular look order shifts the historical business. to anticipating quarterly customers our splits our from in we with some second few for

timing. that IVDR Therefore, business we anticipating additional kits quarter second saliva-based May, Additionally, be on undergoing basis introduce the will which for volatility quarter. shipment could the this typical molecular positive sequential in our kits could in flattish late a core second to despite we our are transition quarter seasonality be

but were did XX% to decline we achieve sales QX collection, QX versus COVID see pleased in levels, growth versus COVID 'XX. our For a peak our

sales and new US the in shift gain several of kit studies by tests Canada, Our state clinical for customer, in well and kit in as a QX offset inventories of our testing to sales antigen as research a some reflected high and customers. the existing

we're viral the US surveillance. overall launch focused and broader in on ahead, the expanding beyond Looking

quarters. in demand to However, several expect the kit see continued collection over volatility we COVID next

of we mentioned, and advance to Nancy the our offerings. service new continue launch As collection

at completed new Dx begin our several we of shipping spring. this quarter, transfer this GUT production We product conferences service quarter. began microbiome and This XXX(k) metatranscriptome promoting will OMNIgene our

researchers be of activities. commercialization work. co-publication alumina our speaker a invited offering, on development activities As part alumina and alumina include of These we'll of webinars with metatranscriptome guest joint new our engagements, strategy series around will relevant marketing and with gut embarking validation

newly OMNIgene add on also DNA human a incorporates to developed the OMNIgene include research we'll quarter and fecal our Gut stabilize Gut offerings portfolio. based product RNA new samples. few This DNA RNA use validated only kit. microbial kit the to a DNA This and from These reagent

the interpretation cases the need continue annotation and specie-specific well applications nutrition [ph], microbes to the kX kX and there microbiome. growing as uncovering curated and rates, and launching is We're of a a as function microbiome study the the important identification improve Medigene microbiome. to to facilitating of Medigene grow, pathways disease. also use As database composition increases the health, in relevant of the transcriptome,

This pertaining to well new awarded three as outside device as methods US. patents microbiome quarter, were our the we chemistry also microbiome for and testing,

Additionally, method analytics. we microbiome patent filed a pertaining to

our to our continue products property intellectual We for expand and for look opportunities portfolio to services.

sharing raw minimum on turn Scott. to XX% that, cost. we future calls. we of kit COGS call results although back collection attractive enjoy this collection to despite in look targeting our increasing margins We a COGS have embarked products, the forward across the initiative Finally, program, across reduction pleased With to of I'm our over material a management kits,

Scott Gleason

Thanks, first updates our discuss for and Kathy. financial I'm on our financial pleased quarter results to the provide outlook.

First, XX%. top perspective, for from representing of of the growth we quarter, a new million in first delivered the company, $XX.X which total record another was line year-over-year revenue

non-COVID-XX and driver InteliSwab with our a highlight Molecular year-over-year, core also While Diagnostics basis, both business. our year-over-year would in XX% growth Solutions we on major a actually clearly growth double-digit grew that was products

our gross to Turning margins.

margin gross months reflective margins items in hires. having margin combined in inefficiencies for was business our We a in along XX%. new $X expense two process, the is expect quarter, to first the scrap InteliSwab gross the by million under the high Our significantly These the absorption led to of very in for first due quarter longer-term significant where the impact. items gross experienced quarter structure impacted and of this percentage we rates we quarter to in be. production approximately a Gross with train not two margin the as few were

earnings our X% quarter As late than finished the at we the declined noted quarter. rates goods XX% from in release, less of InteliSwab scrap the start in our to first

in-process leadership will margins remarkable We lower initiatives and by consulting a of will and support ways forward. that improved through our was previously had a NIH our at improve program also driven supported turnaround new process team improved cost. yields going significantly number structure that This gross and the implemented RADx our

well and this this margins. saw saw more from some government We also quarter declines impact was in saliva at lower COVID-XX the since our contract. of volume collection the sold price InteliSwab under selling the sold quarter kits as Furthermore, product was the majority were mix, procurement as quarter of we in gross as average anticipated,

configuration. [indiscernible] in structure. team, to changes initiatives chain that leadership changes we reduce material process supply and of and labor evaluating can changes currently believe are sourcing include These gene number a requirements, improve optimization, structural manufacturing our automation As our a further our cost we dramatically raw our logistics, shipping to to

these our and we million sequential From will value investment a can But $X.X see some for structure, strategic expense expenses allow were overall be operating of will changes which increased take and to improve years fully further few the and total year, an improving million implement. standpoint, in basis. $XX Some a quarter on the in implemented business cost profitability. this

$XXX modestly cash quarter. expenses we equivalents. of perspective, we to in million to in our quarter Due ended place with had onetime transition, and a expenses other to items, process From high the We with alternative the cash and the nonrecurring our in onetime associated CEO operating are continue to these items $X.X control that it's we expense this expecting important emphasis and note on quarter. a million second items, strategic nonrecurrence decline tax

additional XXst, approximately As of million contract we $XX the of $XXX manufacturing from associated March million had build capacity. Defense due government Department our with to

So position our million. cash forma was pro $XXX

scaled to year. flow increasing quarter InteliSwab. As of approximately of as the working cash go the anticipated, a working this million and of capital inventories of these and we we in with changes working moderate we use use quarter the a through $XX cash saw significant capital expect we led cash remainder in as receivables from Changes to adjustments

We quarter this financial alternative given providing are strategic formal ongoing process. not guidance our

we meaningful are this quarter, will by in be but InteliSwab our COVID-XX however, offset extent the anticipating growth quarter, second given laboratory reduction to some This States. the continued in business, kits in in expected decline collection testing in the United

working Additionally, we kits as our molecular timing Kathy shifts section, business. are indicated in expecting some her with

and we takes, remarks. anticipating operating the with meaningfully lower concluding expecting reduction improvements second back are total margins, a coupled With Nancy loss cash revenue for modest I'm second call perspective, in quarter. to profitability puts growth Given that, also in quarter, to over a these our the From in are pleased turn we utilization. in gross the

Nancy Gagliano

Lisa Thank and Scott, as you, Cathy. well as

quarter As and production efficiency. improving made you see, we've can this InteliSwab on our significant progress operational scaling our

strong We are Q&A team Both growth our core Directors in Board important our and start two to value. Solutions new I'd and launched like highly turn Molecular businesses also shareholder leadership Scott the over back With portion. executing driving call that, strong in our to saw products our division. on and our focused to of

Scott Gleason

broader now ready limit you Thanks, question one call. your ask Nancy. questions to follow-up Operator, our We'd to the portion participation. one and that of to begin ensure Q&A we're

Operator

[Operator we Woodring. question Instructions] And a from have Casey

Casey Woodring

Hi, thanks for taking my question.

InteliSwab government the that to throughout continue year. noted the you buying plans So

revenue the government this increased contract test. now Are then, quarter this should And I worth numbers I how had to you’ve think about And for of we think InteliSwab that guess that that how much government? the capacity. InteliSwab for $XX the year? production you these $XXX say million million went of revenue

Nancy Gagliano

relationship to this to going give to more specifics. Casey. have the with to very you such over government. pleased you, Lisa I'm some a strong We're Thank turn

Lisa Nibauer

Thanks, we the Yes, split the have had much of single value with installed weekly. that government we or Yes. announced and we non-government. not conversations million. of target contract government been we not will are with year capacity. forward-looking ongoing providing on receiving consistent guidance of previously say that utilized every government at the week procurement do and current Casey. have how I a our orders They $XXX this be contract have We're will large

that time. you we are currently capacity at at As from heard prepared demonstrating that and the installed remarks, level this

simply is basis. the on doing So non-government what an to as both our production as demand we're matching well ongoing government,

our capacity on we demand. production and corresponding we needed increase I this can at the to uptick. may produce that given installed Importantly, COVID-XX uptick we could And in increase think country, production need to depending the in latest

Scott Gleason

thing quarter in only say is, the bit actually different business was from little the That's this on quarter of majority was I our government. the did would the of our fourth the fourth Casey, Yes, we commercial a business call that add the majority the from where quarter.

Casey Woodring

then color now? you where And as quarter. I increased that run you. versus to as was Can think production some mentioned fourfold -- Got January where think you that in give the are you kind us we rate about of through

Scott Gleason

capacity, the about Casey, number given Obviously, we not giving were we're throughout before. specifics January, challenges think early we've at we've scale-up to in our some Yes, volumes. out scaled kind that up beginning which fact I kind able of quarter. April, of We the and production were installed we talked around the the that demonstrate at facing of

we -- So of not ramped obviously, weekly dramatically time out that over numbers. But what so have we're is. guys frame. But you that giving an idea

Casey Woodring

dig Board board you strategic us is would complete, is if one in place Thank should I update January. a more a team management you. review? the And come how transitions or say, progressed, review just ends expects management to the the strategic before And road could in announced before when Can before map the on follow-up, as last in. the review would complete when Okay. was review fit that I wanted a then that's the give installed? an into to I

Nancy Gagliano

Casey. you, Thank

by active give our going are not will and process you process. of of to expect CEO we the So search, details exact be do is which June. we're The ongoing the complete doing is that tandem. end as process We in the obviously

our this hard run with not are see, However, all going focused business the staying it the as to work on, stalling we on very we're business and imperatives. takes you can

Operator

Thank you.

We have Frank a Takkinen. question from

is open. line Your

Frank Takkinen

Or follow guess little Great, Can just Wanted more. there? terms? could a up taking contract that hear the that Just to user in directly, are of bit $XXX I once terms committed trying they little end the reduce more thanks million for my if get $XXX $XXX a is questions. amount explain demand on amount target, to a elect million they contract just where the you the clear. to to I target better so understanding the million?

Nancy Gagliano

you Why ahead? Lisa. I'll that turn don't over to go

Lisa Nibauer

sure. of Yes, phrased actually in the so million terms. Yes, amount just contract $XXX that is the target

government As be federal it be There of rapid particularly contract, with congregate that's different a on indeed is over a regular government the period. or bill and of much need bit of tested but would number procurement much lower the antigen settings test to and ordered. an be to basis. higher more who what is with not a individuals Again, good amount settings, supply those amount any commitment, could firm anticipated amount a

demand good surges then seeing COVID goes a peaks consistent to which the and the basis, government weekly on through in when currently we're super the speak. So valley so from helpful the is

Nancy Gagliano

they on provided just share that the And they are what their Lisa to needs the saying, needs have we only I'll insights will add and weekly their meet a basis government continue. on with and encouragement

no suspect anything So different. we have reason to

Frank Takkinen

modest to growth, sequential then And basis? Was my missed stick I'll helpful. or it. follow-up, year-over-year a may basis to hoping revenue you really one on that I have when Scott. you just just That's was could clarify I Great. talk a

Scott Gleason

the [Technical Difficulty]. Yes, Frank, Thanks for

Operator

a [Operator Instructions] Andrew have from Cooper. we you. question Thank And

line Your is open.

Andrew Cooper

sticking for Maybe first with Thanks question. everyone. Hi, InteliSwab. the

kind what sense in inventory give maybe our think I the really wondering remarks the like of the inventory be of you give overall, the distribution what think in might there of I sort was I or could prepared a commercial if a could for of the channel would demand, weeks look was days sort the like? about and to us inventory if looks side channel, understanding that relative channel. commercial you in comment helpful in for

Nancy Gagliano

for Andrew. you, question again, once another Lisa. Thank And we have

Lisa Nibauer

clearly the of Andrew. as the in our inventory are We watching in well channel amount Thanks, Yes. both distributors, retailers. as

I Omicron that challenge was supply with rapid not antigen think overall the the surge, was clearly there test. enough for

disease as enough so there was to going keep up of test growing, down. supply weren't then the And and the disease test was all as of the sudden, a available became

So kits, of like period that's direct-to-consumer essentially did mailing year. they where QX the these just the last in of time

involved. is award into a it directly distribute this the September all that many So And logistics were know only number includes XXXX. kind QX of total money distribution follow-up to long year to of involved Most different that of services was takes it counseling thing to start the awarded establishment similar go in kits to provided on that start we there year. consumer, how think the with there's it $XX some and both what happened of both be that. it's by other groups $XX and timing We a buy are depends last in provider. test in The is healthcare going It and of -- million that's a the they likely, and that on and to supposed will million. how

that kits. Difficulty]. us be So portion certainly, procurement we in which to million we But -- coming only a because what terms in of in this country will know of we $XX have will of are portion [Technical that the don't our the really approved self-test of

Scott Gleason

forward and other things. of fulfillment, training as some go Lisa will Total time toward, shipment, said, that, to

And kits so actual a for award is portion test the only of the so. and

Andrew Cooper

I'll it thanks. as too Okay. stop asked, you

Nancy Gagliano

you. Thank

Operator

no questions this in And time. we queue at have further

Scott Gleason

a in thank safe and be in evening, Have interest call afternoon well. you stay and for continued your All great and for Well, right. participating OraSure. today's

Nancy Gagliano

Thank time. appreciate you, everybody. your We

Operator

have for a and Thank the This day. now concludes joining meeting. pleasant you

OraSure (OSUR) 11 May 222022 Q1 Earnings call transcript