Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing-by. Welcome to the OraSure Technologies Earnings Conference Call. At this time, participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session [Operator Instructions]. Please be advised that today’s conference is being recorded.

hand Relations. over to Head Scott like Investor of would the to conference Gleason, I ahead. go Please

Scott Gleason

Thanks, Amanda SVP Officer. Chief afternoon. for Chief call. and and Executive good Presenting OraSure I'm XXXX first Communications. Ken our Scott earnings is quarter Officer; Carrie Gleason, President me and Financial the with of Manner, Relations Welcome Investor today to and OraSure’s our McGrath,

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

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

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

With call that, to I'm to pleased turn the over Carrie.

Carrie Manner

everyone thank Thanks, to you for joining Scott, today. us and

and our to with strengthening allowing for make the accelerate we to beginning profitable our to then us core in growth. strategic growth, on pleased transformation, foundation report growth progress are to elevate We our continue

disciplined costs, innovating strengthened our our culturally unlock and delivered reinforcing mantra, with completed foundation and volumes, we our with we our potential on on and business forward. moving cash accountability. we while execution unit to position We with COVID-XX IntelliSwab operating bolstered saved quarter, record This working capital meaningful and integration

sequentially We also core. in our grew

opportunities are partnerships, growth. road we on can we inorganic believe including strategic our organic and for important, innovation which fuel Equally focusing map with provide

Starting reductions in XX% Those previously workforce with implemented non-production as of the savings, with we shared affected had we on cost detail headcount you. our February. our

to IntelliSwab addition, operational and reduce steps QX, began cost volumes with and taken taper structure, we in In to have starting headcount. our manufacturing further

a assembly operations for IntelliSwab As shutting automation manual fully US. that changes, to the leverage these part of built we've down we're capabilities in our overseas

flow to cost cost with We in breakeven will cash deliver in continue XXXX. and achieve align demand to from COVID-XX we as structure our operations work additional savings

improve ahead IntelliSwab gross these the new in schedule cost over changes test. save reduction, Furthermore, March. order to configuration we quarter. margins of One in redesign We month ship to products our began per will via $X.XX the and product believe in in packaging completed

the We're contributing learnings an opportunities longer-term benefits, product these drive positively our sustainability. looking to also translate gross portfolio in and effort improvement, while at their margin across more to broadly to

in COVID-XX sales testing. InteliSwab with volumes new record $XXX quarter set total this for over our diagnostic million a

with to April, in volumes we QX, InteliSwab taper in As saw expect previously I in lower disease we U.S. demand consistent mentioned, and the incidents

which They working to to path occurred manufacturing potential these last a under extend appropriated could Health existing warm-base on year. and discussions test contracts. We are utilize ensure of disease for readiness similar our orders includes Part currently the with be to infectious fulfilled potential timeframe Partners for what funds outbreak. Public InteliSwab previously the

core to working growth. to cost longer-term elevate critical our we've from in addition core with The is drive and end, To fund a this investments, InteliSwab, savings business portfolio to future goal growth cash innovation our our to generated opportunities. sustainable been

our And HCV as COVID-XX quarter core, tests sequentially molecular grew of well QX. our in diagnostic of products. were outside a franchises, and we as HIV in catalysts there number this On in

Let's under rural most began University and the where Together product HIV with and early disadvantaged comorbidities program Stop communities partnership by of which in to shipping, its lead we its our States. Emory of to first First, Program, expansion. prevalent the HIV are on testing this CDC United funded could focuses potentially success the outreach the The

the For Dr. House in of highlighted article National HIV recent eliminate Francis Health. -- Head encouraged by White Collins, JAMA to which HCV, sorry, the we recent by was the are also a former plan HCV, of Institute

populations collection, HCV demonstrate up the through made these as well also individuals, and a of data HCV outreach increase priority million such XX% as an prisoners, $XX high-risk injectable in to Both investment active to HCV testing. infection. Unitaid and preventing where as have of users initiatives drug these surveillance

focus a and is strength example Health, and in why the transmitted our two innovation our sexual Public offerings well on HIV It's aligned roadmap. of important Overall, our good both product affect a priority at-risk themselves HCV our really population. health that for sexually in with as within distribution infections as

to also devices of following in QX our Grifols quarter, commercial our that saliva provide. announcement. deals highlights looking these products, precision in to grew patient access and Shifting reliability sequentially the X%. new Quest signed expanded recent We molecular important partnerships leverage collection Each the three health can we and companies at Diagnostics

urine, cancer deal develop is using biopsy is our device Colli-Pee a first enriched FDA has liquid The and to This with co-promotion biomarkers testing. enriched deal which first-void applications DX. using for

French the world and, Biotech the million innovation second a endometriosis. women estimated diagnose Ziwig of impacts is XXX commercializing years which, to using breakthrough to quality this. some painful condition, on a suffer from life for in company average, in fertility takes who eight Endotes This Ziwig, cases, with MicroRNA diagnose, Salivary The

subsidiary kits samples using be precision leader microbiome by and Diversigen. offering sequencing collection insights provided our is commercial microbiome to month their microbiome launched health. These collaborations microbiome gut recent biosolutions deal The test last global other company which services a provide full and and collected in analytics Genotek BiomeFx healthier a health lives. of the Novozymes will is sample leverages lead with biotechnology build and partnerships upon to participants personalized DNA third support our service The service and BiomeFx product. in from to a empower from in vaginal

this, Quest, Aquarius supporting lung I strategies supports team screening with been Grifols Group, with testing Colli-Pee, patients Also partnership sampling. manuscript of evaluation on offerings entitled accepted collaboration Genomic molecular with cancer disorders. COPD a our clinician-collected viewed a portfolio, our that this Services compared at Sequencing cervical alpha-X And period and Recently, Population other progress organization for test and and product clinical mentioned U.K.-based in has HPV publication economic primary the for and quarter our have Manchester journal just we from made that a researchers Health, authorized of University for two risk self-sampling for

The effects three void Colli-Pee urine strategies vaginal using self-collected model flows and screening first eligible of our primary and cost compares HPV including screening, XX,XXX sampling self-collected cervical are sample, program. women NHS for device routine the who in cervical the clinician-collected for

improved committed study the approaches. sampling and support the solution cell routine women as costly HPV could This cancer Colli-Pee of studies U.K. underserved noninvasive the affordable the that patient and an that women alternative self-sampling elsewhere. collection to cervical for device with experience expanding product Colli-Pee cancer globe. with could value around cervical screening Colli-Pee reach and mediated the screening to OraSure possibly demonstrate of clinician-collected other provide Notably, sampling easy-to-use concluded evidence-based to a in self-sampling the scale Through affordable an for is at ongoing prior device. less

we In pipeline extend innovation, our our expansion, we leadership we for growth portfolios. profitable are we are to advancing opportunities are additional inorganic products, of further and position. our molecular our through working current focus exploring as across Beyond potential offerings, will build on to the both organic that accelerate functionality customers each

portfolio, these regarding meaningful collection could infectious sexual disease we long-term and us. strengths in In complement test for year. that in they technologies our could believe provide anticipate sharing more We later the and our differentiators and new health stabilization be to sample Diagnostics

point capabilities solutions. stabilization and to shift actively core services and sample Ultimately, that leverage growth collection they growth product diagnostics our in our the our effortless power pipeline diagnostics extend with and unique patients of innovation care goal portfolio, self-test is our solutions are meaningfully healthcare partnerships In to our in also evaluating and of meets reignite where and to and in across opportunities. are the and we

growth As profitable capital we evaluating our to look the M&A to further and ways by future, we accelerate deploying also look will structure. capital for through long-term

us Our as future. position partner strength for today, well and now collaborator the a and

to results Ken And pleased to our financial and call turn talk to the that, about with over I'm guidance.

Ken McGrath

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

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

last to the is IntelliSwab total growth. of growth. year, representing over components XXX% million compared contributor the million in sales $XXX at Looking largest with $XX

diagnostic COVID-XX, was grew by the by significant Our Together Let's excluding program. HIV products, HIV driven growth year-over-year. strong XX% domestic sales The Stop bolstered

saw also strong the fourth from quarter. seasonality to typical primarily quarter, first demand negative the international We in despite order carryover due

molecular revenue Total year-over-year. our and at products services. XX% Looking declined

year approximately million revenue. $X collection However, the included first quarter of COVID-XX kit last of

X%, basis, Excluding On molecular grew services a showing products and modest COVID-XX collection year-over-year. sequential improvement. kits, our our declined products XX% molecular

see with which this the we with While some sample customers collection, products supports level the industry-wide, quarter. remain top our with around decentralized of trends molecular to innovation continue long-term emboldened and high business disruptions we

positioned for trends our second improved optimistic calendar are We half products be as look growth the will this to year. business molecular we of

were margin revenue, From a mixed new to contracts, test basis. in higher in showed COVID-XX the non-GAAP gross gross XX.X% positive headwinds quarter. our diagnostic quarter quarter perspective, pricing XX.X% with margins were on Despite GAAP the meaningful compared margins our headwinds XX.X% with progress last a sequential gross and we test and

Opus consolidation forward. quarter, gross will per this these $X.XX looking future. on remain new March, month gross packaging ahead. a already to we schedule, automation ahead will Carrie have other in our products on transition our in believe one margins IntelliSwab improved the margins for of We which As site focused our completed We to with leading utilize going save IntelliSwab plans at further positive changes mentioned, test redesign facility approximately impact

at procurement, We and material product with and expansion. are our also efficiencies future new facilities packaging standardization, reductions labor of as drivers margin looking automation

process improve highly eliminates we production were nature. which production manual lines, are efficient. This as closing as our more IntelliSwab mentioned, and overseas Additionally, our to automated highly overseas Carrie is is shipping and US-based expected margins in

of packaging is spite quarter contracts. IntelliSwab will our that impact factor between the two improvements, mix our negatively second margins In one

preponderance lower-priced the means second gross factors headwinds a half by improvement that some on under Our above of in sequential the continued expectation tests anticipate our the by year. that could the basis, followed we margin being fall of contract which

operating our expenses. to on Moving

quarter. fourth the reductions in were to expenses with to in were $XX.X $XX.X This timing and while primarily we our litigation expenses the million, operating attributable operating was expense higher modestly benefit from GAAP while receive increased February. our non-GAAP spend did Our quarter headcount the in our quarter, million some relative

realize additional annualized forward, plan quarter the efficiencies Looking beginning earnings. operating during second we in in to highlighted expenses we million quarter $XX first the beyond

our for to to as attributable as cash support production, excluding scale the XXXX. in InteliSwab Some SG&A the down we core well accounted of investments These of utilize is cash achieve we our are are to savings other are of in for savings. our committed which identified revenue for flow InteliSwab and as these by business, growth end functions breakeven savings critical look as

was This income operating $XX.X quarter, million. our GAAP

dramatic million a quarter calendar XXXX. operating and income $X.X $XX.X first loss representing our the from Our XX% was non-GAAP of improvement growth operating year million, in sequential

perspective, working believe the once We in quarter. paper of ended capital, total $XXX quarter modest as representing cash and in significant cash future. from the InteliSwab we equivalents will improvement we with a increases again a convert cash From to saw which last cash million, revenues

end contract. to as the to million have of our government continue $XXX tied expansion has this recruit $XX.X cash of the remaining milestone cash Defense Department The of now the been of to quarter. the first spent, flow positive also in generate We from to we from million and majority expect payments

Turning to our guidance.

quarter school the quarter. we April are ordering As total in quarter. $XX from for million to sales Consequently, InteliSwab previously, guiding million versus in levels our mentioned to second the $XX in million in first first $XXX the the declined we compared to Carrie revenue program of saw the orders government seen

ongoing total the million. revenues earlier, a to we to are government. we discussions As in are of Consequently, with million guiding second $XX $XX quarter Carrier discussed

expect optimize to of receivable million work cash Department our growth to we we Our contract, goal down with has InteliSwab from been milestones inventory, for investments. future generate flow generation facility Defense existing balance meet on collect $XXX operations. the our as meaningful and remaining And on significant cash

conclude. over turn to I'll that, back With the Carrie call to

Carrie Manner

order priorities culture innovates meaningful in and in progress Thanks, continue we disciplined deliver a in operates strategic execution transformation shareholder make to creating and with on our and to Ken. summary, And that accountability value.

focused We generation continuing expand manufacturing through the partnerships, strategic organizational, opportunity our structural on future internal bolstering are efficiencies, and of improve and and optimizing pipeline InteliSwab highly innovation. growth to development to core cash

We also as meeting patients, power to we are access, shift transformation believe on and delivery, our We care. of forward people, that capabilities quality the on increase you continue to execute strengths foundational care and continue where affordability progress our health help to can to our in they updating look journey.

over for I'm the call that, to pleased to turn back with And Scott Q&A.

Scott Gleason

follow-up limit one your begin and Q&A a to to portion Thanks, call. now broad would question you ask participation. We share one the of Carrie. we and that questions Operator, the are ready

Operator

this will question-and-answer the Patrick Donnelly conduct At the of first [Operator question we from Thank from Citi. session. you. comes Our line time, Instructions]

Unidentified Analyst

Thanks question. Liz is taking on This Hi. for for Patrick. my

So on pull diagnostic forward part this that I of was the guess, quarter? of the international orders, of you how to that first, quantify much able are

Kenneth McGrath

for the question. Thanks Yeah.

at you quarter the quarter. quarter, about NGOs we seasonality this approximately orders other organizations. amount. When total quarter, placed we when And you million fourth look are in I because look at think they we international the orders quarter, similar positive typically, fourth think orders are the last $XX a see in nongovernmental the by and the saw when

that did on completely we quarter that fourth of carryover. talked weren't fill. you call see there earnings to demand that our some was And We some quarter so about probably is what the able this

about $XX million, had how size, might you you and we so And seen. so have how the quantify guided we obviously good think when exactly idea -- give didn't with you much a much about

Scott Gleason

I international of at add And just for revenue referenced, last seasonality. business look QX a that, as as to can you year guideline that to

Unidentified Analyst

ton Understood. the tesa. cost $X.XX see Thank per savings you. great to And then I'm

I think tests, may towards this. implemented touched $X.XX be of just guys that you that was I'm those quarter. last up initiatives have you some discussed wondering on from think cost on other I

something this is expect that hear So can year. we to about that

for thanks. it me. wondering applied? how be could And Just That’s

Kenneth McGrath

can Yeah. answer other we And opportunity on I think heard I InteliSwab lines business. the Short was, is the your yes. the the leverage from savings product question What cost and existing was other leveraging will lines, InteliSwab with we that HIV, leveraging develop going capabilities HCV we product of did we forward. are those be that our automation think on products and in

Carrie Manner

I'm packaging opportunity specifically And regarding an sorry, the because product to redesign, resubmission by at that's a product product does the -- look involve that we FDA.

So we're I share our inform prepared timing. moving aren't specifically learned, by on those it forward. or to and lessons think But and of the looking product does really development benefits opportunities at anything

Unidentified Analyst

you. Great. Thank

Kenneth McGrath

you. Thank

Carrie Manner

for Thanks questions. Great. your

Operator

get our Please as we stand next by ready. question

Please question next Alexandra ISI. Our comes from from Evercore go ahead.

Unidentified Analyst

one Hi. on just for have I question. my gross Thanks taking margins.

rest of You're for the up sequentially. that progression about year? talk the you expecting and you're just year-on-year the Can

Ken McGrath

Yeah.

margins, and If drivers, There's several mix. right? mix you pricing are think there the about product gross

headwinds mentioned prepared was earlier the we remarks, the mix that contracts. the around of of one InteliSwab in So

the shared we've have before previous calls, As three with in we government. contracts

the and one, I think is shared first the is, we've this The in past, $X. original

The is to What come approximately preponderance expecting QX from one contract. we're second is second that of volume our in $X. the

will which as other we packaging that the a automation headwind, mentioned will be that we offsetting as some redesign, of help we is drive. the mentioned as well continue efficiency drive in the tailwinds to So us efficiencies

forward. how about So as I would model it going think that's your

Carrie Manner

that a the temporary then expect in QX to based we be half. on second mix compression And recover to

Ken McGrath

think That's right, I shared… we've and

Unidentified Analyst

between between going could just follow-up InteliSwab you we to how the like just and and segments? about if business, two was ask I think should about those base margins a talk Sorry,

Scott Gleason

Yeah.

biggest and products. we've year, services. our our with what we've has, business Alexandra, our highest with think amount trend increase associated the revenue shared the our molecular you key of that's the I to mix at the business you margin kind been when dramatically. and that's for driver at look diagnostics is look diagnostic our obviously, portion of products there seen amount of molecular the products When that is last The is units, associated

the look products the year we And shift towards again, positive so begins as as half in of begins increasingly at year. of the margin gross that to drivers will mix of second molecular our as to of shift the mix the back the and back actually a be one driver half the

Ken McGrath

Scott build of to and add to just what And said off what Scott said.

pass-point the the gross in IntelliSwab actually improved so overall of that margins. where last items for we One at it's IntelliSwab the seen gross or the to above now we've margins our average had that is year weighted over

Unidentified Analyst

Thanks. Great.

Carrie Manner

Alexandra. Thanks

Operator

Thank you.

next JPMorgan. Woodring question from comes Our from Casey

Carrie Manner

Casey. Hi,

Casey Woodring

Hi for guys. Thanks taking my questions.

the year-over-year diagnostics the side, guide both for XQ about be molecular at growth talk you looks that on just in core just So flat the business embedded it will sequentially. XQ Can like in and non-COVID guide? the and on midpoint, what's growth

Scott Gleason

the at obviously, Yeah, think diagnostic when business. you Casey, the different components, we look have I

The had international that sales improvement -- first in some. And change but first quarter is we're we so on a that the there then the expecting piece could products of second second we there. that what not taper to said are business, half to we we elevated quarter, we're start optimistic we was obviously our the look huge with year call the the molecular towards expecting as see in some

by really the two sequential that's in and when what's business so flat core at relatively look the implied factored pieces And a you guidance.

Ken McGrath

we and saw increase to there it. an QX, to with what HIV from And we QX. saw Scott In on a also side, diagnostics increase the Emory in on add to build program said our significant

one felt forward. flat a bit was we promised but that that's going going areas of are little forward, more We sequentially the

Casey Woodring

payments. on milestone I to Got touch wanted helpful. it. the That's

I think What You those? those? million you was receive it to this to Can do elaborate year? you need to you do receive mentioned, expect on worth. do And $XX them

Ken McGrath

a definitely. question. great That's Yeah,

$XX few of So the dollars million, have spend we a to left. still

So and to then what when about have think of we we of million net the that you the think forward dollars a spend going million. collect $XX $XX

deliver the and their plan capacity receive ability the our year. through prove of to it The all expect of to to to regulation. government the go We is by end amount

$XX now, to receive in payments that of have will point, the At Right completed is that plan full the QX. million. we

Carrie Manner

track And we're well on

Ken McGrath

on well And we're track that for absolutely.

Casey Woodring

it. one for then That's last And me. Got helpful.

talked I guess, on calls. Just, lot maybe Colli-Pee than the a so more about call, Carrie, previous you

So, can you is think business today? of you you. maybe several? us that over remind this those catalysts next just of talked with here, big grow product that how And how do kind then all year and about can Thank the you

Carrie Manner

thanks. big enough out is to yet. called Casey, have Well, not Yes, Colli-Pee us for

are potential to We it as liquid in biopsy through of both because insights as oncology the about unlock well STIs. excited biomarker urine,

you us that is what product fact today encouraged proof volumes and by for have sort the variety in think chemistries. So, a of different of clinical I and hear we the Mark progress CE

different are there chemistries STI oncology the and applications. between So, the

think guiding set And we opportunity we of today, potential path progress. volume, to not stage the we'll to real Thanks, the say in clearance. terms to not so with yet, current working the clinical be but we're there's with But want Mark immaterial Casey and that but with CE long-term I'd regulatory US

Operator

Raymond Andrew our James. Okay. ahead. from Please is go from final question Cooper And

Unidentified Analyst

my Thank for on you for Andrew. question. Liam is taking this Hi,

Ken McGrath

Liam. Hey

Unidentified Analyst

$XX you Hi. you before. through out million about that of the kind cost from called might the Carrie, you kind for rest talked Can walk savings me that of Thanks. how year? further look of

Scott Gleason

we quantify and not we're didn't Liam, savings significant. ready those, are the but Yes. yet,

working fully we're that look right that yet of on. Some through for has would later it And be you to and quantify now. so to we completed

they on on for so And update an future that look calls.

Ken McGrath

context, stated put our of then it from on end perspective, to cash think a target just modeling breakeven is business core And to XXXX. be I from of by operations Yes. it in the our remember, flow

Unidentified Analyst

XQ? there? might other see Together to should the the And molecular while nice there. back And see raising Thank on we look. products Can helpful. growth side, incremental little HIV the how you. what That's I XQ was then also program, just we half and bump thing, one about Take in Thanks Home on a think that wondering, for Me Great.

Ken McGrath

HIV, could yes, haven't time. It's But been program, from we three-year terms under mean think any I little about would Liam. Stop of product you predict difficult We allocated. Let's to the that specifically guided a of overall a lumpy in guiding -- When specific program, Yes. to you orders the over that terms in exactly the timing other what the have of it's would expect be product, ever where dollars. program, bit individual It see to not somewhat we like. any looks quarter-to-quarter. funds

Scott Gleason

units we've year think past the about five think that HIV Scott, our could Yes. then test. factor is price price you the that I said is about per in average typical the we and with XXX,XXX years, our

Carrie Manner

you with And up us program adoption start describe very good heard what got is a communities. of the in the launch within very to QX strong

And And as a positive with that sign. to just so, share always as well. to share more that on we potential that ordering, that changes will have is we any momentum

Ken McGrath

but and Where channel we're surprised, health the we're partners. the by that not our encouraged from channel of pleasantly usefulness is public surprised,

Unidentified Analyst

Great. Thanks.

Carrie Manner

questions? Amanda, is -- all those are the Great. that Thank you.

Operator

the That's all questions.

for it closing remarks. to Turning you, Carrie over

Carrie Manner

to you good Have Thank and afternoon in do continued you evening stay Thank everyone much. you for for That, today's we’ll Excellent. safe your interest close. OraSure. participating and Thank well. in and so a call.

Operator

participation conclude This your conference. today's in Great. for Thank program. you the does

now may disconnect. You

OraSure (OSUR) 10 May 232023 Q1 Earnings call transcript