OSUR - Earnings call 3 2023 | OraSure Technologies, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the OraSure Technologies, Inc. 2023 third quarter earnings conference call. [Operator Instructions] Please be advised that today's conference is being recorded. . I would now like to hand the conference over to your first speaker today, Jason Plagman, Vice President of Investor Relations.

Jason Plagman

you. Thank welcome Third and Call. XXXX OraSure to afternoon, Quarter Technologies Earnings Good McGrath, Officer. on OTI Chief President Ken for call Executive Chief Carrie and Participating today our are the Eglinton Manner, Officer; our Financial and

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

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

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

Carrie Eglinton Manner

us today. and joining Jason, for you, everyone Thank to thanks

million to during X cash pillars elevating strategic the highlights and we provide to flow grew two, pleased growth. accelerating growth; A QX balance million. our an update on operating on $XX of -- and are include: three, our few the in OraSure's -- We our core cash generated progress one, the $XXX transformation. quarter of our foundation; strengthening notable profitable making

for of reopening during to execute million in quarter. of as award part And U.S. test the we volumes delivered conduct, continue NTELOS the for received we orders $X.X from on the future of government an September, We stronger-than-anticipated IntelliCabCOVID-XX and COVID-XX our covitest.gov.

revenue core year-over-year on delivered of growth X% a basis. We

solutions on and on to innovation savings continue sheet, our with efficiency to cost evaluating growth. road management operating operating to cost and highly expand in internal services sample We to our strengthen delivering And assays efficiency. portfolio unlock remain we strengthen investments both long-term focus our greater related balance in of focused order as of with and are our our and we accelerate investing foundation, map in production expenses. and as we including nonproduction Starting and our driving partnerships structure our for external improved cost enterprise-wide reductions continue part stronger

During the our quarter, the we in final Pennsylvania. successfully expansion Department at of capabilities Defense, to and of milestones contract included Wave our U.S. the automation Batam, capacity related completed our Opus the in facility with completion

in $XX the and With make progress of million have our final this already efficiencies Additionally, savings. milestone additional in payments expect collected to expansion the phase we manufacturing QX. further here to of drive footprint completed, cost consolidating we

enterprise-wide on that efficiency. improvement tremendous Over progress year, have establishing made the mindset in we is in focused continuous an operating last

controlling coming our facilities target our will XXXX. costs. the leveraging operating including over the enhancements consolidating years, our flow of productivity additional generate to breakeven cash automation we of business achieve our give expect initiatives capabilities, and that confidence We for end by further us These nonproduction core

COVID-XX. to Moving

in revenue volumes in were QX. expected, generating stronger Intelliflo Our than million $XX

our portion be Health the we continues complete trends relationship order Human -- and first Department half existing to XXXX. to good remaining positive. have of Services that the of of during contracts U.S. Our the with could and visibility

the U.S. future of free households shelf FDA covitest.gov. U.S. U.S. Slob for September. the available part orders life of as Covent from XX side, extension award from for reopening in XX the the earlier, we approved to Additionally, purchase to on in the months product as $X.X of I are tests September, across And for mentioned X -- an government, that received million Intellis the

create at program, testing revenue Together, grew to QX excludes to basis. our strong HIV on take a and the our underserved franchise, at-risk enter year-over-year core the products, COVID-related for in Me year We In additional our in look to access infectious continues positive disease business. our forward program collaborate X% as Looking we outcomes initiative. populations. total business, core this traction with expanding which And Home demonstrate from we to HIV X-year believe partners of second continuing important this to the could opportunities

resonate quarter. to also to Diagnostics continues contributed our which HIV growth differentiated in Our in international markets, the product in

expanding this will launch are tests new be provide to can that international through expansion test of in this Through available international agreement for international X opportunities. in team we our of markets our a late relationships new tests growth. B will and partnership key syphilis, able client portfolio menu hepatitis existing for additional future disease our through hepatitis Additionally, our year. and new and offer B. partnership, infectious sales believe existing this We fuel markets channels

to market. substance and presence testing and our our the in expand these offerings point-of-care This sales the manufacturer are a toxicology the our our channel leverage we abuse of testing through in abuse devices. portfolio, distribution agreement of services expansion Additionally, announce team pleased allows substance agreement with to us

toxicity part covering add several As range opiates panels we amphetamine. including agreement, oral this will of THD, of and a drugs,

to molecular. Shifting

relationships signs and that as despite of segments We softness in sample new some And our relationships. as seeing extending in in see we management end stabilization well momentum discussed solutions previously. are positive existing we've partnerships to commercial continue establishing

our announce rare with variety hereditary example, will a device multiyear using relationship to Genetics. Ambry testing be pediatric for of health we our and Oragene disorders. pleased related Dx reproductive are extension hereditary to Ambry of disease, a As an cancer,

expand As base, the Animal our delivered and also Companion to to we're share we've recent we customer the proud continue diversify success in segment.

inorganically, X sample the that selected organically leaders to make collection the including as continue growth to been and canine on progress in profitable accelerate and device we external has space. Overall, by product for acquisitions. investments being potential gene health our through initiatives offerings launched new Performa Our investments are

and track our landscape. strong that channel partner our differentiators execution precision the and believe comic customers, factors into delivery and our We help record navigating current positions positive experience power well balance the complex consistent choice strong of for in these client to key processes, flow our the approval cash relationships, as are generation as to market health regulatory future. sheet and plus be our OTI of

like our to turn I'd and discuss guidance. to to results Ken that, financial With call the over

Kenneth McGrath

million the core in quarter. Within was quarter financial the outlook. In happy COVID-XX provide we million updates excludes contributed contract our This markets. products of discuss international of generated XX% the $XX.X our $XX in quarter. stronger Total by Thanks, X% results million Carrie. delivered under our Purchasing on than which and representing to products, driven the QX I'm growth year-over-year and growth. XXXX quarter. grew revenue and patterns U.S. with of revenue COVID-XX of in U.S. third sales were in $XX.X QX, products, the our test Inteloswab, year-over-year. revenue, during total expected the federal $X.X revenue predominantly third core for revenue, diagnostics third HIV was government million.

line basis, quarter products. . Revenue which decreased sample but was Looking XX% in our million at $XX.X with sequentially, third in a molecular increased X% the our expectations. management year-over-year of on

in GAAP perspective, margin margin discussed. to expense. purchasing gross Non-GAAP quarter. a From in patterns seeing third as are including stabilization large see That the customers XX.X%. areas, manufacturing current to improved we We continue some was quarter our opportunities as from of efficiencies, was a XX% said, customers well muted new gross margin operating also few Cary lower the during due third quarter in signs the scrap with as gross

Looking in gross margin the expect moderate the mid-XX% product the fourth Intellisap volumes. range anticipated shifts to ahead to back quarter, to reduction to mix including due we

expanded margin we As over mid-XXs from the years. we drive we margin the beginning additional can believe coming our a high gross range at to the of XX% the XXXX. And have XXXX expansion in reminder,

standardizing operating driving delivering enterprise, savings at Opus We remain further Shifting our consolidating expenses. capabilities our procurement and leveraging sites, our products, facility. Way across on to automation focused including efficiencies

for which million intangible operating $XX.X GAAP quarter acquired Our assets. $X.X the million, expenses were in of impairment includes

Our The primarily in a decline sequential operating to expenses $XX fees. non-GAAP legal were expenses due was QX. operating external million in significant non-GAAP decrease in

achieve additional on nonproduction of look to in efficiencies to by coming expenses operating cost flow savings in core to goal business in cash XXXX. our We end and breakeven growth driving These focus as important continue in invest cash in quarters. utilize to the our we our are our

$XX.X equivalents quarter. The $XX.X cash short-term million income and million by last from inventory cash, million, in in the increase operating levels. QX, which which increase cash quarter GAAP which QX was QX operating our investments $XXX million QX reduction balance during million cash of X million $XX was Non-GAAP the up debt operating in is flow, We total driven Our is was from primarily million an XXXX. is from a with $X.X year ended ago in in including quarter. in of $XX.X our $XXX and up income

facility. of $X.X Opus payments milestones received related in the $XX final to QX, Way we also million to QX our Furthermore, We million the this related at collected project. achievement in milestone during

to guidance. Turning

million million. IntelliFlob fourth revenue which revenue $XX to quarter includes of $XX to guiding are million We $XX $XX million, of to

and revenue the flat QX implies expect of We million midpoint year-over-year core on million, revenue to a approximately $XX basis. core is $XX

QX of efficiency, Finally, announced annualized are in $XX to we million on XXXX. cost enterprise-wide as track operating ongoing on of part the our focus savings exceed

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

Carrie Eglinton Manner

Thanks, Ken.

delivered strategic quarter, our we progress During third the significant on imperatives.

transforming our and to is delivered health of of of that the execute operational foundation our confident expand our the health improved completed aligned the over in are. cash with We capacity well provide portfolio Defense access, of and our some final milestones that of actionable coming we our sales to quality powering improving in contract connects flow solutions at and we Opus care strong U.S. effortless can care and U.S. Overall, globally on team We tests shift mission the strengthen to innovation facility. through of years. people wherever services expansion health health and is management OraSure sample value clients they insights, our related Wave with the continued examples positioned where the is our included care to tests, our headed with plan are generation and vision in to through Department to efficiency. our

pleased I'm With the call operator that, over turn to Operator? to Q&A. the for

Operator

Jacob [Operator first Instructions] with Johnson line of Stephens. question from Our the comes

Jacob Johnson

discuss big just a was kind mix of assume quarter. benefit the gross on a just a in executed Congrats much quarter. exco shouldn't basis on But improvement nice on line, quarter, margin your margins seems you've this Maybe, the that how we comment, the an seen gross from gross could margin? in standout Ken, was XQ. like you which in

Kenneth McGrath

past, we've way One Yes. is Thanks, Jacob. facility. in a the improvements are comes our areas. it Yes, some our couple the of existing improvements as our as when expressed we And facility our seeing consolidation seeing ex-COVID expertise. of overhead of continued we are to -- and operational facility, we're -- Opus around in leveraging particular, in leveraging the

tremendous other our our we've The and our some scrap. other on innovation packaging our regular products. for leveraging then the product that where that we our of of in We've our basis. leveraging Intelsat start can product scrap into then a other in around is some one into with other then we . And and reducing made can lines. our that automation leverage, levels a some standardization, is improvements and improvement achieved automation product, example,

Jacob Johnson

Ken, my And helpful. follow-up. then maybe, That's it. for I'll with just you Got stick

think, $X you'd base the Just Or there? I million quarter. . just out Is the the in there a is call decline anything implies, business that guidance in fourth seasonality? sequential else

Kenneth McGrath

the into probably then molecular in some mostly our could purchasing related in previous diagnostics seasonality, some our the particular, customers funding you larger think to years in in difference just a international really our I patterns. and Yes, timing and our lump of in it's donor timing of products from it timing

Operator

from Woodring next Casey The with comes question JPMorgan.

Casey Woodring

Great.

Can contemplated in there on in InteliSwab And you guess, how XQ half, was just the a that sight then in that more think contract government -- help government next us is mentioned have back how you should for year. the . half that XQ? frame of of said of of for XQ So for million line we I that you run you was much revenue lab? rate first just Intellis think of you about had expected. kind line much $XX in than you how of Intelliswab, I revenue sight

Kenneth McGrath

I'll and are past share we've shared of Yes. some the numbers we in that the today. where

quoted remaining, past, on main that the last contract government purchase from million million QX I the is shared and devices we $X. for about about million the left. left we with So of Intel consumed quarter past of think total units had we we leaves HHS have the point XX price that you That's swab. $X, $XX in the at can about in the And confidence were $XX the Coven in $XX would there. apply that about the revenue units That amount those QX. in million that,

million, roughly $XX $XX Our about $XX guidance million in or is QX. million so,

contract of mentioned to dollars million $X that So leave that would received another we revenue realize additional dollars that the million now, months. in million which contract the government half to additional which include XXXX. couple the from we not the over first that's $X of recording does year. related that this of $X.X expect X QX, then Kerry now remaining the in And in past And

Casey Woodring

That's wanted services. Got touch on I helpful. molecular it. to really

I macro us think there that being through from kind that business on headwinds funding-related XX% expectations imagine and business just of XX% and XQ? would there. declined is year-over-year. I that, for walk Can sequentially impacted you

So further kind in has what expect at that all? just to stabilized that down? trends Do you are step business? of And

Carrie Eglinton Manner

return the aren't real delay I do still large -- hope really strong the during space, recovery Health, in this health, start. And a sequencing that's a I all of We to the if do just it's think with don't who it is. timing, we in doing it's And We of it's we're a work. on academic is recovery well, customers for, looking don't molecular interesting bottom, Casey, the But -- an that what looking knows think but services, in seeing we I'd COVID, is nascent. believe are impacted That's it's was This most green think, know. we're impacted which precision really, Yes, in is shoots and of say for been have of yet. the we funding. On think, COVID. was pause -- I'll super very everybody and sort services. microbiome looking but part experienced everybody of else of some it. to think very all funding part those We Precision return. I business what full X sort -- investment that on know we the we of both I but interesting in as

I return it, think that's of color on for probably kind everybody but we're like looking just the that else.

Kenneth McGrath

There clients. yes, going that's lumpiness related to the is But some certain

Casey Woodring

for then sticking just And Okay. question me, molecular. just with last

those have genomics seasonally over consumer the flattened past, in understand strongest given years. has sort of holiday your XQ benefit, season the been So you guys quarter contracts I out the

-- on guide. sounds So still just like XQ business that reflected there's It in customer kind seasonality curious of lumpiness. some in that of the kind

the that's is the those any see And orders? to want is color there 'XX, if . of just larger in kind the what then fluctuation customer business rate I So right you that with if have run of there? some case. for What

Kenneth McGrath

driving some our not at QX. lumpiness thesis QX We're received guidance little we to where particular guide time, think ready what's orders in this I within right on in is that's had to of that we but your And a customer area. bit XX QX for --

Carrie Eglinton Manner

this fill few I seen lot less lining only we're having that the large new is customers If large the that to we've customers. softness silver of color sort add I, I'd -- And a the say there's in of to the is any that customers. would on few dependent we're add in

new excited customers green customers. as about think players, We genomic microbiome, say and to very shoots market in we I'd that are so a a And we of is sequencing that but believe are in large adding how just can the I what not segments. do number there at low recovery . stronger and continue was like many you services, there softness big sequencing look fill say as to microbiome in Again, recovering. I'd

Operator

with comes next Brandon Jefferies. The from question Couillard

Matthew Stanton

It's on Matt for Stanton Brandon.

meaningful the growth. calls the base for next growth do year, It the guide like some in business and guiding business I in looks midpoint the I the for maybe core that? then next flash here talked nice 'XX of On could could disease drivers And appreciate year? infectious expect contributors of the new you tests X grow you're but be key you quarter. those launching, of that mean, business, not behind kind the to about the

Carrie Eglinton Manner

is We include working term. the the more that guidance near that range business, base And into revenue in to QX where about kind low we've you that. this our year, agreements on growth. of XXXX core digits partnerships we distribution X% the that where Brandon improve for Thanks, add announced like year-over-year single see when we're tests portfolio

we impact, portfolio to While year. in of this I'd profitable core a say change accelerate would say to are I that wouldn't into it's we call material our plug that in that next order to for and X%. growth. expand year's moderate working core a sort

While range that that we it's guidance about increasing. to kind aren't in providing think XXXX low right single-digit but yet, of

Matthew Stanton

'XX. just year of the for you gap getting the end that by do between and you business any of terms this the either we flow has the XXXX. tracking could of free where progress get think to And of of and or year-to-date? by some Just is on burn clarity made business been bridge about break the to cash Maybe then closing color some talk this XQ in in trying the today year, on core what what the where we breakeven are they'll end on kind even Ken, about provide

Kenneth McGrath

achieve from as flow progress. cash of making we the being goal business We're core We're operations XXXX. will that still we exit Yes. our confident breakeven

of -- news mentioned drive the and we reductions. we in lot continuing opportunity $XX good savings As cost exceeded had we QX, and more of target is a the that, cost million drive we're and out to we've have

contract. -- we progress that, mentioned of tailwinds do lot overall perspective, $XX a already from that in to the an Department higher. did Defense that quarter to $XXX for cash had drive we the we making collected we at mention see QX there. related And We So QX that the of we million million. in finished

cash related inventory that addition, In positive our our some as balance generate should think to receivable then and accounts items tailwinds some we have we'll we And this flow well. area quarter. in

Operator

Vijay The next from comes question Evercore Kumar . with ISI.

Unknown Analyst

to on Vijay. I is And X This seeing we that actions ones. this we've going more on same then is Alexandra that have quick that for when this at showing could just out? quarter? Tim, to actually just Age new there's further expect as be you the $X see give color, ASP, those On contract, past can and any been cost

Carrie Eglinton Manner

Alexandra. the I'll start is in $X contract just on range. the HHS

been our and XX that we the So range. X there in awards RFPs last with on -- that government the were . were all really range they're in as latest have have

Kenneth McGrath

the the math that, and Terry On on action on said. cost just to build what

out $X.X expect million. is that So we we revenue set from Latha the

we other was product at comes to learnings devices that operational as On made automation, opportunities the that the So some just so. of from automation the And that as and well looking or focused we're volume -- years unit also volume math progress reducing of and Intelliswab scrap, areas focused of want to had by X.X that X last the other when scale. all a to to lines. really actions, Opus comes consolidations in the looking which lot it overhead learnings facility next X, year. into as leverage there we facility the more basically, down divide that's well by product do our the facility. are putting where we're it standardization as and on Way when packaging. applying cost leveraging We're on and efficiency our paying driving we that at at so expecting our doing

side. all So those we're the are That's operations driving. that on the areas

-- a through side, the doing profit our look our what On at and mindset streamline areas kind trying and we're of drive all the to at look cost can is of we way that. savings processes. excellence we where OpEx along opportunity leverage where of we

Carrie Eglinton Manner

Lean rigorous leading and drive and having accountable And Sigma specific is talk we training rigor. by both Six the using the that organization only indicators the indicators, and key we work stream methodology, lagging execution to have people about, across area function performance by that really for

So the on of the core -- cash on that by types are operating an from . on of things give flow confidence next the breakeven end us commitment that delivering our those year.

Operator

comes James. question next Raymond The at from Cooper Andrew

Andrew Cooper

always in sort in molecular I has how margin for than COVID, And things between longer longer-term the core? guess pretty business diagnostics -- question. about into these this growth perspective? think margin term, . the first everything different I think kind back historically, we been from bringing components molecular there's coming a the it we If maybe more a on portfolio the big when Maybe into look peak. all was business. just guess, term of a lot about that lower -- together near changed, gap and side the at gap we or of gross a way, should where OPUS of then the post

Kenneth McGrath

correct the for at are you probably is what down the on thesis. kind a term question. everything mid-XXs. Well, margins you guiding described Thank normalizing for QX, is we we're of the the to not back But looking longer

higher into gross margins. our Way was where it's particular been and a leverage do to higher. The the overall trying the dynamic year, much we're driving we to improved to significantly and And than our so average facility, margins before, efficiency has drive over margins, and from and year will are mix take driving advantage what TELASA, the started our than in starts cost processes. -- We are we is that -- what overall our a portfolio look try endemic the to the getting overall advantage mix that's at the out we leveraging gross diagnostic efficiencies. has dynamic our of mentioned that last the which our higher overall operational trying the was standardization impact the of that take take automation, improvement Opus but last the drive I -- or again advantage of when the lower products biggest are efficiency, through doing items facility our in of and And then phase, on is margins point benefiting of in

Andrew Cooper

Maybe Okay. just on the capital deployment rise X That to is continues as helpful. cash here. balance to credit your

Just how the But what right trigger think shown. all to environment you're what evolve. seeing you coming out like the what's any there as continues desk . the in the there's maybe you've change if maybe we look assets to about the environment, across discipline the and and when make

Carrie Eglinton Manner

in a strengthening and foremost. put long where the first this let specifically. address for about and capital term. the business, to and to plan investing of deployment I about then term think innovation I'll the with excitement this long We investments, start, But started we us the together I'll transformation Ken of more opportunity foundation mean, that's that think give

diagnostics molecular -- and strength Internally, So externally the really investing of and balance and taking management to capabilities the solutions. that's on that's sample we in about a us I'd and both giving everything time. coming organic economic in what strong vantage and our say, market is think building portfolios exactly across point on based We're the that's diligent being our are start incredibly we where sheet our landscape,

having build about to for on the we what shareholders very lot being most to thoughtful this want market. coming the because And comprehensive for fundamentally, -- there's and in and value, do both based we're is base but a challenges a across long-term to that just our customer . use So portfolio.

Kenneth McGrath

Yes. And to said. on what build Karri just

maybe keep now, to I to conservative to million that probably expect there. right based cash and million really on that So tailwinds that earlier. mentioned we being is about expenses operating the increase need our $XX of million we cover annual We have $XX to $XXX we we're -- want

as you at gives before mentioned of bit past, imagine, what -- I that to and diligent what mindset look disciplined at with be as sure have to and starting a the success So profitable making it. and is with. the that we partnerships can we're opportunity work be little we look gunpowder high able growth. look a and us partnerships through to mentioned get That's that that want growth to Kerry's in drive And we and we in trying for future to is our

Carrie Eglinton Manner

strengths accelerator our with really can Where together that. an be

we'll in there's at. So look what to we're say right everything looking we to I'd time we're lot a our choose . taking just at -- and but really But think be the thing.

Operator

The next question Citi. of comes from Patrick Donnelly

Unknown Analyst

This is on Patrick. Brendan for

Just for X me. X quick

disease, So extend areas sexual of call, earnings health infectious to last you guys possible to. highlighted and respiratory

pipeline for guys become So areas I of was have the quarters updates new you any any or that are may in next years? or that mean, kind wondering there been in the revenue I on few -- generating of those areas

Carrie Eglinton Manner

Yes.

the right announced and that's and with of is We is test. for But in So the both fastest-growing international this strong U.S. we've the which Syphilis, hep me -- say exactly let terms building sexual segments, as what And international portfolio, I'd B portfolio STIs that's for we're and sexual in our well partnership with be partnership our clear, agreement HCV an of in very International distribution. international. around infectious health disease health. includes infectious on realm strategy disease X plug the into as well and as plugging HIV of first HCV Syphilis and test

distribution rather, a year. impact. expanding we expect launch wouldn't I last our would of right But sort of quarters. for been comprehensive few say line and the next you in the to near about in I while talking quarter that I really terms ramp we've call that any think for of would of strong it's the are with we reiterate In -- up, and guidance example portfolio, not we strategy it's that providing

is in excitement of our right these public And the So it's interest just there health relationships commercial the wheelhouse partnerships as the our donor we it's team, in existing to our well. and part portfolio. right that client of have, announce

Operator

This to Eglinton now like concludes President would question-and-answer back it session. over turn Carrie and to the CEO, I Manner.

Carrie Eglinton Manner

Thank your look to interest and you thank for OTI forward to everybody joining. in and our We so much, conversations. you Thank appreciate you. . ongoing

Operator

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

disconnect. now may You

OraSure (OSUR) 7 Nov 232023 Q3 Earnings call transcript