Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by and welcome to the Cue Health First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference call is being recorded.

I would like to turn the conference over to your speaker for today, Lorna Williams, VP of Investor Relations.

begin. may You

Lorna Williams

welcome call. and first XXXX quarter Good to conference earnings afternoon Cue's

Joining and Financial Khattak, of Ayub me are today Chairman and Javed, Cue Aasim Chief Incoming Chief Officer. Health; Officer Executive

let me forward-looking growth, of and strategy, be statements our Before we future including get begin reminding results we statements, expected you the impact to long-term assumptions, financial by related of subject business, overall other may the that performance guidance, started, pandemic. as future prospects, cause are uncertainties, as These differ those could to that the risks, to materially and well factors statements results described. COVID-XX actual from and

risks as public reports filed These to, call well limited as not with the other statements and SEC. from but uncertainties our and risks are in today's those outlined in identified include, time-to-time

Forward-looking except required any made we and the as this of based made, are to date obligation have update company beliefs call as and on they by statements, are law. assumptions the disclaims statements that on these

addition, our In non-GAAP included non-GAAP are be will measures financial GAAP measures in Reconciliations financial between release. used. and today's earnings on call,

our Finally, the this recording Relations available call be the like on mention website. of release of and will page to I press would a Investor that

call I'd that, over to With turn like the Ayub. to

Ayub Khattak

Lorna hand. we range performance of million which you, is guidance the quarter us for thank at on $XX our joining and of the financial Thank and revenue, total you end with the Cue's cash delivered today. for everyone million first quarter ended top $XXX of

care plan our is way to do. of progress are making our results delivered at strategic significant everything heart healthcare from predominantly we we're the product, the these While with diagnostic-enabled COVID-XX improve in

that in future are growth, between I but for period. believe today, well-positioned Cue's realistic a we

the us growth and in between and second believe that in will expanded return half we of we flywheel success come product our saw are COVID the to product from deploying of offering opportunity, the which execution our believe year. our will We initial unique from we success the

future the build growth of Namely, manufacturing up have significant We million for years to deliver completed last Monitoring core in on point the System Cue a to our largely menu progress major over innovation R&D diagnostics. capital and and will two power on the $XXX expenditures pipeline we our our million our capability. automated at-home our and build infrastructure and and $XXX investment spent that expansion Health digital care to

an Cue Care new Additionally, Integrated enable platform telemedicine, our lines capabilities expanding the universe launch for of expanding recently, in treatment product investments in the lab-based to Cue resulted of and most have testing, Pharmacy.

Now, major preservation first we as key regulatory new submitted on the already is R&D on cash tests tests macro given the push, of approvals environment. studies we and towards finished work A on clinical focus the final few have its

we last will cost that savings in last To the an $XXX roughly In annualized made This spend. million cuts expected million additional we announced week, annualized announced million end, in in our as investments gain $XX of the Care, macro reap on Cue Cue and and come Integrated to Cue the our plan Cue of of our products Lab, we platform pipeline the Pharmacy. to the weather Care climate $XXX allow cost annualized quarter combined savings. traction Cue tests benefits to we out commercial

point respiratory to submitted that For care of significant make de a Cue on share RSV submission novo Cue for use. test we Monitoring care offering. we menu at-home on the to continue full and We're for expansion our System, happy Health molecular progress comprehensive a

on de do novo a productive We and expect remain for FDA conversations novo decision novo COVID our the in flu de submissions. flu plus COVID multiplex with de our test, We COVID soon.

beginning the we'll FDA engagement the have are COVID that season. of multiplex hopeful flu continuing respiratory plus and authorized for our had with this the before We've test

expect Rounding the this studies and Throat molecular continue side, out good test on test to Strep made we've to year. of our do and clinical the submit pipeline FDA half we'll second the on respiratory progress the

health authorization we expect we received quarter. for announced sexual we commercializing test, the last which molecular FDA In quarter Mpox in in category, to the next be

of Our good gonorrhea continue in progress test chlamydia the expect and to in studies second is a its and making clinical we FDA to submission year. half this

near-term the for and to the opportunity structure developed, one opportunity that have reimbursement test. of portfolio aligns we the structure represents because point care reviewing cost test the back of our the of like Looking well molecular largest molecular

data a industry wide and pharmacies, flow, best running both settings band workflow believe system for allow Cue to cares, an and doctors' which the urgent including emergency of offices, We of tests for departments. has that into flex retail

phase our first believe and large major expansion leading underserved is testing. opportunity. point respiratory and menu expect an to completed for both and of of categories, is health we of diagnostic largest care to Our menu testing market we point molecular care sexual the industry near-term for The have

flu-like symptoms for number visit are health, another doctor. US, gonorrhea chlamydia for sexual in and a to and Cold top doctor the one especially being the reason with reason the a visit

kits, the Integrated introduced a new platform treatment Care, and of just capabilities Pharmacy. Care to where Cue Cue including Cue several our telemed at-home we've services solution, and diagnostic suite this on important Moving products in test week,

if the in enabling virtual hours. test to and a closed Our a loop medication of to consult options, clinician delivered care treatment test from individuals platform of home, take appropriate, a comfort have to matter discuss the treatment with

Cue presented access a care. diagnostic with complement the are enter of are they delivered a processing. test and collection virtual at-home receive the envision and customers Customers taking in our we Health loop app COVID, test a test options wide lab-based virtual to to treatment we testing, System, and our launched return broader have recently and lab flu, many diagnostic kits to core et While access tests on for to standalone that cetera, their the cartridge the common panels STIs, Monitoring conditions, of Cue including results where diagnostic market, capabilities home variety of care portion Health for for to place RSV,

COVID, capabilities, health number we've conditions needs. other enabled already wellness flu, treatment to of growing for sexual and treatments where continue build common a to health and on We UTIs, our

now birth offers with for the on to control prescription and sexual options access herpes, health, more loss medication convenient dysfunction related well treatments to hair including and erectile Cue as as way.

indicated, medication Health about delivered of web trend This the to service. Cue prescription advice using subscription On to is is an exciting a if accelerated the the to medication and telehealth them receive subscription or common health concerns get as with a condition pandemic, consult customers but clinician app, here was medically opportunity their and believe a the by a adoption secular stay. now for we that as is can

the customer-centric that in launch, feedback customers. to of a and receiving While I'm beginning solutions these Integrated stages live from we Care proud of tend lives. our platform, new Cue positive the are are empower evolve enabling efforts offerings healthiest to people

major lines Care growth. well-positioned With we're continued our progress on our platform, executing our and Integrated launch strategy I on menu new expansion future for the product we're pipeline within of and believe

of as manage the early In menu on the new gain products. our will set process expansion regulatory we cash our progress traction meantime, and continue to our prudently we to

that, With over the I'll Aasim. turn call to

Aasim Javed

testing announced to the the and beginning afternoon. volumes. Since the reduction and macroeconomic the has you, Ayub, current environment good Cue year, COVID company of cost two programs Thank align to

We of In million rate $XXX achieved annualized cost annualized expect QX, actions already savings. a these $XXX million total we in in approximately result of run to savings.

and regulatory We are Cue including on approvals early Cue gaining and spend is to our tests, continue our programs, highest Lab. and of execute rate priorities, comfortable to this molecular new that lower of us of sufficient Pharmacy development traction for key commercialization

revenues walk end through of the was $XX.X first Cue's quarter, the our were guidance. first quarter, the private contributed were $XX.X $X.X for and of Public million high sales. or let's total our QX revenue $XX.X guidance and range. cartridge million. Now, of at total our sector financial results million sales XX% million test quarter In sector

charge announced million to costs. plan. the of $XX.X XX% QX a we million charge down to product operating total related profit $XX.X $X.X a million expenses cost of excluding Sequentially, to QX adjusted announced vendor. margin efforts operating previously a $XX from which adjusted excludes loss million, XX%, reduce were expenses disputed QX recently gross our from relating restructuring manufacturing reduction are reflecting was

Sales and a the million digital quarter, decrease a by marketing decrease driven expense million, $XX.X in first was in costs. marketing of from $XX.X QX and spend

health was product million studies offering. expense R&D decrease sexual $XX.X QX our on focus spend of $XX.X for from we QX, million and respiratory related to a clinical as

QX million. G&A of of spend $XX.X decline during $XX.X million expense QX this from a was year,

Adjusted $XX.X was a diluted net adjusted result, million a for per a $X.XX As of income EBITDA loss or of million. share. the first quarter $XX.X loss was

million, $XXX.X sheet, with Moving priority. our ended reflecting we shared cash slight previously which a over on quarter balance of the improvement the estimate, cash was first progress to preservation the

remains $XXX Additionally, we million undrawn. which have credit secured revolving facility,

with operates Cue obligations. reminder, a no As debt

like I'd respiratory move Now, believe is for a that We the our to seasonal guidance. COVID pattern. testing into settling market to

are lower industry test through. this We seeing from peers pull reflected COVID forecasting

of the shifted have to existing our several respiratory Cue, season. contracts timelines For with delivery align

million result, a of the $X As revenues second we $XX expect to quarter. million for

continue the As Therefore, challenging. we expectations. near-term our demand forecast testing is forecasting to you COVID quarterly will to beyond know, limit

comprehensive on the respiratory plan and we Health the deliver market. Care FDA track platform strategic RSV review. plus the the company for System to COVID Cue continues Integrated summary, offering with our deliver believe in COVID, a flu Monitoring with multiplex, launched to currently a tests In are and more on with fully flu, We

topline Cue second year. few should We half and services also the in the launched of to which months, the Cue Care, Cue in Pharmacy the last begin contribute to Lab,

In a months cash more hand. of strong than with addition, balance XX we on have sheet

Cue's offering. are like further not in of given R&D, and the to our we past investments revenue, QX outlook longer and provide our would expanding giving pandemic, term beyond commentary guidance product manufacturing state I the for While

continue our stage the volumes revenue, to indicative of test to expects For of COVID-XX this Cue pandemic. molecular sell

anticipate for of also from tests molecular available the the half the revenue second year. begin the respiratory to We will XXXX in season contribute our

return at-home We a help R&D, more Cue that significant actions to believe on and namely execution Cue investments addition, of the and cartridges In test manufacturing we expect near-term along durable expect test Pharmacy, announced recent a team kits, EBITDA health positive foundational growth us, Care, reduction and laser-focused by with the to behind mid-term. to return we over badges, generating cost to topline sexual create revenue early capability, to well-positioned adjusted are XXXX. digital and the programs, with

and to over would attention, With that, I'll for operator for thank the call I now turn questions. your the you like to

Operator

And you. Instructions] [Operator thank

comes first Tejas from Savant Stanley. from our Morgan question And

Your line is now open.

Gaby Teran

Gaby Thanks my on is taking this for for question. Tejas. Hi,

the pharmacy Health start, new you So, just offering recently app. to launched Cue the on

And platform? about your pharmacy care positioned offered choose be to way utilization the are then this another do thinking we you offering how Thanks. the treatments as should of via within So, what business overall platform? expand virtual

Ayub Khattak

the Yes, thanks for question.

So, what we're this natural really excited really from Cue doing with launched a that we're already to week It's treatments. announce we earlier Pharmacy. growth

COVID with treatment, UCI Cue as flu treatment, So, part treatment and Care. of

to strategic accessible very And it make our it's be always and digitally-oriented. provide vision able healthcare been and to to convenient to access

So, offering. which this with complement to core -- so this Cue year Pharmacy Health earlier the we launched Care, really Lab, System of and Cue combined Cue Cue Monitoring

across provide really point categories, helpful offering have a is look our blend we for to of of DXC. care, you enterprise, when So, and these sector we comprehensive these have have we products categories. The more public all customer really

Gaby Teran

the $XX purposes, And RIF, cost that was in reductions additional distribution about for great. of announced plan recently modeling be just Thanks. to then given thinking the of how incremental the announced savings January. the savings million should we Okay,

Just recognized? $X charges be of and the should R&D, anticipate $X million to marketing, and we when And and between sales associated G&A? million

Aasim Javed

Yes.

we comfortable play and move plan. our would by fully we recently an way the to $XXX a reduction, The to the expect add structure year to announced I about strategic we What is is million it out on through achieved cost of QX. year with achieve where have basis goal our the reduction as annualized decrease On cost $XXX cost goal million in is we're end. think we'd our which spend of

To hit, it's a to that's on the chart will range. $X million, when $X your question million

to range that expect QX. We hit in

Gaby Teran

Okay, Thank great. you.

Operator

thank And Dave from next And Goldman you. Sachs. Delahunt from our comes question

Your line is open. now

Dave Delahunt

on seeing? color DSC Hey, point guys. more care of that and mix government versus Could you little you're of please give us a enterprise the

Ayub Khattak

have is that's the test Reader thinking are so System, So, of one near-term, we Cue really of in of it sort Health and the which for suite review. are Monitoring our regulatory the molecular Cue about -- that way

suite that's point there. That tests, that really nicely of the that's structure reimbursement reason And of really is the for oriented for care.

right pricing have cost test. allows structurally for the at aligns or that look the the of model of set you with when reimbursement So, up, structure molecular kind

a think good of care point really is opportunity. we the So,

We as lighthouse most like well Memorial major set of Mayo lot already as customers have distributors. and the infrastructure Clinic with having commercial create a distribution there, up Herman, healthcare

So, feel like really and there what's we feel we're we the and in well. shape long-term really that good menu the is missing is like for expansion tracking

I million DXC year think DXC. in So, side, illustrative on $XX is I think that one the last around we did for is revenue number

have SKUs new or what and it just had a we're we three COVID-dominated moving different providing where of benchmark XX the at we number that that's Obviously, into turn year, -- and So, has that's been. that a plus. to two now we have we're phase the was now probably

these we're all different really new rolled out. for and that's the mix oriented categories product we've evolve, stages that the lines the products early going product, is of customer in but different So, to

Dave Delahunt

Thanks. types for smaller of on where seeing of additional sense demand in your say make throughput Okay. point you're the wouldn't it And higher most product to clinics color maybe where any instrument? have settings a the care,

Ayub Khattak

in in regular just Yes. outpatient We're I clinic retail care. in We're mean, in departments. urgent emergency we're We're settings. pharmacy.

we various the already really from We that think settings. data major have operating So, we we types And have think footprint good test long-term, EMR the a that integrate is workflow we a and all have best advantage with actually the systems. in flows. industry of we

to the further So, and will I that of really care grow. the the once for horizon, offering on a which there, menu expand point is really they competitive think have is

Dave Delahunt

Thanks.

Operator

And thank [Operator you. Instructions]

next our question from from comes Charles Cowen. And TD Rhyee

open. now is line Your

Unidentified Analyst

how may pharmacy you thanks -- have announced to ask guys areas Care their the is offering. into taking guys other offering of all expand for this on you Charles. that evolving Cue You last Hi, the Thanks for look forward Lucas in time? like pieces you -- see to platform Integrated Wanted there about any question. now at-home for guys or and do the kind going test diagnostic the quarter the a place? Are you over feel

Thanks. guess And offering are offering. then economics through more walk how the the guys us pharmacy revenue? I of you just on second you would question be the that Can

Ayub Khattak

Yes.

is So, Integrated right. think have Cue I way you the the platform. the question we frame Care Structurally, for pieces Care the major built

Pharmacy, is big offering. now And that's the test So, the Cue that's piece, the those which is Cue kits is which expansion our Lab Care and telemed, piece, at-home panels. which of that's Cue

see there in we But terms of more is -- terms think So, more selection these we products, of be all pieces for the structurally, are there. in what would of categories. in to expect development to each

of working we That's expansion. also menu actively Monitoring of Cue the course, where are on Health very true, System

really commercialization there Integrated is think the to it for the I think going are major time. and evolve over So, most of about Cue the way the pieces Care platform now. to But those the are selection motions,

Aasim Javed

Lab, customer excited piece be about Cue think do more over we We've and just really gotten the piece. Cue good in second launched already And feedback. on revenue of it We're will this we We will Pharmacy. important it. I'll the meaningfully a year. us just very the in half there jump time Look, for contribute believe really

Unidentified Analyst

think the Thank a And sense exit OpEx then run the last you. the you exiting mentioned rate? somewhere of will guess million I of you Okay. you do terms what in $XX the I have around guys year restructuring, year. given quarter,

can an If restructuring? this now us we've of kind new you update had that give

you about also guys us XXXX of And target? some that reaching positive could you EBITDA thinking the through in assumptions walk then of adjusted terms are

Aasim Javed

before, I we as that the expect all items decreasing across the spend $XXX and million, year we achieved $XXX the line if really Yes, as And QX. achieved of million just think expected P&L mentioned, savings, you in of CapEx. million come $XXX of about as $XXX well already OpEx, end. keep terms by mentioned we've And we the full the million I as about in out

how kind that's of cost cadence over savings the the of about think I the So, year. would

a are of In costs look, behind EBITDA, we our terms us. the lot as mentioned, of

a plan of kind have reduction initiated revenue of catalysts lot we upcoming. have this We cost

have of a things FDA. front in of We the lot

gonorrhea of to front have the strep and We expect chlamydia in FDA.

all So, Cue just you up Cue Lab, Pharmacy, that that including add launched. we

that spend. us of focused our the with of cash to really, EBITDA So, cost That to combination on all -- along what really collection us early and expect we in profitability being our is XXXX. get

about thing spend versus OpEx really in baseline. We're The say last our to baselining think the I is way XXXX. QX reduction would the

So, that help should kind modeling from perspective. of a

Unidentified Analyst

Great. right. you. All Thank

Operator

question. concludes I'm And This participating. you. Thank Thank for no conference you today's call. further showing

disconnect. now may You

Cue Health (HLTHQ) 10 May 232023 Q1 Earnings call transcript