Earnings call transcript Q2 2023

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Operator

Good day and thank you for standing by. Welcome to the Cue Health Second Quarter 2023 Earnings Conference 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.

turn Williams. over to for your like Lorna today, would the to conference speaker I ahead. go Please

Lorna Williams

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

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

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

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

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

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

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

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

Ayub Khattak

at the quarter for today. delivered Cue second of top our us million you joining Thank you, and in everyone thank Lorna total revenue end $XX guidance. the of

million $XX to next million quarter $XX range. expect have to revenue the in We

will to products on cost menu Cue achievements ahead return revenue greater cutting, million expansion pace of test believe of aggressive milestone help to Despite which the cost maintain and reached annualized strong $XXX savings Additionally, have new I platform, services than a we we've growth. Cue and been able for schedule. in

a June, track our menu Health to expansion we System. We progress strategic for to on I'd industry number our for the authorization use was remain our efficacy. and a we part Monitoring landmark respiratory process to a milestone offering of XXXX-XXXX for company achieved robust first on view, COVID start, for test. care To Cue season. novo and a the like safety very when FDA's for Cue as review reviewed this one our we In have the summarize others a priority, In under receive already home test signal thoroughly positive became FDA test molecular is respiratory have forthcoming. the system submissions de

first new set novo COVID we granted this de an emergency home respiratory for use the offered as breakthrough, With testing regulatory authorization. any standard use Historically, a was under test.

tests, enables continue to ends. authorization approval offer if use the to use our even full Cue accurate simple Our to pathway molecular emergency

COVID already submissions. application flu on have test be in standalone authorization expect now novo submitted de the remain and We for and test. plus FDA multiplex complete this flu important point continues with around Cue fall. FDA step-through to RSV respiratory authorized productive optimistic at our our our for are a time We in respiratory submission our very test we and out care productive had RSV home for pipeline, molecular interactions early program of the Rounding XXXX. May, we this conversations In season COVID that will the in later multiplex our de currently novo and plus

they process. lines they and all cartridge built same ready can of into if turn and We the or revenue scale often automated time. produce menu any production have share We asked quickly long is a whether a tests regulatory are already manufacturing backbone our test commercial are at to authorization in there ramp our as

we facilities. contracted relationships directly roughly $XXX CapEx public to manufacturing the enterprise I and customers, advanced not and additional provider it into highly already and that with invested scale investment we require to What ready million manufacturing customers, does have our want major XXX sector we commercial side, than are that as more distribution emphasize is have on have we distributors. Furthermore, healthcare

installed million Cue more quarter of readers from one than menu. is number We have additional and customers an a base request the our

To capabilities with timely of in be manufacturing think tests our will place, new possible. our relationships customer and be we clear, existing as firmly launch as

last will to has accelerate Going a contract a the run expansion, has an awarded base. further menu Cue be BARDA cartridge COVID, to Cue already new RSV intended same the comprehensive to simultaneously. and on install over-the-counter development that reader point-of-care test This detect has on that of a flu, week, is respiratory and large

Cue our regulatory standalone working accelerate supported funding will of new test. for molecular BARDA development approximately over contract, with has years flu previously and authorization $XX five BARDA the provide to combination this they validation, COVID test. been the COVID flu of an Under and million development, RSV and as of

available for respiratory XXXX multiplex this have season. to is objective the initial Our

the is as platform on efforts different test for Moving of our Cue-mpox health in a that utilizes the category, authorized non-COVID first noteworthy sexual collection expansion authorization molecular to this is point test. from the and method already believe sample Cue's the is COVID Cue We is the it care. menu approved test

submission to quarter continues planned. the fourth with this Our Chlamydia goal as the of FDA gonorrhea in test year, progress of

to our health menu complement important respiratory very menu. sexual be Our will a

suite I the pharmacy, counter the like of wellness platform, treatments our services Cue and from telemed number our shift common the concerns. products lab, new a monitoring of solution, of care Cue's integrated system for to the have test and prescription and care, diagnostic Cue we and expansion health at home Now introduced over Cue will where a Cue kits,

test access delivered diagnostic health types. and and is variety can of consultation panels, Cue app processing. panels at data. health for seamlessly order lab customers Cue and test cartridge and more are prescription tests our to value homes the line and lab includes customers and kits. capability key our in more Cue standalone provide markers, to available for with that panels sexual app, of returned a where medication clinician. care Cue virtual for available their of the tests market diagnostic Customers access are app heart home enables of us to hormone a various Results health complements can to in our receive

introduced to quarter, second with medications. provide access we common the Cue convenient customers treatments pharmacy During lifestyle to prescription and

conditions platform birth like Our sexually common herpes as COVID to and treatments infections infections for respiratory control dysfunction. provides flu treats now like to UTIs health and erectile for transmitted such and

indicated, local through pharmacy. Customers them to Cue advice from for prescription a a Health if picked consult up with their delivered about clinician and condition app medically receive medication the their or

building we the Integrated Care very Now Platform, test fully blocks treatments of programs incremental launched effort. combined and treatment the new adding small a have and is test that or

performance our with in with cash what we view proud no review a I executing detail, will to how We have on $XXX and sheet, Aasim debt. of balance million been strong am we with of financial as hand Well, the quarter financial including ended operate discipline. continued

We coming new customer within hard I through our gain rate also plan in of new to cost goal million diagnostic the set work to our the progress launch on healthiest tests. believe cash their process continued saving commercial manage as quarters. Integrated regulatory that ahead $XXX of am original we continue and has well of enabled us solutions centric traction for and team's our prudently lives. Platform of the empower run Care menu on live the our I positions which expansion progress annualized delivered to that products of the expectations. end-to-end on proud our We people growth

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

Aasim Javed

reduce to basis savings Thank we quarters achieved Earlier our you, million target. cost and that this an $XXX QX, Ayub good and we intention on our of just afternoon. two have announced by as the year, now year, into annualized

tests, comfortable market are for sufficient Cue and with key including of our rate is our Lab. approval commercialization low execute new that this We development regulatory and programs Pharmacy to and us traction highest Cue spend priorities of molecular

As on than the run products hand believe a contribution of execution reduction services, operations. from more to these expected we strong and our of have development new XX result months and that cost I of cash milestones our efforts,

sales sector walk $X sales. Public $XX million $X.X guidance loss a of results contributed revenues million. desiccated of sector through second was QX $X.X of product guidance. was to $X.X down and profit total excess were quarter, or manufacturing by million and were million. let's inventory. $XX.X of QX of private $X.X In gross the million total lower an Now quarter impacted our second XX% Cue's at revenue million end write million for high volumes our $XX.X and our the range million financial of quarter the

quarter first OpEx plan. XXXX previously expenses QX from almost to total announced down $XX.X expenses our XX% QX decreased XX% the by adjusted operating million our excluding million reduction and expenses $X.X $XX.X relating of charge restructuring QX reduction cost the adjusted from operating Sequentially, cost were million by was driven efforts. operating

expenses marketing $X.X decrease and second XXXX XX% a quarter, in in and decrease Sales were from marketing the digital a by QX driven of costs. million

XX% $XX.X expenses XXXX as sexual focus million of of R&D expenses offering. million million. of and QX XX% QX decrease QX were product for a health during from our related $XX.X we QX, decline studies in this $XX a $XX.X clinical G&A of spend XXXX were spend million on to of year, respiratory from

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

Moving slower debt, balance versus the a quarter and sheet, to reflecting with QX. utilization outstanding the the rate we of cash second million cash second ended quarter no $XXX.X in

decline Looking quarters. cash ahead, in next we the burden our to each expect two of

guidance. move our to on like I'd Now, to

QX. of $XX we testing COVID While of from expect industry for third digits to the million many double to $XX growing our down revenues be quarter, peers expect quarter-over-quarter, volumes million

of may you driven testing COVID As vast the know, revenue by majority demand. is our

quarterly demand we is this near challenging, beyond to term therefore, forecast to will expectations. Forecasting limit the our continue

lower with operates reductions, and reminder, our a break-even a cost hand. Cue balance with top-line $XXX on we quarter, $XXX our of achieved we substantially cash XX% of decreased annualized saving and million second point. debt reducing cash healthy in our by Even have million quarterly over sheet As the with of utilization revenue goal no

we and line term. the near-term expect contribute in product offerings the top new growth Additionally, near our submissions Pharmacy, Lab as to our of to regulatory such Cue catalysts, and Cue through

fuel options our position further Finally, cash we growth. are to our and evaluating and always bolster opportunities financing

I platform, summary, made am new discipline. expansion, and test with on product progress our integrated menu strong being In launches our XXXX priorities against the of pleased financial care

on expect have molecular tests market we positive a by adjusted ahead, our XXXX. Looking early in to XXXX, strengthening several the of EBITDA expectations

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

Operator

Tejas today from Thank of [Operator Morgan is you. Stanley. Savant Instructions] first coming The question

open. Your line is

Unidentified Analyst

questions how few if Thank the Hi. regarding could multiple I [indiscernible] a you. you on quarter. of contract spans and Congrats Tejas. associated on just for I This some the you it's if contract years, through how the wondering and the share flowing the is P&L? BARDA it the for, anticipate economics contract. with had long was

Aasim Javed

$XX the test will think do awarded test We market be a BARDA. question. for very a strong about that the of entrance market. a heading Thanks very being million think the into flu, type towards this COVID, multiplex with contract that and is We're combination excited we new market RSV

the that and Our brings plus we've test available place it and respiratory the submitted flu already COVID this together. the for in submissions this so goal already for is then XX builds put everything RSV we've have this to season in for on and FDA,

impact, R&D is this or will of item, in jump steady R&D stay subsequent the fact after advantage we show at constant show the it'll same then to and will expect reader line but backbone it up taken, remember we reductions the for spend on installed cartridge line the system, that next base. over important we've so of the To where have quarters to really same it line and the item into revenue. on our QX would existing have item, our reimbursement there the get the that the relatively run P&L spend Another on up the plugging in

Unidentified Analyst

Got it.

size that tests the of months, XX or to non-COVID begin given but what opportunity current be rapid installed the just the the the you among next from been testing to expected perspective is the non-COVID approved your volumes get greatest your opportunity, adoption then for you approved over a And think you've base? helpful. super considering that's drive in do mind, Okay, not where may to of

Ayub Khattak

big comprehensive that opportunity then very amplifies We think and flu is COVID a it us we and for so offering. it makes a RSV think completely

We menu. also Chlamydia important with the on a horizon, respiratory to think that gonorrhea compliment very the that's

One's be other. the a really setting. I in and point bit sexual complement expand little the can think that more in so Cue the the home settings platform adopted in. respiratory than and and the health other care Both each seasonal of they

things, would flu So we really two those be the Chlamydia gonorrhea, important think really compliments so of tests. COVID, RSV

Aasim Javed

the to it compare mentioned, when then these to they same tests on to by reimbursement and attractive add have And remember you tests are that that, line. made just especially rates manufacturing Cue Ayub COVID the

from help as our to well. and improve a these unit margin perspective, that be expect attractive, profile should we So gross margin

Unidentified Analyst

cash about help up think to you continue Okay, perfect. a could strengthen to to purchase West agreement I us we you about one if be following current how maybe thinking sheet considering in And then financing East more, options balance $XX about can squeeze receivables million, any if just you up talk Bank other are the with bit runway? of could and the should

Aasim Javed

the expect We've achieved about And no as that cash well. only $XXX of Pharmacy to we as as revenue cash with QX Not of in Cue QX Lab about quarters So continue utilization, came that savings we've we in been million contributing $XXX debt. million test catalysts menu that cash versus ahead ended the expansion Cue talking and with top utilization down we about and have the we upcoming we noted our well of with line. annualized quarter that trend as of plan. think our expectation the really to that,

have we factors, we something -- of XX as and for as so. more will you do we our profitability a strengthen and on continues we combination do do than continue months confidence secondly, The it's financing, of QX always And build to cash. EBITDA our about evaluate to to XXXX. those expect we And set would look expect, think

Unidentified Analyst

Thanks the much time. so for Perfect.

Operator

while question David the your Thank you next question. we And of will for next coming One be moment question. Goldman ready get our from Delahunt for Sachs.

David Delahunt

Hey, guys.

the to of for you single mix you it Could expect be? flu combination and virus test its So COVID you what combination season. about the us like sounds upcoming be versus ready tell to tests expect

Ayub Khattak

Yes. I installed we COVID, multiplex a do test, we But receptive going have contracts we general, already that single in that's place obviously the think have do the flex base and in healthy tests. for to to market mean, is that towards test. move

a COVID in and a path term the there are flu long that we well. RSV as that's we going be excited test the single have in us think so And the near with test. COVID the then for to We flu term very important as

near towards term season, flu and So the more symptoms longer what and for towards know have the when you really you we're it to then think disambiguate both and term, get wants to is treatment want is go, which in right to we and where really trending market information cold the just that. the the

and that's the So we we're do that trend that's where heading. think

Aasim Javed

while of to versus our And return saying that's now about of and mix COVID. growth second the year, a for half in And you the second we what think about exactly year been suggest. to that half as guide the would of think the the we we've non-COVID expect

Cue COVID that that and We and we be haven't really combination and small and into to Pharmacy. that a traction out in non-COVID then been on of past, revenue flu continue have the Lab spit momentum saying Cue would QX QX increased believe would we in and start really grow but then and

David Delahunt

the And there? there a multiplex? value help think Is Got price of the much us of difference adding could RSV to flu it, thanks. you about incremental COVID

Ayub Khattak

very RSV standalone year in very last over of acutely is COVID It of and a is health high. We quite an was children burden. the as flu one public A people lot a significant hospitalizations of young cause utility XX. significant or RSV the think aware cause that it in is adults number became of hospitalizations RSV a it of

there's And have awareness around a So and some that health there and right it's approved been COVID. activity recently of vaccines around problem been now have the RSV treatments by public a really in flu addition FDA. to as rising tide big

of importance, health for public adults. top the of it's elderly right recognition mind that and and both now consumers in treat folks pediatricians So

addition So important a think it's to I very menu. the

David Delahunt

Keep work. the Got good up it, thanks.

Ayub Khattak

you. Thank

Operator

our Instructions] Charles coming Rhyee of from for question. TD next moment next One be Cowen. will Our question [Operator

open. Your line is

Charles Rhyee

in thanks or versus office Yes, a do were consumers? to home the up, by quarter, have a between taking clinic just care for at follow done breakdown a tests a of many like the questions. in Maybe you done at physician's how point

Ayub Khattak

Hi, Charles, think typically the don't when test the between our we segments. out quarter, break customer we about different we don't

and public about our segments, provider, then enterprise, I have and them the we've within haven't to consumer, totality. think consumer how is about sector, XX% our this other on good But the think you to we about broken direct historically for direct point. sector, proxy at having private installed of to customer direct broadly consumer base, revenue the private, spoken which in a we sectors, out

Charles Rhyee

because, test I to you have, I just sick, opportunity think themselves asked over about? of a about a site you're employer to a buy menu. and was approved if what get But about, that about to I a to order the consumers whole really we direct Because make test. subscribe I to think versus there about was go And new kind at pharmacy, the having their right, counter. it you for to like, know, because, the employees. respiratory a an I reader. in go expansion think driven could And order are thinking give But readers you're some particularly model then they the strategies and to sort obviously, package. and the test Is the the of just there, of more I like Walgreens to Okay, would to going thinking when a tests, available the to to a how right, start, I'm feel open want the to test think leaders I come, it if online would strategy like that

like into thinking a we to adoption can clearly season, you this like out, last any that's trying thought how that of tests. particularly respiratory about you're And at really Just these talk grown year. would us can there this the adoption and get think accelerate you base through of if come Because that's at as to tests I But accelerate, in sort XX% that? other this of is user of seems opportunity of the sort the because, point or to be, these bigger great.

Ayub Khattak

an So care I It's molecular accuracy about of a option. important expensive use. it it our test utilizes offerings and use the to and is molecular and than test that's itself you reader gives think of other actually other the compared one the test, test, it's very system of a easy cyanogen easier less antigen a much a is this things that and point to readers really but to the yet it's

that a agree the start we lowering really for to of lot and the important customers from who to piece adoption seen reader from use because a platform. adopt they've the the So reader is every barrier good reordering

barrier the you're and and by can retail of the look enter to very to is So been, the BXB that or point enterprise reader be expand expect. of our through which on important has it's at important will lowering opportunities been a the we ability certainly very making into home option that continue we we to business the part a BXC have and entry distribution enterprise

yet in a very like on easier barrier that fact of versus are I it's do because much as the you or but is skewed have a provider proportion BXC there the compared get So if a the I entry side that's not home that reader point use test said of of good run just tests you result to to get offerings at there's only low opportunity this the you to have and mean the home you care. BXBXC to the use. fueling going in well as and other look the

for gives clinicians able and that So want tests designed want a of both the that originally to the also result nurses point of to of and of in course for simply, they test in deliver fact but home be to care it. this the point ultimately very this consumers the easily patient lot to in be advantages they very the we also build platform and run care reimbursed setting because

the to anybody so core And from we the from it. is is perspective one product because highest an of really of a standard which design consumer -- or means in care the and use that the of FDA it from from think sort make consumer can which grade regulatory perspective it benefiting

we continue so retail consumer us And the really we good will and we also will in the before opportunity I to that at we in expand are pharmacies look point and side hospitals about home. distribution. care are it's the are and options note now to in the and of retail and also

it's a versus unique I other aspect Cue think really of to sort platforms.

Charles Rhyee

of XX the that Maybe I sort flu right notable back recent of RSV think are the that. employers don't just how talking about obviously now the this of people kind in new just where expect signing about with million the season of up for for you've sort appreciate the to it's enterprise selling sort back we -- but year? and any the perceiving come touched coming market. in I And Can obviously COVID know and quarters but next it of and signings are on you talk employer Okay, fall.

sort at Just be from curious just that around because adding of Thanks. to over of new accounts would the then kind great. you've for that quarter growing you what curious bit been very leaders and been little a million the look number recently slowed new that on a quickly number interest of employers level on of have we what when a sign up kind It's while. holler the

Ayub Khattak

this the ended the in are really out earlier just market been public and all whole digging general a very health and together. we the from pandemic year dynamic look at time COVID it's people As emergency it's

a said still think a to not that also moment is of And added multiplex is sort COVID with on RSV on think trend generally that. do it a flu with so and testing by introducing there market for for and a the we that respiratory option that for we that for transition then just being COVID large we're market

do we this the these is of compelling We function most we think So etc. that that's approvals a to contracts think regulatory where but heading. signing going course for offering compelling new be of and the market's have new products.

So that's why that's revenue of growth being are we factor these a to customers that's the for. more we installed significant be number really our do to from base expand what really asking accounts. and expect And because going and in products able new think a

Charles Rhyee

that think RSV in health for but need get mass the is well interested ball year standalone really to menu critical message just you flu get wait that early of their we'll maybe we'll plus do sort are least having and up sexual that next customers you a is test to the signing core waiting till logos? new at does the rolling accelerate test the you're as of hearing to the have guess employees expand the Or again? t more COVID the Is that they're question I until

Ayub Khattak

customer set a you're respiratory it and are and talking It's aligned type. in health care, about RSV really Sexual aligned little very enterprise if with and does for COVID We sexual sexual and point and up do is COVID public the important DXC health. more set more open in but health are flu term. also urgent the with, a sector of DXC bit think more that really near penetration and flu different specifically planning interest is It care. more of that's of market RSV yes a

they higher they employers to a self-insured end up end talking for more anyways time up that treat So we're respiratory but off that talking really plays employees some It's they at taking more terms that it's this paying BXB work BXC, slower sexual off think that health when about anyways it up end people, their up I going easily. very expensive. end as effective because test another in they for in a is and or because about getting you care we're way paying important end less urgent for role of test, test a usually and employers can't lab up because it's rate something

on the you as opportunity we've long introduced really other with the Cue that today additional think the really that Lab sorts information term there and is is test we that's well with important. now enterprise give then we XX of complement So all what the available can panels

Charles Rhyee

ask if sense Yes. sorry makes question I last that No just could one here.

productive You the responded have on have response talked about their in an where give Are given are update where time? FDA clock already questions terms you we have they of just like in commentary Maybe conversations to they with with FDA. you the in where like them? we you are the commentary

Ayub Khattak

Yes.

significant platform a have and COVID validation the perspective meaning the it revalidate backbone gave to of really us the was it's clinical that the because the the cartridge from each incremental moment we what reader don't and So from for were the that novo data safety de we're the that's new we really agency about regulatory for the reader able a to applications. on cartridge backbone us chemistry generate and going for and indication in those changes new

first difference of big really a makes all. that So

like these after with where have got definitely the to terms that the code feeling with dialogue and one novo I that's code all that's flu dialogue where blue contract and think going we single it's also COVID in RSV have really to to in bring of for on we'll we a we following of get confidence our our together strong RSV. into regards COVID indication and bar and this blue with test de things that to And season on state RSV respiratory and we're

test board So was progress these we're the market to is strong and a signal really the to on that really new able strong across making to COVID we're and how be know the important bring specifically going of that piece part because we feel good this we in regulatory and

Charles Rhyee

comments. the all Appreciate Great. Thanks.

Operator

all call you. does joining. This conclude you for the conference today. Thank Thank for

evening. now have disconnect and may You great a everyone

Cue Health (HLTHQ) 9 Aug 232023 Q2 Earnings call transcript