HLTH - Earnings call 3 2023

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Operator

Good day, and thank you for standing by. Welcome to the Cue Health Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Lorna Williams, Investor Relations. Please go ahead.

Lorna Williams

to Quarter welcome Call. Earnings and afternoon, Cue's XXXX Third Conference Good

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

results well by and uncertainties, Before to testing SEC. and statements reminding not but making we from those statements, as related as These risks, FDA assumptions pandemic. in as of statements our to, expectations regarding and the including to availability other COVID-XX let described. around These applications get me in other financial and differ and to forward-looking you materially production we expectations business, outlined may risks could reports started, of that programs the identified results of and are be performance capacity, as filed submission factors our prospects any well the to actual those begin receiving time today's to from the related guidance, growth volumes, statements time are expectations call long-term expected subject authorization, that our risks the future strategy, impact public uncertainties include, limited with and and future cause of overall clearance

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

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

would on the our page the to the this to recording are Finally, website. With like available of call turn of that mention over and Relations release to Ayub. like I'd that, I press Investor call

Ayub Khattak

new expectations, the and this joining to of non-COVID by expect in Cue revenue you, coming had contribution growth as driven thank total exceeding stronger-than-anticipated gain quarter, the in us momentum. Thank continue products and revenue today. third test COVID-XX We quarters for quarter, Lorna, sales. you, $XX.X million reported everyone, we

million the cash Additionally, we and $XXX.X quarter equivalents. with ended of

financial execute $XXX an discipline to million continue strong by our priorities annualized brought with target. our on having We basis, exceeding $XXX cost our down key strategic million

Turning menu for Monitoring expansion priority, System. Health #X our to the strategic test Cue

COVID quarter, review. added flu remains active COVID-XX-positive the a of samples FDA Our the required has for substantial samples, we clinical to data in flu is flu Flu and clinical and study our This B our additional enable use at and get users in first year. the Southern point FDA's X last the and Hemisphere additional clinical of home prospective we the multiplex amount this both would use, Through Test samples. To care. which the for all B Multiplex of and performance conducted + application and over-the-counter exceeds for lay at criteria believe A FDA a we submitted data, been

detects we Flu + our into believe effective product, between adding with differentiates and decisions XX the for treatments. health COVID-XX Cue to app. solution, to providers at treatment individuals we're integrated Our COVID Multiplex and same-day the Test Cue results to influenza and digitally approximately simultaneously is test Care, Health delivered It minutes, make care home, informed timely to this prescription seeking delivery. powerful and enables a telehealth better With enable which tool enterprise in

respiratory with later have FDA. the submitted last FDA. within in Flu quarter the can full and continued applications season. The anticipate was Cue address the additional the The we The to season. progressing almost circulating year. we requirements. and submission novo FDA, for B the We of clinical exceeded all We been an the samples well rarely X we received also the from in is which Northern samples, feedback believe circulation We earlier very a by We in feedback submitted over flu Hemisphere Molecular the number approval respiratory Test the greater suggested no has Cue FDA approval review. years, flu a this the were believe Subsequently, de and we collected we that under with year, de Molecular have novo this the asked Hemisphere. as to for X last Southern the review de was RSV novo currently Test

receive our line distribution soon these significant For all ready channels. tests, additional without be sales capital and our These of on launch to are products as existing automated we as production authorization, utilizing them, will investment. we made

lines to any produce in at production designed automated were Our scale. test our menu

the the all same show Health cartridge Cue System manufacturing a tests and As backbone of process. Monitoring reminder,

X.XX season. Rounding follow production of the for though, our continues million with has an sector of a now our to we Our Cue the save public direct-to-consumer we decision, We've as providers. flu, delay utilize multiplex an X on $XX objective customers, on the our we developing are into promising having we strep market. Last including prioritize revenue-generating directly of available EUA quarter, than believe near-term for the we developed and the The start in line. development to cost contract. and also system to test test team partners throat completed being the drive with molecular our FDA. review is respiratory test. development We molecular have contracted this new clinical to COVID we XXX the and the XXXX-XXXX than tests more installed study and channel, respiratory have and products, channels multiplex get base the BARDA pipeline. This combined announced same Together distribution test available a We made the cartridge with out plan initial and more regulatory the RSV supported these test. progress by solid same Reader million + this all-in-one Readers, Cue products enterprises to will pathway

to highlight I'd in efforts the health Now expansion sexual menu like Cue's category.

in the an half first next submission test Gonorrhea year. + FDA studies. multiplex now clinical Chlamydia We Our is in of expect

Test. the next caused to people we a produced new molecular RT-PCR independent our key step in herpes and reviewed as comparing Mpox the important that experience Microbiology intervention. Today, concordance + about Mpox the We HSV-X test viruses. study's and test. General on an to by as this clinical can and of to our testing. Shifting accuracy of in Care progress highly with study antigen to a receive poor-sensitivity find active Health XX.X% to our the sexually expansion. This Cue app Multiplex health a of timely infection Microbiology. This Cue believe the sexual next Cue developing Platform, detect Recently, that is lab-based herpes, the solution finding published believe molecular see diagnostic to the that for an our X world a STD the with without We and and a both the a priority with the to health and publication have and lesions + Spectrum, quickly medical test FDA-authorized seamlessly our lab-based could in needed our end-to-end people and these care American active lab-based capability Integrated sexually contagious Mpox if menu have menu been speed, basis people consult accurate Cue, herpes United already individual with every U.S. COVID-XX by has there for for Cue treatment. market. is Cue is Herpes superior foundational of the with lab-based testing and/or the RT-PCR of our is test. we herpes Herpes builds point-of-care real We System, Cue Mpox test Molecular the not an We're with PCR Health delays is Cue provider extends on Test and accurately PCR test through test. that X or a available journal was is enabling market allow The journey happy customer receive an peer-reviewed an Monitoring solution comparing in clinical States on Multiplex new System test differentiates of Mpox of eligible A we're test PCR determine many an diagnosis, most for for active the out the excited common of our to an on EUA, largest-of-its-kind Society peer either way, HSV-X test asymptomatic very Cue Monitoring tests study also believe year. The has multiplex our testing on lab-based

announced integrated a Department the have citizens consultation partnership of enable many over We cost Minnesota we XX and for all allowing without Care months. Last year, We these state last Care, with building Health launched patient. access delivery. the prescription to Cue to with to Public of clinicians blocks video Cue

kits, test Cue for Next, we Pharmacy Lab, leveraged at-home platform mail this prescription add to Cue subscription. and in

of a year. We believe opportunity. potential be continue the Cue business the excited have next over be Lab We this part the to Pharmacy about to Cue and meaningful

care new how team expect we Now new that pleased indications. we that and programs continues treatment have with fully built the integrated platform, leverage tests really to adding be platform the across I'm will straightforward, the and out

in we've team will operational discipline. made management. to progress performance our The execution with review While cost the financial Aasim want I detail, with financial continues highlight balance to

$XXX year million. the spend by reduce to of beginning was the at goal Our

the continue we're cost as revenue-generating We We have and FDA FDA have positive data also annualized now continued to the in add opportunities, review million approximately engagement savings. At upcoming team common $XXX same including the believe the run as rate near-term where with focused process. delivered of have is close on time, is to we approvals. necessary getting

We shortly Over EBITDA approvals, for and be in to and actively requests that, new data product last catalyst will as launches, necessary. with additional the that XXXX. With optimistic growth that turn the call have early reaching I'll over Aasim. information to and revenue been will supplying we responding these authorization the months, breakeven along we've additional remain

Aasim Javed

afternoon. you, Ayub, and Thank good

quarter third to let's third walk range revenue Cue's guidance our financial of million quarter of $XX and million. million Now our through total exceeded guidance. $XX quarter fourth results $XX.X

amidst sales. product or were test for of We the million. QX Public the third a million. manufacturing sector by the $X.X pleased increase cartridge quarter, quarter, and $XX.X the COVID volumes includes lower $XX.X profit items. XX% and was Gross million total loss impacted of revenues continued profit contributed noncash million gross is sector are revenues. In private also sales were sequential industry decline our with in $X.X

reduction the decrease related by from such spend marketing driven a for digital the amortization to XXXX $XX.X of development of and expenses reduction expenses decline basis. Sales operating quarter operating million. In sexual operating million from were decrease in excluding were quarter, on higher product by the the R&D our and $XX of marketing QX would G&A depreciation, expenses QX expenses programs amortization gross credit items as XX% efforts. second percentage quarter, XX% from QX Sequentially, IRS. $XX.X employee the if and were QX a million even of with driven noncash decrease million, QX respiratory slightly were and expenses comp, in third costs. from QX cost during are from a you cost line Excluding be of in focus compensation, spend we revenue. operating quarter. XXXX, XX% were $XX.X positive. Total and an XXXX down of million $XX.X of the retention XXXX from received would stock-based XX% in exclude Further, $X.X quarter, as in depreciation, XXXX million a stock-based the expenses we profit our on expenses a be offering. million QX, in $XX.X health

$XX loss net GAAP diluted $XX.X was net was share. or or adjusted per loss a EBITDA result, an $X.XX On million. share. was $XX.X a per the in $X.XX basis, loss third quarter of diluted million As million Adjusted

cash balance of to $XXX.X sheet. million. Moving quarter We with ended the the

to guidance. to Now our move like I'd

prioritize We fourth hand expect to $XXX.X continue million $XX sheet revenues we of for cash balance of $XX million as cash to a preservation. the has healthy million with quarter. Cue on

we reminder, QX rate $XXX of run cost As savings delivered approximately XXXX. annualized million versus a

from from Our operating $X.X decrease expenditures expenses in QX down a and capital were XXXX, the QX million, XX% XX% XXXX. were PPE quarter

rate from burn improved cash underlying QX. Our

and Flu continue + for near-term including our offerings. multiplex, we launch flu preparing our new RSV to other COVID product regulatory execute the approvals and Additionally, on catalysts, of

our continue Finally, discipline. our we against options bolster made to priorities menu and and with test position. In XXXX progress strong summary, of Care I am to platform expansion, our integrated evaluate financial opportunities pleased cash the being

like molecular to expect Looking expectations early to XXXX, turn over questions. positive adjusted ahead, we would by that, your the in call for our to strengthening tests you XXXX. With several for a I'll the EBITDA And attention. operator of the I now on market thank have

Operator

Morgan Stanley. the Savant with Our [Operator Instructions] line question first of comes Tejas from

Unknown Analyst

for This ] [ Tejas. is in Jason

guys. quarter, So congratulations on the

question on first then back letter group separate independently business in strategy. a shareholders, a my public in views. shareholders recently, similar of August, acting is voicing your your views they So October, And published letter a one their voicing published of

have had Is these just months. this how was question few moving forward? dialogue any do my you And about the in think So you the strategy of with past one? right either your stakeholders company's

Ayub Khattak

the for question. Thanks Yes.

the team, value we value. key every It's So of we the make and Board decisions. feedback. shareholder increasing the to And part decision shareholder is how that lens management we a fundamental apply

we It's this it not as fiduciaries the we strategy but right take and shareholders behest what at the time. the So the company seriously, on deliberate very for just only of all is the of company. also

million a $XXX $XXX see of executing that lowering. regards target, we've really with fiscal been actually of discipline. cost we strong we're So you achieved Instead million to with doing, what can

moving -- focusing key that's So and of our while strategic forward expansion. priority and menu

are our care they menu, do full with in delivers of to platform. to products that and with which integrated So discipline, experience seek to fiscal expand to expand our the an the terms platform, priorities, so we

Unknown Analyst

Got $XXX quarter, with provided then guided runway. in quarter about may million And months you you ask ended a of follow-up -- XX I it. question, the If so last cash.

runway? past us, think So X the extend over next about to with management months opportunities cash do your another how year you financing

Aasim Javed

Thanks the opportunities phase we're always -- towards for that and all We're building come it. towards our with building profitability post-approval question. the

cash very performance cash million cash QX our performance. quarter, happy had whole Omicron. of has if the quarter, height better So not we've And is which XXXX, year, best our utilization, was at This since utilization this the a performance of just the look trended that year in quarter-on-quarter. this with we're every $XX the you

the standpoint, edging target our our our mentioned, most closer continuing we're we're higher focus Ayub than or So and $XXX runway. million, target closer and in extend our timing And target. at standpoint, cash so from came behind are savings and a a investments million. as we investments a to And We our bigger -- All of ahead on cash and our of from of approval. to manage had $XXX us.

these really about the So have hand. future here, as excited sit we we're not-too-distant when in approvals we

Operator

This question the comes Matthew Sachs. to Sykes with of Goldman line

Unknown Analyst

] This Will Matt. is [ for on

the sales for once that, of see stand-alone Just your wanted tests? multiplex the multiplex to start out? on use Do level. tests cases at the tests cannibalizing comes the And a you high top of stand-alone what are

Ayub Khattak

flu, tests We the have ability COVID, test complementary important tests see developing the and Like to deliver or very under like that with we're the RSV individually. flu, that we COVID, RSV multiplex review is COVID to BARDA. flu,

they ability Our the to options. to having a side, provider order both on test. used Especially the customers, combinations and they're single want

flexibility. And so wanted that provide to

regulatory also strategy. We it's of think a part

So regards term, from we better-than-expected we've believe with long think options is that, for to that circulating. flu sales the could in best been they're or having whether category, having really our customer combination test. strategy. And a And we to COVID-XX the going also the depend one have there's not or on not upon depending circulating test or test and more desires cannibalization,

pretty a I not it's the is think it's want And baseline So that you options. -- nuanced.

Unknown Analyst

Is about those Or half makes sense. evidence. there first the are A/B up new That this guys FDA. are like the good pushed end to the how you the follow-up It just are thinking then getting on tests upcoming the some generated and with quarter a guys RSV 'XX? the currently And that? expecting in and those sounds any season, that for you chance of flu

Ayub Khattak

Yes.

for flu well. data we COVID What said, flu we in to the our that good over lot and novo. RSV think respiratory that, be achieve there's and season, there's combo, de of especially good for applications, course the as RSVs of approvals novo novo able a de de a process is and flu, added As we really we'll chance flu-COVID the

with we're them can't optimistic the In process we get timing, exact we working But respiratory terms that are in can I give the through you timing. that season. I exact of mean, this a is an FDA, so the

Aasim Javed

are to as are same line, these made And that, from manufacturing as we're on so really ready. the tests manufacturing ready standpoint to soon tests a these add

million customers, over in X.XX and had have over We terms we've XXX installed readers. that customers of base

think have us soon do to we approvals. available commercialize get as channels those we as So these to we

Operator

question the next Cowen. Our to comes Instructions] [Operator Rhyee of line with Charles

Charles Rhyee

that I figure run just guess did a sort us sort reach when can you you're be? I to wanted $XX bit to about -- breakeven in sort positive XXXX. the revenue revenue early million then reaching would sense your an on annualized what and of follow like on expect here, up rate I'm to a target what EBITDA the the you $XX Maybe of little reaching million, you the basis would give mix of out quarter. trying comments

$XX million-$XX next for million quarter. You're guiding the

season. obviously, It in So we're in second the respiratory the was light obviously quarter.

mix we to margin look that even sense Just between in point. how you're -- million, to -- expect prior get on we really that are hit trying driving to expense like? reach So OpEx a respiratory $XX come margins, we that's that million COVID the revenue be and to end to multiple -- reach running, right should in market, Particularly now. What as like would 'XX, about the breakeven? down? like expect where look is to tests at with Or we continue expenses, for looks EBITDA to gross in tests question revenues towards looks if going what what, better breakeven the or respiratory the it that you that of out $XX

Aasim Javed

for thanks the question. Charles,

right? to you're about right, models, kind your rate I have on of be and we early we you expect to a So quite way approvals. While there. COVID when do we're basal there's XXXX and But that expect do the then is, not of -- you think guiding that, top recognize XXXX, XXXX guys to think several

several have to expect XXXX. in we So approvals

have. respiratory. also we've just those not expect all Cue top software piece test we'd and And Care, top as also services, Lab, flywheel effect we It's the Pharmacy, Care, to these approvals, Cue we is on to Pharmacy. well. And health the effect sexual actually this then there's Lab, when then Cue it's benefits that line, not grant think about last have forget, revenue that momentum. So gaining Cue our the start that, talked Cue that of flywheel we other on a And the Cue

the contract of line. to we deal contributes BARDA That have signed We million. the that top $XX also

kind that's So of line. strokes broad about top I think how

products, As you impacted mix. I you'd higher profit volumes, you'll over of has And when go away we by we profit how kind -- played year, they're COVID, benefit price/mix of trended think have kind we'd volumes have the out. And to well P&L, think we've have in posted as down the sequentially or about as mean, future as on as the margins. And is proportion seen gross gross away we've also with see our do this our move when from COVID from well margins. past XX% going a volumes we had be

So now out we as our of spend that where spend very for priorities. right amount we're our -- of us and grow happy on right spend, to would strategic play very margins grow, think, revenues over the is reasons. And we're then -- allows time, to proud those with

And spend, least going at similar at the not while of it's to of fair kind in OpEx we're I'm term, level near to of XXXX assume So new guide amount quarter-on-quarter. OpEx. this

Charles Rhyee

used what $XX delta Okay. million us quarter. adjusted sort in the and cash $XX the of EBITDA remind only million. used EBITDA you loss Actually, Can was actually is? the between cash was And

Aasim Javed

to $XX that, QX was an $XX of as cash I as is utilization our a kind million, the to we've best since million. think balance. have performance here onetime, cash did of cash bolster that is A the look And for of ERC credit team, management opportunities XXXX. had We I mentioned, we that Yes. continue while philosophy here,

Charles Rhyee

of the go will us chunks? Okay. those Is for should contract we as portion revenues it just in quarterly? year? be sort we through layer recognized remind a And lastly, the to can Just Or expect there. of you BARDA sort curious that how

Aasim Javed

approval continue BARDA line the up And The grant the until we up Yes. the revenue, it to RSV it quarterly, on revenue mean, multiplex. P&L. item I for and in flu, will and up does show have show COVID, quarterly our it up shows the

Operator

Thank further you you no conclude thank this today's now at This participation you. questions and I'm disconnect. so for conference. showing in time, does your program, the may

Cue Health (HLTHQ) 8 Nov 232023 Q3 Earnings call transcript