LHDX - Earnings call transcript Q3 2021

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Operator

Good day, and thank you for standing by. Welcome to Lucira Health Third Quarter 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] I would now like to hand the conference over to your first speaker today, Greg Chodaczek. sir. ahead, go Please

Greg Chodaczek

available and results everyone. ending for copy release XXXX. Charlotte, website. Health September today, released A is press the financial the of the good you, company's Earlier afternoon, Lucira XX, on Thank third quarter

call on Chief Chief George, Erik Engelson, Officer. Joining Executive today's President and Officer; me is today Dan Financial and

the to statements These strategies, from Risk during XX-K Form XX-Q, Erik. forward-looking company's on or without you potential, differ the company in call, we With these identify I'd begin, development, conference encourage filings may regarding future sales like Before and factors in to described and materially on marketing capital reports the limitation, call cause We make which that factors past events to the company's regarding those statements. specific without forward-looking regulatory over with environment, product may the to including, Form that, events. remind report product quarterly turn annual review resources limitation, Factors you include, that the SEC, I'll the statements future will now and the performance. or section actual operating the results

Erik Engelson

you Greg. XXXX for Thank and third us. everyone, Good the you, earnings Welcome to afternoon, joining call. thank quarter conference

results. continues to unvaccinated among and continue contributor those reliable welcome demand and and world subsequent the accurate, and need testing quick of normalcy new vaccinated Testing the the among that infected, COVID-XX the a we the decentralized customers provide options to the to see As waves options. as who navigate remains return to for critical easy-to-use spread variants, as continued well yet are

$X.X provide range The $XXX,XXX substantial fluctuations, anywhere past have COVID-XX molecular the Irrespective and CHECK testing. producing immediate results in IT believe the team Lucira been large consultants, expanding the alternative lab partners volume the and result selling our in further and PCR seen for as small, to suppliers anytime a of results U.S. benefit demonstrated accurate to who factor for XX that testing a that Test these of the as our Our product success a million spot. into skilled or in way We employees, while the decisions believe months, Lucira inform resulted in the the have the against for we commercial outbreaks. platform Throughout quarantine has testing tests. channels is manufacturing past Test convenient and of years fight part is success All-In-One remains in scale market form in that enjoying fluctuate Kit easy-to-use demand in and aiding are been their defined this quality quality strong on that lab COVID-XX which the use per testing Lucira Kit, of daily on-the-spot tests, our the an is a of early testing day treatment volume to does we versatile highly well passion deliver of our testing further are customers. on a to over initial great these experience is that believe thereby we we and infectious eight achieving have the our of efforts Lucira that efforts We channels. leverage contractors, what to

welcome continue look COVID-XX Lucira's the with testing to will for their test availability. and of diseases, at-home COVID-XX We revolutionize starting medications to infectious for forward antiviral market the commercial advent We kit.

diagnostic influenza benefit early. kit, infection both and medications. and Flu the when which is speaks the development medications for be COVID-XX We to used infection. from a anticipate with utility course multiplexed as early same in molecular test Lucira's can most test B to This for As of the be our in appear of taken A, drugs COVID-XX antiviral accurate that detect these treatment companion influenza, to Flu effective on-the-spot

steps and an is on accomplished instrument quarter, free propel are fully we disposable carry. and factor readily taken reader what the test Lucira's to in the example, luggage, back form with easy have pleased for we Looking Lucira when easy use to that provides accuracy is level. and to carried test in Lucira's the lab next to traveling.

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build then workflow medicine next that test had to as elimination have issue test able spot. believe all and the available no And by are capacity instrument that and to clinics required. to their be Lucira patients, continue easily test capitalize as health to no patient the ourselves practitioner. there families members is is untethered can nicely or establish of bottleneck of opportunities testing mobile physician the there modern The provided to leader the visiting their completed tested communicate and the family lab before to traveling test we infrastructure care the environment physician. testing dentist the many of fits medical testing or many concurrently upon in stop and the patients technology. can there the continue to LUCI offices three, part reader will mobile an a can molecular the doctors tests back make We and This start extensively people and results PASS. as individuals they We Lucira on Two, are using as are a concierge reports supporting means investment in is simultaneously travel

financial our call a highlights, I During review business provide I will third update Dan, review a will our to for today's more future. of quarter outlook the the call, and will and who then discuss turn plans detailed the results. give over

to quarter, a would turning the of more a to provide review I Before like financial summary. detailed third

third quarter. We are strong by encouraged our

is accelerate representing to growth a progressed. $XX Gross as XXXX, certain when margin previous from quarter revenue million, XX% of continued quarter continuing of reported excluding Our to In volumes the our quarter of sequentially growth obsolescence sequential organic as the revenue and the increase. improve we XXXX. impairment charges third

investment end we by are increased anticipate could at positive in XXXX, demand. instead manufacturing Although, we response be prioritizing the of run to margin we capabilities a rate in gross

Based believe ongoing In on this $XXX quarter we are trends accelerating Jabil. the yielded capacity in in fact, be of revenues million this to positive Dominican partnership presence results. million. our forecasting team achievements, continue and our on at has contract the with basis least XXXX revenues XXXX joint from operational excess an so in are will demand and We end, Republic of of to focus. product XXXX, manufacturer, manufacturing Dominican senior $XX a fourth the Republic in and Dominican half ramp of quarter and production the track primary total demand exceeded the total Republic We in To remains personnel the shipments the bring to XXXX. first now stationed facility in Lucira on third remain

product the Our is last and strategy, To to several this business focused that strategy on increase grow expand remain initiatives pipeline. we discussed margins we key drive revenues, quarter.

driving international over-the-counter and reopening by aiding and on and quarter, in and we the of opportunities during revenue third had these significant the of its a initiatives growing variants. As initiatives revenue milestones. these indication, reminder, control vital several focused were Many COVID-XX generated our worldwide to

We share made have strides are we excited these to the goals. toward that

our XXXX. EUA the FDA over-the-counter Lucira test authorization half indication. granted First, was The looking of kit via in first at

available upon. strive a to in individuals We and prescription oversight easy-to-use, that to foundation continue milestone the of positive accessible. at-home testing authorization we few an channels. requiring access result customers allowing accurate, professional. testing ready is mission As vital a confirm ours as as a is products from build XX with to a A a result centralized alternative physician to via FDA result, instrumental provide or minutes distribution or minutes was make our to an to various to with test is healthcare users a to XX negative within without detect

contracts. product in of channels demand late While distribution sales online large strong, to remained in we better paused has our the second quarter all support

test IT have are to online we that We website our CHECK on Amazon. and reopened for pleased sales LUCIRA our share on kit

hands was our had allocate decision based remains retail desire get solely on into with channels to to our Our do the consumers very nothing to of which overall to demand, inventory strong. and retail online tests

quarter, to Last of Now its international turning we sales revenue. to mentioned globalization contribution our the business. and growing

and We U.S. demand. to customers support international vigorous continue the in as see

regulatory international instrumental in team processes affairs the and partners. facilitating of quality Our has with importation been along our countries, various and approval

international Pandemic by in Sciences As for Special This step CHECK COVID-XX is continued kit an or IT Authority. our we our PSAR, essential LUCIRA example, received Access Health October, an Route, expansion. Singapore’s approval test in commercial

products with partnered in to import approval, the distribute of part Labgistics Singapore. As and Lucira’s have Asia we

continued several reopen sales as growth. investments the for presence particularly support its and becomes of variance continue have unfortunate, the testing, steps are world COVID-XX made to continues While the and taken COVID-XX of sustain essential rise see the personnel To endemic. and to we demand this ramp, we to

sales pre-procedural and to team leisure. our on enterprise strategy testing to sales serviced and including government, International, increase This presence, service including developed service testing travel sales providers, online strategies to and partnerships been healthcare, capitalize has consumer, telehealth Our and and the business, events resourced experienced hospital networks, four access business corporate channels with by dentists, is members. to more. enterprise growing to sales, sales including which to are executives our and The demand various includes clinics, with and the product. strategy business

Our Officer, during these further the has and the led demonstrated quarter commercial Collins effective expanded by third selling team into Chief team Revenue second This quarter. beginning onboarded Kevin in channels.

the With joined third As so Ghazi are of of new Vice continues playing as In have our an does Lucira President company quarter. role and team Executive Ghazi of August, additions we Officer Quality volumes his Kashmolah and and experience, over top-tier during bring to executive as the increasing current made grow, globally, Chief our important and market product. several team, to we expand Regulatory manufacture expanding years Affairs. XX products

instrumental as of Operations joined of Additionally, With in XX team management, Chief company’s and increased a increase over in expanding been number Officer. streamline we Tony September, operations Allen his the growing availability Tony in years product production, have and and operations experience countries.

their tenure on and Lucira, impacts business. profoundly Tony have with both Ghazi During brief made positive the

facility the the we run manufacturing In a manufacturing. partner in opened second to Moving new by quarter, Dominican our production Jabil. Republic,

initial delighted the first production new to running. the with having of half many report XXXX. operating through center are anticipate two currently and We we of production start-up at We have full challenges lines associated have lines all we that in worked four the that capacity

continued at will and these be manufacturing Michigan that decision lines second led we in first the fifth in and half same see XXXX, we us in our consolidate began efficiencies operational to ramped capacity Republic this a of As the Republic, Ultimately, plant. third the into while labor respectively. Dominican at Dominican all to experienced to the during then line quarter, the current and implement improved to time, the shortages

key in business Republic as needs. be facility like complement to the as to worked in Michigan. Dominican Dominican our to for team I production the near-term innovations those and able strong hard made to performance expect Republic who acknowledge We would their the well support manufacturing

benefits of be platform It mind. designed One technology with ability of diseases. is other to adapted Lucira’s this its was diagnose infectious in to the flexibility

test COVID-XX full-scale to a market. few seeing new in in development like on this commercial additional in led is of redouble positive in pipeline to addition of tests a the to In feasibility either would tests COVID-XX to our products pipeline. and has success or bring us efforts mind, provide an to I With the the test, update

one flu a be B COVID swab season. tests is A, a refer sample, ABC Flu time. resourced With program The available in from same single device test. the support submission. test, XXXX to is first have results these our This can to and could the what user Flu we submission and and we a anticipate that the for at three on regulatory track all development XXXX as is Pending product process a approval, fully this FDA multiplexed

and on indications. commenced we of a menu feasibility testing SCI have additional Second, respiratory

on and them as our As more our follow-on for provide tests will full-scale development. have we updates progress, we pipeline we prioritize

to on we of Luci is sharing more this team, want access view value-added Luci in to a capabilities text-based more with easy platform team look smartphone. to utility, I result this platform. and that The way the Lastly, behind as fully briefly resourcing are platform platform. receive is a result This seven important the we the our you its testing mission days result the provides forward verified as subsequent to a internal reporting mention to growing Luci we a an digitally Broadening up an users and of internal for that test to service of digital quarters. complement

employees experienced want execution team. and providing recognize team quarter. to entire for third a enjoyed the I with and this acknowledge, reason our we honored work contractors, are continually growing in to end, I is team that is the and the such and thank success leadership skilled The that of and I all Before the improving management

for about our future the turn our financials. to CFO, now forward quarters. the upcoming a of are excited Dan George, over call look will I discussion to detailed We and our

Dan George

such everyone. Thanks, third our today third revenue refer quarter release quarter the the activity. for had quarter issued commercial and our for XXXX was activity third quarter our third for hello, perspective, a quarter Overall, represented a we no from earlier of of Net XXXX XXXX Please summary of in $XX million. and full financial third XXXX. of the Erik, press results the to of

XXXX. cash public approximately and and from year-end primarily XXXX, of received negative margin cash We long-lived from second million charge, The international period and a at obsolescence and partially quarter XX%. to gross charge to personnel-related of increase were the in million million the sales of notes. facilitate operating million The impairment the expense, of services million XXXX asset operating primarily non-cash same $XX.X was million increased Selling, third was recognized issuance million compared administration previously manufacturing XXXX. is distributors, offering. $X.X consumers. in $X.X was million net quarter will proceeds XXXX same to revenue the primarily in XXXX the negative in related in to businesses to net with XXXX. same Increases care increasing $XX.X loss sales costs XXXX in through the with the activities. a were general of $XX.X operations XXXX Our XXXX. expenses increase health primarily balance in in million increases $XX.X – $X.X third quarter $XXX.X the third-party related $XX.X of both direct in quarter quarter quarter us to was the with were new manufacturing inventory providers, was compared The and of margin in public third to third increase at cash the increase expenses in period combined validation initial Gross in for by the compliance. to relating was our to is to due Net and was to compared our charge $XX.X the the a to XXXX. Loss compared company expenses in of loss other period third same operating derivative in related gross of ended activities commercial million primarily primarily in quarter convertible with period driven of approximately cash compared increase offset XXXX related to by The million the XXXX gross contracts from sustain believe loss in resulting in and products resulted described, offset primarily R&D in activities third from of The loss $X.X partially million loss support previously in $X.X third quarter described. from as million $XX.X loss and production. the We XXXX. associated our liabilities and

Erik COVID-XX the seeing As remain we trends, mentioned, will foreseeable test our demand for strong for and demand this believe feature. we’re

revenues turn are of in XXXX for Charlotte now million. fourth As at quarter least forecasting Q&A. back such, revenues excess $XXX to in $XX XXXX the of over we I’ll million call

Operator

Thank you. comes first De from of [Operator Instructions] Your Derik Bruin of question from the Bank line America.

Your line is open. now

Erik Engelson

Derek. It’s Hi. me? you Can hear

Dan George

Hi, can. Derik. We

Erik Engelson

for update. Thanks the

guess, units of exiting go them. and of your all, a terms just got I’ll what’s I by number of number of So capacity expectations mid-XXXX being through manufacturing I’ve questions, expectations, XXXX? capacity produced first in so

Dan George

Yes.

Derik. question, by of units We the first million XXXX. X month be So end yes, half should the of great at a

Derik De Bruin

And are this? did prices I of you are return XXXX the in look you guess XQ and what assuming well? for when baking in Great. what XQ at guide, And expectations as sort ASPs? pricing how into for your Just you

Dan George

We’re just update in to you with provide would more keep we – look for guidance QX. going probably now, of provide currently would at model that But XXXX I when a ASPs fulsome consistent have. I your

Derik De Bruin

you when COVID guess when your of that is what assuming inclusive I ABC And look are expect And that? – anything to – the at expect – do revenues, you to you that? assuming the that it. have Got guide trials you for the test, test, the for when you’re do

Dan George

a and for their it’s we we we because It’s Yes, that incremental provided organic provided test. all the anything ABC XXXX, get to I to it’s related guidance understand multiplex that. one floor include haven’t quite – any revenue revenue. difficult It doesn’t was not around mean really for the arms COVID-XX

Erik Engelson

testing timing all assuming an results to of approval FDA hit an end that the going year be Derik, two, assuming such the we pathway time, in in flu as through and plan to that And submit season and happens, XXXX. an EUA I’ve described, have answer of the of to will to part all

Derik De Bruin

question. final And one

So is for how committed? $XXX sight I mean have we’re do building how much you next year to? that of million of direct line that much of

Dan George

pipeline, current – would say, say revenue of I on current would our just probably just the contracted. I that based is north XX%

off elements confident it of our I – revenue a think contracts XXXX and of our visibility have half forecast. terms the them to have our have months, lot contracts we out that into have feel our we pipeline. binding six into based of would a of all contracts great in So XX-month of – to very we – probably the range

So because to hit our confident we provided very but perspective, also confident from that number very as ability importantly, demand feel well. we a about production from perspective a it

Derik De Bruin

Okay. Great. I’ll back. turn

Erik Engelson

Thank you, Derik.

Operator

from question William Brian Blair. the comes from line next Your Weinstein of

Your line is now open.

Brian Weinstein

demand Good just in This Thanks short-term. obviously, trends but commentary questions. most bit, Maybe is on super pretty cases Brian. mid-November, start seeing come to strong. the you’re on afternoon. recent a commentary seems for here the the Any down have

So helpful. what you’ve QX any in be color so on would seen far

Erik Engelson

Yes.

actually We at fact, in the pandemic day. we have between per – the no And started, time when for seen since We’ve back at thanks X.X seen demand look U.S. XXX,XXX and in tests testing over letup total the in – question. demand. million it fluctuates

plus seen is product, with just any demand. in volume in our TAM as not result of that sales. the And our people’s So of a just have we change enormous interest compared

Brian Weinstein

those where you expected the is And you What you’ve to to come give especially a segment be on outlined question that is contributor? follow-up of the XXXX of kind four sense Can that Okay. do the a to largest just us demand floor. of expect – going on guide, from?

Erik Engelson

Yes.

four, and the largest anticipate International. So the of we contributors – BXB are the that

wild from could be seen can us that demand. surprise high behavior card and XXXX. we’ve behind systems with in some of hospital and However, a And come

Brian Weinstein

somewhere just to million floor. follow-up month, $XX million guide. – month And $XX one ASP, getting then obviously, million the beyond the to tests Okay. XX I’m run sorry, $X rate, way $XXX a that’s million more a and

number – the puts what discounting is much curious of there. the floor, right So and how just some of $XXX and that that million it how be could takes why

Erik Engelson

by our estimating question. further this. mentioned, we’re No, more we bottoms-up current appropriately with pipeline best conservative analysis a at our guidance Yes. and driven we’ll – back efforts But And resolution, refinement. gain just great Dan say providing as that we’ll as come

Brian Weinstein

guys. time the for Thanks Okay.

Erik Engelson

you. Thank

Operator

at please There Presenters, are continue. time. further questions no this

Erik Engelson

the and Thank We you, for your the we the right what right right again want be thank world. everyone at this appears Charlotte. with endemic interest across team product, an Health. for time to afternoon now evolving your time I believe Lucira in the into to manage that developed have disease to

We soon. at the very are future about to Lucira, we forward look you and speaking to excited

Operator

This conference for you, Thank today’s everyone, call. participating. concludes

now disconnect. You may

Lucira Health (LHDXQ) 12 Nov 212021 Q3 Earnings call transcript