CODX - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the Co-Diagnostics Q2 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Andrew Benson, Head of Investor Relations. ahead. go Please

Andrew Benson

Andrew members I'm Egan, joining this Financial me Executive Thank the Benson, Co-Diagnostics are Officer. Chief Brown, of and Dwight management afternoon Officer; you. Brian and team, Chief including

with call call the from to begin questions will management's remarks open to and analysts. prepared our up then We

objectives, Before expectations, the statements. of this that call assumptions constitute would forward-looking certain beliefs, the statements performance inform we statements. we during of to made statement course company about Any plans, begin, like or forward-looking events listeners by Co-Diagnostics future may are

the statements regulatory new example, concerning based of are For XXXX and company financial statements. plans commercialization of management are operational on guidance, believes features reasonable forward-looking market statements trends all development, assumptions. and and objectives clearance, products, The these

in are results guarantees and factors, statements. these forward-looking Co-Diagnostics implied the to actual Co-Diagnostics unanticipated SEC. events statements the Important and and involve any statements to occurring differ and that those different these materially no expressed cause which future be materially could circumstances performance not from may this known call update uncertainties reflect of detailed after to any or the results cause are or occurrence obligation to with disclaims assumes filings expressly reflect in forward-looking or actual events. risks results any unknown statements, such However, by duty from to of

you Officer, to measures the At with GAAP company's I and measures results. results. like non-GAAP release read this today's to refer most to Executive reconciliation out Dwight be turn be financial to certain shortly contains comparable In Egan. These company a should earnings call, Dwight? financial during considered should discuss before addition, the their the GAAP for over Chief to may the non-GAAP together would We Co-Diagnostics, time, not measures financial call call. replacement non-GAAP this presented which

Dwight Egan

metrics we call, strategy. On on our and discussion overview all Then, against will and quarter, a of for thank questions. performance this Thank take joining results you you, progress for financial your provide of Andrew updates us. will the an we key our

of well other and of for test including million and Co-Diagnostics to sales A, continues allowed announcements. variants multiplex believe global the the milestone our have recently B flu the by and fueled Delta and are flu achieve our products COVID-XX we've ABC over deliver in achieve QX rates products a are in strength vaccination SARS-CoV-X. for clean we demand the sales lower domestic record US, ongoing with with was proud with continued part along as margins in earnings a been international growth, XXXX. experiencing and achieve international become to Co-Diagnostics due we the much in momentum, previous last and are in well as as providing US partnerships, over those exceeding record it demand, on saw year-and-a-half, so sales quarter Logix rise our the battle predicted accumulation able selling related And the able COVID-XX large exceed This company to of our COVID test. that X-gene been sheet gross our especially predictions foreign us valuable us expect those in molecular and leading as Smart expectations, remain while cash the We for to balance have sales This product time. diagnostics that some throughout our strong the of to to where and $XX demonstrate regions, our positioning to than sales

market. products offerings, suite opening but as COVID other up for planned existing sales related driving just our an of overseas not our well, opportunities even diagnostic and those Importantly, now our relationships larger for are for products to

uptake the this our countries our seeing than test products and important profitable Zika, before. India, already experiencing more CoSara, factor for venture in in This CoPrimer segment. prior its a for in areas, as registered the demand Co-Diagnostics COVID country. take received augment to are the increased clearance by better countries built sales ever posted the its from demand laboratory we several opens domestic surrounding to diagnostics its in or Dengue, will our example pandemic. on expanding another We profitable to of Chikungunya and has in product is ZDC customers seeing onset is lifted other IVD exporting place our exporting the begin COVID demand its joint to test its our anticipate also COVID-XX operations. diagnostic which diagnostics ban serve centralized platform, the also This Recently, offerings emphasis to the that but CoSara quarter door for tests Indian other for QX, government of driven on in on serve driving also

registered like segment efforts company business is industry. first R&D our a lab as will by of focus week we hundreds Anvisa business been test COVID-XX that worldwide of and Brazil, that notification two many for the our where and Brazilian This This our domestic there vertical, and our we Smart network. been country disease sale grow to markets. segments, infectious includes foreign currently we large continue sales drives pipeline received the just product that in has strong customers, company the in pursue the expand kit Logix forward comprises countries this have health which in what centralized Going the in

which well. a are submission. FDA rapid We and and In throughout contribution as labs, Eikon diseases progress in applications our optimizations also world COVID about and the will point-of-care company's the development be for platform pace with continues many for not at-home by centralized prepare EUA the market for will is for is addressed platform. the to optimistic that new vertical believe we diagnostic addition addressable considerable and but to other just point-of-care forthcoming potential at infectious have The the disease Eikon composed our various studies market, of at-home

include unveiling platform Since blood regulatory capped sales system international our We particulars as our every capable mutations on rates to The the will this been the technology profits development a balance. prep labs with investments countries our infectious with needs product months pending our prepare devices and platform it over cancer XXXX, years tests part we a has other small the Eikon our up biopsy Bayer YourTest and has performance the cancer of is launch. historic people the COVID-XX R&D and is accessible and but XX than to over produce by deadly delivered which worldwide our States is of Bayer mutations own high-quality reliable company Co-Diagnostics liquid products its have by and including The take truly originally communities believe rising in use, of peer reliably the simple the mobile our performance in available rinse of footprint qualified the the results sample disease PCR accurate just our Services to and future, vast company positioning Co-Diagnostics always of shown test significant after as detection talent patent-pending founding The illustrate that a other vertical instrument addressing continuing the coming to the and believe have is eight of U.S. the of pervasive to customers end the a most pursuant system test and performed a ago, are into repeat continues, technology's is be comprised a their at-home This required. which and real-time results and and scientists and long-held, introducing a utilizing results present the contract has in of need in in LGC. to deployed in beyond those to found to superior test in meets variety obviate well strength an The high-grade These consumables Operation other laboratory these to preparation, for position cancer initiatives is test The effectiveness product to the authored future United Eikon CoPrimer's again number CoPrimer Co-Diagnostics for not results and continue their due and showing also technology. including most. of Crop detect are platform just weeks the ultimately authorizations library standards who mass throughout global system. developed setting into be has sample our disease of validated capabilities ability the we include to The product for Eikon diagnostics is in use. company, easy relevant the without our development majority reusable the recently have under in publication. our reporting platform PCR. vaccination expanded for platform, research to lives in detection. human widely to an basis. in ongoing development. this anticipate for in [ph] instrument, company while at as them in in our designed and proof-of-concept results. it oral we maintaining inserted need continuingly struggle being in The that not in being fast, in who pandemic, technology testing PCR system agricultural possible that personnel as of that which excellent chemistry the places we inexpensive multiplex testing. are with the be to is A quality. infection, are various human the would diagnostic Since COVID. currently effective a healthcare. far our of in These conceived sales the nearly review a with expansion strong Co-Diagnostics positive ramping affordable applications More we project detection, our diagnostic yield territory using which performance a with users countries result sophisticated of platform are developing kit and extending cancers vaccine, again CoPrimers and over single-use of company NGS a Overall, DNA with bring to and are hardware amplification, hanging underpins app app. mission and automatically the patented No RNA low-cost, by and high are prior work The of or relating Progress access from mobile cup the can used especially is for for scale paper on potentially was is growth interpretation to been assays. that

we around year, to ourselves authorized. early this regard to viewpoint Fauci week to even people have who last Meet admit had testing was "Previously, positioned were has vaccine give Dr. who This correct. Press, said, or with that to have who was a just before available in people, since it We symptomatic. said contact the CBS' Anthony on infected, proven And on this are reality our be have

there And undetected. to here will it's that into asymptomatic, other you'll an are and go contact that know be with gone very have that asymptomatic that, from who beyond got infected. get we experience would you people countries otherwise know you've Now now more because infection, who person clear, have will who's in

platform and schools go said, to quite to schools, you're is done. to is hotels, that to company thing safe prepared a reliable testing." PCR Gottlieb has work, but for workplaces, not do be wherever on on I should order remarks normalize results. standard We Earlier will our other settings. would et We outstanding doing go The on for Scott this back cetera. designed Dr. continue in to regular my from be that an, our testing to also protocols the restaurants, like helping accurate, at-home to we and more the create history will testing COVID, that to need with added right, and basis will It deliver of optimal testing this results dedication a growth. normalize to be very regular travel NBC's curve has is distributors onset believe week the is point-of-care remaining basis Face beginning, conclude testing by basis." operationalizing on operationalize Nation been back to action a that the solution, need to ahead and the of So pandemic in since quarter. menu fast intend the with the et ability in that of to operationalizing employees "The trajectory cetera The ships of infectious for overtime. only this importantly thanking school, society drive we Eikon asserted to will diseases regular testing to believe that our safe It required, and inexpensive, regular other be gold with their

turn now a for me key numbers. over of Let things Brian Brown, Brian? and to the metrics review

Brian Brown

Thanks Dwight.

second our million of Our $X.X quarter the as the year period. primarily to in quarter XX.X% by XXXX reflection second Gross test. million increased million XXXX, of mix of up Logix the as well the prior due $XX Smart increased or $XX.X the COVID-XX in continued as pandemic COVID-XX a quarter, to XX.X% of second $XX.X revenue sales profit $XX.X improvement or million, million $X.X to quarter product million compared continued from of the ongoing from in for

our During prior of resulting gross a year XXXX, revenue period, to margin. higher in includes QX, compared a sales recognized the as smaller equipment amount

from result a a million increase recognize price, as to was gross an XX.X%. first of higher and the gross the $XX.X Sales commissions. second Year-to-date, compared for million for international research by expenses the to quarter, $XX.X operating or sales quarter driven development on And quarter international which quarter operating million structure increase a expenses the Total than higher of increased for for and sales. by increases million, of XXX%. able $X.X provided third-party grew million second XXXX a in to expenses to And certain from marketing million quarter up $XX.X revenue, of $XX.X up XXXX. of more million XXXX. due were for of The both $XX.X of an second commissions margin profit the the healthy expenses. sales third-party $X.X increased $X.X marketing expected and and of were we higher Additionally, higher sales quarter with up were the million

$X.X of and XXXX the our research expenses $X.X by for expenditures and up of the million development second expenses research the second Our the operating the June XX, expenses of million to device. primarily planned for point-of-care to XXXX related compared were for the quarter six Total first same $X.X were from and for $XX.X identified ended six months months XXXX of quarter. increases sales million expense up marketing million development -- reflecting development and

of from of million Income $XX.X the the operations resulting in from for million $XX.X quarter $XX.X prior income the for XXXX. before $X.X primarily just quarter income million was increased increase million Second comparative down were an from in from taxes quarter $XX.X was $XX second quarter. quarter Year-to-date same compared that the in income was the million to XXXX described. XXXX million expenses operations the from year of period second operating

ended $XX.X months $XX.X recognized XXXX of six-month increase million period XXXX. taxes $X.X the an million, the million June six of was XX, comparable income from For the for income before

taxes. Now turning representing tax expense an representing was million Income of XX.X% effective for quarter of period tax XX.X%. the was for ended the June XXXX six-month rate to effective million income an XX, second rate income tax tax $X.X expense and $X.X

XX.X% of taxes due differ items Our statutory discrete from permanent items. and federal to generally US effective rate will tax the rate state

income months of in benefit XXXX in an we taxes position. as valuation effective or we three result, the tax six no XX, rate and expense a X.X%. For And recorded resulting both full ended allowance a were June from

$X.X million previously income $X.X by from income $X.XX resulting million $X.XX $X.X of or offset prior the was operating diluted the a an partially increased of fully revenues net in diluted net expenses described income per of compared increase levels. expense and sales primarily margins product The million share $XX fully share quarter per result million of year net was higher of in to Second decrease quarter. or and income tax

in million increase of an marketable XXXX second sheet further strengthened cash XX, securities million remain million and June March $XX XX plan with balance XX, up of cash, $XX.X totaled With XXXX at quarter executing Our in equivalents our continue $XX.X drive that December from XXXX debt and to highly positioned liquid we on and processes development by investing no growth. solidly a to XXXX. growth our future from balance research strategic sheet, people, the and

quarter research As planned XXXX. we marketing expenses and discussed and second our increased in and sales the first during we quarter call for of development

However, million we to of XXXX strong million people. from in operating operations in used grow the ended compared prior were able revenue XX, was months $X.X cash flows cash activities in was six year $XX cash cash still due to operations Net million. by provided improvement position. during our our for hard primarily cash June to the strong debt-free activities continued our period, from increase increase process reflecting reflecting the significant operating of of $XX.X significantly flows work This an and growth balance

effort team's remain that Our back first results the half results -- efforts will for confident half the generated continued strong and those result in for of XXXX solid we that these of XXXX. financial

reflecting our $XX anticipating products. revenue third and $XX million demand for domestic are We and million continued between international strong quarter

of diagnostics platform. anticipate $X.XX, share $X.XX and earnings a spending increased which in research of range per our We the on diluted also to development effect includes new

strong enables financial such We are which as us pleased Eikon very opportunities the in platform. growth invest to our position, with significant

position and now strategic experience presentation on our I'll build back the to are strong Dwight. over We foundation continued will progress to our solid turn plan. business upon growth continue in to a

Dwight Egan

the call. begin portion to we Operator, of now Brian. ready question-and-answer Thanks, are the

Operator

the Chen with Wainwright. H.C. Our question comes go Yi begin first session. will Instructions] [Operator ahead. Please from We now question-and-answer

Yi Chen

you long-term new diagnostic question. the become on solid quarter. Congratulations and of for rate of could increasingly a mortality Could variants Hi. taking as new view lower? emerge my the on the comment demand market Thank you variance of COVID-XX concern

Dwight Egan

As vaccination. COVID earlier my be that I problem testing in -- wide-scale would said notwithstanding for we obviate would that that the remarks believe not is Yi, something COVID-XX

is That's are how assumed we course as of foolproof. problem, to problems, part is of a vaccines. are it Fauci to The to as the put plan notwithstanding people at But have remarks if school arenas, a back the story always into articulated into work. back Variance have plays airplanes there have and widespread my that that as and strategic point. effective We vaccination. of that of vaccination, back They showing so cruise additional course, out. we see not to at want evidence vaccinations that to our cause on effectiveness what far, is be test certain continue and to by would level, to predict. that ships back to especially a We'll wide Dr. can't we're sporting the relates in going colleges, only

create been And goal accurate according that the that's product people those will any of to by So in our gold product our accuracy, settings point-of-care fast, has to with at-home CDC. and allow platform accurate a inexpensive. with mean test us a and accuracy, to PCR Eikon standard we

on flu year And will as so didn't and of a But also a testing. we much need lot last season. are issues time reemerge. on for going continued flu prolonged There we goes see a have Yi, of where other

gateway is many, that pathogens. of flu our Eikon, is A, be with go to YouTest flu all-in-one COVID and increasingly COVID between called want these beyond stress as And The test test solutions different platform excellent way strategy We to many sample I and diseases. that for other we have types need will for really differentiate to COVID. something will B an strategy one a really

there in platform tests pathogens transmitted infection vast others. We upper sexually the menu prepared that world. pathogens, million this And includes sexually respiratory infections being all have a Yi, keep a different mind strong every for kinds day of of transmitted and in are

throughout the makes cases to the United that XXXX, in widespread cold, small of States, common still United And XX million vaccination And the of the look billion rather notwithstanding States. COVID just are plus a up comparison. we cases have so There in flu. in

need there's of that diagnosed. So be things lots to

a Our waiting for Eikon or be of a what really reset parking parking to and our cost to platform up to gone. lot days driving and think Eikon done. tents days day results. are hospital types and to hours meant is and done. and the and things where those for into of testing into We Dodger testing will Stadium how the in think supplant the is to a think platform good PCR for going wait important those get We grocery then ways, lot are for or how where we store very why And new

Yi Chen

what's And Got Eikon it. for timeframe the the current enter estimated to market?

Dwight Egan

QX a that getting having eventual optimization think, trials end response mentioned, the tests I is, So agencies. those in I product the We EUA submission, our that FDA in This for and we're government QX. in of a before anticipate we early and clinical submission. regulatory of other middle, demands from as hopefully, into the ready FDA tests and are continuing our rapid

will vast European world. fast you possible, to for We Union distribution we the as be marking, because submitting, also throughout as CE have as know, the

platform. domestic substantial But that's targeting timetable. it's just we're our Eikon a market not of the for So the current that market

Yi Chen

we next And any it. should is XX months COVID Got related? not that within the the expect catalyst company for

Dwight Egan

other Well, first it respiratory on by definitely that Eikon test be platform is diseases. going be coming upper will will out then, followed and the to our COVID-XX be

think So like this, I it basically we view Yi.

diagnostics. with the This is and think terms this you our at-home platform. that being overstate our revolutionary patent how our products Our to taking our and introduction of could most sales beyond product. an test is the I doing, Eikon in way point-of-care basis we device world settings think COVID that in the really the able bridge We -- a as on to go to company, a product for to and exciting our of domestic strong Eikon is could technology surest and thing groundbreaking be the COVID don't CoPrimer international really of and chemistry international are of

whiz-bang as So regular we're solid as prepare not which to for Eikon looking looking definitely performance we products, for showing, we're put the any market. particular laboratory much we're centralized catalyst, on our as through

the to trajectory. an Eikon. And is our also So COVID to business. is centralized international evolvement was That's laboratory it our world bridge bridge our --

Yi Chen

you. Got it. Thank

Operator

Instructions] next Our O'Neill Theodore from comes ahead. question Please, Hills [Operator Litchfield with go Research.

Theodore O'Neill

Thank you and business. great quarter. board-level what congratulations realize -- I you've you than it's possibly more a with cash, have on cash got you I could a do but decision the your need for

So all how should going think what's we about that? happen to with

Brian Brown

do have strong very good, great do only We have debt. cash balance, cash balance. but a we not And have we a Theo, no

going And ambitious just amount product so, of offices our launch for is to X.X and United senior and schools very This an businesses, be enormous product. States, is talking in and XXX going just we're we're centers offices million about talking colleges. dental about international product the to Eikon launch. XXX,XXX -- care and we're a an be This preparing physician

lot a with to And we're we're and worrying get about that need this it make do in we have have to launch product work so be we're going doing plan and reserves we do to cash all the not to of where so can money. going to

go right We and is Eikon we regret have is now than launched that distracted we to other the nice, be we to if don't that, get we My like by put it. Eikon balance. with having out any to think like But done around it ready We could only I instantaneously. things. respect the would the don't done we're we've into things market So want hunt on be primary or for it it goal acquisitions -- faster door but could have and already. marketplace. the to don't we think could our cash it

the States we the that world, do can and faster chest market the we get that's And we're off makes so -- way. the the in be. a to to United it both better and around here war having it the right So going

Theodore O'Neill

an it queue the talk test your a enough. product In Fair recent about low-cost results the developments, provide developing that hour. is is PCR you under for about talking Eikon That in can you're COVID-XX quality not?

Dwight Egan

the than in minutes Eikon less from to XX result. results product basically delivers Well, sample

than minutes people it but the smartphone the into cup. is mean the then it we smartphone, generate we And cloud. can the So when -- water protocol person saliva. person's result test two we it just will mind -- makes say the takes -- sample it's basically a normal direct in the around purified easier mouth in they require fast, an to water use a It from of result. sample. for process, extraction not for will an Eikon or Eikon keep that the seconds to less that XX provide taking go like to device the does saliva from spit In so for to And transmitted from before the that, swish milliliters PCR the their test, into XX the

in is through could halfway room ship They exactly are of be board when it it the so They'll ship just revolutionary. setting the elegant But you're fact it's terms status. COVID example phone of They of And in have hours who on. in But unbelievably bioinformatics entire and it board a again the point-of-care in on record before cruise. that each again the what people It's for couple departments their a entities, just elegant. state self-administered. an And they've of do the status ship the and so health if PCR running This Eikon state servers a this every a It's the ship they within can an ship, cloud plane. their terms to of government product. so of operations certain describe. it a ultimately what into do any amount notifying time. in keep be people makes room. leave that almost and and mind can is within test know at-home had So that hard secure for a is could cruise can done checking there through that

Theodore O'Neill

was results Eikon for quality asking section I has say recent PCR developing that. that's COVID-XX it than talks because and product. understand developments that hour, doesn't a Yeah, provides just less the low-cost, about it the I but test this an queue called in

just I want going So quick? there to make to two there be are sure out different aren't that products

Dwight Egan

Yeah, yeah.

Brian Brown

This You've the we tell for queue. Brian can queue. since I you got the right. I'm that's about talking responsible were what it exactly in is

Theodore O'Neill

Okay.

rest Okay. talk My have looking your June of year more sales is what last going offset fall-off just United year the this quarter such the would June about in the world. what's last sales falloff in the sales quarter in US? at for the by dynamics to can are that than in you in a question on But from States the

Dwight Egan

I vaccination in think far much States was ahead is have that of rest to to the Well, the of you of the which United world. point the the thing widespread

became of And United of environment. and Delta sort now vaccinated the as the testing problem so vengeance. mortality the And that just that vaccinations, fact States two normalize getting of hopeful out testing We'll secure variant how their of like the of more it again have is what we're sort terms in combined kick its -- comes off in trying seeing which way emergence it's status transmissible. making a seeing in But what's you're variants are things, that to much potentially the naturally preoccupied variant rate. to fell in with are the you're see with with

America environment last that really where the sort over bars and months normalized an the events. few celebrating, only So was we are but were sporting of had places

this behavior. problem, especially seeing testing, started and we at as masks ongoing to need operationalizing and workflow refer basketball have mentioned up sort in without used order whole and what I used people So the of have with of forward, But things that variant live. life, to what amping you I call things to normalizing our to as thing, we going to the the the that to games do

it's so the and a pervasive. have have things Those to to level have go going story, to to You you to widespread on. go the testing the of to require you go and office, certain we going on that have are to grocery and bank

vaccination of be are out. to that lot a still and and are on, are that unvaccinated. infection a both So meantime, And getting vaccinated are story still played passing vaccinated people, in going other is is people the even that though that infected people yet vaccinated on there's to

your COVID-safe day, to tests is heading. constant in going of market. resulting order That's And this. in ballgame, at have that's COVID-safe COVID to you're in know you domestic the a So workforce, order a COVID-safe what and it for where need is wherever end a to we're status strong demand the operationalize or a in the school,

think I say, serpentine bit. than COVID I better model and a more off, a of parking this tied a cars. for with it durable few operations have most would We're lot So tent line we fell to business not companies.

the We for. equipment in XXX of States world United which XXX equivalent the almost different XX have laboratories in around centralized labs of about had India XXX in labs we about labs the provide in XX neighborhood those CLIA of the -- or

have test companies less have, who business as result are activities tied and same other the certainly and because durable other has of sales have the had. broader we brush companies much diverse of we it of with more be COVID have we as business many COVID diminution in to a And types been for a disconcerting many overall model and have as to us than painted So models vaccination. not those experienced a what durable

Theodore O'Neill

Okay. Thanks very much.

Operator

to concludes question-and-answer turn I remarks. Dwight to This back the would any like closing the for Egan session. conference over

Dwight Egan

for us for company joining direction your quarter for call. enthusiastic headed. and second you is about the our very Thank interest our Co-Diagnostics We're in today

invest is throughout the an to investment expanding world, future. marketing our efforts which in sales We our continue and in

international for centralized scientists, and potential and and the better that where redefine, Thank is dedicated success how Our performed, device PCR in with introduction to regulatory, team our company good and bridge expanding financial you better help have positioned have platform we the staff, growing tests business our everyone. than support, Eikon ever. to provided believe the menu day back durability along our of has office a is a believe to With of with we quality, presence sales Co-Diagnostics segment and future. and laboratory near our

Operator

for The today's concluded. you attending now has Thank conference presentation.

disconnect. now may You

Co-Diagnostics (CODX) 13 Aug 212021 Q2 Earnings call transcript