Earnings call transcript Q1 2023

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Operator

Good afternoon and welcome to the Co-Diagnostics’ First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded today. I would now like to turn the conference over to Andrew Benson, Head of Investor Relations. Please go ahead.

Andrew Benson

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

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

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

example, and For statements. features operational the development, market and statements products, objectives and forward-looking new all and commercialization guidance, trends concerning XXXX are management of financial regulatory of plans clearance,

FDA company’s Co-Dx yet platform, concerning not Home company statements available for the includes sale. This assumptions. these on forthcoming reasonable and based review statements The are is subject PCR to believes testing which is

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

considered before with earnings to We results. for should which presented company’s certain financial to release you measures not non-GAAP most the contain non-GAAP reconciliations measures during call, replacement financial non-GAAP today’s the measures out addition, and be These In financial together refer company shortly may GAAP may their to GAAP call. should this comparable be read results. discuss the a

would Co-Diagnostics’ Dwight Dwight? to I Chief turn the like Egan. time, this Officer, Executive At to call over

Dwight Egan

our joining for navigate we like taking Afterwards, thank perspective we discuss headwinds. analysts. you take from recent share Thank our our Andrew us. strategy we all on to business to against would actions Today, you, questions as near-term and long-term progress and we the discuss position will are performance,

and to and We progress the several year. remain have the help established guide strategy remainder measure for goals our in our confident of

First, clinical for device we initial and the PCR product and FDA targeting are by submission completion to of of end evaluations the our the calendar Home year. the Co-Dx

in to ABC coming expect Next, commence RSV tests flu our plus we for clinical this evaluations season.

which service ABC a develop the tests continue the continue that to test believe platform currently tests the to clinical Here I for as in new am distributor and are on We various role RSV well market play intend to laboratory our throughput high utilized products some will sector, laboratory as significant which sold to only of to both to is development. We plus the of design diagnostic be and base. referring centralized that time. will in customers testing will that be Other stages one.

reduction of been costs by A testing. infectious mainstay democratizing healthcare disease has the last the for of around mission decade our globe

vision both will world. to this the directly developed a less Soon and quality a platform diagnostics by developed high degree possible with of be and made bringing

test. Thanks to our by the for trials and the than the closer disease ever its We PCR initial world. infectious are high-quality of around our PCR to Home making communities now to platform progress all the preventing of accessible achieving spread and goal Co-Dx diagnostics clinical

study time the that as FDA the to concluded And results There in near authorization the home. are trial on clinical reported We at discuss by by play pleased evaluations that to are at top we key currently make trials will use while and all year. of and the of we patients X will easy-to-use whether healthcare clinical or update help a trials. the far, the and be the of participants overall we the this decisions can’t for We believe X FDA the sites have for are at giving and scores role report facilitate to seen submission details point-of-care subsequent end states. different an physicians of ease informed device timely the know conducting usability the an scale. power new the by thus in anticipate Now platform

on The procedure not chemistry in to regulatory the that is are first like But simply and our would COVID-XX we demonstrating PCR that effective this the COVID-XX. undergoing test underscore device I detecting Home standalone Co-Dx test. are

plus we the home. to are trials testing applying the point-of-care but platform world panel, the ABC the has the shift begun use These already have simple validate and that laboratory and proving RSV the first-of-its-kind test highly in in tuberculosis. format role a advanced, diagnostics to multiplex We and to diseases, technology including a from the post-COVID this for with a that respiratory disease other to even

platform now notified governmental been receiving Recently, we to platform. I that highlight organizations the and already had recognition on tests our new selected receive multiplex to non-governmental tuberculosis our the grants alike. is want for and new multiple from respiratory were we

every market, grant platform prominent believe of bringing is technology One recognition testament to we to ABC responsible industry platform. are details with It’s technology. as and are the our organizations plus making patented device to the is the Co-Dx While investigation respiratory the individuals the the reality. platform experts we unable task related RSV from these these and the CoPrimer including the as reagents, and monumental Home a our to we new into announce on a grants, vision thorough the panel history, chemistry PCR a of the design, well involved of a was additional platform aspect enhancements by that

or endemic despite in geographic all Tuberculosis for in TB to a designed PCR certain clinical lives product MTB still just XXXX. generations. preparation Other took million been verified and and modern the And abbreviated Co-Dx highly in advances Home relate being validation regions on X.X grants tuberculosis medicine platform the has for trials. of in people

the death of might otherwise and has our XXXX NGOs diagnostics, exactly incidences our result allocated TB may TB urgency that be in uptick new the gold to being to created since This the slow concerns. disease to funding the with spread an of real-time COVID-related standard have been access among of mission and to re-appropriated Some line in platform. increase to

with in our our being grants company’s The lockstep this aspirations been and marking emphasize internationally and With of MTB seen, of market CE point-of-care in evolution real-time testing then TB from be disruptive long-term refocus has X We TB. for renowned technology. with difference between reflects of and XXXX now among multiplexing point-of-care our on we platform a believe vision Harnessing platform anything platform we a addressable our mere grown a to global unlocks in potential built our as other grow find using this want and received I sets coupled diagnostic durable, that July the the technology, for NGOs X.XX their plan. XXXX. strategic the diagnostics X.XX platform and The now is proprietary believe CoPrimer’s and test mode. to power The recognized from the partially technology CoPrimer’s compact Smart natural billion We PCR. potential was different new eradicating to to beyond by billion fully and patented the IP, execution new experts Logix designed first world our ago device. new versatile expected engineered is that ourselves as world regard battle tested with has ever medical these years have interest benchmark

design and for major allowing sample multiple disease and infections tests for diseases other Our multiplex testing to test single price. also is our for cup ideal sample planning and innovative overcome convenience can such indicate with sample with price a planned hurdle research respiratory a patients affordable that collection panels, as test. multiplex The sexually testing, transmitted a single processing

over need device the it test the fly. end where of to to their or was to the and year on maintain does result ability proximity the smartphone the the One instead innovations important receives following their and from most return to not on go, last runtime an cloud user the

case data also of by of physician data to system as community or provides outbreaks the place their secured they locations to to point-of-care and The allows user provide by real-time cloud-based as among results information also or resources analysis and takes patients send The cloud-based quickly required a to directly parties authorities to track law. regulatory and or where in Health and opportunities the spread identify Ministries and Departments region. for end diseases authorized test directed other are epidemiology before needed

feedback invaluable size, and our for only itself, market. not we the potentially analysis ongoing understand we initial usability better needs most throughput on field is everything on that Our the for accessible respective provided helped in as to provided from the has firm the the but by of packaging, price total scope, commercialization by believe addressable marketing our the us launch, has strategy research platform’s locations what being be also will high focus guided device

Logix our test test achieve ago, time develop, diagnostic for at standard gold was meant Smart years greatest. record results a X to when allowed agility and need financial PCR the COVID-XX providing quickly receive testing by clearance us our to

team of at the move working experts of growth, next point diligently growing achieve we shared we into letting platform believe our position, care pipeline, pathway our time success. our has As our our stage for positioned company our support, testing cash execute pave initiatives real of product advancements grant vision, Co-Diagnostics PCR of future to financial in the to and to and funding practice against management drive strategic growth strong cash home intelligence continued

We recently our testing lines quarter. and the to several over capacity. add to for Headcount production prior cups has have new new year already a device grown manufacturing and built signed XX% lease to compared have

by in further necessary the positive for achieving we talent This shareholders. of investments our R&D reflects drive our of remain the to in point, are and diagnostic that value facilitated challenging to as flexibility cash and Our the landscape. success the provides is our position we forefront indicators this strong progress remain

my remarks. initial concludes This

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

Brian Brown

results had joining COVID-XX financial period. global sales prior compared COVID Thanks, of Dwight. in an unfavorable And call. our thank a on to in year impact Logix you The everyone decline the resulted for today’s testing tests and our declining Smart

the to prior in to quarter year million For the for year Gross revenue in $XX.X to of $X.X to period. comparable decreased $X.X profit first prior year same period. XX.X% compared million compared decreased as million, the million the XXXX, $XX.X

percentage the revenue of cost reflecting as quarter decreased in percentage margin gross of XX.X% prior larger to in the compared from XX.X% a year revenue. our costs period, of Our for first fixed recognize

company increase approximate $X.X expenses elevated expenses compensation and in X operating work increase This initiatives. research and expenses the was XX, and as offset in first partially fiscal the The development of XXXX months in and were million X% was quarter for by our compared we a goals XXXX. variable March commissions. of achieving to Total by ended XXXX decrease third-party research $XX.X and development increase driven million towards

Co-Dx care ongoing testing resources Development investment and trials in our quarter invest million and to revolutionary and year to platform our to expenses With we for million $X.X other company prior and were primarily platform Home period. diagnostic first The clinical at the home to compared of additional in continued Research PCR bring market. in our platform point increase time the $X.X initiatives. reflects continue

to XXXX, a million, The tax demand in of income of quarter year XX.X%. million, for of an million, period. achieved to an tax effective COVID be before $XX.X $X.X experienced income We first rate benefit for loss of attributed of the compared decreased income as same taxes decrease the the loss global quarter testing. to representing first prior For $X.X can

the U.S. of on our prior diluted permanent per first $XX.X discrete income quarter for compared to of rate quarter XXXX effective rate fully share of diluted $X.XX due taxes, state loss XX.X% items. the net – tax differ year, stated per to As from the $X.XX loss or Net calls, same fully items, for of million period. will the or share, in was and a $X.X previous statutory million, federal

adjusted Adjusted quarter prior first EBITDA $XX.X an to in million EBITDA of the of loss for period. was gain XXXX a $X.X year of the million compared

health actions of ensure manage for and positioning We continue we the our in flexibility deliberate growth. sheet long-term balance be to to our as

discerning and As opportunities progress of to further make on while deliberate the platform, capabilities, trials our clinical timing bring our we to or remain our that evaluate we platform we enhance market.

on equivalents and quarter cash $XX.X securities Cash, down XXXX. million, million at marketable the from December at ended XX $XX.X

recently new were resources which care additional home we we highlighted financial us and that bringing our receive As Dwight’s provide as progress flexibility in was grants, on to market. notified platform point and multiple we remarks, of continue to were with selected to at will

a sheet balance while the and and remains position, committed flexibility remain sheet. we health solid balance preserving our also strong of Our to maintaining cash

highly enables long-term and long-term Our utilize our with us opportunistically allocate balance us and for to of goals, to liquid, shareholders. enables maximizing resources no achieve sheet short debt goal to the capital, value

XXXX our the our to use be and on Internally, be not company’s goals development in concentrated will goals. company statement of rather Turning opportunity preservation operational development operational to based our us it maximizing future call. near-term now the will will and focus captions, income success discussed on our measured and in and to guidance, of be cash the order on achieve our cash allow greatest achievement

this not As a will we guidance providing financial result, at time. be

cash deploy capital home that strategy, uncertainty including Co-Dx and foundation a manner position of will and the provides year our be a position point XXXX future. one support the long-term us navigate and disciplined Home monumental of solid for for Our platform. us will company, our with the care in in near-term to long-term at PCR

ways We increase and continue consider to returns for value greater create additional to shareholders.

now turn With I will to that, Dwight. over presentation the back

Dwight Egan

Brian. Thank you,

We Operator. analysts. will our from now take calls

Operator

Theodore Instructions] I sorry. – from [Operator first with question O'Neill The is am

Yi first ahead. The from of is Wainwright. question Please go Chen H.C.

Unidentified Analyst

on I to behalf couple Chen. Hey. questions. quick of have Yi am a Jade used I of

is you also specific And the the any provide ongoing from you COVID-XX be to some readouts, be would The around eventual it to get second first Thank infection diagnostic, filing current your clinical readouts one COVID-XX? subsequently the as to data evaluations? being clinical the question or FDA and evaluations, be specific able infections any that being year during you. other would or would clinical on it

Dwight Egan

part trial To your support test question, the in of FDA an is clinical on submission COVID-XX current emergency the only. authorization first for the of use

with remarks, my having a in test, and that trials multiplex conjunction B, stated have upcoming execute. season. are to Flu which flu the the Flu contemplated submission COVID-XX, I As include would we we are current in anticipate going A, Those EUA RSV

Unidentified Analyst

readouts readouts, clinical this color Any the you. Thank on potential year?

Dwight Egan

respect We giving with remarks. results, to are not any prepared we interim the other our in guidance gave than

are the some been of middle States. guidance very of We future. the the different we United data locations user are with in And And with gathering of pleased on throughout element that. from five metrics provide the some what’s we as happening the will study other appropriate in

Unidentified Analyst

you. Thank Good.

Operator

Hills The O'Neill next Litchfield Please go question is Theodore ahead. of from Research.

Theodore O'Neill

multiple Dwight, development, platform disease platform for the or getting much. very particular Thanks and that you or on are PCR that grants diagnostics certain this is funding, for diseases the both?

Dwight Egan

have large to is both we prepared targeted those I Theo. of It it’s a my elements have really Certainly, focus, as remarks. stated – in

plan and will contemplated different terms that new platform. this RSV do we PCR. to these targeted One large there panel number is handle of everything the B, COVID, critical that just this This a very it – specifically in But is multiplex real grants device A, a panel. time of pathogens. to is of Flu the That’s with

of undertake. your device kind head, what to of PCR, be you gives an just idea we real in can of it diagnose So, with this able time the you and what scope would think

an world. just TB so Another is awful the of TB And realm, grant example. specifically is in many for targeted different countries the in situation

this work product. are gone that grants, to both able government and do recognized how recognition press in and innovation an has we pleased we detail And non-government on just As entities more so releases. into have much this to future are from these will so we you give see

in world said that terms our the is has seen we remarks, of the prepared never device. this in something before, As

future. will it’s So, in conjunction going sexually we upper the panel, a things ongoing basis, respiratory COVID think be multiplexed but COVID to in other and tested an on infections transmitted have broad with and in impact our eventually tuberculosis,

Theodore O'Neill

sounded this year, yourself, have to manufacturing? next prepared will will runs but if how it you of going are place, to if some be hope you that And building you you it on will I I – you facilities and/or heard in way need the your the the these is there remarks think this outsource

Dwight Egan

to handle built kind collection in both already a capacity, of We a will probably that capacity, respect just for just we committed are us outsourcing. lines the have and the With our will we needs step foregoing some cups. But facility have next handle that that Lake Salt here number been we be, and think interim-term. have And instrument another building near large enhance the for of greatly to to that production future, capability. to City a the Theo, of in our lot right lot of the – anticipated I

Theodore O'Neill

Thank very Okay. much. you

Operator

at no There over this question-and-answer for to time. session. questions remarks. would turn our I additional This the are concludes back closing to like Dwight Egan conference

Dwight Egan

platform for expectations is reality, mandates. the do testing in Simply in recognize way, to So, And being shift for persist for this cold Co-Dx need worldwide not our ourselves, basis, we occurring some so PCR this arise. as short upon new Home elimination the may that we well the new COVID attracted beyond endemic as normal to vertical. for put, that a platform, Co-Diagnostics what reset lay And the of how shareholders We array just and build the tuberculosis. centralized the only well we COVID with as the shift with at new it reduction as diagnostics along our to future for underway. address to you pathogens to wide eventually world employees, in versatility that is in has point we Thank achieve this foundation will as The for on this the arrive well And has a others that the world believe common laboratory influenza, of milestones landscape consultants other long-term the a diseases, its also had attention whole have as now, we navigate, our for would talking for envision in and look will shared like and well We continue RSV, or at forms of forward It with redefine successful we COVID we that will and new success Co-Dx a space. where much as our COVID. our home as the opinions major to out family the believe we co-exist to embrace including existing much diagnostic testing. in the whether and yet post-pandemic Co-Dx experts the confidence or next is joining to testing to to pathogens and which undertaking. as of same the It looks post-pandemic is same. of in we to respiratory quarter. COVID important us significant distributors to time after you normal, learn the were but again Co-Dx care before have player broad

Operator

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

You now disconnect. may

Co-Diagnostics (CODX) 11 May 232023 Q1 Earnings call transcript