Q2 2020 OPKO Health Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to OPKO Health in quarter 2000, Twinkie financial results conference. At this time, all participants are not listen only mode. After the speakers presentation. There will be a question and answer the question to ask the question. During this session you will need to press star one.
And your telephone please be advised her today's conference maybe recorded if you will be quite any further Houston. Please press star Encino I'll now hand, the conference over to evolve Briggs with an eight A. Investor Relations. Please go ahead.
Thank you operator and good afternoon.
Bob rigs with L.A.J.. Thank you all for joining today's call to discuss Opcos health financial results for the second quarter of 2020, I'd like to remind you that any statements made during this call by management other than statements of historical fact will be considered forward looking at such will be subject to risks and uncertainties that can.
Materially affect the company's expected results.
The forward looking statements include without limitation various risks described in the company's FCC filings, including the annual report on form 10-K for the year ended December 31, 2019, and subsequently filed FTC reports.
Importantly, this conference call contains time sensitive information that is accurate only as of the date of the live broadcast today July Thirtyth 2020.
Except as required by law Opco undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Before we begin let me review the format for todays call Dr. Phillip Frost, Chairman and CEO will open the call dense Steven Rubin Opkos Executive Vice President will provide a business update and pipeline review and then Dr., Jon Cohen will discuss bio reference laboratories.
After that Adam Vogel Opco CFO will review the company's second quarter financial results and then we'll open up the call the questions.
Now, let me turn the call over to Dr. Frost.
[noise] Burns for joining the call.
We continue to come during Rupert cobrand ranging from government.
We were business moves with both drone driven opportunities I'm proud to say they bought a reference laboratories as further solidified its leadership position.
Over 19% for both <unk> and private sector.
Our management team of employees are going to have scrubbing job to read the ever increasing demand for testing.
Help manage the problem government.
Robert Route.
You ever be successful efforts to provide quality results within reasonable turnaround times.
Our reference has been chosen to provide testing services by the CVC various groups cities and war Joker systems as well as several hard visibility professional sports organizations.
As you would expect bureaus brings clinical testing business has been impacted by the reduction in the number of physician office visits.
On the postponement overworked medical procedures.
However, with the <unk> restrictions starting in May we bring to see some recovery in our based testing services.
Regardless Kobin I think first thing has more than offset this decline I was a strong contributor to our second quarter growth and profitability.
As we work through the third quarter with daily case numbers continue to increase we foresee strong demand for covert 19 to us.
No we're expanding the prime dynamic we've made progress with our pharmaceutical business.
We're on track for Pfizer to submit a beer wafer human growth hormone product to the FDA. This fall.
In addition, we reported favorable top one results for the smoker gone phase three drones or Brian and children with growth hormone deficiency, showing non inferiority to the current standard of daily injections.
Regarding reality sales growth was heavily impacted by restrictions put in place to manage the pandemic.
Never the worse Rayaldee sales continued to make progress right and also the number of prescriptions and number of prescribers.
Because of unique auction of vitamin D to produce a potent anti microbial peptide in humans.
We believe Rayaldee may be helpful in treating patients with Tobin 19.
And are pleased that the FDA recently authorized in phase two trial, which we hope to begin soon.
Finally in recognition of the important contribution so opco his role as while reference laboratories, Jon Cohen was recently appointed to the Opco Board of directors.
Welcome John.
So with that I will now turn to go over to Steve Rubin to further discuss our business units Steve.
Thank you Phil good afternoon, everyone and thank you for joining us today.
Overall, we're very pleased with the company's progress across all our business units, especially a by reference laboratories, which has seen increased revenues as a result of the ongoing pandemic.
Still certain aspects of our business continued to be impacted by code 19th.
As discussed on our last call two abstracts regarding this summer Trogele global phase three pediatric trial presented at Endo online 2020 by Dr. Sherry deal.
Studies principal investigator.
Dr deal presented data demonstrating that once weekly so much rogan treatment met its endpoint of Noninferiority when compared to daily Genotropin with regard to hide philosophy and high standard deviation score or Sps Importantly, dr. deal presented new data demonstrated that 95% of patients.
Had mein Schiff, one sds levels within the normal range idea point STS is used as a biomarker for efficacy and safety of human growth hormone replacement therapy.
The extensive I'd up one data obtained during this phase three study permits physicians to describe some of drug and for their patient with confidence.
In the U.S., we expect Pfizer to submit the biologics license application to the FDA this upcoming fall.
In Europe are open label study demonstrating benefit and compliance with reduced treatment burden will be completed later this quarter, enabling pfizer to submit a marketing authorization application with the he may have in Europe early next year.
Last month, we were pleased to announce positive topline results for the pediatric growth hormone study in Japan.
Japanese phase three clinical study of summer Trogele met its primary and secondary objectives. The study demonstrated that the efficacy and safety of Cemig drug and administered weekly was comparable to Genotropin administered once daily as measured by annual high velocity in treatment naive Japanese threepi brittle children.
Hormone deficiency.
Both high velocity and height Sds were higher in the summer Trogele treated group after 12 months.
[music].
The efficacy and safety findings in the Japanese study were consistent with the results previously where in the global Phase three study.
We anticipate the regulatory filing to be submitted with Japanese authorities in the first half of 2021.
Now I'd like to turn our commercial commercial pharmaceutical business, starting with reality reality numbers for the quarter breakdown as follows total prescriptions for reality in Q2 2020 as reported by Q via increased approximately 45% compared with Q2, 2019 and 21% increase comes.
Pair with Q1 of Twentytwenty.
Fortunately sales around did not decrease with the auto the pandemic. However, prescriptions grew on essentially halted in Q2 due to both the decline in patient visits to doctors offices.
And the widespread inability of so many of our sales reps to meet with physicians and their offices.
As a direct result, the cup 19, new patient starts decreased by almost 33% in Q2 versus Q1.
Since launch of a 20500 patients have had reality prescribed by nearly 3200 positions.
Approximately 200 positions or about 6% of the total number of prescribers were new reality prescribers in Q2.
Our partner before for sending us expect assume receive under a decentralized marketing authorization application European approvals for reality in all countries in which the application was filed and to launch the product as soon as possible and thereafter.
In an effort to come back over 90 with multiple strategies, we announced in June that the FDA had authorized opco to initiate a phase two trial with reality as a treatment for patients with mild to moderate Cobra 19.
This authorization follows from the publication of numerous independent studies reporting a correlation between vitamin D status and Koby 19 risk there.
The upper file is randomized double blind placebo controlled study and approximately 160 subjects, including many with stage three or four chronic kidney disease.
The result from fair health analyzed in private insurance data found that CKD and kidney failure with the most common co morbidities among patients hospitalized scoping team.
Enrolled subjects will be treated daily for four weeks and monitored treatment for another two weeks.
Subject design the reality treatment arm will receive at loading dose of 300, Mike grams on each of the first three days of treatment followed by a maintenance dose 60 micrograms for the remaining 24 days. There are two primary efficacy endpoint time to resolution of cover 19 symptoms and consistent attack.
Payment of serum totaled 25, hydroxyvitamin de levels greater than or equal to 50 milligrams per mill during the last week of treatment.
The study is expected to begin enrolling subjects later this quarter.
During our Q1 call, we discuss progress with our clinical studies designed to expand the indications for Rayaldee.
Interim results from our paid for clinical trial, comparing reality with three common treatment regimens for secondary hyperparathyroidism in adult patients with stage, three or four CKD and vitamin D. Insufficiency show that a daily dose of 60 micrograms of reality was the only treatment that reliably race here.
Total 25 Hydroxyvitamin D. The range of 50 to 100 nanograms per mill, a level required to effectively suppress elevated plaza intact parathyroid hormone in CKD patients.
Due to pandemic related safety concerns and given that 86% of the subjects had already completed treatment. We ended the study early.
Final results from the trial are expected by the end of the fourth quarter.
We continue to advance our phase two clinical trial exploring the safety efficacy of a high strength formulation of reality as a new treatment for secondary hyperparathyroidism.
All patients with stage five CKD require regular hemo dialysis and vitamin D insufficiency.
Due to the ongoing pandemic enrollment was slower than expected, but is now complete we expect finer topline data in the first quarter 2021.
Now, let me turn the call over to Jon Cohen to discuss our bio reference lab business John.
Thanks, Steve and good afternoon, everybody, let me begin by discussing the broader bio reference clinical business as physicians and hospitals began to get back to business. We have seen a return of our base business to about 80% about pre Tobin volumes, we've had a strong uptick in our hospital rep.
This business from new client relationships, we established as a result of providing covert testing.
The Westchester Hospital deal is making excellent progress as we continue to fully operationalized that relationship.
We have also developed some new women's health relationships and are seeing increase new business as a result of our focus in the oncology space.
As urology offices began to open we have seen a return of our for K business.
As you know Medicare coverage for Fourq case score resumed on January Onest of this year with the new local coverage determination by Novatel us.
Earlier. This month, we were pleased that Medicare granted a favorable decision on our appeal for reimbursement of nearly all of our 14000 tests performed for Medicare beneficiaries in 2019 before the LCD went into effect.
Adam will discuss this later.
We have seen the same return and business with gene Dx. In addition, we are currently utilizing the GDX laboratory to give us increase capacity for covert testing.
Since the beginning of the pandemic bio reference laboratories has been committed to offering high quality testing services with efficient turnaround times as I mentioned in our last call. We were able to pivot our laboratory operations to scale up PCR molecular testing several different platforms to diagnose covert 19.
Shortly thereafter, we started offering surajit testing for covert 19 antibodies indicate prior exposure to the disease.
We continue to see a huge demand for covert testing across all segments of the economy.
We have provided coven 19 testing to the general public direct relationships with multiple stages cities multiple drivers around the country urgent care centers and in our partnerships with both rite aid and Cvs and almost 500 different locations.
We continue to support our existing physician client base Sq agencies prisons health systems unions nursing homes and multiple types of employers.
We are providing coven 19 testing to large employers.
Including several highly visible sports franchises, including the NFL, the N.B.A. and major League soccer.
In addition, we have contracted with several colleges and universities to provide testing of students as they return to school this fall.
Recently, the CDC awarded by reference an indefinite delivery indefinite quantity contract to provide antibody testing to determine covert 19, ciro prevalence across the country.
We will provide results with from with key demographic information and analysis in collaboration with the CDC for the next four months.
During the second quarter, we agreed to divert significant resources for nursing home employees due to the crisis in New York.
We tested approximately 225000 employees over four weeks from over 350 nursing homes.
Although this volume increased our turnaround time during that time, we've been able to return our average turnaround time to 72 hours.
We are still prioritizing test for hospital patients first responders healthcare workers and all those on the front line of patient care.
To date, we're performed about 3.2 million covert 19 molecular tests, we have a current capacity of over 50000 tests per day with plans to scale to 100000 tests per day over the next several coming weeks.
We introduced pooling of samples several weeks ago, I don't know evaluating additional emerging technologies to further increase our capacity and types of offerings.
Since October 19 antibody Surajit testing offering began in late April we're performed more than 400000 tests measuring the Sars tovey too specific antibody levels laboratory has a significant capacity to perform antibody testing, although we have not experienced the demand for surajit tests.
In comparison to viral testing, we see increased interest in these tests as the research evolves around risks for reinfection and the role of antibody testing that may play relative to vaccinations.
The pandemic and the role of diagnostic testing has put the diagnostic industry front and center in the mines of the American public.
Not a day goes by when testing is not the focus of some major news story.
Our response to the crisis has significantly increased awareness of bio reference as a national brand.
We are seeing the results of this recognition and several other parts of our business has multiple other opportunities have begun to emerge that will help us continue to grow the top and bottom line over the long term I will now turn the call over to our CFO Adam.
Okay.
Thank you John.
Phil Stephen John covered many of the highlights that have resulted in a strong financial quarter for us the rapid and lasting response to the Kobin pandemic. The bio reference team has mounted has resulted in consolidated operating and net profit for the quarter.
As John mentioned in his remarks today, we have performed over 3.2 million coded 19, PCR tests, including 2.2 million tests performed during the second quarter average reimbursement for this testing was in the low to mid $60 per test.
Each month during the quarter and through July we've seen increasing demand building and have increased our capacity for testing.
As John mentioned, we have capacity to perform over 50000 test per day and continue to expand that capacity.
Our daily testing volumes have been limited by availability of reagents in consumables used with the various testing machines that run. These tests, we are using emerging merging technologies such as pooling of samples to help expand our testing capacity.
Moving to our second quarter financial performance I'll start with our diagnostic segment we.
Revenues from services of $251 million compared to $178.5 million for the 2019 period. The increase in net revenue was driven by the execution of our cobot 19 testing strategy, combining our routine testing business and our co bid testing does.
MS volumes overall increased over 46% compared to historical levels.
As stay at home orders were issued we saw a significant decline in our routine and genetic testing business is beginning in March in early March continuing throughout the quarter, resulting in overall decline of our routine and clinical testing Jeanette.
Well in genetic testing of 46%, we can to continue to see week over week return of our routine clinical and genetic testing volumes and through July have seen those volumes return to more than 80% of historical levels for clinic routine clinical business and 90 per.
Scent for our genetic testing volumes.
As a result of the increase in testing volumes and revenues as well as the effectiveness of the cost control measures put in place over the last two years. The diagnostic segment reported operating income of $40.9 million in comparison to an operating loss of $28 million over.
Overall improvement of $68.9 million compared to the 2019 period.
The second quarter of 2020 benefited from two items. In addition to the cobot 19 testing.
First we have received $6.2 million grant under the carriers Act, which was recorded as other revenue and second as John mentioned, we successfully appealed over 14000 Medicare claims previously denied for the for the four case score and recorded $10.9 million of incremental revenue.
Related to that successful appeal.
Overall cost and expenses increased by $9.8 million compared to 2019 expenses, reflecting increased cost of revenue due to the 46% increase and overall volume.
Selling general and administrative expenses decreased $4.6 million compared to the 2019 period as a result of the cost control programs I previously mentioned.
Moving to our pharmaceutical segment, we reported revenues of $44 million for the second quarter of 2020 compared to $47.9 million for the 2019 period.
Revenue from product sales in the second quarter of 2020 increased to 20.9, Im sorry, $29.4 million, including 8.6 billion of revenue from Rayaldee compared to 28.7 million in the second quarter of 2019, which included $5.7 million of Red.
The new from Rayaldee.
As Steve mentioned Rayaldee volumes remained strong posting approximately 18.4 thousand prescriptions during the second quarter. However, the growth of Rayaldee has been negatively impacted by the stay at home orders and physician offices restricting product sales representatives from making sale.
This call.
When looking at revenue for the transfer of intellectual property, we reported $14.7 million that revenue for the 2020 period compared to 19.2 million.
A year ago, reflecting the completion of our so much rogan phase three clinical trial.
As a reminder, refined our we had been amortizing our upfront payment from Pfizer over the development periods. So so much rogan and have now fully amortized upfront payment.
Loss from operations of our pharmaceutical segment decreased by $2.6 million to $6 million for the second quarter of 2020.
Overall research and development expense for the second quarter of 2020 was $14.1 million in comparison to $25 million for the 19 period, reflecting.
Do spending on our so much Rogan development program.
On a consolidated basis, the second quarter 2020 had an operating profit of $27.2 million, a significant improvement of $74.4 million over 20, Nineteens operating loss for $47.3 million.
Consolidated revenues for the second quarter of 3300 $1.2 million reflect an increase of $74.8 million over 2019 $226.4 million.
Our net income for the second quarter of 2020 was $33.7 million or five cents per diluted share compared to a net loss of $59.8 million or 10 cents per share.
For the 2019 period, our second quarter net income included other income of $18 million related to the mark to market activity or our strategic investments, which were partially offset by increased tax expense in our international tax jurisdictions.
As we look forward to the remainder of 2020, we see significant opportunity to continue to generate operating profits revenue growth compared to 2019 levels for the third quarter of 2020, we have built the following assumptions into our forecast.
Cobot 19 testing on a full quarter basis will fluctuate between 45 and 55000 tests per day, combining both PCR testing an antibiotic testing should we develop additional PCR testing capacity through the expansion of the supply chain greater testing volume for the quarter could reach.
Increased hours to revenue significantly behind beyond our guidance.
Should demand decreased for PCR test Oriental body testing, we could see revenue come in lower than anticipated. However, based on july's volumes, which has been higher than any month before we consider this unlikely.
We assume continued improvement in our base business were both routine clinical and genetic testing, resulting in a return to historical levels in both lines of testing.
Should routine office visits or elective surgeries again be suspended because of increased cobot 19 infection rates, our revenue expense actions could be negatively impacted.
With that overall, we expect revenue for the third quarter of 2020 to be between $360 million to $380 million, including revenue from services of $325 million to $350 million revenue from products of $25 million to $33 million and other revenue.
Of $6 million to $8 million.
We expect cost and expenses to increase the $340 million to $360 million, resulting in an operating profit of $20 million to $30 million at various points in the revenue and expense assumptions operating profit includes approximately $20 million to $22 million of noncash depreciation and amortization expense.
[music].
As well as ex the an expectation of an increase in overall research and development expense to $21 million to $25 million.
Increasing over the second quarters levels.
We provided we will provide further guidance on the fourth quarter during our third quarter Conference call. Later this year, given the remaining opportunity and uncertainty of Covis testing, we believe there's significant upside for the remainder of the year. However, should cobot testing decline, we believe our base business is well positioned to organically grow.
In the near term because of the significant relationships our bio reference team have established before cobot testing began in which have accelerated over the last five months.
Our cash balance as of June Thirtyth was $21.6 million. We also have approximately $15 million of availability of our line of credit with JP Morgan and a $100 million under our line of credit with Dr. Frost, which remains on utilized the combination of cash on hand, the lines of credit and our saw strong for financial.
Well performance at bio reference.
For which we anticipate generating cash flow from operations for the remainder of 2020 provides us with a strong balance sheet.
With that I'll open the call for questions operator.
Okay.
[noise].
Oh.
Hi, Great Cross your mind helpful.
Hi, everyone.
Hi, Thanks for taking my question bank in that congrats on the update today to start off. So so you you mentioned you anticipate 45 to 55000 Kobe tests per day, and Thats a mix of PCR an antibody ties.
I'm just wondering if you think that that's going to be for Threeq, you or potentially for the rest of the year or what's the what are your thoughts on the but for the longer term perspective.
Hey, Mark So I'll start and then let John kind of chime in here. So so you know we've we've looked at where where July has come in which which as I mentioned demand continues to build.
You know they over day of week over week, but that again in the supply chain constraints that we have been faced with his have limited our ability to really expand our task testing capacity. So I think as as that supply chain opens up and were able to obtain more and more reagents and consumables I think that.
That opportunity it will expand as well as as infection rates allow for us to pool samples.
The lower the infection rate the higher the ability it is and benefit there is for us to pool. Our samples we could we can expand our testing capacity as well. So I think as we looked at it as we saw that the 45 to 55 in Q3 with with the potential for that number to increase significantly John.
I don't know if you have any additional comments to that.
Yes, I just think the the demand.
As you can imagine.
Has been is continues to be enormous that every single sector across economies. So its a.
It's mostly like that I referred as how much of that.
We continue to increase I do think that.
Some of the technology advancements.
Oh, we'll certainly improve our capacity.
The that's one issue.
Since I've been being there the.
The only Oh, I don't really see any other limitation. The Suralco decided you asked about continues to.
To be level, Oh, there is some increasing demand beginning to occur on this or allergy side relative to.
Certainly because of the C D C O when we talked about.
Some other issues.
But I I think that.
The 45 to 55 is is there's a is about right where we see July coming in.
But there can be significant uptick on that based on some of these other issues.
I think we as you pointed out that.
In fact, we've tried to modulate the demand to assert Nixon because what we don't want is to develop a backlog built will.
Result in a delay in delivering results. The fact that we've been able to do a pretty good job in this area.
Stood us in good stead in terms of getting new business and.
Enhancing our reputation in general so, whereas we would like to do lots and lots more we're trying to take into consideration what the reasonable capacity is and work in those terms within that framework.
Got it and it's all very helpful and.
I'm also wondering if you fine tune your views.
For the I guess on a plan for return to work in school and I will be antibody testing.
I guess could you give more of the partnership contracts for the antibody testing and we could those types of contracts be announced over the next couple of months and then what are your views on additional PCR partnerships as well I guess could we expect more of those partnerships in the next couple of months.
Yeah, so absolutely the a and as as Phil says where we are.
Being incredibly sensitive too.
Our 72, our turnaround time right now.
For all of the I guess obvious reasons, but if you look at employers. However, you want to divide them up into health care, meaning biotech foodservice professional services manufacturing hospitality.
And then other entertainment into sports franchises movies casinos et cetera.
We have we have been in discussions with most parts of the.
You asked economy that we have as I mentioned in my comments, we've already signed on several colleges and universities. We are also talking too.
Oh, the public and private schools in addition.
So those are those will be those are all coming that will will be announced the there has been a mix of employee of Oh contracts with the employers were some want PCR only on someone antibody and PCR.
I would say that there is some other.
Valving interest in antibodies as I referred to before.
Which if that occurs we'll make announcements around.
Got it.
Thank you very much for taking my questions.
Thank you.
And then turn to ask a question you will need to press star one on your telephone.
Our next question you sound Dana Flanders with Guggenheim. Please go ahead.
Great. Thank you for the question I guess my first is for John and just on your comments on pooling can you just elaborate that on that a little bit and just talk about what you're kind of current and expected.
Use of pooling is you know over the next couple of months here and just what that exactly means for capacity expansion does does the 50000 a test per day capacity you have now does that.
Clued pulling more earns pooling kind of an additional upside on on the capacity side.
And then just my second follow up question I know a big goal of yours has been to improve.
The profitability of the business and we certainly saw some nice progress for coated had and I know testing decoded testing has certainly helped on that side as well can you just frame.
How we should think about the profitability of bio reference labs, and its incremental testing revenue I mean as testing increases.
Do you have a fairly fixed cost base or does the cost increases while wins with revenues. Thank you.
Hey, Dan I think things for the questions and I will try to answer a couple of them quickly and then turn it over to John So.
The overall profitability profile for bio reference, we we've talked about it for some time, where we expect it to EBITDA margins overall to continue to improve in overall margins continue improve.
With the goals of in the medium term.
Excluding cove, Ed to gotten into them to the high single digits to low double digits.
We've made good progress leading up to coded as as we sit here today and looking at 2020, its financial results, it's going to be very difficult for us the parse the cobot business apart from the base business given the substantial.
Declines in that routine business and offset more than offset by the substantial increases related to covance. So we think the profitability levels that we saw in Q2 or are going to be sustainable as long as is coded sticks around.
With the base business really starting to build and build momentum around some of the things that John mentioned between the Westchester and other other business development opportunities that are coming to light. So I think the profitability profile should continue to improve and could even accelerate as we continue through the this year into next year.
The ill just mentioned on the on the capacity numbers no. The guidance that we gave a 45 to 55 really takes everything into account that that we know, but but as John mentioned, we have line of sight to bring that capacity up to 100000 test per day I think.
That does include the ability to pool in some assumptions that we built around our ability to pool effectively with based on those infection rates, who maybe John you want to address any of those as well.
So so on the pooling you know each pooling that you do has to be Oh.
True has to be validated it improves on each separate platform. So as we March two hour.
Our different platforms, we're moving towards more pooling.
On the platforms and then of course the.
No. The issues is it has to be in low prevalence areas and and that actually means also you can do it by <unk>.
Certain client types, where if you're doing more of a screening for them you know that hopefully will be will be highly effective I think.
What's.
I get.
Two judy, but the the capacity numbers.
Our take taking it to Pat taken too.
Consideration Oh, how we view the platforms running relative to their efficiency numbers and reagent supplies. So.
Yes, we say 45 to 55000, that's taking into consideration a bunch of other factors that we've learnt.
As we as we've gotten into this business for the last five or so what I mean by that is our true capacity, which we may have mentioned or I've talked about on different interviews is actually higher but when we consider.
What we now know as reagent supply and what we now know is how well these platforms right.
I believe that capacity to more of a realistic number than what the actual specific capacity could be.
Well I think it any more complicated with that the so there's all those factors we take it to.
Oh, well we report these numbers.
Okay got it very helpful. Thank you.
Thank you know and are carrying mind academic year, just thank God and Warren.
Next question Jan <unk>, well and company. Please go ahead.
Good afternoon, and congrats on a very good quarter.
Just a quick.
So quick ones, but ended diagnostic side.
You mentioned about constrain the reagent constrain or in your due diligence do you feel that will be so the alleviate the bulk of the full were well it that's still will be a some of those situations also what's the average cost of call. It the serology test Oh it performs.
So I do believe that they're really age was so let me just so that the supply chain is not just reagents its multiple different factors no multiple different parts of the test kit that comes to us. So.
For instance on one of the platforms is actually 17 different parts of a reagent kit that we get which includes the reagents. So it's it's plates plastic pipe pet tips. There's all sorts of other parts of the equipment that we get in when we run. This so and then we're running four different platforms as you've heard me talk about so they do the supply chain on all.
On the platforms are different so.
So it's not just one versus the other so that that's first thing the second is.
Our understanding and our discussions with the platform manufacturers is we do believe by the third quarter.
[noise] limitations that we're seeing up till now we'll begin to list. That's what we're being told so I do think that they will be some loosening.
Of the supply chain side starting.
Somewhere around September maybe into October.
Okay, great in terms of the Suralco G. I mean its publicly they the.
The Medicare Suralco GE reimbursement now is there's a little over $40 and that's what's you know that's a work that's what Medicare will be paying and that's what we assume the the payer the rest of the payers.
Okay, that's very helpful and maybe just.
Two brief questions first one is in terms of by Pfizer building to file later this year and or do you anticipate for instance, the approval may be into second half of next year and that is that the scenario would that be the cone. So don't quote profit sharing.
Oh program was roughly in that time and then maybe at the last question here is that.
You've got earning this quarter do you anticipate this financial performance will continue Poland, Romania off a year or it's too difficult to tell at this moment and thanks.
Well two points a lot Adam take.
A lot of par financial but as you mentioned his remarks, you did forecast a continued growth throughout the year, but.
For growth hormone, yet so we basically assume 12 months from submission and you know that puts us in the second half of next year. As you said is it and yes profit share begins upon approval pediatric.
So yeah, I'll, just kind of supplement what Steve said on the guidance I guided the you know an operating profit on a consolidated basis for the for the third quarter of of $20 million to $30 million.
We see that continuing as long as the coded testing remains as robust as it has been and and I think as John mentioned it it seems like it will continue.
On the on the profit share Steve Steve mentioned, we'll have a significant milestone that we receive upon the approval in the U.S. and then in the US region will start to have that that gross profit share.
Amounts with Pfizer at that time.
Okay, great. Thanks, a lot of it appreciate and congrats.
Thanks.
Yeah.
Our next question from 10 haul freight Viper Sandler. Please go ahead.
Great. Thank you very much for picking requests and then congrats on just fantastic quarter really amazing however tools coming together.
Kind of up to personal if your question.
In terms of the pooling, it's it's a really interesting conceptually in the heavier considered that but wouldn't see kind of localized insect sooner rate is it that how you sort of trigger when you come pool or how does that actually how does pull in sort of go into effect really interesting.
Yes, it should be should be less than 5%.
Overall infection rate because.
Whether we're pulling one to 314 or whatever that number is.
You have to.
If you're infection rate is higher than you know one in 20, then you get to bump up against that you're pulling it will be an effective because too many people too many people in that pool will become positive. It means you have to re run them. So yes, it's essentially very good for low incidence large screenings.
Yeah that makes a lot of the sounds great.
And yeah actually I actually think you guys did a great surface walking through everything and I. Appreciate all the detail provided so thanks and congrats on a great quarter.
Thanks.
Oh yeah.
And this concludes hockey on a question for today I want tangle called back to Dr. Phillip Frost for his final remarks.
Thank you all for participating and we look forward to.
Meeting with you at the end of the next quarter in the meantime.
Stay safe and stay for Hawaii as possible from other people.
Okay.
Thank you.
Thank you, ladies and gentlemen sport participating in today's program you may now disconnect Cologne football.
[music].
[music].
[music].
[music].