Q1 2021 Prophase Labs Inc Earnings Call
[music].
Thank you and good afternoon, I would like to thank you all for taking time to join US for Prophase Labs first quarter 2021 financial results conference call. Your hosts today at Prophase Labs, CEO and chairman of the board of Directors Ted Charcas a.
A press release detailing these results crossed the wires today and is available on the company's website.
Today's lab Dot com.
Before we begin the formal presentation I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects are forward looking and maybe some jack subject to a number of risks and uncertainties that could cause actual results to differ materially from those described.
Nicole.
Please refer to the company's SEC filings for a list of associated with.
Finally, this conference call is being webcast. The webcast link is available in the Investor Relations section of Prophase Labs Dot com.
Time, I would like to turn the call over to Prophase Labs, Chief Executive Officer, Ted Carcass, that's the floor is yours.
Awesome, Thank you John and.
Thank you everyone for joining me on.
And our company Prophase labs. This is the first quarter.
Full quarter that we've reported cash.
Revenue and earnings.
And put this in perspective.
Hey, nothing more than an idea six months ago and at six months.
We went from not even been in.
The clear laboratory testing business to have a two.
Significant lab.
And generating in the first quarter of this year, a significant amount of revenues and earnings.
And I'll get into the numbers a little bit now.
And just to remind everybody that did read the forward looking statement I would like to be very careful in terms of projections is a volatile business that we're in.
In general, we do not give earnings guidance, but to the extent that I say anything on it sounds like guidance understand the volatility and nature of the business and it's a dynamic world that we live in in this industry and I'll get more into that but please be cognizant of that I am going to do the best I can to give everybody.
A full picture of what's going on but again.
As a two day and things change better and worse it doesn't necessarily mean, it could be worse it could be a lot better too.
So with that said I'm going to review a little bit of the numbers and then I'm going to get more into.
The actual I'm going to talk about our company and the strategy going forward are we.
We reported revenues of $15 3 million versus $1 9 million a year ago, and net income of 1.1 million versus a loss.
Just to break that out a little bit our lab actually had a profit of $2 $8 million.
Typically our manufacturing dietary supplement business have on block in the first quarter of this this quarter was no different so that might bring a drag down on the total company numbers, but to be clear the vast majority of our revenues and earnings are currently and going forward are in our diagnostic tests.
The business saw a lab.
Pretty nice maybe not what I, what I would've expected in January when things were really hot but it's still a I'm really pleased with the quarter to generate 2.8 million profit a lab and also to be clear we had significant startup expenses in the first quarter that hit our first quarter.
By the very nature of the work start up I mean, this will not be ongoing expenses and so if we were to do hypothetically. Even just the same numbers that we did in the second quarter was the first quarter without the start up expenses, we would be well ahead of the game. We also had noncash items.
In the first quarter of about $1 million.
Combination of depreciation and options and warrants and again these are non cash items.
So overall when you look at the quarter I'm really pleased with the quarter on this also.
It is the opportunity for a 32nd cash dividend. This is a special cash dividend I have a history of doing this it's a it's a nice way to reward our long term.
Shareholders. We currently have enormous cash flowing in from insurance.
I think I've described this on our euro.
Your line is a conference call about six weeks ago that and also you know going back to December and January when I was talking to institutional investors that in the October through February timeframe.
We were investing heavily not only in purchasing our first lab and in building out our second lab in garden City and purchasing all of the Thermo Fisher state of the art equipment that we have we have an enormous amount of equipment. Now. We are also purchasing reagents and consumables used in lab processing and and of course, we start.
Testing at the end of December we really start to ramp up in January all of that testing, we had dollars going out the door Berkeley no dollars come in and so we have enormous negative cash outflows. This is aside from earnings and losses, but just cash flowing out of the company.
For the person that equipment is consumable and insurance really wasn't able to set up yet and I think as I indicated even with all the insurance, who set up properly and all the billing was set up properly. It can still take 60 day and we were purchasing consumable.
30, and 60 days before processing and then getting paid 30 to 60 days later, but in some cases instances, it's taken longer to get the insurance is set up to get the billing properly all it takes time, especially when you're in a new business and so we're now in the last six weeks.
An enormous amounts of cash is flowing into the company from insurance companies and quite frankly that cash flowing in has more than covered just whats come in in the last six weeks has more than covered the 31st dividend, which is a ballpark about four and a half million dollars free up more.
More cash and that's what that flowed into the coffee line six weeks. So we are a very strong company financially.
At the moment.
As I told people in the past those who have been shareholders for a long period of time and extremely careful and how our company manages its cash our CFO Monica Brady is even more conservative than I am at the end of the day on the largest shareholder on the company and frankly I care about our work.
From shareholders, even more than myself I would never do anything to take advantage from them and so you.
You can be rest assured that we're not going to all of a sudden burst through the cash to the contrary we have the strong cash flow flow into the company from insurance payments.
Hum.
I'm looking forward to all sorts of strategic initiatives and given the platform that we haven't been.
A NASDAQ public company, having a very strong balance sheet.
About $49 million.
Net working capital we have just.
Just over $36 million.
Hum.
Cash and cash equivalents and I guess marketable securities so that puts us in a fantastic position to take advantage.
Opportunities Opportunistically.
And I'm going to get more into that on a little while but suffice it to say.
I told everyone that initially we were going to get into the COVID-19 testing, we're going to get it we pivoted from being simply a dietary supplement company manufacturing company to pivoting into.
On a CLIA lab for COVID-19 testing and then the next step will be to pivot into other types of testing and.
So I'm going to get into that a low level a.
A little bit more now, but understand that now we have the cash we have the balances we have on growing revenues.
And cash flow and earnings it puts us on a great position when I'm talking to these other companies that are now eager to join our company and to do deals with us.
Alright, let's get into the COVID-19 landscape, which is complicated as I highlighted about six weeks ago. The incidence of COVID-19 drop in the February to April time period, we peaked in January.
I mean, the testing was out of control the amount of incidents of COVID-19 was out of control and then all of a sudden there was.
As I mentioned, we were doing testing one of our largest customers are testing across the state of Texas, We had terrible weather all the main sites in Texas for testing were actually shut down.
And that was from one of our largest customers, but then at the same time across the country. The incidence of COVID-19 started to drop in the amount of COVID-19 testing.
Began to drop and.
It appears that it's leveled off now, although again I can't guess, which way it's going to go but at the same time.
The incidence of COVID-19 drop in the amount of testing dropped.
Now have a situation where people are burnt out they're tired of COVID-19, they're tired of thinking about COVID-19. They want to get back to work they want to get back to go into sports events. They want to go back to all these different things and the standards.
Are constantly changing and relaxing so that initially had to have a PCR test to get into an arena. Then it became a PCR test or you could just be double vaccinated and now in some cases or in many cases, an antigen test will suffice on antigen test.
Sometimes it's also called a rapid test.
Rapid test in general they give you rapid results often very quickly but at the same time in most instances those results are not nearly as reliable as the gold standard which is PCR testing, which is what we do on our lab.
And so it's interesting while there has been a drop in COVID-19 and the standards have been relaxed theres more antigen testing. So overall, there's less COVID-19.
Testing overall and now a piece of the testing that would normally have gone for PCR testing is growing rapidly.
So it's a very dynamic world that we're living in with regard to COVID-19 testing as the laboratory.
Now, having said that at some point invariably I at least belief in my humble opinion, there will be another wave of COVID-19 in India. It's out of control at the moment and as we all know co.
COVID-19 goes in waves, it's no different than the flu, which goes in waves every season.
And right now we're in the down season for COVID-19, we are still doing COVID-19 testing, but that.
Then leads into strategy and that's where we have enormous flexibility with our strategy.
Again, our our PCR.
As the gold standard.
Particularly with the test that we do it's about close to 100 percentage you can get for specificity and sensitivity, we're talking about 99, 7%.
On the antigen tests out there the reliability as low as 65 or 70%, which means if you get tested positive or negative.
This is like a 70% chance a little more than two thirds probability that you're going to have an accurate result, now if you're on COVID-19 doesn't really even makes sense to know that there was a 70% probability that that could accurate test or that you're negative 70% and all the people that actually have COVID-19 to come back with a negative.
Result, and then think that they are safe and that they're faced with those around so the antigen test quite frankly to me its more psychological than anything else.
It's possible, we're going to go through a wave where right now antigen tests are popular and its possible, but not going to be four months from now, especially if we have a new wave of COVID-19 that's to be seen.
In any event.
We because it's a dynamic situation and it's always evolving we have to be aggressive.
In terms of our offerings. So we are currently working on a couple of different antigen testing immunity tests.
There are those on the market that we could actually purchased from other distributors. If we want to to complement our testing. There is also an antitumor immunity test at least one if not two that we're looking at that we could potentially license.
Developed further in our lab sell as a laboratory developed test I don't want to get too complicated here.
Except suffice it to say.
Our next step in the evolution of Prophase lab is to introduce other types of COVID-19 tests that go beyond the PCR testing and that would be the antigen test that provides you with a fast much faster results.
One in particular on working on is a Florida based antigen test that provides results.
7% to 15 minutes saliva based is great I mean, it's really easy to use you don't need somebody to take blood from you or stick a swap up your nose.
It can be self administered it makes it really efficient, particularly if youre dealing with a large crowd of people that want to get into an arena.
So there are some.
Great positive plus the antigen tests in particular on working with has particularly high tens.
Utility and specificity specificity result, we're still doing research on that regard, but I'm really excited about potential we have to generate immunity test.
That we could be introducing in the future.
And then once you get beyond COVID-19 testing the net.
Next step is to diversify beyond just COVID-19 testing offers and mass.
When we get into.
All the other types of testing that.
So before I get into that I, just want to cover a little bit about the COVID-19 side, but I want you to know that COVID-19 testing with PCR and antigen and immunity testing is just the first store.
The epogen and immunity testing as the next step in our diversification strategy, but on our next diversification strategy is to become a full blown lab with all the other types of testing so that no matter what happens with COVID-19 it doesn't necessarily have to be.
The end all be all to a revenue center and our earnings.
That's more for looking further ahead.
We then just COVID-19 testing we've announced.
A couple of really big wins.
First one was with the township of Oyster Bay that was an aggressively competed RFP, we beat out some of the largest labs in the country.
The reason why we won will actually tell us the number one reason or if there's only one reason, but practically matters. We have tremendous capacity, we have consistently fast turnaround times and quite frankly, that's a matter of having the right management in place and the right employees on the right places doing things right.
Right.
And that's critically important to us.
And so we really pride ourselves on having those 24 hour turnaround time.
Lab industry as general doesn't have a great reputation, particularly when it comes to COVID-19 testing.
Some of the larger labs focus more on their long time customers, who do more than just COVID-19 testing. So when you have a new customer looking for COVID-19. There are a lot less worried about them and the turnaround times again tend to be three to seven day, maybe they're a little bit faster because there's a little less COVID-19 testing going on.
We've always prided yourself on the 24 hour turnaround time, the other thing critically important in the lab business is customer service.
And Barry I believe there are issues, we have great technology, which as we did in the past I'm not going to discuss that again with the acquisition of backtracking on our ability to report results directly to your.
Smartphone so we have great technology with great customer service and fast turnaround time, so when people ask me and they've asked the question. How do you compete with a large lab I always respond they can't compete with us. So it's a question on.
Can we get the customers and so we had this crazy explosion of business back in the end of December and January and then also on the amount of testing drop but you have to understand we're new to the business and we're still building our customer base. So while our total testing.
Dropped after January which it has.
The fact is we're just starting to see evidence that all the customers. We've been working on for the last three or four months that theyre going to be building business with us I don't know the exact timing of that business is building, but I can tell you that we have from trim.
Tremendous potential with some very large potential awards.
And the fact that we just won township avoid today and that was followed a couple of weeks later.
With Dutchess County.
There's a lot of potential in both places 300, almost 300000 residents and each of.
These two.
Two areas from New York.
We are going to be building the marketing in those areas to build up the testing.
And then we also have a situation where schools were now getting closer to summer so theres less testing and the school, but now we have graduations and problems. We also have weddings.
What is coming.
There are all of these different factors at work and then also theres still much larger initiatives out there like the administration wanting all schools opened next September and nationwide initiatives.
Or testing we are working to be involved in these nationwide programs that if any of them hit I can tell you that the numbers are going to be explosive I can't guarantee that we're going to win but I can tell you. We are extremely well positioned given our state of the art equipment.
Our major capacity and our fast turnaround times. So we are really well positioned as a COVID-19 testing company and to the extent that there is COVID-19 I expect us to continue to win customers and win Rfps.
Alright that covers COVID-19 and of course as I mentioned COVID-19 is out of control on India.
I'm talking to people, who say there is no question that some of what's going on in India is going to come over here.
And it's a question on when not if so but that does that can be seen in the meantime, I do believe regardless of the waves of COVID-19, there's always going to be some COVID-19 testing and our goal is to be diversified between PCR testing antigen testing and immunity testing so to the extent that there is some testing we expect.
To be a part of it.
Alright.
Moving now.
So our first.
Initiative for diversification as antitumor immunity testing, that's still obviously COVID-19.
Related.
Our next step is to look at acquiring labs.
And.
Understand we could we could build labs or.
Or apply for licenses and insurances, but that can take 123 years I don't have that much time.
That's just not the way I think.
When when we decided to get into the CLIA lab business four weeks later.
We acquired our first lab and.
Eight weeks six weeks eight weeks.
10 weeks after that we had built out a major new lab and we were doing major testing.
I'm not waiting around as I mentioned earlier on this call. We have the platform we have the capital we have the resources.
We're going after acquiring other labs.
They vary in size had been working on this now for months they vary in size from a smaller it's about a half a million dollars lab to a $10 million of lab to $50 million lab I can't tell you what we're going to acquire a win but I can tell you.
Our goal is to acquire one or more labs that gives us instant diversification into other types of testing.
We are currently doing business with customers, who would bring us the other types of testing. If we provided it. We then have other customers, who would love to do business with us, but don't want to until we provide the other types of testing.
As one small example, I talked to an owner of Turkey.
I don't have 13 nursing homes.
Ted I Love you I'd love to do business with you I would love to move from where the lab.
But I'm not going to just split up my COVID-19 business. The other business is much greater than the COVID-19 business, but when you diversify please make me your first call.
That's just an example, but then we have other customers that we currently do business with and when I say customers. These often are companies who.
Provide the specimen collection services they are the ones on the ground.
Absolutely going from the nursing homes to test them and so in those cases, we're already doing business with these types of customers and they'd be happy to bring us.
There are other types of testing.
We were in your traditional blood and urine and so forth. So we're looking at several different labs I have I can make no guarantees about whether we're going to acquire one lab I can only tell you that that's the focus of the company and is very real and judging by the recent past if I tell you I'm going to do something you can assume I'm going on.
Every effort to actually make it happen and we certainly have the capital on the wherewithal.
The revenue and cash flow so.
Capital is not an issue.
So once we get beyond potentially acquiring one or more labs than and we start building up the other types of testing and by the way.
At least two groups.
<unk> sales organizations that would love to join Prophase labs as soon as we acquire another lab and start building out all your traditional types of passing what can sustain in the industry.
Is that a lot of these labs.
The manager has the people in charge there.
It is very cheap.
It's funny people laugh on prime when I say people lab industry landfall on time, because they say Ted Youre, absolutely right and it's just amazing to me that they don't understand.
How to motivate salespeople and the way you did they salespeople is by paying them in that short changing them and I've actually attracted and we've attracted a couple of different groups salespeople, who could build up a business at a very significant way if and when we diversify so now that that's very serious.
It's a very serious initiative for us to work on.
Additionally.
We are working on to genomics companies.
One is more consumer oriented.
Where potentially we would be doing the whole genome sequencing in our lab.
But the goal would be to build out and leverage our infrastructure and food drug and mass retail stores. As you can read you might recall, we used to sell colby's and 40000 food drug and mass retail stores. We currently have.
Your line of dietary supplements our lead product.
Now on Cvs, and Walgreens and Rite aid and Walmart.
So we have.
Tremendous distribution to leverage and we could actually marry research and science with the end consumer and so Thats one genomics company, we're looking at and we're looking at another one that's more on the research side.
Towards doing diagnostic testing.
For different types of cancers.
And I don't want to go too much into too much detail right now because obviously this is all hypothetical at the moment, but know that I'm in.
I am very interested in working towards diversifying for clinical labs that do all the other types of testing and then the.
Higher level use of a lab for our research.
To get into more sophisticated types of diagnostic testing for.
The point of view of health.
Related issues and diseases.
That's an awful lot the lab.
Last thing I would tell you is a month to look at it.
At a telemedicine company on the health care company that health care company actually they both have access to large groups of nursing homes.
Physicians and patients and again that would leverage our lab testing services.
I've said an awful lot.
I think a relatively short period of time.
I finished a little faster than I have in the past so that will leave time for.
Plenty of questions.
Again I, thank everybody for joining the call.
I'm frankly, I'm really pleased with the results maybe they are less than what I might have anticipated in January but by the same token.
It actually is.
One of our investment bankers to pointed this out to me.
Who said Ted.
Nothing goes up on a straight line and you can't grow your revenue every week or even necessarily every month and he is absolutely right.
But the bottom line is we've had.
Tremendous success over the years within the lab business, we've had tremendous success over the last three to six months and I hope to continue to bring everyone positive results in the future.
With that Jen.
Why don't we open it up to questions.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone keypad.
<unk> total indicate your line is from a question Hugh.
The press Star two if you like train moving a question from the queue.
Participants you will speak on equipment, it may be necessary to pick up the handset before pressing on with car Ts.
Please let me call for a question.
Our first question comes from the line of Jason Kolbert with Dawson James. Please proceed with your question.
Congratulations you certainly beat my expectations on the quarter. The thing that strikes me. The most about your comments is bidding on potential national contracts and if you were lucky enough to win something something like that.
Actually could be transformative can you go into a little bit more detail about what those prospects might look like.
Sure first of all day, so I really appreciate your support and I also appreciate your comments the tricky part of this is when you go back to January.
I was talking to companies, even some of the companies some of our customers and a couple of our customers. We're talking about doing three to five times the amount of business. They were doing in January only it didn't come through and I regularly.
Talking to potential customers and potential initiatives that could be really really large that don't come to fruition and what I don't want to do is get shareholders excited about something and then it doesn't come to fruition I would really much rather just consistently build our company and if we get surprised by a major win.
That would be fantastic, what I can tell you though.
Is that.
We have a lot of really positive initiatives, we're working on.
The first of which.
<unk> is very real.
It could get our business going again more similar to what we were doing in January and grow beyond that.
Second initiative, when we start talking about national on the initiatives again, providing administration once schools open and they're not just sending money to the states, but theres actually a national initiative with Rfps that went out.
And we.
We partnered with a couple of major companies.
That.
Submitted for the Rfps and we are optimistic that one of those companies that we work with is going to win and if they win a part of the country, we're going to give us an enormous amount of business.
What I can tell you is we are perfectly situated for a major initiatives because we have state of the art equipment 24 hour turnaround times stay.
State of the art technology, So there'd be no reason.
For anybody involved with the with a major win of a national initiative not to use us at least like in the northeast and with the National initiative is broken up into <unk>.
Four quarters of the country.
But even having said that as I said, one of our largest customers with testing throughout Texas.
And it was nothing for us to Fedex that collect specimens from <unk> P. M.
On Fedex, we'd get a made a classic memorial day would have the results by six o'clock at night, but they were still getting 24 hour turnaround time, even across the country.
So there is no question that there are national initiatives to open up schools. There's also no question. If that initiative is follow through on it and I believe that is going to be followed through on there's going to be an overwhelming enormous amount of business.
And if one of the if one of the companies that stability RFP, which is partnered with who we partner with to if one of them wins, even one of the quarters. It will be a transformative amount of business.
Our company, but I can't guarantee that that's going to happen and I can't spend my time right now we already filled out all the paperwork we did all the RFP.
To give you an idea of when we went oyster Bay I don't even know if that was 50 pages, we filled out of information and data. We already did all that work I can't spend my time.
Dave thinking about and quite frankly, I don't but that type of initiative is very real and it's in the background and what's interesting is when our stock sold off and I really don't want to talk about stock price.
I start thinking about our start getting down to liquidating values put zero value on it.
Our laboratory testing business when we have.
And an enormous amount of state of the art equipment, and we're doing business, we're generating revenues and cash flow positive. So I can't control the stock price does but youre talking about a situation with very little risk and huge potential rewards either from winning a national initiative for COVID-19 <unk> as as we diversify.
The company in <unk>.
I've told investors all along if you're going to invest in our company and best long term I have a history of building value longer term. It doesn't mean I can do it on a monthly basis.
Literally impossible to do and so every move that we're going to make going forward is going to be to continue to build the company longer term for our long term shareholders and that's why something like the dividend that we just paid today I do that for our long term shareholders as it sort of.
A small payback for their loyalty and then I'll go and frankly on that and it came out of six weeks of cash flow.
Literally.
Alright rarely have I.
<unk> seen a dividend paid like that.
I'd also like to focus a little bit on something you said, which is there were some big.
Your expenses actually came in below my estimates and so for me that means that your Cogs were below my estimates, which means your margins were higher than my estimates.
What day.
And you also said that.
Expenses would kind of normalize some of the build out costs.
Go way associated with a lab that occurred in the fourth quarter first quarter. So I know I know you don't want to give guidance, but how should we be thinking about you know those expenses for the rest of the year.
Sure so.
And I have discussed this on past calls our margins are a tremendously complicated beast and the reason is because we have so many different types of customers that we pay different way.
You're even issues within our numbers with whether or not a payment to a customer should go into Cogs to go into the.
And to the cost of goods sold or whether it should go into sales and marketing expense and in some cases, it's a combination of the two.
It's really complicated and.
So all I can really do on guiding news to talk about trends.
And so far.
Four out of net out of network insurance.
On the numbers haven't changed in terms of reimbursement rates.
And then her for those without insurance, it's an automatic $100 those numbers have not changed.
I heard about one lab that was.
In network somewhere where they cut it below $100, but that hasn't affected us at all and in general I just don't.
So far I don't see the revenue side of the picture changing very much at the same time, we've gotten more sophisticated in the business.
And in many instances.
Our customers who are the people who are the companies that are going on and collecting assessments in many instances what we're paying them is less than what we were paying the first customers that we do business with.
So and then the.
The last part of this is that.
It was tremendous.
Yeah.
Backlog.
Back ordering of consumables.
Back in December and January I was really concerned that we were going to have a major customer come in and we're going to run out of consumables and I thought that would be the worst thing of all time. So we loaded up on consumables, but what's interesting is the cost of reagents.
It is coming down.
And so if anything the trend on the cost base reagents is coming down we're getting more sophisticated in terms of how we pay our customers and so far insurance rates have not been coming down. So it's possible that you could see margin expansion going forward, alright, I don't want to come on.
Not really.
Reported I know you reported $16 million in inventory and so thats, a big number and so I would assume that what you're really saying is between accounts receivable and inventory on those numbers come down we could even see better numbers on the top line yes.
Oh, yes, yes.
Yes, absolutely absolutely.
Okay perfect. Thank you congratulations great quarter.
Really appreciate the questions and thanks for your participation on your support.
Thank you ladies and gentlemen at this time there are no further questions and I would like to turn it back to.
<unk> cartridge for closing comments.
Greg.
Well listen.
I really want to.
Actually I see there's one more question if you want to take that Chad a question just came in.
Yes, we do have a question from the line of Robert Danaher Private Investor. Please proceed with your question.
Thanks for taking my call on great quarter, I, just have a couple of questions regarding.
The date of ownership from the dividend.
Whether there is there anything personnel changes since the beginning of the year.
And the last one is I think.
If you could make any comments regarding how you're on.
Do you feel about the consulting agreement.
And that's working on for you.
I'm sorry, what.
In reverse order, what consulting agreement that you're referring to the one that's on the 10-Q.
10 10-K report.
The agreement back in September 25, 2020.
Yeah.
I apologize we have so many consulting agreements.
Oh.
Youre talking about the one with the major laboratory.
Yes that one we actually that's a complicated question I would almost rather you contact me individually for that but.
What I can tell you it's actually it's pretty straightforward, that's what the laboratory, but as they do testing.
They pay back there, but that to us and as they do testing they.
They paid back to us and so far everything has been status quo.
With regard to the timing of payment of the dividend.
If you actually look at me I believe it's in the press release the actual day.
<unk>.
I don't want to misquote it.
Let's see.
I'll just tell you very quickly I'm pretty sure it's actually okay.
I'll catch it.
Oh, it's definitely in the press release.
And then in fact associated the dividend is payable on June 30 to stockholders of record as of May 25.
So you have time, if you want to get your hands on the dividend as far as employees, we ramped up employees in a dramatic way.
Back in December and January as we were building out our second lab.
And what you got to understand when I don't know I think we might have hired.
100 employees in the span of about eight weeks anytime you hire.
100 employees over a short period of time, you're always going to have some attrition.
And so a number of people weighted themselves out and of course, we also had a drop off in revenues and actually more importantly expected revenues.
Which.
Therefore fit in well with the fact that we had a number of employees that didn't work out. So you put those two together we're more efficient now our overhead is less now than it was three months ago, and that's a smart business if our numbers.
Amp up in the future for instance, as Jason Colbert was asking about the national initiatives. If we hit on a national initiative will actually be hiring more people right now we're happy with the with the head count the way. It is I certainly wouldn't comment on any employee in particular, whether they were let go for disciplinary.
<unk> reasons.
But in general there is also a natural.
And just from the fact that we hired so many people and some people just doesn't work out for them.
Hey, great. Thanks, Ed.
You're quite welcome.
Looks like we have one more question Jen I'm happy to say our next level all the time.
Next question comes from lead Auditor with <unk>. Please proceed with your question.
Alright.
Hope you can clear this up there were some rumor on one of the.
Internet boards.
Yeah.
Oh Bridge lab was closed.
For equipment problems on the people who were laid off.
Yes, Okay. So that was all.
Blown out of proportion I assume that that's either somebody is short the stock.
Somebody actually brought that to my attention and interestingly it was the.
The person was related to people who were fired from the lab. So it doesn't surprise me when rumor start related to disgruntled employees and people related and for the people listening if you're talking to former employees in trading in the stock you probably want to think twice about doing that.
It's just not smart, especially on people, who know who you are and the other people that were let go.
I can tell you is hypothetically.
Their inspections to take place in lab, the same way that we've had a manufacturing facility and we do FDA inspections I don't report on it.
On FDA inspection.
On lab ex inspections.
But the blown out of proportion I can tell you that we have never had a hiccup in terms of accepting.
<unk> and you can see by the numbers, we just had a tremendous quarter. So I will be happy.
I really don't like to address rumors, especially when it's 40 information on there, but I hope that that clears up your question.
And generally there anymore I think I see one more question.
We have a question from the line of Pat furnishing category that strength. Please proceed with your question.
Okay I can how are you.
Awesome patent it's good to hear from you.
You did unbelievable job I mean, I never thought on and have a chance to even.
Talk to Superman, but now I can say I'm Donna.
Uh huh.
Question, Yes.
My question is about the antigen cash because.
What you were talking about being unreliable and whatnot, maybe they won't be maybe they won't be really popular six months or a year from the day I don't know, but what I'm curious about is since youre going to get into the antigen test business.
How do you go about actually putting into your energy test in the hands of people.
Can you address that.
Sure.
Georg.
Yeah, So there's two ways.
Really three ways.
For us to potentially distribute antigen test number one.
When the FDA became overwhelmed last year.
With various different types of tests coming to market. Those that were developed by CLIA labs with the call of laboratory developed test or <unk>.
The process for approval for selling them is very different.
You want to sell on a store so as an LPT you can sell to.
Health care practitioners.
Medical doctors' offices, and so forth.
We can also in our testing.
Since we actually have health care provider is working for us and our customers are oftentimes health care providers that are doing assessment collection, we can sell to them or partner with them. So from all the testing that we're doing in schools and potentially events. We can if we introduced an L. D. T antigen test we can run.
That is very very quickly and that's what we're working on right. Now in addition to that we can also purchase through distribution companies, we can purchase antigen test.
And again those we can distribute in our testing obviously the margins are going to be better on an antigen tests that we develop ourselves.
And the one that we're working on ourselves.
The reliability results of sensitivity and specificity are fantastically better than most of the antigen tests out there and it's alive a day. So if we can introduce that to complement our PCR testing than.
The testing that we're currently losing two antigen testing, we'll be able to bring that back in house, because we'll be able to provide the same customers with both <unk>.
PCR testing on antigen testing and for instance, with schools a lot of the schools now are really into doing the antigen testing.
It's just it's easier for them and the results are faster.
This also has to do with politics and psychology of doing an antigen test because it's easier it's quick and all they care about is having a negative result reported they don't even care how accurate. It is so because we are dealing with that type of psychology. It's important that we provide both PCR test antigen test.
Whats nice is the one that we're working on has.
Excellent reliability result, and I really don't want to go into too much detail because we haven't finalized any antigen test deals, but we are able to right now offer antigen testing through a third party who provides us with the answers and tests that we then provided as a part of our testing right now, but the goal ultimately.
Is to introduce our own and then also not only as an LPTA, but what you're doing as you apply to the FDA for an EUA for at home or point of care testing, that's a bigger hurdle, but thats something that we would be working on as well.
If we get the point of care testing on our antigen test forget about it the same way that Jason Kolbert.
About something transformative if we got if we got point of care testing for antigen test.
That would be transformative.
Again, I'm getting way ahead of the game and even talking about it but those are the kinds of things that we're working on for.
For the future I.
I hope that answers.
Yeah. It does thank you very much and great job.
Thank you really appreciate it.
And no further questions.
Alright, awesome, so listen I, just want to tell everyone. How much I appreciate you joining our call today.
And to tell you I really im working on behalf of the shareholders and it's not just me and something I didn't mention on the call, but I have any other we have a fantastic management team.
Led by our COO Steve.
Steve <unk> on our CFO Monica Brady and we have fantastic head of IP and surgery on morale and our two heads.
Our high complexity molecular lab tests, the head of R&D, Carlos Brewster, and Amanda Vasquez, we just hired.
On a fantastic.
Person to head up lab operations, who officially started working for US yesterday Youre named Alex Leroy and then also adjacent markets.
Who heads up our sales.
I'm really really pleased with our team we just had a major potential customer sit in.
We just all sat in with them today than they were selling price in fact, everybody that comes into our company is so impressed with our management team.
It almost makes it easier for easy for us to win awards and.
Net rfps when potential customers come and visit us in person.
I couldnt be more pleased when you have a strong management team.
The strong financial base fantastic equipment.
The Sky's the limit on what we can do I cant guarantee success in advance, but we have all the right pieces in place and all the right infrastructure in place and the strategic initiatives that we're working on and I'm. So excited about and I am hoping to transform our company.
From <unk>.
We transformed it last year into a COVID-19 lab testing business I expect to quickly.
This format into a COVID-19 lab, not only PCR, but also antigen immunity testing company and then I expect to.
<unk> once again by diversifying it with other labs into other types of lab testing and then beyond the look out down the road.
If if if and when we get into the field. The genomics. So there is some really exciting things ahead for our company and for those of you that are patient I'm going to do my best to.
Provide returns for all of you have a great day. Thanks, so much for your time and thank you disconnect the call.
Thank you ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Yes.
Okay.