Q1 2021 Quidel Corp Earnings Call

[music].

Alright.

Welcome to the <unk> Corporation first quarter 2021 earnings conference call at this time, all participants art and I listen only mode.

<unk> and instructions will be given further question and answer session. If anyone has difficulty here and the conference police per store zero for operator assistance and.

And now like to turn the call over to Mister Rubin.

Argueta Cordell director and industrial relations. Please go ahead.

But you operator, good afternoon, everyone and thank you for joining today's call with me today is our president and Chief Executive Officer that blood and ready Steward, our Chief Financial Officer.

First quarter and 2021 earnings releases now available on <unk> Dot Cornell Dot com or Investor Relations website. We will also post are prepared remarks on the presentations tab of our our web site. Following the conclusion of this call on may 6th for a period of 24 hours.

Note that this conference call will include forward looking statements within the meaning of federal Securities laws.

God statements.

Forward looking statements by there and nature involve material risks assumptions and uncertainty.

In particular, our expectations and assumptions around the COVID-19, pandemic impact and response and our business results of operations and financial condition and that of our suppliers customers and other business progressed are highly and circle and continuously evolving and unpredictable.

Any possible events or factors could affect our future financial results and performance such that are actual results and performance may differ materially from those and a forward looking statements.

For a discussion of such factors. Please review quite else. Most recent annual report on form 10-K, including this section titled Risk factors registration statements and subsequent quarterly reports on form 10-Q is filed with the SEC.

Furthermore of this conference call contains 10 sensitive information that is accurate only as of the date of the live broadcast may 6th 2021 quite ill undertakes no obligation to revise our update any statements to reflect events or circumstances. After the date of this conference call, except as required by law.

Today quite are released financial results for the three months ended March 31, 2000 total loan.

If you have not received our news release or if you would like to be added to the company's distribution list. Please contact me at 8586468023 following decks comments ready will briefly discuss our furniture results and will open the call to take your questions. We'll know him a call over to Doug first comments.

Thank you and good afternoon, everyone. Thank you all for being with US I know, it's quite late for a minute.

Time, and your interests and our company are appreciated as.

As you saw and our press release, our first quarter of 2021 results.

Showcase a very strong performance execution and capital discipline of are required to our team we.

We delivered a 115% increase and revenue and.

163% increase and gross profit.

And and and approximately 340% increase and net income and earnings per share compared to the same period one year ago.

We achieved this growth while simultaneously and launching new products expected to have high impact.

Like our quick few at home.

OTC rapid and some test.

And Salon and stars Kobe to completing the construction of a new distribution center continuing to establish our new manufacturing facility and Carlsbad, managing a challenging supply chain negotiating regulatory clearances.

And advancing innovative new products platforms that will give us the foundation to capitalize on mass market opportunities that will serve quite well and to 2021 and beyond.

These results would not be possible without the extraordinary vision talents commitment and grit and the entire quite and our team we see it every day and our labs manufacturing facilities and packaging operations as well as across our strategic and specialty teams from regulatory and quad.

80 to HR marketing and emerging markets, everyone and stepping up big to take on the unique challenges brought on by the global pandemic.

While doing our part and the fight against COVID-19 has remained the top priority for us.

And have also undergone a significant transformation as the company over the last several years centered on the belief that what we do and powers others to take charge of their personal health and wellbeing and doing so our customers can pay it forward by taking prudent steps to protect their families co workers.

And and communities.

That is the diagnostics based and the force multiplier that is helping to contain the pandemic.

The breakthrough products, we have and introduced and our meeting societies needs and thanks to our R&D and innovation teams as.

As a result, we have several other strategic growth drivers worth noting.

And as most of you know we are poised to introduce Savannah multiplex molecular analyzer that enables professional customers to analyze up to 12 pathogens are targets plus.

Plus controls and a single assay Ram and under 25 minutes.

And built on our crew and robust real time P. C. R techniques.

Given and and genius combination of many unique factors, we managed to achieve superior and differentiating performance for turnaround time simplicity ease of use modularity and versatility of the platform. This revolutionary Savannah technology promises to disrupt and.

And decentralized multiplex molecular testing extending big iron centralized lap capabilities to moderately complex labs regional hospitals, and potentially physicians offices urgent care clinics and other point of care settings.

Feedback from customers has been tremendous we have submitted our first Savannah for.

And like respiratory panels to the FDA recently and.

And we expect this in and our first fights and K package to the survey and a platform and the back half of this year.

Regarding cardio metabolic product development, and we began use clinical trials and April for Triage high sensitivities draconian and expect to submit a day now move bites and K package for Pls GF.

Also known as flow central growth factor.

This quarter.

Pretty soon and we look forward to introducing are long and waited Sophia to Corona virus antibody test.

Or is it will be more properly known these sophia to Sars Kobe two antibody agg FIA.

And a proprietary technology employees immunofluorescence for the rapid qualitative and differential protection of human IGT antibodies to Sars Kobe to nucleocapsid protein.

Like protein, one and spike protein too from fingers stakeholder blood Venus whole blood and share them and plasma specimens from patients suspected with COVID-19 exposure.

And our Sophia to analyze your instrument also reported semi quantitative signal to cutoff values for antibiotics to each protein wishes.

Wishes and indicators antibody titers four levels and the body.

That's the technical side of the story, but these case, it's far more understandable and compelling.

Patients, who experienced COVID-19 like symptoms before P. C. R and antigen tests were widely available one and no two things did they had COVID-19 and do they have antibodies and <unk>.

Get the future infection.

<unk> COVID-19 blood test to detect antibiotics to three distinct parts of the virus.

Along with the individual's degree of active immune reaction to go and 19.

The test and also be used to confirm they've vaccinated patients asset immune reaction.

Detecting antibiotics to Spike one which is the single target protein for current COVID-19 vaccines, we plan to submit to the FDA and EUA packet eminently and believe that access to this antibody test will bring peace of mind to countless people with pressing concerns about their immunity or.

And their ability to COVID-19 infection.

We're already getting calls from urgent care and medical practices with patients asking for the test.

Also and the coming months, we look forward to introducing are compact and competitively priced Sophia queue analyzers.

Which should accelerate and amplify Sofia platform penetration and.

Across traditional plants care outlets and ultimately reached the over the counter market.

During the first quarter, we also focused on portfolio and channel expansions to enable quite delta and a new markets, which we expect to be significant drivers with market demand and revenue going forward.

Several of these opportunities have been secured and are beginning to take shape and the second quarter, perhaps the most significantly inflection point for our company came on the final day of the quarter and the first part of that if when we received EUA from the SDA for non prescription use of our curfew at home OTC.

C. COVID-19 test for pre symptomatic and asymptomatic screening through share of testing.

This over the counter sales authorization and embrace of frequent testing represents a C change for viral diagnostics growth regulation that is already generating a wave of demand for at home testing and testing for reopening at schools workplaces and entertainment sites.

The next day, which was the first day of our second quarter, we received and for serials screening with our Sophia Sars products. This clearance for objective observe screening provides employers sports leagues and countless other commercial operations with the means to give their employees and patrons.

Greater peace of mind, when returning to commercial workplaces and venues with assurance of compliance with SBA and CDC guidelines.

Both the quick few OTC and Sophia screening Eua's are truly pathbreaking regulatory developments.

Overcome significant barriers to both market adoption and the benefits that flow from frequent Amish and testing.

The potential implications of this regulatory shifts extend well beyond the immediate addressable markets for OTC at home and reopening testing at schools workplaces and entertainment sites, we see tremendous opportunities ahead of us to leverage our rapidly expanding installed base of 70.

Sophia analyzers, along with the potential rise a telemedicine to drive sales are are full array of Sophia assays for flu strep lime disease, and a host of other conditions.

Similarly, we believe broad consumer adoption of our quick few at home test could open the door to OTC approvals for at home use of several of our other diagnostic products and platforms.

Quite other is determined to capture significant share and these newly addressable markets through our strategic partnerships with global distribution and retail leaders, including Mckesson and Walgreens.

We believe that these partnerships could be significant and helpful and driving brand awareness as well and a significant retail scale.

For example, our partnership with Mckesson enables us to continue to supply our existing customers and the professional segment.

While at the same time, reaching significant new markets, such as retail testing for reopening schools and for health departments employers entertainment centers and many other locations.

Our agreement of Mckesson will provide us with and access to multiple retailers and it's health smart franchise, allowing <unk> access to a network of over 5000 and independent pharmacies.

Finally, mckesson and will provide us with the ability to rapidly introduce products across multiple e-commerce sites, such as Amazon and ebay and simply medical.

Our partnership with Walgreens will allow us to sell our quick few at home OTC COVID-19 test to consumers at any of the more than 7006 hundred Walgreens locations and the us and Puerto Rico.

Or at Walgreens Dot com further, enabling consumers to take charge of their own and health.

These important and significant partnerships will give us unprecedented exposure to the OTC segment as well as fulfillment pathways.

To serve employer groups that are seeking to bring employees back to opposite from work sites.

We are extremely proud of these new partnerships and the promise stable for democratizing access to our innovative rapid management test for the wellbeing of families.

Workplaces and communities everywhere.

And each quarter and to a certain extent be values based on short term performance, but longer term value of our company is far greater Randy.

Thank you Doug good afternoon, everyone.

As Doug stated, we saw a very strong year over year growth and in the first quarter. We continued to make great strides to develop introduce and scale, new COVID-19 assays as well as progress on our longer term goals and strategy, which involves the rest from our product portfolio.

As reported total revenues for the first quarter or a trend and suddenly $5 3 million.

Compared to $174 $7 million and the first quarter of 2020.

This 115% increase from revenue was driven by significant growth and a rapid immunoassay and molecular category due to strong demand for our rapid antigen and PCR COVID-19 diagnostic products.

And lesser extent demand for our Salon isothermal molecular products.

And the quarter. We also saw solid growth for our car deal and metabolic line.

While our specialized diagnostic solutions product category saw modest declines.

Foreign currency had a positive impact of $2 1 million and the quarter.

And it's interesting to note that for the first time and 10 years, the Cdc's Ili data never cross the 2% threshold, 4% positive cases illustrating the fact that they are effectively was no influenza season are all and flu revenue for the quarter was $5 2 million.

Compared to $79 $6 million and the first quarter of last year.

Rapid immunoassay product revenues increased to $141 7 million to $237 $7 million and the first quarter of 2020 one within this category Sofia products grew $156 $4 million or 240% to 220.

$1 6 million of which $212 $1 million were.

<unk> to Sofia, Sars and <unk> sales.

And the $15 million and quit for you product revenue and the quarter $12 $4 million was attributed to the quick view Sars test.

As a reminder, and as Doug mentioned, we didn't that received the EUA for a quick for you at home OTC COVID-19 test until March 31.

For the cardio metabolic immunoassay business.

Revenue was $66 6 million or <unk>, 23% increase from the first quarter of 2020.

And this was our second consecutive quarter of year over year growth for our cardio metabolic assignment.

Demonstrating a return to pre COVID-19 levels as we continue to see strong performance from both our triage and Beckman BNP global businesses.

Of the $66 $6 million and revenue $33 million came from the triage business and $33 $5 million came from the Beckman BNP business.

For both triage and Beckman BNP year over year growth came from all geographies.

Revenue and the specialized diagnostic solutions category decreased $5 6 million and the first quarter to $10 $9 million driven by a decline in sales and our respiratory products from our cell culture business. The result of very little non COVID-19 respiratory disease.

Our molecular diagnostic solutions category increased $51 $9 million from the quarter to $63 million, driven by $51 $6 million and sales of our <unk> Cove II products.

And our revenues grew 11% to $7 $1 million and the quarter.

<unk> Sars COVID-19, two assay generated $4 $2 million.

That $7 1 million in the quarter.

And this was below our internal estimates due to the late EUA approval from a product, resulting in being a late entrant into the market.

Gross profit and the quarter increased to 187 million to $302 million and gross profit margin was 80%.

Margin improvement was driven by the demand for the Sars COVID-19, two assays, which drove favorable product mix.

The sequential decrease versus fourth quarter of 2020 wells and also due to product mix with less Cyrus Cove II products sales.

As it relates to operating expenses, we continue to invest in R&D with the goal of launching our savanna platform this year and advancing on our longer term initiatives.

New and new Sofia assays that can leverage our large installed base of instruments and <unk>.

Generation platforms, like Sofia queue, and other exciting technologies.

We will also continue to invest and sales and marketing as we develop more partnerships and expand sales promotion and marketing dollars and new markets such as at home testing OTC and other markets that can significantly broaden our customer base.

As it relates to the provision for income taxes for the quarter, we recorded $44 million and income tax expense, which resulted in an effective tax rate of 20%.

Tax benefits from excess stock based compensation affected our effective tax rate and the quarter by approximately three percentage points.

We are currently estimating a full year effective tax rate between 22, and 23% and excluding any potential impact of legislation which remains uncertain.

As of the end of March we had approximately $981 million in cash and cash equivalents.

During the first quarter, we generated $585 million and cash flow from operations.

And the quarter the company also invested and approximately $65 million and and capital expenditures.

Relating to capital deployment and.

In April we made our annual $48 million payment to Abbott for the Alere assets. We acquired in October of 2017, and have a remaining balance of only $88 million on the deferred consideration and that will be paid over the next two years for the remainder of the year, we plan on spending and <unk>.

<unk> $200 million and support of our savanna cartridge manufacturing.

Increased capacity for our immunoassay products and <unk>.

Updating our overall information systems.

And with that we conclude our formal comments for today operator, we're now ready to open the call for questions.

At this time and Youre asking a question press star one on your telephone keypad again and start online we'll pause for just a moment.

And your first question comes from Alex Nowak with Craig Hallum.

Great Good afternoon, everyone.

The biggest question.

Doug I think the biggest question that everyone has here's how do you quantify all of these new markets with sales and both the near the long term. It sounds good you got first thing going from the professional market you got to go into Asian demand and you have to go and at home Youre, taking these distribution deals, but as all other deals out there just how definitive is that revenue.

And how can the company ticks all of these announcements all these potential channels that it could go into and <unk>.

Quantify them by year and put them into our financial model.

Just looking for some clarity and some.

How does define ultimately what the revenue could look like this year.

Yes.

Sure answer Alex although eye failure pain.

And the reason, we don't give guidance and will not be giving guidance.

And revenue or capacity.

Is that it's essentially not it's not forecastable.

So recognizing that you would like to build a model for your clients.

And for most situations I guess that would make a lot of sense.

But.

For this new paradigm of COVID-19 testing at retail, which is new for employers, which is new for schools, which is new.

<unk> and entertainment venues as well and travel all of which are new it's impossible for us to model at this stage.

So I would say Q on the phone.

And our colleagues and the analysts.

How can you model, it's just not it's just not possible so.

Field.

European Alex and that you could try to bucket each one of these opportunities and C.

And what you think the opportunity looks like but if you just take school testing for a second.

You've got some states that are already out there.

Definitively decided what they're doing and they did so without an RFP.

And have several of those which.

Which will be announced shortly and additionally, you have states that are just starting and RFP process to determine what is possible and menu and have some stage.

Our living and Super ticket and superintendents and the schools makes a decision so.

Staff and bucket alone how much growth to figure it out at this stage with the actual demand.

Is going to be I can make some wild guesses.

But I cant later, if folks want to talk about all of the different categories and I can tell you.

And with each one of them, but at the end of the day.

And it should super difficult to define.

How big it could actually be.

Just from.

Just a little bit more color on the question I do appreciate the question.

Employer testing, we have two very very large global employers that are eminent and will have impact and this quarter. They are large enough to be material and so therefore, we will be required to advance.

But we also have numerous other employers that arent quite full and are in process as well and how many employers can actually do it and at what price point, how big of an employer do you actually health and what sort of appetite you have got.

Some people that think the vaccines are the answer others like my own kind of thing we're testing twice a week, because we know we need to protect our employees and mentoring and bringing our employees back until we know that we can say definitively for them that their share.

<unk> venues and several are in other words.

And the name, but deposit rates, because we went public and is it really.

Example of what we're doing there and we're testing not only the employees of the park and.

And the vendors, who support the games and all of that the front office the back office.

But we're testing potentially a number of people who are showing up to quite a delegate.

<unk> can be adjusted.

I would say to you that there are numerous other sports franchises that have reached out and were in active discussions with marsh, how big could that be item really now.

We talked about our schools are really travel and we'll be providing test for a couple of countries right now where they are testing inbound passengers upon their arrival.

I suspect other companies will do something similar moving forward in fact, we've had a number of conversations with respect to that type of testing and as well.

Pharmacy retail pharmacy.

Big channel, but how much demand really is there I don't know.

Certainly mckesson and Walgreens.

So we've partnered with those two and half.

And those will build outs, but we also have several others that are going to fall shortly and it won't be just the big three.

Big name retailers and it'll be grocery store chains that have pharmacies and their stores. So we have a number of those in other words.

I apologize Alex that we don't have anything definitive that we can tell you by the major buckets.

But it also is why it's just impossible to forecast.

I appreciate the answer Doug. Thank you and then just the second question here and now that you've got and beachhead established with and over to current or past I guess, one other assays do you want to add to that platform and quick view what is Walgreens really want you to add.

Signaled anything and then the same question, but I guess over to Sofia, you had a really big menu lined up to launch and so be it back in and we're talking 2000 eye to answer to launch in 2020, just where does that pipeline stand and then.

Okay.

And for your OTC.

We're still progressing very rapidly with Sofia assay.

Revenue development.

And I don't want and go through all those on the call here now, but if you refer back to the analyst day.

We did a pretty good job of reviewing all of those things.

Are they moving at the speed that we would expect and a non COVID-19 here no the FDA.

They clearly is prioritizing.

<unk> versus <unk> and other things. So there is a noticeable delay.

The FCA understandably not their fall right. So you asked about other products I think and places like Walgreens I won't speak for Walgreens or any of the other big.

Big box retailers and retail pharmacy change, but I would say that we've had and the number of conversations where Z.

These folks think that.

This could be.

And important.

C change in terms of diagnostic testing, so we're going to move from telemedicine to work.

We're calling.

<unk>.

Total diagnostics right. So I think that the retail pharmacy segment.

As a bit and Mexico, there are some larger folks talking already about could you do flu.

And could you do strive.

Or could you do Lyme disease at home and.

And so I think there is an opportunity.

For diagnostic companies, whether it's us or other or somebody else too.

Begin to build a market for diagnostic testing that is acceptable for those folks who want to test at home, whether aided by the counseling other physician or other health care provider or not.

We certainly see that that could be and opportunity I mean think about what happened and pregnancy testing or a glucose testing, our FY and completely over the counter.

I think that is an opportunity. We're certainly planning is if there is an opportunity.

And I think that data is and additional market segments that could be very helpful for us moving forward.

Alright excellent I appreciate the update thank you.

Thank you Ark.

And your next question comes from the line of Brian Weinstein with William Blair.

Hey, guys. Good afternoon. This is Chris and one for Brian.

Just a quick one on the Walgreens announcement can.

Can you clarify what your pricing is and with the channel and then maybe what you think that price is going to end up being.

And to the end user and.

And then on.

Second here, you're shipping directly to Walgreens and.

And revenue recognition is there a right of return or is it revenue recognized on shipments.

Yes, we were recognized from revenue and directly into or grants.

So thats the short answer to that question.

Moving on one of my messaging and the first part.

And I'm pretty soon too.

And users.

And again.

Yeah, and so I'm going to answer it.

Two different ways first I'll start by saying.

Price is interesting because in Q1, and we didn't actually see any change in price.

Moving forward, though other.

Other than to say, we believe in our products and command premium pricing.

And we aren't really going to be very specific but I would say this.

And that the.

A quick few products the OTC quite a few products is faster and easier to run and our competitors. Therefore, we believe that we should be priced to the end user at slightly higher and so wherever they go we will be slightly higher that's my view.

Okay, and then just one more kind of a non COVID-19 side. There are about six months removed from the from.

And from your last Analyst day, where you gave some pretty specific revenue targets, one of which was.

Core non COVID-19 revenue to grow at about an 18% CAGR from 2019 to 24 is there any reason to think that there is a change there or are you still endorsing those revenue targets from the analyst day.

Yes, we believe those are solid and you heard Randy talked about the cardio metabolic segment.

We're poised to continue to do well there and can grow I would say low to mid single digits with the prospect of growing more rapidly when we introduce higher since Japan.

As I mentioned and we started clinical trials and in April we think that that's a pretty big opportunity, obviously that would be a huge growth.

And what you're talking about and then <unk>.

Moving to submit to the FDA the data.

And we'll see what the intended use claim is but and minimum I would say that we will get a claim for that product and it says it's useful and assessing for central health.

If we got something that is a little bit better and you could say that physicians could use this as an aid and diagnosis of preeclampsia or.

To be used as a predictor of preeclampsia and so.

We were to get clearance for that product I see that as being a huge growth driver as well and then on top of that.

And what I see as the next big flagship products for this company.

It was a home run I think savanna is going to be a grand slam and so.

You heard Randy say wherever spent another $200 million and ramping up cartridge manufacturing because we firmly believe we've got a product that is going to be best in market.

Great. Thanks, Jeff.

Thank you and Ken.

And your next question comes from Tycho Peterson with Jpmorgan.

Hi, guys. This is Casey on for Tycho.

Going back to your comment.

Yeah, Hey, how's it going.

Going back to a comment you made earlier regarding guidance, so youre, not giving 2021 guidance, obviously, but I think I heard that youre, giving capacity guidance anymore.

Just wanted to clarify so the $240 million.

Unit run rate for Sofia, and $600 million quick view by the end of the year.

Should we still.

Think about that and how youre tracking towards that or maybe not yet.

And I'll just tell you we are.

And we already know we're going to beat those numbers, we're running ahead of that now.

But im not going and get into the Nitty gritty because there's so many moving parts from week to week.

One week this number and an extra week, it's another you guys.

I think it's simple, but it's not it's a highly complex supply chain.

Hi, its highly complex set of people and doing a lot of things for us that are outside of the company.

And we don't always have control of absolutely everything so it is very difficult for us to say one number and then having to come in on that number is just way too hard, but what I would tell you right now the important component of the manufacturing process is the pouch and strips.

And we're running ahead of schedule pretty significantly now.

And can we catch up with the all of the other stuff.

It looks like we could fingers crossed but you guys don't want to hear fingers crossed do you want to hear and number and I don't have that number for you.

Got you, Okay that makes sense.

Going back to Savannah, following up on the previous question.

So that is still tracking towards the <unk> launch here and then maybe what sort of.

Barry conversations that you're having with customers given the scale and buy new competitors in the space and you think it makes the palace stinks.

There is starting to become sort of crowded and that space. So.

And maybe just talk a little bit about how program and shortly here.

I'll start by saying the companies you mentioned or timing.

They are.

And timing kind of and a good word microscopic.

So.

And our ability to ramp and to compete with.

What's the big players like Cepheid and others.

Don't see is eminent.

We on the other hand our.

Ramping up manufacturing pretty dramatically in order to to put out a number of cartridges.

And of the space the other thing.

Companies lack that we possess is menu we already have six products multiplex products that we're going to be launching into the market. They are going to be and clinical trials. This year. So we've already submitted the EUA for RVP for.

So we're way way ahead of those.

Those companies so not only in terms of product quality.

But in terms of our ability to ramp and to manufacture plus we have a commercial organization. So.

And I don't want and sound defensive here and if I hope by zone offensive.

Because we intend we don't intend to worry about those guys who are worried about what the cepheid reaction is going to be.

Got it and then maybe if I can just sneak one last one and.

On the combo test for Sofia, obviously fluid materialize this year, but given a more normalized environment, how should we think about the split between Standalone and combo.

Previously you've talked about potentially as much as 80% of the.

So C of COVID-19 going to the combo.

Maybe just wondering updated thoughts on that and then maybe longer term how will that combo test potentially maybe cannibalize deregulatory business with flu and COVID-19 being tested together moving forward just how should we think about that thank you.

Sure well I'll start by saying that we do have inventory of the combo products and so we're ready to roll and the fourth quarter if and.

Indeed.

We need to ship products, we were asked developed to develop that product.

And by folks and the administration business.

And so.

And.

We were asked to manufacture a lot of other products with it.

And then we had enough flu so of course, we have inventory and.

And so I wouldn't see us manufacturing significantly more.

At this stage.

Moving forward and Thats a really good question.

I can see a world and the future where youre going to be looking at our respiratory panel that includes flu.

RSP and COVID-19.

If you want to throw another one and thats probably more prevalent than you think you probably should our human metapneumovirus on there too.

So our ability to do that.

Thank you.

And is.

And is going to be great timing as we move into future respiratory season, and so people who are sensitive products.

Fever, and a cough.

Which could be almost anything these days.

And anything Thats indicative of the viral infection and account and want to capture the panel I think so I do think that I don't know if he could cannibalize necessarily but I do think that our influenza products will be part of the combination of whether it's on Sofia. The other way, where we're doing a combo assay to that include.

Those things.

Or if it's by and molecular methods and we're in a position I think thats, great and from a customer perspective and from our commercial organizations perspective as well.

We go and see a customer we ask them, what they want and we give it time and we don't debate, whether molecular stutter or sales better.

But other both better depending on what you are looking at are you looking at speed or are you looking at and affordability are you.

And at sensitivity.

And performance and so.

We are one of the few companies I could name the other ones, but we wanted a few companies that obstacle goes and sees what the customer loss and we give account and.

And I C Savannah with the panel now making that even more so the cash because we have a product that basically will go just about anywhere and testing is done.

And your next question comes from from line of Steven Mah with Piper Sandler and company.

Hi, guys. Thanks for the questions.

K C.

Okay and.

And you might've discussed.

And if so I apologize, but my one question just a follow on to to Savannah.

And maybe you can just bundle that and with an update on timing of <unk> as well and then my question was what is the Capex is going to be to support the Sofia Q launch and the Savannah launch and how should we think about timing of that capex spend.

And we'll start with the Capex question Steve.

And we already said and the script that we were doing 200 volume of $200 million total between non ear and eye.

And did just sign a fairly.

A big chunk.

And our CET this morning.

And obviously big enough that it required by Sigma and share.

So we've got some I would say, it's pretty evenly distributed between the quarters.

The $200 million. So you wanted to 777 or something like that that would be about right and if youre trying to.

And so bucket and.

Okay.

And to the quarter.

And regarding Sofia, Q, where and greater shape, there we've already submitted to the FDA to have the data package there.

Right now or as they like to say, it's under active review.

Which means they are looking at the data they are sending back questions.

And it's kind of like that.

And the chest clock.

Right.

And in day to vaccine and we hit the bottom.

Et cetera et cetera zone.

Does that answer what you were looking for Steve Yes, that's right and then Savannah and is set to launch in Q3 still.

And then it's number and then Q3 Q4, but Q4 sorry.

Q4 launch.

And honestly.

And we've done some things to pull it forward given the things that we had to solve for along the way so I'm pretty proud of the fact that we're still stick into Q4.

Okay got it perfect and <unk>.

Next question.

Congrats on the on the Walgreen per OTC do.

Do you have timing for the other big box retailers.

Seven.

Very soon and then.

With the military for Amazon.

Around the corner Alright got.

And again.

Right.

Fair enough and then a final question.

On the and I know, there's a government contract out there.

And to deliver $60 million.

At home test by the summer.

And I know things are impossible to forecast, but can give any color on that and and confirm that you guys are and the mix for that at all.

As it is at $60 million and school kids.

Is that what youre asking about.

And then just to that government contract that <unk> got and they've got a look at $230 million.

Grants.

And it's about them.

They were funded in order to ramp up manufacturing capacity.

Yes. This is the $60 million at home.

Okay.

Doing as the government has agreed to buy those in order to fund the manufacturing capacity ramp up.

Okay got it and I know.

I had mentioned theres going to be like six or seven companies that they were only announced one.

Okay, So thats completely separately.

So we're not and that drew because rumored.

And the larger companies, although we are not as large as obviously Abbott Roche and others, but.

And we don't need funding in order to ramp up manufacturing capacity. We did give you. Some funding as you know Doug to ramp ups Sofia manufacturing I think the number there.

$2 72.

And over the rest of the Rad at 70.

And nine.

And then we are still doing and minus 10 and 11.

And then for the for.

And for the Rutherford facility and Carlsbad.

That's all self funded as well so unlike these smaller companies and we don't need the funding.

Okay got it thanks for clarifying alright, Thank you sure.

Alright.

And your next question comes from Andrew Cooper with Raymond James.

Hey, guys. Thanks for the time, a lot's already been asked.

Really one and I appreciate that things aren't on.

Necessarily signed yet and just when you think about the stage and Canada schools, and Whatsapp and look like.

Can you help firm up.

The structure is obviously the state and and are getting the money from the federal government, having more conversations where it's.

Hunting licenses and our school once the buyer school district wants to buy and sort of a nice to buy or is this day.

Direct sales to the state or school district level, and how are those conversations really shape and now let me yes.

Yeah, Let me let me repeat.

Or maybe I'll, just say again and maybe to be cleared and the second time.

<unk>.

So schools have.

And sorry states have received funding.

And.

And most states already have access to the funds.

Some states are implementing statewide testing and have their own plan. They are looking for turnkey solutions, which we.

We're providing and the number of cases.

There are also states that are early in the process and have therefore, just now begun sending out rfps.

So there are some states running away and others and are embracing it and there are others that are involved and the RFP process and our.

We're trying to see which way things are going.

And then there are.

And states that are basically, allowing the individual school superintendents to make the decisions.

And with testing and will be done.

And it'll be done when it will start at one of those stops.

And they have a bunch of.

School superintendents.

And so you have two approaches one is.

The latter being the bottom up and the other thing somewhat top talent and it's easier for us to obviously work with the states that are top down because we go to them and we present proposal and how we would do that for them and us.

They engage with us and we have at least three states that fit that particular profile that are really committed to using our products as a platform. So what I would say is.

It is impossible at this stage to predict.

The magnitude and all of those but I would say that we share the wind blowing.

And we see signs that the trees are beginning and though.

Okay helpful and and maybe just.

You said, there's three states and are committed to using your products and the top down way is that exclusively or in conjunction with it.

Whether its lab based or other sort of point of care products.

Help us think about what.

And we call it I wouldn't call it <unk>.

Practically it exclusively.

So you might have a stage where the chunk.

He has gone out and to you and the <unk>.

Other.

May not be decided so.

It is a pretty darn complex, we've got a whole team of people.

Just do and schools right now and because every state.

And so far a little bit different not dramatically different but we're all just a little bit different.

Okay helpful. And then maybe just one on sort of the pacing out.

The quarter and the comment you made around kind of April looking more like February and March.

Can you give a little bit of granularity and obviously you had a tremendous amount of inventory and the channel.

And symptomatic cases were coming down in January.

And here I'm thinking misunderstood to comment and the script.

The months, where we were talking about there was the testing for COVID-19 and the age are current and the symptomatic professional segment right.

I think we've just said professional segment, which you may not have connected the people who are getting sick right.

Alright.

And that base level that base level of testing that is for people, who had a fever and a cough.

That growth.

Okay.

Understand that and get that.

You were talking more about kind of and aiming and market utilization not necessarily the revenue trajectory.

<unk> right now is that a fair comment.

And again those two.

And two components right now.

This was just a little bit more complicated and the last year. When we are only testing people, who are either symptomatic or they had been in contact with somebody who is symptomatic or they were just worried right here and there is that underlying demand and that demand looks a lot like those months.

So when you look at April and it looks a little bit like the back half of the first quarter.

So it didn't change much we're now training and uptick.

And what we're pointing out is that inventory that we talked about the wisdom of channel. We're now starting to bleed through that and so we're now seeing reorders and the back half of the of this quarter, which we had and not necessarily anticipated.

We had hoped.

And that won't be the case, but right now we see positivity rates from various state decreasing.

We see some states where at least one fourth of the cases around cash.

And kids, obviously haven't been vaccinated, so kids are spreading and.

Infections.

And.

Primarily.

At this stage so that's the point and we were trying to make Andrew is that.

Underlying demand is always going to be there for some period of time, because we're not going to be able to eradicate COVID-19, it's going to be there at a certain level and.

And we thought that that had flattened, but now we're actually seeing it start to tick back up and we are starting to actually see reorders.

For our traditional professional products.

And what that net net on top of that of course you are not.

And to have this transition and to asymptomatic testing and Thats I think where most of the volume is going to be at least from 2021, and probably 2022 as well.

Understood. Thanks.

Opex.

Sure. Thank you Andrew.

And as a reminder to ask a question Chris Star One on your telephone. Your next question comes from Jack Meehan with Nephron research.

Good afternoon.

Doug I was wondering if you could give us an update on your progress with employers around back to work testing I think.

You previously said you would hope to and add something announced by now how are those conversations going and how.

How do you feel kind of with your capacity and the ability.

Build out some of those relationships.

Yes.

Yes.

I think maybe there's so many of us that are that are.

And connecting call today, and so just jumped on a little while ago.

Early in the call I said that.

With employer testing, we have two very very large global employers that are eminent and and I would add a little more color on and say that we're in the final throes and at the back and forth.

Yes.

When are you going to get your approval.

And so that we can do testing for our employees there and.

And.

And so these are global employers.

And our significant and if we can get them done and time theyre going to have a material impact from that on a quarter.

And there are numerous other smaller employers.

As well, so I would say were and the.

At the point, where we are expecting to announce one or more of these eminently.

Yes.

Great.

And then nothing.

In fact, the larger of the two I believe we've already ship products is that right.

A small amount and order ticket started right, but we have begun shipping.

Alright.

And then on Savannah, I know you had started the clinical trial last quarter can you give us an update on the status there and what the data looks like.

Just in terms of the performance of Savannah, and the field.

And I can tell you that.

Things look great.

Great at this time.

Brian.

Rehab test is every single one of the six cartridges for we're doing and and a phased approach and obviously we have data.

On the RVP.

And because we've already submitted and it looks pretty good.

Is the plan with the initial approval for it and still be for moderately complex settings, and how do you think the demand is going to look like from.

From hospitals to add new equipment and the fall is it kind of.

It pertains for COVID-19 testing.

So we intend Jack could be both filed 10-K and clearly.

We could have made a decision to link those together, which would have given us a more predictable timeline and with the FDA.

Either we have decided to separate it and go five 10-K.

And in order to get the instruments and the hospitals.

Quickly as possible and we also want and CLIA waiver, though because we want those larger integrated delivery networks to be able to democratize testing in other words decentralized it out to their clinics, where do they want testing for example, a lot of folks would tell you that it's really handy to have STI or.

Testing.

And for the clinics and they're not actually able to do that at this stage very very easily.

And so.

Is that sort of thinking that causes us to believe that having a clear way products will be very important.

Makes sense and can do.

One last one I know, it's obviously difficult to model right now.

And didn't have a question about one specific products.

As it goes for the COVID-19 sales how is the funnel there in terms of demand.

And just any commentary around what youre thinking there for <unk>.

Literal looks pretty solid and I have to tell you.

And your other companies talking about the demise of PCR test, but we're not seeing it I do think we're taking cash from.

Customers too and we have some targets that we're actively working but we haven't seen a falloff that others.

It's reasonably stable disease.

Bryant.

I think it has been a decline if you want to look at it.

Same store sales.

C decline, but we're offsetting that with GAAP.

Games.

Particularly in the regional reference labs segment.

Thank you Doug.

Thanks Jack.

And that is all the time, we have today. Please proceed with your presentation and for any closing remarks.

Well I'll just conclude by saying thanks, everybody for your support and your interest and quite well.

We had an excellent first quarter.

Not necessarily the best forecasting on the planet, but.

We're in good shape to achieve our growth objectives over the next few years feel great about it very optimistic and.

We're not done yet so and thanks again for being on the call.

Ladies and gentlemen, and we thank you for your.

Sure.

Participation and ask that you. Please disconnect your lines Goodbye.

Goodbye.

And then.

Got it.

Thanks.

And.

Yes.

And then.

And then.