Q4 2021 Meridian Bioscience Inc Earnings Call
Thank you for joining us for today's conference your conference will begin shortly.
Thank you for joining us today and your conference will begin shortly thank you.
[music].
Yeah.
Yeah.
Greetings welcome to Meridian Bioscience fiscal fourth quarter 2021 earnings call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should they should require operator assistance during the conference. Please press star zero from your telephone keypad.
Please note this conference is being recorded.
At this time I'll turn the conference over to Charlie Wood, Vice President of Investor Relations. Charlie You May now begin.
Thank you Rob good morning, and welcome to Meridian's fiscal 2021 and fourth quarter earnings call with me are Jack Kenny Chief Executive Officer, and Bryan <unk> Chief Financial Officer.
Please note that our SEC filings earnings release and slides to accompany this call are available on our website at investor about Meridian Bioscience Dot Com, we will post a copy of these prepared remarks after the call.
With regards to our calendar, Jack and Bryan will be participating in the Piper Sandler <unk> 30, <unk> annual Health Care Conference November 30 to December 2nd and the H C. Wainwright Bio Ignite conference January tends to 13th the details of those events will be posted to our website as they are finalized finally, our Q1 fiscal 2022 earnings call as <unk>.
Scheduled for Friday February 4th 2022.
Before we begin today, let me remind you that the presentation and the company's remarks include forward looking statements forward looking statements are subject to numerous risks and uncertainties many of which are beyond the company's control, including risks and uncertainties described from time to time in the company's SEC filings.
The company's results may differ materially from those projected.
Meridian makes these statements as of today November 12, 2021, and undertakes no obligation to publicly update them. Additionally, the company's remarks also include market data based on managements knowledge of the industry and good faith estimates of management. The market data referenced involves a number of assumptions and limitations and you are cautioned not to give undue weight to such estimates.
While we believe the estimated market position market opportunity and market size information is generally reliable such information, which is in part derived from management's estimates and beliefs is inherently uncertain and imprecise and has not been verified by an independent source.
Lastly throughout this presentation, we refer to non-GAAP financial measures, specifically operating expenses operating income operating margin net earnings and net earnings per diluted share each on an adjusted basis. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures and other related discussion are included in our earnings.
And now I'd like to turn the call over to Jack Thank you Charlie.
Fiscal 2021 was another wild year, we started the year to be beginning of another wave of coronavirus infections affecting the world with hopes of vaccines would bring us relief from the pandemic. While the introduction of vaccines has brought some relief to the spread of the virus and allowed most individuals to return to a more normalized many countries are still battling this disease and it is clear.
That COVID-19 will be present to varying degrees for years to come.
This time around rather than being depressed due to government lockdowns non COVID-19 testing demand was negatively impacted by health care systems that were stressed by searches in the virus as compared to last year testing volumes recovered throughout the year and for US remain fairly close to pre pandemic levels. This suggests that we are at the point, where the pandemic headwinds are limited to locations where.
Our health care system see a surge in hospital hospitalizations limiting available care for non COVID-19 patients.
That said it still remains to be seen if this upcoming respiratory season, we'll see infections at pre pandemic levels or if continued masking in schools and amongst certain populations result in limited spread of seasonal infections.
The consensus seems to be that this will be a stronger respiratory season relative to last year.
As a company Meridian had a second consecutive record year building off a record year in fiscal 2020, we.
We exceeded the upper end of our original guidance, both at the topline and the bottomline delivering substantial growth over the prior year that performance. However was not without a mix of both achievements and setbacks along the way expected growth for the diagnostics segment was slowed by the delay in the EUA authorization of our revenue in Sars Cov, two assay and the lead share recall.
These were more than offset by the continued commercial success of our life science segments reagents, both for Covid and non COVID-19 applications. Fortunately.
Fortunately these setbacks or just that setbacks. The team is executing through them and we look forward to seeing the benefits of the full strength of our product portfolio in the coming months.
With that I would like to provide some further updates on a number of specific items beginning with our diagnostics segment and then our life Science segment.
As you know, we resubmitted our revenue Sars Coby coby two EUA to the FDA at the end of June and earlier this week announced that the FDA has now approved the U S.
As with any new product launch you can expect that it will take a few weeks for us to begin shipping product as we finalize labeling and begin working with customers to validate the new assay.
This is an important milestone as it is the first RNA assay for the <unk> platform, we look forward to delivering this to our customers again later this quarter.
Development of both the respiratory panel and the GI panel continue and we anticipate those assays entering clinical's before the end of the fiscal year. Currently our plans are to submit the GI panel for five 10-K clearance first followed by the respiratory panel. Both of these panels will incorporate our own life science segments molecular reagents to improve both cost and performance.
<unk>.
On the production side to build out of the new manufacturing lines have gone well. The second line in Quebec is completing its product product performance qualification and after some minor delays from equipment suppliers. The product performance qualification has begun on the first manufacturing line in Cincinnati.
We expect to be producing saleable product by the end of the month.
The installation and validation of the second line in Cincinnati should begin towards the end of the quarter.
As a reminder, these two new lines in Cincinnati, coupled with the two lines, Quebec enable a maximum production capacity of 40000 pies per day and offer significant opportunities to improve margins on the <unk> products.
As of September 30, the <unk> install base was 359 instruments commercially installs of new ravaging instruments remains slow as customers continue to wait for the authorization of the Sars Cov two assay, we did see a pickup in new orders in Q4, but still below our expectations and the peaks that we saw during the second half of calendar 2020.
The approval of the Sars Coby Coby two EUA in the panels in development will be important additions to the portfolio and drive increased demand for the <unk> platform.
The clearing platform made modest progress in growing its base at the end of Q2, we submitted the kurian can't be assay for five 10-K clearance due to the pandemic and FDA resource constraints timelines for approval of non COVID-19 products had been delayed.
While this assay is an important addition to the carrier portfolio further menu expansion is needed for the platform to really gain steam on that front. The sugar toxin assay has begun clinical trials and we expect to submit for five 10-K clearance within the fiscal year. The <unk> C. Diff assay has gone back into development to improve performance.
With the addition of these three assays, we believe we will have a comprehensive market, leading gastrointestinal assay menu.
Our H pylori breath testing business led by Brett I'd had a tremendous year operations are now fully integrated and while the U S. Based team has been unable to visit the team in Israel members of the breath Ied team have joined leadership in the U S on numerous occasions.
From an R&D perspective, the team is focused on enhancements to the product that will yield significant reductions in manufacturing costs as well as feature enhancements that customers are asking for.
At the end of July we added to the portfolio with the acquisition of breath Tech from Otsuka that acquisition added over $20 million of revenue annually to the H pylori franchise for an acquisition cost of approximately $20 million integration of those operations is ongoing the bulk of which is expected to be complete in the first half of fiscal 'twenty two.
As a reminder, this was a product line carve out and we are integrating it without taking on any new employees from Otsuka, which provides for a significant operating margin contribution.
H pylori testing remains meridians largest disease state with our strongest portfolio of products not only is there a growth opportunity from incremental testing volume for this under tested disease, but there are opportunities to shift the industry and favorable ways.
Serology testing is not clinically recommended does not recommend does not detect an active active infection has high false positive rates, leading to inappropriate antibiotic treatment and is often not reimburse we estimate that approximately 25% of the testing volumes in the U S are from serology testing and one of the one of these growth areas is in shifting tech.
<unk> from serology to our meridian testing solution.
Both our stool antigen in urea breath tests confirm active infection produced results with significantly higher sensitivity and specificity and have solid reimbursement rates.
Second we estimate that approximately two thirds of all H pylori testing is performed a national reference labs. This compares to approximately 25% of typical diagnostic testing done at National reference labs, providing an opportunity for us to decentralize testing and our hospital or IDM customers a win win for both meridian and the customer.
As the only company with both stool antigen test and urea breath test for H pylori Meridian is well positioned to capitalize on these market dynamics.
Next I'd like to provide an update on our lead care recall situation.
As you know in May we initiated a voluntary recall after identifying an issue with testing of the controls included in the kit for all of our lead care systems, including plus an ultra.
This recall expanded to additional lots in June and again in August as we announced in early September we have stopped shipping lead care test kits, while the team identifies and implements changes that address the issue as of today, we are still not manufacturing kits and anticipate that we will not be shipping product for three to five months to be clear. This is a complex supply chain issue involving <unk>.
Tamara nation in the plastic treatment reagent tubes that occurred at the suppliers' manufacturing site. We are actively testing alternative tubes, both in plastic and glass forms across multiple suppliers in order to ensure that any replacement tubes are free from contamination. This process takes some time and we are working in conjunction with the FDA to do this as quickly and <unk>.
As safely as possible.
<unk> is the only CLIA waived blood test on the market in the U S. So it is critical to get this back on the market as soon as possible and we have all hands on deck to do so.
The life Science segment had yet another blockbuster year, beating our expectations on all levels first the team continues to launch new innovative products at an exceptional rate in Q4. The team added in air travel mix for isothermal amplification and completed the portfolio of sample specific air drive a master mixes with introduction of products optimized.
For stool blood and urine.
This is a truly disruptive approach in the industry as evidenced by the number of companies starting to adjust their marketing to make similar claims.
The difference with Meridian is that we have used our deep expertise to modify critical components in our mixes to address complex inhibitors present in a given sample types, resulting in the increased assay sensitivity, even with crude crude clinical assessments to pandemic is creating an environment, where R&D teams are expected to develop high performance assays and shorter periods.
The time, and we are facilitating that by removing the need for our customers to optimize their own mix. They simply need to know the sample types and whether the target is RNA or DNA and we have a fully optimized off the shelf mix for them to use currently no one else in the industry can match. This looking ahead to fiscal 'twenty two the team will expand this portfolio of sample specific mix.
As to our lie already and isothermal amplification formats.
The team also launched a thermo stable reverse transcriptase enzyme. This allows us to enter the multi $100 million market for <unk>. We are working to incorporate this enzyme into our new master mixes further improving manufacturing cost while at the same time improving performance in thermal stability. We also have introduced to reach compliant enzymes that are.
Triton free and continue to look for other opportunities to make our products more environmentally friendly without sacrificing performance.
Commercially fiscal 'twenty one was another successful year, we continued to build upon the relationships forged during the early days of the pandemic and are collaborating with customers on new assays across multiple disease states.
A common concern of investors is the sustainability of these customers post COVID-19.
I would like to offer a few statistics to demystify. This a little for you in fiscal 19 before the pandemic only seven of our Heidi IBD customers generated sales of greater than $1 million.
Accounting for approximately 30% of our total life science revenue.
In fiscal 'twenty, one, we had $41 million or more accounts, which made up approximately 75% of our total life science revenues.
Each of those accounts are using our reagents in one or more regulated assays, which makes it a recurring revenue stream probable given the cost and effort to change components of our regulated assay.
While all before these IBD customers have our reagents in a COVID-19 assay approximately 80% use our reagents in the respiratory panel and over 70% use our reagents in at least one non COVID-19 regulated assay.
In total approximately 95% of our top IBD accounts use our reagents in at least one non COVID-19 assay and over 50% use our reagents in their single target Covid test the respiratory panel and at least one other assay.
If you look beyond these top customers to include the IBD customers with greater than $100000 in sales approximately 90% use our reagents in at least one non COVID-19 regulated assay as you can see not only do we have a highly diversified customer base, but we are embedded in them beyond just COVID-19 overall, a great year for Meridian I'll now turn the call over to Brian to go.
Through the financial results for the quarter and the year.
Thank you Jack it is a pleasure to recap what was another record year in financial performance for the company starting with Q4 <unk> recorded consolidated net revenues of $76 million up 19% year over year life science accounted for $42 million up 22% and diagnostics accounted for $34 million up.
15% and diagnostics, we are seeing strong demand for our respiratory products with the exception of flu demand began increasing much sooner than usual.
Unclear. If this is an early sign of a solid respiratory season or simply a shift in timing in life Science. We estimate the products included in Covid assays accounted for $23 million, an increase of approximately 29% year over year, while other non COVID-19 related revenue was up approximately 11%.
<unk> gross margin was 59% with a life science gross margin of 69% and a diagnostics gross margin of 46% gross margin was and continues to be negatively impacted by the leg care recall with the overhead of manufacturing staff in billerica recorded in cost of goods without offsetting revenue.
Life Science continues to benefit from the increased scale, particularly from our molecular products.
Solid at operating income on an adjusted basis was $13 million a margin of 17%. This was comprised of an adjusted operating margin for life science of 55%, partially offset by an adjusted operating loss of $7 million from diagnostics, we recorded a charge of approximately $5 6 million in.
<unk> or cost associated with the <unk> recall, we have decided to proactively creditor our customers for the recall kits given the uncertainty around when replacement kits will be available. The combination of these factors led to a greater loss than in recent quarters for the segment.
Adjusted diluted EPS was <unk> 23 up 21% compared to Q4 fiscal 'twenty, while GAAP diluted EPS was <unk> 15 flat to Q4 fiscal 'twenty.
We finished fiscal year 'twenty, one with consolidated net revenues of $318 million up 25% year over year life science drove that growth with a contribution of 190 million, 43% growth over fiscal year 'twenty.
COVID-19 related sales for the year or an estimated $112 million diagnostics segment revenue also posted growth of 5% to $128 million.
The primary driver of the year over year revenue increase with life science Covid related demand coupled with a full year of RFID and two months of breath Tech revenues, partially offset by soft demand for the diagnostics respiratory products and I'll, let Carol recall.
Consolidated gross margin was 63% with a life science margin of 72% and a diagnostics margin of 51%.
<unk> gross margin was favorably impacted by scale benefits and life science, but was partially offset by a drag from the wet care recall ravaging scrap rates and provisions for short dated product stemming from depressed sales levels during the pandemic.
Consolidated operating income on an adjusted basis was $95 million a margin of 30%. This breaks down to an adjusted operating margin of 61% for life science, partially offset by an adjusted operating loss of $9 million for diagnostics, including the costs associated with a linker recall adjusted diluted EPS.
<unk> was $1 66 up 55% compared to fiscal 'twenty, while GAAP diluted EPS was $1 62 up 51% over fiscal 'twenty all of the consolidated metrics. We guided two exceeded our original guidance set in November of last year and were in line with our revised guidance in August.
You want to dig deeper into the drivers for Q4 or the full fiscal year 2021. Please refer to our press release, and our 10-K, which will be followed by November 20 <unk>.
Turning to the balance sheet as of September 30, we had $50 million in cash in late October we amended our line of credit, which among other favorable changes increase the total capacity to $200 million maturing in 2026 during the quarter, we paid approximately $20 million from the <unk> assets with cash on hand.
And settled the remaining Jean <unk> acquisition earn out obligation for $20 million with a combination of $10 million of cash on hand, and a $10 million drawn under our line of credit. We also repaid $5 million of contingent grant obligations due to the Israel innovation authority with all that taken into account. We currently have borrowing capacity of one.
<unk> hundred $40 million.
Turning to guidance in fiscal 'twenty, two we expect revenue of between 285 million $300 million, which includes between $145 million and $150 million of revenue for our diagnostics segment and between $140 million and $150 million of our life Science segment.
We expect diagnostics revenue in the second half to be moderately higher than the first half as lead care production comes back online.
For the purposes of guidance, we are assuming that we began shipping leg care kits and April life Science revenues assumes solid double digit growth on the core non COVID-19 related business offset by lower demand for reagents used in COVID-19 testing as we have mentioned in the past because our molecular reagents are disease target agnostic.
And the same products can be used in multiple test accurately recording the split of Covid and non COVID-19 related revenue is becoming increasingly challenging for that reason, we are no longer going to provide guidance on the amount of revenue generated from Covid testing and we will not report a split in our quarterly commentary. Our view is that we have moved into a peer.
<unk>, where COVID-19 is endemic and will just be part of the regular respiratory testing landscape to that end our guidance contemplates higher revenue in the first half of the year aligning with the respiratory season, we are not forecasting a first half to second half decline to be as dramatic as last year and expected to somewhat mirror. The second half increase we are expecting it.
Diagnostics.
Adjusted operating margin is expected to be between 21% and 22%. This reflects slightly lower gross profit margin in diagnostics due to the impacts of the liquor recall and a lower life science gross profit margin due to a combination of lesser scale with our molecular products and an increased mix of our lower margin immuno <unk>.
On a blended basis. This implies a consolidated gross margin range of 58, 5% to $59, 5% lower than fiscal 'twenty, one due to the aforementioned reasons, coupled with revenue contribution mix changes between the segments.
And operating expenses, we are increasing our investments in R&D and our commercial infrastructure, which among other things includes an assumption of travel returns to pre pandemic levels throughout the year.
Bind with the gross profit margin impacts I mentioned life science operating margin is expected to be greater than 50% and diagnostics is expected to be break it breakeven to having an operating margin in the low single digits. Our expected tax rate of 23, 5% reflects a greater percentage of revenues and taxable.
Coming from the United States. This ultimately leads to expected adjusted EPS between <unk> 98, and $1 eight based on a fully diluted share count of $44 5 million shares.
Similar to last year, there are a number of unknowns that make setting guidance challenging in particular timing of FDA approval for the Caribbean can't be assay. The resolution of the leg care recall situation. The anticipated demand for COVID-19 testing globally and supply chain interruption considerations the guidance presented today reflects.
Our current visibility into these matters and overall market conditions and now I will hand, the call back over to Jack Thanks, Brian.
As you can see we fully expect fiscal 'twenty two to be another strong year for meridian, while we still have some operational challenges to overcome the consolidated business is 50% larger than fiscal 19. The last full pre pandemic period. We believe this is the new base from which we will be able to grow consistently.
After a period of heavy investment through acquisitions, new product development spending and manufacturing expansions diagnostics will be focused on operational execution. Our key strategic focus areas will be advancing new product development, including the submission of three to four new assays. The commercial launch of the <unk> COVID-19, and Korean can't be assays, completing the integration of breath.
Tech expanding <unk> production capacity and executing on a number of operating efficiency initiatives. These will position the diagnostics segment for strong organic growth in fiscal 'twenty three and beyond.
Life Science will continue to focus on growing relationships with our largest customers and meeting their supply demands as I mentioned earlier, we have a number of new master mixes and the pipeline that will continue to solidify meridian as a leader of innovation. Additionally, the team we'll be hard at work supporting the dozens of customers testing and validating our products in new assays across a variety of disease states.
To fill the funnel for future growth beyond fiscal 'twenty two.
Fiscal 'twenty, one was truly a transformative year for meridian all of our hard work over the previous two years prepared us to both weather the storm and diagnostics and excel as a critical partner to the IBD industry battling a global pandemic in life Science. We are excited about our opportunities that lie ahead and have no doubt that our best is yet to come now Brian layer here for your questions Rob can.
You open it up for questions for us.
Yes. Thank you.
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One moment, please while we poll for questions.
Our first question comes from the line of Brian Weinstein with William Blair. Please proceed with your question.
Ryan how are you doing.
How are you doing good morning, very well good morning.
So just a couple of ones here that Oh.
I'll kind of non-religious sort of one offs, but.
Just to start when you think about life sciences in the revenues there that youre guiding to I appreciate all the commentary on.
All of the percentages.
You ran through their Jakob and has to go back to the transcript to get all this down there was a lot there was a lot of staff.
I'm just curious if you look at that is that guide for next year, how much do you guys see as kind of like repeat ordering where you guys have excuse me visibility versus new business that you need to go out there and trying.
Trying to have to win at this point.
So I'll start with Brian you can you can chime in so first of all Brian I would say that.
From a guidance standpoint, we're kind of taking a similar approach that we have to last year, which works for US which was don't try to go way out in the future go to where we have some line of sight and then try to use what we think is good business judgment with historical perspective to finish the longer term part of our guidance and so we have a pretty good idea.
Kind of what's going on in the business as we head into respiratory season, with Covid and non COVID-19 related stuff and so part of the reason we expect fairly strong Q1, and then as we worked into the later part of the year Q2, three and four we really kind of viewed it more like what does our business what does it look like and you still had COVID-19 testing.
Going on but more of an endemic type of volume likely like we had in Q3 and Q4 of last year or Q4 of 2020 in Q3 of 2021, alright, great quarters at that rate and so that's kind of the way that we look at it which is how we got to the 140 to 150.
And so it is look we have.
Well over 100 customers that are running our products in COVID-19 or respiratory and other types of tests that are tied to this endemic if you will and there are recurring orders that we anticipate there. The question comes down to how severe are those how large are those orders and that really depends on the progression of the disease is.
Covid is it goes kind of more towards endemic Friday, when they add the other thing that I would add to that is that when you. When you talk about like the 40 customers that were referenced in Jack's comments earlier on we have a lot of those same customers in our guidance assumptions for 2022, Brian.
Varying degrees of revenues, but certainly there is there is what we would say COVID-19, but theres also a non COVID-19 growth embedded in those customers as well.
For the balance okay.
And then maybe catch up.
There's a balance between the two.
Got it no that's understood Okay, and then for the recent authorization <unk>. Just can you tell me how impactful that is you talked about placements being a little bit.
On the software side as customers were waiting for this can you give us some idea some.
Scale on what that funnel looks like and just how impactful this can be relative to your guidance that you've put out there for for the diagnostic side.
So Brian I'll start with Brian and I, just got back from our sales meeting we had our team in the U S altogether for a sales meeting and.
While we would've liked to have had the EUA earlier, the timing of getting it earlier. This week was great and that we had the entire salesforce together this week for some training.
A couple of different notes first of all the energy from the sales team was off the charts. They were incredibly excited they have a large number of customers that their work with existing customers of the 359 placements. We have that have interest in looking at Covid, there's still strong need and remember we're in a lot of these smaller hospitals that don't have all of these other solutia.
<unk> molecular wise and they really like the <unk>. So we do think that our existing customers. There is a desire for it. We also have a lot of other customers Brian that.
For us to financially make a ravaging work for them and financially work for them getting a broader menu is important so they may not run enough now for us to financially have made it makes sense to convert them from <unk> over to <unk> and now when you have COVID-19 EUA and you bring that in it can make great sense financially for us and for the customer it works as well.
So.
We would anticipate that this puts us back into the kind of volumes that we had in previous quarters. The.
20, plus instruments, a month or more type of range for instruments.
Related to that and then following that up with the GI panel and then following that up with further respiratory.
While we do believe that this will help us to kind of reignite the.
The revenue so we're looking for.
Kind of like the performance, we were having before on a quarterly basis and I think that we fully expect that going forward and we'll have a lot more line of sight to that at our next call because we will see what <unk>.
Sales Rep energy has to equate into sales right effectiveness sales they have to be effective and that we'll start to see that as we get through this next quarter.
Okay and then the last one for me.
Is just around the lead care situation.
Obviously, it's been a thorn in your side for a while now you're qualifying a bunch of different.
Our options here, which is great, but what gives you the confidence that that April is the right timeframe here and how much specifically do you have embedded in your guidance for <unk>. Just in case this were to extend beyond that timeframe.
So I'll start and then Brian can can.
Work around it a couple of comments first of all Brian I want to make sure I'm really clear to you and to other investors. The investors that we have this is a COVID-19 casualty.
The reality of this whole thing is is that plastic tubes. The plastic tubes that are used in our in our kits we've been using them for a number of years. They work fine we have a quality system that kind of keeps track if you want to make sure youre not having interference.
In the summer of <unk>.
2020, and ultimately we started to see in the fall.
Plastic tubes that we were getting there were changes to their performance and that's what led to this this recall ultimately some changes occurred in the residence and we don't know what those changes are.
And quite frankly in working with the FDA. They also we're like don't keep looking for that let's figure out a different path youre looking for a needle in the haystack scientifically, but ultimately changes to resins were made probably related to COVID-19 when theyre trying to make more plastic or something along those lines and ultimately our quality system caught up. So we are proud of the fact that our quality systems did what.
They were supposed to do here. Unfortunately, with these changes that happen due to Covid that's hap.
As far as confidence goes.
There is.
This is a grinding process you have to validate tubes and it takes time because you have to prove that you don't have any issues with lead being affected and it takes time.
It's not that it's hard work to do you have to validate these tubes, but its the time to run that over a period of time. So you can be confident that you don't have interfering substances coming out of these tubes. So it is more of a time game than than a risk game, but we are actively looking at different suppliers to try to find some that either the resins did not have the changes that occurred with the.
<unk> many of the residents that we've looked at another folks had the same issue. So there is a broader resin change that went on here. That's why we're also exploring glass tubes as well so Brian we don't know the answer to that I don't want to get over my skis. We felt that the April timeframe was a conservative estimate we certainly would like to be earlier than that but we don't.
It's a little bit of an unknown still.
I would just say in general we tried to be conservative what we included in our guidance for that so Brian I know if you want to comment Brian I can speak to that I think if you were to look at our leg care business on a normalized basis, it's an $18 million to $20 million business. So if you think about us starting to ship product again at the mid year point that kind of gives you an.
From a guidance perspective, what that means.
But we also again, we didn't assume anything like that the channel's completely been emptied you've got a failure channel backup we didn't make any of those assumptions we tried to be very.
Black and white to this to these amounts as we did.
Yes, Okay I was going to ask you about that channel, but thanks for addressing it okay alright, guys. Thanks, so much and we'll talk to you after the call. Thanks, Brian I appreciate it.
Next question is from the line of <unk> Chen with H C. Wainwright. Please proceed with your questions.
Yeah, Hi, Thanks for taking my questions. So the COVID-19 related revenue in the fiscal fourth quarter bounce back from the previous quarters. So can you comment on the the trend up.
Revenue going forward.
So we definitely started to see if you are in the following the press when the World started talking about the Delta variant and the surge of Delta.
We definitely saw that and we started to see increased orders in our life science business and Thats really what happened in the quarter.
No.
Kind of exactly when the press started come August timeframe when the world started talking about Delta surge in what they felt was going on we started to see the increase of that and it has maintained what I would also say is that we are seeing different parts of the globe are different places with regards to Covid right now and so we're seeing different hotspots.
Different parts, whether it's Europe is in a different place in the United States right now from how they're how the COVID-19 is affecting them and so we are still seeing demand for that but one other thing that I would say and then I'll have Brian Mcgee comment is.
The other thing Thats different for US is before supply chain didn't know how to order for this so they would order a ton of it at a time just because they were trying to afford anything they could we are at a little bit more of a normal mode, where we're getting good size orders, but they're not stocking up for six months at a time at least thats not the feeling that we're getting so we do feel that it's still a lumpy business and life science, but.
Lumpy than it was a year ago I think that's a fair characterization, Jack because I think the hotspots lead to some of the Lumpiness in the order patterns that still resident out there. It's just a little less so than what it's been over the last 18 months.
Last thing I would say as part of our thing is we do think that you'll see a good Q1 from a life science standpoint, because we do believe there is still a good amount of activity with regards to Covid and we do think that as we head into the winter season that youre going into respiratory flu season, it will be.
It would be silly to think that we're not going to have some kind of return of COVID-19 during that window of time. So that's part of the reason why we felt life science will be bigger in the first half in the second half as well.
Got it and.
So based on your guidance for fiscal 2022.
The projected decline in life Science segment solely based on the Covid related revenue are up there are some other factors play into.
It is solely based on a decline in COVID-19 related revenue volumes.
Yes, we have we have not lost any customers those customers continue to order. It's the assumption as he moved from pandemic to endemic that volumes overall are lower and that's really what drove the difference.
That's being offset by new business that we've been picking up in regards to non COVID-19 related so.
The COVID-19 stuff slows down a bit we pick up millions of other dollars of new business and Thats, how we kind of got to the $140 million to $150 million range for life Science.
Got it.
And lastly, how many new products do you expect to launch during fiscal 2022.
The diagnostic side, we're expecting to release three to four excuse me to send into clinical's into the FDA I don't want to get in the game of predicting FDA timelines I don't think that would be good for my.
Career, predicting so but three to four tests that would be submitted to the FDA I guess Cobra to you as one of them that we're talking thats coming through so you've got another two to three more in addition to that on the life Science side. There is a we have a steady stream.
We seem to be doing fiber more products, a quarter and I would say that we anticipate that to continue as we go through this fiscal year.
Great. Thank you.
Thank you I appreciate it.
Thank you we have reached.
And as the question and answer session I will now turn the call back to Jack Kenny for closing remarks. Thank you Rob as we close this call I want to thank our team for their hard work. This year. They helped deliver another record year and it positioned us to establish the new post pandemic base from which we expect continued growth. Thank you for all thank you all for joining this call today and we look forward to speaking to you again next quarter.
Have a great day.
This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.