Q3 2021 Chembio Diagnostics Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the <unk> third quarter 2021 earnings conference call and webcast. At this time all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation. It.
It is now my pleasure to turn the floor over to your host Greg Huddle check Sir the floor is yours.
Thank you, Matt and before we begin let me remind you that the company's remarks made during this conference call. Today November 4th 2021 May include predictions estimates or other information that may be considered forward looking.
These forward looking statements represent <unk> current judgment for the future.
However, subject to numerous assumptions risks and uncertainties many of which are beyond <unk> control.
Including risks and uncertainties described from time to time in <unk> SEC filings.
Including those under risk factors and elsewhere in <unk> filings with the SEC, including quarterly reports on Form 10-Q for the first quarter 2021, and the current report on form 8-K.
It filed with the SEC on July 19th 2021.
<unk> results may differ materially from those projected <unk> undertakes no obligation to publicly revise or update any forward looking statements made today I encourage you to review all the company's filings with the SEC concerning these are other matters with that I'd like to turn the call over to Rick Eberly, President and CEO.
Thank you Greg.
Good afternoon, and thank you all for joining us today.
Today's call I will provide an update on our commercial product development regulatory and operational initiatives.
We will then go over the third quarter financial results and I will conclude and open the call up for a Q&A session.
To start off I would like to highlight our strong third quarter performance, we generated total revenue of $12 $1 million, including product revenue of $9 $4 million.
Presenting growth of 17, 4% and at 11, 5%, respectively compared to the prior year period.
We are especially pleased with the product revenue growth considering the comparable period Q3 of 2020.
We recognized $2 7 million of deferred product revenue from Brazil from Q2 of 2020.
After reflecting the revenue recognition timing of their shipments total revenues in Q3 of 2021 increased by $4 $5 million or 59, 2% compared to the prior year period.
This growth is largely due to our previously outlined strategy to maximize the value of our DPP point of care diagnostic platform and professional health care settings.
We have focused our resources on initiatives within two main categories to drive near term growth and long term profitable growth.
The first is expanding our product portfolio to address needs in higher value markets.
Recurring premium solutions command higher pricing.
The advanced features and benefits of the DPP platform, including multiplexing and enhanced performance quite a broad range of infectious diseases.
Differentiate it from other point of care offerings.
The second is to optimize operations to scale efficiently as we grow.
Today I'm going to discuss three recent transformative accomplishments that underscore the strategic process and progress and the growth potential for <unk>.
These include strengthening the balance sheet.
Any way submission for the DPP respiratory panel.
The largest purchase order in the company's history.
Starting with the recent financing.
To provide capital needed as part of executing our strategy, we have meaningfully strengthened our balance sheet.
We raised $38 $8 million of net proceeds through an at the market equity operating agreement that we entered into in July.
This facility has the remaining capacity of approximately $19 million that may be offered at <unk> discretion subject to market conditions and business needs.
Now on to our second accomplishment the regulatory submission of an EUA application to the FDA for our DPP respiratory panel.
We intend to work collaboratively with the FDA to assist their review.
Development of this test is being supported by our words of up to $12 $7 million required.
The DPP respiratory antigen panel test system is designed to simultaneously.
Freely and differentiate detect influenza a influenza b and Sars COVID-19 two antigens from a single patient sample using a simple nasal swab.
We believe the DPP respiratory antigen panels as well positioned as an essential tool for the pandemic response.
The respiratory infection season and beyond.
Seasonal flu remains low thus far into the respiratory season. The CDC has issued guidance encouraging clinicians to utilize multiplex test that can detect and differentiate Sars COVID-19 two from influenza viruses.
The FDA has laid out a pathway for a diagnostic test manufacturer such as ourselves that do not have a pre existing five 10-K approved influenza test.
Though we have not seen yet any EUA awarded to any such manufacturer we remain confident in our submission based on the strong clinical data generated evaluating the accuracy of the system.
Later in the call we will provide an update on overall progress related to the BARDA contracts.
Our third highlight from the quarter is the driver of our strong revenue results in July we received a $28 3 million purchase order from <unk> for the purchase of our DPP stars Koh to antigen tests.
<unk> is responsible for the development and production of vaccines diagnostics and Biopharmaceuticals, primarily to meet the demands of Brazil's national public health system.
The order is intended to support the urgent needs of Brazil's Ministry of health in addressing the COVID-19 pandemic during 2021.
Also in July we received a $4 million purchase order from their partnership for supply chain management supported by the Global fund.
For the purchase of HIV, one two stat Pak assays for shipment to Ethiopia, Ethiopia into early 'twenty two.
To support orders like this at scale, we have been investing in automating our test manufacturing processes.
We cannot predict however, the number of our mix of tests for which purchase orders would actually be received and since receiving the Brazil in Ethiopia orders, we had been in the process of optimizing the use of our automated manufacturing lines and expanding our manual lines to maximize production output.
The number of tests to be delivered pursuant to the Brazil, and Ethiopia purchase orders significantly exceeds the capacity of our automated manufacturing lines.
Limitations of our supply chain staffing and liquidity are impacting our production capacity.
We do not have the time or the resources to increase our automated manufacturing capacity meaningfully during the delivery schedule is contemplated by the orders.
We have established internal plans designed to maximize the number of tests, we can deliver timely and we expect to continue to revise those plans as production proceeds and obtain new information.
The number of uncertainties that are related to third parties.
Our outside of our control, including the availability of required personnel raw materials and other resources.
It has made it difficult for us to reliably estimate the extent to which we will be able to fulfill that Brazil in Ethiopia purchase orders on time and at an acceptable cost.
In the third quarter, we recognized $5 4 million and $1 $2 million in revenue from orders shipped under the Brazil, and Ethiopia purchase orders respectively.
We expect that labor shortages global supply chain issues and other resource difficulties limiting the capacity of our automated and manual manufacturing will continue throughout the remainder of the delivery periods under the orders.
We currently anticipate that at least 11 $5 million of the purchase order from <unk> will not be fulfilled by December 31, 2021 at the end of the shipments schedule under the order.
We continue to discuss with BMA and gives us the possibility.
Being allowed to fulfill a portion of the order into early 2022.
While we are working hard to fill the balance of there being a genius purchase order, we cannot reliably estimate the extent to which we will be able to do so.
<unk> U S. Besides in its discretion to extend the shipping deadline for a portion of the order beyond December 31.
We intend to provide that information in our SEC filings.
We are certainly doing everything we can to minimize the impact of the continuing market challenges on all of our customers.
This demand still represents a significant growth opportunity for the company. Our primary goal is to provide the value to our customers that led them to choose can buyout in the first place we.
We are taking steps to ensure we can continue to meet customers' needs by increasing manufacturing capacity and efficiency.
While focusing on our global supply chain and manufacturing operations. We are also improving our commercial operations.
We have made changes to increase consistent performance by region across the United States.
The upgrades and the team are designed to further enhance our distribution relationships drive sales growth and place us in a better position to capitalize on the opportunities in front of us.
Now I'll transition to our product pipeline, where we are laying the foundation for opportunities in the U S and higher value markets not just in COVID-19, but across the infectious disease market.
The infectious disease point of care rapid testing market is growing and will continue to grow due to a multitude of factors. These include the high prevalence of infectious diseases globally are growing geriatric population.
Demand for rapid test results as they are more broadly integrated into the health care delivery and our advanced advancements and multiplexing on the DPP platform.
Our strategy for evaluating new applications for our products.
Centered around our deep understanding of the market growth drivers, our customers and patients needs and analyzing our internally conducted research.
With our structure and disciplined approach broadening our menu of differentiated high value products in the U S and international markets with higher average selling prices, we can expand our customer base and deepen our existing commercial relationships.
Our commercial and product development efforts are focused on areas, where one rapid diagnosis is critical to patient outcomes.
Two there is an unmet need related to performance or availability three opportunities for new products arise whether regionally demographically are clinically.
All the tests that meet these criteria will create premium solutions for markets that can support higher average selling prices.
In the near term, we anticipate that regulatory approvals for products that we have already developed can meaningfully expand our market opportunity will discuss we will discuss regulatory and development is two components of our pipeline.
We hope to receive a clinical laboratory permit amendments for CLIA waiver from the FDA for our DPP HIV syphilis system over the coming weeks.
This approval will create a much more robust market opportunity for an existing product.
To remind you the system to the multiplex 15 minute test, which simultaneously detects antibodies to HIV types, one two and treponema pallidum the bacteria that causes surplus using the DPP micro reader optical analyzer the.
But thats only requires a tiny 10 microliter sample a finger stick whole blood venous whole blood or plasma. It is the first and only rapid test approved by the FDA that multiplexes, where detects both diseases from a single sample.
Our system offers health care providers near immediate actionable information to address two of the most critical threats posed by syphilis infections.
Potentially lethal mother to child transmission.
And an increased risk of contracting HIV.
This represents a unique innovation in the sexually transmitted disease or <unk> testing market, while addressing and importantly for patients and their healthcare providers.
Receipt of a CLIA waiver with open access to 40 to 50.
Point of care testing sites in the United States.
Significantly increases our potential customer base.
These slides include planned Parenthood, and the state and local public health clinics, which are often the first start providers for prenatal and STD health services.
Our pursuit of the CLIA waiver for the DPP HIV syphilis test illustrates how we are targeting higher value markets, where the DPP system can both add clinical value.
And support premium pricing.
We plan to service this market through our growing collaborations with our distribution partners.
Now we will highlight the development work, we have done with the support of the biomedical advanced research and development Authority BARDA.
Which is part of the U S Department of Health and Human services office of the assistant Secretary for preparedness and response.
In July of 2020, we received an initial award for $628000 to assist us in our development submission and receipt of an EUA application for COVID-19 point of care antigen system using DPP technology.
We later received an additional grant of up to $12 $7 million from BARDA in December of 2020 to develop and submit an application for our respiratory antigen panel and support the preparations submission and approval of FDA five 10-K clearance.
Clearance for the DPP Sars Covid two antigen system.
Regarding our pursuit of the five 10-K clearance from the FDA for the DPP Sars Covid two antigen test system. We are currently wrapping up the clinical trials and following routine regulatory processes look forward to submitting it to the FDA.
Through September 30 of 2021, we have recognized government grant income totaling $8.0 million, which was awarded under the second contract with BARDA for up to $12 7 million.
Through September 30 of 2021, we have recognized government grant income totaling $8.0 million, which was awarded under the second contract with BARDA for up to $12 7 million.
Unless extended by Florida at its sole discretion all of the remaining $2 $9 million of awards remaining under the contract as of the filing date of our Form 10-Q will expire unless earned by December two 2021.
The completion of milestones to earn a portion of the remaining awards.
Outside of our control and we cannot assure you that we will succeed in earning any or all significant portion of the remaining reward award by December two 2021.
Any such an ability to earn a significant portion of potential grant recipients would adversely affect our business financial condition results of operations and prospects.
To leverage our expanded commercial infrastructure, we started distributing the KOB two antigen detect rapid test during the third quarter.
This test received an EUA for use in laboratories and point of care settings.
This requires no instrumentation, providing results in 20 minutes.
Using samples taken from a nasal swab and can detect proteins from the Sars COVID-19 two parts.
It is intended to be used to be used both for patients suspected of COVID-19 within five days of symptom onset <unk> asymptomatic serial testing.
We are pleased by the launch and the customer interest in this product.
Along with the status of COVID-19 flu tests that we began distributing in the second quarter. We believe these visual read tests complement or our own DPP tests that will help us grow our customer base as we complete development and our regulatory approval for the DPP products.
I will now turn the call over to Neal for details on the financials.
Thanks, Rick.
For the three months ended September 32021, total revenue was $12 1 million.
Representing growth of 17, 4% compared to the prior year period.
Product revenue for the third quarter of 2021 was $9 4 million.
An increase of 11, 5% compared to the prior year period.
Government Grant income license and royalty revenues and R&D revenues combined for the three months ended September 32021 were $2 7 million.
An increase of 44% compared to the prior year period.
That dollar amount $2 $4 million was earned by achieving milestones under our $12 $7 million program with BARDA, bringing our cumulative government grant income under this program through the third quarter of 2021% to $9 6 million.
Our revenues were in compliance with the 12 month rolling minimum total revenue covenant in our credit agreement.
Before moving further down the income statement I'd like to provide some more context to the revenue comparisons to the third quarter of 2020 that Rick highlighted in his opening comments.
Our total revenues during the third quarter of 2020 included $2 $7 million that was not previously recognized during the second quarter of 2020 due to the hurdle that required a high degree of confidence that it was probable that a significant reversal in revenue would not have occurred for certain product shipments outside the U S.
After reflecting the revenue recognition timing for those shipments during the three months ended September 32021.
Total revenues increased by $4 5 million or <unk> 59, 2% at product revenue increased by $3 7 million or 64, 2% compared to the three months ended September 32020.
Both government grant income and R&D revenue are related to the timing and cadence of program performance obligations, which do not always occur in a certain period, but we continue to incur certain of the expenses.
Gross product margins during the three months ended September 32021 increased by approximately <unk> 5 million compared to the prior year period.
Gross product margin percent was 15, 7% in the third quarter of 2021 compared to 11, 2% in the third quarter of 2020.
Gross product margin in the third quarter of 2021 was favorably impacted by higher average selling prices and higher product sales volume.
Gross product margin in the prior year period was impacted by several factors, including the Fda's replication of the DPP COVID-19, IGN <unk> systems in June 2020, which precluded planned sales of those systems to customers in the United States as well as operational inefficiencies triggered.
<unk> offset by the recognition of the $2 7 million net revenue for product shipments outside the United States that had been deferred from the second quarter of 2020 as I previously described.
R&D cost increased by $1 $1 million, primarily associated with clinical and regulatory affairs costs related to pursuing an EUA and 500 10-K from the FDA for the DPP Sars Covid two antigen test system and an EUA for the DPP respiratory panel each pursuant to awards from BARDA.
Selling general and administrative expenses increased by zero point $6 million in the third quarter of 2021 compared to the prior year period.
The increase in selling general and administrative expenses, principally reflected increased compensation costs related to our expanded U S commercial team commissions and insurance offset by a decrease in legal fees.
During the third quarter of 2021, we recognized zero point $4 million of restructuring costs related to professional fees to support the structuring and execution of the aftermarket equity offering agreement or ATM, which I will describe further in a moment.
Net loss for the three months ended September 32021, with $6 4 million or.
Or <unk> 24 per diluted share compared to a net loss of $5 5 million or 28 per diluted share in the prior year period.
The net losses reflect asset impairment <unk> restructuring severance and related cost of zero point $4 million were zero <unk> per share excuse me one penny per share what I mean of course for the third quarter of 2021 compared to a de minimis amount in the prior year period.
On the balance sheet cash and cash equivalents as of September 32021, totaling $36 million.
On July 19, 2021, we entered into an ATM agreement, enabling can buyout offer from time to time at its discretion.
The aggregate of $60 million of shares of common stock during the third quarter. The company raised $38 $8 million of net proceeds through the ATM program.
Net working capital as of September 32021 was $49 4 million.
I'll now turn the call back to Rick for concluding remarks.
Thank you Neil to.
To conclude we are invigorated by our recent commercial successes and are optimistic that the heightened demand for <unk> products will further our presence our presence in the point of care rapid diagnostic testing market.
The submission of the EUA application for our DPP respiratory panel.
Initiatives to potentially add to our U S portfolio of COVID-19 diagnostics.
We are already beginning to see the results of our recent investments in our infrastructure and remain well positioned to drive long term growth on our path to profitability.
We've talked a lot today about our COVID-19 opportunities.
In addition, we are actively developing new products.
Aligned with the strategies I have described to expand our presence in our target markets outside of COVID-19.
I look forward to sharing more with you in the future as we make as we make progress in these activities.
Before we conclude as.
As you may have heard our CFO Neil Goldman has accepted a CFO position at another company.
I want to thank Neal for his efforts and all of his many contributions to the advancement of <unk> over the past years and we wish him luck in his next chapter.
With that operator, please open up the call for questions. Thank you.
Certainly your first question is coming from Bruce Jackson from the Benchmark Company. Your line is live.
Good afternoon.
I was hoping I could ask a few more questions about the bias.
<unk>.
Orders, so you have still $5 4 million in the quarter.
Some of that.
Hey, Jeff.
Next year, if you do the math.
You could potentially still maybe less of that order in Q4 does that sound right.
The hydrogen it's Neil so we've laid out the different figures as we're able to share them and consistent with the company's approach of not providing guidance I can.
Get into confirming the map that youre trying to do but we have tried to provide some context.
One way of thinking about this very important.
Program for the company.
I think the other the other factor Bruce.
Thanks for the question Bruce This is Rick.
We are in the process of continuing to increase our production capacity.
As we've talked about that as both a complement of our automated lines as well as our manual lines.
In the early next year, so obviously trying to forecast what those numbers are in Q4 and Q1.
It's really related to the uncertainties.
I would say the labor market is probably the number one issue Bruce as.
As you would imagine in long island.
The labor market is extremely tight we have put in programs. I mean every program you can imagine to attract manual production labor, including multiple job fairs, including looking at premium rate changes.
Benefactor and staff.
We put.
Performance rewards in place to retainer people so.
The labor market I would say is the number one obstacle that we're dealing with but.
We're doing everything we could possibly do.
To continue to hire people add manual production lines and as we execute on that hopefully we can deliver.
As much as we can and Q4 and hopefully some into cuboid of next year.
Versus Neil again, just to provide a little bit more color on the volumes is I'll remind you and everyone that that both of those orders from <unk> as well as from the partnership for supply chain management supported by the Global Fund first step back came in in the back half of July and while as we've said.
An earlier calls this year that we did have some inventory ready for the Brazil or the B M. A genius order ready to go in anticipation of that order.
Certainly it was by no means.
A significant amount of relative to the size that order, which meant while we did get that out of the gate quickly, which the customer very much I appreciate it.
Then take some time to crank up the engine and get going as it relates to materials supply chain as well as labor and the other issues that were talked about.
Hopefully that gives you some additional ways to think about our go forward.
Approaches related that business and optimizing the manufacturing.
Oh, that's great. Thank you.
Just a quick follow up on the D. M. D D. H I V. Once you step Peck order you some.
With that in Q3 does that have any timeline sensitivity to it and how do you see that that was being filled over the next several quarters.
Bruce what we said in.
Today and also on our prior car.
Conference calls is that the stackpath for the global fund to supply Ethiopia.
And in the first quarter of next year.
So that's that's what the timeline is on that.
Okay. Okay, great. Thank you.
Thank you Bruce Thanks.
Thank you. Your next question is coming from Kyle Bussiere from call. Your Securities. Your line is live.
Great. Thanks for the updates and and all of the best in your next role a meal.
Meet me following up on.
Yeah.
Bruce These question regarding the stat at quarter to Ethiopia.
So.
Given that the supply chain issues and it sounds like it if anything it's more of a staffing issue.
Is there a risk that.
At that order could not be fulfilled by and the Q1 or or you feel free comfortable with that just kind of.
In a sense for modeling.
Yeah. Kyle this is Rick certainly are internal plans are to produce that product and ship. It in the first quarter of next year.
So that that's our internal plan.
We will adjust that as.
We increase our capacity increase our manual production lines.
Throughout the next two months.
So we're very committed to do everything we can.
To supply in the global climate, Ethiopia with product because they've been a longtime customer have kept vital.
Global foreigners.
Credible organization and very supportive of <unk>. So we're doing everything everything we can to balance our capacity to both fulfill.
And getting this order as well as the global fund order for HIV step back.
Yeah, the only other thing I'll add Kyle and thanks again for your comments is that is Rick said in the prepared remarks. These kinds of issues of things that many companies are encountering you can't pick up the newspaper today without reading about global supply chain issues about the availability of people in the workforce on a national basis.
Not to mention here on long Island in New York.
So whether that can translate to win his way or any company works with its customers is.
Customers suppliers and manufacturers were all of us together and so as a collaborative approach to a manager there and certainly that's the way we're we're approaching it and that's how I would characterize it in the press release that we put up today as well.
Now I understood.
Greed.
It medium on the third party energy panel you're selling.
Ballpark, what what sort of sales because it generated for chem bio or maybe add another way.
Unit volumes, just kind of curious.
Material in the sale of this product is that all.
Show up on that as well.
We haven't broke out revenue byproducts.
Lola replace it and then with the F D. A still so backed up it seems like.
Would you say that the chances are likelihood of getting five 10-K clearance for some of these test is greater than getting EUA as we.
Hope to make it through Covid I'm, just kind of trying to get a sense of how the F. D. A is prioritising COVID-19 applications right now thank you.
Yeah.
Check the first question first and that is the DPP respiratory manage apparel.
That is run on our Microreader. So it provides us it provides an objective test result for the operator.
So we believe the TV Pete product will being very complimentary to the to the products. We're currently distributing the status COVID-19 include product.
<unk> because not all customers.
Rely a lot of visual read interpretation.
Of important test results like Covid and flew a included so we believe the respiratory panel run on our Microreader too in the United States.
Has great clinical value.
And provides another solution. So we think it's very complimentary.
And our plan is to continue to move forward with a portfolio of COVID-19 tests.
And respiratory paddle cuss as we move through.
A respiratory suit.
In terms of the SCA question Kyle.
The five 10-K submission.
The end of that first with four hour contract runs through December 2nd So we talked a lot about that in the prepared remarks. So we are on track to submit to five 10-K to the SDA by that exploration date of our part of our part of contract.
There's always things things can happen, but that's what we're aiming for shooting for and hoping to realize.
What's it submitted to the USDA then it's really up to the to the FDA in terms of how are they going to prioritize that in relation to EUA submissions and so.
I don't think the FDA has come out with any guidance.
To the industry relative to how they're going to handle 510, Ks and balance that with the number of Doa.
Companies that have products on the market. So I think this is TBD Kyle to see how.
Go into.
Evaluate by 10 case versus Eua's.
As we move into the future.
Okay, great. Thanks, so much for all the updates vitiate it.
Thank you call.
And as well as our Chief Technology Officer to Brazil.
To sit across the table from being that good news and explain the issues to supply chain issues that labor shortages.
Two of them face to face.
Because we value them as a customer and we value the transparency with our customers to let them know, what we're experiencing and they're sharing with us what they're experiencing so.
We're doing everything we can in these discussions.
To try to extend into early part of next year.
Given these challenges and so.
I think our relationship is strong.
And I think at this point, we've done everything we can to insure.
We maintain that customer relationship.
Because as you said they've been a great customer of ours for a very long time.
Yeah, Neil I'll add on just one other thing.
Maybe less for you are very familiar with the.
The history in the relationship but for others on the call who may be less so and that is that.
Our customer our products in Brazil that beyond giving yourself as a registered through them on a regulatory basis.
<unk> web site.
Make your way through the Portuguese Youll see something as TR, DPP, which stands for testing Rapino DPP. So it's kind of vitamins DPP branded for bema gain yes.
The theme of that is that they view us not as directly as a partner as a supplier, but as a partner and Thats. The way the relationship has been throughout its history and we believe thats how they.
Our continuing to approach it with us.
Those things are things you don't take for granted and as Rick said at the beginning of his reply, we certainly do not.
And I think they respect the way that we lean into that relationship and we will continue to working closely with them to do everything we can.
Sure.
And thanks for adding that Neal I think that the.
Good point.
I guess following up to my one follow up.
I may.
I think when we spoke on the on the second quarter calls you know there was there was certainly the discussion of.
I've really having been in a position to kind of plan ahead for an order of this size you know I mean this disorders.
On its own.
Because we all lived through <unk> and through the first part of this year with Wynn was Tuesday Wednesday oriented com.
And importantly, and this is what I wanted to highlight before I handover the rhetoric through what time period would.
<unk> genius and their customer the Brazilian Ministry of Health wants a products delivered that was an unknown. So when you take that much size of volume and squeezed it through what turned out to be at least.
Initially and hopefully limited to initially if we're able to work things out with them to extend the period as we suggested not certain yet, but that's going to happen, but we're working on it.
That obviously effects when you can turn out in a certain period of time no matter. What you do ahead of time to prepare and that's just that's just simple math.
And with.
And I don't mean to be glib with the answer but rather just to describe the practical realities of what was known versus what was not known in preparation for and with that I'll hand, it over to Rick.
Yeah, Neil summed it up very well.
Well I would just add to that.
Our internal plan.
For this once we once we received the award and realized how large it was and in a very short amount of time.
Our plant has shifted to <unk>.
Okay.
I think that that's what we what we did not anticipate in terms of what everybody else is experiencing we're competing with.
Very large companies like Amazon and Walmart and target for people.
And I think that's that's the debate.
The biggest issue.
Yeah and just to.
Clarify one thing around what I teed up with pear is that.
When the order came in we.
That did.
In the days as we were finalizing the details of the order with the.
<unk> once we knew that they were ready to go before we finalize it and then properly announced it.
We had a plan to deliver on that it had.
Meaning full ramp, but one that at the time, our team is confident and with specifically laid out and how to achieve it and as with anything sometimes.
What ultimately turns out in reality continues to evolve and the market dynamics with labor continue to evolve and change.
Changes, we just try to deal with as we move forward and we're continuing to do that with the customer.
Yes, that's right.
That's reasonable and you'll just to be clear I didn't think your answer before was glib either I think it was perfectly I think it was perfectly fair.
Actually kind of lead into another question that I had kind of had which was.
Related to the automated capacity and this has been a you know something that gets discussed announced on calls it's come up for several years now and I guess I was a little surprised in the sense that you know that.
The automated capacity almost sounds like it's being overwhelmed already but I think it is it fair to think that simply.
Because of the bolus of the of the of the order of the size of this particular order. It's not like you are you you're not given the luxury of producing product over the course of 12.
12 month period, you're trying to do this this sizable order over the course of several months instead of 12, and then if you have that situation exacerbated by labor shortages. It just makes it that much more taxing is that fair.
Yes.
That's fair.
I think you hit the nail on the head relative to the <unk>.
Does the size of the order as well as the time frame.
Okay and product mix, obviously factoring into that too.
Sure no absolutely Okay. One last one for me I promise.
You mentioned, the CLIA waiver situation with HIV syphilis, I think everybody on this call would love to see that eventually granted you did you did mention.
Particularly a waiver.
So I think that's that's.
That's sort of communicating on confidence that we're getting very very close and.
Hopefully, we'll have some some news to announce over the coming weeks.
Excellent alright. Thank you for all the time, all the color and Neil Congratulations and best of luck in your next wrong.
Thank you <unk> I appreciate it thank you bear.
Thank you there are no further questions in the queue.
[noise] okay.
Thank you Matt for.
Reading the call today, and I want to push everybody.
A great week and have a good evening. Thank you.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.