Q3 2023 Cue Health Inc Earnings Call
Good day, and thank you for standing by. Welcome to the QHealth third quarter, 2023 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You'll then hear an automated message advising that your hand is raised.
Good day, and thank you for standing by and welcome to the Q Health third quarter 2023 earnings Conference call. At this time all participants are number can only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising that your hand is raised to withdraw your question. Please press star one again.
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Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Lorna Williams, Investor Relations.
Please be advised that today's conference is being recorded I would now like to turn the conference over to your first speaker today Lorna Williams Investor Relations. Please.
Please go ahead.
Good afternoon and welcome to Q's third quarter 2023 earnings conference call. Joining me today are Yup Katak, Chairman and Chief Executive Officer of Q Health, and Austin Javed, Chief Financial Officer. Before we get started, let me begin by reminding you that we may be making forward-looking statements, including statements related to the submission of any FDA applications and expectations around receiving clearance and authorization.
Good afternoon, and welcome to Cube third quarter 2023 earnings Conference call. Joining me today are you could talk chairman and Chief Executive Officer of to help an awesome Javad Chief Financial Officer before we get started let me begin by reminding you that we may be making forward looking.
Statements, including statements related to the submission of any FDA applications and expectations around receiving clearance in authorization expectations regarding production capacity expectations related to availability of our programs and testing volumes the expected performance of our business future financial results and guidance.
expectations regarding production capacity, expectations related to availability of our programs and testing volumes, the expected performance of our business, future financial results and guidance, strategy, long-term growth, and overall future prospects, as well as the impact of the COVID-19 pandemic.
Strategy long term growth and overall future prospects as well as the impact of the COVID-19 pandemic.
These statements are subject to risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from those described.
Such statements are subject to risks uncertainties assumptions and other factors that could cause actual results could differ materially from those described.
These risks and uncertainties include, but are not limited to, those outlined in today's call, as well as other risks identified from time to time in our public statements and reports filed with the SEC.
These risks and uncertainties include but are not limited to those outlined in today's call as well as other risks identified from time to time in our public statements and reports filed with the SEC.
For looking statements that we make on this call are based on assumptions and beliefs as of the date they are made. And the company disclaims any obligation to update these statements except as required by law. In addition, on today's call, non- GAAP financial measures will be used.
We're looking statements that we make on this call are based on assumptions and beliefs as of the date. They are made and the company disclaims any obligation to update these statements except as required by law. In addition on today's call non-GAAP financial measures will be used reconciliations between GAAP and non-GAAP financial measures are included in our earnings release.
reconciliation between GAAP and non-GAAP financial measures are included in our earnings review.
Finally, I'd like to mention that the press release and recording of this call are available on the Investor Relations page of our website. With that, I would like to turn the call over to AU.
Finally, I'd like to mention that the press release and recording of this call are available on the Investor Relations page of our website with that I would like to turn the call over to Asia.
Thank you, Arna, and thank you everyone for joining us today. CREPorted total revenue is $17.5 million in the third quarter, exceeding expectations, given by stronger than anticipated COVID-19 test sales.
Thank you Anna and thank you everyone for joining us today.
We reported total revenue of $17 5 million in the third quarter exceeding expectations driven by stronger than anticipated COVID-19 test sales we.
We had non-COVID contribution revenue this quarter, and we continue to expect growth in the coming quarters as new products gain momentum.
We had non Covid contribution revenue this quarter and we continue to expect growth in the coming quarters as new products gain momentum.
Additionally, we ended the quarter with $111.5 million of cash and equivalent
Additionally, we ended the quarter with $111 $5 million of cash and equivalents.
We continue to execute our key strategic priorities with strong financial discipline, having brought our costs down by $165 million on an annualized basis, exceeding our $150 million target.
We continue to execute our key strategic priorities with strong financial discipline, having brought our costs down by $165 million on an annualized basis exceeding our $150 million target.
Turning to our number one strategic priority, test menu expansion for the Q Health Monitoring.
Turning to our number one strategic priority test menu expansion for the Q health monitoring system.
Our flu plus COVID multiplex test remains an active FDA review.
Our flu plus covered multiplex test remains active FDA review through the.
Through the last quarter, we added a substantial amount of additional clinical data, and we believe our application exceeds the FDA's data performance criteria and the required prospective clinical samples for lay users for all three of flu A and flu B and COVID-19 positive clinical samples.
Last quarter, we added a substantial amount of additional clinical data, we believe our application exceeds the FDA stated performance criteria and the required perspective clinical samples for lasers for all three of flu.
And flu B and COVID-19 positive clinical samples.
We get the additional flu B samples. We conducted a study in the Southern Hemisphere this year. This is our first multiplex and has been submitting to the FDA for over-the-counter use, which would enable use both at home and at the point of care.
To get the additional fluid samples we conducted a study in the southern hemisphere. This year.
This is our first multiplex and has been submitted to the FDA for over the counter use which will enable us both at home and at the point of care.
Our flu plus COVID multiplex tests simultaneously detects and differentiates between influenza and COVID-19 in approximately 25 minutes. The results delivered diligently to the Q-HELP app.
Our flu plus covered multiplex test simultaneously detects and differentiates between influenza and COVID-19, approximately 25 minutes for the results delivered digitally to the Q help out.
It is integrated into two care, our same day test treatment solution, which enables telehealth and prescription delivery.
It is integrated into acute care or same day test of treatment solution, which enable telehealth and prescription delivery.
With this product, we believe we're adding a powerful tool for individuals at home, providers and enterprise seeking to make better informed healthcare decisions enable timely effective.
With this product we believe we are adding a powerful tool for individuals at home providers and enterprises seeking to make better informed healthcare decisions enabled timely effective treatments.
We also have two denovable applications currently under review of the FCA. The QRSP molecular test was submitted earlier this year and we have received feedback from the FCA.
We also have two de Novo applications currently under review with the FDA.
<unk> RSV molecular test was submitted earlier this year and we have received feedback from the FDA.
We believe that we can address all the feedback within the quarter and continue the review. We anticipate an approval later in the respiratory...
We believe that we can address all of the feedback within the quarter and continue to view, we anticipate an approval later in the respiratory season.
The Q-flu molecular test was submitted to the FDA for a full de novo last year. Subsequently, we were asked for a greater number of flu-B clinical samples, which has been very rarely circulating over the last three years, with almost no circulation in the northern hemisphere.
The Q molecular test was submitted to the FDA for a fault and over the last year. Subsequently, we were asked for a greater number.
We'll be clinical samples, which has been very rarely circulating over the last three years with almost no circulation in the northern hemisphere.
We collected the additional samples in the southern hemisphere as suggested by the FDA and we believe we exceed the requirements.
We collected the additional samples in the southern Hemisphere as suggested by the FDA and we believe we exceed the requirements.
The blue submission is progressing well, so de novo approval of this respiratory.
The first question is progressing well to a de novo approval best respiratory season.
For all of these tests, as soon as we receive authorization, we're ready to launch them, utilizing our existing sales and distribution channels.
For all of these tests as soon as we receive authorization, we're ready to launch that utilizing our existing sales and distribution channels.
These products will be made on our automated production lines without significant additional capital investments. Our automated production lines were designed to produce any test in our menu at scale. As a reminder, all of the QF monitoring system tests show the same cartridge backbone and manufacturing process. This is clear.
These products will be made on our automated production line without significant additional capital investments are automated production lines were designed to produce any testing our menu at scale.
Under all of the QF monitoring system tests show same cartridge background in manufacturing process.
Our installed base has more than a quarter mind two meters.
and we have more than 300 directly contracted enterprises and providers.
And we have more than 300 directly contracted enterprises and providers.
Together with public sector customers, our distribution partners, and our direct-to-consumer channel. We believe we have the available channels to get these products into the market.
Together with public sector customers, our distribution partners and our direct to consumer channel. We believe we have the available channels to get these products into the market.
Last quarter, we announced we are developing a combined flu RSC plus COVID all in one multiplex test supported by Barbara on a $28 million contract.
Last quarter, we announced we are developing a combined flu RSV cloud cover it all in one multiplex test supported by BARDA on a $28 million contract.
This new molecular test is being developed on the same curator and cartridge system. I will also utilize the same production.
New molecular test is being developed on the same commuter and cartridge system and will also utilize the same production lines.
The team continues to drive solid progress from the development of this multiplex test.
The team continues to drive solid progress in the development of the multiplex test.
We plan to follow an EUA regulatory pathway with an initial objective of having this test available for the 2024-2025 respiratory...
We plan to follow an EUA regulatory pathway with an initial objective of having a test available for the 2020 for 2025 respiratory season.
Rounding out a respiratory pipeline, we've now completed development for our strep throat and molecular tests. We made the decision, though, to delay the start of the clinical study to save cost as you prioritize promising your term revenue generating products, including the three tests and review of the FDA.
Rounding out our respiratory pipeline, we've now completed development for our stepped up molecular tests, we made the decision to delay the start of the clinical study to save costs as they prioritize policy near term revenue generating products, including the three tests and review with the FDA.
Now I'd like to highlight Q's menu expansion efforts in the Sexual Health category.
Now I'd like to highlight two of menu expansion efforts in the sexual health category.
Our Climidia, Wisconsin, Rhea, and Multiplex Test is in clinical studies. We now expect an FDA submission in the first half of next year.
Our chlamydia gonorrhea multiplex test is in clinical studies, we now expect an FDA submission in the first half of next year.
We have been developing a Q-Hurpees Plus Ampox Multiplac Molecular Test. This is an important next step for sexual health testing menu for sexually active people with lesions and builds on our already FDA authorized Ampox Molecular Test.
We have been developing a key herpes pause and talk multiplex molecular test that's been an important next step for our sexual health testing menu for sexually active people with regions and build on our already FDA authorized impasse molecular tests.
General Harpuse caused by HSB1 or HSB2 is the most common SVN United States with an infection in one out of every six, especially active people in the US.
General herpes caused by HSV one HSV two is the most comprehensive in the United States with an infection and one out of every six actually active people in the U S.
A diagnostic test is needed to determine if an injured user all has either of these highly contagious virus.
A diagnostic test is needed to determine if an engineer at either of these highly contagious viruses.
We believe our new multiplex test can quickly and accurately detect herpes and or mpox to allow for timely medical intervention.
We believe our new multiplex tasking quickly and accurately detect herpes.
<unk> or <unk> to allow for timely medical intervention.
Today, there is not a point-of-care herpes solution available on the market. We believe that our herpes plus mpox multiplex test is eligible for an EUA, and we believe that we could have this herpes mpox test on the market.
Today, there is not a point of care ERP solution available on the market, we believe that our herpes plus and Fox multiplex test is eligible for an EUA and we believe that we could have herpes.
Fox test on the market next year.
The acute health monitoring system has many new tests on the way, and we're very excited about the progress and our key priority of menu.
Q health monitoring system has many years has gone away and were very excited about the progress on our key priority of menu expansion.
We're also happy to see the pure-view publication of Role-Wold Clinical Experience with Q comparing Q to a lab-based RTC CRTES.
We're also happy to see the peer reviewed publication of real World clinical experience with Q, comparing Q2, a lab based RT Pcr tests.
Recently, an independent clinical study comparing our Q and molecular COVID-19 tests to a lab-based PCR test was peer-reviewed and published in microbiology spectrum. A journal produced by the American Society for Microbiology.
<unk>, an independent clinical study comparing our Q molecular COVID-19 tests to elaborate PCR tests, plus peer reviewed and published in microbiology spectrum <unk> produced by the American Society for Microbiology.
This largest of its kind study of asymptomatic people finds that Q-Test is as accurate as a lab-based PCR test.
This largest of its kind study of asymptomatic people find their acute test is as accurate as the lab based test.
99.4% concordance with a slab-based RTCCR.
With 99, 4% concordance with his lab based RT Pcr tests.
The study is finding differentiate Q on the basis of above accuracy and speed. Superior to the poor sense through and gen testing and without the delays of lab-based PCR.
The <unk> finding differentiate Q on the basis of the accuracy and speed.
Superior to the portion of the two Amgen testing and without the delays of lab based PCR testing.
Clipsing to the Q Integrated Care Platform are a solution that seamlessly expands the capability of a foundational QF monitoring system, enabling an end-to-end customer journey to receive an accurate diagnosis, consultal to help care providers who are AFF and receive treatment. We have integrated many of these.
Shifting to the queue integrated care platform or solution that seamlessly extend the capability of our foundational QF mooring system, enabling an end to end customer journey to receive an accurate diagnosis can totaled a health care provider through our apps and receive treatments.
We have integrated many of these building blocks to about 18 months.
Last year we launched Q-Care allowing for video competition with clinicians and prescription delivery. We announced a partnership of Minnesota Department of Public Health to enable all the state citizens to act with Q-Care without positive patients. Next, whoever just platform to add Q-App, mail in at home test kit. Thank you, pharmacy for prescriptions. So.
Last year, we launched Q care, allowing for video consultation with clinicians and prescription delivery, we announced a partnership with Minnesota Department of public health to enable all the states that have been with Jackson to cure without cost to the patient.
<unk> Leverages platform to add QR mill, an at home test kit. Thank you pharmacy prescriptions subscription.
We continue to be excited about this opportunity. We leave QAB and keep our promise we have the potential to be a meaningful part of the business over the next.
We continue to be excited about this opportunity as <unk> App <unk> pharmacy has the potential to be a meaningful part of the business over the next year.
Now that we have fully built out the integrated care platform, we expect that adding new tests and treatment programs will be straightforward. And I'm really pleased with how the team continues to leverage the platform across new indication.
Now that we are fully built out the integrated care platform, we expect that adding new tests and treatment programs will be straightforward and I'm really pleased with how the team continues to leverage the platform across new indications.
I'll often will review our financial performance in detail. I want to highlight the progress we've made with financial.
Awesome I'll review, our financial performance in detail I want to highlight the progress we've made with financial discipline.
team continues to balance operational execution with cost management.
The team continued to balance operational execution with cost management.
Our goal at the beginning of the year was to reduce spend by 150 million dollars. We have now delivered approximately 165 million dollars of annualized fund rate costs.
Our goal at the beginning of the year was to reduce spend by $150 million. We have now delivered approximately $165 million of annualized run rate cost savings at the same time. The team is also focused on near term revenue generating opportunities, including upcoming FDA approvals.
At the same time, the team is also focused on near-term revenue-generating opportunities, including upcoming FDA approval.
believe we're getting close as we continue to have positive engagement with the FDA and have continued to add data where necessary as common in the review process.
I believe we're getting close as we can show you got positive engagement with the FDA and has continued to add data where necessary as common in the review process.
Over the last month, we've been actively responding to information requests and supplying additional data as well.
Over the last months <unk> been actively responding to information requests and supplying additional data as necessary.
We remain optimistic that we will have additional authorization shortly and that these approvals, along with new product launches, will be the catalyst for revenue growth and reaching EBITDA break-even in early 2025. With that, I'll turn the call over to Austin.
We remain optimistic that we will have additional authorization shortly and these approvals.
Armed with new product launches will be the catalyst for revenue growth and we see EBITDA breakeven in early 2025.
I'll turn the call over to Austin.
Thank you and good afternoon.
Now let's walk through our third quarter financial results and fourth quarter debt items.
Now, let's walk through our third quarter financial results and fourth quarter guidance.
Q's third quarter total revenue of $17.5 million exceeded our guidance range of $11-13 million.
<unk> third quarter total revenue of $17 5 million exceeded our guidance range of $11 million to $13 million.
We are pleased with the sequential increase amidst the continued industry decline in COVID-19.
We are pleased with the sequential increase amidst the continued industry decline in <unk>.
In the quarter, our private sector contributed 82% or $14.4 million of sales.
In the quarter, a private sector contributed 82% or $14 4 million of sales.
Public sector revenues were $3.1 million for the third quarter, and total desk cartridge sales were $13.2 million.
Public sector revenues were $3 1 million for the third quarter and total desktop sales were $13 2 million.
Q3 product gross profit was a loss of $7.4 million.
Q3 product gross profit was a loss of $7 4 million.
Gross profit is impacted by lower manufacturing volumes and also includes non-cash items.
Gross profit is impacted by lower manufacturing volumes and also includes noncash items.
Excluding depreciation, amortization, and stock-based compensation, our gross profit would be slightly positive.
Excluding depreciation amortization and stock based compensation, our gross profit would be slightly positive.
Total operating expenses in the quarter were $60 million, excluding cost of revenue.
Total operating expenses in the quarter were $60 million.
Excluding cost of revenue.
Sequentially operating expenses are in line with the second
Sequentially operating expenses are in line with the second quarter.
Q3 operating expenses were down 37% from Q4 2022 driven by a cost reduction.
Q3 operating expenses were down 37% from Q4 2022, driven by cost reduction efforts.
Further, if you exclude non-cash items such as depreciation, amortization, and stock-based comp, the reduction in operating expenses from Q4 2022 would be even higher on a percentage.
Further if you exclude noncash items, such as depreciation amortization and stock based comp.
And in operating expenses from Q4, 2022 would be even higher on a percentage basis.
Sales and marketing expenses were $7.1 million in third quarter, a decrease of 63% from Q4 2022, driven by a decrease in digital and marketing costs.
Sales and marketing expenses were $7 1 million in the third quarter, a decrease of 63% from Q4 2022, driven by a decrease in digital and marketing costs.
R&D expenses were $37.1 million for Q3, a decrease of 34% from $56.1 million of spend in Q4 2022.
R&D expenses were $37 1 million for Q3, a decrease of 34% from $56 $1 million of spend in Q4 2022.
as we focus on development programs related to our respiratory and sexual health products.
As we focus on development programs related to our respiratory and sexual health product offering.
GNA expenses were 15.8 million dollars during the quarter, a decline of 17% from Q4 2022 spend of 19.2 million dollars.
G&A expenses were $15 8 million.
During the quarter.
Decline of 17% from Q4 2022 spend of $19 2 million.
In the quarter, we received an Employee Retention Credit of $20.9 million from the IRS.
In the quarter, we received an employee retention credit of $20 9 million from the IRS.
As a result, gap net loss in the third quarter was $47 million, or $0.31 per diluted.
As a result, GAAP net loss in the third quarter was $47 million.
<unk> 31 per diluted share.
On an adjusted basis, net loss was $63.6 million or $0.42 per diluted.
On an adjusted basis net loss was $63 6 million.
Our 42 cents per diluted share.
Adjusted EBITDA was a loss of $36.6 million.
Adjusted EBITDA was a loss of $36 6 million.
Moving to the balance sheet, we ended the quarter with cash of $111.5 million.
Moving to the balance sheet, we ended the quarter with cash of $111 5 million.
I'd like to move to our guidance.
We expect revenues of $16-18 million for the fourth quarter.
We expect revenues of $16 million to $18 million for the fourth quarter.
Q has a healthy balance sheet with $111.5 million of cash on hand as we continue to prioritize cash preservation.
Q as a healthy balance sheet with $111 $5 million of cash on hand, as we continue to prioritize cash preservation.
As a reminder, we delivered approximately $165 million of annualized run rate cost savings versus Q4 2020.
As a reminder, we delivered approximately $165 million.
Annualized run rate cost savings versus Q4 2022.
Our operating expenses were down 37% from Q4 2022 and PP capital expenditures in the quarter 1.7M dollars, a 76% decrease from Q4 2022. Our underlying cash burn rate.
Our operating expenses were down 37% from Q4, 2022, and PPE capital expenditures in the quarter $1 7 million.
76% decrease from Q4 2022.
Our underlying cash burn rate improved from Q2.
Additionally, we continue to execute on our near-term catalysts, including preparing for the launch of our flu plus COVID multiplex, flu and RSV regulatory approvals, and other new product
Additionally, we continue to execute on our near term catalysts, including preparing for the launch of our flu plus COVID-19 multiplex.
And RSP regulatory approvals and other new product offerings.
Finally, we continue to evaluate options and opportunities to bolster our cash.
Finally, we continue to evaluate options and opportunities to bolster our cash position.
In summary, I am pleased with the progress being made against our 2023 priorities of test money expansion, our integrated care platform, and strong financial development.
In summary, I am pleased with the progress being made against our 2023 priorities of Jasmine Your expansion are integrated care platform and strong financial discipline.
Looking ahead, we expect to have several molecular tests on the market in 2024, strengthening our expectations of a positive adjusted EBITDA by early 2025.
Looking ahead, we expect to have several molecular tests on the market in 2024, strengthening our expectation for positive adjusted EBITDA by early 2025.
With that, I would like to thank you for your attention, and I'll now turn the call over to the operator.
With that I would like to thank you for your attention and I'll now turn the call over to the operator for questions. Thank.
Thank you. As a reminder to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A route.
Thank you as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile our Q&A roster.
Our first question comes from the line of Teja Savant with Morgan Stanley . Your line is now open.
Our first question comes from the line of Hey, Josh <unk> with Morgan Stanley. Your line is now open.
Hi, this is Jason and for Cajos, so congratulations on the quarter, guys. So my first question is, back in August , one of your shareholders, they published a public letter voicing their views on your business strategy. And then recently in October , a separate group of shareholders acting independently published a letter voicing similar views. So my question was just, have you had any dialogue with either of these stakeholders in the past few months? And how do you think about your company's strategy moving forward, if it's the right one?
Hi, This is Jason infotainment for Tejas, so congratulations on the quarter guys.
So my first question is back in August one of your shareholders. They published a public letter voicing their views on your business strategy and then recently in October a separate group of shareholders acting independently published a letter voicing similar views.
My question was just have you had any dialogue with the stakeholders in the past few months and how do you think about your company's strategy moving forward is the right one.
Hey, thanks for the question. So, you know, the board and the management team, you know, the key lens that we apply to every decision is, you know, increasing shareholder value. That's a, it's a fundamental part of how we, we make decisions.
Hey, Thanks for the question so.
The board and the management team.
The lands that we apply to every decision is increasing shareholder value.
It's fundamental.
Part of it.
And we value shareholder feedback. So, you know, we take it very seriously. And we deliberate on what is the right strategy for the company all the time. Not only at the behest of, you know, shareholders, but also just as the, you know, fiduciaries of this company.
Make decisions.
And we value shareholder feedback and so we take it very seriously.
And we deliberate on what is the right strategy for the company all the time.
It's not only at the behest of P&L.
Shareholders, but also just ask Felipe.
Fiduciary of this company so.
So, you know, with regards to what we're doing.
With regards to what we're doing.
You can see that we've been executing with really strong fiscal discipline. Instead of $150 million target, we actually achieved $165 million of cost lowering. So, and that's while focusing and moving forward our key strategic priority of menu expansion.
You can see that we've been executing with really strong fiscal discipline.
Instead of a $150 million target, we actually achieved $165 million of costs lowering so.
While focusing and moving forward, our key strategic priority of menu expansion. So.
So in terms of our priorities, they are to expand the menu, to do so with fiscal discipline, to expand an integrated care platform, which delivers the full experience that we seek to with our product.
In terms of our priorities they are to expand the menu to do so fiscal discipline to expand into creating an integrated care platform, which delivers the full experience that we seek to with our product and platform.
Got it. Thank you. I may have a follow up question. So, you ended the quarter of the 111 million dollars in cash and then last quarter you guys provide you about 12 months of runway. So, with another 3 months past us, how do you think about cash management finance financing opportunities over next year to extend your runway?
Got it thank you for the color.
I may ask a follow up question. So you ended the quarter of the $111 million in cash and then last quarter you guided us to provide you about 12 months of runway. So with another three months past that how you think about cash management finance financing opportunities over the next year to extent youre runway.
Thanks for the question. You know, we're always building towards, we're building towards our post-approval profitability phase and all the opportunities that come with it. So our cash performance this year of the $17 million utilization, we're very happy with that performance. You know, this is the best cash performance we've had since Q1 2022, which was the height of the Omicron.
Thanks for the question.
We're always building towards we are building towards our post approval profitability phase and all of the opportunities that come with it. So our cash performance. This year with a 17 million dollar utilization, we're very happy with that performance.
This is the best cash performance, we've had since Q1 2022, which was the height of the omicron.
And not just this quarter, if you look at the whole year, in every quarter a cash utilization has fronted a better quarter on quarter.
And not just this quarter, if you look at the whole year and every quarter on cash as cash utilization has trended better quarter on quarter. So we're continuing to focus on our cash manage our cash and extend our runway and as you mentioned from a savings standpoint, we had the target of $150 million.
So, you know, we're continuing to focus on our cash, manage our cash and extend our own way. And as you mentioned, you know, from a saving standpoint, we had the target of $150 million. We came in at $165 million. So, bigger, higher than the target and from a damning standpoint ahead of our target.
We came in at $165 million.
Higher than the target and from a timing standpoint ahead, if I target.
You know all our investments and most of our investments up behind us
All of our investments in most of our investments are behind us and we're I think closer and closer to approval. So as we sit here, we're really excited about.
And we're edging closer and closer to approvals. So, as we sit here, we're really excited about the not-to-distant future when we have these approvals in hand. Got it. That was helpful. Thank you.
Not too distant future when when we have these approvals in hand.
Got it that's helpful. Thank you guys.
Yeah.
Thank you.
One moment for our next question.
This question comes to the line of Matthew's psychs with Goldman Sachs. Your line is now open.
This question comes from the line of Matthew <unk> with Goldman Sachs. Your line is now open.
Hey guys, this is Will on for Matt. Thanks for taking the question. Just wanted to start a high level. Do you see your multiplex test canvolizing the sales of standalone tests? And on top of that, what are the use cases for the standalone tests? Once the multiplex comes out, thank you.
Hey, guys. This is will on for Matt. Thanks for taking the question just wanted to start a high level do you see your multiplex test cannibalizing sales of Standalone does and on top of that what are the use cases for the stand alone <unk> once the multiplex comes out thank you.
We see the ability to deliver the tests individually, like flu, COVID, RSV is very important in a complimentary to multiplex tests, like flu, COVID that we have under review or the flu, COVID, RSV tests that we're developing with BARDA. Yeah.
We see.
The ability to deliver the tests individually like flu RSV is very important and complementary to multiplex tests like <unk> that we have under review or the flu <unk> RSV test that we're developing with BARDA.
Our customers, they want options, especially on the provider side. They're used to having both combinations and an ability to order a single test. And so we want to provide that flexibility, we also think it's part of a regulatory strategy. So we believe that having options is really the best strategy.
Yes.
Car customers, they want options, especially on the provider side, they're used to having both combinations and the ability to order a single test and so we wanted to provide that flexibility. We also think it's part of.
Our regulatory strategy.
So we believe that having options is really the best.
and with regards to cannibalization, you know, we've been having better than expected sales from our COVID-19 test.
First strategy and with regards to.
Cannibalization.
We've been having.
Better than expected sales from our COVID-19 test.
And we think that in the long term, depending upon the customer category, they're gonna have more desires for one test or a combination test and also could depend on whether or not, you know, there's flu circulating or not circulating. So it's not a...
And we think that in the long term.
Depending upon the customer category, they're going to have.
More desirous for one test or a combination test and also it depend on whether or not.
There is fluid circulating or not circulating.
It's not.
It's pretty new off, and I think the baseline is that you want off.
It's a pretty nuanced and I think that.
The baseline is that you want options.
That makes sense. Thank you. And then just follow up on the tests for this upcoming season, the FluA-B and the RSV that are currently with the FDA. It sounds like you guys are expecting those in the quarter and generated some good new evidence. Is there any chance those end up getting pushed to the first half of 24 or how are you guys thinking about that? Thank you.
Sure.
That makes sense. Thank you and then just a follow up on the tests for this upcoming season, the flu <unk> RSV better.
Currently with the FDA. It sounds like you guys are expecting those in the quarter and generated some some good new evidence is there any chance those end up getting pushed too.
The first half of 'twenty four or how are you guys thinking about that thank you.
Yeah, as we said, we added a lot of really good data for especially our flu COVID and flu genoa applications. And there's...
Yes, as we said we added a lot of really good data for especially our flu COVID-19 and food applications.
RSP is in process as well. But we think is that over the course of the respiratory season, there's a good chance that we'll be able to achieve the provost for flu COVID, combo, flu to novo, and RSP to novo. In terms of the exact timing, I mean, you know, this is a process that we're working through with the FDA, so I can't give you an exact timing, but we are optimistic that we can get them in distress.
And there is.
RSP is in process as well.
Well, we think is that over the course of the respiratory season.
There's a good chance that we'll be able to achieve the approvals for fluid Covid combo flu de novo and RSP to Nova in terms of the exact timing I mean this is a.
Assets that we're working through with the FDA. So I can't give you an exact timing, but we are optimistic that we can get them in this respiratory season.
And to add to that, these tests are made on the same manufacturing line. So we're really ready from a manufacturing standpoint. As soon as these tests are ready, we have customers, over 300 customers that we've had, and over a quarter million installed base in terms of readers. So we do think we have those channels available to us to commercialize as soon as we get these approvals.
And to add to that.
These tests are made on the same manufacturing line so.
Really ready from a manufacturing standpoint as soon as these tests already.
Have customers over 300 customers that we've had in over a quarter million installed base in terms of readers. So we do think we add those channels available to us to commercialize as soon as we get these approvals.
That's very helpful. Thank you.
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Our next question comes to the line of Charles Re with Collin. Your line is now open.
Our next question comes from the line of Charles <unk> with Cowen.
Your line is now open.
Yeah, thanks for taking the questions. I just wanted to follow up a little bit on sort of the comments about reaching EBITDA positive early 2025. Maybe can you give us a sense then sort of what the revenue mix you would expect.
Yes, thanks for taking the questions.
Just wanted to follow up a little bit.
On sort of the your comments about reaching EBITDA positive early 2025.
Maybe can you give us a sense then sort of what the.
Revenue mix you would expect.
when you're reaching break even and sort of what the run rate revenue on an annualized basis to reach that target would be. I guess I'm trying to figure out here, you know, you did, you know, like the 70, 18 million in the quarter, you know, you got in 16, 18 for the next quarter. So obviously we're in the respiratory season. It was obviously light in the second quarter. You know, so you're running, you know, what the...
When you are reaching breakeven in sort of what the run rate revenue.
On an annualized basis to reach that target would be.
I guess I'm trying to figure out here.
It did.
$780 million in the quarter.
You're guiding to 16 to 18 for the next quarter. So obviously, we're in the respiratory season. It was obviously light in the second quarter.
So you are running.
60, 70 million on COVID right now. What would you expect that to look like, particularly to the prior question about with multiple respiratory tests in the market? Is it really respiratory tests that are going to be driving the
$60 million to $70 million on Covid right now.
What would you expect that to look like particularly to the prior question about.
With multiple respiratory tests and the market is it really respiratory tests that are going to be driving the.
revenues out in towards the end of 24 where
Revenues.
Towards the end of 'twenty four where.
That's how we reach even up, break even, or if we look at expenses, should we expect up to continue to come down, just try to get a better sense for what that makes between revenue and expense looks like, or even in margins, gross margin looks like as we hit that to reach...
That's how we reach EBITDA breakeven or if we look at expenses.
Should we expect Opex to continue to come down I'm, just trying to get a better sense for what that mix between revenue and expense looks like or even margins gross margin looks like as we hit that to reach that breakeven point.
And Charles, thanks for the question. You know, while we're not quite guiding 2024, recognize you guys have to do your models, right? So I think the way to think about 2024 and early 2025 is, you know, you're right, there's a kind of basal COVID rate that we expect to be there. But then when you, and on top of that,
Hey, Charles Thanks for the question.
While we're not quite guiding 2024 recognize you guys have to do your models right. So I think the way to think about 2024 and early 2025 as you are.
Alright that does it kind of basal COVID-19 rate that we expect to be there, but then when you.
You know, we do expect several approvals. So, you know, we expect several approvals in 2024. So it's not just respiratory. It's a sexual health as well. And then on top of that, you know, our software and services, the QCAREQ, LabQ Pharmacy, we'd expect those to also start gaining a momentum. And we've also talked about this flywheel effect that when we have all these other test approvals, we think there's a flywheel effect that actually benefits
On top of that we do expect several approvals so.
We expect to add several approvals in 2024, so it's not gesture expert Teri seck.
<unk> health as well and then on top of that.
Our software and services acute care to lab pharmacy, we'd expect those to also start gaining momentum and we've also talked about this flywheel effect that when we have all these other test approvals, we think there's a flywheel effect that actually benefits.
Q-caricule lab, Q-pharmacy. And then the last piece on the top line is not to forget is the grand revenue that we have. We have the barter deal contract that we signed at $28 million, that also contributes to the top line. So that's kind of broad stroke, how I think about top line. As you go down the PNL.
<unk> carried through lab Q pharmacy, and then the last piece on the topline is not to forget is the grant revenue that we have we have the BARDA deal contract.
Contract that we signed a $28 million that also contributes to the top line. So that is kind of broad strokes, how I'd think about top line as you go down the P&L.
I mean, gross profit is going to be impacted by volumes as well as mix. And you would have seen in the past when we've had higher volumes, we've posted over 60% margins. And you'll also see sequentially this year, you know, our gross profit has kind of trended with how volumes have played out. And when we think about our future product,
Gross profit is going to be impacted by volumes as well as mix and you would have seen in the past when we've had higher volumes, we posted over 60% margins and you'll also see sequentially. This year.
Our gross profit has.
Kind of trended with how volumes have played out and when we think about future products.
You know, there as you move away from COVID or the proportion away from COVID, we do think we'd have a kind of price mix up benefit as well on margins. So we think, you know, over time as revenues grow, margins would grow for those reasons.
As you move away from coal the proportion away from Covid. We do think we would have a kind of price mix benefit as well on margins. So we think over time as revenues grow margins with growth for those reasons.
And then on spend, you know, we're very proud of, we're very happy with where our spend is right now and that allows us to, where the right amount of spend to play out strategic priorities. So, you know, while I'm not gonna guide 2024 spend, you know, we're kind of at this new level of our peg.
And then on spend.
Very proud of it we're very happy with where our spend is right now and that allows us to.
The right amount of spend to play out our strategic priorities. So.
Well I'm not going to guide 2024 spend we're kind of at this new level of Opex and at least in the near term it's fair to assume.
And at least in the near term, it's fair to assume similar amount of all packs quarter on quarter.
Similar.
Similar amount of.
Opex quarter on quarter.
Okay, thanks. And, you know, the EBITDA loss was 35 and a quarter. Actually cash used was only 18. Can you remind us sort of what the Delta between adjusted EBITDA and actually cash used is?
Okay. Thanks.
The EBITDA loss was 35 in the quarter.
Actually cash used was only 18 can you remind us sort of what the delta between adjusted EBITDA and actually.
Cash used us.
Yeah, a cash utilization of 17, as I mentioned, the best kind of cash performance that we've had since Q1, 2022. We did have an ERC credit of $20 million. And while that was one time, I think the philosophy here is that, here as a management team, we continue to look for opportunities to bolster our cash balance.
Yes, our cash utilization in 2017 as I mentioned, the best kind of cash performance that we've had.
<unk> Q1 2022.
We did have an ERC credit.
$20 million.
And while that was one time I think the philosophy here is that we.
The management team will continue to look for opportunities to bolster our cash balance.
Okay. And lastly, can you just remind us for the Barta contract, how we should expect to sort of layer those revenues on, as we go through the year, is that sort of a portion quarterly or will it be recognized in chunks? Just curious there, thanks.
Okay.
And then lastly.
Can you just remind us for the BARDA contract, how we should expect to sort of layer those revenues are.
As we go through the through the year is that sort of the.
A portion of quarterly or will it be recognized in chucks just curious there. Thanks.
Yeah, the barter revenue, I mean, it shows up in the grant and the revenue line item on our PNL and it does show up quarterly and it will continue to show up quarterly up until we have the approval for the flu COVID RSV multiplex. OK.
Yes, the BARDA revenue.
It shows up and granted the revenue line item on our P&L and it does show up quarterly and it will continue to show up quarterly.
Up until we have the approval for the Corbett RSV multiplex.
Okay, Great I appreciate the questions. Thanks.
Thank you. I'm showing no further questions at this time. So thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.
Thank you I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.
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