Q1 2025 OraSure Technologies Inc Earnings Call
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Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Jason Plagman, Vice President of Investory Relations, please go ahead.
Jason Plagman: Good afternoon and welcome to OraSure Technologies' first quarter 2025 earnings call.
Speaker Change: Participating in the call today for OTI, our Carrie Edwinton Manner, our President and Chief Executive Officer, and Ken McGrath, our Chief Financial Officer.
Speaker Change: As a reminder, today's webcast is being recorded and the recording can be found on our Investor Relations website.
Speaker Change: Before we begin, you should know that this call may contain certain forward looking statements, including statements with respect to revenues, expenses, profitability, earnings or loss per share and other financial performance, product development,
Speaker Change: Shipments and markets, business plans, regulatory filings and approvals, expectations and strategies. Actual results could be significantly different.
Speaker Change: Factors that could affect results are discussed more fully in OTI's SEC filings. It's annual report on Form 10K for the year-end in December 31, 2024. It's quarterly reports on Form 10Q and its other SEC filings.
Speaker Change: Although forward-looking statements help to provide more complete information about future prospects, listeners should keep in mind that forward-looking statements are based solely on information available to management as of today.
Speaker Change: OTI undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. With that, I am pleased to turn the call over to Carrie.
Carrie Edwinson-Manner: Thanks, Jason, and thank you to everyone for joining us today. We are pleased to provide an update on the progress on the three pillars of our transformation.
Carrie Edwinson-Manner: One, strengthening our foundation, two, elevating our core growth, and three, accelerating profitable growth.
Carrie Edwinson-Manner: Today I'll discuss a few highlights from Q1 and our progress on key priorities for 2025.
A few notable developments during the first quarter include
Carrie Edwinson-Manner: The strength of OTI as demonstrated in our ability to navigate continued uncertainty due to external market factors, and examples of that are we reported revenue in Q1 that it was in the top half of our guidance range for both total revenue and core revenue.
Carrie Edwinson-Manner: The preference for our differentiated products across our customer base, which we continue to expand and diversify.
Carrie Edwinson-Manner: We are also making good progress in advancing our innovation roadmap, including multiple new product milestones expected in 2025, as I'll describe in a few minutes.
Carrie Edwinson-Manner: Integration of Sherlock Biosciences is off to a good start with a talented team of scientists and other professionals.
Carrie Edwinson-Manner: who are helping expand OTI's product pipeline with molecular diagnostics innovation.
Carrie Edwinson-Manner: including a low-cost disposable platform on which we're advancing the clinical study for Climidia and gonorrhea, or CTNG, as its initial test.
with others to follow
Carrie Edwinson-Manner: Solid Execution, providing seamless continuity for our customers as we ensourced manufacturing of our SMS products from contract manufacturers to our facilities in Bethlehem, Pennsylvania.
Carrie Edwinson-Manner: We expect to have this transition substantially complete by the end of Q2, which is months ahead of the expected timeline when we initiated this project in early 2024.
Carrie Edwinson-Manner: In late March, our board authorized the repurchase of up to $40 million of our common stock over the next two years from the authorization date, which will be funded from cash on hand and aligns with our capital deployment strategy.
Thank you.
diving into our core business.
Carrie Edwinson-Manner: Q1 core revenue of $29.5 million was above the midpoint of our guidance range.
Carrie Edwinson-Manner: Core revenue decreased 2% on a year-over-year basis, and was flat compared to the prior year period after adjusting for our previously announced exit from the risk assessment testing business.
Carrie Edwinson-Manner: Diagnostics Revenue grew 8% year-over-year, and Sample Management Solutions revenue decreased by 16%
Carrie Edwinson-Manner: With a year-over-year decline attributable to disruption at a large customer in the consumer genomic segment, as we previewed on our earnings call in February .
Carrie Edwinson-Manner: Within our diagnostics portfolio, growth was driven by our international business, including revenue from the initial orders we received last year for our WHOPQ-listed hepatitis C
Carrie Edwinson-Manner: We believe that delivering successful results through a pilot with a national health ministry in Africa will demonstrate the value of HCV self-testing programs and potentially lead to similar initiatives in additional countries in the year to come.
Carrie Edwinson-Manner: As you may recall, we received WHO pre-qualification status in July of 2024, and our OraQuick HCV self-test is the only hepatitis C self-test to earn this designation.
Carrie Edwinson-Manner: With current pressure on aid funding for public health, we believe that the proven success of interventions.
Carrie Edwinson-Manner: and documented health economic data demonstrating their value will help the industry, including OTI, through transition to increasingly durable sources of funding.
Shifting to Sample Management Solutions or SMS
Carrie Edwinson-Manner: Revenue in Q1 was consistent with our expectations given the impact of a disrupted ordering pattern from the consumer genomics customer.
Carrie Edwinson-Manner: Excluding the impact of that singular decline, SMS revenue grew on a year-over-year basis in the first quarter.
Carrie Edwinson-Manner: Overall, market trends in SMS remain mixed with growth in clinical genomics and animal health, offset by anticipated softness in academic and research labs related to uncertainty with NIH funding as we previewed in February .
Carrie Edwinson-Manner: At a high level, we continue to believe it's a matter of time.
When Notive
Carrie Edwinson-Manner: Genomics and segments return to consistently stronger growth, driven by scientific advancements and greater clinical adoption of precision medicine, while customers continue to demonstrate their preference for OTI products.
Carrie Edwinson-Manner: On that note, we are delighted to announce that myriad genetics has renewed their agreement.
Carrie Edwinson-Manner: Reaffirming their trust in our products and services. We believe that this renewal underscores the value and reliability of our FDA-cleared, OriginDX, saliva collection kits in supporting a number of myriad screening tests.
Carrie Edwinson-Manner: Additionally, Fulgent Genetics, a longtime customer and collaborator with G&A Genotech.
Carrie Edwinson-Manner: Recently renewed their commitment to continue to offer our FDA-Cleared or APELECT DX saliva collection device as an option for their advanced genetic testing and research.
Carrie Edwinson-Manner: This decision demonstrates fulgence focus on providing convenient at-home solutions that ensure accurate and efficient saliva collection, which is critical for their cutting edge work in genomics.
Carrie Edwinson-Manner: Renewals like these and other examples we've shared across the quarters demonstrate OTI's leadership and customer loyalty earned by the quality of our devices and consistent service delivery by our team over many years.
Carrie Edwinson-Manner: We continue to focus on strengthening our customer relationships, while also expanding and diversifying them. And we continue to closely monitor ongoing developments amid existing market uncertainty, including funding across our key segments.
Carrie Edwinson-Manner: Our international diagnostics business remains steady, even while our growth rate has been impacted by the elevated uncertainty related to U.S. funding for global public health initiatives that we discussed in February .
Carrie Edwinson-Manner: Over the last few months, there has been disruption in USAID and PEPFAR sponsored programs.
Carrie Edwinson-Manner: Yet, in spite of on-the-ground staffing challenges for implementation, we do see some continued activity.
Carrie Edwinson-Manner: which we attribute to the value of these life-saving programs and their history of proven success with rapid self-tests that are easy to use and interpret at the point of need, at home,
Carrie Edwinson-Manner: As we previewed in February , we have seen less disruption to date in multilateral funded aid programs, such as the global funds to fight AIDS, tuberculosis and malaria. But we continue to closely monitor the situation and expect that these programs are likely to tighten budgets.
We continue to support execution of test-to-treat efforts.
Diagnostic Testing is critical in any successful HIV initiative.
Carrie Edwinson-Manner: While international diagnostics remain stable at this time, I'll repeat that we continue to frequently engage with our partners and closely monitor the situation.
Carrie Edwinson-Manner: In the US on the other hand, headwinds in our diagnostics business have increased over the last few months.
Carrie Edwinson-Manner: Public Health organizations at the federal, state, and local levels in the U.S. are dealing with elevated uncertainty given potential cuts to their budgets and significant reductions in staffing at HHS, CDC, and other agencies that administer public health programs.
Carrie Edwinson-Manner: To that point, we understand that the Together Take Me Home program is scheduled to end later this year due to funding impact of CDC budget and staff reductions.
Carrie Edwinson-Manner: We are working with our partners in the program, as well as the broader HIV and public health communities.
Carrie Edwinson-Manner: to explore alternative avenues to continue this meaningful work beyond the program's scheduled termination at the end of the current federal fiscal year on September 30th.
Carrie Edwinson-Manner: OTI's revenue from the Together Take Me Home program was $8 million in 2024 and is expected to be approximately $4 million in 2025, which includes $1.5 million of revenue in Q1.
Carrie Edwinson-Manner: While the market in the US faces elevated uncertainty, our position enables us to focus on strengthening our customer relationships and establishing new ones to continue expanding the markets we serve with our rapid diagnostics.
Carrie Edwinson-Manner: Over the last few quarters we have focused on growing our basic customers who are less reliant on public health funding, such as specialty pharmacies.
Carrie Edwinson-Manner: Hospitals and Medical Centers plus DTC testing and telehealth companies, which we've described as part of our business to business to consumer or B to B to C priority.
Carrie Edwinson-Manner: We are pleased to note that a growing number of the new customers we signed in Q1 were in categories that are not historically reliant on public health funding, demonstrating early momentum with this initiative.
Carrie Edwinson-Manner: For example, our HTV business saw solid growth in Q1, driven by expanded use of our OraQuick HTV test in emergency room settings, and our OraQuick OTC HIV test, now available through Everly Wall
Carrie Edwinson-Manner: Switching gears to sample management. The overall trend is mixed. It's muted but stable, outside of significant disruption, concentrated in the single large customer mentioned previously.
Carrie Edwinson-Manner: While we built good momentum over the past years in diversifying our customer base, growth with new customers in SMS isn't yet offsetting that headwind.
Carrie Edwinson-Manner: Additionally, the NIH funding environment remains uncertain with budgets and projects.
Carrie Edwinson-Manner: Proceeding, but in an uneven study by study basis. We are encouraged that our academic and research customers are beginning to see some positive movement in the grant review and funding process.
regarding tariffs.
Carrie Edwinson-Manner: For now, we expect minimal impact on OTI, and we continue to monitor it. Our current supply chain is highly concentrated in the US and Canada and has fairly limited exposure in the current tariff environment.
In part, we are well positioned because our transition to enforcing.
Carrie Edwinson-Manner: of Contract Manufacturing from Canada to Pennsylvania is on track for substantial completion in Q2. Well ahead of our expected timeline when we kicked off the project in early 2024.
Carrie Edwinson-Manner: We are currently capable of producing more than half of all global SMS volume in our Bethlehem Pennsylvania facilities.
Carrie Edwinson-Manner: And by the end of Q2, we will be capable of producing the vast majority of SMS volume in Pennsylvania, consistent with our plan.
that also maintains existing partnerships in Canada.
Carrie Edwinson-Manner: for Surge Capacity, Redundancy, and Potential Mitigation of other global reciprocal tariffs. We expect that our operating efficiencies from the transition to in-house manufacturing will ramp in the second half of 2025 and into 2026.
Carrie Edwinson-Manner: Overall, these are fluid situations impacted by the changing dynamics of the federal government. While we do not have full visibility right now, we wanted to provide updates on evolving external factors as we closely monitor them along the way.
Carrie Edwinson-Manner: Switching gears to growth opportunities with our innovation that serves customer needs from research to clinical and beyond, including customer innovations leveraging our technologies along with life cycle expansion and new product launches.
Carrie Edwinson-Manner: While our origin and our collect products remain the only 510K cleared saliva collection devices for use in clinical applications beyond COVID-19, they are also used to enable innovation and critical research applications.
Carrie Edwinson-Manner: A recent example that we are pleased to highlight is a study published in the New England Journal of Medicine on a new at-home saliva test to identify men at high risk for prostate cancer.
Carrie Edwinson-Manner: The study named Barcode One was carried out by the Institute of Cancer Research, London and the Royal Marsden NHS Foundation Trust to help diagnose prostate cancer earlier and more accurately.
Carrie Edwinson-Manner: The DNA extracted from samples collected using origin research use only saliva kits was used to calculate the polygenic risk scores based on 130 variants associated with an increased risk of prostate cancer.
Carrie Edwinson-Manner: This innovative approach, utilizing saliva collection, allowed for more accurate and effective identification of individuals at high risk of developing aggressive cancers compared to the traditional PSA or prostate-specific antigen blood test.
Carrie Edwinson-Manner: Further studies will test this approach to ensure it works at scale and for men of all ethnicity.
Additionally,
Speaker Change: Or a collect saliva collection is being used in the Generation Victoria, or Gen V study, which is the largest longitudinal study of children and their parents in Australia.
Speaker Change: with the aim of developing a better approach to child health, development and well-being in the state of Victoria.
by Supporting Research
Speaker Change: Through the integration of our saliva collection devices in breakthrough studies like these, OraSure's proud to contribute to early discovery and innovation in healthcare diagnostics with a promise of better patient outcomes.
Speaker Change: In addition to our leadership role in saliva collection for clinical applications.
Moving to our Collie P. Year-In Collection device
Speaker Change: We continue to make progress toward our stated goal of submitting for FDA clearance in 2025.
Speaker Change: In the meantime, we are proud to support color health following the recent approval from the New York State Department of Health of their at-home cervical cancer risk screening test that utilizes coli p.
Speaker Change: Cervical cancer is a preventable disease, yet it often goes undetected until it is advanced.
Speaker Change: Traditional screenings can be costly and uncomfortable, leading many women to avoid them.
Speaker Change: Our Collie P. device plays a crucial role in this test by enabling the self-collection and transport of First Void urine. With the addition of New York, the ColorHealth HPV test is available in all 50 states.
Speaker Change: We are also excited to announce the upcoming release of our new microbiome extraction products scheduled for June .
Speaker Change: These products are designed to meet the diverse extraction needs of researchers and clinicians, working with challenging microbiome samples, particularly for those with low or medium biomaths.
Speaker Change: These proprietary extraction solutions have been optimized for use with microbiome collection from DNA Genotech, ensuring seamless integration and reliable results.
Speaker Change: Success with difficult low biomass samples, like vaginal or skin samples, could unlock large potential markets such as women's health, cosmetic and dermatology applications.
Speaker Change: OTI's extraction innovation represents a significant advancement in support of microbiome research, offering enhanced capabilities and optimized performance across a wide range of sample types in this so small but promising segment.
Next
Speaker Change: After acquiring Sherlock in December , we have been executing well together. Integrating the product pipeline and our teams has been remarkably smooth with talented employees who are great additions to our OTI family.
Speaker Change: And part of what OTI lens to Sherlock is our experience and expertise in sexual health diagnostics.
Speaker Change: Here, we are in the process of accelerating the clinical trial for our low-cost, disposable, molecular diagnostics platform, and is initial test for CT&G.
Speaker Change: We remain on track to submit for its regulatory clearance by the end of 2025.
Speaker Change: Rapping my commentary, I'll turn the call over to Ken to discuss our financial results and guidance.
Ken McGrath: Thanks, Carrie. I'm happy to discuss our first quarter results and financial outlook.
Ken McGrath: Total revenue in Q1 was $29.9 million. Core revenue, which excludes COVID-19 products and the molecular services business that we exited was $29.5 million and decreased 2% compared to the prior year period.
Ken McGrath: As Carrie mentioned, core revenue in the first quarter was flat on a year-over-year basis after adjusting for the impact of our decision to exit the risk assessment testing business.
Ken McGrath: Within core revenue, diagnostic products generated $17.7 million of revenue in Q1 and grew 8% year-over-year.
Ken McGrath: Sample Management Revenue in the first quarter was 9.1 million and decreased 16% compared to the prior year period.
Ken McGrath: As Carrie mentioned, and as we have previewed on our last earnings call, the year-of-year decline in SMS revenue was due to the disruption at a customer in consumer genomics.
Ken McGrath: Excluding that headwind, sample management revenue from the rest of our customer base grew on a year-over-year basis in Q1.
Ken McGrath: COVID-19 products contributed $500,000 of revenue in the first quarter, which was consistent with our expectations.
Ken McGrath: Revenue Q1 from the risk assessment testing business was $1.4 million.
Ken McGrath: We have invested certain assets related to the risk assessment product line at the end of Q1 and we expect to complete our exit from that business in Q2.
Ken McGrath: Our gap gross margin in the first quarter was 41.1%, non-GAAP gross margin was 41.7%, which was consistent with our expectations.
Ken McGrath: Gap operating expenses in the quarter were $30 million, which includes $2.7 million of non-cash stock compensation expense, a $1 million gain on the sale of fixed assets.
Ken McGrath: and a $478,000 expense related to an increase in the estimated fair value of acquisition related contingent consideration.
Ken McGrath: Our GAP operating loss in Q1 was $17.8 million and our non-GAAP operating loss was $15.3 million.
Ken McGrath: Looking at our balance sheet, we ended Q1 with zero depth and total cash and cash equivalence of $248 million.
Ken McGrath: Operating cash flow in the first quarter was negative 19.7 million, which was in line with our expectations given our investments in innovation and the Sherlock clinical trial that we discussed on our last earnings call.
Ken McGrath: Our Q1 operating cash flow also includes a $9 million outflow related to typical seasonality and working capital that was primarily driven by the timing of annual incentive compensation payments and Canadian tax payments.
Ken McGrath: Overall, we remain focused on maintaining the break-even level for cash flow from operations for our core business as we move through 2025.
http://www.kennethmcgrath.com
Ken McGrath: Switching the capital deployment. In late March, OraSure's Board of Directors authorized the repurchase of up to $40 million of our common stock over the next two years from the authorization date.
which will be funded from cash on hand.
Ken McGrath: Consistent with our capital deployment strategy, we also continue to evaluate inorganic growth opportunities that would expand our product portfolio, especially with commercialized innovation, and accelerate near-term revenue growth.
Ken McGrath: Turning to guidance. We are guiding to second quarter total revenue of 28.5 million to 32.5 million.
Ken McGrath: We expect core revenue Q2 to be $28 million to $32 million, and COVID-19 and risk assessment testing revenues of approximately $500,000.
Speaker Change: Thank you for watching. Please subscribe to my channel. I hope to see you again soon.
Ken McGrath: Our Q2 guidance factors in a variety of scenarios regarding the impact of uncertainty associated with the funding for testing programs and academic and research budgets.
Ken McGrath: Our guidance also assumes continued disruption in ordering patterns from our large customer in the consumer genomics industry.
Ken McGrath: This customer represented approximately $3 million of revenue in Q2 2024 and we don't expect significant revenue from them in Q2 this year.
Ken McGrath: We expect our gross margin percentage in Q2 to be flat up slightly compared to Q1 and then expand in the second half of the year with potential expansion primarily driven by growth
Ken McGrath: Additionally, we expect to realize incremental operating efficiencies from automation, psychonolidation, and insourcing.
Ken McGrath: Moving to operating expenses. In Q2, we expect core operating expenses in the low $20 million range, plus 10 million of investments in innovation, which includes 7 to 8 million of investments related to Sherlock.
Carrie Edwinson-Manner: With that, I'll turn the call back to Carrie to conclude.
Thanks. Thanks, Ken.
Speaker Change: While most organizations are navigating market turbulence, many of us in healthcare share passion for this industry's purpose.
Speaker Change: to help deliver better care, outcomes, quality of life for more people. We rally around health care's meaningful purpose with the stamina to weather uncertainty, and in OTI our stamina is both stirred by a very healthy balance sheet.
Speaker Change: We've worked hard to build it and will continue to thoughtfully manage it and deploy our capital for long-term value creation. We are well positioned.
Speaker Change: In diagnostics, we are well positioned with differentiated proven products that deliver high quality rapid results, and our multi-product, syndemic approach is resonating with customers.
Speaker Change: We are building momentum with Diagnostics Direct's Civilist Health Check, and we have good progress with our Sherlock Molecular Diagnostics platform, with our CTNG clinical trial for our initial test that is currently ramping to plan submission by the end of the year.
and with our Increasing Pipeline of Diagnostic Tests.
Speaker Change: In SMS, we are well-positioned with market-leading products today and an expanding portfolio, adding more sample types, analyte and applications.
Speaker Change: In 2025, we have planned product launches with microbiome extraction kits and blood proteomics sample stabilization.
Speaker Change: and we are extending our leadership position into new sample types, such as urine with coli-p, and blood with our proteomics offering, plus our entrance into the small volume self-collected blood segment later this year through our partnership with Sapporo.
who submitted Statio Docs for Regulatory Clearance in April .
Speaker Change: In addition to our product portfolio, we continue to expand and diversify market segments, geographies, and our customer base.
Speaker Change: Strengthening relationships with existing customers, such as myriad genetics and full-gen genetics, while also cultivating many new ones.
Speaker Change: Overall, we are confident that OTI has the capabilities, products,
Customer Relationships, Commercial Channel, and Strong Balance Sheet
Speaker Change: to emerge from the current environment as a stronger enterprise, one that thrives while delivering on the purpose that motivates us. With that, I'm pleased to turn the call over to the Operator for Q and A. Gigi.
Speaker Change: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced.
To withdraw your question, please press star 11 again.
Please stand by when we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Patrick Donnelly from City.
Speaker Change: Hi, this is Brandon on for Patrick. To start over, I want to talk about, again, specifically, the international revenue.
Speaker Change: How have conversations been like with possible alternative funding sources and then specifically on the HIV testing how to see.
How do we think about-
Speaker Change: Those testing demands kind of moving forward, given the funding uncertainty there.
Speaker Change: Yeah, so there's a hybrid of thanks for that. We talked in February about the USAID and PEPF are funded programs and the impact that we had called out was just under a million dollars of revenue that we saw moving
Speaker Change: We have very close conversations with multiple funding sources whether it be that the US funding sources or quite frankly countries themselves, their departments of health.
Speaker Change: Those are going well and what we're seeing is movements that had sort of stopped for a while but that is restarting and it's why we refer to it as a steady. Bye.
Teddy Butt Flaps
Speaker Change: So, I think a little bit better than we'd expected and then on that the global funding, multi-lateral funding sources again we see more stability there because they come from from multiple countries.
Speaker Change: So, I described it as we were on a trajectory of 2023 being the biggest year in international then it was 24 and we really saw that continuing into 25.
Speaker Change: Until the uncertainty that we've been talking about and that's where you kind of see it
Speaker Change: and, you know, Flatish from Q1 and Q2. So that's how I describe, you know, both international broadly and really that represents that HIV, you know, portfolio that you asked about. And just to build on what Terry's saying, you know, we have 10 years of a proven track record.
Speaker Change: with a product that's easier to administer, it's a rapid test oral test and we have strong relationships within international and then recall that for some of these funding cuts, one of the things that was waived were testing and treat.
Speaker Change: So now, it's a matter of yes, there's some disruption in getting the product there, but because our product is a self-test, it's oral and rapid, it's easier to distribute and the infrastructure required is a significant. Thank you again.
Speaker Change: Got it. Thank you. And then sticking with the international piece in the quarter. Did you guys see any pull forward and demand ahead of any possible tariffs being put in place there? And are there any like indicators you guys are really watching to see just how to track like feature ordering trends? Thank you.
Speaker Change: We didn't see poll forward. We were monitoring the terror situation really closely, having manufacturing facility that we've been transitioning from Canada to the US and having made
A big, insoriting decision from around the world.
You'll prior to that
Speaker Change: So, I don't know if I'm asking the question, I'm sorry if I'm answering it exactly how you meant it to Brendan but we didn't see pull forward and I say the tariff situation for us we're seeing minimal impact at this point because we're so heavily concentrated in the US.
with that Canadian Insourcing having already started.
Brendan: Yeah, to Carrie's point, the only impact you may see from us.
Speaker Change: As we did a little bit of a build up of inventory at the end of Q1, just as we were withholding some shipments just with some of the uncertainty, but that was about it for us.
Speaker Change: but because of- In preparation. In preparation. In the preparation. But to the point, as you recall, our strategy over a year and a half ago was to bring in in-source manufacturing into Bethlehem, Pennsylvania. So we've been I guess ahead of this curve.
Speaker Change: as far as getting manufacturing within the United States, and specifically within Bethlehem,
Speaker Change: Thank you appreciate it and congrats on the quarter.
Thanks, Brendan.
Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Vijay Kumar from Evercore ISI.
Speaker Change: Hey, this is Daniel on for Vijay. Thank you for taking the questions. The first one I wanted to ask on the together take me home initiative.
Speaker Change: It sounds like that's a $4 million headwind here in fiscal 25. Does that assume no contribution in 4Q given the September termination and then you also talked about alternative avenues once the the work is terminated if you could discuss those that would be really helpful too [inaudible]
Speaker Change: Yeah, so you're correct in some of your statements. Let me go through it. So what we said was about $4 million for the year
Speaker Change: about 1.5 million Q1 and the remaining split between Q2 and Q3.
Speaker Change: And then as far as the ending of the program, it is at the end of Q3 as they end the end of funding and out of your point about alternatives obviously we believe that the program has demonstrated value in identifying positive patients.
Speaker Change: with HIV. So we think there is value there within the program and what's been established. So, yes, we are exploring alternatives to continuing that program.
Speaker Change: Got it. Thank you. That's helpful. And then for my follow up, I was curious on the the SMS genomics customer, the lumpy one that was called out. What are you seeing in terms of their inventory levels and ordering activity? I know you said lower here in the second quarter, but put any read through to the second half based on conversations and order activity. Thank you.
Speaker Change: Yeah, so you're you are correct and that we called out no volume in Q2 is what we anticipate we don't have good visibility to any future ordering. Thank you.
Speaker Change: potential. So what I'd say is, you know, they're a very good partner. We stay very close and, you know, we'll share any of that as we have it, but it's not just, you know, low volume.
Speaker Change: It's called out no volume for Q2. While we don't have visibility beyond that, we stay very connected to them and we'll share any of that as we have it. We normally don't provide guidance.
Speaker Change: Yeah, multiple year guidance anyway, but I think, you know, we'll we'll share what we have when we have it. And from a positive kind of financial perspective on a small positive financial, we don't have any outstanding ARs. There's no collection risk or uncertainty associated with that.
Speaker Change: Yeah, and then you didn't ask but I will point out without that disruption the business did grow year over year. So, you know, while that is you know
Speaker Change: A significant disruption as a single customer. We've spent the last couple of years really diversifying and expanding that customer base to ensure that those green shoots.
Speaker Change: could help seed the business broadly and so we absolutely see that and it's why we called out, you know, without that there was growth in SMS.
Speaker Change: Right, okay, that's really helpful and encouraging me here. The last one I had and then I'll get in the back of the queue is on PEPFAR and some of the funding disruptions.
Speaker Change: I think you were looking for a $1 million headwind in 1Q and you said it came in a little bit better just if you could quantify that and then what should we expect in 2Q and going forward? Is it like a 1 million type headwind or a reasonable assumption to make?
Speaker Change: So, just to say what came in better, so it materialized as we thought. So the PEPFAR impact for Q1 was a combination, it was about...
Speaker Change: 750 of PEPFAR and we called out another 150 of NIH. That material, materialized in Q1.
Speaker Change: to be around a million as we had thought. What's coming a little bit better than we anticipated based on that.
was Q2 being at around the same amount. So we had called out PEPFAR volumes in case...
Speaker Change: that continued to accelerate rather than accelerate in and we see that hold steady. So we would call that out as around the same level for Q2.
Very helpful. Thank you so much.
Thank you, Daniel.
Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Andrew Cooper from Raymond James.
Speaker Change: Everyone, this is Noah on for Andrew. Thanks for taking the question. I guess first one you know it's it's good to see you know your buyback programming was 40 million. Do you have any like timeline over the next you know two years that you want to deploy that? I was going to be more this year or are you kind of waiting to see the stock and certain level from here? I'm sure you're right.
Yeah, so some of the details and what we said was...
$40 million over two years.
Speaker Change: And last, when we talked about last, we mentioned that you can think of it as evenly being spread. So think about eight quarters divided by forty kind of thing. So five million a quarter.
Speaker Change: And just for Q1, because we initiated it at the end of Q1 and there's a 30-day cooling off-period, we didn't do any purchases in Q1.
Speaker Change: Okay, awesome. And then kind of sticking on the capital deployment and, you know, you still have a pretty significant cash balance. Are you still looking at assets in the market? Are you still focused on the share lock investments?
Speaker Change: You know, other players in the space have called out maybe dislocation on the M&A and where there's better evaluation so just trying to get a feel for what you're thinking on that and if there's a particular area you would like to target.
Speaker Change: Yeah, you nailed it Noah with with where we're focused. M&A and the potential to
Speaker Change: Portfolio, we have the customer channel, we have the manufacturing capacity and capabilities we've built. So we're very much focused on M&A opportunities as well as.
Speaker Change: delivering on the the opportunities of Sherlock. So we've called out those investments.
on bringing that molecular diagnostics platform and our first
Speaker Change: Test being CTNG, the clinical trial that's underway. That is a clear priority in the business as well. So you hear us talk about the...
Speaker Change: Investment and Innovation, both internally with Sherlock and beyond the other product launches we've talked about this year and submission to FDA as well as M&A.
Are you all right back in the tube?
Great. Thanks Noah.
Speaker Change: Thank you. At this time, I would not like to turn the conference back over to Carrie Eglinton Manor CEO for closing remarks.
Speaker Change: Thank you, Gigi, and thank you to everyone for participating in today's call. We appreciate your continued interest in OTI, and wish each of you a great week. Thanks, Gigi, we'll close it with that.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.