Lumos Diagnostics Holdings Limited

Good morning, everyone, and welcome to the Lumos Diagnostics first half FY26 results investor briefing. My name is George Copsey-Aftis, and I'll be your moderator for today. The webinar is being recorded today and will be available on Lumos' website. With us today from Lumos Diagnostics, we have the CEO, Doug Ward, and the CFO, Barry Lambert. Good morning to you both. Morning, George. Thank you for being here today.

Morning, George. Morning, everyone.

The format for today is for Doug and Barry to walk you through the presentation that was released to the ASEC this morning. This should take about 15 to 20 minutes. And then we will be followed by a question and answer session. If you'd like to ask a question, please click on the Q&A tab in the ribbon below and type your question into the box provided. And with that, I'd now like to hand it over to Doug to get us started.

Okay, thank you very much, George. Thank you, everyone, for being on today's webinar. I greatly appreciate it. As George said, the presentation was announced today on the ASX, so feel free to pull that off, and you can have that read at your leisure. So with that, Barry, do you mind going to the first presentation slide? Sure. One of the things that we typically always talk about here, even though most of you probably are very familiar with the Lumos story and have followed us for quite some time, is who is Lumos? So I always like to put it in the perspective of Lumos is trying to change the practice of medicine. We are very bullish about what we do, how we do it, and we have the ability to develop our products, manufacture them, and then commercialize and bring those to market. And we do that with a technology that allows us to do it very close to the patient, which that testing is known as point-of-care testing. So next slide, Barry. So the history for Lumos really dates back where Lumos initially started out as what we call a commercial services business, meaning we were more of a contract developer or a contract manufacturing org for other IVD diagnostic companies. And with that, right, we built a tremendous not only competency and expertise, but also the infrastructure, the people with the skill sets necessary to develop and manufacture the IBD products. Those same resources that we were using to help other companies, we also use those for ourselves and bring our own products to market. And over the last I would say two years, three years, we've started to bring some of those products to market. And without a doubt, right, that flagship for this company is Febredux. We'll talk more about that shortly. We've also announced, right, we've started initial feasibility work on our women's health portfolio as well. We'll speak less about that because it's very, very early days. But very excited about the business and its structure and the people with it within the company. Go ahead, Barry. So, listen, I can honestly sit here in reflection over the last six months, and I would say in the three and a half years now that I've been here with the business, that was fantastic. the best six months that we've had with the company. I'm very, very pleased with the performance. I feel, and hopefully most of you who are familiar with the company can think about us as we actually do what we say we are going to do. So all the accomplishments that you see here, which I think are transformative relative to the company, we have made it clear to people in advance these were the things that we had aimed to do in the first six months of 2026. With the signing of the phase deal and, again, reminding new people what that – was they're our exclusive distributor for Febrezex in the United States. And, you know, a lot is positioned on the pending CLIO waiver grant that we're expecting from the FDA. But with that, what we've signed is a six-year agreement with Faze as our exclusive distributor in the U.S., and they will bring a minimum of $317 million U.S. in sales to Lumos over that time horizon. So we're very, very excited about that. And obviously, we've already initiated work since we signed that agreement back in, I think it was July. It was the first month of the year. In fact, right after that, in August, we did complete our CLIA waiver study and submit to the U.S. FDA for grant of the CLIA waiver. As we've talked about many, many times, this is Hopefully next quarter I can talk about that's our greatest quarter ever because we can sit here and we expect that we're going to have our FDA clearance here or grant a CLIA waiver by the end of this month. We continue to have great dialogue with the FDA, and we remain very bullish that that event will occur here in the month of March, which we are now in. So very, very excited. you know, short timing to us being able to make that announcement, I hope, here in the coming weeks. So the next item, listen, in the U.S., it's one thing to have a waiver or a 510K, and it's as well as having a great relationship with an exclusive dealer signing up for $370 million. But for any of that to actually happen, In the U.S., you must get reimbursement for your product. We have reimbursement. We secured that a year ago for $41.38 per test for the physician to be paid by by CMS, or not paid by CMS, but it was set by CMS, and the MACs, or the Medicare groups within the U.S., or seven of them, have all now agreed to pay that full reimbursement for Feberdex. So, again, it's critical that you actually the doctors get paid to do the test. If they don't get paid, quite frankly, people won't order the test. So, you know, it's really important, again, to have clinical benefit, which addresses an unmet medical need, which Febredex obviously does by saying whether or not someone has a bacterial infection. or not. Second is the whole issue around economics and that people, the doctors and the dealers and the distributors are getting paid and make margin, including Lumos. And then lastly, it needs to be done in a way that that's easy to do. And obviously, Febridex being Such a great product. It's so easy to use, and it's very fast, and they can use it while the patient's there at the doctor's office once it's Cleo-waved, and it's a very, very simple test to do. So if you have those three things, you can be very, very successful in building this potential $1 billion market opportunity that we have. In addition to that, as you know, the original CLIA waiver trial was paid for by BARDA, a part of the U.S. government. We did secure additional funding. I think it was approximately $6.2 million U.S. to fund our pediatric trial and extend our label to children 2 to 12 years of age. And we're expecting that trial to wrap up at the end of the calendar year at this stage. And then the last thing, again, given that we have such great partners in our top two investors, Ten Mile and Rider Capital, and that they did work with us to establish a loan facility that, you know, if we need cash prior to the CLIA waiver event occurring, which on that event, right, very close after that event, phase will pay us an additional $5 million for prepayment of product. So, you know, we're sitting in a very, very good place from a financial standpoint. And I'd like to really, really stress to everyone that, you know, I think we've done a really good job over the last I'd call it two years in trying to bring as much non-diluted funding into the company, right? We did that with the Hologic IP. We also did a sales leaseback agreement with Hologic. And certainly with the BARDA agreements and with the agreements with FASE, we were able to bring in capital into the company. That was non-volutive, right? So we'll continue to try to do that throughout this fiscal year and calendar year as well. So next slide, Barry. And then I'm going to pass it over to Barry for the next two slides. The only thing that I've set it up, if you don't mind, Barry, is just financials came in exactly where we were expecting them, given where we are with CLIA waiver. So very pleased with the results that we had here. And go ahead. You can go through the detail, Barry.

Okay. Thanks, Doug. Yeah, just a couple of slides on the first half results. And obviously these should be, you know, looked at. in conjunction with the ASX announcements we've made and the first half financial statements which we released on Friday last week. So just revenue and gross profit on this slide. So on the revenue chart on the left there, first of all. So first half revenue was $6.1 million. And just to remind everyone again, our reporting currency is in US dollars. So all these numbers are in US dollars. So $6.1 million for the first half, as Doug said, was exactly where we expected it to be. So very happy with the result. There is a little bit of a change in the mix, revenue mix here, which I just wanted to point out as, again, I guess, you know, how that's changed over the first half. So products revenue made up $1.7 million out of the $6.1 versus $0.8 of a million in the prior corresponding period. So, you know, double the previous half year in FY21. So largely February X revenue, which was up significantly on the prior cross-funding period. With the increase in February X revenue, more than offsetting the reduction in revenue from the loss of Viradex sales, which we've talked about in the past. So very happy with that result. On the services revenue, it was $4.4 million. for the first half versus $5.5 million in the prior corresponding period. It was down on the prior period, but I just put some notes there to explain the reduction. So as the length of the FFN project with Hologic has extended, primarily as Hologic changes the scope and we have to do extra work, we did recognise a lot less... IP revenue in the first half of FY26, which was only $1 million versus $2.6 million we recognised in the prior half. So that's obviously the main driver for the reduction in service revenue. But that was largely backfilled with ongoing project work. And just in the last couple of months, we've actually been working on about 14 projects. So very happy with that sort of change in mix and being able to backfill that revenue with project work. Moving to the right, gross profit and margin. So we reported 4.2 million for the first half. Very happy with that number considering the revenue was a little bit lower. 68% gross margin. Also a very strong number there. It was up 1% on the prior cross-bonding period and actually up 13 percentage points two years ago. So a really good result on gross profit and margin. I'll just move to the next slide. A couple of comments on EBITDA and cash flow. So there's a full reconciliation of how we derive these EBITDA numbers in the financial statements, so please take a look at that. So adjusted EBITDA loss for the first half was $1.4 million. Slightly above the prior corresponding period, but a significant improvement over the first half of FY24, which was a loss of $4.2 million. OPEX was up a little bit, which is to be expected when we're running the two trials there, the clear waiver trial and the paediatric trial. That was the main reason for the increase in OPEX. But just a reminder, those costs are fully offset by the BARDA grants. So even though OPEX is up, it doesn't actually have any significant impact on the EBITDA number because it's offset by the grant income. We did increase some expenditure in sales and marketing spend for February X in the US, and we did have some new hires to scale up, and unfortunately in the US, medical insurance costs tend to go up on a regular basis, which is something we need to manage each year. And just a comment below that box says, so adjusted EBITDA excludes the share-based payments and one-off impairments or expenses. We did not actually have any one-off impairments or expenses in the first half. Nothing unusual there and none of those items. Final comments on the cash flow. You can see there is significant improvement in operating cash flow for the first half. It was actually positive, 0.1 of a million versus an outflow of 6.8 million in the prior corresponding period and 5.5 million the year before that. As Doug mentioned, We had the non-diluted funding from BARDA. We received $2.8 million in the first half. And as we've mentioned several times, we're containing any spend on property, plant and equipment. That was minimal in the first half. So net cash flow generation, so that's operating cash flow, investing cash flow, plus lease payments. was actually a positive 0.1 million for the first half versus you can see the prior periods there. So big improvement in operating net cash generation. And as Doug said, we've got the finance facility there. You'll see in the financial statements we did draw down 1 million a couple of weeks ago and there's a 4 million remaining on that facility to provide working capital through to clear waiver. So I think that's it. Doug, I'm happy to take questions at the end, but as I said, there's a lot more detail in the financial statements that we lodged last Friday. I'll pass it back to you, Doug.

Yeah, thank you very much, Barry. Love looking at these numbers these days. So with this, listen, I'll just wrap it up with an overview of the key priorities and where things stand. So like I said, we are very bullish that this month we will have CLIA waiver. So with that, obviously, a lot of activity can go into motion. Right now, we're still limited in terms of being able to market. into the CleoWaved environment. So once we have that, we can really start to initiate that work. And likewise, right, Faze will then continue to work with us in regard to getting their sub-distributors on and starting to gear up the supply chain activity around the Febridex product itself. Together, we'll both continue to drive the key aspect of, what I call reimbursement coverage, that's to get the private payers, the insurance companies, those companies like United, Aetna, Blue Cross Blue Shield, you want to get your products into what's called a policy coverage. It's a written coverage where it's automatically paid. And that becomes a volume coverage. dependent process. So with clear waiver, volume should jump significantly such that then we can get into the coverage policy documents from with those payers. And we'll continue to work the pediatric study as we've discussed before. That will expand our market an additional 20% or so. So looking forward to that for, you know, again, wrapping up that study toward the end of the calendar year. We just talked about, you know, what's going on in the service side of the business actually is doing very well right now. This part of the business is cash flow positive for us. And, you know, we have a great partner in Hologic that continues to move forward in a very positive way. And, you know, the team has been able to sign up a couple of new large opportunities like the Optitech deal that we disclosed earlier in the half. And then lastly is, you know, we'll continue to look to bring more products to market over time. And we've talked about bringing a women's health portfolio product that's in the feasibility stage within our research and development group here. So with that, we have one more slide that we did put into the deck. It just gives you a lot more detail. I think it's a good slide for investors to consider and have a look at. I'm not going to go through this. Feel free at your leisure to go through it if you wish. It's, again, I'm the ASX in the announcement. And with that, we'll wrap up the presentation part. And, George, we'll turn it over to you for any questions that people may have.

Right. Thanks, Doug, and thanks, Barry. Just as a reminder, if you would like to ask a question, please click on the Q&A tab in the ribbon below and just type your question there. So we've got a few questions here, Doug and Barry. First one for you, Doug. What's the initial Febridex product volume that Lumos is able to manufacture and ship, say, in the April to June quarter?

Yeah, yeah. Good question. Listen, we don't give guidance around our revenue and certainly around the volume, which is just, if you will, a way to think about revenue, to be quite frank, since it drives the revenue number. I would probably kind of go back to what we have said all along, which is, one, we have a great partnership in FASE Scientific, and we meet with them on a regular basis preparing for a CLIA waiver and getting ready for, you know, the volume requirements that they'll have. And both FASE and us, we feel very, very good about where we stand in our ability to supply them with the volumes that they will need. And I would just say, kind of added on to this, although it's not the exact question that's being asked, We also feel for the first two years of the agreement, we have the capacity and capability to supply the demand that both we and FASE expect for the product. And, right, we've also communicated to people we will need to eventually, you know, make some investments into growing the capabilities for increasing capacity, you know, probably, you know, getting ready for that. you're to and beyond, if you will. So hopefully that answers, you know, some of your question, you know, just appreciate can't, can't, and we choose not to give all the detail of, of our volume capacity.

Right. Thanks, Doug. The next one, there's a couple of parties that have asked a very similar question. So I'll just amalgamate and it's around the women's health product. It says, when you expect to see some updates on Lumos's other products under development, And when do you expect to have a marketable product?

Yeah. Yeah, two good questions. So, listen, the first one, and that's why... we don't have a ton of information in detail here is because in feasibility and we started out with a menu of products and some things are going to go well, some things are not going to go well. That's the way it works. So, so once those are at a stage of thinking either, right, what's going to happen is either you're going to say, Hey, they didn't make it through feasibility or it's going to go into development. Right. So from that standpoint, we, When it goes into development, we'll be able to give people a lot more information around what those products are and timeframes and so forth. To answer that second question, though, about, well, when might these products get to market, listen, to bring a diagnostic product to market in this setting with this technology and so forth, think of it as a two- to three-year window. that it takes to develop your clinicals and then get your regulatory clearance in order to bring the products to market.

Right, thank you. I'm not sure you can answer this next one, but I'll ask it of you anyway. If the waiver is granted, are there any plans to merge with or take over Otomo?

Yeah, listen, I... I can't comment on that, other than to say, like, yeah, we don't anticipate right now that we have that going on. Who knows what the future would hold, but, you know, we don't have plans for that right now. Anything to add to that, Barry?

No, I think you've covered it.

Yes. All right, great, thank you. Next question. If IP revenue is 100% margin, the increase of overall margin to 68% on a lesser IP of $1 million must mean that the other margin is very, very good. Is this correct?

Yeah, I mean, there's a change in, obviously, the revenue from the IP agreement with Hologic does not have any cost, so it's 100% margin. So that reduction in IP revenue does obviously make the margin decrease. However, as we announced previously with the phase agreement, there is an exclusivity fee was paid by phase of $1 million. So that was recognised in the first half's revenue, which is obviously 100% margin as well. So it does offset it to some extent, George. And that's why we were able to maintain such a good high GP margin of 68% in the first half.

I would say, though, Barry, also the difference between Febridex and Viridex, right, also has been distilled.

Yeah, no, good point. Viridex was obviously a much lower margin product versus Febridex, which is, you know, north of 60%, correct?

Yeah. All right, great. Just one final question. This one actually was sent in earlier today. Is the total U.S. revenue for phase scientific research excuse me, for face activity, currently less than 15 million, primarily from the sale of at-home tests.

Oh, okay. Yeah, I would just say, listen, we can't comment on Faze's mix, nor their revenue numbers. So, sorry, yeah, it wouldn't be appropriate for me to comment on Faze.

Fair enough. Thank you. All right, well, there's no more questions at this time. So, Doug, I might just hand it back to you for any closing remarks.

Yeah. Thanks, George. Greatly appreciate it. And thank you very much for the questions. Listen, I am extraordinarily positive about where we are as a business right now. I think operationally we executed exactly the game plan that we thought that we would. And that has also resulted in line with exactly where we thought we would be from a financial standpoint. So I think those two things combined have put us in a great place just prior to, hopefully, the most significant announcement in this company's history, which I expect to come, you know, sometime later this month. So, you know, be on the lookout. We're happy where we're headed. And I look forward to the next time I talk to everyone about Cleo Waiver here with Febredex.

Right. Well, with that, Doug, thank you. Barry, thank you. That now concludes the presentation. You can all now disconnect. Thank you for your time today.

Thanks, everyone.

Thank you.