Cue Health Inc.

Good day, and thank you for standing by. Welcome to the QHealth fourth quarter 2022 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 will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised, that today's conference call is being recorded. I would now like to go ahead and turn the call over to your speaker for today.

Good afternoon, and welcome to Q's fourth quarter 2022 earnings conference call. Joining me today are Ayub Katak, Chairman and Chief Executive Officer of QHealth, and Asim Javed, Incoming 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 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. These statements are subject to risks, uncertainties, assumptions, and other factors that could cause actual results to differ maturely 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. Forward-looking statements that we have made on this call are based on assumptions and beliefs as of the date they are made, and the company disclaims any obligations 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. Finally, I would like to mention to you that the press release and a recording of this call will be available on the investor relations page of our website. With that, I'd like to turn the call over to AU.

Thank you, Lorna, and thank you everyone for joining us today. The board and I are pleased to officially welcome Asim Javed to our executive leadership team, as he has recently been appointed as our chief financial officer. Austin is a seasoned finance executive and has been with Q for the last two years as VP of financial planning and analysis and treasurer. Austin also led financial planning going into our IPO. Prior to Q, Austin held a variety of finance roles at Beckman Dickinson, Heinz, and General Motors. Austin graduated from McGill University with a finance and accounting degree and holds an MBA from Harvard Business School. With his experience and demonstrated leadership abilities, Awesome was a natural choice, and we look forward to continued contributions as CFO. I am pleased to report that Q's financial performance for the fourth quarter delivered $146 million of total revenue and $54 million, excluding $92 million of deferred revenue, which exceeded our prior financial guidance. We ended the year with over $240 million of cash on hand and untapped $100 million revolving credit facilities. While all of this has been done predominantly with our COVID-19 product, we are executing well on our strategy of expanding our test menu, along with increasing the scope of our integrated care platform to allow greater actionability on diagnostic test results and an expansion of the types of tests and treatments that can be delivered quickly and conveniently through Q. In 2022, Our test menu expansion growth driver centered on diagnostic tests for our Q health monitoring system, which consists of our Q reader, test cartridges, and sample collection wands. Our near-term focus and development milestones were from programs in both the respiratory and sexual health categories. I'm happy to report that we continue to make significant progress with our respiratory health tests. We submitted the flu AB standalone de novo application, the flu plus COVID multiplex EUA, and the COVID-19 de novo application. We are pleased with the level of engagement and dialogue between Q and the FDA, and we continue to anticipate that we will be able to bring to market a comprehensive respiratory health offering by the year end. To round out our respiratory product offering, we have completed our clinical studies for RSV and have begun our clinical studies for strep throat. RSV is a respiratory condition that can be dangerous for infants and young children and the elderly. According to the CDC, Two million visits to the hospital occur on average due to RSV annually, with over 50,000 children hospitalized and another 100,000 hospitalizations for people over 65. Last year, RSV leapt into public awareness as it impacted many families. Our clinical studies are complete, showing high accuracy for our molecular test. The QRSV clinical study started in the third quarter of 2020 as anticipated. And we intend to submit this important diagnostic test to the FDA during the second quarter of 23, seeking full clearance. We began our clinical study for strep throat in Q4. Strep throat is another frequent respiratory illness that spreads quickly and is typically contracted to close contact with people who already have this bacterial infection. We believe our Q strep throat molecular test offers a chance to detect strep early and allows for targeted antibiotic use to decrease the risk of complications. We started this clinical study in the fourth quarter of 22, and we anticipate submitting strep throat for FDA review in the second half of this year. Moving to the sexual health category, where we have an ongoing program for chlamydia and gonorrhea. While the CDC recommends routine testing for all sexually active adults, the current level of testing is not sufficient, as the number of chlamydia and gonorrhea infections has increased every year for the past six years. Our platform allows healthcare professionals and individuals to screen more easily, and if positive, enables quick delivery of the proper antibiotic. Q's chlamydia and gonorrhea clinical study began enrollment during the first quarter of 22 as planned. We plan to submit this test to the FDA during the second half of this year. In addition, to support our goal of having a robust test menu, which adds to the utility of the Q Health monitoring system, We are pleased to report that we have completed clinical studies and submitted an EUA for a high-sensitivity molecular Mpox test, formerly known as monkeypox, to the FDA for point-of-care use. Overall, we are proud to have achieved or exceeded all of our menu expansion milestones we set out to meet in 22, including four FDA submissions, completion of RSV studies, and commencement of clinical studies for strep throat and chlamydia gonorrhea. For 2023, we are committed to delivering four high-quality FDA submissions. We plan to submit the RSV molecular test in the second quarter, followed by submissions for strep throat and chlamydia and gonorrhea molecular test during the second half of 2023. We've already submitted our Mpox test in the first quarter of 2023. Given that more menu on Q-Reader is the number one requested item from our existing customers and the most important factor for new customer adoption, we're happy with the excellent progress by our product, R&D, clinical, and regulatory teams. Now I'm going to shift to our digital capabilities growth driver, which has been key for the stickiness of our product to date, and we believe it's fundamental to the product platform for the future. When we started the company more than 10 years ago, we understood that every healthcare journey begins with diagnostics. In fact, roughly 70% of all clinical decisions are made utilizing diagnostic data. Our strategy was to transform healthcare with a simple, fast, accurate solution centered on the user, whether that be a clinician in a doctor's office or an individual at home, with the goal of enabling customers to have reliable information at the fingertips to make faster and more informed healthcare decisions. I'm pleased to share that with the recent launch of QCare, a virtual care delivery solution, the Q integrated care platform is now reality, allowing individuals to test from home, talk with a clinician immediately, and get treatment delivered to their home within hours. This is a very significant upgrade on the healthcare delivery experience, and we believe a foundational concept for the future of healthcare. Additionally, our platform has been integrated to major EMR systems to allow for seamless interoperability between a clinician, their EMR, and Q diagnostic capabilities. We view Q-Care as a building block capability that allows for integrating clinician visits into any diagnostic or treatment journey. Soon after launching, we expanded the Q-Care experience to allow customers to upload results from any COVID-19 test, including antigen, as well as third-party influenza and urinary tract infection tests to go through the same virtual care and e-prescription process. Last December, the Minnesota Department of Health selected Q in a competitive bid to provide a statewide telehealth treatment program to all residents. Any Minnesotan can now access Qcare for on-demand virtual consultation with a healthcare professional and prescription delivery if medically indicated. Last month, this contract was extended to June 2024. By providing an end-to-end solution, Q has a unique opportunity to provide specific health information to customers when they need it most. For example, this month, we announced a partnership with Pfizer to make educational resources available on the QL tab to raise awareness among individuals with underlying conditions about the risk of COVID-19 and their options for treatment. This is just one example of how we are pursuing our mission to empower people to live their healthiest lives. I'd also like to highlight an important recent product category launch. Leveraging our integrated care platform and acute care building block, we have further expanded our testing menu by recently launching 13 at-home test kits. For example, we have a nine-target sexually transmitted infection panel that can be done from anywhere, a test kit for several heart health markers, a test kit for food sensitivities, and fertility panels for women. All of these allow for discrete, personalized care and treatment. Through our platform, Individuals can order these test kits through the QHealth app or on our website, receive sample collection kits at home, and mail their sample back to a CLIA-certified diagnostic lab. After processing by the lab, test results are securely and privately delivered back to the customer in the QHealth app. Customers can also consult with a clinician for personalized care and arrange for delivery of any prescribed treatment via QCare. Q is the first company to offer a complete solution, diagnostic tests at home and at the point of care, seamless integration with clinicians and their EMRs and treatment delivery. We believe that by adding these new at-home test kits to our platform, Q will have the market's most compelling value proposition for home and point of care diagnostic needs. In the future, we expect to address even more conditions as we continue to execute on our strategy. As an example of how the integrated care platform comes together, I'd like to highlight a recently launched partnership with Scripps Research Translational Institute. Scripps is conducting a remote trial utilizing Q's tested treatment platform, including Q's diagnostic tests, QCare, and home medication delivery aimed at reducing COVID hospitalization rates for immunocompromised individuals. We believe that early detection of COVID in this vulnerable population, combined with easy access to antiviral treatment, will lead to better health outcomes. This study is an important initiative for efforts with payers. As you know, reimbursement already exists for the test in our menu expansion pipeline in the point of care setting, and we feel there is a significant opportunity to extend reimbursement models into the home. Fundamentally, we believe there is alignment between payers, patient needs, and what you can offer, especially for certain populations that are more vulnerable to respiratory disease and at a greater risk for negative outcomes. For example, Immunocompromised individuals can benefit from on-demand testing at home in order to get earlier detection and earlier treatment to avoid expensive hospitalization. We believe data from studies like the one underway at Scripps can play a key role in discussions with payers as they evaluate the value of coverage for an out-of-home testing, especially with the public health emergency ending, resulting in a loss of coverage of home antigen tests. According to the expansion of our customer base, today we have a broad and diverse install base of major players in every industry, including tech, sports leagues, healthcare, and finance. We've shipped over a quarter million Q readers and sent over 15 million diagnostic tests directly to consumers, providers, public, and enterprise customers. I am pleased to share that we have achieved over $1 billion in sales in the last two years from the launch of our first product. I'm proud that we provide the number one most accurate COVID test available for home use. With the expected expansion of the QF monitoring system test menu on the horizon and the expanded capabilities of our integrated care platform, we are excited about delivering our customers the broader offerings they're looking for and believe this will allow us to return to growth in the second half of this year. I'd like to end by commenting on our cost reduction plan. I made the difficult decision to reduce costs as we adapt to the realities of the current macro environment. We expect these actions to result in cash savings of approximately $100 million on an annualized basis. We believe we have sufficient liquidity to realize the benefits of our significant investments in R&D to date without entering the capital markets during 2023. Looking forward, we will continue to focus on programs that will generate near-term revenue, including completion of our ongoing clinical studies for point-of-care and at-home test cartridges and new product launches. We believe our conservation of cash objective will moderate the pace of further test menu expansion programs. In summary, I'm extremely proud of the tries the team has made during 2022, with four regulatory submissions to expand our test menu, the nationwide launch and subsequent expansion of treatment delivery with Q-Care, and new strategic partnerships in support of our mission to enable personalized, proactive, and informed healthcare that empowers people to live their healthiest lives. With that, I'll turn the call over to Asim.