Cue Health Inc.

Good day, and thank you for standing by, and welcome to QHealth's first quarter 2023 earnings call. At this time, our 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 will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lorna Williams, VP of Investor Relations. You may begin.

Good afternoon, and welcome to Q's first quarter 2023 earnings conference call. Joining me today are Ayub Katak, Chairman and Chief Executive Officer of QHealth, and Asim 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 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 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. Forward-looking statements that we make on this call are based on the assumptions and beliefs as of the date they are made, and the company disclaims any obligations to update these statements except by 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 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. Q's financial performance for the first quarter delivered $25 million of total revenue, which is at the top end of our guidance range. and we ended the quarter with $178 million of cash on hand. While these results are predominantly from our COVID-19 product, we are making significant progress in our strategic plan to improve the way healthcare is delivered with diagnostic-enabled care at the heart of everything we do. I believe we are well-positioned for future growth, but realistic that today queues an in-between period. We are in between the success we saw from deploying our initial COVID product and success that we believe will come from our expanded product offering and the execution of our unique flywheel opportunity, which we believe will return us to growth in the second half of the year. We have largely completed the significant investment that will power our future growth and innovation in at-home and point-of-care diagnostics, namely our $250 million in capital expenditures to build up our automated manufacturing infrastructure and the $200 million we spent on R&D over the last two years to deliver major progress on a pipeline and menu expansion for our core QHealth monitoring system and to build our digital capability. Additionally, our investments in expanding the Q integrated care platform have resulted in new product lines to enable telemedicine, lab-based testing, and most recently, an expanding universe of treatment capabilities for the launch of Q Pharmacy. Now, as we work towards regulatory approvals on the tests we have already submitted and finished clinical studies on the final few new tests of this first major R&D push. A key focus is on cash preservation, given the macro environment. To that end, we announced last quarter we made roughly $100 million in annualized cuts to our spend. In the last week, we announced an additional $50 million in expected annualized cost savings. This combined $150 million in annualized cost savings will allow Q to weather the macro climate to reap the benefits of our investments. as our planned tests come out of the pipeline and we gain commercial traction on the Q integrated care platform products of QCare, QLab, and QPharmacy. For menu expansion on the QHealth monitoring system, we continue to make significant progress on a comprehensive respiratory care offering. We're happy to share that we submitted our QRC molecular test for a full de novo submission for at-home and point-of-care use. We remain in productive conversations with the FDA for our flu plus COVID multiplex test are fluid de novo and COVID de novo submissions. We do expect a decision on our COVID de novo soon. We've had continuing engagement with the FDA for our fluid plus COVID multiplex and are hopeful that we'll have this test authorized before the beginning of the respiratory season. Rounding out the pipeline on the respiratory side, we've made good progress on our strep throat molecular test and clinical studies and do continue to expect we'll submit this test to the FDA in the second half of the year. In the sexual health category, we announced last quarter we received FDA authorization for our mpox molecular test, which we expect to begin commercializing in the next quarter. Our chlamydia and gonorrhea test is making good progress in its clinical studies, and we continue to expect a submission to the FDA in the second half of this year. Stepping back and reviewing our opportunity, for a molecular test portfolio like the one we have developed, the point of care represents the largest near-term opportunity because of the reimbursement structure. that aligns well to the cost structure of a molecular test. We believe that Q has an industry-best workflow for running tests and data flow, both of which allow for the system to flex into a wide band of settings, including retail pharmacies, doctors' offices, urgent cares, and emergency departments. When our first major phase of menu expansion is complete into both the respiratory and sexual health categories, we expect to have an industry-leading menu for molecular point-of-care testing. The point of care market for diagnostic testing is large and underserved, and we believe our largest near-term opportunity. Cold and flu-like symptoms are the number one reason for doctor visits in the U.S. with sexual health, especially chlamydia and gonorrhea being another top reason for a visit to the doctor. Moving on to the Q integrated care platform, where we've introduced several important products and services, including Q Care, our telemed solution, at-home diagnostic test kits, and just this week, a new suite of treatment capabilities in Q Pharmacy. Our test-to-treatment platform closes the virtual care loop, enabling individuals to take a test from the comfort of home, consult with a clinician to discuss treatment options, and if appropriate, have medication delivered in a matter of hours. While we envision the diagnostic portion of the virtual care loop for many common conditions, flu, COVID, RSV, STIs, et cetera, taking place on our core QF monitoring system, to complement our test cartridge capabilities and enter the broader diagnostic market, including lab-based testing, We recently launched a collection of at-home test kits for customers to access a wide variety of diagnostic panels and standalone tests that are delivered to their home and returned to a lab for processing. Customers receive test results in the QHealth app where they are presented with treatment options and have access to virtual care. We continue to build on our treatment capabilities where we've already enabled treatments for COVID, flu, UTIs, and sexual health conditions to a growing number of other common health and wellness needs. QNOW offers convenient access to prescription medication options related to sexual health, including birth control and treatments for erectile dysfunction and herpes, as well as hair loss, with more on the way. On the web or using the QLF app, customers can consult with a clinician to get advice about their condition and, if medically indicated, receive a prescription medication delivered to them as a subscription service. This is an exciting opportunity, as we believe the adoption of telehealth and medication subscriptions for common health concerns is a secular trend that was accelerated by the pandemic, but is now here to stay. While these new offerings are in the beginning stages of launch, we are receiving positive feedback from customers. I'm proud of our efforts to evolve the Q-integrated care platform, enabling customer-centric end-to-end solutions that empower people to live their healthiest lives. With continued progress on our menu expansion pipeline and the launch of major new product lines within our integrated care platform, We're executing on our strategy, and I believe we are well positioned for future growth. In the meantime, we will continue to manage our cash prudently as we progress our menu expansion through the regulatory process and gain early traction on our new set of products. With that, I'll turn the call over to Asim.