Cue Health Inc.

Good day, and thank you for standing by. Welcome to the QHealth second 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 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 is being recorded. I would now like to turn the call over to your speaker for today, Lauren Williams. Please go ahead.

Good afternoon, and welcome to Q's second 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 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 statement. Finally, I would 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.

Thank you, Lorna, and thank you, everyone, for joining us today. Q delivered total revenue of $10 million in the second quarter at the top end of our guidance. We expect next quarter to have revenue in the $11 to $13 million range. Additionally, we have reached greater than $150 million in annualized cost savings ahead of schedule. Despite aggressive cost cutting, we've been able to maintain a strong pace of milestone achievements for test menu expansion and new products and services on the Q platform, which I believe will help Q return to revenue growth. To start, I'd like to summarize our progress on our number one strategic priority, test menu expansion for the Q Health Monitoring System. We remain on track to have a robust respiratory care offering for the 2023-2024 respiratory season. In June, we achieved a landmark industry milestone when we became the first company to receive a de novo authorization for a COVID home use test. Q System was thoroughly reviewed as part of FDA's process for safety and efficacy. In our view, this is a very positive signal for our molecular test submissions already under FDA review and the others we have forthcoming. With this regulatory breakthrough, we set a new standard as the first de novo granted for any home use respiratory test. Historically, COVID testing was offered under an emergency use authorization. Our full approval enables Q to continue to offer our simple to use accurate molecular tests, even if the emergency use authorization pathway ends. We are currently in productive conversations on our flu plus COVID multiplex and standalone RSV de novo submissions. We remain optimistic that our flu plus COVID multiplex test will be authorized in time for the respiratory season later this fall. In May, we submitted a de novo application for the QRSV molecular test for authorization at home and point of care and have already had productive interactions with the FDA around this very important test. Rounding out our respiratory pipeline, our strep throat program continues, and we now expect to complete our FDA submission early in 2024. We are often asked whether regulatory authorization of a test can turn into commercial revenue quickly or if there's a long ramp time. We already have our automated production lines built and they're ready to produce any tests in our menu at scale as they all share the same cartridge backbone and manufacturing process. What I want to emphasize is that we are ready to scale manufacturing and that it does not require additional CapEx investment as we already have roughly $200 million invested into our highly advanced manufacturing facilities. Furthermore, on the commercial side, We have more than 300 directly contracted enterprise and provider customers, public sector customers, and we have distribution relationships with major healthcare distributors. We have an installed base of more than a quarter million Q readers, and the number one request from our customers is additional menu. To be clear, with our manufacturing capabilities and existing customer relationships firmly in place, we think our launch of new tests will be as timely as possible. Going further on menu expansion, last week, Q was awarded a BARDA contract to accelerate the development of a new comprehensive respiratory cartridge to detect flu, COVID, and RSV simultaneously. This is intended to be an over-the-counter and point-of-care test that will run on the same Q reader that already has a large installed base. Q has been working with BARDA for over five years as they previously supported the development of our standalone flu and COVID molecular tests. Under this new contract, BARDA will provide funding of approximately $28 million to accelerate the development, validation, and regulatory authorization of an RSV flu and COVID combination test. Our initial objective is to have this multiplex available for the 2024 respiratory season. Moving to Q's menu expansion efforts in the sexual health category, the Q-MPOX molecular test is already authorized for the point of care. We believe this authorization is noteworthy as it is the first non-COVID test approved on the Q platform and utilized a sample collection method that is different from our COVID test. Our chlamydia gonorrhea test continues to progress with the goal of FDA submission in the fourth quarter of this year, as planned. Our sexual health menu will be a very important complement to our respiratory menu. Now I will shift from the expansion of the QHealth monitoring system to the Q integrated care platform, where we've introduced a number of new products and services like QCare, our telemed solution, QLab, our at-home diagnostic test kits, and QPharmacy, a suite of prescription and over-the-counter treatments for common health and wellness concerns. QLab is our line of at-home test kits. Customers can order a variety of diagnostic panels and standalone tests that are delivered to their homes and returned to lab for processing. QAPP includes tests for key heart health markers, sexual health panels, and hormone panels of various types. Results are available in the QHealth app, where customers can seamlessly access virtual care and receive prescription medication in consultation with a clinician. QAPP complements our test cartridge capability and enables us to provide more value to our customers and access more of the available market for diagnostic data. During the second quarter, We introduced Q Pharmacy to provide customers with convenient access to lifestyle treatments and common prescription medications. Our platform now treats respiratory infections like COVID and flu, to UTIs, to sexually transmitted infections like herpes, and provides for birth control and treatments for common health conditions such as erectile dysfunction. Customers consult with a clinician through the QLF app for advice about their condition, and if medically indicated, receive a prescription medication delivered to them or picked up from their local pharmacy. Now that we have fully launched the building blocks of the integrated care platform, adding new tests and treatments or combined test and treatment programs is a very small incremental effort. While Austin will review our financial performance in detail, I am proud of how we have been executing with financial discipline. We ended the quarter with what we view as a strong balance sheet, including $129 million of cash on hand and continued to operate with no debt. We also delivered on our annualized run rate cost savings goal of $150 million ahead of original expectations. We plan to continue to manage our cash prudently as we progress through the regulatory process and gain commercial traction on our new set of diagnostic tests. I believe that the continued progress on our menu expansion and the launch of new products within our integrated care platform well positions us for growth in the coming quarters. I'm proud of the team's hard work, which has enabled customer-centric, end-to-end solutions that empower people to live their healthiest lives. With that, I'll turn the call over to Asim. Thank you, Ayub, and good afternoon.