Cue Health Inc.

Good day, and thank you for standing by. Welcome to the QHealth third 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'll need to press star 1-1 on your telephone. You'll then hear an automated message advising that 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 conference over to your first speaker today, Lorna Williams, Investor Relations. Please go ahead.

Good afternoon and welcome to Q's third 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 submission of any FDA applications and expectations around receiving clearance and authorization, expectations regarding production capacity, expectations related to availability of our programs and testing volumes, 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 obligation 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'd 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. CUE reported total revenue of $17.5 million in the third quarter, exceeding expectations, driven by stronger than anticipated COVID-19 test sales. We had non-COVID contribution revenue this quarter, and we continue to expect growth in the coming quarters as new products gain momentum. Additionally, we ended the quarter with $111.5 million of cash and equivalents. We continue to execute our key strategic priorities with strong financial discipline, having brought our costs down by 165M dollars on an annualized basis, exceeding our 150M dollar target. Turning to our number 1 strategic priority, test menu expansion for the QHealth monitoring system. Our flu plus COVID multiplex test remains an active FDA review. Through the last quarter, we added a substantial amount of additional clinical data, and we believe our application exceeds the FDA's data performance criteria and the required prospective clinical samples for lay users for all three of flu A and flu B and COVID-19 positive clinical samples. To get the additional flu B samples, we conducted a study in the Southern Hemisphere this year. This is our first multiplex and has been submitted to the FDA for over-the-counter use, which would enable use both at home and at the point of care. Our flu plus COVID multiplex test simultaneously detects and differentiates between influenza and COVID-19 in approximately 25 minutes, with results delivered digitally to the QHealth app. It is integrated into QCare, our same-day test-to-treatment solution, which enables telehealth and prescription delivery. With this product, we believe we're adding a powerful tool for individuals at home, providers, and enterprise seeking to make better informed healthcare decisions and enable timely, effective treatments. We also have two de novo applications currently under review with the FDA. The QRSV molecular test was submitted earlier this year, and we have received feedback from the FDA. We believe that we can address all the feedback within the quarter and continue the review. We anticipate an approval later in the respiratory season. The Q flu molecular test was submitted to the FDA for a full de novo last year. Subsequently, we were asked for a greater number of flu B clinical samples, which has been very rarely circulating over the last three years, with almost no circulation in the northern hemisphere. We collected the additional samples in the southern hemisphere as suggested by the FDA, and we believe we exceed the requirements. The blue submission is progressing well to de novo approval this respiratory season. For all of these tests, as soon as we receive authorization, we are ready to launch them, utilizing our existing sales and distribution channels. These products will be made on our automated production line without significant additional capital investment. Our automated production lines were designed to produce any test in our menu at scale. As a reminder, all of the QF monitoring system tests show the same cartridge backbone and manufacturing process. Our installed base has more than a quarter million key readers. and we have more than 300 directly contracted enterprises and providers. Together with public sector customers, our distribution partners, and our direct-to-consumer channel, we believe we have the available channels to get these products into the market. Last quarter, we announced we are developing a combined flu, RSV, plus COVID all-in-one multiplex test supported by BARDA on a $28 million contract. This new molecular test is being developed on the same Q-Reader and cartridge system and will also utilize the same production lines. The team continues to drive solid progress in the development of this multiplex test. We plan to follow an EUA regulatory pathway with an initial objective of having this test available for the 2024-2025 respiratory season. Rounding out our respiratory pipeline, we've now completed development for our strep throat molecular test. We made the decision, though, to delay the start of the clinical study to save costs as we prioritize promising near-term revenue-generating products, including the three tests in review with the FDA. Now, I'd like to highlight Q's menu expansion efforts in the sexual health category. Our chlamydia plus gonorrhea multiplex test is in clinical studies. We now expect an FDA submission in the first half of next year. We have been developing a Q-herpes plus mpox multiplex molecular test. This is an important next step for our sexual health testing menu for sexually active people with lesions and builds on our already FDA-authorized mpox molecular test. General herpes caused by HSV-1 or HSV-2 is the most common STD in the United States with infection in one out of every six sexually active people in the U.S. A diagnostic test is needed to determine if an injured individual has either of these highly contagious viruses. We believe our new multiplex test can quickly and accurately detect herpes and or mpox to allow for timely medical intervention. Today, there is not a point of care herpes solution available on the market. We believe that our herpes plus mpox multiplex test is eligible for an EUA and we believe that we could have this herpes mpox test on the market next year. The Q Health monitoring system has many new tests on the way, and we're very excited about the progress and our key priority of menu expansion. We're also happy to see the peer-reviewed publication of real-world clinical experience with Q, comparing Q to a lab-based RT-PCR test. Recently, an independent clinical study comparing our Q molecular COVID-19 test to a lab-based PCR test was peer-reviewed and published in Microbiology Spectrum, a journal produced by the American Society for Microbiology. This largest-of-its-kind study of asymptomatic people finds that Q test is as accurate as a lab-based PCR test with 99.4% concordance with this lab-based RT-PCR test. The studies finding differentiate Q on the basis of both accuracy and speed, superior to the poor-sensitive antigen testing and without the delays of lab-based PCR testing. Shifting to the Q integrated care platform, our solution that seamlessly extends the capability of our foundational QF monitoring system, enabling an end-to-end customer journey to receive an accurate diagnosis, consult with a healthcare provider through our app, and receive treatment. We have integrated many of these building blocks over the last 18 months. Last year, we launched QCare, allowing for video consultation with clinicians and prescription delivery. We announced a partnership with Minnesota Department of Public Health to enable all the state citizens to access QCare without cost to the patient. Next, we leveraged this platform to add QLab, mail-in at-home test kits, and QPharmacy for prescription subscription. We continue to be excited about this opportunity. We believe QLab and QPharmacy have the potential to be a meaningful part of the business over the next year. Now that we have fully built out the integrated care platform, we expect that adding new tests and treatment programs will be straightforward, and I'm really pleased with how the team continues to leverage the platform across new indications. While Austin will review our financial performance in detail, I want to highlight the progress we've made with financial discipline. The team continues to balance operational execution with cost management. Our goal at the beginning of the year was to reduce spend by $150 million. We have now delivered approximately $165 million of annualized run rate cost savings. At the same time, the team is also focused on near-term revenue generating opportunities, including upcoming FDA approvals. We believe we're getting close as we continue to have positive engagement with the FDA and have continued to add data where necessary as common in the review process. Over the last months, we've been actively responding to information requests and supplying additional data as necessary. We remain optimistic that we will have additional authorization shortly, and that these approvals, along with new product launches, will be the catalyst for revenue growth and reaching EBITDA break-even in early 2025. With that, I'll turn the call over to Asim.