Lucira Health, Inc.

Welcome to the first quarter 2022 earnings conference call. Lucera achieved record revenues in the first quarter of 2022, driven by demand for our accurate and easy-to-use molecular COVID-19 test. We are pleased with our performance and see COVID-19 testing as a proxy for what Lucera will become, a leader in the healthcare paradigm shift to a new category of decentralized diagnostic testing combined with rapid treatment, otherwise known as test to treat. Lucera's founding almost a decade ago, this has been the vision. The pandemic, tragic as it has been, catalyzed this transformation in infectious disease diagnosis, quarantine, and treatment. For Lucera, The pandemic accelerated achieving manufacturing and commercial scale for our current COVID-19 tests, for the next diagnostic tests in our pipeline, and it also deepened the investment in our digital reporting platform. We see our mission not only as a molecular test manufacturer, but as a digital healthcare company. Accurate and easy to use testing is fundamental, but the full service of test to treat is enabled through a digital backbone, that we achieve both through telehealth partnerships as well as by the growing accomplishments of our in-house digital development team. We envision a society in which early diagnosis, at times even before symptom onset, results in immediate prescription and medication delivery for rapid intervention and recovery. The current infectious disease and treatment paradigm, while good, is still too slow. in that it requires patients to travel to see healthcare providers or at times relies on healthcare providers to make educated guesses rather than to know with certainty. And it also requires patients to speculate as to whether they or family members are infectious. Utilization of Lucera's test mean that guessing is replaced by knowing at the earliest moment possible. All of this in the name of reduced suffering and improves personal and public health. COVID-19 continues to evolve toward an endemic disease. And thankfully, severity is measured by hospitalization and death has declined from recent peaks. But as shared by the many fully vaccinated and boosted people that I know, who currently have or recently had COVID-19, it is no picnic. For some it is benign, but for many otherwise healthy individuals is debilitating. Our plans assume that COVID-19 testing demand will cycle, but will remain, likely fluctuating seasonally, cycling with population vaccine booster durations, and rising as new variants emerge. Visits to grandparents, to families with young children, to those who are immunocompromised, return to work, return to school, travel, all are made safer by testing first with Lucera's accurate molecular test. While no test is 100% accurate, only Lucera's molecular level of accuracy can ascertain if a person is infectious with or without symptoms. A family member recently needed a flu antiviral that would have been far easier and faster to obtain had there been an accurate home flu test on the market. Negative on Lucera's COVID-19 test, but bedridden with fever and flu symptoms, telehealth providers still wanted the patient to visit the clinic for evaluation. This was not practical, and we obtained a flu antiviral quickly elsewhere. This antiviral worked very well, but the telehealth process is in need of Lucera's COVID-19 and flu combo tests, so that telehealth physicians can prescribe treatment medications with diagnostic confidence at the earliest sign of infection and without requiring a patient visit. The near-term launch of the COVID-19 and flu combo test is the next step in our growth strategy, predicated on new products, regulatory approvals, and global expansion. The first quarter of 2022, recording revenue of $90.5 million, a 19 times increase over Q1 2021, with net income of $13.1 million, demonstrated the leverage that exists in our business with only modest commercial volume. This was the first quarter that produced net income in a company's commercial history. In February, we announced a debt facility available to Lucero for up to $80 million. We have drawn down only the initial financing tranche of $30 million to bolster capital reserves. 2022 remains a year of strong growth for the company. This quarter also demonstrated several marketing expansion achievements. Our main commercial channels remain business-to-business, healthcare, including telehealth, direct-to-consumer, and international. In Q4 of 2021, we signed an agreement with a major Silicon Valley tech company, and an initial product purchase was made. In Q1 of this year, this customer doubled their purchase volume. In Q2, their demand has remained strong even as COVID-19 ebbs and flowed. This representative customer shares characteristics with other enterprise slash B2B customers. These are employers who wish to mitigate the risk of illness because their employees are critical to their operations, require their employees to work in proximity with one another, and for whom the cost of downtime is high. Examples outside of the tech space include film and media production, professional sports, and financial services, all of which are categories of our current enterprise customers. We would also like to provide an update on sales to the Government of Canada. In 2021, Lucera was awarded a standing offer that allowed Health Canada to purchase defined quantities of tests from Lucera over a 12-month period. Health Canada has subsequently exercised the first of two six-month extension options. Our tests have been used across Canada and have provided value to remote and hard to reach communities in which providing fast and accurate testing would otherwise be difficult or impossible. For the remainder of 2022 and beyond, we look forward to continuing our important working relationships with the government of Canada, the Canadian provinces, and all Canadians from coast to coast. Lucero is investing in people and other resources to allow us to deepen our relationship with institutional buyers like the Government of Canada and to expand our offerings and ease of ordering to private enterprises and to individual customers. In Q1, we entered into a distribution agreement with a national healthcare and laboratory products distributor. This distributor in turn provided Lucera tests to a major health system on the West Coast that had not previously been a Lucera customer. Over the coming quarters, we expect this distributor to increase sales with this health system and to expand sales to other health systems and hospital networks. In 2022, we are continuing the hiring of a small team of seasoned healthcare sales professionals who will sell directly to healthcare organizations, augmenting the distribution business. We will continue to monitor and optimize this hybrid distributor and direct sales strategy. Additionally, we are delighted that we received CE Mark for the COVID-19 and flu combo product on May 6th. Influenza and COVID-19 are the two major respiratory diseases for which there are antiviral treatments. On May 11th, we submitted our Application for Emergency Use Authorization, EUA, for our COVID-19 and flu combo product to the U.S. Food and Drug Administration. Clinical trial results for this product were positive. and submissions to other regulatory authorities, including Health Canada, are anticipated to occur in the second quarter of 2022. Clearance for this device will allow Lucera to expand its geographic footprint while also transitioning away from reliance on revenues based solely on COVID-19 testing. The Lucera COVID-19 and flu combo test and the COVID-19 test, which also received CE mark on May 6. are nucleic acid amplification tests with sensitivity and specificity comparable to lab-based PCR assays, miniaturized to run on Lucera's palm-sized test with no separate instrument or reader, and producing results in 30 minutes or less. Lucera's COVID-19 test is authorized in the U.S., Canada, Singapore, Israel, and Taiwan, with millions of tests distributed to date. The Lucera COVID-19 and flu test uses the same platform and palm-sized device design and independently tests for COVID-19, flu A, and flu B from a single nasal swab. As a reminder, COVID-19 and flu have similar symptoms but distinct treatments. This underscores the importance and utility of providing tests such as the COVID-19 and flu product that differentiate between such infections when the viruses that cause them are both circulating. We have an efficient and leverageable infrastructure that we believe now has sufficient capacity to support anticipated demands in 2022, including production of the COVID-19 and flu combo product. However, given the unpredictability of potential COVID-19 surges throughout 2022, we are withdrawing the previously stated revenue guidance of $450 million. Many factors contribute to a lack of visibility into the remainder of the year. An internal analysis of cycling COVID-19 peaks, new variants that challenge vaccine efficacy, potential seasonality and timing associated with booster cycles contributed to the decision to withdraw guidance. We anticipate that seasonality of respiratory illnesses will cause Q1 and Q4 to be strong revenue quarters. Note that the Biden administration is forecasting a cold weather wave of COVID-19 infections, mentioning a potential quantity of 100 million infections, which represents nearly one-third of the US population. The average quantity of influenza-like illness cases in the US is almost two times this number, underscoring the potential demand for the combo product in Q4. We expect that our commercial expansion into the southern hemisphere will bolster mid-year demand. Additional tests in our platform, primarily respiratory and STI, are undergoing feasibility evaluations. As these products are developed and approach commercialization phase, we will report relevant information to shareholders. Lucera is building on the momentum that we have gained through COVID-19 testing to bring accurate and actionable test-to-treat into the home and to professional settings, such as medical clinics and hospital emergency departments. Empowering patients and healthcare professionals with accurate, real-time information about infections enables tests to treat. Our product, because it is reader and instrument-free, eliminates bottlenecks in points of care, enables simultaneous testing of multiple people in any setting, and provides an easy-to-carry form factor for travel. We appreciate the hard work and dedication of our employees, partners, and contractors who are delivering long-term success to Lucera. Lucera's leadership is experienced in commercializing new technologies at the forefront of changes in healthcare. We are excited with the progress that we are making in new products and new markets. I will now turn the call over to Dan George, our CFO, for a detailed discussion of financials.

Thanks, Eric. Please refer to our press release issued earlier today for a summary of our financial results for the first quarter of 2022. Net revenue for the first quarter of 2022 was $90.5 million, an approximate 19 times increase over the first quarter of 2021. Our net revenue was primarily driven by sales to businesses and distributors, international sales, direct sales to consumers, and healthcare providers. Gross profit and gross margin for the first quarter of 2022 were 39.9 million and 44% respectively, compared to a gross loss and negative gross margin for the first quarter of 2021 of close to $900,000 and 19% respectively. Our increase in gross profit and gross margin was driven primarily by increased sales and operational efficiencies gained through increased manufacturing output and scale. Selling, general, and administration expenses were $13.9 million in the first quarter of 2022 compared to approximately $6.1 million in the same period in 2021. The increase was primarily related to increasing personnel-related costs and third-party services to facilitate commercial activities and public company compliance. R&D expenses were $12.2 million in the first quarter of 2022 compared to $6.3 million in the same period in 2021. New product development, clinical activities, and validation and manufacturing activities primarily drove the increase. Gap net income was $13.1 million for the first quarter of 2022 compared to a gap net loss of $13.3 million in the same period in 2021. Non-gap net income was approximately $16.7 million in Q1 2022 compared to $13.6 million of non-GAAP net loss in the same period in 2021. The decrease in net loss primarily resulted from increased gross profit. We ended the quarter with $120.6 million in cash compared to cash of $106 million at the end of Q4 2021. The increase in cash was primarily related to the closing of the first tranche of our debt financing agreement of $30 million. Most of our investments in our contracted manufacturing facility in the Dominican Republic have been completed, allowing us now to manufacture at scale. These investments include automation of certain critical manufacturing steps. We are also investing in our lease facility in San Diego County, which will house commercial operations and other functions. We have the cash necessary to fund our long-term business strategy. For 2022 guidance, as Eric previously stated, we are withdrawing our initial 2022 guidance of $450 million in revenue. We are expecting that revenue in the second and third quarters may be down sequentially from Q1. And although we anticipate demand to uptick significantly in Q4, visibility limitations resulted in our decision to remove annual guidance. These estimates reflect our most recent assessment of manufacturing output and commercial demand. I'll now turn the call back over to Alex for Q&A.

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