OraSure Technologies, Inc.

Good day, and thank you for standing by. Welcome to the OraSure Technologies 2022 Fourth Quarter 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 a session, you need to press star 1-1 on your telephone. You will then hear an automated message advising you. 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 speaker today, Scott Gleason, Head of Investor Relations. Please go ahead.

Scott Gleason Thanks, Victor. Good afternoon, and welcome to OraSure Technology's fourth quarter 22 earnings call. I'm Scott Gleason, the SVP of Investor Relations and Communications, and presenting with me today for OraSure is Kerry Eglinton-Manner, our President and Chief Executive Officer, and Ken McGrath, our Chief Financial Officer. As a reminder, today's webcast is being recorded, and the recording can be found on the investor relations section of our website. Before we begin, you should know that this call may contain certain forward-looking statements, including statements with respect to revenues, expenses, profitability, earnings or loss per share, other financial performance, product development, performance, shipment and markets, business plans, regulatory filings, approvals, expectations and strategy. Actual results could differ significantly. Factors that could affect results are discussed more fully in the company's SEC filings, including its registration statements, its annual report on Form 10-K for the year ending December 31, 2021, its quarterly reports on Form 10-Q, and its other SEC filings. Although forward-looking statements help to provide complete information about our future prospects, listeners should keep in mind that forward-looking statements are based solely on information available to management as of today. The company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. With that, I'm pleased to turn the call over to Carrie.

Thanks, Scott, and thank you to everyone for joining us today. In the fourth quarter, we once again delivered strong top-line results, which exceeded our prior financial guidance, generated cash of $9 million in the quarter, and made further progress in our strategic transformation journey. As we look to important aspects of how we are transforming, we have predominantly been focused on strengthening our foundation, expanding our cost reduction programs. Today, we announced a reduction in our non-production workforce of 11%. These changes better align our organizational structure with the realities of our business. We believe the restructuring allows us to utilize our COVID-19 cash generation to support incremental growth investments while targeting to achieve cash flow break even for the core business, that is non-intellectual revenue, by end of 2024. In 2023, we are focused on elevating growth across our core portfolio, increasing the reach of our current products, expanding segments, and further enhancing our enterprise capabilities to drive business efficiency and growth. As an early proof point in our strategy, we signed a deal with Quest Diagnostics to serve as the preferred provider of saliva collection kits for Quest Genomic Sequencing Services Group's test offerings. We also have several co-clearances of sample collection devices underway with partner companies for their novel assays, similar to our recent GRIPPLS announcement. As we gain momentum across our business, we'll also look for opportunities to further accelerate growth through our own innovation pipeline, along with enhanced strategic partnerships, as well as potential acquisitions. In order to provide more detail on our strategic progress, I'll begin with our organizational restructuring and efforts to drive core business profitability. First, we consolidated our two business units into one orature and have just announced the reduction of our non-production workforce by 11%. Streamlining our organization makes sense for our size and for the potential to unlock significant efficiencies, enhance collaboration while simplifying our leadership structure, increase revenue synergy opportunities, and improve resource allocation across the company. It will also allow us to leverage our enterprise functions such as manufacturing operations, R&D, quality and regulatory, along with our digital IT assets enterprise-wide. We anticipate the restructuring, along with other process improvements and cost reductions, will deliver operating expense savings of approximately $15 million per year when fully implemented at the end of the first quarter. As we lay the groundwork here for long-term cash generation, we have also made enhancements to our enterprise capabilities and manufacturing operations. I am pleased to announce that our new packaging and labeling configuration for IntelliSwab has been authorized by the U.S. Student Drug Administration, and we expect this new configuration to begin shipping by the end of this March. These changes have been a major undertaking by our team and will drive per test cost savings of approximately 40 cents. This includes the impact from lower shipping costs based upon the smaller packaging configuration, which will reduce total truckloads by approximately 50%. Furthermore, it will reduce our environmental impact since these changes will save on the order of 90 tons of plastic and 1,500 tons of paper from entering the waste stream. We are looking to apply these learnings to other portfolio products as well, such as our HIV self-test, as we believe we can unlock additional savings through further standardization and process enhancements. Contributing to our continuous process improvements, I'm pleased to share the addition of Trace Custer to our executive team, leading quality and regulatory. Trace is a highly experienced life sciences industry veteran with leadership experience across numerous healthcare companies. Having joined us in Q4, Trace has now helped us implement a number of improvements, helped lead in our restructuring, and is evaluating further areas for efficiency such as within our recent implementation of an electronic quality management system. On systems, I would also highlight that we have now fully launched Salesforce.com across our commercial teams. Using a standard CRM enables better monitoring and improvement of our sales KPIs, including in areas like pipeline growth and conversion success. I am a strong believer in operating rigor, and every one of our teams at OraSure now has established sets of leading and lagging key performance indicators to drive visibility and accelerate our success, each of which, along with those we roll up across the enterprise, we believe will drive results and deliver shareholder value. As I've mentioned repeatedly, our organization has strengthened our foundation and is increasingly focused now on elevating our core growth and our strategic transformation. This quarter, we established some early proof points that we believe help set the tone for our longer-term roadmap as we look to establish the company as a leader in self-testing and point-of-care diagnostics, as well as an effortless sample collection and services. First, within our diagnostic segment, we are working to expand our respiratory assay portfolio. Building on our success with COVID-19 lateral flow testing, we believe that IntelliSwab will transition to become part of our core, and combination influenza tests will become an important diagnostic for two of the most widespread clinically actionable and serious respiratory viruses. As such, we are working internally and in partnership externally to address this healthcare need around the flu. While we are not yet prepared to share details, we do believe in the important role of this test as a part of the commercial expansion of our respiratory portfolio. Also in IntelliSwab this quarter, we won two additional contracts from the U.S. federal government. On the first contract, the U.S. Defense Logistics Agency agreed to purchase an estimated 18 million tests of IntelliSwab COVID-19. with a maximum award of 36 million tests and a guaranteed minimum award of 3.6 million tests. The contract runs from November 2022 through November 2023. Additionally, we were notified by the government of an incremental award of 3.2 million tests in December. Fulfillment of both of these awards has been running concurrently with our existing government contract that is supporting the school testing program. Under our federal government contract, we have shipped approximately 46 million tests as of the end of the fourth quarter and have up to 64 million additional tests, which can be purchased assuming the government orders the target number of tests under our second RFP win. Additionally, in December, we were one of a group of companies awarded a tender for the state government of Connecticut, which also allows us to compete for up to 6 million additional tests. As we think about growth drivers for diagnostics in 2023, we've also been notified that we will receive our first orders from Emory University supporting outreach testing under the Let's Stop HIV Together initiative. Furthermore, our OraQuick in-home HIV test is now offered on amazon.com directly with prime fulfillment. While our online sales via Amazon are relatively small, They are increasing as we fulfill more customer orders and have moved up in terms of search algorithms. We are also encouraged by recent U.S. government funding and future potential funding focused on healthcare conditions we serve. Moving to our molecular kits business, the headwinds we've discussed have continued as some of our key customers have taken a more cautious stance on their near-term business outlook. That said, we believe the fundamental backdrop supporting genetic sample collection remains very attractive as the number of applications continues to expand, and precision health is key to the future of healthcare. Examples of these trends include the increase in high-value diagnostic and precision therapeutics, along with clinical laboratories increasingly working to reach patients in lower acuity settings, such as in-home and retail, and like the deal I mentioned with Quest. As we think about expanding our collection kits business, we would also highlight progress with Coli-T. This quarter, we launched four new CE IVD products in women's health and beyond. Additionally, we have multiple clinical research and commercial co-clearance collaborations kicked off in an effort to continue establishing first void volumetric urine as a validated sample type for HPV screening, women's health therapeutics, and the detection of oncology biomarkers. Finally, I would point out the recent FDA approval of the first microbiome-based therapeutic to prevent C. difficile in adults with recent data showing that these therapeutics improve health outcomes. This approval paves the way for other biotherapeutics, and we believe will serve as a positive catalyst for microbiome-based investment in new research studies. In conclusion, We have made significant progress strengthening our foundation by resetting our cost structure and operating rigor. This progress will facilitate future growth investments and sets the stage for us to achieve cash flow break even by the end of 2024. As we look forward here in 2023, we are increasingly focused on elevating core business and increasing our innovation pipeline to accelerate profitable growth. With that, I am pleased to turn the call over to Ken to discuss our financial results and guidance.