OraSure Technologies, Inc.

Good day and thank you for standing by. Welcome to the OraSure Technologies 2023 Second 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 the session, you will 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, Jason Plagman, Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome to OraSure Technologies' second quarter 2023 earnings call. Participating in the call today for OraSure are 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 our investor relations 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, and other financial performance, product development, performance, shipments and markets, business plans, regulatory filings and approvals, expectations and strategies. Actual results could be significantly different. 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 ended December 31, 2022, its quarterly reports on Form 10-Q, and its other SEC filings. Although forward-looking statements help to provide more complete information about future prospects, listeners should keep in mind that forward-looking statements are based solely on information available to management as of today. Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. Please note that we will be discussing certain non-GAAP financial measures that we believe are important in evaluating or assures performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press releases posted on our website. With that, I am pleased to turn the call over to Kerry.

Thanks, Jason, and we appreciate each of you joining us today. We are pleased to provide an update on the progress that Orchard is making on the three pillars of our strategic transformation. That's first, strengthening our foundation, next, elevating our core growth, and also accelerating profitable growth. A few notable highlights during the quarter include We generated $57 million of operating cash flow in Q2 and grew our cash balance to $186 million. We executed to deliver stronger than anticipated IntelliSwap volumes on our COVID-19 contracts during the quarter. And in July, we received orders under existing contracts for delivery of additional IntelliSwap devices. when these orders are expected to generate at least $70 million of revenue in the second half of 2023. We unlocked incremental cost savings as a part of our ongoing enterprise-wide focus on driving improved operating efficiency. We also delivered core revenue growth on both a sequential and a year-over-year basis. And with our stronger balance sheet, we are investing internally and externally to support and enhance our leadership position and grow in our key portfolios. Rigorous portfolio processes are helping invigorate our innovation roadmap with organic and inorganic opportunities, including strategic partnerships that we believe can provide additional fuel for growth. Next on costs. As we continue to strengthen our foundation, we remain highly focused on delivering greater operating efficiency, including in cost reductions. The second quarter reflects a full quarter of impact from the headcount reductions we made in February, and we've implemented additional expense reduction initiatives since then that are expected to reduce both our production costs as well as our non-production related expenses. During the quarter, we made progress consolidating our manufacturing facility footprint to drive operating efficiencies, including reshoring some of our capacity to the U.S. to leverage innovative automation capabilities that we have developed. We also continue to make progress on the installation and testing of new equipment and manufacturing processes at our Opus Wave facility. in addition to our existing automation production of our AuraQuik platform. As discussed in prior quarters, we expect this phase of Opus Way expansion to be completed in 2023. Overall, we expect to generate additional operating efficiencies across our enterprise in the second half of this year and into 2024, including further consolidation of facilities, leveraging of automation, and controlling our non-production costs. These initiatives, including incorporating Lean Six Sigma training and methodologies across multiple functions of the company, support our efforts to break even in operating cash flow on our core business by the end of 2024, a target which we remain on track to deliver. Intellisoft volumes were stronger than expected in Q2, and we generated $47.5 million in revenue from our COVID-19 products during the quarter. As I mentioned earlier, we received purchase orders in July under existing contracts for delivery of IntelliSwap devices. Overall, we are really proud of our work with our public health partners, and we believe this additional visibility improves readiness for potential infectious disease outbreaks in the U.S. and beyond. As we've discussed previously, we also believe the cash generated from IntelliSwap, plus the cost reductions we have implemented, will help us fund investments in innovation and future growth opportunities in order to elevate sustainable growth in our core portfolio. On our core business, which excludes revenue from COVID-related products, we grew 4% sequentially this quarter and 3% on a year-over-year basis. In our HIV franchise, we mentioned during our Q1 earnings call that we saw strong starts to the Together Take Me Home program, which is funded by the CDC. This five-year program focuses on providing free in-home testing to at-risk and underserved populations nationwide. We believe the early momentum of this program could create additional opportunities for our infectious disease business. Moving to hepatitis C, revenue grew on both a year-over-year and a sequential basis, driven by strength in domestic segments. We continue to be encouraged by the increasing recognition among health officials of the need to increase HCV surveillance and data collection through outreach testing. Shifting to molecular products, revenue grew 1% sequentially in Q2, representing the second consecutive quarter of modest sequential improvement. While end segments have experienced softness that we've discussed previously, we are seeing some positive signs, including continued momentum in establishing new partnerships and commercial relationships. Fundamentally, we believe in the long-term potential of molecular testing as an enabler of precision health. On that front, we are very pleased to announce a collaboration to work on a multi-year project with the Regeneron Genetics Center, a wholly owned subsidiary of Regeneron Pharmaceuticals Inc. that focuses on early gene discovery and functional genomics. RGC has chosen our OroGene device for all saliva collection requirements, along with leveraging our in-house kitting and single order fulfillment services to remodel its DNA collection workflow. Also in our molecular product portfolio, we continue to make clinical and commercial progress with Coli-P. We recently signed an agreement with the International Vaccine Institute, IVI, to utilize our Coli-P first void volumetric urine collection kits as part of a research study to understand the burden of human papillomavirus, HPV, among girls and women in low and lower middle income countries. The International Vaccine Institute is an organization with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health. The study will help inform intervention implementation and prioritization of research and development efforts that have the greatest potential for public health impact. We believe that first void urine has the potential to provide powerful insights through non-invasive sample collection methods that can transform the approach to HPV patient screening, vaccination, and treatment strategies, regardless of a patient's geographical proximity to or familiarity with professional healthcare settings. Effortless at-home sample collection is fundamental to how our offerings can help power the shift in healthcare delivery that connects care with patients and consumers wherever they are. These ongoing and prior studies demonstrate the value of Coli-P urine collection as an easy-to-use, non-invasive self-sampling device. And OraSure is committed to delivering an evidence-based, affordable solution with improved patient experience for people around the globe. Microbiome is another emerging science that has potential to contribute to precision health innovation. Our microbiome collection devices and services are used to advance research, direct-to-consumer, and clinical applications in the space. Of note is the pioneering work done by our biotech customers to leverage the power of the microbiome in developing new therapeutics. One such customer is Ceres Therapeutics. Ceres, a commercial stage company developing novel microbiome therapeutics, and Nestle Health Science, a leader in the science of nutrition, have jointly announced the FDA approval of the first and only orally administered microbiota-based therapeutic, Voust, to prevent recurrence of C. difficile infection, or CDI, in adults following antibacterial treatment for recurrent C. diff infection. The FDA approval of Voust was supported by a robust phase three development program, that included the ECOSPOR-3 and ECOSPOR-4 studies. Orsha subsidiary Diversagen provided the microbiome sequencing services for this series of studies and are pleased to see the FDA approval for this important new oral treatment option for C. diff infection. On our innovation roadmap, in addition to our current product portfolio, we continue to make progress on our initiative to accelerate profitable growth through investments in our internal product development pipeline as well as potential external investments, partnerships, and acquisitions enabled by the strengthening of our balance sheets during the last year. We have discussed in prior quarters that in diagnostics, we are working on opportunities to expand our portfolio of assays in areas where we have existing strong capabilities such as in infectious disease, respiratory, influenza, and sexual health. We expect to share more on these opportunities later this year. In molecular, over the past few quarters, we have shared our progress in new collaborations in precision health. It's great to see those partners, such as Quest Diagnostics, GRIPPLS, and ZWIG, launching their new offerings across a broad range of use cases, such as consumer-initiated testing, and genetic counseling services, as well as disease-specific testing. Overall, we believe Orish are well-positioned to be the partner of choice to help power precision health due to several important differentiators. One, the quality and reliability of our offerings and the expanded patient reach they enable. Two, the consistency of our delivery and execution. And three, our track record of collaborating with our partners and successfully navigating complex regulatory approval processes for segment access and expansion. With that, I'd like to turn the call over to Ken to discuss our financial results and guidance.