OraSure Technologies, Inc.

Good day, and thank you for standing by. Welcome to the OraSure Technology's first quarter 2024 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 conference over to your speaker today, Jason Plagman, Vice President of Investor Relations. Please go ahead.

Good afternoon and welcome to OraSurf Technologies' first quarter 2024 earnings call. Participating in the call today for OTI 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 column 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 OTI's SEC filings, including its registration statements annual report on Form 10-K for the year ended December 31st, 2023, 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. OTI 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, Jason, and thank you to everyone for joining us today. We are pleased to provide an update on the progress OraSure is making on the three pillars of our strategic transformation. And before I talk about the quarter, I just want to frame what strengthening our foundation, elevating our core growth, and accelerating profitable growth look like in our business. Strengthening is our organizational restructuring and cost rebalancing that has improved our balance sheet and cash flow generation. Elevating is the focus on our core capabilities and leveraging these strengths internally and in strategic partnerships to expand our product portfolio and the market segments we serve. Accelerating is about investing for profitable mid- and long-term growth while our end segments rebuild momentum. A few notable highlights during the first quarter include we delivered Q1 revenue that exceeded our guidance ranges for both core revenue and COVID-19 products. As part of strengthening our foundation and our enterprise-wide focus on operational efficiency, we are taking next steps to streamline our operations, including insourcing third-party manufacturing activities into our Bethlehem facility. exiting our microbiome laboratory and analytical sequencing services business known as Diversagen, and consolidating our Novasana site in Belgium and other locations. These initiatives are expected to result in significant cost savings over the next two years and are important steps to align around our strength, right-size our cost structure, and achieve our targets to break even in operating cash flow from our core business by the end of 2024. Next, our strategic partnerships with Sapros and Diagnostics Direct that we announced earlier this year are off to strong starts. And with our healthy balance sheet, we are investing in our innovation roadmap and partnerships that leverage our existing strengths in order to position OTI for profitable growth. Starting with operating efficiency, We continue to strengthen our foundation. As we've discussed over the last 18 months, we have made tremendous progress in improving our operating efficiency, streamlining our footprint and establishing an enterprise-wide mindset that delivers continuous improvement. As part of these efforts, we are taking additional steps to rebalance our cost structure and position OTI for long-term success. First, we initiated steps to wind down Diversagen by the end of the third quarter. OTI acquired Diversagen and CoreBiome in 2019 based on the potential of the microbiome sequencing services market. Despite early success, the COVID-19 pandemic and other external market factors have negatively impacted the microbiome segment, and we have experienced a decline in services revenue while lacking line of sights to meaningful near-term growth in this segment. Given our limited visibility to scaling the business profitably and prioritization of our other core strengths, we have decided to exit the microbiome sequencing services business. We are focused on providing continuity for our clients and transitioning them to a leader in the space. Plus, it's important to note We will continue to participate in and serve the segments with our DNA Genotech microbiome sample management kits and our distribution of anaerobe systems collection offerings. Second, we commenced projects to in-source production of certain sample management products from external contract manufacturers in Canada into our manufacturing center of excellence in Bethlehem, Pennsylvania over the next 18 months. Insourcing these activities is expected to improve our operating efficiency and further leverage our existing capabilities and infrastructure. Third, we are planning to exit our NovoSana site in Belgium by the end of this year and integrate those activities into our existing infrastructure. We will continue to develop and sell the ColiP urine collection device as part of our sample management solutions. In total, These actions are expected to result in more than $15 million of incremental annual expense reductions following completion. And they are important steps in achieving our targets to break even in operating cash flow from our core business by the end of 2024. Moving to COVID-19. IntelliSwap generated $23 million of revenue in Q1. As we discussed last quarter, we have visibility to order trends that are expected to fulfill the remaining portion of our largest IntelliSwab contract with the US government during Q2. Moving to our core business, which excludes COVID-related products. Q1 core revenue of $31 million was at the high end of our guidance range. Performance in both core diagnostics and core molecular sample management markets were consistent with the outlook embedded in our guidance. Within our diagnostics business, March 2024 wrapped up the initial 12-month period for the Together Take Me Home program that includes HIV at-home test kit distribution. As you may remember, Together Take Me Home is a collaborative effort across the private and public sector with the goal to provide free HIV test kits in all 50 states and Puerto Rico. Initial plans were to distribute 200,000 test kits per year during the five-year program for a total of one million tests deployed. However, the demand for tests has far exceeded expectations. According to data collected by the program, 27% of orders were people who reported they had never tested for HIV before. The program's success demonstrates how reducing barriers to care empowers individuals to learn about their health, combat stigma, and positively impacts access to HIV testing, prevention, and care services. We are proud to play a role in this important program and look forward to a successful second year. Since our last call, we've successfully launched the sales and distribution partnerships that we announced previously. We delivered our first sets of orders for diagnostic direct syphilis health check test, and for anaerobic systems, biome preserve, amongst others. These launches demonstrate how partnerships allow us to enter new market segments, expand the portfolio of comprehensive products we can provide to our customers, and leverage our existing capabilities. Shifting to molecular sample management solutions. The market environment remains muted as the industry emerges into the post-COVID environment. In addition to factors such as regulatory uncertainty for diagnostic labs, evolving research priorities and funding environments for life sciences and academic organizations, and a few customers working through short-term uncertainty related to corporate structures. Even with these near-term headwinds, however, we remain confident in the mid- and longer-term opportunities for our sample management solutions while we continue to reinforce our market leadership position. As our end segments begin to recover, we are confident in our position as an industry-leading provider of sample management solutions for a number of reasons. We continue to demonstrate the quality and consistency of our sample management solutions, including our 510 cleared collection and stabilization devices in several categories. Also, we believe our track record of collaborating with our partners and successfully navigating complex regulatory approval processes will become even more important for diagnostic labs as they contemplate FDA regulation of LDTs. And we have developed very strong customer relationships as a result of our consistent execution, reliability, and our experienced sales team. We continue to reinforce our leadership position by onboarding new customers as well across multiple segments, including clinical reference labs, biopharma companies, global research, as well as non-human segments. While the orders from these customers represent a small percentage of our revenue today, they represent future growth opportunities as their offering scale and their discovery work progresses. In addition to onboarding new customers, we are proud to hold longstanding relationships with the pioneers and innovators in the genetic testing space. On this note, we are pleased to share that we've recently signed a multi-year deal with 23andMe to continue to provide our 510 FDA cleared or gene collection device to be used in their health and ancestry services. 23andMe provides individuals with genetic insights and tools to empower them to take action on their health. From an innovation standpoint, we continue to make investments in our product pipeline and evaluate potential investments that can accelerate our growth. This includes both internal and inorganic opportunities through strategic partnerships and potential acquisitions. Our strong balance sheet and positive cash flow generation continue to be important differentiators in the current market and economic environment as we look for opportunities to accelerate our growth and profitably scale our business. Before I conclude, I'd like to highlight that we recently published our 2023 to 2024 Orrishare CARES ESG report on our investor relations website. This report highlights our progress in advancing sustainability and governance related initiatives that are meaningful to our internal and external stakeholders and our efforts to create value for our customers, employees, shareholders, and the global communities that we serve. With that, I'd like to turn our call over to Ken to discuss our financial results and guidance.