OraSure Technologies, Inc.

Good day and thank you for standing by. Welcome to the OraSure Technologies, Inc. 2024 Third 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 first speaker today, Jason Plagman, Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome to OraShirt Technologies' third 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 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 OTI's SEC filings, its annual report on Form 10-K for the year ended December 31, 2023, 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. OTI undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. With that, I am 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 Orishare is making on the three pillars of our strategic transformation. One, strengthening our foundation, two, elevating our core growth, and three, accelerating profitable growth. A few notable developments during the third quarter include we delivered Q3 revenue that was in the top half of our guidance ranges for core revenue and total revenue. We received initial international orders for our OraQuik HCV self-test following receipt of WHO pre-qualification status in July. The OraQuik HCV self-test is the first hepatitis C self-test to earn this designation, and we look forward to expanding access to this important test. Also, we are expanding our sample management portfolio with the planned launch of a new solution targeting the rapidly growing blood proteomics market in the second half of 2025. In order to further streamline our organization, as well as sharpen our focus on markets that align with our strengths in diagnostics and sample management solutions, and that offer better opportunities for growth and profitability, we are in the process of winding down our risk assessment testing business. which also includes substance abuse testing. We expect to exit this business by the end of 2024. During Q3, we generated $12.7 million of operating cash flow, which includes positive cash flow from operations for the core business. And with our healthy balance sheet, we continue investing in our innovation roadmap and opportunities internally and externally that leverage our existing strengths in order to position OTI for accelerated and sustainable, profitable growth. Starting with our core business, Q3 core revenue of $37.8 million was above the midpoint of our guidance range. Performance in both diagnostics and sample management solutions was consistent with the outlook embedded in our guidance, And our international business had a strong quarter, as we expected. Within our diagnostics portfolio, we continue to have success with multi-product sales across our portfolio of HIV, HCV, and syphilis tests, as healthcare providers and public health organizations recognize the need for a syndemic approach to rapid testing, given the significant overlap in patients at risk for these infections. We are also seeing solid momentum with Diagnostics Direct syphilis health check following our launch of this test at the end of Q1. In our international business, we received initial orders for our OraQuick HCV self-test following its WHO pre-qualification in July. As a reminder, the OraQuick HCV self-test is the first hepatitis C self-test to earn this designation, and we are actively working with the global health community to bring this test to populations in need, including the 50 million people living with HCV and the 1 million individuals who acquire HCV each year. Shifting to sample management solutions, revenue increased sequentially in Q3, and we continue to see signs of a still gradual recovery in the market environment as genetic testing and research segments adapts to the post-COVID landscape and an evolving regulatory environment for diagnostic labs. Moving to operating efficiency, we continue to drive and demonstrate the benefits of operational improvements through an enterprise-wide focus on continuous improvement and by leveraging our capabilities, including in automation. To that end, earlier this year, we discussed our initiative to in-source production of certain sample management products from external contractors in Canada into our own manufacturing center of excellence in Bethlehem, Pennsylvania. We are making terrific progress and expect to complete the transition in 2025, consistent with the project timelines we've outlined previously. Internalizing these activities is expected to further improve our operating efficiency, leveraging our existing infrastructure as we work to expand our gross margins. As I mentioned earlier, as part of our efforts to focus our resources in areas that best leverage our core strengths and streamline our cost structure, we plan to exit our risk assessment testing business by the end of 2024. OTI has served this market for many years, but our addressable market has now declined significantly due to several external factors, including the evolving legal status of marijuana and cannabis products and changes to the Department of Transportation testing guidelines. Our legacy risk assessment testing products do not meet these new guidelines and would have required significant investment by OTI in both product development resources, and new production equipment to continue to successfully compete. Given this backdrop and our priority focus on growth opportunities, we have decided to wind down and exit our risk assessment testing business by the end of this year. Switching gears to product innovation. We are excited to begin sharing more details around our planned 2025 launch into the proteomics space. Our anticipated launch is a prime example of our sample management solution strategy in action, where we seek to drive growth in our portfolios by targeting new sample types, analytes, and applications. We anticipate our Proteomics product will address all three priorities, as it represents expansion into blood collection with innovation in protein stabilization that enables us to enter new high-growth applications such as liquid biopsy, Alzheimer's disease, and diabetes to name a few. Sample collection solutions for these and other chronic illnesses represent a total addressable market in the hundreds of millions of dollars that is rapidly growing. These applications, specifically in developing areas like oncology and neurology, may be more research-oriented in the near future, but are expected to evolve into the clinical space over time just as genomic risk testing did. Our proprietary innovation targets specific gaps in competitive offerings. Intended benefits of our proteomic device and chemistry combination include ambient temperature shipping and room temperature storage over a longer duration of time, as well as compatibility with traditional and next-gen proteomic technologies. Initially, we anticipate our product to be for phlebotomy-collected blood, but we expect future iterations to marry our proprietary chemistries with self-collected small volume blood technology access through our SAP ROSE partnership. We look forward to sharing more details as the launch progresses. Another important growth driver for our collection kits portfolio involves working with key partners to validate new applications for our cleared collection devices. We are pleased to share a recent collaboration in which PacBio validated and endorsed our DNA Genotech saliva collection devices for use with nanobind extraction kits on PacBio's long read sequencing platform. Long read sequencing provides insights about complex genomic variables, including complex bacterial genomes, and are also used in applications such as oncology, treatment monitoring, rare disease testing, and chronic disease research. Additionally, we are making good progress on our CallEP initiatives for FDA submission of self-collected volumetric urine by end of 2025 and the HIV claims expansions that we discussed last quarter. On each, we expect to share more next year. With that, I'd like to turn the call over to Ken to discuss our financial results and guidance.