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spk04: And then finally, the NASDAQ listing provides a platform for industry consolidation and a path for ecosystem partners to gain access to that liquidity. It is also a strong tool to attract talent, especially at current valuation levels. In essence, Trinity is a 30-year-old business with a serious brand, has the ability to operate effectively in a regulated industry, is small enough to be nimble, and has the public vehicle to enable partnerships, industry consolidation, value creation for our shareholders, and wealth creation for the Trinity Biotech team. My experience in working closely with the portfolio of GE healthcare businesses and other regulated platforms opened my eyes to the fact that in this industry, operational and regulatory excellence is a competitive advantage that comes with long-term superior returns. Just a few thoughts about my priorities for the next three to six months. I think they're quite straightforward, to be honest. First, the focus is to establish a clear vision and strategy that aims at scaling our core businesses. Namely, I want to position our point of care platform and lab services capability to enable the decentralized testing disruption that is being led by digital health, other payer-sponsored programs, and new market entrants. Scaling our autoimmune platform through partnerships and product development are also a priority, and maximizing profitability in our hemoglobin's business is key. I also would like to leverage our Fitzgerald brand and figure out how to maximize it and its capabilities, both in terms of its efficient sales process and its distribution capabilities and its breadth of offerings to find further growth capabilities. The second priority is to build a performance culture and drive ownership and accountability. This starts at the top with a focus on operating rigor, clear execution goals, and shareholder alignment. Our ESOP program will be at the core of this transformation and will be modeled after my compensation plan. Shareholder value creation and the Trinity team's wealth creation are perfectly aligned. Third, a renewed focus on inorganic growth through partnerships and M&A will be a priority. This is how we scale. We have a public currency. We intend on using it in an intelligent fashion. Finally, I am pledging a renewed commitment to shareholder communication and to rebuilding credibility with the streets. My intent is to attract institutional investors who get the vision and believe in this team. In exchange, we need to have a clear strategy and deliver on our results. Now I'll turn it over to John to give you some perspective on the financials for the quarter.
spk01: Thank you, Iris. Good morning, everyone. Now I will take you through the results for Q2 2022. Let me begin by warmly welcoming our new CEO and chairman, Aris. Since Aris joined the board back in May of this year, I've had the pleasure of spending a lot of time with him as we look at the opportunities available to the company and indeed some of the challenges we continue to work through. I very much look forward to partnering with Aris and the rest of the team in continuing to drive Trinity Biotech's modernization and transformation to a more dynamic, higher growth, and efficient globalization. global organization. Before again discussing our Q222 results, I will point out that we have changed certain presentations in our financial statements this quarter. In previous earnings announcements, we have disclosed one-off accounting charges, such as impairment losses, in a separate line below profit or loss after tax. Similarly, in the past, we have split our financial income and expenses between those items that are cash and non-cash, the latter being disclosed below profit or loss after tax. This presentation reflected how management evaluated the performance of the business, although it did not conform to international financial reporting standards. Beginning this quarter, one-off accounting charges will be reported within operating profit and loss in accordance with IFRS. We will no longer disclose non-cash financial income and expense separately, and we will show a full cash flow statement rather than an abbreviated version. Moving on to our results for the quarter, starting with revenues. total revenues for the quarter were 18.5 million, compared to 25.8 million in Q2 2021. As Joe pointed out, and has been our typical approach, our CEO, Aris, will discuss revenues in further detail on the call. As such, I will now move on to discuss other aspects of the income statement. Gross margin for the quarter was 35.3%, compared to 42.7% achieved in Q2 2021. our gross margin remains susceptible to product changes, geographic spread, currency fluctuations and product level variation. As was the case in Q1 this year, the reduction in gross margin this quarter was mainly due to the very strong sales and margins recorded in the comparative period within our COVID-19 related portfolio products. In the years since then, Demand for our PCR viral transport media has fallen, as the level of PCR testing for COVID has declined in North America, and the availability of greater supply from other manufacturers has also hampered demand. Moving on to R&D expenditure, which was 1 million in the quarter, down almost 100,000 compared to Q2 2021. We continue to focus on operating efficiency and cost control, and have continued to reduce headcount as we pursue greater automation and simplification of processes. Meanwhile, SG&A expenses in the quarter were 6.5 million down over 100,000 compared to Q2 2021. Here we are benefiting from the stronger US dollar against the Euro, which is reducing our substantial Euro denominated SG&A expenses. And this is a trend we expect you will continue to see in the second half of the year. Offsetting this has been increase in transaction related management bonuses and increased travel costs as our sales teams have been focusing on meeting our customers and distributors. now that most COVID-related travel restrictions have been lifted. We have recorded an impairment charge of just over $500,000 this quarter, compared to a charge of $6.1 million in the corresponding quarter in 2021. Under IFRS, a company is required to carry out periodic impairment reviews in order to determine the appropriate carrying value of its net assets. This period's review has resulted in a non-cash impairment charge of $0.5 million being recognised. A number of factors impacted this calculation, including the company's share price on June 30, 2022, which was lower than the share price at the time of the prior impairment review, being 31 December 2021. Cash flow projections for each business unit and net asset values across each of these companies' individual business units. The above factors have resulted in an operating loss for Q2 2022 of $1.4 million, compared to an operating profit of $200,000 reported in Q2 2021. The main drivers of this reduction in operating profit are the reduction in revenue and margin contribution from our COVID-related portfolio products, along with zero Paycheck Protection Programme income being recorded in Q2 2022, compared to 2.9 million of Paycheck Protection Programme income being recognised in Q2 2021. This was partly offset by a lower impairment charge this quarter. Moving on to net financial expenses of 8.3 million recorded in Q2 2022, which compares to 0.3 million for Q2 2021. This increase of 8 million is mainly due to non-recurring expenses of approximately 5.6 million associated with the early partial repayment of the preceptive term loan. As you may know, we repaid approximately 42% of the term loan principal during the quarter, As a consequence, we incurred a penalty for earlier payment of approximately 3.5 million. And secondly, under IFRS accounting rules, we had to accelerate the recognition of the accretion interest expense. And this resulted in an additional non-cash expense of 2.1 million this quarter. I will talk further about this earlier payment of the loan later on the call. The remainder of the increase in net financial expense is mainly due to higher interest rates applying to our borrowings post the refinancing. We replaced exchangeable notes with a coupon rate of 4% with a senior secured term loan with an interest rate of approximately 13%, albeit the net amount now borrowed is substantially lower. As a result, interest payable increased by 0.9 million compared to Q2 2021. Lastly, we recorded a fair value adjustment on derivatives balances related to the term loan, which this quarter was an expense of 400,000. Loss after tax was 9.7 million in Q2 2021, compared to a loss of 0.8 million in Q2 2021. As in prior quarters and as set out in our press release, we quote earnings per ADS effectively our equivalent of EPS. Loss per ADS has increased from 3.7 cents in Q2 2021 to a loss per ADS of 28.6 cents in Q2 2022. I will now move on to address some of the main balance sheet movements we have seen since quarter one 2022. I'm pleased to be able to report that Trinity Biotech has a significantly stronger balance sheet this quarter. The total liabilities lower by 21 million compared to the end of March 2022 and lower by 28 million compared to last fiscal year end. The most significant balance sheet movements during quarter two 2022 are the 45.2 million investment from the MECO group and the part repayment of the term loan. The MECO investment has resulted in 25.2 million of additional equity capital and a new seven-year convertible loan of 20 million. This 2 million convertible note is accounted for as a compound financial instrument containing both an equity and liability element. The debt component is accounted for at amortized cost in accordance with IFRS 9. At June 30, 2022, the carrying value of the convertible note's debt component was £13.4 million. The equity component of the convertible note is £6.7 million and has been recorded in the equity section of the balance sheet. The carrying value of the term loan has reduced by £32.3 million this quarter, reflecting the early settlement of approximately £35.4 million, partly offset by accretion interest. The remaining balance sheet movements, which I would like to highlight, are intangible assets and inventory. Intangible assets increased by 1.4 million. This is met up by additions of 1.6 million, which mainly comprises capitalized R&D expenditure, and this was partly offset by amortization. Inventories have decreased by 0.5 million since the end of Q1 2022. This increases within the normal range of fluctuation for inventory levels, and that 500 decreases This quarter brings the inventory balance back to a level we reported at the end of December 2021. Finally, I will discuss our cash flow for the quarter. Our cash balance increased by $400,000 to $10.5 million in quarter two 2022. The aforementioned investment of $45.2 million from the MECO group was received during the quarter and was primarily used to fund an area repayment of the term loan of $34.5 million and a related penalty for early repayment of $3.5 million. Cash from operations was an outflow of $1.9 million. We had capital expenditure cash outflows of $1.8 million and payments for property leases of $0.7 million. Entrance payments for the quarter were $2 million. And as you may have seen in our earnings announcement, we have made a cash saving to date of approximately $2.3 million from repaying part of the term loan early. While we're speaking about the term loan, I would also like to bring to your attention the fact that the minimum liquidity covenant for the perceptive loan has been amended until May 2023, so that the unrestricted cash balance that we are required to maintain is now $2 million, down from $5 million previously. I will now hand it back to Aris, who will bring you through the revenue and key business highlights.
spk04: Thank you, John. Now I would like to discuss a few revenue highlights for the quarter and priorities for the rest of the year. Total revenues for Q2 2022 were $18.5 million. Excluding our COVID-focused PCR viral transfer media products, Q2 2022 revenues of $18 million were broadly flat compared to Q2 2021, and were up 7% compared to Q1 2022. A strong year-over-year increase in our diabetes A1c product line revenues of over 25% offset a decline in legacy infectious disease product demand in Asia due to continuing COVID-19 lockdowns. Preliminary estimates for Q3 are for expected revenues of between $19 million to $20 million, driven by an approximate double-digit year-over-year increase in both our hemoglobins and Fitzgerald life science businesses. Fitzgerald's revenue momentum into the second half of 2022 continues with a 25% quarter-over-quarter growth as a strategy of focusing on high-value bulk sales is getting traction. Q3 global health HIV orders for Africa, which are often difficult to predict, increased compared to Q2 2022. And we expect our HIV point-of-care revenue to grow over 30% on a quarter-over-quarter basis. Since World Health Organization approval in February of our trend-screen HIV product, The relevant Kenyan Ministry of Health Task Force recommended Trinscreen as a first-line screening test for Kenya's new HIV testing algorithm. In addition, the pre-submission process has been started in several other African countries. For context, our target countries for Trinscreen HIV under active evaluation in 2023 have a combined estimated market size of 30 million tests annually. We chose Kenya as the first country to submit TrendScreen for inclusion in the national HIV algorithm, given its large market size, estimated 5 to 6 million tests a year, and its prestigious leadership role as an innovator in HIV management in Africa. The use of the new HIV algorithm had been delayed due to the change of government in Kenya following the election in August. and a legal objection by competitors regarding the overall HIV algorithm evaluation process. The new government is now in place, and we understand they are motivated to scale up the HIV rapid testing program to pre-COVID-19 levels. We understand the implementation of the new testing algorithm will begin before the end of the year and expect the first orders to arrive shortly. I would also like to take this moment to welcome Tom Lindsay to our Board of Directors. His experience and networks in Africa will be a significant benefit during this product rollout. In May 2022, the company announced the closing of a $45.2 million investment from MECO Limited. The investment consists of an equity investment of $25.2 million acquired for $2.25 per ADS and a seven-year unsecured junior convertible note of $20 million with an interest rate of 1.5%, and mandatory conversion price of $3.24. As part of its ongoing balance sheet restructuring, the company made an early repayment of the $35 million of its student loan with Perceptive in May. The partial repayment will save the company cash interest expense of $5 million annually. Further refinancing may be optimized in conjunction with the execution of one or more potential strategic transaction opportunities we are contemplating. Now focusing on our hemoglobin business, our largest platform. We have recently completed a comprehensive three-year execution plan for the business that incorporates new targeted product launches and intelligent actions to maximize profitability. In late August, the company submitted its 510 submission to the FDA seeking U.S. regulatory approval of its premier resolution hemoglobin variance instrument. Subject to FDA approval, commercial sales are expected to begin by Q2 2023. The team is also finalizing the development of a lower cost, mid-throughput A1C instrument that leverages the core consumables technology from our existing Premier 9210 instrument. This new instrument is targeted at developing markets where rates of diabetes growth are substantial, but the entry price of instrumentation is a barrier. We are also developing a commercial strategy that combines equipment financing with our core product offerings, ensuring a favorable cost entry point for our customers while optimizing the Trinity balance sheet. Supply chain, product design, optimization, and commercial actions are underway in this business to significantly optimize the margins of the platform. This includes insourcing key elements of our consumable column manufacturing and streamlining our product focus. My expectation is that these actions should deliver a double-digit profile for the business over the next three years at well over 50% gross margins. We see significant growth potential in our autoimmune business as well. Our focus is on the 2023 launch of a clinical laboratory reader and processor range. to complement our existing IFA consumables products. We are also in the platform evaluation stage for the adoption and development of a chemiluminescence system aimed at our current ELISA product range. I'm quite focused on our proprietary Sjogren's dry eye testing capabilities within our autoimmune portfolio and believe we can scale this product line through pharmaceutical partnerships and applications in adjacent markets such as dentistry. In an effort to address demand growth for our cryo-slides business, we are expanding manufacturing capacity at our Jamestown facility while also offsetting excess production capacity from the expected runoff in demand from our legacy infectious disease products. We have launched a strategic review of expansion opportunities in the point of care space. and in the sponsored decentralized consumer testing programs in order to take advantage of the evolving patient expectations, rapid technology convergence, focus of ambitious and well-funded tech and CPG players, and payer focus on controlling healthcare costs through proactive digital healthcare. We are actively exploring acquisition and partnership strategies in these areas aimed at accessing channel distribution, product innovation, and user experience expertise. And at the same time, we intend to make a substantial investment toward this effort over the next 18 months in our Buffalo, New York lab, which is well-positioned to serve the decentralized testing market because, unlike many other U.S. labs, it is certified to process samples from all 50 states. In addition, we are positioning our point-of-care product business and Irish manufacturing operation to apply its operational capacity, product development focus, and regulatory know-how as an ecosystem enabler of the disruption in this space being driven by market forces. There may be an opportunity here to leverage our mycobiomed relationships in relation to their handheld enzymatic product line. I like to use the analogy that we are aiming to be the Shopify of the decentralized testing space. The combination of our world-class lab operation and decentralized testing product development history is unique in the industry. Platform optimization actions to date have resulted in a significantly more efficient workforce. Our average headcount in the six months ended June 30, 2022, was approximately 410, compared to over 500 in the six months ended June 30th, 2021. And we expect total headcount to be under 400 by the end of 2022. Operational efficiencies will continue to be a focus across the board as we aim to make our processes leaner, more agile, and highly automated. We are undertaking a portfolio-wide capital and talent allocation review, emphasizing maximization of return on capital, and to ensure that our incentive systems are being enhanced to drive significant target improvements in gross margin, earnings, cash contribution, as well as revenue growth. The centerpiece of our incentive system will be an ESOP program modeled after my own equity compensation, which results in substantial financial incentives when shareholders benefit the most. Over the past 18 months, the company began a program of leadership upgrades, beginning with our CFO, John Gillard, and subsequently attracted experienced leaders in operations and HR. Most recently, over the last couple of quarters, this focus on talent has expanded to include new leadership in supply chain, regulatory compliance, business intelligence, and technology. I urge you to visit our website to see their bios. While we have brought in fresh talent to lead key sales initiatives, this area continues to be a direct focus of mine. Over the coming weeks and months, my intention is to further outline Trinity Biotech's strategic focus for 2023 and beyond. One such opportunity will be the upcoming Piper Sandler Healthcare Conference on Thursday, December 1st, where Trinity Biotech is scheduled to present its strategy. That concludes our commentary regarding the quarter. We are now available to take your questions.
spk00: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone screen. If you're using a speaker phone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. The first question is from Jim Sidoti of Sidoti and Company. Please go ahead.
spk02: Good afternoon, and thanks for taking the question. First one, with regards to the sales of the VTM, the COVID-related products, you said down about $7 million and a quarter. So does that mean those sales are basically gone at this point, and do you expect them to come back?
spk04: Well, let me give you some context, and I'll have John give you maybe some of the – detailed trend lines on this. But, you know, look, COVID is a little hard to predict right now in terms of how we're facing the winter season. Obviously, there's a fair bit of concern, you know, in the U.S., and there's this whole triple threat with RSV and flu. Last year, I think, you know, we saw a tick, a tick up. Will we see that again? I don't know. Frankly, we're not predicting it. It's down substantially. We're not counting on VTM to be a driver of our strategy going forward. John, I don't know if you want to add anything to that.
spk01: Yeah, Jim, we're down about 7 million, as you said, to about 400,000 in quarter two. And looking not to labour the point, it continues to be a very fluid situation with COVID, but we have seen, you know, the continued demise of PCR testing in North America. So, you know, hard to predict, but at this stage, it doesn't seem like it's going to be a significant feature for quarter four.
spk02: Okay. And then for the third quarter, I believe sales a year ago for the VTM was around $3 million. So it sounds like you expect sales to be up about a half a million from a year ago, if you exclude that. Does that sound about right?
spk01: Just give that to me again, Jim, sorry.
spk02: For the September quarter in 21, I believe the sales were about $3 million. So if you come in at the midpoint of your guidance for 2022, I think you're implying about 3% top line growth, you know, excluding the COVID. Does that sound about right?
spk01: I think we have about, between 3,000 to 400,000 of COVID sales in Q3. It's preliminary guidance, but I think it's probably going to land somewhere in around what we have in Q2.
spk04: I think, John, the question was, our guidance at 19.5 million ex-COVID, what's the year-over-year for third quarter? Is that your question?
spk02: Yes.
spk01: Yeah, COVID last year was about 3 million in quarter three, and this year we expect it to be between three and 400,000.
spk02: Okay, so if you come in at 19 and a half million, you're up maybe a couple hundred thousand from 2021 on a year-over-year basis. Yeah, yeah, understand what you're saying.
spk01: Yeah, understand what you're saying. Okay.
spk02: Okay. All right, how should we think about interest expense for the third quarter and going forward? I know this quarter was unusually high because of the accelerated paydown.
spk01: Yeah, so interest on the perceptive debt is about 14% now, okay? And there's about $45 million on that. So that'll be our expected cash interest cost. The accretion interest is non-cash. And there's an IFRS-driven... driven charge.
spk02: And how should we think of the share count for the third quarter and going forward?
spk01: In terms of EPS, it will increase somewhat more, Jim, because obviously the shares that were issued to MECO will have been outstanding for longer.
spk02: Right, so 38 million, does that sound about right?
spk01: In around that, Jim, yeah, in around that, Jim.
spk04: Okay.
spk02: All right, thank you.
spk04: So, Jim, just context on the revenue. Effectively, you look at kind of where we are quarter over quarter and year over year. We're kind of flat, you know, all of the ins and outs of COVID. both the VTM upside and the effects on hemoglobin, you know, because of all the COVID testing. All that's kind of washing out, and we're basically flattening out on revenue, somewhere around $19 million to $20 million, that range. And the idea is to build from there. So that's kind of where we're playing out right now. And that's kind of where John and I are building our base case, kind of from this kind of flattening out point in terms of the next three-year plan.
spk02: Right, so basically you start out with a $75, $80 million business, and then you expect to grow it from this point based on increased sales for the HIV test and the autoimmune and diabetes test.
spk04: Yeah, and some of the initiatives that I highlighted, I think, have real growth potential in 23 and 24. I think at the end of the day, we feel like we're, yeah, we're at the run rate now from where do we want to build a plan.
spk02: And what level do you think you need to achieve of revenue to obtain profitability on the bottom line?
spk01: We're really attacking it two ways, Jim, right? So obviously we want to grow revenue, but we're very, very focused on and growing gross margin as well, and gross margin contribution, okay? So I think we flagged previously, the average selling price of the trans-green HIV test will be lower than the unigold test, okay? So we expect that would have a margin percentage erosion, but will add to gross margin contribution, okay? And then we're very focused on managing our SG&A costs and our overall cost basis. So I wouldn't want to give guidance in terms of, you know, of what level we'll reach overall profitability. It will depend on progress around not just the revenue number, but also if we look to optimize our gross margin. So as Iris had spoke about, for example, if we take our hemoglobin business, we're looking to insource there a significant aspect of our consumable production, you know, we think that could add somewhere around a million dollars to our bottom line on an annual basis through that action. We will not hit that for a full year for 2023, but I'd expect we'd hit that for a full year 2024. So we're executing on that at the moment, and I think it'll start paying dividends in early 2023. So there's a number of key initiatives that we're focused on to make the business much more efficient, rather than just rely on revenue growth to get us to break even. What we're really focused on is revenue growth and efficiency to get us to significant profitability.
spk04: I mentioned the three-year plan on hemoglobins. We are looking at a business that should have gross margins well in excess of 50%. and operating profit margins pre-tax in the 20% maybe plus or minus range, so in the three-year timeframe. So that'll be a healthy, profitable, and that's our largest business. The areas right now that we're spending some time really vetting out is point-of-care. How do we position the lab and the product business in point-of-care to take advantage of high-margin products opportunities in developed markets as well as what we currently have, especially in the case of the product business and the developing markets. That partnership strategy, and we feel very confident in terms of what opportunity we have at the lab level, but that strategy is a very high-margin strategy, both for our Irish-based lateral flow business as well as our lab business. I think that's going to be one of the key drivers, but we're putting some work around that, and we're in discussion with a number of partners, and that'll determine that model for us shortly. Autoimmune, to be honest, has got tremendous growth potential. It's small right now, and that's an area where we may be willing to, in the short and medium term, significantly invest to take advantage. So the idea is between now and the Piper conference, we'll have this thing pretty much narrowed down. We'll have a pretty good three-year view.
spk02: Okay, and then the last one for me, are you actively working on refinancing the remaining piece of that 14% debt?
spk04: Well, you know, look, the market is a little fluid right now. And one of the things that John and I discussed when I got involved was, refinancing the debt has penalties associated with it, okay? When you do all the math in the short term, it's a fair bit of penalty for the amount of refinancing benefit you're getting. Now, what I have been thinking about with John here is we've got a number of potential transaction or partnership opportunities in front of us, and that we're probably better off going to both debt and equity investors around a transaction idea and do a refinancing once as opposed to doing it twice and paying a penalty. So we're trying to be prudent. I mean, 14% money is stupid, right? I mean, that doesn't make sense to sit on. So that's not my intent. I expect to refinance out of it. I just want to make sure that, you know, John and I want to make sure we're being clever about it.
spk02: Understood. All right. Thank you for taking the question.
spk01: Yeah, and just through the earlier repayment, Jim, we have taken, you know, a significant piece of that cash cost out. So it's not as, while the rate is high, the amount borrowed is substantially less than we had previously. So that's taken some of the cost out.
spk02: Understood. All right. Thank you for taking the questions.
spk01: Thanks, Jim.
spk00: Again, if you have a question, please press star, then 1. The next question is from Paul Norrie of Noble Equity. Please go ahead.
spk03: Hey, good morning. Good morning. What do you see as the size for the variant instrument, the size of the market for that?
spk04: Well, look, we had a previous – I'll let John give you a little bit of a kind of a forecast or a perspective on those numbers and what they could potentially be, but – You know, look, the Variant product is replacing a market leadership position we had historically and expect to kind of hit the same rates once this product is rolled out. It's really a much better version of the Ultra product we had in the market, right, John? So where were we on the Ultra, roughly, in the ballpark?
spk01: Yeah, look at me. well over, you know, five to six million revenue a year, right, in the U.S. predominantly, with very healthy margins, Paul, right, and a recurring revenue model. You know, we could get higher to that, obviously, to the extent that we push this outside the U.S. So while we have launched it under CE Mark, you know, in a lot of countries, because it's a U.S. manufactured product, it needs 510K approval. It needs home country approval. And just also from a marketing and credibility perspective, right? One of Trinity's great strengths in its other areas is the fact that it has a large number of 510K approved products, right? And that markets those products well outside the U.S. And the same should apply for the premier resolution. So, yeah, look, we'd hope to be getting five or six, if not more, million a year out of that at a good margin today. And really the growth is only dictated by, I suppose, how far we can expand that outside of the U.S., of which the $15K is a key pillar in that strategy.
spk03: Okay. And then shifting to the screening market, in Africa, how much does – how much market share does the current leader have there approximately? I know it varies country by country, but, you know, are they, you know, predominant over 50% or is it more of a scattered market than that?
spk01: Yeah, look, and I don't think we'd want to necessarily talk about someone else's market share. We're more interested in our own. But, yeah, they have a predominant position within the market.
spk04: Well over kind of what you can target it, so, yeah.
spk01: But that gives us an opportunity, Paul, to pick up a meaningful piece of that market. They have been the incumbents there for many, many years, and that gives an opportunity with our product, which we think has key benefits in terms of its performance, but also the time to test. It's a faster test to run, and that matters a lot where you're running a HIV testing clinic in terms of throughput. So, you know, we think that we can pick up a meaningful piece of that market, notwithstanding their position there.
spk03: And do you anticipate that legal objections might be an issue in each country, or is this country unique in some way that they thought that they had a leg to stand on?
spk01: Again, not inclined to talk about cases that other parties are involved with and we're not involved with. But I'd say this was not necessarily an issue that we had perceived would be a problem in terms of a broader rollout in Africa. So we don't foresee it as a major issue.
spk04: I'll give you my perspective on having done a fair bit of business in Africa. Look, Just one step back. We're talking in our screening market about $150 million a year roughly, okay, of revenue available in the market. Given the attributes of our tests, and they are substantial, and the desire for many countries to have an alternative on their algorithms, you know, it doesn't – we're not – planning to kind of go get 50% of the market or anything like that, but it isn't inconceivable for us to have 20% of that market at all. I think that's doable. So that will give you some context of sizing around that for now. And then the other thing I would say is, you know, whether it's a legal case, sometimes it's a political issue, Africa is lumpy, and it's going to be lumpy. That's one of the main reasons why we're focusing our point-of-care test to scale beyond Africa into higher margin, more predictable markets, okay? At the same time, we brought Tom Lindsay on board, and Tom built Aaliyah's business in Africa. He's got the networks. He's got the gravitas. It's one of the main reasons we brought him in, to enhance our transparency and overall – uh, intelligence around dealing in Africa and getting more, you know, predictability out of it. So all those are the best things we can do, but it's always going to be lumpy out of Africa. And we just have to accept that.
spk03: Okay. Um, and I know this is kind of a tough question cause you, you know, there's no way that, um, you can predict this kind of thing, but as you're looking for, uh, partners to, uh, you know, possibly merge with or whatever the strategic combination would be, are you leaning more towards younger companies who have more capital and could use, you know, the fact that Trinity has been in the market so long, or is it the other way around where you're looking for more mature companies who are maybe looking to, you know, you know, just bolt on some extra product lines or whatnot?
spk04: Look, I would say we're looking at a range, okay? We're looking at companies that might be similar to us and have what I would find an appealing product pipeline in the point-of-care space. That could be interesting to us. We are talking to companies that – are plugged in to the new healthcare treatment ecosystem with telehealth and all the other digital providers being sponsored by payers and who are connected to these networks through user interfaces, APIs, abilities to do private labels, very interesting IT capabilities among other things that are really important if you're gonna try to fulfill solutions, especially as you start getting into over-the-counter B2B2C models and over-the-counter strategies. So those tend to be what I would call, yeah, younger companies, more techie companies potentially, but who get healthcare and who get the complexity of being plugged into healthcare. And then I think the third category would be traditional CPG companies and tech companies who are who see this as a real growth opportunity for them. And what I like about those discussions is, you know, we don't have that kind of distribution reach. They do. And they don't have the regulatory and operating excellence in this industry that you need to have that we do. So I think there's some very interesting dialogues going on. But that's the range of conversations, John. I don't know if you want to add anything to that.
spk01: So I think that's a fair summary. Like, Paul, really what we're trying to do is, you know, in a post-COVID world, we have a capability for developing manufacturing point-of-care tests, and now we think we can direct towards a more over-the-counter, higher price point consumer market. And our laboratory also, we can redirect that capability to serve that market in to support virtual care. So it's really around us taking our existing capabilities and looking to scale them and point them at higher price point, higher margin opportunities than we have been maybe over the last 12.
spk04: Hey, look, we've had inbounds for people wanting to buy, digital companies who've been wanting to spend a fair bit of money wanting to buy our lab business. You know, the reality is we realize we actually have something interesting and allows us, this allows us to lead in terms of the interconnectedness you need to have to this ecosystem. And the margins are, I got to tell you, are a lot higher, a lot higher.
spk01: To the extent there's capabilities we need to bring in to do that, then partnerships are a way for us to do that, as well as, you know, building on our existing platform with, you know, product acquisition or, you know, synergy plays?
spk04: You know, look, you've got a fundamental, aside from user preferences that have all evolved and companies like Apple who want to get into healthcare and CVS and everybody wants, everyone wants your bulletin results if they can get it. What's the most important trend is that payers have had enough. All right. And payers are driving digital health. And everybody knows that progressive, proactive testing is critical to make this work. The ecosystem is looking for solutions. We're a piece of that solution, okay? And what we're figuring out is how do we plug what we're good at with people who have other aspects of what this ecosystem needs to provide solutions? Because the payers, the insurance guys, they're looking to put together programs to get ahead of the cost issue. So we're just being smart about this. We're not trying to be something we're not. Some things we'll buy. I'm very interested in buying user interface, user experience opportunities or partnering around that kind of thing to plug in with our lab and product capabilities. I think that positions us very, very well. And so, look, stay tuned.
spk03: I appreciate all the insight on that. And then just one technical finance question. Inventories, I think, for the company have historically been at a high level, and I think my understanding of it was that it was mostly related to Fitzgerald and them needing to have a lot of inventory on hand, a lot of different types of inventory on hand. Is that still the case, and is the current inventory level where you would expect it to remain approximately in coming quarters?
spk01: Paul, I think it's not just down to Vistura, right? So, you know, given the supply chain challenges that everyone, not just us, have had over the last 12, 18 months, we made a decision to increase our safety stock levels for many of our inventory items. especially in our home hemoglobin business, we had significant supply chain challenges. We were typically able to overcome them, but they can be quite a distraction, okay? So, you know, we need to be able to produce when our customers and when ultimately the patients need our product. So for that reason, we've made a decision to increase levels of safety stock. So that's the main driver, I suppose, of that high level, I'd expect that to maintain in around the same place.
spk03: Okay. Thank you.
spk00: Again, if you have a question, please press star then 1. This concludes our question and answer session. I would like to turn the conference back over. to Aris Kakajian for closing remarks.
spk04: Well, look, thank you for attending my first earnings call. I thought your questions were very, very insightful, and I appreciate it. We will actually be back to you fairly soon to do our third quarter update, and I promise you that we'll be on a more regular schedule going forward. So stay tuned. We look forward to talking to you in a few weeks' time, and And I think we have a link on our website to the Piper Conference. So that will be live streamed, and we'll provide the presentation online. So with that, thank you for the time, and enjoy the rest of the week.
spk00: The conference is now concluded. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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