Chembio Diagnostics (CEMI) 4 Mar 222021 Q4 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Chembio Fourth Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Philip Taylor with Investor Relations. Sir, the floor is yours.

Thank you, Operator.

information me conference that XXXX, call predictions, or let made company's may begin, considered estimates, this be during today, other we remind the you remarks include forward-looking. Before might that March Xrd, These future. forward-looking the statements current for Chembio's represent judgment beyond subject from are with time-to-time under SEC including control, are, in of however, and Risk many and those elsewhere SEC. filings numerous Chembio's the to They including in Factors risks, risks assumptions, uncertainties, which Chembio's described Chembio's and uncertainties filings, its reports on Form Including and for third XX-Q quarter quarterly the quarters second of XXXX. current Form report And with the XXth, on the July SEC on filed XXXX. X-K Chembio's projected or Chembio results publicly those statement revise materially update to may from undertakes any no made differ obligation forward-looking today. the these SEC with of I company's filings and matters. encourage concerning you the review other to all With to would President Chief the Executive to over like and call Rick Eberly, Officer. that, I turn

product you, our quarter, I fourth start prior we Then Q&A performance. Thank On this thank compared year. generated all fourth of to record pipeline, and year XXX% XXX% respectively, and revenue like for million, lay regulatory revenue provide today. for call on results go to afternoon, and our $XX.X of the session. our for a us performance, the product commercial development the total off, $XX.X for conclude an joining will XXXX. open To highlight would we representing our full-year including a million, priorities I and Phil. quarter quarter period. In out growth of and and the Larry financial Good initiatives comment fourth discuss our and over on update call, operational you today's everyone, will will

respectively of million, revenue to XXXX, we compared XX% $XX.X XX% XXXX. full-year and product revenue the total of representing growth of million, For $XX.X generated including

Global development COVID-XX from Fund order purchase Test Our across The and establishing added driven including shipped Tests sheet to of supported A in for Larry award with Brazil. purchase performance and DPP of from order States. United the introduce our XXXX, In $XX.X appointed significantly of several Antigen by today. our tests for have for leadership strengthened by will tests Ethiopia Board Bio-Manguinhos an the XXXX, COVID-XX the was million highlights HIV newly Directors. SARS-CoV-X third-party team Steenvoorden, whom distribution XXXX, And we the to also we in balance our in I BARDA CFO,

all-time the by ANVISA revenue Antigen deeper for tests, completing tests, high the DPP On development American achieved in the growth into product reached and Diving an shipments quarter for Latin front, our with product regulatory from sales these quarter, mark products. along of million product the we FDA in the of mainly to COVID-XX for DPP led also consisting Chembio. approval Bio-Manguinhos. CE submissions region, Growth SARS-COV-X to $XX was

We fulfill continue $X.X quarter. fourth test, of sales We're third-party of a foundation are the million United the Bio-Manguinhos, relationships target complete are expanded for are in product laying are distribution tests to drive we remainder revenues opportunity the this to through broad the test this pleased further in with our excited we continued track deepen with approaching The in which do on about commercial QX as also of States. for DPP will and in System but towards growth levels Not HIV-Syphilis to accounts only CLIA the supplemented quarter. relationship U.S. the traction making our market which achieving U.S. we for order progress product. the our The very waiver a QX local to the relationships. to organization and the sold drove progress our that remain distributor state, with sales Antigen In distributors COVID-XX systems, retail, we leverage we also broad, States, us providing marketing region. our United be increase across distributor and Brazilian gaining healthcare in and tackle coverage

and further opportunity We established as development we expands. EMEA revenue orders Africa, portfolio of a to which opportunity have established recognized bolster product leverage these tests In $X.X of the million channels about the priority and point-of-care globally, about will part pipeline. HIV cross-sell In we the infrastructure Global product the XXXX. STAT-PAK delivery the business, are are our as in our have by additional by the we as our excited for self-testing robust Europe in be excited of Ethiopia, expand HIV commercial potential supported a regulatory driven a to shift we and sales region, to the To Fund. test

Our product on existing DPP objectives. growth To already geographies expansion for markets, novel platform register our where develop are that portfolio includes infrastructure. commercial to two products established additional we strategy solutions high-value tests and have and

System a rapid HIV-Syphilis perform waiver CLIA very unlock XX As -approved market waiver in our STD we've in thousand regularly XX by before, use rates. the of FDA December, co-infection that infections, we that DPP clinics tests testing. receipt large PMA for believe additional talked enabling would to will In require opportunity the a about the it notified other these for our submission. and no combo for infection There are data company CLIA rise despite the

and ANVISA for clinical the test which received fulfill are and receive Flu and The a decide this test Late action product present In panel. B us respiratory The differential December, patient address FDA to order flu panel, a pandemic. provides application review CE clinicians in the absence in Europe. that the tells are of SARS-COV-X, with the influenza similar Brazil, declined the to United a We samples, has concurrent us, to discrete, commercialize commercialize the to that the and States, us this single detection. respiratory from submission our transport mark Flu approval DPP will request Influenza mark in experienced to required through Chembio for infections from and This and proceed, outbreak common FDA diligently CE A to foreign-sourced, approval collect respiratory we produce viral order B to allows to symptoms. and new recently that Diagnostics, ANVISA data specimen. notice media. a the appropriate country respiratory application. EUA Recently, in working then with A to included COVID-XX care in informed near the for ongoing prospectively our samples, need simultaneous, -- waiver. a had taking EUA we helps influenza-positive allows this that submit Influenza preserved

the necessary trial. in States, to ability the timeline near-absence continued the United the complete the of Given influenza and were we unsure

The product a Southeast with to year, the HIV received the aggressively which completed. in ANVISA and South self-tests and around [Indiscernible] received market self-tests CE Kingdom, test, mark another for Antigen and the approval world growth has was review CE SARS-CoV-X is WHO pursue our the product the ANVISA SureCheck as we recently as Registration mark. EUA increasing. available in Our well DPP with us. Asia under of channels This commercialization and has African FDA. driver all represents This portfolio. approvals, The more HIV played remains use along the United through

the we've additional market insect infection front, we're development invested of sexually the product needs. The evidence at tests. product categories identification vector development transmitted in large, in exploring work potentially unfilled On is to feasibility develop these

the investments produce our pipeline over year past profitable of progress and more R&D see the potential the with strong pleased made are revenue long the We over for term. to

and stretched we has growing magnitude profitably. operations our while of orders initial This that growth earnings said, than recognize our The Although we experienced lower tremendous the XXXX, has capacity. expected. recent in in are we margins revenue are resulted not beyond

offers that This product growth advanced We immediate the profitability assets forward, about Global to enable enhance HIV P&L. Competitiveness the test. be the will are solution. for have premium the of exploring created component We capabilities markets. that higher pricing part business expand and platform feel program business margin higher to every DPP geographic efficiency model the focus with and for CLIA Program. I've option syphilis is our into margin will down improve To mix as starting first our we that our on our business. before step Improving going we greater the talked in waiver sales achieving targets, an only DPP

be cost me is Chembio at The under structure review. Let clear. entire

at we the has need and to than automation. just will joining low-cost gross principal manufacturing let Global more a been [Indiscernible] more since require understand as will line, we this alternatives margin detail Exploring this Looking is Larry the focus increase Competitiveness manufacturing priority. efficiency in establishing Chembio. I and Program for discuss top a

been, path has to always will and we forward are and shareholders, going and profitability. Our for we're create value remain forging a new -- towards goal

Chief Financial healthcare experience, He years Healthcare to like our Steenvoorden at newly Executive us appointed Vice and many would with I financial in introduce Now, President Diagnostics. joined Larry leadership including Siemens deep Officer.

We in his of are early will on the results. him our will insights days, let the be material provide excited I financial in about for after value his business future. creation provides assessment details operated has the he he which

Larry. Now you, to

you opportunity excited of Thank very I'm in here Chembio. at front the really much. about us

I fourth-quarter Before results. initiatives the describe the plan, operational in new I'll our cover

and by a million compared months Of of $XX.X cumulative through period. the XXX% was amount, quarter the $XX.X earned prior million, to Product increase ended revenue prior-year to combined of royalty year with and XXXX three XXXX million. December three revenues program growth the $XX.X fourth were the months to prior under fourth this million, $X.X program our of income the XXXX, grant achieving was $X.X total BARDA, XXXX was year revenues, revenue under license, for of $XX.X ended of quarter to income, XXst, compared X% a that bringing grant For for XXX% decrease milestones the Government period. an our dollar the representing R&D December government XXrd, period. million million, compared

prior an awards or from diluted decreased year per to product ended period, minimis acquisitions product decreased the of pursuant period. during negative period. $XX or were quarter three in XX-month the $X.X of fourth to December with million and amount minimum to million of period of prior-year loss $X.X compared $X.X general panel, Agreement. the December ended clinical net by with in XXXX. R&D intangible loss or of Antigen inventory goodwill compared impacted XXXX, unfavorable and DPP of XXXX months million and fourth revenues for administrative costs three fourth product margin million XXXX rolling XXXX. The compared XX, mix $X.XX was EUA an quarter increased XXX(k)) quarter million months $X.X each SARS-COV-X revenue EUA affairs in million. in compared prior percent of in an total assets compliance to from $X.XX in $X.X from prior X.X% Credit write-down per by share $X.X year BARDA. share in by per XXXX includes test, in FDA X.X% for related the net of Gross $X.X Gross selling pursuing to expenses [Indiscernible] margins quarter to labor and and period. quarter loss the margin prior fourth costs, to regulatory our the the fourth a to by of for associated compared diluted DPP to Our approximately the impairment de XXXX, year was million an primarily Selling, Net Gross compared the was $X.XX in the respiratory quarter year million prior the XXXX, $X.X XXst, the the in costs covenant share of the fourth to the the million and average prices, a increased the of

December quarter Networking of XXXX. ATM did cash XX, of sheet, as the cash capital of The any fourth million. in company common and stock part balance totaled offering sell of December $XX.X as the XXst, shares XXXX On was as equivalents $XX.X XXXX million. not the of

we QX of As level purchase large of working XXXX product are in Rick the mentioned, to of in reflective approach expect QX to current revenue the orders XXXX. achieved we fulfill,

half first for We full-year be weighted. revenue also XXXX expect the to

planning, create and like start operational from not manufacturing meaningful achieved plans scaling investments to beginning are improve see our the implementing in the in labor to from for have it but growth. and has have this month quarter To company Chembio analysis a headwinds, towards been required change profitability. overarching and volatile significant monitor XXXX, to my changes and goal this production share share and availability, as a that. And initiated throughout months, been shareholders. goal There execute improved I'd front. our Now both observations The improving the for the aggressively company capacity many revenue first profitability. the recent including to a the expectations my met in main growth taking on address away that to has regulatory value attention is We efficiency and resources first targets up headwinds with But time further first profitability we profitable taken potential production has profitability. pandemic my have From proactively in Global focus. Program. of steps, of to for mitigate with great to automation to accelerate make Competitiveness We're of years,

on Global higher been accountability with commitment company's in throughout include organization. the the the Program, to executive One, of developed business main leadership Our markets. of team and Competitiveness alignment, Global Competitiveness following. growth support ensure margin Program the pillars focus The the has a cross-functional

higher remains with prices markets in selling growth of pursuit unchanged. Our

analysis We basis. visibility increased that portfolio and With focus be key markets. more recurring an Automation use product to have in-depth lower business, tests recently our strategies, product now infrastructure channels to includes ways established model. a manufacturing distributor on on down. of and functions like marketing our and with U.S. our lower-margin Two, disciplined our further completed on costs while support transparency regional and pricing, the markets, our will this and other into and unit customer but of micro reduce pipeline will we level, profitability evaluation target have visibility perfectly a prices. will labor labor streams at centered in and volumes Furthermore, additional costs align direct to product to to scale a optimization DPP including seeking expansion support material and play Products our this in-depth the cost of opportunities increase recently costs. evaluate DPP With revenue and improved product drive management landscape. of and customer costs. core we competitive at target both product core readers manufacturing leveraging systems, on future an innovation a with level, reduce strategy, and also external are essential first business. spend analysis, development This approach of Research to of all benefit more costs. require Three,

our strategic to of and more profitable All of revenue must Four, businesses spend generation. assets. review contribute non-core

and in the those with both on achieved strategic not specifically, the business businesses to More the an will Brazilian as and emphasis have of subsidiaries acquisitions for independent the achieve long-term plans prior model. originally be Our our profitability reorientation German path with alignment roadmap.

to turn and is improve in pillars long-term long-term and growth with these value. for plan including these framework underpin many large execution markets, key remarks. relationships U.S. that approvals, on concluding implement Rick While including to customers, aggressively for call a the regulatory back our I'll profitable profitability, dependent We established to sustainable fundamentals factors shareholder successful now actions expansion future the

Thank you, Larry.

message Our is clear. today

record quarterly team. business pandemic of dedication and We to effort entire generate the challenges and by the We're very while proud the the annual navigated managing throughout have revenue.

infrastructure growth. products, commercial We continued make going every growth. pipeline drive of the the is requirement absolutely continue hinges to have This now forward. business a on our to we decision But profitable and

As we reduce expenses initiatives, plan of revenue course a efficiency improve XXXX. margins execute operational to product the our percent over we as and of gross operational

structure for Operator, and cost call provide the market. the ability new Chembio. and changes, for open our information gain please for in questions. With excited the the We're manufacturing remain to As a the new We point-of-care share, market results develop that, more about long-term impacts future around we lower-cost diagnostic direction up we implementing and from visibility confident of gain will business.

open is for now floor the gentlemen, questions. and Ladies

poll If Please have [Operator or questions questions. while hold comments, a Instructions]. we moment any for you

first Kyle is Your Colliers. from question coming with Bauser

Your line is open.

with Great. COGS sale and catch we are were into million, is profitability. remarks. growth for gross the based do here? how the products know talk your previous profitable so XX. from start of Can you. quite is know back in associated thanks $XX we've but Thanks. here. at get it. the clear the updates margin much this we If about you Thanks green what initiative Thank here perspective? look I seen the but I dynamics a Maybe I'll quarters, on didn't some I prepared

for question. our Rick. margins. is basis, in heard more this you the as Kyle, visibility product prepared level Thank On the Really, our you into a go-forward have much strategic gross remarks. we

the And not strategies, focus regions but marketing only States, relative to by United so enabling better our around that world. sales to the is decision-making our

also when We an forward that moving the So we're the quarter. doing quarter on adjustment Larry, anything Larry in add your relative fourth think have went margins. financials. the I to fourth did to gross was through question to inventory want -- about relative he to what touched

And we guiding think that visibility is now Yes. decision. the strategic so our now have I

So going as to a we using where we're coming with current are pricing forward. each to decision every be more up for that we and are have our with going certainly opportunities, and we robust approach

what we're now other leverage leadership improvements, as XXXX year. this with the now with that through done that to committed So this, that to to we've on in upcoming that growth going that And execute we're on continue team, profitable that. we'll automation making and entire higher an just expectations focus

initiatives, Bio-Manguinhos, to of that on the it. be that were margins you've of hit. quarters? revenue take what Latin said get We've QX decent now like as COVID saw margin additional presumably and that is, the This similar of will QX? the guess we gross going to a it of profile there's to Maybe big order like be similar Antigen your great, trying that. so looks recognized Looks I QX Got following which going in be QX QX $XX lot at in was up to was will million. couple pretty partner to expansion Okay. I'm gross going margin it got America, amount is tests when and levels a is into a that in XX

Yeah, Kyle. of A factors. couple

know, - or July largest order in history. the and of Manguinhos As the Fund we Bio large were BM you the company's in was year, order received largest the the order Global when they last the

the the imagine, some Also, output shipping, early in only can not of we experiencing the logistics. factor get and volume focused, chain that in as the played that. was really also headwinds a areas were continue scaled as So up labor required. as we scaling were in market relative were they pressures experience to Supply of fashion, about the up to and QX, increasing talked to all you of our today. but we components where to we and very pricing type tight monitoring Larry on manufacturing some of remarked, We on was dramatic And scale we that very, to very the in efficient. up, efficiency. some And a as days, weren't were

continue And through on we focused we to the to stay and QX. progress efficiency quarter, so that increase continue throughout fourth we the as

lastly it. just so then about bit gross talked a little -- And we Got Thanks. margin.

you. or I or and a you characterize burn think $X.X you the rate quarterly lot burn what's target talked plan that for improving was guess year scale how do it, quarter low think a could or I go a the -- basis? you cash on Thank that. you how to last want What you about rate on at however annual about million

Kyle. Yes,

Kyle, longer demands line out in doing efficiencies, to to quarterly into or and is, customer get with we long our is XXXX. around not and remarks, That's our on basis. We some and one especially term priority their to essential it do operations get way said whether into for our reduce government improve operating our one priority. XXXX everything are Kyle cash gross cash large testing, That is -- we expect visibility putting especially is to what margins, also as We our we to manufacturing, trying a number What But operating our visibility sight plan number rate commitments. to profitability. improve expenses, HIV for on continue our the lower NGO our qualitative ongoing we to comments guidance can to relative impact burn can COVID-XX. QX. better a did in That prepared the customers, or is a it's of in path in are we

jump all Thanks That for in here. it. Got will back the sense. I makes queue. updates

Kyle. you, Thank

question is from from Ostlund next coming Your Hallum. Craig Per with

Your line live. is

to are of the that. is be Or through ammunition officially, to product it Thanks. get to do How acknowledgment the yet in all of to in have things of your products, the I certain Larry, cash go in of on going levels it's going and situation? terms with little to it. local at cash rein guess going order out do where Good team. Thank a roll and registrations are out I'm want that going giving maybe that? to care to amount cash you you start to Kyle's follow get R&D, here burn some and be bit taken to continuing like there the feel in preserve you're position that to you. with able side the a time feel there Got that about you I that afternoon question the and headwinds welcome, QX the certain to on to up is new take everybody

Thank you to question. for the new products. Relevant

time focused development, product as We take product and for very, They clinical and the as on are trials, possible. pipeline etc. time, FDA fast etc., do forward very regulatory review moving those

not were what our only you COVID focused impacted focusing largely the So QX by we're our on on But core order. Bio-Manguinhos on doing we're products. products saw very which is

America. really core our prioritized and, the States, has only market Europe of in got realized organization products in in their in fact, Africa United products, our strategies core revenue we've but we not our and And terms strategies. from Latin maximize selling In our and commercial to

selling then been So, high doing has what product in and FDA's test data syphilis that priority need our additional to the of request approved we for combination do terms CLIA to PMA answer waiver. a HIV the remains

our seeing realizing that we're uncertainty what's around everything can COVID, Omicron certainly So our products, it's We're on related the maximize doing focus variant. future the we happening to core with and other of the variant of that to United COVID-XX decline of States. to and beginning in some the we're and significant pretty the the in. markets the of some a Omicron We're incidents see

So can leadership committed as everything commercial we on a our team, the to we do products we to moved XXXX. focus have throughout core efforts as

good. On it's the that seen Okay. they the extension you you and necessitated do two you point, a I about those over. the guess issues? respect? acute? order, most of the Very issues Are very be have - one supply worst control that the How that feel Maybe of parter. staffing the Bio-Manguinhos very, might When still in think chain we have the staffing

to at the I of them. team strong suppliers prices operations procurement longer-term to chain components, issues some logistics our be chain, agreements pricing are of some as so same all with continues to long-term supply recent relationship headwinds or will we're our suppliers problem components. very it's trying most threatening time, supply that many They -- combating the a But companies pressure very, the the continue let with biological for events. first. me a to with the raise with experiencing, has be address built seen and We contractual negotiate of whether The on especially us. global

chain. supply the that's So

we that so to and shipping look continues costs increase XXXX. with move talking impact at is also that's gas about into everyone logistics be its a the If shipping, headwind you price as

been for side of QX, On production. front, extremely manual the and we and additional hiring an the competitive labor labor employees market, especially were during especially it's the ramping as up

we necessary will what the to relative our we see move are, part early XXXX. employment in adjustments, making the by affected we of directly As needs what QX XXXX, into be demand beyond

me good. can into here. this we the from for moment. Last very Okay, Larry question bring discussion Maybe

I initiative, of the think competitiveness a laid tremendous make tenants out global sense. the that So you all amount

alluded and to you think of I too. things, those Rick number this a

and these hey, of talked codifying really things while. much lot and geographies, now a that we the and feel specific that higher-margin is year laid and is well? have -- we've were to. just not not mark and out we set things. Larry of just at saying, as Focus and a you're global are the have you we like initiative two Rick, have the down for versus, of products, of sorts we virus How we we we know officially and much think have efficiencies I can and things higher-margin How competitiveness it can -- of we -- and on about there it a done now of fresh sitting these things frankly, we

Fair.

I going where and it's and value. to go. mean, current shareholder and we XXXX the to So the is to that thanks with that this was Rick come two where would we say I'd just model into in not of and first I I organization set budget in so create a just question sustainable certainly about to realize at the month a forward to coming to where key a when and fresh now, started look eyes for move right lever we're I'd and need have my experience we how

one really profitability. And they path at commitment revenue started the continues the to just to changes now looking forward. So from then -- back also business leadership in are the call team. cost that's ones are where immediately to first then we what key through saying, and and be and is make you are. going can I we be other going just it's where And But the to our then that infrastructure, look to subsidiaries entire at what higher-margin looking I'd from key -- going need also that a a we say we ensure know pillar. what, at are And down levers it's that the a can subsidiaries that our

that had strategy the make and benefit be the to been for has profitable in, growth vision together. leadership the team going of are And and to team we're execute, held from of going So also putting forward. all we to going entire my then I focus coming accountable. to the that progress But the entire clear consensus getting

key do key an that now road going that's held the to we accordingly. all be that to we're is map So and have accountable now entire elements it will we is And of see execute again, the we are team.

that question. helps address your hopefully, So

done has -- product to I the you you're labor just down Rick. of If material company, Immediately cost joined is our We've it on costs. that. incredibly that to was been that from is analyze That more XX one thing the to there on obvious XXXX. really indirect top for grown just revenue It I that the all and this was Larry could production high. assessment was when actual in labor, will of an example. executive add a gone really, the an was give he margins XXXX. costs and one well to was standard from If labor presented our very product revenue team based The review. direct and data, gross products based company,

didn't I we our have moving can or that on based to able -- marketing on the we're very ask on that and I point of product sales, visibility whether before going leadership there question is now going about we So, that why the Larry's detailed we're and focus, just both we're actually Larry side, To are you finance regions before. we It's and to Well, biggest information. joined. you the would give whether we're might been now codifying execute. forward making decisions execute. have strategic we it that assurance this period That's wish have my you your with to be say change. have

all it. I the appreciate context. for Thanks Excellent.

lines the this at event. from This ladies time. questions further and Thank gentlemen. no phone have concludes you, today's We

your day. this You time have at Thank a wonderful disconnect and may you for participation.

Thank Catherine. you,