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Chembio Diagnostics (CEMI)

Participants
John Sperzel Chief Executive Officer
Rich Larkin Chief Financial Officer
Kevin Ellich Craig-Hallum Capital Group
Ross Taylor Somerset Capital Advisers
Raymond Myers The Benchmark Company
Larry Haimovitch HMTC
Matthew Campbell Laridae Capital
Kevin Ellich Craig-Hallum Capital
Call transcript
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Operator

Good day, ladies and gentlemen. And welcome to your Chembio Diagnostics 2017 Third Quarter Financial Results Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, John Sperzel Chief Executive Officer. Sir, the floor is yours.

John Sperzel

Good afternoon. participating call. for you thank in today’s And

Joining Officer. is Rich Chief Financial Larkin, our me today

statement begin, like XXXX, risks of we and Securities of conference with statements revise the Before the I’d Actual uncertainties. the Act results call during comments within involve the today, any today. this and of or company to concerning no obligation company’s and made company, from you statements XXXX could November encourage matters. Commission undertakes current of the these which assumptions, X, of meaning update will concerning forward-looking and to to contain the the caution made I beliefs all other these that Exchange differ number review Securities filings a

the continued broad only quarter its a and fever by areas: FDA the use quarter strong to scientific strengthening achievement further building test, During of execute DPP significant DPP advances third a on authorization and We a patented disease Sales company technology triple first growth business transmitted as digit highlighted our tropical receive team. expertise. compared year, to global a sexually in during HIV commercial the XXXX, business; XXXX, of three the to focus third building and Brazil. our key the rapid We Zika with became including company sales made strategy to portfolio; the and prior of for emergency the validating disease core our

pleased for achievements financial period. significant performance particularly we’re company’s the these While with the

XXX% $X.X prior revenue period. million XXXX, of quarter increase Chembio the During total achieved year of which the a over represents third

$X.X in sales quarter during highest million, revenue prior which was XXX% history. over a were quarter the the year during Product total company XXXX increase of fourth of XXXX period. third fact, represents In third the the quarter

of $XX.X prior note which over a the of revenue XX% of increase first target to million total the XX% more United regions sales the Africa, in and of quarter review XXXX, the number XX% that nine year increase States, year-to-date a a results following a product period. to months prior-year product by a the which sales the quarter Latin achieved Europe. third months significant XXX% in we XX% a period achieved for detailed period. XXXX XXXX America, $XX prior the Rich? of represents represents first and compared During increase during third I XXX% million, business review were year nine growth a important the in a increase Rich. provide the in increase over It’s And increase Chembio a will in of of including

Rich Larkin

my conjunction additional filing comments, Thanks, with Chembio’s recommend participants details. I’d that review for XX-Q like John. In to

XXXX. review for the will I of First, quarter the financial third information

grant and Our total quarter million third compared million the Product $X.X XXXX R&D in $X.X third $X.X the XXX.X% quarter XXXX XXX.X% year revenues in to milestone sales year period. with $X compared of of increased XXXX prior in million for the the to of compared increased of $X.X primarily the quarter $X.X million period, $X.X prior-year third revenues product XX.X% for prior due compared million in period. of in million with royalty million quarter million XXXX revenues. margin increased Gross XX.X% third increased $X.X of period. prior-year the in the dollars the with increased

was in XXXX XX.X% the margin primarily the prior-year also prior-year to scale $X.X period, $X.X million for quarter up third million XXX.X% of Operating diluted $X.X for the third increased decreased operating gross expenses period. in XXXX our and XXXX development made again increased million in quarter loss to dollars in compared $X.X was a third and for million quarter of million, million in with to for in period, and of share investments the period. million $X.XX was period. share marketing the product $X.X $X.XX with of loss Our general organization Brazil. the were product to increased due our of prior-year of million loss prior-year due $X.X XXXX prior-year net $X.X $X.X largely compared the globally Net of of administrative million increase of quarter the sales Selling, per to the loss compared or XXXX which revenues. million with the in the diluted third in XX.X% per quarter $X.X expenses and third Research with $X.X compared sales or commissions, an due compared

XXXX. Now, review of I will months for X the information first the financial

revenues Our in $XX.X milestone first X XXXX XX.X% of X grant increase expenses XXXX of period. increased of with $X.X $X.X amount of $X X first margin in Gross increased XXXX XX.X% of $X.X million period, in period. gross with million $XX in compared the Product million in the prior-year million product $X.X dollars XXXX Research with primarily increased in million prior-year the the $X.X months for $XX.X million the the compared increased X.X% $XX.X XXXX to due months million with $X months prior-year period. first in R&D to compared of of with months million development compared and XXXX product in prior-year prior-year the X total first sales. million the first compared XX.X% of months $X.X in the XX.X% months million revenues for the for million the in of prior-year and royalty X compared X period. period. XX.X% margin sales the first decreased the The increased of million

and XXXX due in to for the of scale first months The with our loss an a the million with diluted diluted to $X.X compared in compared loss and million operating fees. the professional increased XXXX prior-year largely with or first the made globally, $X.XX of $XX.X million commissions general X per first period. of tax loss was X deferred million $X.XX of of marketing and in organization loss expenses the XXXX of $X share share million provision loss XX.X% administrative a sales prior for of valuation of $X.X investments up the compared $X.X period. Operating the company's months selling, months $X.X also X Our recording net asset period, million a prior-year tax $X.X The net million. was for per the XXXX in the on period year allowance or for includes

to with operating million. activities had XX, primarily $X.X million cash million used of as of as XXXX, September Lastly, and XXXX. cash December the in company $X.X XX, cash decrease was compared due $XX.X of equivalents of The

and known again, capital working $X.X scale XXXX due formerly CDM being organization million, million $XX.X Malaysia, this our and global XX, Our increased acquisition million to primarily, to year, by Diagnostics $X.X to decreased the of earlier Chembio from December as as due up SG&A expenses CDM RVR. largely of

turn allowance financial million December John. Our million net XXXX December review the will receivable as of $X.X as accounts cash and and our combined concludes of XXXX. the over to call compared of receivable as XXXX. as million compared XX, of $XX.X million accounts $X.X XX, That with was to of XX, I And of as $X.X September XX September

John Sperzel

Rich. Thanks,

of team. fever we're strengthening overview the third operational XXXX core key initiatives. a focused the as building achievements. transmitted achievements disease we're each key global of core as during To business, several well our for disease a and provide areas business, commercial on transmitted of building I'll noted, on sexually tropical areas; portfolio, our a disease quarter three these strengthen an few previously sexually and focused As broad

States, high XXXX our with HIV We HIV is The sales assays in made good product our sell total this America, Latin more the Europe, prior first during Africa. key of quarter increased countries initiative initiative third and XXX% to the as increases sales compared and progress including year HIV more quality period, to the on very customers. United

we our noted, resulted in quarter. position during Brazil's the regained National Algorithm, in previously second million from which HIV $X.X Testing Brazil order a As

and $X.X third the our million Early of strong we we and ship Brazil's During quarters, quarter million XXXX. other during and to $X.X fourth the products DPP indications HIV shipped the indicate the Health of $X.X expect demand remaining million second in Ministry order from of XXXX. for

to initiative the our prioritize to response Syphilis key and global co-infection HIV DPP HIV is to concerns and Syphilis child transmission. Assay in related second The to mother

trial which US the States. Multicenter World with to in our in countries on market first HIV States, be to we the Health plan United Outside in a Assay year HIV clinical by complete HIV to Syphilis end a initiate the United believe collaboration we in in DPP for submission, XX the Syphilis expect DPP to early Study us FDA We Syphilis for the track keeps preparation Organization. combination XXXX,

successfully which with Centers in the expand our & to DPP pilot deployed in is The programs several or Mark the Assay, Disease third key CDC. DPP's is Prevention, been of Screen collaboration Confirm self-test The in initiative expand both a of HIV the CE and use multiplexing rapid key as capability. treated taking Control can Syphilis has advantage and for product This international to is detect only active unique that infections test Syphilis it's business. simultaneously, final initiative past our Africa

HIV in seen the we've driver self-test nine XXX% growth months achieved of is year-over-year first of in the XXXX. the XXXX, our business, through growth During which Europe major we've

which potential. are fever to develop most of markets, during international At well which communicated believe products, have tropical per including the world's excellent our CHECK and made significant platform HIV progress. significant of we approximately growth our technology build and fever DPP year Our disease multiple we collectively self-test leveraging care Shifting gears, commercialize portfolio, patented develop the we're for XXX point the health for to of threats, cases SURE tests Brands Dengue, intent malaria products disease offer including tropical XXXX, some DPP broad the a account and global and million and suited HIV for we to beginning and year.

infected population World to According compared at XXX funding Foundation, with is a we of the million to nearly annual sensitivity approximately XXX,XXX competitive world's of malaria. deaths discuss and are developed Melinda let's and attributed Over are tests. Health X/X malaria. malaria. Gates risk Bill the superior Malaria people DPP Organization, assay the from prior annually malaria With First, to

XXXX. of by Malaria a during Gates satisfied Our been partner. the plan DPP and with Malaria we has assay results evaluated commercialization We're Foundation performance assay to begin our DPP

discuss million to world's and and Dengue. year Control Dengue. annual cases for risk of the X/X deaths Dengue. let's Nearly According occur population to is the Prevention, at nearly approximately Centers XX,XXX attributed Disease Second, of are each XXX

XXXX. DPP Dengue As India, Guatemala. pilot of CDC mentioned update, for assay Assay Haiti, We the program and commercialization DPP previously assay countries: with combination and quarterly sales initiated our our Peru, we during our expand Dengue plan of in during we've the DPP Dengue/Zika/Chikungunya initiated last a X to

became we a validating company to or The Health XXXX, of use DPP Department rapid DPP test, emergency quarter Zika FDA the first authorization federal from Services, BARDA. third funded for assay scientific and expertise. patented and technology the platform During and Human of Zika with has only been receive further U.S. the our funds our

approvals, Virgin positioned during U.S. with and are regulatory and the Zika the to obtain believe World Mark, the EUAL. Zika sales covers Assay well we're Brazil, United our to FDA covers Assay States, the WHO numerous and Microreader DPP Islands, authorization, region, use of including achieved commercialization Zika ANVISA Caribbean meaningful and We've DPP Health engaged Rico, which we in and DPP Our capture have Europe initiated CE XXXX. Organization emergency which Puerto we

FIND, portfolio, in broad report including Paul a standalone with evaluation quarter we first completed of Fever Assays. the of the our Peru build Nigeria to and Panel Foundation, and of Fever we tropical in evaluation the and efforts disease combination continue collaboration Panel to DPP and and of G. the Allen Assays our development numerous the advance full recently DPP fever and XXXX. X,XXX We development first field in expect DPP patients during the Finally, Family

The on Asia organization systematically commercial making Panel great the progress marketing funded one globally. which global our by objective to resources Southeast also the supports middle significant been Asia. is commercialize which reliant pivot States, have Latin today and completely represented strategic Africa building team sales of FIND. to Fever we’ve and to Chembio sales a We’re America, QX. and results partners the increase development we the as you we own build the by sales see DPP products Europe, decision beginning United of a to with produce XXXX, for company overriding Since in our in positive Historically, are

XXXX. had As encouraging important sales to of expanded and a noted XX% results increased compared Malaysia Diagnostics as employees. in Malaysia facility quarter recently a company, production the of year number quarter earlier, nine number the Operationally, completed during year the integration business accomplishments we third We product prior the we had increase. of and acquired the of XXX% third months very a Chembio the prior renamed increase

Malaysia, Diagnostics improve us our to areas HIV established in will for manufacture company is STAT-PAK on also believe for integrated through STAT-PAK a installed the initiated DPP of We a during Fever completed CE automated manufacturing to Zika a and significantly Assay fluid. Syphilis a to We in products In company, United XX% Panel prior the We CE expected for including advanced emergency and at DPP Malaria initiated Assay X manufacturing were will clinical on ANVISA, as or with and our STAT-PAK cost, increase the allowing nine of reflect both Mark. for from DPP FIND a automated we and Dengue Chembio blood use assays tests the per allow We Malaysia HIV HIV which manufacturing line Assays initial and We compete sales. We assays DPP competitors. an key we as in Malaysia. order facility the line testing business in milestones internationally. new minutes year lower DPP our HIV U.S. Medford our a leadership which sales our line DPP collaboration DPP margins We Brazil the sales our appointed taking first New ordered We to current key to We commercial new field to and million period. tenders be Mark I’d HIV achieved oral the York we supply first FDA us the for our months sales Asian team expanded Microreader, multiple by regulatory half accomplishments. of trial business to $X.X acquired planned. some output year. awarded few to our of This the by the our allow market. renaming for and States, multiple the develop XXXX. We compared Assay. year-to-date and first increased We secured like DPP summary, of and for take state from billion marketing received DPP approximately Assay manufacturing

executives the year-to-date Board, and adding by results. HIV finally, We’re I’d self test building now commercial our with This a to our successful like for a we prepared our any questions. business team our concludes team. foundation strengthened international for And leadership positive to remarks leadership experienced call And open diagnostics our for today.

Operator

Thank you. floor [Operator open now The is questions Instructions]. for

comes Please state question. your first Kevin. Our question from

Kevin Ellich

John, afternoon. again. have to Good call welcome on Hey, you back. Glad the

John Sperzel

Thanks Kevin.

Kevin Ellich

have you'll after year well. XXXX? impact FDA And follow you authorization how of the use should can has into Starting think of sort uptake to revenue off drive I us as color remainder be What guess with DPP the for the how some able we emergency been see do Zika, initial the give and the and test? much for you as for to that

John Sperzel

Sure.

to Zika really Assay. like our I'd say DPP progress First, on with pleased we're the

or use during sales a as XXXX. Health Human and as basis think million sensitivity bit, emergency the doing we're what U.S. I we developed about specificity. you mentioned meaningful on have during with of Zika as the approvals little a Kevin, regional starting in We asked and remarks, started I'll believe in it from positioned BARDA. capture authorization. in because $X.X Zika We Assays well we're to prepared comment, FDA And far and XXXX. my achieved funding regulatory number that a I DPP excellent Services,

sales departments, offices. EUA, of Assay departments Zika of team we DPP a state our with OBGYN via public U.S. on certain the Following local health, granting and focus health launched the the

For discuss and into or I the region, we region. the while the Brazil we've we've we Outside we're Zika sales the tests think in comparing as comment to in have via report spoken have But not we're And public prepared In meaningful regions. not on product testing Caribbean let's of the including positive Zika the produced can launched of and Test for UNICEF XXXX. an test uptake. of the is through like Microreader, for who our end Initiative, Zika have the had of rapid various RFP not say DPP That develop Virus departments the rapid And such on Puerto And product. we in health Isla available approved the the from with during I is or those is that of from working in to the American prior a Caribbean market. we're the where and advanced We're a USAID any think award in departments pursuing make tests from but Brazil hopeful we purchase that UNICEF. based well we but DPP Health developed very FDA/EUA to our of are to Africa. And most you based We in superiority U.S. Pan state Proposal, positioned assays. is and Assay supported PAHO, selling $XX as UNICEF contract say point the System, know, Zika Mark integrate award that XXXX collaboration details our WHO contract million partners a there February how get thus believe now, UNICEF supply aren't tests we There commitment we we XXXX. care to health launched Zika do UNICEF's algorithms. with U.S., by and Zika have algorithms a partner, product year, from CE our between bit emergency I'd a little RFP. XXXX been PCR exclusive the Africa, the approval the that in In Organization initial far. Zika of WHO, had use were essentially familiar recent what RFP, ELISA competitive one for that in to sales notably, confirmed we're which have first yet Brazil, criteria authorization of Zika distribution given those fact sales FDA We're had that what study one feedback is are Request have developed. with for Lab, of the only our very which laboratory with to Assay we Diagnostics in folks this the following Zika in can initial previously we're that started the and completed we two Zika which DPP been the engaged companies Rico, in doing was test participating of with XXXX,

opportunities. can So what really America, think say Zika advantage We take we're selling I positioned US well to Latin in of Kevin. so the the that's far, about Caribbean and in it

Kevin Ellich

Going in get couple the when and part UNICEF -- question million back -- we a someone else? -- find had another which you contract, up to and terms be actually that $XX could I who's that of split going amongst to will that was was out

John Sperzel

not think FDA puts our because So product hoped by to we're when we very now. is will point. process deter in fair of an the but the tend think data out good assays can't it's to the this regulatory part driven who of based delayed generally that performed that would that things that an performance hoping fact find also the than that had with make more I awards more that only and say fair UNICEF be WHO, with in out does that were is we speaking, of believe split position that similarly, EUA on but is we're it's all and company us guarantees be not preferred at would there that only approved to any a award fact we day. fact than And We confidence if decision position here, split. find the at being we're to the be respect the share product of it's a Again, equal, been going that, is all the again, we that The with question to fair we the probably our UNICEF. given I get with approvals, the so say

Kevin Ellich

understood. Sure,

or release Going potential updates? funding, back guys BARDA $XX you additional the were of to million we BARDA, if the contract, there? the exercise their funding the had think in options. press status have I any to for the about talked all $X.X What's another million Do

John Sperzel

funding So award from $XX.X let me contact and was split. was BARDA. up just clarify a million little to it the The bit

guarantee The $X.X Zika million. first was for piece, was which a

piece agreement, the and an was DPP option to Zika/Dengue/Chikungunya that a it's second The that was and Assay. million Combination $X.X BARDA's was option in fund

to emergency a maybe about the The a to little get take was just of assay and for authorization more those. funding CLIA FDA then process. Zika through product to XXX(k) So million that color the Waiver use process develop $X.X DPP the and Assay

have we two checked So of those boxes.

We with test. a the have is on FDA we authorization. the emergency have The use and assays, outstanding, ELISA par also successfully developed obtained performance

we the then on subsequently million, looked The for We $X.X believe in CLIA combination XXX(k) our is, BARDA's for we on that application. believed to there good working initiative, we'll demand on Waiver we that deliver process option. promises progress, But the capture have work which BARDA at DPP Zika that on again, great combination the and a is standing successfully would there test, Zika/Dengue/Chikungunya it's if always the a as shown now be million which we $X.X and then we've assay. to we are

Kevin Ellich

by you back queue. you prepared One your million increase hear then for I a did Did XXX I'll that that -- question manufacturing year? DPP. you mentioned your in line last say it output tests automated the remarks, right hop will in John,

John Sperzel

two tests running That's year million a shifts. X

Operator

next from your Please state Ross Taylor. question comes our And question.

Ross Taylor

Sharon you it a John, my I'll your nice your absence great also in but to have return. job for did congratulations, in saddle. is back add the

John Sperzel

Thanks, Ross.

Ross Taylor

proven show that side out. basically your business the and Your has filings really presentation scientific your of

some the investment wayside, it kind time, of can you the seems going I ahead. of your or it been more your we you're getting the on you're starting and these competitors gotten force, and turn weakness in potentially market, can now the who that about have talk to scientific negative competitors' by number what the hurdles the But to see of than conference these profits stark to At of in that the to market. able HIV that we're of calls, contrast about scientific one from listened weakness you've should operating money the should Chembio on break space. you AIDS to the would revenue side out being made to a how listen guys be having expect some hurdles reference to their kind you cash performed the sales in ramp same flow your Because losing in talk seems to to You have cusp might this business. U.S. fall year of go meaningful able in problem expect in you've generate

John Sperzel

Let me take those in Ross. pieces,

calls, XX% competitors' on I one their of couple quarter the our HIV would First, year about business okay. if of like that that and competitors know I to I also declined our XX% for a U.S. listened basis. to a it's earnings so date comments make stated that to

their their I for the for One explanations Africa others business ordering XX% patterns, were Trendy the confirm bad of on and HIV quarter they comment won't for declined The I the business U.S. sales, weather. bad quarter. X% to targeting OraSure and indicated but those product customers. declined declines that having recommendations, range HIV that HIV from on weather CDC impact will to competition, to

blanks business sure the can I'm fill our I XX% so HIV what's the for increased XXX% business competitively. happening As U.S. mentioned, our previously you increased in the quarter in Africa and on

the that's we best for products, scientific concerned, probably world We hurdles the the as when have regulatory of products for our our of be regulatory authorization that's the far are fact endorsement can that we We us technology. key technology. stringent can the feel about around approval, great the can agencies customers systematically because use As getting best we are give endorsement our us get. emergency give champions very but that approvals

our what into experienced is do obviously that Now, need said to that's don't my diagnostics In investors doing. commercial fund beginning These show approvals success is of organization have said, we've past. you We need us as we in helped I sell prepared and those need themselves, to to regulatory commercial we the that progress. the what translate had discussed remarks, to as in we're people out establish get quarter. and these ramp third close And sales. markets of were cash one the in quarter, really revenue that's even, continue helping there we did distribution third that us saw us we registrations, can If with way pretty to get our objectives. we the the enabling and progress and we helping good to break flow we primary in channels, signs

Ross Taylor

area. the Can and and the And to is the in see should organization, disease can more in about can ramp multiple you see Dengue, you talk, assays? me to one or talk to of the most exciting fever company segments malaria, of hope my we disease this

John Sperzel

of type So we during in statements the made earlier one some assays commercialize XXXX. declaratory going to were them we fever was and that multiple year

that in was another Dengue our one to to introduce we assay, and today, statement, other declaratory was going XXXX. I DPP made our going introduce we're The were Malaria which Assay

So we XXX with million the malaria in on opportunities, the prepared talked more than cases we’re where about this market said significant in past I are there remarks, Dengue, whereas there annually. and are focusing particularly

expect particular. So, in malaria areas sales two dengue and ramp in we both those to

Chikungunya call past tests. be we’re because we in Ebola, Zika for we diseases, or that like type the more other those well have been believe the of not some episodic going positioned the to we where or Now, hadn’t we next developed outbreak

its dengue, like FIND the or whether XXXX standalone Dengue. our one impact developing the Allen expect during with Paul to assays, malaria the and have Family we fever or So, fever assays like or Foundation Funding, panel we’re under assays funding starting malaria

Ross Taylor

if and a million what in? that are So, in market and year. Dengue cases the of does tests kind XXX potential many result malaria course of How

John Sperzel

the they sorry diagnostic there that is price XXX understanding million our that leader million -- tests rapid malaria, around average XXX It’s market are an at So, approximately of tests $X.XX. sell in has approximately used.

about and a with I number according business the Dengue, In have experts million $XXX to the they So, usage it’s, have malaria. they share. the of close to would malaria do say XX% come not tests underreported market diagnostic

significant So, potential in we there’s Dengue. believe growth

Ross Taylor

satisfied said the And test satisfied satisfied the okay, that that ecstatic? were malaria in like we’re or when you test. with you Is is in

John Sperzel

rapid That means to able malaria sensitivity were than times the levels leading XX between the XX we achieve and market greater times that that were test.

we’re So, very satisfied that. with

Ross Taylor

in with sales automated programs your market believe the in U.S., you to And manufacturing new profitability be be manufacturing. do force, price basis? outside place this compete you you’ll on able Will

John Sperzel

So comments that, a couple about Ross.

the attractive. out have in the an much kept standpoint of but produce It intrigued from of a not market selling that The it margin on economic we facility DPP now look that goods and cost Assay. by two average of the a acquired a profile makes lower fact much Malaysia we business as in better at can Malaria price we did malaria market. have a didn’t was test that the not in one, the things One the present us we past were the itself product

selling a malaria research average market sensitive a and approach focused are could The malaria indicate second highly indicates is the price that on for the piece that assay folks important dollar. that

for very have meaningful make And to to in of market size a attractive factors like take the Chembio. don’t those of market share a so both to very too it company much it you make malaria and us

Ross Taylor

I’ll thank queue. the you. step back into And Great,

John Sperzel

Thanks, Ross.

Operator

you. Thank

from state question your Raymond next Myers. comes question. Please Our

Raymond Myers

have you Thanks. Good evening, to back. John. Great

John Sperzel

Ray. Thanks,

Raymond Myers

test. this want the I sense you’ve getting intent? there a you seeing that is ask with customers you’re among for the you of people. market malaria purchase ultra talked that prospective Are a lot interest to Presumably, sensitive about

John Sperzel

Not yet.

the on that. economic I little for pretty are bit achieve think early ones that it for between able we've stakeholders we yardsticks. it's said, as I malaria But a market focused that had sense being and price selling a a cost makes internally produce two at the indicated those to higher course, us the in of in been could that

Raymond Myers

States. United your here emerging influenced market been threat Syphilis opportunity, the HIV development that quite market or the press involving Has onto estimates the bit this Moving of plans? Syphilis that there's year to syphilis Chembio's a in

John Sperzel

call. the point infectious quarterly in to separate doesn't there transmitted testing last sexually of of States. disease budget for the at United because seem for co-infection the budget Syphilis competitors' started most rests for a earnings that known the to you test we're can with care concern. HIV the why Syphilis That's buy of together, our be the many in after and And Syphilis space, that Syphilis incidence it in and because We've U.S. Syphilis think to going But is take how which has is to HIV and And Syphilis is quite rate quarters about quarter. put necessarily. that sort a concerned to budget HIV decline customer that seen combination we We've the quarter interesting the out ago in while listen one which mentioned United I to perspective of calls market in growth between the don't was HIV the the seemed also a it. Not even as the about think I would be, big serious States.

strategy compared one our competitors. in to the that's difference of our So

Raymond Myers

And been beyond while opportunity great. for the is ask countries and That what's a initial progressing potentially me the that four let How now. you in about little has that That's pilot to the test. triple expand Zika/Chikungunya/Dengue the pilot? sold

John Sperzel

of by are that countries that those have pilot yet. CDC supported the four results don't key being we in So

it's a So because that healthcare transmit know, professionals think mosquitos with that we those strong I Zika/Dengue/Chikungunya to is that. co-infection, present you all it's And They demand the to can't comment viruses. identify of would on cross three the other. be test combination from But market becoming have one same more impossible for it's more to problem. of you're able first patients that discriminate the similar barrier if very and almost which difficult symptoms a to and as

Raymond Myers

have think pilot you certainly would when when leverage Do of can You to will so. results a and you that those sense use you get sales?

John Sperzel

Don't know yet, Ray.

Raymond Myers

study. Organization elaborate Can there's on in XX you World You that That sounds your that? remarks mentioned a Health really interesting. country

John Sperzel

on to can't first XXXX We're the in countries the going yet. quarter that I and comment initiate of

Raymond Myers

is HIV it Syphilis? for And

John Sperzel

Yes…

Raymond Myers

Excellent…

John Sperzel

reflection think about And Syphilis I of and HIV growing it's a the concern co-infection. global

Raymond Myers

study And take? you that will do long think how

John Sperzel

comment sure. a future I able I'll to that in quarter update yet, don't be Ray. want on for to

Raymond Myers

on New capacity you automation does in how I I York. think need One last made level. the increase tests? That's what is it the prong then question is costs? lower And ask to much for one mentioned that. you And the to want me your million two second, a feel very X to a high

John Sperzel

type not. effective in you've competitive not cost to may Island, on or manual processes, in tend they many be the Well, have United seen if generally and assembly an York and of countries it's the but some in it's flow way goods certainly that's States largely Long New to manufacturing lateral manual be

of So automating controlling quality. ensuring terms in terms also It's production is costs. important of in important

decision those well And of factors both demand. were as our expected in our automate as to so

having ability ensuring in and increase is terms our part terms capacity the strategy quality. of million growth or capacity having in by of to So tests the X of

Raymond Myers

safety million this need next two other part tests, do a for just you about capacity the X million test year see the And X is or capacity? potential a in

John Sperzel

in we're want into call as look made but of we've part QX either. But Well, that on where areas Certainly, you also the important manual don't that. it growth, to that of automating I assembly. there's are what going grow commercially investments sales an did to you expect have investment look we've don't products we in if and to think some purely I you the is manufacturing made to in at and get company of and replace -- we the the incremental think at we forecasting terms

Operator

Please state your question from question. Our Larry. next comes

Larry Haimovitch

congrats quarter. great back. Hey have back. on great all Larry Welcome have did a we're Haimovitch, job We're Sharon, HMTC. but happy a John to you delighted to back. you John

John Sperzel

be to Great back.

Larry Haimovitch

contract contract in on I for was which think think Is a of contract million, question A QX. heard I shipped The the just and $X.X $X.X you correct? is Brazil. I million correctly, that you this year if

John Sperzel

expect we $X.X million, million the ship which we fourth X.X to but it's have shipped in and all So quarter.

Larry Haimovitch

So what was QX shipments X million something?

John Sperzel

shipped the the complete we ship in $X.X $XXX,XXX which million, $X.X million to so X.X third, million $X.X would the second order. million and the quarter, in fourth, in we expect

Larry Haimovitch

leave regarding in XXXX… continue John, business that business, that Can we that for expect us to does XXXX? where reasonably And

John Sperzel

Early be will our the from Ministry in demand indications Health that of XXXX. is strong

Larry Haimovitch

business, in other that well, right? obviously would I'm as in love though, people that others to It's against it that bid you'll not And get shoe a can there you have that sure. are it. are There

John Sperzel

in. Assay. this the in different that never our discussed because It's DPP Health quality in go back past is think and to HIV of did thing a Brazil of to can a they we and Ministry decide in we XXXX say I direction Chembio shoe the the One in came of

we So XXXX. are that in confident feel going we that business to hold reasonably

Larry Haimovitch

it's And delayed. then know been we tremendously UNICEF, of course,

initially be $XX award you've but they they the when I contract million that it's to said award think were and to players. June, it's two in amongst likely contract going it, divided a

or the Now, is that get does million John, XXXX when revenue business that $XX business flowing into side?

John Sperzel

XXXX It's and a XXXX award.

Larry Haimovitch

XXXX, and million of between and so you'd in take and and If million million of half 'XX. splits you get $X XXXX it split in example. XX-XX it an $X get you 'XX half $X just Okay, can

John Sperzel

on spread. can't would I followed be it how but comment I your math,

Larry Haimovitch

guess. that math But sense, just speaking, some make would roughly I

John Sperzel

Right…

Larry Haimovitch

point, another And is beyond is or to business continue that another that, that some at RFP? likely award,

John Sperzel

is by The backed funding $XX million USAID. that from Award UNICEF

another it's other some group. So or to would be award backed by I have USAID think whether additional funding,

Larry Haimovitch

of year things so this the excited or particularly proud final many or quarter, When look what one in Tremendous two year, have sales first my force. Malaysia question. many at are been things John, positive the up or that -- and building in you months you in have certainly XX And things so accomplishments this so particular, been all particularly about?

John Sperzel

growth diagnostic have many don't accomplished first the basis. sales put on companies too nine I'm XX% we've year-to-date a points care year-over-year of I that growth the that super months of through know up excited about year. the

absolute So frankly, because going factor I'm to commercial investor to have us forward that super about that. hope the and continues. excited support the we're that's invest we very in it success organization, grateful, allowing key

Larry Haimovitch

seen look team day And are business we that the one, don't that million longer lot increase and walk really in commercial yet My more the business go-forward, has it? the a a will that Chembio see should reasonable show long benefit that at a full as on over or time. that -- selling point commercial that guess, as we given up just ground to That there fruits John, side, they're order. you haven't of as a because on the Is $X team. we way of $X representative get a million this

John Sperzel

are offense, we as to starting it characterize would I play really yes.

Larry Haimovitch

play John. offense, like good. know you to I That's

John Sperzel

Absolutely…

Operator

you. Thank

comes Campbell. next question. Matthew your from Our question Please state

Matthew Campbell

about third, gone. while having And Sharon comments you everybody's job, and second, I'll did phenomenal fourth, a you were back.

curious, So Asia? that to the but you, start STAT-PAK on Chembio When your, in congrats and quarter HIV. of did congrats in manufacturing the just process you

John Sperzel

we So in have put place. the line

started we’ve here manufacturing that York. the Malaysia, not to STAT-PAK in in the have product essentially we We and line markets replicated have yet produce for New

Matthew Campbell

So when live that to actually? you would think go do

John Sperzel

XXXX… Early

Matthew Campbell

some see good obviously you to I -- running, foresee assume? would you do And benefit up having that and

John Sperzel

the that’s something STAT-PAK World the the product We need mean, of WHO… into Africa, Organization, for pretty Malaysia for HIV sell good get Health example, and We get on. in need we that’s to today. support Yes. have market example, in to strong working I we’re to where produced that sales

Matthew Campbell

Could you just some how to think there the investors, it. And is speak thinking about and or the have as we, get understand potentially, us how should to about like receivables balance opportunities about I cash if you’re you. what cash?

John Sperzel

to it’s to if on going I’m ask Sure, Rich Matt. that comment okay

Rich Larkin

this prefer think also we we’re on receivables. with do the pretty And quarter. more a one that certainly, which our I on or that to about up was million. had few hand that had combination I good than inventory But should built what cash for we more working would in have I I done shape plus have into a a have of collecting months robust we’ll amount $X.X collect, say cash we that in we mean, receivables, thing fairly be was will XXXX.

you better if So mentioned offset, to operations us the I think some that little will, see if month profitability. cash in for bit, get to a then we goal And back our in we forward, we’re is had was to cash third had we less than the situation could and as generate that, John down will the continue looking be to hand move And a from you that forward. going to go if really which us that $XXX,XXX cash from quarter. flow P&L, should our which also do certainly well

Matthew Campbell

congratulations a on great Rich, And at Chembio. tenure

board going but How does We’re sorry to search it you another to... is go, John. as CFO to the question going see was

John Sperzel

Matt. going It’s great

We’re down to in up a it candidates, couple finalist get and of time. wrapped to going we’re

enjoy can the before end Rich of So year. his the retirement

Operator

Kevin. have Thank from state we question. another you. your question Please And

Kevin Ellich

Kevin it's profitability, want Rich of just run-rate a is and guess, Matthew couple ask what hit my will do profitability And questions. Ellich guys be think to or on, guess, you I I you’ve since got you breakeven? at since cash asked again about John, did what revenue I utilization. should

John Sperzel

the amount that going product we the to sales to and obviously, we’re somewhere realize of $XX to. I that combination, target probably, if get between margins would those million looking in But revenue, think the get revenues. gross can to we’re we’re get on a product that along be from going the It’s R&D at with the and that

Kevin Ellich

characteristics And then was the specific I quality you’re Rich’s the successes? search. But CFO for of about in ask John going is in to again, looking anything there terms

John Sperzel

not Kevin. would comment I the call, but on Probably,

Kevin Ellich

that I million Board lot areas added within of the the to Gail there other plan ago, a of Directors. what X also Page you you a think add? Gail then Are from the And months of and Obviously, or management not. know board any few guys to us retirement

John Sperzel

has on. that Gail experienced executive is to board. happy and obviously diagnostic really that comment board. our addition She terrific the can But she I a Not an joined been

Operator

comes question from next your our Please state question. Mark. And

Unidentified Analyst

increased result and filings, also I'm and with the AR which wondering what an going orders what's SEC Briefly inventory materialized the and are, the not balance? to-date in at on are about

Rich Larkin

that were And as would to we time. ahead Zika Zika, you we sales. Well, blocks of of have of build some the that some part hoping of orders the validation expected course need were

there’s on there. we So those to be build went purchased able materials were customer orders. up some But that to that respond of also to quickly the just raw

we to tenders times rapid in need come fulfilled fashion. in of get some lot rather that So a that

taken we to able be fulfill to some the have those. be to position of ready So

Unidentified Analyst

And balance? the AR

Rich Larkin

as filing, quarter. in AR full the one see And you during probably is customer this balance, that, be to most is again, from of in expected Brazil. that's that could On the for and collected

Unidentified Analyst

have market then used last in And the that thing, you at all?

Rich Larkin

What market?

Unidentified Analyst

sale potential million $XX of stock…

Rich Larkin

The ATM all. utilized at not ATM we have the

Operator

on you mute? are Matthew,

Matthew Campbell

an on seems views get like to am you wondering, John wearing talk just suite. just then is sudden without TV all would is outside armor and on from subjective to without can't This I And no But there Zica. a me there’s that. And perspective. It worldwide. the still your of problem you can't walk Zika. day, that it's a the One I you hearing with turn question. Zika going your What think on about

John Sperzel

Zika six a Zica become from long months I which the hear Frieden So because a for before ever dengue, put whether malaria. it's normal I think I'm about I press. don't I about is time. think where, to hear than is more into there falling not us have in disease to anything that as we going year. don't about that going not Tom is in with because said hear normal, Malaria or to now quotes, are and We it's point terms acceptable. category. said anything it's Zika be us million not But obviously would cases malaria. a And very we of XXX CDC same or ago

you not anywhere experts. going it's according but the probably Now to consider episodic, maybe

Matthew Campbell

helpful. Well, that's

John Sperzel

And easy of in of test acceptable to more professionals way, way. by rapid close of people believe positive to that identify put patient Zika healthcare terms we and in terms the monitoring a be very a helpful is the in and the hands in in terms of going surveillance much

Matthew Campbell

test. think Is that states to working this that you I the And correctly? mentioned did I with that right, on were had earlier integrate you that hear to call point,

John Sperzel

I exactly said. It’s what

Matthew Campbell

Thanks much. very

John Sperzel

forward next to and your night. participation quarter. of again again to would Have Chembio I great look a We you, like Thank Matt. thank support for you your all Diagnostics. you of updating