Chembio Diagnostics (CEMI)

Rick Eberly President & Chief Executive Officer
Larry Steenvoorden Chief Financial Officer
Bruce Jackson The Benchmark Company
Per Ostlund Craig Hallum
Joanne Lee Maxim Group
Call transcript
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Good day, ladies and gentlemen, and welcome to the Chembio First Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Marisa DeBiase [ph]. Ma'am, the floor is yours.

Unidentified Company Representative

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 May X, 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 report on Form Including XXXX. for XX-K year annul the full may Chembio's materially results differ from those projected. no publicly obligation Chembio update undertakes today. to any made forward-looking statement or revise I encourage other the and matters. filings you with of company's the SEC, these review to concerning all President and Executive would Chief that, call turn With I Eberly, like Officer. to Rick the over to

Rick Eberly

the start would to performance. growth Total $XX.X included of off, of million, our the year to session. joining Q&A to and update current on operational upon like prior total I quarter call our the new update program. today's all and I quarter, call, period. XXX%, year afternoon, revenue compared In results revenue period. competitiveness strong financial pipeline, discuss our priorities on an $XX.X I closing will the the first you Larry we representing prior first thank and the provide regulatory commercial touch open Good million, product provide global and representing then a highlight the record and will us. generated On for cover of performance, year. remarks first our To quarter for growth revenue of XXX%, development for product quarterly will compared

result burn operational gross and cash of and capital significantly product working improved as our We management. improved also productivity margins a

STAT-PAK shipments United DPP under shipment The Brazil. continued remaining supported order the from Strong growth Ethiopia. for of Our by driven in as the under completing for million $XX.X they order quarter Global was units Bio-Manguinhos States Antigen the ship purchase X/X tests SARS-CoV-X the first Fund the to the by and purchase HIV performance in in

Going $XX.X Bio-Manguinhos product Brazil. of product million, by led strong into Antigen of Chembio sales shift growth in region consisting of America by the of more detail. the DPP test Revenue and Latin SARS-CoV-X was primarily sales Diagnostics

we time, to and distributors test, offer out representatives markets. third-party and a Traction health with the relationships the markets. sales subsidiary relationship this across waiver. were potentially would in antigen Europe SureCheck In We Europe, excited to are main to COVID-XX completed the the with STAT-PAK our and their US in and are quarter purchase system, long-time HIV-Syphilis prioritize customer In self-tests as to same from first recognized partner testing supply the of compared continuing pleased we continue representing HIV first of Assay we a of marketing been of driven The the last distributor in Bio-Manguinhos through leveraging order CLIA to the sales sales detect like quarter the local which across and pending the health have growth distribution a to million where EMEA working care quarter, order we revenue our our Fund. two opportunities has continue we I the rounding will US retail manufacturer X/X shipped entire explore relationships be the In systems takeaways field sold France. address by to by same Brazilian deepen new care needs. we look and the DPP diverse our portfolio country's and to were state, to $X.X distributors care our Chembio market to States, footprint $X.X the expanded Global comprehensive highlight. see tests are to we the Ethiopia UK XXX% part million There supported of forward have HIV in by quarter. supplemented most of target our sales United strong to year. as At attractive opportunity to be drove health that the our Asia, distributor end

First, automation further enable the from by the scaling full capacity, optimized in complete order the learnings test efficiency future. will supported to manufacturing manufacturing to Bio-Manguinhos

chain significant were relative to in product we the gross able sequential margin markets fourth challenges learnings, of supply the quarter. these drive labor face tight With and improvements to

the in are are Second, higher our as focused higher portfolio around As our opportunities growth represent commercial products we value refocusing we expect weighting efforts COVID have core test we markets. on product our internationally, shared, resources core demand for that commercial

analysis through prequalified the a Our and HIV-Syphilis waived. recent WHO strategy CHECK EMEA to in And is In SURE and DPP and our major and the in carried In CHECK sale commercial prioritize pharmacies for HIV efforts In SURE self-test CHECK achieved supports United CLIA the States States, X/X Brazil, subsidiary. Brazilian and the SURE globally top two SURE portfolio HIV as Brazil, recently is now has CHECK Asia our is United Assay self-test retail HIV products. in around Africa, over-the-counter SURE self-test. pharmacy approval X/X the chains. on CHECK

and for our and We across UK HIV Europe on focused self-testing about a as the potential XXXX. France expand the business, top are excited Brazil Africa and to in priority

the Respiratory pharmacy with will we any event As approval States, the and outbreaks. flu respiratory Brazil great the of this Brazilian Separately in the in United DPP state summer subsidiary or ANVISA of COVID to we season. are through needs enter our enter retail the Panel, in serve local, position

infrastructure. products, In regulatory that current pipeline opportunity we development believe expand commercial available strategy product addition, improved our we The and for where operations. in already portfolio market our two our novel on existing to geographies, existing our to we of and main for point-of-care established our has will growth solutions additional markets leverage commercial platform our our portfolio develop register high-value expansion objectives: have DPP to products as

we would significant a to continue to previously, that market of DPP providing our the opportunity believe by CLIA we XX,XXX up for the receipt open waiver As access HIV-Syphilis to FDA PMA-approved mentioned XX,XXX infection there recent clinics by that are opportunity This on tests despite combination and the in currently STD rise testing. regular co-infection rates. market, no other is compounded that the conduct the system, fact

ANVISA and It Our CE the by approval On a part active remains team EUA test, is South making progress has as which waiver on SARS-CoV-X CLIA review has been well under data approval. the as submitted application. FDA Antigen XXX(k). FDA an EUA an African providing requested the received of for for as to and Mark DPP

are tests additional work to potentially diseases disease feasibility sexually develop and transmitted side, borne development product engaged the we states. in for On insect

can large We point-of-care be disease through unfilled of for advanced which multiplexed we addressed state, each have in identified believe the tests these categories. development market needs

R&D We investments long revenue are making and in generate expect term. progress in the will on profitable our our pipeline

I Now improvements hand the competitiveness to the program. to more detail global financials will on quarter Larry, our call the operational first provide under over details and

Larry Steenvoorden

you, Rick. Thank

of first For the XXXX an period. growth for XXXX, to was Product total for increase previous three the due March R&D royalty to year revenues period. of $XX.X prior XX XX% ended ended year were to and expiration representing months combined of three March compared of agreements. the million, partner Government months period revenue revenue income prior grant of to revenues prior compared compared the the $XX.X license XXX% quarter the a XXXX, $X.X XX development and was year the decrease XXX% million million,

ended first to higher product the million $X.X agreement. costs by the XXXX. the completion to quarter expenses share, for related revenue by million by or revenues in of first XXXX development compared Gross the to year quarter amount compared in The with margin America minimis net year year restructuring, product increased gross months minimum $X.X by share, for approximately million Sequentially, first rolling in operational the to Our severance prior for margins compared and to period percent quarter or during March XXXX, the with prior fourth million. ended compared selling increased in of of to points, months three R&D of increased prior in first million $X.X to million the net period margin decreased driven the at The million, million and of first quarter $X.XX March Net total the in development costs volumes compared the compliance partnership $X.XX XXXX. quarter XXXX, average our prior in in share a million primarily covenants XX was in XX% of gross of $X.X compared the period product were XX% productivity. $X per first XXXX. $X.X prices by associated XX work in year loss period. impairment, loss $X.X margin of prior credit was to Latin XX, and increased the the quarterly year the relative agreements. three was US sold per percentage diluted XX-month prior quarter increase administrative product and $X.X a Selling, Gross percent XXXX quarter $X.XX $X.X product to of or XXXX, the of to includes per XXXX, loss the diluted period. de general

The quarter and to On sheet, to XX, were in totaled working capital in did million Net first usage $XX.X cash any operational as million. efficiencies XX, reduce March of was the equivalents company of XXXX, able cash and common the the XXXX. We the of as through management. $X.X million. quarter balance cash offering March not shares stock of as capital $XX.X sell of ATM part working XXXX,

will the nature past COVID over we competitiveness Looking face half we two forward the and to fourth of quarters and revenues revenue global continue weighted program. year first challenging to substantial XXXX. third the be given will sales expect for quarters, now on touch the of comparables will I the growth the

are foundational priorities as we forge to guide to Here, on efforts, path a we execution our profitability. focused four

higher-margin in on First, focusing we are growth markets. business

We product President providing recently strategies In customer continue international portfolio gain Vice and establishing we us undertook from Operations profitability of basis. in-depth to pricing, and marketing a quarter, insight pursue with support our accurately prices. the and our to a Senior allows with Caso to more Global markets visibilities both Chuck growth and more our an of relationship. evaluate selling first new of higher to as review and have Commercial product appointing selling The increase opportunities business, including reorganization geographic prices analysis us a is this distributor of concluded our in

opportunity We this identified Brazil CHECK product. self-test dedicated strong increased a have for And UK. in have HIV France, the SURE resources our to

first the including labor to to addition is other in overtime offset unit in reduced we we turn, to greater products the levers inflation our strategy accommodate tighter continue It appropriate our on to costs. price impact to have manufacturing overhead, costs. for volumes we lower looking management planning In our materials. are controls from scaling are hours. impacts. that labor to accretive increases and we and manufacturing increases resulting we quarter, lower experience disposal to Second, Automation are at achieved with productivity worth In price evaluating lead suppliers for times our these are longer of the of noting

costs. to costs to of and reduce of Third, infrastructure in-depth spend functions costs. includes external analysis an we our reduce working all infrastructure are support our Reduction

research Our the the our of around with the development centered closely system investments DPP more aligned strategy, and be and pipeline. in product expansion will innovation

to markets and Fourth, non-core and in actively the strategic target to approach go benefit we every competitive with more dollar profitable are have Our our we revenue businesses assets. more disciplined be generation. is to goal and spend proceeding of analysis, landscape towards review cost

to in businesses profitability, we achieve our focusing those operations our We enhanced to our market with local line long-term Brazil with dynamics. Germany aligned road and past our more costs and manufacturing on in In resources low-cost Brazil subsidiaries strategic bolstered independent to are map. closely have reorient bring

Specifically levels. in SURE packaging OTC Brazil, supply have to we CHECK maintain appropriate capabilities

taken We profitability. together, on initiatives can trajectory improved are confident these an towards that, place Chembio

turn now to and committed look we as global providing call program firmly Rick are to this updates, to comprehensive execute plan. competitiveness we the forward remarks. I'll back concluding for We the

Rick Eberly

Larry. you, Thank

the would say words Shareholder conclude, at to XX, I Directors like few Annual has to May upcoming I Board been nominated XXXX. Leslie on for Before about Teso-Lichtman a Meeting election who the of

the Vice years in a President XX care Leslie Roche followed Officer device she product and wrap to Vice the and quarterly She believe is described have her industry Financial Senior our annual off XXXX, President efficiency. with Hologic. Vice excellent Board and proxy Controller To company. at Previously, experience. Senior Hematology held diagnostics and of improved statement, phase President, start meeting. over We the and revenue, finance for our in a margins, set As growth. this gross we may for a we up, roles skill Finance strong veteran CereVasc, health fit in experience an Diagnostics as capital record leadership Chief were Treasurer is medical of product occur, of of increasing the and generating currently Chembio

to near-term the questions. drive refocus resources opportunities, to strategy reposition and With more valuable execute profitable term. long continue most and growth our domestically call on open please operator, to our We our the over while advancing that, to up internationally


now Thank Instructions] Then Jackson. you. Our is for open Please Ladies [Operator announce your is first your coming affiliation. and from gentlemen, the question. floor question. pose question Bruce

Bruce Jackson

parse out revenue a about little bit. the afternoon. Good maybe Questions just

purchase million that was big order. of Brazil $XX.X If remainder had the my So Is $XX.X is correct, of the right? that million. math

Larry Steenvoorden

Yes, that's right.

purchase all revenue order the remaining completed QX. So in we in the

Bruce Jackson

And product Are mix dengue still like tropical was you Brazil, that? then on the shipping remaining fever the and what the revenue tests for chikungunya?

Rick Eberly

is this Bruce, Rick. Yes,

was in mix Our was of said Bio-Manguinhos. that product balance America, was that the as revenue of of a The mix that Latin number test a majority to Larry COVID-XX finishing products. up the of

excited in subsidiary growth Brazil. our about of are We the

Brazilian you in months, the of the significant our subsidiary. CHECK SURE of in Bruce, made know couple on shelves Brazil. we progress commercial over HIV some self-test course in the pharmacies the we As enhanced of leadership the our getting last And

retail four it's chains being As exciting largest now said, to I Brazil. in to pharmacy the

well growth Brazilian from as subsidiary, from had good the coming growth as our good Bio-Manguinhos. we So

Bruce Jackson


Okay. right are And HIV-Syphilis we us, waiver. the Can what the you over in in maybe now? steps CLIA moving to test the process? then, remaining remind where combo the are And

Rick Eberly

to today Yes, FDA Bruce. for as the Where about data did we submission data FDA the additional talked supplement in have some been the process waiver hopefully additional request is, our earnings stand to CLIA of in approval. we've XXXX submit CLIA a so, the call, gathering and and fourth will we And that application, we're the waiver we once that data. completed, then quarter

Bruce Jackson

Okay. you care be assembled? as the And to a then, would when data guess might to hazard

Rick Eberly

ongoing. It's Bruce. Yes,

timing We any haven't on projected that announced that. timing on any or

know be at we're time given possible And very, the will the very once turnaround that's as at. then, we and so, where data. working we're the workload. And complete, get And submit we it's And FDA. aggressively to as their additional quickly to don't FDA, what it will the

little So uncertain bit because on Bruce, the those timing is factors. a of this

Bruce Jackson

It's for queue. All right. Okay. then One and the last question about your It's me I'll in manufacturing. hop flexible arrangement. -- a back

both and You've out? product any in you can for particular or manual lines. Is up the got automation and product, lines different set some some the swap automation

Rick Eberly


as CHECK multiplex DPP every Bruce well well for that is goal automation as DPP have HIV our our STAT-PAK Our product format capability our includes to we which platform, our platform, have as platform. self-test SURE platform, as HIV

So goal. that's our

of production the is addition approvals do some flexibility WHO, ANVISA strategy options. the only thing have that that in around I validation cases and of of in that, terms for production. The have built world in Mark Europe, regulatory of would we of to Brazil, formats on a registration automation go including that in have a through say CE Bruce those in change we lot we into to FDA, because So product a

though maximizing we're every bit to bottom automate the is line opportunity So manufacturing. or of

Bruce Jackson

you very for much Got it. Okay. Thank Great. questions. my taking

Rick Eberly

Bruce. you, Thank


Our Per next question from comes Ostlund.

Per Ostlund

afternoon, everybody. Good Thanks.

how know So an the may feeling to but fulfilled inventory the coming been that have season they for well the Brazil how summer and too fulfilled that get over into up not as has of to a you? Let's would near-term a I order into that besides burn of there's will? distant country in sense back a just in sense you're here season have sort that other future. its trying if stocked curious, Bio-Manguinhos. Do you with if you going go used whether Brazil now you handle quarters, last that the been be product you the channels a couple of to order has in respiratory opportunity and Rick going presents mentioned it's be pursue the Bio-Manguinhos

Rick Eberly

where Yes, supplying and lot terms shipping has into providers is of of Per great visibility needs What know question. Brazil the testing their all We volumes. of don't been COVID-XX. Bio-Manguinhos with in we do a timing have Bio-Manguinhos product the healthcare federal is in for

few meeting and better So build they relationship number to give multiple one begin getting – that country. meet number two quantity a relationship our And hospitals the have number or – and their whether in to be goal across a HIV was our we them. to what team. continue testing coming our with around ago to around for or And core Brazil that's CFO they're but or the the strong federal it DPP gets visibility timing of testing season healthcare with CEO a that needs SURE their was future leadership to clinics they And CHECK HIV with customer like one their respiratory visibility discussions products us was into don't to distributed world. ship into their needs, future where inventory. up the weeks and and I in shipping the Bio-Manguinhos the and

products thoughts were to needs relationship last of the Brazil trending And around so on COVID season. the We do about think what we months. over had in discussions down the they we having several into move and their talked the But core pandemic to respiratory they forward. we're before where visibility were the move strong our testing – as is trying to better back their is and that and

Per Ostlund


of That makes Okay. a sense. lot

logical in product CHECK, extension always may that on this I've kind it's you has probably most perhaps the the Chembio. you Has of moment globally I an history there effort think internally, of a where team before. SURE awards think heard your covering won perhaps realized call are about can say felt self-test. a HIV. very to this technical now aha for making like given HIV I would be more sounds ever wondered self-test for self-test there product and had you something concerted have I've the potential press? always referenced you You the a been that mentioned the of It like advantage it's product in I the than on

Rick Eberly

Per, Yes. some example. probably CHECK for what as time. seeing quite started self-testing one COVID and be had test antigen us. pandemic for it core a post But actually absolutely. we're to It's We've SURE self-test HIV product recently during pandemic began as more accepted well for the

saw seen need in take the self-testing HIV, to countries because incidence WHO. we the overall the of just So especially is some interest CDC, the HIV of where in the We've renewed for reduce higher. incidence

support So ANVISA well some as that saw as approved we NGO in soon as recently this government for self-testing. as and just of Brazil,

approved relatively getting more So to are beginning many it's today in endorse many, continue support, the Brazil. for to beginning to a HIV. And governments UK, to countries development HIV going pursue new the self-testing for we're there's they are France where our and other in self-test because support and treatments

treatments positive get and are the get question one. so because if And effective. is extremely That's tested you're the treated,

thing as relationships. example is, The you our in we've I'll Brazil. give expanded second distributor one

largest of we're the four subsidiary enabled in marketing Brazil, our what effort, into through to subsidiary Brazil. effort chains have It's which the selling in two pharmacy through there. strong commercial our through also a is us distributor. And very largely direct We our our get

prices the growing. as seeing the market, about why, And average more talking we're we're that about retail I because what well. momentum So potential. think Per, higher are is, growth The in selling that, excited we're that's

much selling competitiveness So we're our after prices into program, higher it where our really fits to improve gross margins. global going

Per Ostlund

I blame, that you into ask maybe I'll -- Can't think there more at here. dovetails all, one

margin quarter gross now. So quarter the the from product improved in to historically December

sort have hazard have turned is recent percentage like the some about much How away, that is -- have increase better of how some through product Larry points think that been. parse probably stuff up way straight point or a through we've percentage in I might at word write-downs artificially When ASP think like a and something much I think of one-off of XX is point. had, higher-priced might maybe to because mostly XX the we of and it strip I quarters returns organic they would better this said, for And impacted talk I U.S.? you December's of quarter-to-quarter, the efforts geographies lack tests that quarter? there improvement a in

Larry Steenvoorden

Yeah. Hey Per, is this Larry.

we that That the that in there take was inventory can the last $X.X-ish from point, is QX one. to I in release. so that And of -- disclosed earning an as for period. release So adjustment million earnings

really as lot just labor any Previously just strong So to have comparability, for labor order. And controls the premium automation we was a pay complete QX. it performance. the had that with of we don't on had in one-offs then, overall tighter learned And We the lessons a mainly. had well. to I operational think, its we that

we've scale. trend we So, the now continue how to able to margins the a for is of point, then, to key year. and be that know continue the higher that the to got generate rest driver And where

the I'd out So that's point item, a from QX. one-off

Per Ostlund

Thanks taking looks for good progress. It some my questions. excellent. Okay, like

Larry Steenvoorden

much Yeah. Per. very Thank you


comes from question McCarthy. next Jason Our

Joanne Lee

how they leading approval the the prior the submission? Thank received to for test in with receiving in you HI. Brazil? McCarthy. if some of feedbacks to you. filing line I submitted ask up the color regarding The such my provide or for for ex-U.S. was your discussions Jason Test. the regulators This Thanks on, as XXX(k) is Europe last And the regulators Joanne call year. and similar with Antigen from question. taking the Could Lee, to were wanted SARS-CoV-X end on near

Rick Eberly

limited for that because we Antigen from received have the test time very EUA. same SARS-CoV-X Thank at The we -- XXX(k) you, around is feedback the the FDA Joanne. fairly submitted we the submitted DPP

by currently getting that over the XXX(k) trend we EUA a the the so priority FDA review submissions. And see. right we see as now That's are is

XXX(k) process is because the EUA to is is and anticipation reviewing FDA going take longer much submissions. still the approving and our prioritizing So,

Joanne Lee

Thank you cases follow-up could that challenges just of COVID as you have some company out the may fluctuation or new driven that. All to the we where the the to discuss and COVID certain terms emergence that's given steps of of a planned And are right. emerged variant? has carry program, largely undertaken address for by in regarding the a

Rick Eberly

Yes. an over What the last hospitalizations. days, of in the seen cases Omicron article increasing we're variant. read a The New I again is XX we've in just seeing rates to the and somewhat surge York Times today about due

watching we're So, closely. very, that very

As in our and you lot of was QX know a revenue QX COVID related.

very we're ourselves Europe. from getting whether in whether America, to surges a United if it's demand it's States, a testing and So, perspective in whether the quickly it's manufacturing in position commercially in respond South

So, as something continues and rate population. fluctuate see as be opportunity among COVID out we it in if there to an patient the positivity its

the we were in in on meet what we're based our be than position to better which customer the and quarter company's to able today order do largest the order to think ever I the in first production history. Bio-Manguinhos happened a scale

a So, at Chembio where needed fabulous here meet automation combining the manual demand. capacity did job that production to team of

be think help we're demand good out I in there. the demand with if increases whatever a So, testing and position where is might to

Joanne Lee

all and the really I appreciate insights your Thanks again. All updates. right.

Rick Eberly

Thank you, Joanne.


like finish questions to appears Do you queue. with? be Sir that there in no any you the closing would to further have comments

Rick Eberly

we for on drive keep by which And like profitability. stay as encouraged everyone quarter moving will very just is program, competitive results. thank We the would first were their designed quickly focused as today. to global forward time to us possible the to really I and

today for a thank everyone. time day. good So, Have your you


gentlemen. This conference you, Thank does conclude and call. ladies today's

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