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01/11 03:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: strong core revenue and gross margin improvements are positive, but significant challenges include revenue decline from a major customer, NIH funding cuts, and high operating losses. The Q&A reveals uncertainties in revenue guidance and manufacturing transition impacts. The share repurchase is a slight positive, but overall, the sentiment is neutral due to balanced positive and negative factors. The lack of clear guidance and uncertainties in key areas temper potential optimism.
Core Revenue $30.8 million, above the midpoint of guidance range. Diagnostics grew 3% year-over-year, while Sample Management revenue decreased 22% year-over-year due to a large customer in the Consumer Genetics segment. Excluding this customer, Sample Management revenue growth would have been positive, and overall core revenue growth would have been 5% year-over-year.
Total Revenue $31.2 million. Core revenue was $30.8 million, with COVID-19 and risk assessment testing products contributing $474,000. Total revenue was influenced by the decline in revenue from the large consumer genetics customer.
Diagnostics Revenue $19.2 million, grew 3% year-over-year. Growth was achieved despite challenges in international markets due to USAID funding freezes and slower deployment of HIV tests.
Sample Management Solutions Revenue $9.9 million. Excluding the headwind from the consumer genetics customer, revenue from the rest of the customer base grew year-over-year.
Gross Margin GAAP gross margin was 42.1%, and non-GAAP gross margin was 43.2%, better than expectations.
Operating Loss GAAP operating loss was $18 million, and non-GAAP operating loss was $13.2 million.
Cash and Cash Equivalents $235 million at the end of Q2, with 0 debt. Operating cash flow was negative $10 million, consistent with expectations due to investments in innovation and clinical trials.
Share Repurchase $5 million deployed to repurchase 1.8 million shares of common stock during Q2.
HEMAcollect PROTEIN: Launched in July to meet the needs of proteomic researchers. Expands Sample Management Solutions into blood samples, offering extended protein stabilization at room temperature and simplified workflows.
Colli-Pee device: Progressing towards a 2025 FDA submission. Designed for first void urine collection, targeting markets like STIs, HPV, and oncology. Offers non-invasive testing with high sensitivity and specificity.
Sherlock CT/NG test: Clinical study for an over-the-counter molecular self-test for chlamydia and gonorrhea is on track for FDA submission by the end of 2025. Aims to provide lab-like performance at an affordable price.
International HIV testing market: Despite disruptions due to USAID funding freezes, the company remains confident in its competitive positioning due to its unique oral fluid-based rapid test and strong customer relationships.
U.S. Diagnostics business: Revenue declined 1% year-over-year in the first half of 2025. Public health customers face budget uncertainties and staffing reductions.
Sample Management business: Commercial segment grew in the first half of 2025, excluding disruptions from a large consumer genetics customer. Renewed agreement with GeneDx and collaboration with targeted genomics for GlutenID.
Transition to in-house manufacturing: Substantially completed the transition from external contract manufacturing to internal capabilities in Pennsylvania, ahead of schedule. Expected to improve operational efficiencies in 2025 and 2026.
Leadership changes: Anne Messing joined as Chief Commercial Officer to drive market leadership and growth. Brings over 25 years of experience in life sciences and diagnostics.
Capital deployment: Repurchased 1.8 million shares for $5 million in Q2. Evaluating inorganic growth opportunities to expand the product portfolio and accelerate revenue.
Funding Uncertainty for Public Health Programs: Elevated levels of uncertainty related to funding for public health programs and research, impacting customer alignment and revenue stability.
USAID Funding Freezes: Disruption in international diagnostics business due to USAID funding freezes, slowing the pace of HIV test deployment in affected geographies.
Potential Budget Cuts for U.S. Public Health Agencies: Uncertainty around potential budget cuts and staffing reductions at HHS, CDC, and other agencies, affecting public health program operations.
Together Take Me Home Program Funding: Uncertainty regarding the continuation and funding levels of the Together Take Me Home program, which impacts revenue from HIV self-tests.
Consumer Genetics Customer Disruption: Significant revenue decline from a large consumer genetics customer, with no anticipated recovery in 2025.
NIH Funding Reductions: Negative impact on academic and research customers due to reductions in NIH funding, affecting Sample Management Solutions revenue.
Transition to In-House Manufacturing: Operational challenges and gradual ramp-up of efficiencies from transitioning Sample Management Solutions manufacturing to in-house capabilities.
Sherlock Platform Investments: High investment costs in the Sherlock platform and CT/NG clinical trial, contributing to operating losses.
Revenue Guidance for Q3 2025: The company is guiding to third quarter revenue of $27 million to $30 million, influenced by international order trends in the diagnostics business and the timing of orders from the Together Take Me Home program in the U.S. This guidance also assumes continued disruption in ordering patterns from the SMS customer in the consumer genetics industry.
Gross Margin Expectations: Gross margin percentage in Q3 is expected to be consistent with the second quarter.
Operating Efficiencies: Operating efficiencies from the transition to in-house manufacturing are expected to gradually ramp up in the second half of 2025 and gain additional momentum in 2026.
Operating Expenses for Q3 2025: Core operating expenses are expected to be approximately $20 million plus $10 million of investments in innovation, including $7 million to $8 million related to Sherlock.
Revenue Recovery in 2026: The company expects to return to growth in 2026 as end segments and customers adapt to the new normal environment.
Product Launches and Innovation: Investments in new products such as Colli-Pee urine collection and Sherlock low-cost molecular diagnostics are expected to deliver strong returns beginning in 2026.
Share Repurchase: We deployed $5 million during the second quarter to repurchase 1.8 million shares of our common stock.
The earnings call presents a mixed outlook. While revenue and margins are stable, significant challenges include declining international diagnostics revenue and economic uncertainties. The positive aspects include operational efficiencies, innovation investments, and a share repurchase program. The Q&A provides a strategic fit for acquisitions and improved gross margins, but risks like regulatory approvals and market conditions persist. Overall, the sentiment is balanced, suggesting a neutral stock price movement.
The earnings call presents a mixed picture: strong core revenue and gross margin improvements are positive, but significant challenges include revenue decline from a major customer, NIH funding cuts, and high operating losses. The Q&A reveals uncertainties in revenue guidance and manufacturing transition impacts. The share repurchase is a slight positive, but overall, the sentiment is neutral due to balanced positive and negative factors. The lack of clear guidance and uncertainties in key areas temper potential optimism.
The earnings call presents a mixed outlook. While diagnostics revenue grew by 8% and a $40 million share repurchase program was announced, overall revenue decreased by 2% and the Together Take Me Home program is ending, reducing revenue. Additionally, there are risks from funding challenges and customer disruptions. The Q&A revealed no clear resolution to these uncertainties. These factors suggest a neutral impact on the stock price in the short term, balancing positive shareholder returns and growth initiatives against financial and operational challenges.
The earnings call reflects mixed signals. Financial performance shows positive revenue growth and a strong cash position, but there are uncertainties in risk assessment testing and market disruptions. The Q&A highlights concerns about government funding and academic market stability, despite optimistic guidance for 2025. The exit from risk assessment testing and operational disruptions could offset positive revenue growth. Given the lack of market cap data, the prediction is neutral, considering both positive and negative factors.
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