Cue Health Inc. (NASDAQ:HLTH) Q3 2023 Earnings Call Transcript

Ayub Khattak: We see the ability to deliver the tests individually like flu, COVID, RSV is very important and complementary to multiplex tests like flu COVID that we have under review or the flu COVID RSV test that we’re developing with BARDA. Our customers, they want options, especially on the provider side, they’re used to having both combinations and the ability to order a single test. And so we wanted to provide that flexibility. We also think it’s part of our regulatory strategy. So we believe that having options is really the best strategy. And with regards to cannibalization, we’ve been having better-than-expected sales from our COVID-19 test. And we think that in the long-term depending upon the customer category, they’re going to have more desires for one test or a combination test and also could depend on whether or not there’s flu circulating or not circulating. So it’s not a — it’s pretty nuanced. And I think the baseline is that you want options.

Unidentified Analyst: That makes sense. Thank you. And then just a follow-up on the tests for this upcoming season the flu A, B and the RSV that are currently with the FDA. It sounds like you guys are expecting those in the quarter and generated some good new evidence. Is there any chance those end up getting pushed to the first half of ’24? Or how are you guys thinking about that? Thank you.

Ayub Khattak: Yes. As we said, we added a lot of really good data for especially our flu COVID and flu de novo applications and there’s RSVs in process as well. What we think is that over the course of the respiratory season, there’s a good chance that we’ll be able to achieve the approvals for flu COVID, combo, flu de novo and RSV de novo. In terms of the exact timing, I mean, this is a process that we’re working through with the FDA. So I can’t give you an exact timing, but we are optimistic that we can get them in the respiratory season.

Aasim Javed: And to add to that these tests are made on the same manufacturing line. So we’re really ready from a manufacturing standpoint as soon as these tests are ready we have customers over 300 customers that we’ve had over 0.25 million installed base in terms of readers. So we do think we have those channels available to us to commercialize as soon as we get these approvals.

Unidentified Analyst: That’s very helpful. Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes to the line of Charles Rhyee with Cowen. Your line is now open.

Charles Rhyee: Yeah, thanks for taking the question. I just wanted to follow up a little bit on sort of the — your comments about reaching EBITDA positive early 2025. Maybe can you give us a sense then sort of what the revenue mix you would expect when you’re reaching breakeven? And sort of what the run rate revenue on an annualized basis to reach that target would be. I guess I’m trying to figure out here, you did like $70 million, $80 million in the quarter. You’re guiding $60 million, $80 million for the next quarter. So obviously, we’re in the respiratory season. It was obviously light in the second quarter. So you’re running what $60 million, $70 million on COVID right now, what would you expect that to look like particularly to the prior question about with multiple respiratory tests in the market, is it really respiratory tests that are going to be driving the revenues out in — towards the end of ’24, where that’s how we reach EBITDA breakeven or if we look at expenses, should we expect OpEx to continue to come down?

Just trying to get a better sense for what that mix between revenue and expense looks like or even in margins, gross margin looks like as we hit that — to reach that breakeven point.