ORASURE TECHNOLOGIES INC Q1 FY2025 earnings call

• OraSure is making progress on three transformation pillars: strengthening the foundation, elevating core growth, and accelerating profitable growth.
• Notable Q1 highlights: OraSure's ability to navigate uncertainty was demonstrated with revenue in the top half of the guidance range for total and core revenue; progress on the innovation roadmap with new product milestones in 2025; smooth integration of Sherlock Biosciences with molecular diagnostics innovation; in - sourcing of SMS manufacturing from contract manufacturers to Bethlehem, PA, nearly complete by the end of Q2; Board authorized a $40 million stock repurchase over two years.
• Diagnostic business: International diagnostics remained steady despite U.S. funding uncertainty; HCV business grew with expanded use in emergency rooms and the OraQuick OTC HIV test with Everlywell; Myriad Genetics renewed the agreement for Oragene Dx saliva collection kits; Fulgent Genetics renewed the commitment to ORAcollect Dx saliva collection device.
• SMS business: Revenue was consistent with expectations given the consumer genomics customer's disrupted ordering pattern; excluding that disruption, it grew year - over - year; overall market trends for SMS were mixed with clinical genomics and animal health growth offset by academic/research lab softness due to NIH funding uncertainty; renewals from Myriad and Fulgent showed customer loyalty.
• Innovation: Progress on the Colli - Pee urine collection device toward FDA clearance; new microbiome extraction products scheduled for June; acceleration of the Sherlock integration with the CT/NG clinical trial for the low - cost disposable molecular diagnostics platform on track for regulatory clearance by the end of 2025.

In Q1, core revenue stood at $29.5 million, which was above the midpoint of the guidance range. Diagnostic revenue saw an 8% year - over - year growth, reaching $17.7 million. Sample Management Solutions (SMS) revenue in Q1 was $9.1 million, a 16% year - over - year decrease due to disruption from a consumer genomics customer. Excluding the impact of that disruption, SMS revenue grew year - over - year. COVID - 19 products contributed $500,000 to Q1 revenue. Revenue from the risk assessment testing business in Q1 was $1.4 million. Core revenue decreased 2% year - over - year but was flat after adjusting for the exit from the risk assessment testing business. The growth in diagnostic revenue was driven by the international business, including revenue from WHO PQ listed hepatitis C self - test orders. SMS revenue was in line with expectations considering the consumer genomics customer's disrupted ordering pattern, and excluding that disruption, it had a year - over - year growth.

• Guiding for second quarter total revenue to be between $28.5 million and $32.5 million.
• Expect core revenue in Q2 to be in the range of $28 million to $32 million.
• COVID - 19 and risk assessment testing revenues are expected to be approximately $5 million.
• Gross margin percentage in Q2 is expected to be flat to slightly up compared to Q1 and expand in the second half of the year driven by volume growth.
• Core operating expenses in Q2 are expected to be in the low $20 million range plus $10 million of investments in innovation, including $7 million to $8 million related to Sherlock.

• Uncertainty in U.S. funding for global public health initiatives impacts the growth of international diagnostics.
• NIH funding uncertainty causes softness in academic and research labs for SMS.
• Tariffs currently are expected to have minimal impact but are being monitored, with in - sourcing of SMS manufacturing helping to mitigate some risks.

Q: How have conversations been like with possible alternative funding sources for international revenue and on HIV testing demands moving forward given funding uncertainty?

A: Carrie Eglinton Manner stated that they have close conversations with multiple funding sources. Movements in USAID and PEPFAR funded programs that had stopped are restarting, and international revenue is steady but flattish. Ken McGrath added that the product has a proven 10 - year track record of being easy to administer as a rapid oral test.

Q: Did you guys see any pull forward in demand ahead of possible tariffs being put in place and what indicators are watched for future ordering trends?

A: Carrie Eglinton Manner said no pull forward was seen, and minimal impact from tariffs is expected currently due to heavy concentration in the U.S. with Canadian insourcing already underway. Ken McGrath added about a little inventory buildup at the end of Q1 due to uncertainty.

Q: On the Together Take Me Home initiative, does $4 million headwind in fiscal 2025 assume no contribution in 4Q and any alternatives?

A: Ken McGrath said around $4 million is expected for the year, with $1.5 million in Q1 and the remaining split between Q2 and Q3. They are exploring alternatives to continue the program as it has demonstrated value.

Q: On the SMS genomics customer, what's seen in inventory levels and ordering activity and read through to second half?

A: Carrie Eglinton Manner said no volume is anticipated in Q2, and there is no good visibility to future ordering potential, but they stay connected to the customer. Ken McGrath added there are no outstanding ARs.

Q: On PEPFAR and funding disruptions, quantify Q1 impact and expectations for Q2?

A: Carrie Eglinton Manner said the PEPFAR impact in Q1 was around $1 million as expected, and Q2 is expected to be at around the same level.

Q: On the $40 million buyback program, timeline for deployment and thoughts on capital deployment and M&A?

A: Ken McGrath said $40 million will be deployed over two years, evenly spread like $5 million per quarter, with no purchases in Q1 due to a 30 - day cooling off period. Carrie Eglinton Manner stated that they are focused on M&A opportunities to accelerate innovation and growth, along with delivering on Sherlock's opportunities.