OraSure Technologies Inc 2026 Q2 Earnings Call

Good afternoon, and welcome to OraSure Technologies' second quarter 2026 earnings call. Participating in the call today for OTI are Carrie Eglinton Manner, our President and Chief Executive Officer, and Ken McGrath, our Chief Financial Officer. As a reminder, today's webcast is being recorded, and the recording can be found on our investor relations website. Before we begin, you should know that this call may contain certain forward-looking statements, including statements with respect to revenues, expenses, profitability, earnings or loss per share and other financial performance, product development, performance, shipments and markets, business plans, regulatory filings and approvals, expectations and strategies. Actual results could be significantly different. Factors that could affect results are discussed more fully in OTI's SEC filings, its annual report on Form 10-K for the year ended December 31st, 2025, its quarterly reports on Form 10-Q, and its other SEC filings.

Although forward-looking statements help to provide more complete information about future prospects, listeners should keep in mind that forward-looking statements are based solely on information available to management as of today. OTI undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. With that, I am pleased to turn the call over to Carrie.

Thanks, Michele, and thanks to everyone for joining us. Today, I'll discuss some of the highlights from Q2 and provide updates on our key priorities for 2026. Q2 was another important quarter in OraSure's transformation. We exceeded our revenue guidance, expanded gross margin sequentially, advanced our decentralized diagnostics pipeline in rapid tests and sample management solutions, and continued to position the business for sustainable growth and long-term shareholder value in the second half of 2026 and beyond. Through our multi-year transformation, we have moved from restructuring and portfolio simplification to execution against a more focused growth strategy. In 2025, we said that 2026 would be a transition year on the path back to growth.

Q2 demonstrated that transition beginning to take shape through stronger revenue, improving margins, and meaningful innovation milestones, including FDA clearance of Colli-Pee Dx with its NucleoPrecision Technology for use with Roche cobas STI tests, plus FDA Emergency Use Authorization for our second-generation OraQuick Ebola 2.0 Rapid Antigen Test. Also on the innovation front and an FDA update is our IntelliQuick CT/NG test on the Sherlock platform. While we remain very confident in and excited about this first-of-its-kind rapid molecular self-test, I would like to call out that we are no longer expecting FDA clearance and U.S. launch to occur in 2026. I'll provide additional details later on this, but want to reiterate our conviction that it's an excellent test that performs very well. Following constructive conversations with FDA, however, we recently elected to withdraw our submission.

We are incorporating feedback from the agency and will be working with them on resubmission to bring it to market. We have positive momentum on multiple fronts, and while we are disappointed in the IntelliQuick delay, I want to emphasize this does not change our commitment or ability to deliver on revenue growth in 2026 or cash flow from operations break even as we enter 2027. We are strengthening our foundation by leveraging our Pennsylvania manufacturing capabilities, insourcing work previously performed by third-party contractors and maintaining disciplined cost controls that are visible in our margin performance. We are elevating our core by diversifying the markets, channels, and customers we serve across rapid diagnostics and sample management solutions, as evidenced in our sequential progress.

We are accelerating profitable growth through targeted R&D and partnerships focused on high-value markets where decentralized access, proprietary know-how, scalable manufacturing, and accessible rapid testing and collection solutions can create attractive risk-adjusted returns. Focusing on our Q2 results, total revenue was $30.6 million, exceeding our guidance range. Gross margins improved sequentially. Lapping the divestiture of our risk assessment testing business.

Now with COVID almost entirely behind us, we are focused on growing our business, executing launch readiness for near-term catalysts, and progressing toward operating cash flow break even as we enter 2027. The accomplishments we will highlight today are important proof points of that strategy. Moving to those highlights. In mid-June, we announced FDA clearance of the Colli-Pee Dx urine collection kit, which enables at-home self-collection of volumetric first void urine samples for STI testing, which can be collected at any time of day. We believe clearance of OTI's differentiated Colli-Pee collection device with its proprietary NucleoPrecision Technology, utilized with Roche's STI tests on its cobas molecular diagnostic platform, can increase access, convenience, and privacy for important STI testing.

It also represents a key milestone in our strategy to decentralize diagnostic solutions and connect more people to care, while helping increase SMS portfolio growth. We also recently shared that we received FDA Emergency Use Authorization for our OraQuick Ebola 2.0 Rapid Antigen Test. Building on our Ebola 1.0 Rapid Antigen Test, for which we received de novo authorization in 2019, our version 2.0 test was also developed in partnership with BARDA. The test detects all four Ebola virus species known to cause human disease, including the Bundibugyo species driving the current outbreak in Central Africa. This authorization underscores OTI's strength in public health, including our R&D expertise, our regulatory capabilities, manufacturing scale, global reach, and long-standing partnerships with governments and global health organizations. Together, these capabilities enable us to respond quickly to emerging and ongoing health threats with accessible, rapid diagnostic solutions.

This outbreak is a stark reminder of the devastating impact of infectious diseases, it is another reminder that our mission and expertise matter. We are proud to contribute to the response and remain committed to applying our strengths where they make a meaningful difference for communities in need, while creating value for our shareholders. In international diagnostics, our Q2 progress reflects an approach to stabilize, diversify, and localize. We continue to serve long-standing HIV testing customers while also expanding the portfolio and deepening relationships with partners that support public health needs from Africa to Latin America and in between and beyond. While Ebola is our latest example of the strength of our capabilities to serve global markets, another is our work on nearshoring and in-country value-added assembly programs for our OraQuick HIV Self-Test, which we discussed in Q1.

These partnerships are increasingly important as national health programs adapt to evolving funding structures and as customers seek more resilient local supply chains. We expect to share more on localization later this year. A third strong global example is in the progress following our acquisition of BioMedomics with Sickle SCAN. We are seeing encouraging progress integrating Sickle SCAN into our international commercial channels and pursuing opportunities with national health programs in geographies where point-of-need sickle cell testing can address significant unmet need. In the hands of our international sales team, Sickle SCAN revenue is growing twice as fast in 2026 as it did in 2025. Taken together, Ebola 2.0 Rapid Test access, OraQuick HIV nearshoring, and Sickle SCAN expansion reflects the strategic evolution of our international diagnostics business.

By addressing critical public health priorities with increasing localization while diversifying our revenue base, we are creating new avenues for growth and reinforcing the capabilities that differentiate OTI globally. We believe this approach positions us to serve customers more effectively, strengthen long-term partnerships, and create durable value for shareholders. Switching to U.S. diagnostics, we saw stronger public health demand in Q2, including customer purchasing patterns tied to fiscal year cycles. Even with continued federal funding pressure, HIV testing programs remain an important public health priority, and demand for our market-leading OraQuick HIV Self-Test was strong in the quarter. We also continue to benefit from the syndemic testing approach we have discussed on prior calls. By offering rapid tests across HIV, HCV, and syphilis, we can help customers address overlapping populations while delivering both clinical and health economic value.

In addition, our consumer and B2B2C channels for the OraQuick HIV Self-Test continue to grow, including through telehealth and other digital access points. These channels provide a strong foundation for future OTC and decentralized STI testing opportunities and reinforce the growing demand for convenient, private access to diagnostic testing. That demand is also reflected in the opportunity we see for IntelliQuick CT/NG molecular self-testing. As I mentioned earlier, I want to provide more detail on the withdrawal of our FDA submission and our regulatory path forward. Our studies demonstrated strong performance compared with centralized laboratory molecular diagnostic methods, and we remain encouraged by the product's performance and its potential to address an important public health need.

Based on the strength of our data across all elements of performance, the demonstrated patient and provider need for this test, and the value of IntelliQuick's differentiated profile, we had anticipated FDA clearance around this time. Following constructive interactions with the FDA and in consultation with them, we are building our plan for resubmission. While we are disappointed by the delay in obtaining regulatory clearance and broader market access for IntelliQuick CT/NG, our confidence in the quality, performance, and clinical value of the test has only increased. We will provide additional updates on our progress in future quarters as we move quickly to complete the work we think is necessary for regulatory clearance and full market launch. Moving to Sample Management Solutions.