LumiraDx Limited (NASDAQ:LMDX) Q2 2023 Earnings Call Transcript

Dorian LeBlanc: Yes, we did. So, just about half of that is still the respiratory testing within the 4.4 [ph] of the LumiraDx technologies, including a large portion for the Fast Lab’s business, as we mentioned, that transitioning to the majority of that business being flu-COVID testing. And on the distribution revenues, as you may recall, that’s revenues for products that we don’t manufacture primarily outside of the U.S. and Latin America and Europe for distribution agreements that we have in our sales organizations.

Operator: Next question comes from the line of Andrew Cooper with Raymond James. Your line is now open.

Andrew Cooper : Maybe first, just a little bit more detail, if you could give some of the progress that’s been made through the quarter in terms of strep and troponin. And I think you had commented you expected to be in trials and strep later this year. And then Ron, I think you said, potentially kind of on the market, at least in trial phase with troponin in the UK and this year. So just what has happened since the last update and anything else you could offer there would be great.

Ron Zwanziger: Well, actually both. So, in terms of new products, whether it’s troponin or molecular strep. Molecular strep, we expect to probably get out in the market in the fourth quarter, in the UK. And we’re also looking at the various clinical trials needed for IVDR and 510-K. And troponin continues to move quite well. And I think our previous comment was that we expect we might be able to get it towards the very end of the year, and that’s still the case. I’m specifically talking about it in terms of self-registration in the UK.

Andrew Cooper : And then maybe for Dorian, just the commentary about some of the run rate on expenses. Can you give us a flavor for sort of what’s still to be recognized here in 3Q that wasn’t fully baked in 2Q and kind of from the trajectory what we should expect there? And then should we think that 3Q gross margins look more similar to that 10% type level that you called out as sort of the normalized instrument X inventory reserve piece or more like what we saw in 2Q just now?

Dorian LeBlanc: Yes, so I’ll take the gross margin piece first. It does depend heavily on what happens with the start of the respiratory season and around the timing of a potential approval for the flu COVID test through ITAP in the United States. So obviously that high value, high margin respiratory product coming through in the end of the quarter could have a material impact on where we stand. Absent strong contribution from that then yes, your comment around the 10% level at these revenue levels is on the mark.

Andrew Cooper : I was just going to say, so we should expect more normalized levels from the kind of instrument drag perspective and then you feel like the inventory piece is pretty well reflected after the last write-offs?

Dorian LeBlanc: We would expect that, yes. And on the expenses, yes. So, we did incur the close to $3 million of restructuring charges in the quarter. And that’s largely around severance for reduction in the workforce. Most of those employees left in May, June. And so, there’s the expense savings further on employee costs in the third quarter. But as we’d mentioned previously, some of that will be offset by an increase in U.S. clinical and regulatory expenses. So, we will get some additional marginal savings in Q3, but as we start the work on the U.S. clinicals, on the respiratory products, and on the community-based products to bring the European portfolio into the U.S. We will be using some of that cost savings for the clinical trial costs.

Operator: [Operator Instructions] Our next question comes from the line of Mark Massaro with BTIG. Your line is now open.