OraSure Technologies, Inc. (NASDAQ:OSUR) Q4 2022 Earnings Call Transcript

Scott Gleason: Yes. Ken, obviously, Brandon, we’ve said the preponderance of our revenue is still under those government contracts, which the pricing has been disclosed. So when you think about $0.40 on — relative to that test pricing. Obviously, it’s a very significant increase in the gross margin structure for that business. On a sequential basis, while we didn’t give the gross margins, we did see a meaningful improvement in terms of InteliSwab, on a sequential basis as well.

Operator: Our next question will come the line of Jacob Johnson from Stephens.

Jacob Johnson: Just maybe the other side of the restructuring you announced today, the One OraSure initiative. Carrie, you mentioned the potential for enhanced collaboration and revenue synergies. Can you just talk about some of the opportunities you see as you unite the segments?

Carrie Manner: Absolutely. Jacob, I think we’ve shared some of the restructuring and expanded upon it in this quarter, that we brought together a product office, which brings together our commercial teams in sales and marketing, product management and R&D under Kathy Weber, whom you all know. And the opportunity spans from our collection kits, where we have tremendous relationships and can expand in — through areas like new applications for those kids, microbiome services, building on our services capability of what is our Diversigen business. I’d say, let me be clear that, while we think there is opportunity to cross-sell more, we also, through this restructuring, are very much maintaining the specialized strengths within our portfolio.

So even though we’re creating one product office, which allows for collaboration, there’s also this element of best practice sharing, and it’s not that the sales teams are being mashed together to sell those products. It’s more maintaining specialization, leveraging best practices and sharing sort of a strategic account focus across the business to increase our hunting, while maintaining all of our service capabilities.

Jacob Johnson: Okay. That’s helpful. And then just for my follow-up, I think last quarter, you mentioned inorganic growth opportunities. Ken just mentioned, I think, in the answer previously. Certainly, I understand you’re not going to tell me what you’re going to buy. But in terms of maybe timing and your appetite for M&A, do you think you’ve accomplished a lot of maybe some of the operational internal organic initiatives, that sort of blocking and tackling, such that now you can start looking? Or do you feel like there’s still some more things you need to do, before you look to M&A?

Carrie Manner: To your point, Jacob, there are still things internally we can and will do to increase our innovation pipeline. And so this focus on strengthening our foundation, we feel like puts us on very solid financial footing, while we simultaneously increased our internal pipeline and all of the process rigor around that. And then I said it before, but I’m going to emphasize again, strategic partnerships are the way where we get momentum, before we have the cash because we’re going to be very judicious and not threaten any aspect of our liquidity. But strategic partnerships give us that way to think about how we can expand our value chain capabilities within each of our portfolios and then potentially position for the right M&A, as it’s available. So while we’re not talking specific M&A, I focus on strategic partnerships and value chain expansion in the segments in which we play.

Operator: Our next question will come from the line of Andrew Cooper from Raymond James.