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Edited Transcript of OXFD earnings conference call or presentation 6-Aug-19 12:00pm GMT

Q2 2019 Oxford Immunotec Global PLC Earnings Call

ABINGDON Aug 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Oxford Immunotec Global PLC earnings conference call or presentation Tuesday, August 6, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Matthew T.E. McLaughlin

Oxford Immunotec Global PLC - CFO

* Peter Wrighton-Smith

Oxford Immunotec Global PLC - CEO & Executive Director

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Conference Call Participants

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* Catherine Walden Ramsey Schulte

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

* Doug Schenkel

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Rachel Marie Vatnsdal

Piper Jaffray Companies, Research Division - Research Analyst

* Sung Ji Nam

BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to the Oxford Immunotec Second Quarter 2019 Earnings Call. (Operator Instructions)

I would now like to turn the conference over to your host, Mr. Matthew McLaughlin, Chief Financial Officer. You may begin.

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Matthew T.E. McLaughlin, Oxford Immunotec Global PLC - CFO [2]

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Good morning, and thank you for joining us to review Oxford Immunotec's financial results for the second quarter of 2019. Before we begin, I'd like to caution listeners that comments made and financial information provided during the conference call includes certain statements that are estimates, forward-looking and or subject to various risks and uncertainties.

This information reflects our current expectations, assumptions and currently available data and are neither predictions nor guarantees of future events or performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with our business, including those under the heading entitled Risk Factors in our annual report on Form 10-K for the year ended December 31, 2018, and our annual (sic) [quarterly] reports on Form 10-Q.

The company disclaims any obligation to update or revise any forward-looking statements, except as required by applicable law. During the call, we'll also refer to certain financial information on a non-GAAP basis. We believe that non-GAAP financial measures taken in conjunction with GAAP financial measures, provide useful information for both us and investors to evaluate the company's performance.

These include pro forma revenue, gross margin, operating expenses, loss from operations, EBITDA and adjusted EBITDA.

Reconciliations between certain GAAP and non-GAAP results, such as adjusted EBITDA, are presented in the tables accompanying our earnings release, which can be found in the Investor Relations site of our website. As a reminder, in early November last year, we completed the sale of our U.S. laboratory service business to Quest Diagnostics. As such, the now divested U.S. laboratory service business is shown as discontinued operations in the historical financials in our press release and forthcoming 10-Q.

The discussion of our results and business updates on today's call will be focused on our continuing operations. And to assist investors in understanding the underlying performance of the company's continuing operations, we will be comparing to certain pro forma non-GAAP financials for the prior year periods. These non-GAAP financials for 2018, which were filed as exhibits on Forms 8-K issued on January 7 and March 11, 2019, reflected the company's estimated revenue and cost of revenue as if the closing date of the sale of our U.S. laboratory service business to Quest had occurred prior to the respective periods.

These non-GAAP financials also appear as supplemental tables in our Q2 earnings press release. The pro forma adjustments in these tables were based on the information available at the time and assumptions that management believe were factually supportable and reasonable. With that, it's my pleasure to turn the call over to Oxford Immunotec's Chief Executive Officer, Peter Wrighton-Smith.

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [3]

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Good morning. On today's call, I'll start by providing some general comments on our financial results and operating performance in the second quarter of 2019. I'll then hand it over to Matt, who will walk you through our financial results in detail. And once Matt's completed that, he'll hand it back to me to provide our financial guidance, and we'll then open up the line to take your questions.

Turning to 2019 second quarter results, we posted revenues of $19.6 million, which was towards the top end of our expectations for the quarter.

Excluding 2018 revenues from blood donor screening from the year-over-year comparison, total company revenue grew 16% over pro forma revenues for the same period in 2018. U.S. revenue was $7.8 million, excluding 2018 revenues from blood donor screening from the year-over-year comparison, U.S. revenues grew 47% in the second quarter compared to pro forma revenue for the same period in 2018. This reflects both the pull forward and seasonality of our U.S. business, as we've moved from recording revenue on the performance of test to the shipment of kits, as well as continued strong underlying growth of testing demand. Europe and rest of world revenue of $2.2 million was essentially flat compared to last year, as strong market demand was offset by the unwinding of the Brexit stocking that occurred in the first quarter and that we called out in our last earnings call. Taking the first half as a whole, the growth in this market was 11%, or 18% on a constant currency basis which more appropriately reflects the double-digit underlying growth that we're seeing in this market.

Highlights from the quarter were continued strong growth in our U.K. business and very strong growth in Russia as the benefits from our partnership with Generium start to bear fruit. Asia revenues were $9.6 million for the second quarter of 2019, up 3% from the same period last year. First half growth in Asia was 7% or 8% on a constant currency basis. The relatively weaker start to the year and reported revenue growth is reflective of order patterns in Japan, which are more back-half weighted than last year.

Underlying growth in testing volumes in Japan are significantly stronger than the current reported growth levels, and we therefore, expect reported revenue growth to rebalance in the remainder of the year. Overall, we're pleased with the strong underlying momentum in the business and the continuation of double-digit revenue growth. In addition to renewed focus on driving revenue growth, we're also concentrating on driving the company's profitability metrics.

Gross margin in the second quarter was strong at 72.4%, growing about 530 basis points over the pro forma gross margin in the prior year period. We saw an expansion in product margins due to leverage from higher volumes and as we start to see the benefits in greater automation of kit manufacturing. We also saw a strengthening in service margins, both as we've eliminated the drag on margins for the blood donor screening service and as we continue to grow volumes in our U.K. service lab.

We continue to repurpose the company's spending around our new more focused business model, we're delivering OpEx leverage, whilst also increasing investments in sales and marketing initiatives. This OpEx leverage, combined with gross margin expansion is leading to meaningful progress in moving towards adjusted EBITDA breakeven on the bottom line.

Turning now to our key operating priorities for 2019. Our first priority is to maximize the success of our relationship with Quest Diagnostics in the U.S. market.

As you know, the transaction requires significant increases the reach and competitiveness of T-SPOT. TB in the U.S. market. Our focus for now remains on bringing the former Oxford Immunotec operation onto the Quest platform. This is a staged process covering IT, phlebotomy access, logistics and managed care. On the IT side, on our last call, we reported that Quest had just launched electronic ordering of T-SPOT. TB. This has enabled phlebotomy access with T-SPOT. TB now available in approximately 1,000 Quest patient service centers.

Quest is also continuing to make progress into a team T-SPOT with their joint venture partners and with various GPO pricing agreements. In parallel, we're continuing to strengthen the depth of engagement between our sales forces, and we continue to see early winners from this collaboration. Whilst it's still early, and there's much still to do, we remain highly encouraged by the way the relationship with Quest is progressing, and we continue to expect it to result in expanded growth opportunities once all the integration steps are completed.

Outside the U.S., we're executing on our plan to strengthen our voice and channels into new and existing markets, both through direct hires and the use of commercial partnering to expand our reach. In Asia, we remain confident in the size of the opportunity, both in our existing markets, but also from expanding into new geographies. To support our continued growth in this region, we've recently opened up a regional APAC hub based in Singapore and are significantly expanding our management depth and field resources across the region.

In our new Russian collaboration, I'm pleased to report that Generium received regulatory approval for their domestically produced kit in June, which now makes them able to access new business in the Russian market. Turning to our product development efforts. We continue our work on the T-Cell Select product. Our customers remain very interested in T-Cell Select and the resulting ability to automate the T-SPOT. TB workflow. This interest stems both from existing customers, who see this as a means to increase their testing volumes, and from new customers who have wanted to offer T-SPOT. TB, but needed a simpler workflow to do that.

We are starting to order equipment for the first customer sites, starting in Europe and rest of world region, and we have a strong pipeline of customers, instrument placements and adoption of the new automated workflow. On the operations side, we have multiple cost reduction projects ongoing, including further automation of our kit manufacturing. We're validating new equipment to automate an additional process step, and we'll be rolling that out later in the year.

So in summary, we're making good progress on executing our strategic priorities for the year and as we continue to execute on our new business model, we're pleased to see continued growth and improving profitability metrics. Before I hand it over to Matt, I'd just like to give a brief update on our share buyback timing and steps. At our Annual General Meeting in June, shareholders approved the resolution giving the company the authority for a 5-year period to purchase up to a $100 million of the company's shares over that period.

Subsequent to that, we issued trading instructions to our financial intermediary to purchase the shares on the company's behalf, and we expect the first purchases to commence late in Q3. We will continue to communicate updates in forthcoming earnings calls. Matt will now take over to give you some more detail on our financial performance.

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Matthew T.E. McLaughlin, Oxford Immunotec Global PLC - CFO [4]

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Thank you, Peter. Our full GAAP results, as shown in our press release issued today show the comparison of our Q2 2019 with the GAAP numbers of our continuing operations for Q2 2018. For the reasons I've already explained, when giving year-over-year comparisons, I'll be referring to the pro forma numbers for Q2 2018 instead, to enable the comparison on a like-for-like basis to our Q2 2019 results.

You can find these tables at the end of our press release after the presentation of the GAAP results. Total revenues in the quarter of $19.6 million were up 18% versus GAAP revenues in Q2 2018, but up 10% from pro forma revenues in Q2 2018.

Excluding blood donor screening revenues from the pro forma Q2 2018 revenues, total revenues were up 16%. Breaking down our reported revenues on a regional basis, U.S. revenue was $7.8 million, representing 40% of our total revenue; Europe and rest of world revenue was $2.2 million, representing 11% of our revenue; and Asia revenue was $9.6 million, representing 49% of our revenue.

Turning to volumes in our TB business, we now count volumes in the U.S. based on the number of tests sold to Quest and our other kit purchasers, rather than on the basis of how many tests were run in the U.S. We sold approximately 400,000 tests in the U.S. via kit sales. We sold approximately 700,000 tests in our OUS region, both via kit sales and test processed in our U.K. ODL service business. Gross profit of $14.2 million was up 19% from the pro forma gross profit in the prior year period. Overall, gross margin for the quarter was 72.4%, an increase of about 530 basis points from the prior year period pro forma number.

Breaking down margins by product/service split. Product gross margin was 72.8%, and service gross margin was 65.1%. Product gross margin increased about 250 basis points from the prior year pro forma, as we continue to be successful in driving down cost of goods sold through, for example, increased automation of kit manufacturing. Service margin nearly doubled from the prior year period pro forma as we no longer have the drag from our blood donor screening service, and we grew volumes in our U.K. service lab.

Turning to operating expenses. Operating expenses reduced by almost a $1 million or 6% from the prior year period. Research and development expenses increased to $2.1 million as we continue to invest in development projects aimed at pulling through our new automated test workflow, augmenting T-SPOT. TB test utility and in projects to reduce COGS. Sales and marketing expenses increased to $7.5 million as we continue to make investments to drive channel and market expansion around the world.

General and administrative expenses decreased about 3% year-over-year to $5.5 million. Operating expenses for the second quarter included approximately $815,000 of share-based compensation. Net income for the second quarter of 2019 was $590,000 compared to a pro forma net loss of $5.9 million in the second quarter of 2018. EBITDA for the second quarter was a loss of $218,000. Adjusted EBITDA, which excludes share-based compensation, unrealized FX gains or losses and unusual items, was essentially a breakeven, showing a loss of $48,000 for the second quarter of 2019. This compares to an adjusted EBITDA loss of approximately $2 million in the prior year period. Both EBITDA and adjusted EBITDA are non-GAAP measures.

Turning to the balance sheet. We finished the second quarter with a very healthy cash position of $187 million. Cash utilization in the quarter was $2.2 million, due primarily to higher accounts receivable, in line with our quarter-over-quarter revenue growth. Notwithstanding underlying cash flow from operations, we expect cash outflows in the coming quarters as we execute our share buyback program.

I'll now hand it back to Peter, who will discuss our business outlook.

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [5]

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Thank you, Matt. Given the strong momentum in the business and the results so far in the year, we are raising our revenue guidance for the full year to between $71 million and $73 million. Turning to the outlook for the third quarter of 2019, we expect revenues of between $20 million and $21 million. In the U.S. now that we recognize revenue on the sale of kits rather than the performance of tests, we've seen a pull forward in the seasonality of our U.S. revenues from what we saw previously. Consequently, we expect a sequential decrease in U.S. revenues after the new seasonal peak in Q2. We expect Europe and rest of world revenues to increase sequentially, reflecting the growth in that region.

Lastly, we expect Asia revenues to grow sequentially from Q2 as orders to Japan catch up from the weaker first half of the year. That concludes our formal prepared remarks. We'll now open up the line for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Bill Quirk with Piper Jaffray.

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Rachel Marie Vatnsdal, Piper Jaffray Companies, Research Division - Research Analyst [2]

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This is Rachel on for Bill. Peter, you touched on the seasonality a little bit during the call, and we'd just like to understand the traditional Q3 seasonality as a service provider and shifting into 2Q as a supplier. So can you help us understand the difference between the seasonality and the underlying growth in the U.S. results?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [3]

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Yes. So underlying growth in the U.S. is comfortably in the double digits in terms of test utilization, but obviously, we recognize revenue based on when we ship kits to Quest and our other U.S. customers. And as your question states, obviously, that's been pulled forward. So we expect in the U.S. now for the Half 1 to be stronger than Half 2 with our new seasonality with Q2 being the seasonal peak, and that coming down into Q3 and Q4. So that's kind of what we expect going forward in the U.S. based on the pro forma seasonality.

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Rachel Marie Vatnsdal, Piper Jaffray Companies, Research Division - Research Analyst [4]

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Great. And then one more question. So for Europe, and rest of world, Brexit obviously brought down the quarter. So do you expect that destocking effect to continue through the rest of 2019? Or what are you baking into guidance for Europe?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [5]

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Yes. So we're not baking any further -- essentially, the effect we called out was that in Q1, customers in Europe, fearful of a no-deal or disorderly no-deal Brexit in March kind of stocked up as a kind of hedge against any customer disruption. And obviously, when Brexit didn't happen, they're kind of were holding stock so they didn't need to order so much in Q2. So that's why I gave the first half growth rates to kind of show what the underlying growth in the market was when you take those 2 factors as a wash, right? Who knows what's going to happen in the second half of the year because the prospect of a disorderly Brexit is again, on the agenda, but we certainly haven't built any kind of stocking explicitly into our guidance for Q3.

And again, for the financial year I don't think it would make a difference because even if it did happen in Q3, it would probably unwind again in Q4. So we're not overtly building any stocking into our guidance.

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Operator [6]

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Your next question comes from the line of Sung Ji Nam with BTIG.

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Sung Ji Nam, BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst [7]

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Just maybe a quick one for Matt. In terms of gross margin cadence going forward, do you think the current level is sustainable?

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Matthew T.E. McLaughlin, Oxford Immunotec Global PLC - CFO [8]

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Yes, I think -- yes, so we talked in 1Q kind of around a 70% number, now that we're 2 quarters through the year, I think we clearly see some upside to that number. The one thing I will point out is, it's going to vary depending on geography in terms of where the growth is, just due to different dynamics in terms of pricing and gross margin percentages by country. But we absolutely see an opportunity to over-deliver on the previously commented 70% number.

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Sung Ji Nam, BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst [9]

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Great. And then, Peter, could you maybe comment on the T-Cell Select kind of the timing on the EU, rest of the world roll out there? And what kind of progress are you making in terms of the U.S. development aspects of it?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [10]

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Yes. Thank you Sung Ji for the question. So yes, on the Asia-Europe and rest of world, as I said, we're ordering equipment now to place into customer sites. So we are expecting to get customers operational -- the first customers operational before the end of the year. As it relates to other jurisdictions, we'll have to go through additional regulatory processes in those markets. We're starting to work on those, but I'll give you a further update that on forthcoming earnings calls when we've made concrete steps there that we can report.

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Sung Ji Nam, BTIG, LLC, Research Division - Director and Life Science & Diagnostic Tools Analyst [11]

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Okay, great. And then just lastly, could you just talk about kind of your pipeline development activity, whether -- if there's a lot of activity going on. Just curious as to your overall cash deployment strategy, understanding that there is a share buyback plan, but we'd love to share more about your pipe -- overall pipeline development.

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [12]

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Yes. So I mean, I think as we look at the company today, we see just a fantastic opportunity ahead of us in TB and that's for a number of external factors as well as some internal factors. Externally, what's happening is that more and more data and guidance are coming out, showing the superiority of blood testing over the skin test. We also have helpful tailwinds from repeated skin test shortages. We're also seeing growth in the market as the WHO and then national governments are getting more serious across the world about embedding latent TB screening into new countries.

So that's what's happening in external environment, which makes us very positive. Internally, obviously, we view T-Cell Select as a major new initiative for the company that will help us continue to drive growth.

And so we feel very positive about the outlook in TB. And as a consequence, that's where we're deploying the majority of our investment. And our investments are really going into 2 areas, it's going into sales and marketing because we want to expand our strength and breadth of our market access channels, both using direct resources and, where appropriate, partnering with other companies as we've done with Quest and with Generium in Russia.

And the second major investment area is R&D, right? And in R&D, it's primarily centered around TB, around pulling through the benefits of T-Cell Select in a more automated workflow, through R&D to continue to reduce our cost of goods and to exploring new ways to add utility and functionality to T-SPOT. TB test. So that's really where our investment priorities are. We do obviously have our T-SPOT. CMV test of on which we have very good data, but the company has not yet committed to launch that in a serious way, in part because we're trying to balance the distraction that, that would imply versus continuing to direct our R&D and sales and marketing resources on the opportunity ahead of us in TB.

So I hope that gives you some sense of where our investment priorities lie.

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Operator [13]

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Your next question comes from the line of Catherine Schulte with Baird.

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Catherine Walden Ramsey Schulte, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [14]

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Just first Peter, you guys amended your supply agreement with Quest back in June. Any color on what drove this change? Any details on pricing? And then, did it have any impact on your 2019 guidance?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [15]

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So, I'll answer the second question first. No, there's no change to guidance as a result of that change. But what I would say, in general, the reason that we've raised our guidance is that we are being more positive about growth actually in all our regions around the world, including in the U.S. The U.S. has done better than we've expected earlier in the year, but it doesn't specifically read through from the contract change, if that makes sense.

The contract change is really an opportunity to deepen the partnership. Quest have agreed to higher growth targets, and we've agreed in return to some modified pricing, and we'll also be getting more granular market data, which will help us strengthen the interaction around sales and marketing and targeting.

So that's what the amendment was about. And that amendment alone did not change guidance.

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Catherine Walden Ramsey Schulte, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [16]

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Okay. And then the slowdown in Asia was a little bit more pronounced than we expected. You mentioned you expect this to rebound in the back half. But what are you assuming specifically in your 2019 guidance for APAC growth in the second half?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [17]

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So the underlying volume growth in APAC is really strong, both in China and in Japan, but you've not seen that in the first half and reported revenues because Japan order timing is going to be much more back-half weighted this year. So you should expect that the second half growth rates in Asia are meaningfully higher than they've been in the first half. And so for the financial year as a whole, when we take that in the round, that will be a better reflection of what the underlying growth in the market really is.

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Catherine Walden Ramsey Schulte, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [18]

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Okay. And is there any sort of pricing headwind this year on APAC revenue?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [19]

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Not specifically. Obviously, we're priced in China in U.S. dollars. I'm sure all of us are aware that on the recent currency actions that are going on obviously, short term, that doesn't impact us because we price in China in U.S. dollars.

But obviously, if that weakness of the RMB were to persist for a long period of time, we obviously have to revisit our pricing strategy in China to make sure we weren't disadvantaged in the marketplace. But other than that, there is no other major pricing dynamic going on.

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Operator [20]

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(Operator Instructions)Your next question comes from the line of Doug Schenkel from Cowen.

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Doug Schenkel, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [21]

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So some communication has been out there from the CDC about skin test supply constraints in the U.S., have you seen any impact on your business thus far? And are you expecting any benefit over the balance of this year?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [22]

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So, I think it's a little premature to have seen a benefit because you need to see quite a lot of data to directly attribute that to the shortage of Aplisol. Obviously, just to remind you, obviously, the shortage is only 1 of the 2 skin tests and so it's not yet fully clear to us whether people are unable to get supplies from the other provider, for example. So it's just too early to call it out. And for the same reason, we certainly haven't assumed that in our guidance for the year. So if that would become a very significant effect in the market, then obviously, we'd have to reflect that in future updates.

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Doug Schenkel, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [23]

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Okay. And do you see any benefits from being included in the Quest electronic ordering system as of yet? And I guess just on the topic of Quest, you noted that you're now in 1,000 phlebotomy centers in the U.S., what percentage of total does that represent?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [24]

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That's approximately all of the patient service centers. The next bit would be the in-office phlebotomists, which is a different category, that will take a longer period of time to get into those. So -- but we're in, I think, predominantly all of the patient service centers right now.

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Doug Schenkel, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [25]

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Okay. And on the electronic ordering system?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [26]

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Yes, the electronic ordering system is really to enable some of these other things to happen. It clearly increases convenience for customers, and it's been one of the factors why we've seen some early wins in sales collaboration, but it's what then underpins, for example, the ability to offer phlebotomy, it will also subsequently underpin logistics changes, et cetera. So view it is a series of things that have to happen to get fully inside Quest's platform, and we're striking those things off. Actually, a correction, Quest is striking those things off, systematically.

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Doug Schenkel, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [27]

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Okay. Just going back to ASPs. I believe you noted you sold 400,000 tests in the U.S., clearly, there's some rounding in this number, but it looks like U.S. ASP have declined slightly on a sequential basis to a bit under $20. Is that right? And if so, what drove the decline? And how should we think about U.S. ASPs over the balance of the year? We could just be completely wrong. It just could be rounding, taking us in a certain direction, but just want to clarify there.

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [28]

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Yes, there are many, we keep a record of kind of volumes and ASPs over the quarter. And it does bounce around a little bit. It also depends a little bit, Doug on just kind of what quantity of accessories are ordered with the test as well, and that can vary from quarter-to-quarter. So yes, it declined slightly sequentially, but not any more than in previous quarters in the range of normal variability.

So I wouldn't be guiding you to view that there's any trend going on here other than just volatility around the mean.

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Doug Schenkel, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [29]

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Okay. And my last question, it wouldn't be a tools and diagnostics call in this day and age if I didn't ask a China question. So as you know, some other companies in the group have talked about a bias towards purchasing from domestic Chinese companies due to the ongoing trade dispute. Historically, you've posted very solid growth in China, in spite of the presence of some copycats. With that in mind, I'm just curious if you're seeing any change in purchasing or ordering dynamics in China as a result of what's going on right now?

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [30]

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Yes. We're still seeing strong growth in China. But equally, like all multinationals, we're worried about the increasing economic -- and economic nationalism across the world.

It's not just the China thing. It's happening in the U.S., it's been happening for years in Brazil, Russia, many other countries, India. And it's just a, I think, an increasing theme in world economics. And so I think we're very mindful that we'll need to maybe deploy different strategies to address that as we go forward. So I would view us as kind of -- my answer to you would be sort of no direct impact right now, but we're well aware that, that trend is probably getting more hostile to western companies, and we need to think about how we respond to that.

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Operator [31]

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(Operator Instructions)

And I'm showing no further questions at this time. I would now like to turn the conference back to Dr. Peter Wrighton-Smith, CEO.

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Peter Wrighton-Smith, Oxford Immunotec Global PLC - CEO & Executive Director [32]

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Yes, thank you all for joining us to discuss our second quarter 2019 results. We look forward to updating you on our next quarterly call.

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Operator [33]

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Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.