Trinity Biotech Plc Q4 FY2022 earnings call

• Revenue trends: Total revenue in 2022 and Q4 2022 were $74.8M and $18M respectively. Excluding COVID PCR products, 2022 full-year revenue was $71.5M (1% lower than 2021) and Q4 2022 was <0.5% lower than Q4 2021.
• Diabetes and hemoglobins: Diabetes product line had 27% revenue growth in 2022, 43% growth in Q4 2022 high-margin consumables; U.S. launch of Premier Resolution Hemoglobin Variants instrument in 2023, next-gen Premier 9210 diabetes instrument expected Q3 2023 with improved features.
• HIV: TrinScreen HIV test launched in Kenya, aiming for ~4-4.5M tests in Kenya in 2023, with plans to expand to 2-3 other countries with over 25M annual tests.
• Lab tests: Sjogren’s bio-marker lab tests growing despite limited commercialization; partnership with imaware to power digital health testing programs; intent to introduce up to a dozen new lab developed tests in 2023 for TDM market.
• Portfolio and M&A: Conducting portfolio review around three priorities (diabetes/hemoglobins, point of care/digital health, TDM); secured $20M flexible term-facility for M&A.
• Cost and operations: Q4 operating gross margin run rate over 40% (excluding one-time inventory adjustments); reduced headcount by ~10%; increased IT spend on CRM, ERP, etc.; supply chain optimization in hemoglobins division; restructured commercial sales organization.
• Talent: Rolling out revised employee share-based compensation plan aligned with shareholder interests.

Total revenue for fiscal 2022 was $74.8 million and $18 million for Q4 2022. Excluding COVID PCR products, 2022 full-year revenue was $71.5 million (1% lower than 2021) and Q4 2022 revenue was less than 0.5% lower than Q4 2021. Diabetes product line had 27% overall revenue growth in 2022 with over 60% higher instrument placements vs 2021; Q4 2022 saw 43% growth in high-margin diabetes consumables. HIV business was down 14% in 2022 due to non-recurring bulk orders in 2021. Uni-Gold had 15% growth in Q4 2022 vs 2021 and 10% vs Q3 2022; Q1 2023 preliminary estimates show over 30% improvement vs Q1 2022.

• Expect to start shipping TrinScreen HIV tests to Kenya in Q2 2023, aiming for ~4-4.5M tests in Kenya in 2023.
• Premier Resolution Hemoglobin Variants instrument in U.S. expected to launch with FDA clearance in 2023.
• Premier 9210 diabetes instrument expected to launch in Q3 2023 with improved features.
• Aim to optimize portfolio and pursue M&A to optimize capital structure and reduce debt costs in 2023.
• Expect gross margin run rate to remain around 40% with price increases and cost reductions.

• Uncertainty in COVID testing demand and regulatory approval pathways for COVID tests.
• Foreign exchange fluctuations impacting financial results.
• Risks associated with M&A activities, including integration challenges and valuation uncertainties.
• Supply chain disruptions affecting product availability and costs.

Q: Jim Sidoti asked about when Trinity would start shipping HIV products to Kenya, ASP, impact on other countries, hemoglobin business sales, acquisitions, divestitures, share count, and free cash flow.

A: Aris Kekedjian said shipping would start in Q2, ASP around $0.80 in Kenya; Kenya's adoption helps with other markets; hemoglobin business sales in U.S. and other markets; M&A focus on diabetes and decentralized care; divestitures included Fitzgerald business with ~$12M in 2022; John Gillard discussed share count and free cash flow expectations depending on roll-outs.

Q: Paul Nouri asked about inventory, gross margin in 2023, and strategic investment with imaware.

A: John Gillard said they intend to continue reducing inventory with supply chain optimization; expect to maintain ~40% gross margin with price increases and cost reductions; Aris Kekedjian discussed the partnership with imaware as B2B2C private/white-label solutions, with focus on scaling celiac test and other tests, and 1.5% investment is minority.