Earnings Call Transcript - OSUR Q2 2021

Operator, Operator

Welcome to the OraSure Technologies, Inc. 2021 Second Quarter Earnings Conference Call. My name is Adrian and I will be your operator for today's call. I'll now turn the call over to Scott Gleason, Head of Investor Relations at OraSure. Mr. Gleason, you may begin.

Scott Gleason, Senior Vice President of Investor Relations and Communications

Thank you. Good afternoon, and welcome to OraSure Technologies' Second Quarter 2021 Earnings Call. I am Scott Gleason, the Senior Vice President of Investor Relations and Communications. Presenting for OraSure today are Dr. Stephen Tang, our President and Chief Executive Officer; and Roberto Cuca, our Chief Financial Officer. As a reminder, today's webcast is being recorded and a slide presentation accompanying the webcast can be found on the Investor Relations website. Before we begin, you should know that the 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 the company's SEC filings, including its registration statements, its annual report on Form 10-K for the year ended December 31, 2020, its quarterly reports on Form 10-Q and its other SEC filings. Although forward-looking statements help to provide complete information about future prospects, listeners should keep in mind that forward-looking statements are solely based on information available to management as of today. The company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. With that, I'm pleased to turn the call over to Dr. Stephen Tang.

Stephen Tang, President and CEO

Thanks, Scott, and thank you to everyone for joining our call today. This quarter, OraSure saw an exceptionally strong recovery in our core business. Excluding COVID-19 product revenue, we grew 122% year-over-year and 48% sequentially. While we still have a ways to go, the beginning of the return to more normal activities for our customers is a welcome sign as we look to the second half of fiscal year 2021. The strengthening of our core allowed us to achieve strong financial results despite the anticipated slowdown in Molecular Solutions COVID revenue as PCR test volumes declined in the U.S. This quarter, we also achieved a major milestone with the receipt of three Emergency Use Authorizations, EUAs, for our InteliSwab COVID-19 rapid test in the U.S., which we continue to believe will be a very important driver of incremental revenue and a source of growth for the company. The launch of our InteliSwab test demonstrates the ability of the company to develop, launch and market new products. In the coming year, we will talk more about our renewed focus on innovation and our product pipeline as one of our strategic areas of focus. As we reflect on our strong quarterly results and our COVID-19 launches, I would like to personally thank OraSure's dedicated employees around the world who worked tirelessly to get us to this exciting point in our company's journey. I would now like to discuss our strategic priorities, which include capitalizing on the COVID-19 testing opportunities, expanding our sample collection and molecular services business into new sample types and testing modalities, and expanding our global reach while driving innovation with a focus on achieving higher growth through both internal R&D and M&A. First, looking at the COVID-19 testing opportunity, this quarter, we received three EUAs for our InteliSwab COVID-19 rapid test for Over-The-Counter (OTC), professional point of care, and Prescription Home Use. We believe InteliSwab is competitively differentiated primarily because the test is remarkably simple to use. You just swab your nostrils with a gentle swab, swirl the swab in a tube, and see your test results in minutes. Unlike other rapid COVID tests, there are no confusing steps, no batteries, no electricity needed and no mailing samples to a lab. We like to say it's as simple as swab, swirl, and see. OraSure knows this simplicity is absolutely crucial to adoption and ongoing use by consumers and clinicians. It ensures confidence in the results and enables testing absolutely anywhere, including outreach testing to underserved communities, exactly where our HIV and HCV tests are used today. As is customary in medical device diagnostics, the conversion of customer leads to purchase orders takes time. Recall that we were limited in our ability to promote this new product prior to receiving our three EUAs in early June. While we are in the initial phases of customer acquisition, we did begin shipping orders in June and continue to receive orders in July. We currently have customer inquiries representing over $25 million, including inquiries from over 15 countries that will accept FDA EUA product with appropriate country-specific documents and labeling. We believe the recent propagation of new variants has renewed the focus of global governments on a multi-pronged strategy to counter the pandemic consisting of vaccination, protection, and frequent testing. A study conducted by the National Institutes of Health and recently published in the Journal of Infectious Diseases indicated that testing conducted every three days is essential. This supports the need for regular and frequent testing, which will be in remote locations and at home. One of the most crucial requirements for this type of testing is ease of use, and that's where InteliSwab has a real benefit. Our country's response to the pandemic is well-characterized by the CDC's program of protect, test, and vaccinate. We continue to believe that testing will be a critical component of the three-tiered response to counter the COVID-19 pandemic. As new variants such as Delta and Lambda propagate across the globe, there has been increasing demand for testing in multiple international markets. Additionally, as students return to schools and employees return to work, we believe testing will be vital for ensuring safety and hygiene for all. We've already seen several announcements related to programs incorporating both vaccinated and unvaccinated individuals. Additionally, large funding pools have become available from the federal and state governments, including the CDC's $2.3 billion of funding for underserved communities for which our test is ideally suited. In addition to $1.6 billion from the Biden Administration to address testing in vulnerable communities and $10 billion from the Biden administration to fund back-to-school testing, that adds up to $13.9 billion in federal funding aimed, in large part, at addressing testing in congregate, underserved and vulnerable communities where vaccination rates are low, and COVID-19 variants are now surging. Our InteliSwab test is ideally suited for this purpose. Lastly, concerning COVID-19, I want to provide an update on our oral fluid antibody tests. The FDA recently responded to us and declined to further review our submission as they are focusing on areas of higher priority. However, we will continue to offer this product as a research use-only test with several laboratories interested in COVID-19 antibody surveillance and research applications. Next, I would like to highlight one example of how we're trying to expand our sample collection business. As you know, we've built a saliva sample collection portfolio by generating data to disrupt the standard of care for sample types, often blood, and then co-clearing our collection devices with relevant assays in the genomic space. We are now pursuing a similar strategy with first void urine collection with our Novosanis subsidiary as we look to bring the non-invasive benefits of urine sample collection to new markets. This quarter, we had a significant publication in gynecologic oncology, demonstrating the ability of Colli-Pee, OraSure's proprietary urine sample collection technology, to facilitate testing for human papilloma virus (HPV) using first-void urine samples from patients. In the study of approximately 500 women, the sensitivity and specificity of Colli-Pee collected first void urine samples were shown to be similar to those of clinician collected cervical samples using Abbott's RealTime High-Risk HPV assay for the detection of neoplasia. We have additional clinical studies in process with other major HPV test manufacturers, we expect results from this year. While there is still a significant path to full product validation and regulatory approval, we believe Colli-Pee has the potential to transform cervical cancer screening into a better, less invasive in more cost-effective modality, where women can have the sample collected for cervical cancer and other sexually transmitted diseases in the privacy of their own homes. The market potential for HPV screening represents more than 30 million tests per year in the U.S. alone, making this a significant future opportunity. Regarding Colli-Pee's presence in oncology, we also saw MDX Health, one of our top customers using Colli-Pee, received a draft for Local Coverage Determination from Palmetto GBA, a Medicare administrative contractor, for their select MDX urine test for prostate cancer risk assessment. Typically, these types of reimbursement coverage decisions are catalysts for more significant commercial adoption of laboratory tests. This was also a record quarter for our microbiome segment, both in terms of services and kits, with over $6 million of total revenue. We now have over 50 commercial customers in microbiome testing, including over 30 biopharmaceutical companies conducting more than 20 ongoing clinical studies. We are working with all the top 5 companies in the microbiome space, as well as 5 of the top 10 pharmaceutical companies in the United States. Early data around microbiome-based therapeutics has been positive, and some of these studies are beginning to advance to the Phase III stage with the FDA, which will lead to increasing revenues as the number of samples evaluated increases. We also believe eventual regulatory approval of microbiome-based therapeutics will lead to further research investments in this area, which will benefit our business. Building on the growth of our microbiome business in the second half of this year, we plan to offer a new gut Meta-transcriptome collection kit and Meta-transcriptome service in support of our customers' microbiome research. This is an important step toward the strategy of expanding sample types, analytes, and services as we pursue our multi-omic strategy. Another important strategic component of our Molecular Solutions business is expanding our long-term competitive position in the market. Investors have asked us about recent low-tech COVID-19 collection devices launched by other companies, and I believe it's important to highlight the unique features of our products. Our devices are designed for remote sample collection for genetic sequencing. In addition to the well-proven, easy-to-use consumer-friendly form factors, these features include proprietary patented designs and chemistries capable of stabilizing a variety of analyses under a broad range of storage conditions, allowing shipment and storage at ambient temperatures. Because the DNA and RNA is preserved, sample collection in our devices is suitable for surveillance-related sequencing for variant detection, as an example. While there are lower-cost devices in the market that can be used for COVID sample collection, they do not match our benefit profile. We continually innovate on both our physical design and chemistry, and as a result, have significant intellectual property protecting our technology, many with expirations extending out many years. Additionally, we are increasingly pursuing regulatory approvals in conjunction with our strategic customer relationships, such as the clearance received for our oral fluid collection device in conjunction with Helix for their whole exome test this year. We have established long-term contracts with some of our key customers, providing long-term visibility, and we are increasingly adding a broader range of services to customer agreements, such as fulfillment and customization services. Importantly, our customer base in these markets has become increasingly diverse. We now have over 6,000 customers, with no single customer representing greater than 7% of our revenue in fiscal year 2020. Consequently, we believe we're in an extraordinarily strong competitive position as one of the global leaders in this market with our ability to address diverse markets such as consumer genomics, clinical genomics, and home testing, which are growing in the mid-teens, with our ability to expand our solution set to additional high-growth areas and sample modalities. Moving on to our strategy to expand our global reach and presence. We continue to see strong adoption of our OraQuick HIV test internationally, driven by double-digit annual growth since 2016 of our HIV self test, which is the only regulatory approved oral fluid self-test for HIV in the world. We are already using our established distribution channels for HIV for the new InteliSwab COVID-19 rapid test, where we have increased from several countries as COVID-19 continues to spread outside the U.S. Across the OraSure portfolio, we continue to expand our global reach and now have over 400 product registrations in 95 countries. This not only applies to diagnostics but also the Molecular Solutions side. We're also looking to increasingly expand outside the United States with our collection kits using our COVID-19 collection devices. Finally, I'd like to discuss our strategic priority of driving innovation with a focus on higher growth spaces through our internal R&D and M&A. I would like to provide some additional details relating to our business development efforts, where we've been very active in assessing a number of opportunities and new technologies. From a prioritization standpoint, we're focused on companies and technologies that build upon the foundation of our existing business strategies in diagnostics and Molecular Solutions that would allow us to leverage our infrastructure and market expertise. In diagnostics, we recognize OraSure's strength and what sets us apart is our expertise in simpler, more effortless testing. With COVID-19, we saw in real-time just how important this type of testing really is. As we think about the future of diagnostics, OraSure is ideally positioned to drive additional self-testing and more effortless testing at the Point of Care. We're actively investigating new technology platforms that can expand our menu of tests globally and provide long-term competitive differentiation. With the Molecular Solutions business, we're really looking at innovative solutions that can expand our capabilities from a sample collection format, expand our reach into new high-growth emerging areas of testing, further strengthening our competitive positioning and expanding the scope of data and services we can offer our clients. We ended the quarter with $229 million in cash and cash equivalents, and we believe there's significant opportunity to drive further growth and stockholder value through external M&A. Overall, I'm extremely excited about the outlook for the next 12 months at OraSure. We're currently conducting our annual strategic review, which will incorporate both broad internal stakeholder input and outside expertise in order to ensure we're taking full advantage of the strategic opportunities in front of us. We will look to share the output of this review with investors when the review is complete, along with a broader look at the innovation occurring within our organization. And with that, I'm pleased to turn the call over to Roberto to discuss our financial results and outlook.

Roberto Cuca, Chief Financial Officer

Thanks, Steve. I'm happy to review our financial results for the second quarter. First, from the top line perspective, we delivered total revenue of $57.6 million in the second quarter of '21 compared to $29.3 million in the prior year, representing year-over-year growth of 97%. As a reminder, last year's second quarter was the most heavily impacted by the COVID-19 pandemic. However, as Steve previously noted, our core business, excluding COVID-19 product revenue grew 122% year-over-year and 48% sequentially this quarter, representing a significant recovery and demonstrating strong performance in key areas, such as domestic and international diagnostics, our consumer genomic sample kits, and microbiome kits and services. Total diagnostic revenue in the quarter was $19.3 million versus $10.4 million in the previous year, reflecting 85% growth. Importantly, this quarter, we saw an improvement in domestic HIV, HCV, and risk assessment testing revenue as we start to return to pre-pandemic levels. Our international diagnostics business saw an 89% growth in the second quarter versus the prior year and grew 8% in the first half of 2021 when compared to 2020. This strong growth was achieved despite two important headwinds. First, there were expected changes in the Bill and Melinda Gates Foundation subsidy for our HIV self-test, which has impacted revenue growth year-to-date. This subsidy ended June 30 this year, pursuant to the terms of our agreement with the foundation and has been known for some time. In addition, as COVID-19 is now spiking across Africa with many major countries in lockdown, our NGO customers experienced in-country distribution challenges, which then caused delays in Q2 orders. Looking at our Molecular Solutions business, total second-quarter revenue was $38.3 million, increasing 103% versus the prior year. We saw a strong rebound in customer activity in consumer and clinical genomics areas. COVID-19 revenue in Molecular Solutions increased 36% year-over-year to $11.5 million, a decline of 58% sequentially as PCR testing rates in the U.S. decreased and customers lowered inventory positions. The non-COVID-19 portion of the Molecular Solutions business grew 61% sequentially. Looking back to the pre-pandemic period in the second quarter of 2019, our Molecular Solutions business grew 45% relative to that period, excluding COVID-19 revenue, demonstrating strong growth in the base business. Now I'd like to discuss our financial results, beginning with our gross profit percentage. Gross profit percentage in the second quarter was 53.2% compared to 59% in the same period last year. The decline in overall gross profit percentage reflects three factors. The first was product mix in the Diagnostics segment with a higher proportion of revenue coming from the lower margin international business, coupled with the decline in the Gates foundation subsidy. The second factor was the significant hiring in equipment purchases to date for the InteliSwab launch, which do not yet have associated positive offsets from a revenue perspective. Finally, we did see higher material and labor costs in the quarter. From an expense standpoint, total operating expense in the quarter was $28.9 million compared to $26.7 million in the second quarter of last year, reflecting operating expense growth of 8%. In the quarter, we generated operating income of $1.8 million compared to an operating loss of $9.4 million in the previous year. Moving to the bottom line, we generated a net loss per share of $0.02 in the second quarter of this year compared to a net loss of $0.16 per share in the same quarter last year. Cash used in operations for the quarter was $3.4 million. Moving on to our financial outlook, given the continued volatility and unpredictability around COVID-19 testing, we are providing top-line guidance for the third quarter with some additional color on our full-year outlook. For the third quarter, we expect revenue of $45 million to $50 million. Additionally, we anticipate full-year InteliSwab revenue of approximately $30 million, with the preponderance of that occurring in the fourth quarter. This would position us to deliver full-year revenue of approximately $230 million. I'll review a few of the assumptions underlying our third-quarter guidance. First, for InteliSwab, although we currently have an installed capacity of 55 million tests per year manufacturing, we have faced some manufacturing challenges with respect to tech transfer. Although we are confident in our ability to rapidly resolve these issues, they will impact the amount of product available for sale in the third quarter. As the COVID-19 pandemic continues to evolve in the U.S., we have noted a declining pricing environment, and we have also factored that into our projections. Despite these issues, as we previously discussed, we've been receiving significant inbound interest and expect our book of business to continue to expand throughout the quarter. Regarding our molecular collection kits for COVID-19 PCR-based testing, we're assuming a significant sequential decline in revenue given current PCR-based testing trends. However, given the proliferation of new viral variants, the upcoming fall cold and flu season, increasing international sales, and funding for back-to-school programs where PCR testing is predominantly used for younger children, we believe there may be a rebound in our PCR kit sales for COVID-19 testing products this fall. So ultimately, this assumption could prove conservative. As we look to our fourth quarter, we would anticipate a significant sequential uptick in revenue as InteliSwab revenues become much more balanced. Although our third quarter outlook is conservative, we are focused on establishing a revenue baseline that is achievable with potential for upside if we outperform our current assumptions.

Stephen Tang, President and CEO

Thanks, Roberto. As a company, we are at an exciting point in our history, and the progress we made from a fundamental perspective is beginning to become evident in our financial results. This quarter, we demonstrated the strengthening of our core franchise with non-COVID revenue of $46 million, representing almost a $200 million annual run rate. We have now entered the commercialization phase with InteliSwab. We remain confident that InteliSwab will be a significant driver of revenue growth and free cash flow and also a long-term product for the company as we ultimately enter the endemic phase of the disease. Our Molecular Solutions business is also on increasingly strong footing as we build out new products and service capabilities, increasing the number of sample types we can accommodate and expand into new fields of testing and end-use markets, which are growing in the mid-teens. Finally, we are invigorating our innovation engine and look to introduce new technologies through internal R&D, external collaborations, and M&A. Overall, we believe we are poised to emerge from the pandemic as a stronger, more innovative, and faster-growing company. With that, I'd like to turn the call back to Scott for questions and answers.

Scott Gleason, Senior Vice President of Investor Relations and Communications

Thanks, Steve. Operator, we're now ready to begin the Q&A portion of our call. We would ask that you limit your questions to one question and one follow-up to ensure broad participation.

Operator, Operator

Our first question comes from Vijay Kumar from Evercore.

Vijay Kumar, Analyst

Congrats on the print here. My first question is on the guidance here, Steve and Roberto. I guess for the $30 million of antigen testing revenues, what are you assuming for 2Q and Q4? If I look at your 3Q revenue guide of $45 million to $50 million, are you implying Q4 is about $65 million plus? If all antigen revenues are flowing through in Q4, then on an implied basis, $30 million to $35 million seems to be a pretty dramatic dip line versus your pre-pandemic level. So can you maybe walk us through your second-half assumptions between base versus COVID tailwinds?

Roberto Cuca, Chief Financial Officer

Sure. Thanks for the question, Vijay. I'll start off and then Steve can jump in. As we mentioned in the prepared remarks, we expect that the majority of the $30 million in InteliSwab revenues in the second half of the year will occur in the fourth quarter. We haven't given exact guidance on how much we expect in the third and fourth quarter specifically. However, you're right that there is a decline in the remainder of the business from the second to third quarters. The biggest driver of that decline is our lower COVID-19 molecular collection kit revenue expectations. As we stated in the prepared remarks, we've taken a conservative outlook based on current demand trends. Additionally, we're making lower assumptions for some of the core products in diagnostics and Molecular Solutions, following strong growth in core demand in the second quarter, which could have been driven by restocking or initial distributor purchases or clinic purchasers. So we expect to see a slightly lower third quarter than the second quarter in some parts of the base business and definitely a step down in the molecular collection devices. As discussed in the prepared remarks, there are some challenges in the tech transfer of the InteliSwab manufacturing that have delayed the availability of the product, resulting in most of our InteliSwab sales for the year occurring in the fourth quarter.

Vijay Kumar, Analyst

That's helpful, Roberto. And Steve, maybe one for you. Some recent articles on perhaps some other corporates or companies considering OraSure. Now I know you don't comment on market speculation. But can you - the article mentioned that OraSure has started a strategic review process. Can you tell us if you've started a strategic review process of the business?

Stephen Tang, President and CEO

Well, Vijay, I think, as you know, we wouldn't comment on the veracity of any rumors. So we're going to stand by that.

Vijay Kumar, Analyst

Got you. And maybe one last one, if I could ask. Gross margins, maybe what is one-timer here in 2Q? And should the second half be in the low 50s, or should that normalize to over 50%?

Roberto Cuca, Chief Financial Officer

The biggest driver of the step-down year-on-year in gross profit percentage was the increase in our HIV international sales, which tend to be lower than the average of our gross profit percentage across the company, coupled with the decrease in the Bill and Melinda Gates foundation supplement to those revenues. As we see growth from InteliSwab over the course of the second half, which is likely to be a higher-margin product, we should see some movement in the gross profit percentage.

Operator, Operator

And our next question comes from Patrick Donnelly from Citi.

Patrick Donnelly, Analyst

Just on the tech transfer issues affecting InteliSwab manufacturing. I thought you guys were already manufacturing at risk. Can you just talk about when the problem arose? And also, the path to resolving it? Are you already through it? It sounds like, obviously, with 4Q being bigger, maybe we have a little bit to go here. But just talk through the steps necessary to get us to that $55 million of manufacturing capacity or just some general higher capacity, what you guys are doing internally there?

Stephen Tang, President and CEO

Yes, Patrick, I'll start. So we have been increasing our capacity, as we've been sharing quarter-by-quarter. We currently have installed capacity to produce 55 million tests per year, and we're installing additional equipment to expand to 70 million tests per year in the quarter. Our current production, as we announced, will be significantly lower than that until we can resolve the current issues. We have been manufacturing at risk. The issues that we're facing are one of scale-up as we are getting more volume online and trying to address issues in increasing that scale. These are situations we have seen before in other product launches. Fortunately, the InteliSwab design and platform are largely similar to our OraQuick HIV and HCV and Ebola platform. We've seen this type of situation before, and so we're working to rapidly resolve that, which hopefully will open up more capacity in the fourth quarter.

Patrick Donnelly, Analyst

Okay. That's helpful. And then I know you mentioned orders from, I think, 15 countries that accept the EUA as approval. Can you talk about just broadly the opportunity outside the U.S.? What key markets are you still pursuing additional approvals in? Maybe just time lines around the bigger ones that we should keep an eye out for?

Stephen Tang, President and CEO

Well, it's been shifting, I think, as the pandemic has spiked in certain parts of the world. As you would expect, countries that accept the FDA EUA as part of the authorization to sell in their country and where high risks related to the pandemic are increasing are the ones most in need right now. That's where we're seeing the most interest in the hotspot countries, 15 that I mentioned that have the ability to accept the EUA. Beyond that, we're looking at broader geographical coverage, like the European Union. Quite frankly, we didn't expect interest this soon for our product. We thought primarily, this would be a domestic product, but it turns out the interest is purely global. So we're adjusting to that, and we're addressing those needs.

Patrick Donnelly, Analyst

Okay. It's a good problem to have. So maybe last quick one, just on the long-term contracts on the sample collection, encouraging to hear that you guys established some of those. I know competitive noise has been something you guys have talked about, and investors always ask about. So I mean, was this in response to that, any change in terms of the pricing we should think about? Or any metrics you can give us in terms of what percent of customers are locked in? I know you said there are some key large ones. So just trying to get a feel for what that looks like. Thank you.

Stephen Tang, President and CEO

We have not seen significant price changes in the consumer genomics area. What we're pleased to see is that it's a rebound of not only the commercial genomics but the academic genomics businesses. We haven't announced what percentage of our revenue base, our customers are locked in per se, but it's a significant amount. The issues we had a few years ago with customer concentration are behind us. I think that it bodes well for the continued growth in the consumer genomics area.

Roberto Cuca, Chief Financial Officer

We mentioned on the call that we had 6,000 total customers. It's really just the top ones that we have kind of the longer-term contracts with. But it's more about the multiple strategies that we're engaged in, in terms of getting regulatory approvals in conjunction with the customers and expanding the IP portfolio. As all those factors combine, we think they build a very dependable position for that business.

Operator, Operator

And your next question comes from Frank Takkinen from Lake Street Capital.

Frank Takkinen, Analyst

Not sure if I heard it; I did get on the call a little bit late, but I was curious about the broader capacity expansion plans that were put in place last quarter. Have those changed at all in terms of timeline or size?

Roberto Cuca, Chief Financial Officer

Frank, thanks for the question. Our capacity expansion plans, as far as installed capacity, remain on track. We do expect to, for example, for InteliSwab, have installed capacity at the end of the third quarter of 70 million units per year. That includes non-COVID-19 applications of approximately 17 million units a year. The majority of the investment for all of our capacity expansion efforts is largely committed. We expect to continue the capacity expansions on the same track as we previously described.

Frank Takkinen, Analyst

Got it. Okay. That makes sense. And then I just wanted to ask a broader question about the base business. It's not meant to pin you down on any forward-looking growth rates or anything of that nature, but just wanted to level set on how we should think about the base business. There's a lot of moving pieces there, but maybe you could talk a little bit through broadly how you think growth rates could look across infectious disease versus Molecular Solutions and maybe going to depth in some of your higher growth areas and some areas that you feel could produce outsized growth into 2022.

Stephen Tang, President and CEO

Yes, Frank. As we highlighted on the call, we still see strong growth in international HIV. That was strong first half growth over last year. That continues to grow, particularly in units outside the U.S. We've sold over 28 million HIV self-tests in 35 countries so far. We expect that to continue. We're seeing renewed growth, as we talked about, in the consumer genomics area, particularly in disease risk management, companion animal, and lifestyle areas. We talked about the microbiome franchise, which includes sample collection kits and services, having a record quarter in their own right. We had strong growth expectations for the microbiome business before the pandemic, and those look like they're continuing. Those are some of the areas that I would highlight. We're just at the beginning of the COVID-19 InteliSwab commercialization process, so that will also be a growth driver.

Operator, Operator

And your next question comes from Brandon Couillard from Jefferies.

Unidentified Analyst, Analyst

This is Matt in for Brandon. First one is just for Steve. Could you maybe talk a little bit about the evolution of your talks with customers or potential customers since you got the test approved back in June? I'm thinking of big retail players and academic settings, which you've had success with your collection kits in the past. Where are you seeing the most interest, and talk about the durability of that as we look into the back half of the year and into 2022?

Stephen Tang, President and CEO

Yes, certainly, Matt. The conversations specifically on InteliSwab have been very active and robust. Many inbound inquiries relate to back-to-school and back-to-work programs overall. Additionally, the sample collection area for COVID-19 has a strong base of school programs as well. Since we received our EUAs in June, we are at a low point in testing from June 4 until today. It's only in the past week or so where concerns about the delta variant and testing, not only for unvaccinated individuals but also for vaccinated people, have come to the forefront. We're seeing the pipeline increase over time. Since launching the product, there's been a clear focus on asymptomatic testing and serial testing—testing a single person multiple times over short intervals, which will become increasingly important to avoid quarantines and shutdowns. We've entered a new phase of the pandemic, driving great demand for InteliSwab. The differentiated quality of our product, characterized by its ease of use and minimal time required for the test itself, will be critical factors as we proceed. This is a dynamic market, and I think it's moving quickly in our favor, and we'll see that through the rest of the year, leading into a favorable exit rate into 2022.

Operator, Operator

And we have no further questions. I'll turn the call back over for final remarks.

Scott Gleason, Senior Vice President of Investor Relations and Communications

Thank you, everyone, for joining us today. We appreciate your participation in the call.

Operator, Operator

Thank you, ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.