Transcript
Thank you, and good afternoon. I would like to thank you all for taking time to join us for ProPhase Labs First Quarter 2021 Financial Results Conference Call. Your host today is ProPhase Labs CEO and Chairman of the Board of Directors, Ted Karkus. A press release detailing these results crossed the wires today and is available on the company’s website, prophaselabs.com. Before we begin the formal presentation, I’d like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company’s SEC filings for a list of associated risks. Finally, this conference call is being webcast. The webcast link is available in the Investor Relations section of prophaselabs.com. At this time, I would like to turn the call over to ProPhase Labs Chief Executive Officer, Ted Karkus. Ted, the floor is yours.
Awesome. Thank you, Jane. And thank you everyone for joining me and our company ProPhase Labs. This is the first quarter, full quarter that we’ve reported testing revenues and earnings and to put this in perspective, this was nothing more than an idea, six months ago, and at six months, we went from not even being in the CLIA laboratory testing business to having two significant labs and generating in the first quarter of this year a significant amount of revenues and earnings. And I’ll get into the numbers a little bit now. And just to remind everybody, Jane did read the forward-looking statements. I’d like to be very careful in terms of projections; this is a volatile business that we’re in. In general, we do not give earnings guidance, but to the extent that I say anything that sounds like guidance, understand the volatility and nature of the business and it’s a dynamic world that we live in. I will do the best I can to give everybody a full picture of what’s going on. But again, that’s as of today and things can change for better or worse, it doesn’t necessarily need to be worse, it could be a lot better, too. So with that said, I’m going to review a little bit of the numbers, and then I’m going to get more into the actual ongoings of our company and the strategy going forward. We reported revenues of $15.3 million versus $1.9 million a year ago, and net income of $1.1 million versus a loss. Just to break that out a little bit, our lab actually had a profit of $2.8 million. Typically, our manufacturing and dietary supplement business has a loss in the first quarter; this quarter was no different. So that might bring a drag down on the total company numbers. But to be clear, the vast majority of our revenues and earnings are currently in and going forward are in our diagnostic testing business. So our lab, pretty nice, maybe not what I would have expected in January when things were really hot. But I’m still really pleased with the quarter, to generate $2.8 million profit in the lab. I wanted to be clear, we had significant startup expenses in the first quarter that hit our first quarter by the very nature of the word startup means these will not be ongoing expenses. And so if we were to do hypothetically, even just the same numbers that we did in the second quarter with the first quarter without the startup expenses, we would be well ahead of the game. We also had non-cash items in the first quarter of about $1 million that was a combination of depreciation, options, and warrants; again, these are non-cash items. So, overall, when you look at the quarter, I’m really pleased with the quarter. This also provided us the opportunity for a $0.30 cash dividend. This is a special cash dividend. I have a history of doing these. It’s a nice way to reward our long-term shareholders. We currently have enormous cash flowing in from insurance. And insurance really wasn’t even set up yet. And I think as I indicated, even when all the insurance was set up properly and all the billing was set up properly, it can still take 60 days. We were purchasing consumables 30 days and 60 days before processing, and then getting paid 30 days to 60 days later. Plus, in some cases, it’s taken longer to get the insurances set up to get the billing properly; all that takes time, especially when you’re in a new business. And so we’re now in the last six weeks, and enormous amounts of cash is flowing into the company from insurance companies. And quite frankly, that cash flowing in has more than covered just what’s coming in the last six weeks has more than covered the $0.30 dividend, which is ballpark about $4.5 million. We have more cash and that has flown into the company in the last six weeks. So, we are a very strong company financially at the moment. And as I told people in the past, those that have been shareholders for a long period of time, I am extremely careful in how our company manages its cash. Our CFO, Monica Brady, is even more conservative than I am. At the end of the day, I’m the largest shareholder in the company. Frankly, I care about our long-term shareholders even more than myself. I would never do anything to take advantage of them. And so you can be rest assured that we’re not going to all of a sudden burn through the cash. On the contrary, we have this strong cash flow coming into the company from insurance payments. And I’m looking forward to all sorts of strategic initiatives, and given the platform that we have been a NASDAQ public company, having a very strong balance sheet. We have about $49 million of net working capital. We have just over $36 million of cash and cash equivalents and I guess marketable securities. So that puts us in a fantastic position to take advantage of opportunities, opportunistically. And I’m going to get more into that in a little while. But suffice it to say, I told everyone that initially, we were going to get into COVID testing, we were going to get it. We pivoted from being simply a dietary supplement manufacturing company to pivoting into owning CLIA labs for COVID testing. And then the next step will be to pivot into other types of testing. And so I’m going to get into that a little bit more now. But understand that now we have the cash, we have the balances, we have growing revenues, and cash flow, and earnings. It puts us in a great position when I’m talking to these other companies that are now eager to join our company and to do deals with us. All right, let’s get into the COVID landscape, which is complicated. As I highlighted about six weeks ago, the incidence of COVID dropped in the February to April time period; we peaked in January. I mean, the testing was out of control, the amount of incidence of COVID was out of control. And then all of a sudden there was, as I mentioned, we were doing testing for one of our largest customers across the State of Texas, we had terrible weather, and all the main sites in Texas for testing were shut down. That was from one of our largest customers. But then at the same time across the country, the incidence of COVID started to drop and the amount of COVID testing began to drop. And it appears that it’s leveled off now, although again, I can’t guess which way it’s going to go. But at the same time, that the incidence of COVID dropped and the amount of testing dropped, we now out of a situation where people are burned out, they're tired of COVID. They’re tired of thinking about COVID. They want to get back to work. They want to get back to attending sports events. They want to go back to all these different things. And the standards are constantly changing and relaxing. Initially, you had to have a PCR test to get into an arena; then it became a PCR test or you could just be double vaccinated, and now in some cases or in many cases, an antigen test will suffice, having an antigen test sometimes it’s also called a rapid test. A rapid test generally gives you rapid results very quickly. But at the same time, in most instances, those results are not nearly as reliable as the gold standard, which is PCR testing, which is what we do in our lab. So it’s interesting while there’s been a drop in COVID and the standards have been relaxed, there’s more antigen testing. Overall, there’s less COVID, less testing overall. And now a piece of the testing that we usually do for PCR testing is going for antigen testing. So it’s a very dynamic world that we’re living in with regard to COVID testing as a laboratory. Now, having said that, at some point, invariably, I at least believe in my humble opinion, there will be another wave of COVID. In India, it is out of control at the moment. And as we all know, COVID goes in waves. It’s no different than the flu, which goes in waves every season. And right now, we’re in the down season for COVID. We are still doing COVID testing. But that then leads into our strategies. That’s where we have enormous flexibility with our strategy. Again, our PCR is the gold standard, particularly with tests that we do; it’s about as close to 100% as you can get for specificity and sensitivity; we’re talking about 99.7%. Some of the antigen tests out there have reliability as low as 65% or 70%. Which means if you get tested positive or negative, this is like a 70% chance, a little more than two-thirds probability that you’re going to have an accurate result. Now, if you have COVID, does it really even make sense to know that there’s a 70% probability that that’s an accurate test or that you’re negative than 70%? All the people that actually have COVID come back with a negative result and think that they’re safe, and that they’re safe with those around. So the antigen test, quite frankly, to me, it’s more psychological than anything else. It’s possible we’re going to go through a wave where right now antigen tests are popular, and it’s possible they’re not going to be four months from now, especially if we have a new wave of COVID. That’s to be seen. In any event, we, because it’s a dynamic situation, it’s always evolving, have to be aggressive in terms of our offerings. So, we are currently working on a couple of different antigen tests and immunity tests. There are those out in the market that we could actually purchase from other distributors if we want to complement our testing. There’s also an antigen and immunity test, at least one of not two that we’re looking at that we could potentially license and develop further in our lab, sell as laboratory developed tests. I don’t want to get too complicated here. Except suffice it to say, our next step in the evolution of ProPhase Labs is to introduce other types of COVID tests that go beyond just PCR testing. And that would be the antigen test that provides you with a fast, much faster result. One in particular, I’m working on is a saliva-based antigen test that provides results in seven to 15 minutes. Saliva-based is great, I mean, it’s really easy to use, you don’t need somebody to take blood from you or stick a swab up your nose, it can be self-administered, it makes it really efficient, particularly if you’re dealing with a large crowd of people that want to get into an arena. So there are some great positives plus the antigen test, in particular I’m working with has high sensitivity and specificity results. We’re still doing research in that regard. But I’m really excited about potentially antigen and immunity tests that we could be introducing in the future. And then, once you get beyond COVID testing, the next step is to diversify beyond just COVID testing offers. And that’s when we get into all the other types of testing that labs do. Before I get into that, I just want to cover a little bit about the COVID side, but I want to know that COVID testing with PCR and antigen and immunity testing is just the first, sort of the antigen and immunity testing is the next step in our diversification strategy. But then our next diversification strategy is to become a full-blown lab with all the other types of testing. So that no matter what happens with COVID, it doesn’t necessarily have to be the end all, be all, to our revenues and our earnings. That’s more for looking further ahead. Within just COVID testing, we’ve announced recently a couple of really big wins. The first one was with the Township of Oyster Bay, that was an aggressively completed RFP; we beat out some of the largest labs in the country. The reason why we won, actually they tell us the number one reason or if there’s only one reason, the fact is, we have tremendous capacity, we have consistently fast turnaround times. And quite frankly, that’s a matter of having the right management in place and the right employees in the right place and doing things the right way. That’s critically important to us. And we really pride ourselves on having those 24-hour turnaround times; the lab industry, in general, doesn’t have a great reputation, particularly when it comes to COVID testing. Some of the larger labs focus more on their long-time customers who do more than just COVID testing. So when you have a new customer looking for COVID, you’re a lot less worried about them. And again, the turnaround times tend to be three to seven days, maybe they’re a little bit faster, because there’s less COVID testing going on. We’ve always prided ourselves on a 24-hour turnaround time. The other thing critically important in the lab business is customer service. Invariably, there are issues. We have great technology, which I’ve reviewed in the past, I’m not going to discuss that again; with the acquisition of VaccTrack, our ability to report results directly to your smartphones. We have great technology with great customer service and the fast turnaround times. So when people ask me, and they’ve asked the question, how do you compete with a large labs? I always respond, they can’t compete with us. So it’s a question of, can we get the customers? So we had this crazy explosion of business back at the end of December and January, and then all of a sudden the amount of testing drops. But you have to understand we’re new to the business. And we’re still building our customer base. So while our total testing dropped after January, which it has, the fact is, we’re just starting to see evidence that all the customers we’ve been working on for the last three or four months, are going to be building business with us. I don’t know the exact timing of that business building. But I can tell you that we have some tremendous potential with some very large potential awards. The fact that we just won Township of Oyster Bay, and that was followed a couple of weeks later with Dutchess County, there’s a lot of potential in both places, almost 300,000 residents in each of these two areas in New York. We are going to be building the marketing in those areas to build up the testing. And then we also have a situation where schools. We’re now getting closer to summer. So there’s less testing in the schools. But now we have graduations, and prom, we also have weddings coming. So there are all of these different factors that work. And then also, there’s still much larger initiatives out there, like the administration wanting all schools open next September and nationwide initiatives for testing. We are working to be involved in these nationwide programs that if any of them hit, I can tell you that the numbers are going to be explosive. I can’t guarantee that we’re going to win. But I can tell you we are extremely well positioned given our state-of-the-art equipment, our major capacity and our fast turnaround times. So, we are really well positioned as a COVID testing company. To the extent that there is COVID, I expect us to continue to win customers and win RFPs. All right, that covers COVID. As I mentioned, COVID is out of control in India. I’m talking to people who say there’s no question that some of what’s going on in India is going to come over here. It’s a question of when not, if so, but that’s to be seen. In the meantime, I do believe regardless of the waves of COVID, there’s always going to be some COVID testing. Our goal is to be diversified between PCR testing, antigen testing, and immunity testing. So to the extent that there’s some testing, we expect to be a part of it. All right, that’s COVID now. Our first initiative for diversification is antigen and immunity testing that’s still obviously COVID related. Our next step is to look at acquiring labs, and understand, we could build labs or apply for licenses and insurances, but that can take one to three years. I don’t have that much time. That’s just not the way I think. When we decided to get into the CLIA lab business, four weeks later, we acquired the first lab and six to eight weeks after that, we had built out a major new lab and we were doing major testing. I’m not waiting around. As I mentioned earlier, on this call, we have the platform, we have the capital, we have the resources, we’re going after acquiring other labs. They vary in size, I’ve been working on this now for months, they vary in size from as small as about a $0.5 million lab to a $10 million lab to a $50 million lab. I can’t tell you what we’re going to acquire or when, but I can tell you at least our goal is to acquire one or more labs that give us instant diversification into other types of testing. We are currently doing business with customers who would bring us the other types of testing if we provided it. We then have other customers who would love to do business with us, but don’t want to until we provide the other types of testing. As one small example, I talked to an owner of 13 nursing homes. He said, Ted, I love you, I’d love to do business with you, I would love to move from my other lab. But I’m not going to just split up my COVID business; the other business is much greater than the COVID business. But when you diversify, please make me your first call. That’s just an example. But then we have other customers that we currently do business with. And when I say customers, these often are companies that provide the specimen collection services, they’re the ones on the ground, actually going to the nursing homes to test them. We’re already doing business with these types of customers, and they’d be happy to bring us their other types of testing if we were in your traditional blood and urine, and so forth. So we’re looking at several different labs. I can make no guarantees about whether we’re going to acquire one lab, I can only tell you that’s the focus of the company that’s very real. Judging by the recent past, if I tell you I’m going to do something, you can assume I’m going to make every effort to actually make it happen. We certainly have the capital and the wherewithal, in the revenues and cash flow. So capital is not an issue. Once we get beyond potentially acquiring one or more labs, and we start building up the other types of testing. And by the way, there are at least two groups of sales organizations that would love to join ProPhase Labs as soon as we acquire another lab and start building out all your traditional types of testing. What’s interesting in the industry is that a lot of these labs, the managers, the people in charge, this is very cheap. And it’s funny people laugh all the time when I say people lab industry laugh all the time, because they say, Ted, you’re absolutely right. And it’s just amazing to me, that they don’t understand how to motivate salespeople. The way you motivate salespeople, is by paying them and not shortchanging them. I’ve actually attracted. We have attracted a couple of different groups of salespeople who could build up a business in a very significant way if and when we diversify. So that’s a very serious initiative for us to work on. Additionally, we are working on two genomic companies. One is more consumer-oriented, where potentially we would be doing the whole genome sequencing in our lab. The goal would be to build out and leverage our infrastructure in Food, Drug and Mass retail stores. As you might recall, we used to sell Covis in 40,000 Food, Drug and Mass retail stores; we currently have a line of dietary supplements, our lead product is now in CVS, Walgreens, Rite-Aid, and Walmart. We have tremendous distribution to leverage, and we could marry research and science with the end consumer. That’s one genomics company we’re looking at, then we’re looking at another one that’s more on the research side towards doing diagnostic testing for different types of cancers. I don’t want to go into too much detail right now, because obviously, this is all hypothetical at the moment. But know that I’m very interested in working towards diversifying first into labs that do all the other types of testing, and then the higher level use of a lab for research to get into more sophisticated types of diagnostic testing for health-related issues and diseases. That’s an awful lot. The last thing I tell you is I’m also looking at a telemedicine company and a healthcare company; the healthcare company actually, they both have access to large groups of nursing homes, physicians and patients. Again, that would leverage our lab testing services. I said an awful lot, and I think, in a relatively short period of time. In fact, I finished a little faster than I have in the past. So that leaves time for plenty of questions. Again, I thank everybody for joining the call. I’m frankly, I’m really pleased with the results. Maybe they’re less than what I might have anticipated in January. But by the same token, and actually it was one of our investment bankers that pointed this out to me, who said Ted, nothing goes up in a straight line and you can’t grow your revenues every week or even a fairly every month. He’s absolutely right. But the bottom line is we’ve had tremendous success over the years and within the lab business. We’ve had tremendous success over the last three to six months. I hope to continue to bring everyone positive results in the future. And with that, Jane why don’t we open it up to questions?
Thank you. Our first question comes from Jason Kolbert with Dawson James. Please go ahead with your question.
Great. Congratulations, you certainly beat my expectations on the quarter. The thing that strikes me the most about your comments is bidding on potential national contracts. If you weren’t lucky enough to win something like that it actually could be transformative. Can you go into a little bit more detail about what those prospects might look like?
Sure. First of all, Jason, I really appreciate your support. I also appreciate your comments. The tricky part of this is when you go back to January, I was talking to companies, even some of our customers, and a couple of our customers were talking about doing three to five times the amount of business they were doing in January; only it didn’t come through. I regularly talk to potential customers and potential initiatives that could be really, really large that don’t come to fruition. What I don’t want to do is get shareholders excited about something and then it doesn’t come to fruition. I would much rather just consistently build our company. If we get surprised by a major win, that would be fantastic. What I can tell you, though, is that we have a lot of really positive initiatives we’re working on, the first of which is very real and could get our business going again, more similar to what we were doing in January and grow beyond that. The second initiative, when we start talking about national initiatives, again, the Biden administration wants schools open, and they’re not just sending money to the states, but there’s actually a national initiative with RFPs that went out. We partnered with a couple of major companies that submitted for the RFPs. We are optimistic that one of those companies that we work with is going to win. If they win a part of the country, they’re going to give us an enormous amount of business. What I can tell you is, we are perfectly situated for a major initiative, because we have state-of-the-art equipment, 24-hour turnaround times, state-of-the-art technology. There would be no reason for anybody involved with a major winner of a national initiative not to use us at least in the Northeast. And with the national initiative, it’s broken up into four quarters of the country, but even having said that, as I said, one of our largest customers was testing throughout Texas. It was nothing for us to FedEx; they’d collect specimens till 6:00 p.m., put them on FedEx, we’d get a made class Memorial Day, they’d have the results by 6:00 p.m. So they were still getting 24-hour turnaround time, even across the country. So there’s no question that there are national initiatives to open up schools. There’s also no question, if that initiative follows through and I believe that it is going to follow through, there’s going to be an overwhelming enormous amount of business. If one of the companies that submitted the RFP, which we are partnered with and we partnered with too, if one of them wins even one of the quarters, it will be a transformative amount of business to our company. But I can’t guarantee that’s going to happen and I can’t spend my time thinking about it. We already filled out all the paperwork; we did all the RFPs. That type of initiative is very real, and it’s in the background.
I rarely – have I seen, dividend paid like that. I’d also like to focus a little bit on something you said, which is there were some big expenses actually came in below my estimates. And so for me, that means that your COGS were below my estimates, which means your margins were higher than my estimates, wouldn’t it? And you also said that expenses would kind of normalize as some of the build-out costs go away associated with a lab that occurred in the first quarter. So, I know you don’t want to give guidance, but how should we be thinking about those expenses for the rest of the year?
Sure. I’ve discussed this on past calls; our margins are a tremendously complicated beast. The reason is because we have so many different types of customers that we pay different ways. You’re even seeing issues within our numbers with whether or not a payment to a customer should go into COGS to go into the cost of goods sold or whether it should go into a sales and marketing expense. In some cases, it’s a combination of the two. It’s really complicated. All I can really do in guiding you is talk about trends. So far, out of network insurance, the numbers haven’t changed in terms of reimbursement rates and those without insurance, it’s an automatic $100; those numbers have not changed. I heard about one lab that was in network somewhere where they cut it below $100. That hasn’t affected us at all. And in general, I just don’t. So far, I don’t see the revenue side of the picture changing very much. At the same time, we’ve gotten more sophisticated in the business. In many instances, our customers are the companies that are collecting specimens; in many instances, what we’re paying them is less than what we were paying the first customers that we do business with. The last part of this is that there was a tremendous backlog of backordering of consumables. Back in December and January, I was really concerned that we were going to have a major customer come in and we were going to run out of consumables and I thought that would be the worst thing of all time. So, we loaded up on consumables. What’s interesting is the cost of reagents is coming down. If anything, the trend in the cost of reagents is coming down. We’re getting more sophisticated in how we pay our customers. And so far insurance rates have not been coming down. So it’s possible that you could see margin expansion going forward.
Yes, I mean, what’s really important, I know you reported $16 million in inventory. And so that’s a big number. I would assume that what you’re really saying is between accounts receivable and inventory as those numbers come down, we could even see better numbers on the top line.
Yes, absolutely.
Okay. Perfect. Thank you, Ted. Congratulations. Great quarter.
I really appreciate the questions. Thanks for your participation and your support.
Thank you. Ladies and gentlemen at this time, there are no further questions, and I would like to turn it back to Ted Karkus for closing comments.
Great. Well, listen, I really want to see if there’s one more question, if you want to take that Jane. A question just came in.
Yes, we do have a question from the line of Robert Danaher, Private Investor. Please proceed with your question.
Yes, Ted. Thanks for taking my call and great quarter; I just had a couple of questions regarding the date of ownership for the dividend. Whether there are any personnel changes since the beginning of the year, and the last one is like to make if you can make any comments regarding how you feel about a consulting agreement? How that’s working out for you.
I’m sorry, what – in reverse order or what consulting agreement are you referring to?
Ted, the one that’s in your 10-K report, the consulting agreement back in September 25 of 2020.
Yes. I apologize. We have so many consulting agreements. I think you’re talking about the one with the major laboratory.
Yes.
That’s a complicated question. I would almost rather you contact me individually for that. But what I can tell you, it’s actually pretty straightforward. That’s what the laboratory that as they do testing, they pay back; they have debt to us. As they do testing, they pay back to us. So far, everything has been status quo. Regarding the timing of payment of the dividend, if you actually look in the, I believe it’s in the press release the actual date. I don’t want to misquote it. Let’s see, I’ll just tell you very quickly, I’m pretty sure it’s actually…
Okay, listen – it’s in the report, I’ll catch you.
Yes. It’s definitely in the press release. And in fact, it says here, the dividend is payable on June 3, to stockholders of record as of May 25. So, you have time if you want to get your hands on the dividends. As far as employees, we ramped up employees in a dramatic way back in December and January, as we’re building out our second lab. What you got to understand is that I don’t know, I think we might have hired 100 employees in the span of about eight weeks. Anytime you hire 100 employees over a short period, you’re always going to have some attrition. A number of people weeded themselves out. We also had a drop-off in revenues and actually, more importantly, expected revenues, which therefore fit in well with the fact that we had several employees that didn’t work out. You put those two together, we’re more efficient now. Our overhead is less now than it was three months ago. That’s smart business. If our numbers ramped up in the future for instances, as Jason Kolbert was asking about the national initiatives, if we hit on a national initiative, we will likely be hiring more people. Right now we’re happy with the headcount the way it is. I certainly wouldn’t comment on any employee in particular, whether they were let go for disciplinary reasons. In general, there’s also natural attrition just from the fact that we hired so many people and some people just didn’t work out for them.
Okay, great. Thanks, Ted.
You’re quite welcome. It looks like we have one more question, Jane, I’m happy to take we have a little time.
Our next question comes from Lee Alper with Hammock Investors. Please proceed with your question.
Hi, Ted, hope you can clear this up. There was some rumor on the – one of the internet boards that the whole bridge lab was closed for equipment problems and the people were laid off.
Yes, okay. So that was all blown out of proportion. I assumed that it is somebody short the stock. Somebody actually brought that to my attention. Interestingly, the person was related to P2, people who were fired from the lab. It doesn’t surprise me when rumors start related to disgruntled employees and people related. For the people listening, if you’re talking to former employees and trading in the stock, you probably want to think twice about doing that. It’s not smart, especially when people know who you are and other people that were let go. Hypothetically, if inspections were to take place in the lab, the same way that we’ve had a manufacturing facility and we do FDA inspections, I don’t report an FDA inspection or lab inspections. To blow it out of proportion, I can tell you that we have never had a hiccup in terms of accepting specimens. You can see by the numbers, we just had a tremendous quarter. I really don’t like to address rumors, especially when there’s faulty information in there. But I hope that clears up your question. And Jane, one more – I think I see one more question.
We do have a question for a line of Pat Patterson, Private Investor. Please proceed with your question.
Okay, Ted, how are you?
Awesome, Pat. It’s good to hear from you.
Ted, you did an unbelievable job. I mean, I never thought I’d have a chance to even talk to Superman. But now I can say I’ve done it. So my question is about the antigen test. Because what you were talking about them being unreliable and whatnot, maybe they won’t be – maybe they won’t be really popular six months or a year from today? I don’t know. But what I was curious about is since you’re going to get into the antigen testing business, how do you go about actually putting the antigen test in the hands of people? Can you address that? How the distribution works?
Yes, yes, so there are two ways, really three ways for us to potentially distribute antigen tests. Number one, when the FDA became overwhelmed last year with various different types of tests coming to market, those that were developed by CLIA labs, which are called laboratory developed tests LDT. The process for approval for selling them is very different; you want to sell in a store. So as an LDT, you can sell to healthcare practitioners, medical doctors, offices, and so forth. We can also, in our testing, since we actually have healthcare providers working for us and our customers are oftentimes healthcare providers that are doing a specimen collection, we can sell to them or partner with them. For all the testing that we’re doing in schools, and potentially events, if we introduced an LDT antigen test, we can roll that out very quickly. That’s what we’re working on right now. Additionally, we can also purchase with distribution companies; we can purchase antigen tests. We can distribute in our testing; obviously, the margins are going to be better in an antigen test that we develop ourselves also in the one that we’re working on ourselves. The reliability results, the sensitivity, and specificity are fantastically better than most of the antigen tests out there, and a saliva-base. So, if we can introduce that, to complement our PCR testing, then the testing that we’re currently losing to antigen testing, we’ll be able to bring that back in-house, because we’ll be able to provide the same customers with both PCR testing and antigen testing. For instance, with schools, a lot of the schools now are really into doing the antigen testing. It’s just it’s easier for them; the results are faster. A lot of this also has to do with the politics and the psychology of doing antigen tests because it’s easier, it’s quick, and all they care about is having a negative result reported, they don’t even care how accurate it is. Because we’re dealing with that type of psychology, it’s important that we provide both PCR tests and antigen tests. What’s nice is the one that we’re working on has excellent reliability results. I really don’t want to go into too much detail because we haven’t finalized any antigen test deals. We are able to right now offer antigen testing through a third-party who provides us with the antigen test that we then provide as a part of our testing right now. But the goal ultimately is to introduce our own ones and also apply to the FDA for EUA for at-home or point-of-care testing that’s a bigger hurdle. That’s something we would be working on as well. If we got point-of-care testing for our antigen tests, forget about it; it’s the same way that Jason Kolbert asked about something transformative. If we got point-of-care testing for antigen tests, that would be transformative too. Again, I’m getting way ahead of the game even talking about it. But those are the kinds of things we’re working on for the future. I hope that answers.
Yes, does. Thank you very much, Ted. Great job.
Thank you. I really appreciate it, Pat.
And there are no further questions.
All right, awesome. So listen, I just want to tell everyone how much I appreciate you joining the call today. To tell you, I really am working on behalf of the shareholders. It’s not just me. Something I didn’t mention on this call, but I have in any other; we have a fantastic management team, led by our COO, Steve Kamalic, and our CFO, Monica Brady, and we have fantastic Head of IT and Sergio Miralles, and our two heads are high complexity Molecular Lab Techs, the Head of R&D, Carlos Brewster, and Amanda Vasquez. We just hired a fantastic person to Head of Lab Operations, who officially started working for us yesterday, her name is Alex Levi, and also Jason Karkus, who heads up our sales. I’m really, really pleased with our team. We just had a major potential customer sit in; we sat in with them today, and they were so impressed. Everybody that comes into our company is so impressed with our management team, it almost makes it easier for us to win awards, and bids, RFPs when potential customers come and visit us in person. I couldn’t be more pleased when you have a strong management team, you have a strong financial base, fantastic equipment, the sky’s the limit on what we can do. I can’t guarantee success in advance. But we have all the right pieces in place, and all the right infrastructure in place. The strategic initiatives that we’re working on, I’m so excited about. I’m hoping to transform a company from we transformed it last year into a COVID lab testing business. I expect to quickly transform that into a COVID lab, not only PCR, but also antigen and immunity testing company. I expect to transform it once again by diversifying it with other labs into other types of lab testing and then be on the lookout down the road. Well, if and when we get into the field of genomics. So there are some really exciting things ahead for our company. For those of you that are patient, I’m going to do my best to provide returns for all of you. Have a great day. Thanks so much for your time. Thank you, Jane, this can end the call.
Thank you ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.