Good afternoon everyone and welcome to the OraSure Technologies' 2018 first quarter financial results conference call and simultaneous webcast. As a reminder, today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions]. To allow time for as many questions as possible, questioners are asked to limit themselves to only a single question with no more than one follow-up question related to the same topic. Once the follow-up is completed, a questioner can rejoin the queue for further questions. OraSure Technologies issued a press release at approximately 4:00 p.m. Eastern Time today regarding its 2018 first quarter financial results and certain other matters. The press release is available on our website at www.orasure.com or by calling 610-882-1820. If you go to our website, the press release can be found by opening the Investor Relations page and clicking on the link for Press Releases. With us today are Dr. Stephen Tang, President and Chief Executive Officer and Ron Spair, our Chief Operating Officer and Chief Financial Officer. Dr. Tang and Ron will begin with opening statements, which will be followed with a question-and-answer session. Before I turn the call over to Dr. Tang, you should note that this 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, 2017, 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 based solely 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 would like to turn this call over to Dr. Stephen Tang.

Thank you Jonnie. Good afternoon everyone and welcome to our call. It's a pleasure to be hosting my first earnings call as CEO of OraSure Technologies. Later on, in the call, I will share with you my thoughts since becoming CEO and update you on my initial impressions. I would like to thank all those on the OraSure team that have assisted with my transition and helped make my job a bit easier today as we had a very strong start to 2018. As a result of years of planning, investment and execution, OraSure now operates two key businesses, molecular collection and infectious disease testing that are driving solid results. Overall, our business is well-positioned to continued future growth. Our path forward is clear. We see opportunities expand for the growth of our existing products and the deployment of our strong balance sheet to further maximize the value of our company. Innovation is critical to the success of any company and it is one of my top priorities. We all know that companies that do not innovate are destined to be left behind. Our ability to innovate has made us a leader in our field. We intend to foster our rich history of innovation to gain access to new opportunities and expand existing markets. Our Q1 results were driven largely by our molecular collections and our human immunodeficiency virus or HIV self-test businesses. Consolidated net revenues for the quarter were $42 million, a 29% increase from a year ago period. Product revenue growth for Q1 was 22%. Our molecular business delivered revenues of $18.4 million, which represents a 72% increase over Q1 of last year. Our international HIV sales grew 117% for the quarter, driven primarily by our HIV self-test business. This increase largely offset the decline in domestic HIV revenues and lower international hepatitis C virus or HCV test sales caused by the non-renewal of a large government supply contract in support of a countrywide HCV eradication program. Gross margins increased 344 basis points from Q4 2017. We reported a loss of $2.1 million or $0.03 per share. As Ron will explain in greater detail, this resulted from a $0.10 per share nonrecurring charges associated with a previously announced management transition. We ended Q1 with nearly $180 million in cash and cash equivalents on our balance sheet. So with that, let me now turn the call over to Ron. After his detailed financial review, I will provide some business updates and then we will both take your questions.

Thanks Steve and good afternoon everyone. 2018 is off to a great start. Our first quarter consolidated net revenues increased 29% to $42 million compared to $32.5 million reported in the first quarter of 2017. Our consolidated net product revenues rose 22% to $38.3 million compared to the prior year period. Higher sales of our molecular collections products and the OraQuick HIV self-test were the main drivers of this performance. Our molecular revenues rose 72% to $18.4 million in the first quarter of 2018, compared to $10.7 million in the first quarter of 2017. Sales of our products to commercial customers increased 97% to $14.3 million largely due to our $143 million agreement to supply Oragene devices to a leading consumer genomics customer, coupled with higher sales to other large customers. Microbiome sales continued to gain traction and increased 66% to $1.3 million in the first quarter of 2018 as compared to the first quarter of 2017. International HIV sales increased 117% to $5.7 million from $2.6 million in the first quarter of 2017 due to higher sales of our OraQuick HIV self-test into Africa and higher sales of our professional product in parts of Asia and Europe partially offset by a decline in sales to the Middle East. The tests shipped into Africa during the quarter were subject to the support payments under our charitable support agreement with the Bill and Melinda Gates Foundation, or the Gates foundation and included countries outside of the UNITAID, Population Services International or PSI's Self-Testing Africa program or the STAR initiative. Product revenues during the first quarter of 2018 included approximately $985,000 of support payments associated with this agreement. Domestic professional HIV sales continued to decline and decreased 12% to $3.3 million in the first quarter of 2018, compared to $3.8 million in…

Thanks Ron. So as you have heard, our molecular business performed well in Q1 with revenues up 72% from the prior year period. Coincidentally, we acquired 72 new customers during the quarter in this business segment. It is important to note that we are now seeing for the first time two of our top 20 customers purchasing both genomics and microbiome products as research continues to show the utility of combining these two fields of study. We believe this type of synergy between our product lines is a very encouraging trend and will continue. In our genomics business, sales to commercial customers were the primary growth driver with revenues increasing 97%. We won 10 new commercial accounts in Q1, of which five are consumer genomics companies. Large epidemiological studies continue to represent an attractive opportunity for the business. In Q1, the Simons Foundation renewed its supply agreement for 125,000 of our FDA cleared Oragene-Dx saliva collection kits along with performance services to meet their recruitment goals. The Scripps Research Institute and the Mayo Clinic also selected Oragene-DX and our performance services for a pilot of 13,000 individuals for the improvement and underserved populations in All of Us program. As reported in the New York Times yesterday, this program is historic effort to gather data from one million or more people living in the United States to accelerate research and improve health for precision medicine. On the academic side, we reported modest revenue growth compared to the prior year quarter. However, we posted 66% sequential growth from fourth quarter of last year. Our microbiome business also continued to grow with sales for the quarter up 66% compared to the prior year period and up 15% sequentially over Q4 of last year. We expect microbiome sales to become an increasingly important part…

Operator, could you the open the Q&A section?

[Operator Instructions]. Our first question comes from Brandon Couillard with Jefferies. Your line is open.

Thanks. Good afternoon. Ron, understanding this will be your last conference call. I just want to say, it's been a pleasure working with you over the many, many years and wish you all the best in the next stages of your life.

Thank you Brandon.

Stephen, just to the kick-off, understanding many elements of the strategic evaluation are still forthcoming, would be curious at a high level, what areas of the business you see opportunities to re-allocate resources? Other areas that you want to make incremental investments versus perhaps some that you might want to de-emphasize? And with respect to the balance sheet and M&A opportunities, curious what your view would be of the types of assets that would be most appealing?

Yes. Thanks for the question, Brandon. We are not at a point where we can talk about resource allocation yet. But I think as you can tell from our performance, our growth prospects, organically are aligned well behind our HIV self-test international as well as our human genomics and microbiome products. So I think you can anticipate continued growth in those segments and continued investments for our annual operating plan and budget as well as investments in growth opportunities inorganically to our balance sheet through business development opportunities.

Okay. And then a couple for you, Ron. Just looking at the 2Q revenue guidance, typically we see a bigger quarter-to-quarter sequential step up in the revenues going from 1Q to 2Q. The guidance for 2Q implies flat to up modestly. What are the puts and takes, plus and minuses that we should think about especially considering that the molecular business typically sees a bigger quarter-over-quarter jump?

Thank you, Brandon. It's basically, when we look at the revenue contributors across all the different business segments, we really factor in all the puts and takes as it says, as far as what has an opportunity to contribute perhaps a little bit more in the quarter versus those that are impacted by some seasonality, if you will or some vagaries regarding distributors. And so we don't get down to the level of guiding on the individual products, but it's really just a summation of our best guess as to what we believe will be the total overall revenues from the business in the second quarter of 2018 and I suspect that granularity to the constituent parts, that really won't be available until we go public in August with our work second quarter results.

Fair enough. And if I can sneak one more in. On the international HIV business, any chance you can give us a sense of the relative growth contribution between the STAR pilot program and then those other countries to whom you are shipping tests? And then I think you mentioned 40 of those countries which seems like a much bigger number than what I would have expected at this point. How would you describe your visibility and your view around the funnel of how that's developing?

Yes. The STAR Phase 2 program calls for four million units, Brandon. We are well on our way to fulfilling that requirement. And so I think what is exciting for us is that a significant amount of the countries that we are serving are or will be buying outside of STAR program. So that gives us a great leverage, I think, in further sales. So we are pleased with how STAR Phase 2 has been progressing and I think we expect to see further growth outside of STAR.

So just to add to that, Brandon, we do have six countries that are participating in the STAR program and the 40 countries that we spoke of in the call script actually are those that we are selling to or promoting our self-test to sell. We not necessarily selling to all 40 of them currently. So just to make that small point of clarification, there is plenty of opportunity ahead as we actually do start selling to them and translate that promotional effort to an actual sale. So I think as Steve pointed out, there is a lot of positive momentum building in that self-test program.

Very good. Thank you.

Yes. Thank you.

Thank you. Our next question comes from Dave Westenberg with CL King. Your line is now open.

Hi. Thanks for taking the question. And congrats again to Ron on the retirement. So just wanted to ask, on the DNA Genotek business, you have a lot of consumer genomics companies and you had them for a while. So just on a math front, would you be able to maybe describe what we should anticipate in terms of percent of revenue in each quarter? We now know that this is kind of a backdated thing with Christmas being the strongest time of the year. Can you help us with the magnitude in terms of Q1, Q2, Q3, Q4, just on a consumer genomics kind of ordering patterns, if you are willing to share that?

Well, Dave, I think we are learning right along with you here as we progress throughout the various seasons. And so we had certainly an experience in the fourth quarter that indicates to us that there was a strong seasonal impact from Black Friday, Cyber Monday and the Christmas holidays. And now as we move through the balance of the year, I would expect that we will learn some more about the impact of Amazon Prime Day in 2018 and Cyber Monday and Black Friday and the Christmas holidays and 11-11 and any of the other more impactful spiky type of revenue events that occur throughout the years. So I don't know that we can with any level of accuracy predict what the aggregation of all of our consumer genomics customers as well as the royalty payments might amount to from an entry year distribution but it certainly is a promising fact set that we have to work with.

All right. Got it. All right. So just in terms of, you called out the 13,000 patients in the recent funding of $1.45 billion into collecting one million patient samples. So what's the potential to turn that 13,000 into a bigger percent of that million patient? And then kind of as a follow-on to that, what is your potential in all these different kinds of research projects here? It just seems to me no-brainer to not use blood when you are collecting samples from healthy patients who you want to volunteer?

You should be a medical advisor, I think. We agree. I think overall epidemiological studies are a key part of our business for both the microbiome and for human genomics. For the specific kits you are talking about, the All of Us program which NIH launched and was covered by the New York Times yesterday, the reason that they are sampling blood is that they are doing more than genomic analysis. They are doing other bloodwork to get a baseline for their patients. It doesn't take too much imagination to know that to reach a million patients, you are going to have to find easier way to collect a sample and the easiest way to collect sample is through saliva. That's why we have a strong business segment in that area. So I think over time there will be the opportunity. But certainly this entry point of 13,000 samples is a good one and we will continue to work with the program.

And then I am going to ask a little bit more of a touchy one in terms of HCV. So even when you strip out the project, the countrywide elimination effort, you guys missed me by a lot in terms of revenue estimate. So can you talk about who the customer are in the HCV international right now? What's the composition of that kind of customer looks like versus what the composition of customer looked like maybe last year, the year before that, ex the one country doing HCV elimination effort?

Well, we are exploring country by country eradication programs for HCV. We see parallels in the way that governments have viewed HIV eradication to calling their tests to HCV. Beyond that, I can't really share anymore than that, David. I think that we continue to explore those market opportunities. Clearly, the types of funding sources for HCV elimination are lagging behind the global funding sources for HIV. So we continue to promote our product as easy-to-use for that purpose and we hope that we will have more to report in the coming quarters.

Got it. Thank you for taking the questions and congrats Ron on the retirement and congrats Steve on taking over as CEO.

Thank you David.

Thanks Steve.

[Operator Instructions]. Our next question comes from Mark Massaro with Canaccord.. Your line is now open.

Hi. This is Max Masucci, on for Mark. Steve, congratulations on the new role as CEO and to Doug and Ron, its been a pleasure. So you hired David Rappaport to SVP of Biz Dev, which is an encouraging hire. Other than finding a successor to Ron, are there any other areas at the VP level or above where you are looking to add? Are you contemplating adding a COO since Ron has been wearing both hats?

Thanks Max. We are not currently contemplating the COO role. Things could change over time. But for now, I think we are comfortable with the organization configuration. We don't have anything to share right now about hiring anybody else at the officer level. I have observed for the last seven years as a Board member and the last month as CEO that we have a very strong management team globally and we have taken steps over the past few years of creating global functions and a global matrix organization. And so I am very pleased with how we are executing right now. And obviously, once we have formulated our strategy, operations and organizational alignment will come from there. So stay tuned.

Great. And regarding DTC consumer testing and DNA Genotek, you are ramping your manufacturing lines. Are you able to meet demand currently? Could you speak to any inflection you might have seen in recent weeks post 23andMe's BRCA FDA approval or from any other marketing initiatives, say their DNA Day that they had in late April?

Yes. On the manufacturing side, I think we are comfortable. We have balance supply and demand and have the flexibility to ramp up. So no concerns there about capacity. I think we have made the correct investments without over investing in the infrastructure. And just regarding, I think, the progress and not to comment on any specific customers' program, but I think that as the health indicators in the biomarkers increase the need for an FDA cleared device to go with an FDA protocol for these companies is going to tilt strongly in favor of our products. So as that markets factor increases and there are more biomarkers to be analyzed, that will bode well for our business.

Great. Thank you.

Thank you. That brings the end of our question-and-answer session for today's call. I will now turn the call back over to Dr. Tang for closing remarks.

We want to thank everybody for participating on the call today and for your continued interest in OraSure and we wish you a happy afternoon and evening and look forward to our next call.

Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you very much for your participation. You may all disconnect. Have a wonderful day.