Good afternoon, everyone, and welcome to the OraSure Technologies 2018 Second Quarter Financial Results Conference Call and Simultaneous Webcast. As a reminder, today's conference is being recorded. [Operator Instructions]. OraSure Technologies issued a press release at approximately 4:00 p.m. Eastern Time today regarding its 2018 second 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 Mr. Roberto Cuca, Chief Financial Officer. Dr. Tang and Mr. Cuca 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 recitation statements, its annual report on Form 10-K for the year ending December 31, 2017, its quarterly reports on Form 10-Q and its other SEC filings. Although forward-looking statements help us 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 the call over to Dr. Stephen Tang.

Thank you, Joni. Good afternoon, everyone, and welcome to our call. I'm very pleased to report another successful quarter from both the financial and operational standpoint. Our performance for the second quarter was strong and has exceeded expectations on both the top and bottom lines. The 2 key drivers of growth, molecular collections and our HIV Self-Test franchise continue to demonstrate consistent strength and momentum. Consolidated net revenues for the quarter were $43.6 million or a 9% increase from a year-ago period. Except for the fourth quarter of 2017, this was the highest revenue performance quarter ever. For the first 6 months of this year, our revenues grew 18% over a highly successful 2017. Some specific highlights from the quarter include the following. Net molecular revenues increased 7% for the quarter and 33% for the 6-month period. International HIV sales grew 265% and 180% for the quarter and 6 months ended June 30, 2018, respectively. This growth was driven primarily by our HIV Self-Test. We reported consolidated net income of $4.1 million or $0.07 per share for the quarter despite incurring $2.2 million or $0.04 per share in nonrecurring transition charges associated with the executive management changes occurring earlier this year. We ended the second quarter with over $181 million in cash and cash equivalents on our balance sheet. We also completed an important initiative during the second quarter. As explained in prior calls, we undertook a thorough review of our business strategy. This process started while I was still Chairman of the Board of Directors and continued after I became CEO in April. We reviewed the findings with our board in July and the board enthusiastically approved the strategy. Later on in the call, I will share with you several key insights from the strategy review. As you know, Roberto Cuca's appointment as Chief Financial Officer became effective during the second quarter. He's been with the company a little more than two months now, and this is his first earnings call since he became the company's CFO. We couldn't be more pleased to have Roberto officially join our senior management team. So with that, let me turn the call over to Roberto for a detailed financial review of the quarter. And after that, I'll provide some business updates and then we'll open the call for your questions.

Thanks, Steve, and good afternoon, everyone. As Steve mentioned, OraSure continued its strong performance in 2018 with our second quarter revenue and EPS handily exceeding the guidance we issued at our last earnings call. So let's review what drove those numbers to be higher than what we anticipated and shared with the investment community. Our second quarter net revenues of $43.6 million exceeded the top end of our guidance range by over $1 million. This variance was driven largely by royalty income and by funding from the U.S. Biomedical Advanced Research Development Authority, BARDA, that both exceeded our May estimates. The royalty income was less easily forecasted because this was only the second quarter in which we received it and the BARDA funding simply reflected a greater uptick in R&D productivity than we had achieved in the past. Because neither of these nonproduct revenue items has associated cost of goods sold, their benefit falls directly to the bottom line and contributed to our EPS of $0.07 per share outperforming our guidance of approximately $0.03 per share. Moreover, we saw some savings in the second quarter's operating expenses as we adjusted time lines in executing various research projects and marketing programs. These programs and expenses were consciously delayed until the completion and read-out to the board of our strategic review in order to align spending with the approved strategy beginning in the second half of this year. I'll now go into more detail on our Q2 financial results. Second quarter consolidated net revenues increased 9% to $43.6 million compared to $40.2 million reported in the second quarter of 2017. Our consolidated net product revenues decreased 1% to $38.8 million compared to the prior year period. Higher sales of our OraQuick HIV Self-Test and molecular collections products were able to offset declines…

Thanks, Roberto. As discussed earlier, our molecular revenues in Q2 grew 7% over the prior year quarter, which is impressive given the very difficult comparison resulting from our strong performance in 2017. The consumer genomics market, which includes our largest customer, experienced significant growth last year. Demand for our products during the second quarter of 2018, likewise, increased dramatically and has generally remained at a much higher level than in prior periods. In addition, we are starting to see more identifiable trends in purchasing patterns. There is a noticeable uptick in seasonal consumer genomic demand tied primarily to annual retail promotional events in the holiday shopping season. As a result, we expect to see more variable progression of revenue from quarter-to-quarter. Given that, it's best to view our progress on an annual basis as quarterly progressions can vary. Most importantly, we still expect to see continued growth in our molecular business in 2018 with the growth rate for the full year likely to be in the double-digit range when compared to 2017. Our molecular business remains very strong, and we are seeing growth from both new customer acquisitions and sales to existing customers. About 11% of Q2 orders came from more than 100 first-time purchasers and 18 of our top 20 customers showed solid growth on a trailing 12-month basis. One of our priorities has been to negotiate multiyear supply agreements with as many customers as possible. We've made great progress in these efforts and now have 7 of our top 20 customers purchasing products under multiyear arrangements. The use of multiyear arrangements should aid our ability to forecast revenues going forward. We now have over 300 accounts purchasing both genomics and microbiome products, including 3 of our top 20 customers. We continue to believe that this type of synergy…

[Operator Instructions]. Your first question comes from Brandon Couillard with Jefferies.

Stephen, thanks for those thorough remarks. I'd like to start with the molecular collections systems business. It was down quarter-over-quarter kind of unusual seasonality, I think, to see for that business. Was it tied to any one particular customer, any chance you could spike out the impact of the one lost customer that you mentioned and perhaps elaborate on what device they switched to?

Yes, the change in customer, Brandon, was not a direct-to-consumer customer. It was a different product. So that was -- that did not influence our product sales in molecular for direct-to-consumer customers.

Okay. I guess, sticking there. You quantified or sort of pointed to or alluded to the multiyear contracts. Does that include minimums and kind of what's the average duration of those and when you referred to, I think, Stephen, the variability of the DNAG business, any, I guess, indications that you can sort of give us how we should think about growth in that segment, kind of moving through the back half of the year, understanding that fourth quarter is seasonally stronger period?

Right. So multiyear agreements, we don't disclose. They typically had minimums and they typically are multiyear. I think the best way to view the molecular collections business is growth on an annual basis. And I think, 2017 being a breakout year with some unevenness quarter-by-quarter makes the comparisons year-on-year from 2017 to 2018 difficult, but I think these multiyear agreements will actually help as well our stronger relationships with customers to predict their demand.

One last one, Stephen, with respect to the strategic review. Did that elucidate any finding as to whether you think you're spending enough on R&D and then any comment or color you can share with us in terms of like any divestitures that may be considered? I didn't hear you mentioned risk assessment or cryo is your priority areas in the portfolio.

Well, we're not ready to discuss any particular divestiture and, clearly, risk assessment and cryo contribute to our revenue in our earnings. I don't think we have the same growth expectations for those businesses as we do for our core businesses and infectious disease and molecular. And just regarding resource allocation, I think, that's something we're examining right now, but I think that our spending in R&D and more broadly, in innovation, which I think includes the functions not only in R&D, but in business development and strategic marketing are likely to increase as you would expect from a growth company.

Your next question comes from David Westenberg with CL King.

So just a quick question in terms of timing and kind of understanding the seasonality in consumer genomics. I know it's early. I know you said, it's starting to get on understanding. You're starting to sign deals with business like [Technical Difficulty] playing out in the market, number one the array company kind of said, the company that does a lot of the consumer genomics array said, this quarter would be really strong -- was really strong, but -- our Q2 was really strong, but Q3 is probably a little bit of a slowdown and then when you look at your revenue, you see ancestry up sequentially, what, yes, commercially is down sequentially. So saying all that, can you maybe just give a tiny bit more color in terms of how we should be kind of thinking about these different dynamics at play and trying to forecast consumer and commercial revenue here?

Thanks, David. Roberto here. So I'll take a first crack at that. So one of the important distinctions between ancestry and some of our other consumer -- customers is that we get paid by ancestry based on their end-user purchases, whereas we get paid by some of our other customers based on how much they buy from us. So some of the variability from quarter-to-quarter that we can see is based on our customers' own estimates of what they're going to need in the existing quarter and then upcoming quarters, whereas with our royalty payments, we're going to see that more directly resulting from end-user demand. That said, over the course of the full year, we'd expect that the overall ebb and flow of the sales should become more consistent between those 2 types of customers and that you'll see seasonality similar to what you saw in prior years. So that's how we would think about that. We do continue to expect to see growth in this business, notwithstanding some quarter-to-quarter variability and are very optimistic about the prospects of the business for the year.

Right. That was very helpful. So just the guide was nice for Q3. Can you give us a little bit of dynamics between how much of it contributed other revenue? Or do you anticipate contributing from other revenue versus product revenue for Q3?

So we don't break down our guidance by revenue lines. I'd expect, though, that you'll see some consistency between quarters, but again, because there's some variability from quarter-to-quarter, the exact proportions between other revenues and product revenues isn't something that we disclose as part of the guidance.

Definitely. Would is it fair to say that maybe this quarter had a lot more other revenue then you would anticipate for maybe future because that -- certainly it's been that way in the past or this is definitely a different spike up in the revenue. Is that fair?

No. So two of the big contributors to other revenue are the royalty payments. And because those are tied to consumer genomics consumption, to the extent that there is continued use of those products in the third quarter versus the second quarter, you could well see that payment being similar in third quarter to the second quarter. The other big contributor is BARDA payments and that relates directly to the amount of R&D that we do on our Ebola and Zika programs. And so to the extent that we continue to progress those programs at the same rate that we have in the past, you could see that contributor as well being similar in the third quarter to the second quarter. So I don't think there is any -- go ahead, Dave.

No, no. I mean, acknowledging. Okay. I guess, just one more then. Just on Truvada, the HIV preventative drug, I continue to see those commercials. I was on an airplane yesterday, it was playing a commercial. So is -- do you see that as a potential driver to the typically weak HIV? Is there any opportunity for partnership and I'm saying that with the background that from what I understand, prescriptions for Truvada require somebody be tested for HIV?

Yes, I think the whole area of prep as a new dimension to our HIV testing business and you're absolutely right that those that are on that prescription have to have routine lab tests and routine tests for HIV along the way. I think we factored that into our projection for the business for the year ago. So I think, it's an interesting development for the industry, though.

[Operator Instructions]. Your next question comes from Mark Massaro with Canaccord Genuity.

This is Max Masucci on for Mark. So your microbiome segment is still small on an absolute dollar basis, but it seems a strong growth for a number of quarters now. What's specifically drove microbiome in the quarter? What do you think is underappreciated? And how is it generating interest from pharma customers? And if you could provide an update on your partnership with Janssen and Harvard, that would be great.

Okay, Max, thanks. I can't give you specific updates on the partnerships, but I can say that I think what's driving interest on microbiome is, first, research in that area and we've certainly commented on the breakdown between commercial research and academic research. I think, particularly for the gut microbiome, there was a race of foot amongst pharmaceutical companies to address irritable bowel syndrome, Crohn's colitis and other diseases like that. And once you see a therapy on the marketplace and a companion diagnostic, I would expect that the use of our self-collection kit will grow rapidly. So that -- we're close to that tipping point, but we're not quite there yet. So I think those commercial interests are really driving a lot of the activity there. The other aspect is what I raise in terms of multiomics and systems biology, which is combining features of the human genome and microbiome along with other aspects, the other omics, metabolomics, genomics, proteomics, et cetera, together to create a sort of holistic view of biomarkers. And so, that's an emerging inversion field in its own right. So I think, there's a multiplier effect both on the commercial side and on the research side.

That's helpful. And so you were chosen to supply in the Mayo Clinic and scripts research institute with, I believe 13,000 initial saliva kits for DNA sponsored all of those projects. How is that relationship progressing and what are you seeing in terms of additional opportunities for population sequencing initiatives?

Right. I think our relationship is going well, and I won't comment specifically on that project, but I think that as you see these large epidemiological studies emerge and the need to enroll patients quickly also emerges, that tips heavily in favor of using our product, particularly these are for clinical trials or for clinical purposes. So we cultivate studies like that very actively. You saw, for instance, this last quarter, we announced our agreement with the Simons Foundation on autism. I think if you expect a lot other transactions like that to emerge over time for us.

That brings an end to the Q&A session of today's call. I will now turn the call over to Dr. Tang for closing remarks.

Thank you for participating in today's call and for your continued interest in OraSure. We wish you a very happy afternoon and evening. Thank you very much.

This concludes today's conference call. You may now disconnect.