Chembio Diagnostics, Inc.

Chembio reported third-quarter 2022 total revenue of $11.2 million, down 7% year over year, including product revenue of $10.8 million, up 16% year over year. Gross product margin dollars were $1.2 million versus $1.5 million last year, and gross product margin percent was 11% versus 16% in Q3 2021, impacted by inventory reserves. Net loss was $6.7 million, or $0.21 per diluted share, compared with a net loss of $6.4 million, or $0.24 per diluted share, in the prior-year period. Cash and cash equivalents were $21.1 million, and net working capital was $8.7 million. Looking ahead, management said Q4 2022 comparisons would be challenging because COVID revenues made the year first-half weighted, and they are focused on order visibility; they did not provide full-year revenue or EPS guidance.

Rick Eberly emphasized a strategic pivot toward profitable growth, higher average selling price products, and more recurring commercial channels rather than large one-time tenders. He pointed to stronger U.S. sales, growing Europe distribution, and a broader Brazil retail and e-commerce approach as signs the company is diversifying its revenue base. His tone was optimistic about the pipeline and market opportunities, especially CLIA-waived HIV-syphilis testing, OTC HIV self-testing, and the CDC-funded syphilis program.

Larry Steenvoorden focused on the quarter’s financial details and the cost-reset underway in the Global Competitiveness Program. He noted product revenue of $10.8 million, gross product margin of 11%, R&D of $1.9 million, SG&A of $5.6 million, and a net loss of $6.7 million; he also said cash and equivalents were $21.1 million after receiving about $4 million of net proceeds from ATM sales. He stressed that the company reduced headcount from 290 to 211, moved all product platforms to an on-demand line by end of Q3, and started production with its Malaysia manufacturing partner, while also saying the debt/covenant situation is a major priority and that they are exploring capital-raise and lender options.

Analyst Per Ostlund pressed on whether Q3 revenue reflected a one-time bolus or a more durable mix shift, and management said the strength came from a broader diversification across regions and products rather than a single order. He also asked about the U.S. HIV-syphilis opportunity, OTC HIV self-testing, and whether the company might pursue lower-margin business again; management said the CLIA waiver could unlock substantial U.S. demand, and that OTC HIV and flu/respiratory products are strategic priorities in higher-value markets. In the final question, Ostlund raised concern about the debt and revenue covenant; Larry said the company is proactively searching options, including an S-1 filing, and intends to address the capital structure and speak with the lender.