Hologic enables maiden net free cash flow

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Lumos Diagnostics Holdings Limited (ASX:LDX)

Issue date: 29 Apr

Maiden positive operating cash flow. Lumos Diagnostics Holdings Limited (ASX:LDX) 3QFY24 delivered first quarterly operating cash flow of US$2.3M, also yielding net free cash flow of US$2.3M given negligible capex. US$6.7M receipts were up significantly on the 2Q’s US$1.1M, as was unaudited revenue of US$4.0M vs the 2Q's US$1.7M. Costs were relatively flat, and LDX ended March with US$3.4M cash and nil debt.

Services gets boost from Hologic. The rise in LDX's Services 3Q revenue to US$3.3M from US$1.5M in 2Q was due to US$1.5M of revenue from amortisation of the US$5.0M received from Hologic under the IP Agreement in January, equating to about US$1.5M per quarter.

Product revenue rises as well. Products generated sales of US$0.7M in the 3Q – up on the US$0.2M of the 2Q. The delta mostly arose from increase in ViraDx sales which benefited from the US flu season. With the flu season now winding down, LDX expects sales to be lower in the 4Q, and to begin to pick-up again as the next season begins in later CY2024.

Still early days for FebriDx. Febridx sales only commenced in January, and distributors - such as Henry Schein - were still being appointed during the quarter. We expect sales to grow gradually over subsequent quarters as education and awareness of the product begins to build among clinicians and insurers.

CLIA waiver progressing. Key to unlocking FebriDx's full potential is obtaining a CLIA waiver from the FDA. This confers huge potential to expand the market for FebriDx beyond its current remit limited to ER and urgent care facilities. LDX estimates the waiver could see FebriDx's target market rise from 18k sites currently to >220k. The company is readying administration for the CLIA waiver study whichshould be finalised by June, with first patient expected in September.

Further news flow to come. A number of milestones exist ahead for LDX, including further major distributor appointments for FebriDx, progress on the CLIA waiver, potentially higher reimbursement for its PLA code for FebridDx, another US$5M payment from Hologic due June under the IP Agreement, and...