Understanding Changes in Lucira Health’s Risk Factors

Lucira Health (LHDX) is an American medical technology company that makes test kits for infectious diseases. Its products include a COVID-19 test kit that can be purchased without a prescription and used at home. (See Analysts’ Top Stocks on TipRanks)

Let’s take a look at the company’s latest financial performance, corporate updates, and changes in risk factors.

Q2 Financial Results

Lucira Health reported revenue of $12.4 million for Q2 2021 and beat consensus estimates of $8 million. The company did not book any revenue in the same quarter last year. It said that the sale of its COVID-19 test kits was a major revenue driver in the latest quarter.

A loss per share of $0.42 improved from a loss of $2.90 in the same quarter last year but missed the consensus estimate for a loss per share of $0.32. Lucira ended Q2 with $161.7 million in cash. (See Lucira Health stock charts on TipRanks).

Corporate Updates

Lucira’s COVID-19 test kit, which produces results within 30 minutes, has been approved for sale in Singapore. The company has tapped Labgistics Asia to help it sell the product in the country. Lucira Health CEO Kevin Collins said the Singapore approval marks an important step in the company’s international commercial expansion.

Lucira’s manufacturing site in the Dominican Republic has begun operations. The company is establishing the infrastructure to address the growing demand for its test kits. The company aims to end 2021 as a market leader in providing at-home testing.

Risk Factors

The new TipRanks Risk Factors tool shows 86 risk factors for Lucira Health. Since Q4 2020, the company has updated its risk profile to introduce two new risk factors and remove one.

Lucira tells investors in a newly added risk factor that marketing its products directly to consumers may bring increased regulatory scrutiny. It says that it plans to ramp up its advertising activities, including through social media channels. The company warns that allegations of misleading advertising could lead to the FTC opening a probe into its practices or litigation. Lucira says such actions would disrupt its operations and could damage its reputation.

In another newly added risk factor, Lucira cautions that an inability to expand its marketing infrastructure to drive broader consumer adoption may adversely affect its sales and damage its reputation. For its COVID-19 test kits, Lucira expects to generate a significant portion of revenue from direct consumer purchases.

Lucira dropped the risk factor that cautioned that the company could fail to secure FDA approval to sell its COVID-19 test kit over the counter. As the product has already received OTC authorization, that risk factor is now out of the way.

The majority of Lucira’s risk factors fall under the Tech and Innovation category, with 30% of the total risks. That is above the sector average of 26%. Lucira’s shares have declined about 77% since the beginning of 2021.

Analysts’ Take

In August, LifeSci Capital analyst David Sherman assigned Lucira Health stock a Hold rating with a price target of $9. Sherman’s price target suggests 55.44% upside potential.