OraSure Technologies, Inc. (NASDAQ:OSUR), a leader in point-of-care
diagnostic tests and specimen collection devices, today announced
its consolidated financial results for the quarter ended
March 31, 2018.
Financial Highlights
- Consolidated net revenues for the first quarter of 2018 were
$42.0 million, a 29% increase from the first quarter of 2017.
Consolidated net product revenues were $38.3 million, representing
a 22% increase over the first quarter of 2017.
- Net molecular collection systems revenues were $18.4 million
during the first quarter of 2018, which represents a 72% increase
over the first quarter of 2017.
- International sales of the Company’s OraQuick® HIV products of
$5.7 million increased 117% compared to the first quarter of 2017.
This increase was primarily the result of higher sales of the
Company’s HIV self-test.
- International sales of the Company’s OraQuick® HCV product of
$665,000 for the first quarter of 2018 decreased 85% compared to
the first quarter of 2017 as a result of the non-renewal of a
foreign government supply contract in support of a countrywide HCV
eradication program at the end of 2017. This program
contributed $2.8 million of sales during the first quarter of
2017.
- Consolidated net loss for the first quarter of 2018 was $2.1
million, or $0.03 per share, which compares to consolidated net
income of $12.4 million, or $0.21 per share on a fully diluted
basis, for the first quarter of 2017. Consolidated net loss for the
current quarter included $6.4 million of transition costs
associated the retirement of the Company’s Chief Executive Officer
and Chief Financial Officer and the hiring of their
successors. These transition costs approximated $0.10 per
share and primarily consist of non-cash stock compensation charges.
Consolidated net income for the three months ended March 31, 2017
included a $12.5 million gain related to the settlement of
litigation against Ancestry.com DNA and its contract
manufacturer. This gain was accounted for as a reduction of
operating expenses and approximated $0.16 per share on an after-tax
and fully diluted basis in that period.
- Cash and investments totaled $178.4 million and working capital
amounted to $175.6 million at March 31, 2018.
“We are pleased to see that our growth strategy
is delivering the expected results and 2018 is off to a strong
start,” said Stephen S. Tang, Ph.D., President and Chief Executive
Officer of OraSure Technologies. “Our first quarter
benefitted from robust growth in sales of our molecular collections
and international HIV products. Importantly, we expect to see
continued growth from those businesses for the remainder of the
year. Our years of planning and investment are paying off and
OraSure has never been financially stronger than it is now.
We see significant opportunity in our existing markets and we will
look to expand our addressable markets where possible.”
Financial Results
Consolidated net product revenues for the first
quarter of 2018 increased 22% over the comparable period of 2017,
primarily as a result of higher sales of the Company’s molecular
collections products and higher international sales of the
OraQuick® HIV self-test, partially offset by lower international
sales of the OraQuick® HCV test. First quarter 2018 sales of the
OraQuick® HIV self-test included $985,000 of support payments under
the Company’s charitable support agreement with the Bill &
Melinda Gates Foundation (“Gates Foundation”).
Consolidated other revenues were $3.7 million
and $1.1 million for the first quarter of 2018 and 2017,
respectively. Other revenues in the first quarter of 2018 included
royalty income of $1.6 million associated with a litigation
settlement agreement, Ebola and Zika-related funding received from
the U.S. Biomedical Advanced Research Development Authority
(“BARDA”) of $1.5 million and cost reimbursement under the
Company’s charitable support agreement with the Gates Foundation of
$529,000, which is separate from the support payments mentioned
above. Other revenues in the first quarter of 2017 consisted only
of BARDA funding.
Consolidated gross margin was 58% and 62% for
the three months ended March 31, 2018 and 2017, respectively. Gross
margin was lower for the current quarter primarily due to an
increase in lower margin product sales and a decrease in the
absorption of fixed costs as a result of lower production levels in
the first quarter of 2018, partially offset by an increase in other
revenues and lower scrap and spoilage costs as compared to the
first quarter of 2017.
Consolidated operating expenses increased to
$25.0 million during the first quarter of 2018 compared to $4.4
million in the first quarter of 2017. This increase was largely due
to the inclusion in the current quarter of $6.4 million of
transition costs as discussed above and the absence of the $12.5
million litigation gain associated with the settlement of
litigation against Ancestry.com DNA that was included in the first
quarter of 2017. There was no similar gain recorded during
the first quarter of 2018. The first quarter of 2018 also
included higher spending on the Company’s Ebola and Zika products
and higher staffing and consulting costs, partially offset by a
reduction in legal expenses.
The Company reported an operating loss of
$498,000 in the first quarter of 2018, compared to operating income
of $15.9 million in the first quarter of 2017.
Income tax expense was $2.0 million during the
first quarter of 2018 compared to $3.9 million recorded in the
first quarter of 2017. Income tax expense in the first
quarter of 2017 included the additional taxes due as a result of
the $12.5 million litigation settlement gain. Income tax
expense in the first quarter of 2018 reflects the higher pre-tax
income generated by the Company’s Canadian subsidiary.
The Company’s cash and investment balance
totaled $178.4 million at March 31, 2018, compared to $176.6
million at December 31, 2017. Working capital was $175.6
million at March 31, 2018, compared to $189.7 million at
December 31, 2017. For the three months ended March 31,
2018, the Company generated $7.6 million in cash from
operations.
Second Quarter 2018 Outlook
The Company expects consolidated net revenues to
range from $42.0 million to $42.5 million and is
projecting consolidated net income of approximately $0.03 per share
for the second quarter of 2018. These results include
approximately $1.7 million in final management transition costs
projected for the quarter.
Financial Data
Condensed Consolidated Financial
Data(In thousands, except per-share
data)
Unaudited
|
Three months ended |
|
|
March 31, |
|
|
2018 |
|
|
2017 |
|
Results of
Operations |
|
|
|
|
|
|
|
Net revenues |
$ |
41,987 |
|
|
$ |
32,546 |
|
Cost of products
sold |
|
17,520 |
|
|
|
12,236 |
|
Gross
profit |
|
24,467 |
|
|
|
20,310 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
|
4,075 |
|
|
|
2,970 |
|
Sales and
marketing |
|
7,499 |
|
|
|
6,877 |
|
General
and administrative |
|
13,391 |
|
|
|
7,092 |
|
Gain on
litigation settlement |
|
— |
|
|
|
(12,500 |
) |
Total
operating expenses |
|
24,965 |
|
|
|
4,439 |
|
Operating
income (loss) |
|
(498 |
) |
|
|
15,871 |
|
Other income |
|
412 |
|
|
|
467 |
|
Income (loss) before
income taxes |
|
(86 |
) |
|
|
16,338 |
|
Income tax expense |
|
2,033 |
|
|
|
3,897 |
|
Net income (loss) |
$ |
(2,119 |
) |
|
$ |
12,441 |
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.03 |
) |
|
$ |
0.22 |
|
Diluted |
$ |
(0.03 |
) |
|
$ |
0.21 |
|
Weighted average
shares: |
|
|
|
|
|
|
|
Basic |
|
60,865 |
|
|
|
56,929 |
|
Diluted |
|
60,865 |
|
|
|
58,772 |
|
|
|
|
|
|
|
|
|
Summary of Net Revenues by Market and Product
(Unaudited)
|
|
|
|
Three Months Ended March 31, |
|
|
Dollars |
|
|
|
|
Percentage of Total Net Revenues |
|
|
2018 |
|
2017 |
|
%Change |
|
|
2018 |
|
|
2017 |
|
Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infectious disease
testing |
$ |
14,170 |
|
$ |
14,583 |
|
(3 |
)% |
|
34 |
% |
|
45 |
% |
Risk assessment
testing |
|
3,002 |
|
|
3,130 |
|
(4 |
) |
|
7 |
|
|
10 |
|
Cryosurgical
systems |
|
2,785 |
|
|
3,063 |
|
(9 |
) |
|
6 |
|
|
9 |
|
Molecular collection
systems |
|
18,361 |
|
|
10,706 |
|
72 |
|
|
44 |
|
|
33 |
|
Net
product revenues |
|
38,318 |
|
|
31,482 |
|
22 |
|
|
91 |
|
|
97 |
|
Other |
|
3,669 |
|
|
1,064 |
|
245 |
|
|
9 |
|
|
3 |
|
Net
revenues |
$ |
41,987 |
|
$ |
32,546 |
|
29 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
|
2017 |
|
% Change |
|
OraQuick®
Revenues |
|
|
|
|
|
|
|
|
|
Domestic
HIV |
$ |
3,344 |
|
$ |
3,812 |
|
|
(12 |
)% |
International HIV |
|
5,737 |
|
|
2,644 |
|
|
117 |
|
Domestic
OTC HIV |
|
1,632 |
|
|
1,542 |
|
|
6 |
|
Net HIV
revenues |
|
10,713 |
|
|
7,998 |
|
|
34 |
|
Domestic
HCV |
|
1,627 |
|
|
1,709 |
|
|
(5 |
) |
International HCV |
|
665 |
|
|
4,402 |
|
|
(85 |
) |
Net HCV
revenues |
|
2,292 |
|
|
6,111 |
|
|
(62 |
) |
Net
product revenues |
$ |
13,005 |
|
$ |
14,109 |
|
|
(8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
|
2017 |
|
%Change |
|
Cryosurgical
Systems Revenues |
|
|
|
|
|
|
|
|
|
Domestic
professional |
$ |
875 |
|
$ |
1,496 |
|
|
(42 |
)% |
International
professional |
|
150 |
|
|
130 |
|
|
15 |
|
Domestic OTC |
|
289 |
|
|
285 |
|
|
1 |
|
International OTC |
|
1,471 |
|
|
1,152 |
|
|
28 |
|
Net
product revenues |
$ |
2,785 |
|
$ |
3,063 |
|
|
(9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
|
2017 |
|
% Change |
|
Molecular
Collection Systems Revenues |
|
|
|
|
|
|
|
|
|
Commercial
Genomics |
$ |
14,256 |
|
$ |
7,254 |
|
|
97 |
% |
Academic Genomics |
|
2,832 |
|
|
2,685 |
|
|
5 |
|
Microbiome |
|
1,273 |
|
|
767 |
|
|
66 |
|
Net
product revenues |
$ |
18,361 |
|
$ |
10,706 |
|
|
72 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
|
|
2017 |
|
% Change |
|
Other
Revenues |
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
1,602 |
|
|
$ |
- |
|
N/A |
|
BARDA funding |
|
1,538 |
|
|
|
1,064 |
|
45 |
% |
Charitable support
reimbursement |
|
529 |
|
|
|
- |
|
N/A |
|
Other
revenues |
$ |
3,669 |
|
|
$ |
1,064 |
|
245 |
% |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
March 31, 2018 |
|
December 31, 2017 |
Assets |
|
|
|
|
|
Cash and cash
equivalents |
$ |
64,065 |
|
$ |
72,869 |
Short-term
investments |
|
79,446 |
|
|
83,028 |
Accounts receivable,
net |
|
28,197 |
|
|
42,521 |
Inventories |
|
20,907 |
|
|
19,343 |
Other current
assets |
|
4,139 |
|
|
4,144 |
Property and equipment,
net |
|
22,975 |
|
|
21,372 |
Intangible assets,
net |
|
7,390 |
|
|
8,223 |
Goodwill |
|
19,584 |
|
|
20,083 |
Long-term
investments |
|
34,880 |
|
|
20,690 |
Other non-current
assets |
|
4,340 |
|
|
3,928 |
Total
assets |
$ |
285,923 |
|
$ |
296,201 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
Accounts payable |
$ |
9,622 |
|
$ |
10,228 |
Deferred revenue |
|
1,799 |
|
|
1,314 |
Other current
liabilities |
|
9,765 |
|
|
20,695 |
Other non-current
liabilities |
|
4,258 |
|
|
3,932 |
Deferred income
taxes |
|
1,761 |
|
|
1,951 |
Stockholders’
equity |
|
258,718 |
|
|
258,081 |
Total
liabilities and stockholders’ equity |
$ |
285,923 |
|
$ |
296,201 |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, |
Additional
Financial Data (Unaudited) |
2018 |
|
2017 |
Capital
expenditures |
$ |
1,897 |
|
$ |
878 |
Depreciation and
amortization |
$ |
1,868 |
|
$ |
1,419 |
Stock-based
compensation |
$ |
7,483 |
|
$ |
1,518 |
Cash provided by
operating activities |
$ |
7,636 |
|
$ |
12,619 |
|
|
|
|
|
|
Conference Call
The Company will host a conference call and
audio webcast for analysts and investors to discuss the Company’s
2018 first quarter financial results, certain business developments
and financial guidance for the second quarter of 2018, beginning
today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). On the
call will be Stephen S. Tang, Ph.D., President and Chief Executive
Officer, and Ronald H. Spair, Chief Financial Officer and Chief
Operating Officer. The call will include prepared remarks by
management and a question and answer session.
In order to listen to the conference call,
please either dial 844-831-3030 (Domestic) or 315-625-6887
(International) and reference Conference ID #4298046 or go to
OraSure Technologies’ web site, www.orasure.com, and click on the
Investor Relations page. Please click on the webcast link and
follow the prompts for registration and access 10 minutes prior to
the call. A replay of the call will be archived on OraSure
Technologies’ web site shortly after the call has ended and will be
available for seven days. A replay of the call can also be accessed
until midnight, May 9, 2018, by dialing 855-859-2056 (Domestic) or
404-537-3406 (International) and entering the Conference ID
#4298046.
About OraSure Technologies
OraSure Technologies is a leader in the
development, manufacture and distribution of point-of-care
diagnostic and collection devices and other technologies designed
to detect or diagnose critical medical conditions. Its
first-to-market, innovative products include rapid tests for the
detection of antibodies to HIV and HCV on the OraQuick® platform,
oral fluid sample collection, stabilization and preparation
products for molecular diagnostic applications, and oral fluid
laboratory tests for detecting various drugs of abuse. OraSure’s
portfolio of products is sold globally to various clinical
laboratories, hospitals, clinics, community-based organizations and
other public health organizations, research and academic
institutions, distributors, government agencies, physicians’
offices, commercial and industrial entities and consumers. The
Company’s products enable healthcare providers to deliver critical
information to patients, empowering them to make decisions to
improve and protect their health.
Important Information
This press release contains certain
forward-looking statements, including with respect to expected
revenues and earnings/loss per share. Forward-looking statements
are not guarantees of future performance or results. Known and
unknown factors that could cause actual performance or results to
be materially different from those expressed or implied in these
statements include, but are not limited to: ability to market and
sell products, whether through our internal, direct sales force or
third parties; ability to manufacture products in accordance with
applicable specifications, performance standards and quality
requirements; ability to obtain, and timing and cost of obtaining,
necessary regulatory approvals for new products or new indications
or applications for existing products; ability to comply with
applicable regulatory requirements; ability to effectively resolve
warning letters, audit observations and other findings or comments
from the U.S. Food and Drug Administration (“FDA”) or other
regulators; changes in relationships, including disputes or
disagreements, with strategic partners or other parties and
reliance on strategic partners for the performance of critical
activities under collaborative arrangements; ability to meet
increased demand for the Company’s products; impact of significant
customer concentration in the genomics business; impact of
increased reliance on U.S. government contracts; failure of
distributors or other customers to meet purchase forecasts,
historic purchase levels or minimum purchase requirements for our
products; impact of replacing distributors; inventory levels at
distributors and other customers; ability of the Company to achieve
its financial and strategic objectives and continue to increase its
revenues, including the ability to expand international sales;
ability to identify, complete, integrate and realize the full
benefits of future acquisitions; impact of competitors, competing
products and technology changes; impact of negative economic
conditions; reduction or deferral of public funding available to
customers; competition from new or better technology or lower cost
products; ability to develop, commercialize and market new
products; market acceptance of oral fluid testing, collection or
other products; changes in market acceptance of products based on
product performance or other factors, including changes in testing
guidelines, algorithms or other recommendations by the Centers for
Disease Control and Prevention (“CDC”) or other agencies; ability
to fund research and development and other products and operations;
ability to obtain and maintain new or existing product distribution
channels; reliance on sole supply sources for critical products and
components; availability of related products produced by third
parties or products required for use of our products; ability to
maintain sustained profitability; ability to utilize net operating
loss carry forwards or other deferred tax assets; volatility of the
Company’s stock price; uncertainty relating to patent protection
and potential patent infringement claims; uncertainty and costs of
litigation relating to patents and other intellectual property;
availability of licenses to patents or other technology; ability to
enter into international manufacturing agreements; obstacles to
international marketing and manufacturing of products; ability to
sell products internationally, including the impact of changes in
international funding sources and testing algorithms; adverse
movements in foreign currency exchange rates; loss or impairment of
sources of capital; ability to meet financial covenants in credit
agreements; ability to attract and retain qualified personnel;
exposure to product liability and other types of litigation;
changes in international, federal or state laws and regulations;
customer consolidations and inventory practices; equipment failures
and ability to obtain needed raw materials and components; the
impact of terrorist attacks and civil unrest; and general
political, business and economic conditions. These and other
factors that could affect our results are discussed more fully in
the Company’s Securities and Exchange Commission (“SEC”) filings,
including our registration statements, Annual Report on Form 10-K
for the year ended December 31, 2017, Quarterly Reports on
Form 10-Q, and other filings with the SEC. Although forward-looking
statements help to provide information about future prospects,
readers should keep in mind that forward-looking statements may not
be reliable. The forward-looking statements are made as of the date
of this press release and OraSure Technologies undertakes no duty
to update these statements.
Company Contact:
Ronald H. Spair Chief Financial
Officer610-882-1820Investorinfo@orasure.com www.orasure.com
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