OraSure Technologies, Inc. (NASDAQ: OSUR), a leader in
point-of-care diagnostic tests, specimen collection devices and
microbiome laboratory and analytical services, today announced its
financial results for the three months ended March 31, 2020 and
provided an update on COVID-19 activities.
Financial and Business
Highlights
- Net revenues for the first quarter of 2020 were $31.6 million,
a 5% increase from the first quarter of 2019. Net product and
services revenues were $30.9 million, a 9% increase from the first
quarter of 2019. Excluding cryosurgical revenues, the line of
business the Company sold in August 2019, and Diversigen revenues,
which the Company acquired in November 2019, net revenues and
product and services revenues grew 8% and 13%, respectively, from
the first quarter of 2019.
- Other revenue highlights include:- International sales of
the Company’s OraQuick® HIV products increased 74% compared to the
first quarter of 2019. This increase was primarily the result of
higher sales of the Company’s OraQuick® HIV Self-Test.-
Total genomics revenues were $9.1 million during the first quarter
of 2020, an increase of 14% from the first quarter of 2019.-
Total laboratory service revenues in the first quarter of 2020 were
$2.4 million compared to $717,000 in the first quarter of 2019.
Laboratory services in 2020 include the service revenues generated
by the Company’s subsidiaries, CoreBiome, Inc. and Diversigen,
Inc.
- Net loss for the first quarter of 2020 was $7.3 million, or
$0.12 per share on a fully-diluted basis, compared to a net loss of
$3.3 million, or $0.05 per share on a fully-diluted basis, for the
first quarter of 2019. Net loss for the first quarter of 2020
included a $1.1 million non-cash pre-tax charge associated with the
change in fair value of acquisition-related contingent
consideration. The net impact of the change in the fair value of
contingent consideration in the current quarter was approximately
$0.02 per share on a fully-diluted basis. Net loss in the first
quarter of 2019 included a $1.3 million non-cash pre-tax charge
associated with the change in the fair value of acquisition-related
contingent consideration and $597,000 of acquisition-related
transaction costs. The combined impact of these charges
reduced fully diluted earnings per share by approximately
$0.03.
- Cash and investments totaled $176.2 million at March 31,
2020.
COVID-19 Update
OraSure is working in several ways to improve and increase
testing for the novel coronavirus (“COVID-19”):
- The Company was awarded a $710,310 contract from
the Biomedical Advanced Research and Development
Authority (BARDA), part of the U.S. Department of Health
and Human Services (HHS), to develop a pan-SARS-coronavirus
rapid antigen in-home self-test that uses oral fluid samples.
This support from BARDA will enable OraSure to file for
U.S. food and Drug Administration (FDA) Emergency Use Authorization
(EUA), potentially allowing for an in-home self-test to debut into
the U.S. market. The Company anticipates having the test on the
market by Fall 2020, if its development efforts are
successful.
- The Company is also developing an Enzyme-Linked Immunosorbent
Assay (ELISA) for the detection of human anti-SARS-CoV-2 antibodies
in oral fluid specimens. The oral fluid ELISA could dramatically
increase the throughput of COVID-19 antibody testing. The Company
expects to file for FDA EUA for the ELISA test in June 2020.
- The Company believes that oral samples collected using its
currently marketed liquid saliva collection kits or oral swab
collectors could be a suitable alternative to nasopharyngeal or
oropharyngeal swabs for COVID-19 testing. The Company’s molecular
business unit is working with several labs and researchers to
determine if its sample collection technologies can be used to
safely collect and transport COVID-19 samples. In addition, several
customers are currently validating various OraSure/DNA Genotek
products for COVID-19 testing. If the data supports it, the Company
will explore these avenues for COVID-19 sample collection and
testing.
- The Company is also seeing increased demand for its molecular
collection products from customers who conduct both saliva and
blood-based testing. As it becomes increasingly difficult to
collect blood in clinics or healthcare settings, these customers
are increasingly relying on the saliva collection alternative,
presenting another opportunity for OraSure’s product lines.
“Our underlying business was strong in the first
quarter as evidenced by year over year double-digit growth in both
Infectious Disease Testing and Molecular Collection Systems. We are
encouraged by the continued strength of our International HIV
Self-test franchise as well as our genomics business,” said Stephen
S. Tang, Ph.D., President and Chief Executive Officer.
“Nevertheless, we do expect downward revenue
pressure in certain parts of the business as customers repurpose
funding and testing and research projects are deferred as a result
of the pandemic. The good news is that we also see potentially
significant opportunity from COVID-19 across our business which may
more than offset any revenue declines. For example, public health
customers in the U.S. are buying more of our In-Home HIV tests to
allow continued HIV testing by individuals while adhering to social
distancing requirements. A number of our molecular customers are
already placing increased orders for our saliva collection and oral
swab products as they move from blood collection to saliva
collection as a result of the difficulties in collecting blood
samples due to the stay-at-home and social distancing
restrictions. In addition, with the massive amount of testing
likely required to get the COVID-19 pandemic under control and
restart our economy, we believe our pan-SARS coronavirus rapid
antigen in-home self-test and ELISA antibody test, once developed
and approved by the FDA, as well as expanded use of our saliva
collection products once validated, could play significant roles in
helping end the pandemic,” Dr. Tang continued.
Financial Results
Net product and service revenues for the first
quarter of 2020 increased 9% from the comparable period of 2019,
primarily as a result of higher international HIV Self-Test sales,
higher sales of the Company’s genomics products, and increased
laboratory services revenues. The increased sales were partially
offset by the absence of cryosurgical sales in the quarter, as the
cryosurgical systems business was sold in August 2019 and by lower
world-wide HCV product sales.
Royalty income from a litigation settlement
associated with a molecular collection device was $446,000 and
$1.1 million for the first quarter of 2020 and 2019, respectively.
Other revenues were $264,000 and $706,000 for the first quarter of
2020 and 2019 respectively.
Gross profit percentage was 51% and 60% for the
three months ended March 31, 2020 and 2019, respectively.
Gross profit percentage in the first quarter of 2020 was negatively
affected by a less favorable product mix as a result of higher
sales of lower gross profit products and services, increased
international freight costs, higher scrap and spoilage expense, and
the decline in other revenues which contribute 100% to our gross
profit percentage.
For the three months ended March 31, 2020,
operating expenses were $24.2 million, an increase of $2.3 million
from the $21.9 million reported for the three months ended March
31, 2019. This increase was due primarily to increased staffing
costs, higher lab supply and consulting costs in support of
bioinformatics and new product initiatives, higher legal fees, and
the inclusion of operating expenses incurred by Diversigen.
The Company generated an operating loss of $8.0
million in the first quarter of 2020 compared to an operating loss
of $3.8 million in the first quarter of 2019.
During the first quarter of 2020, the Company
recorded income tax expense of $712,000 compared to an income tax
benefit of $29,000 recorded in the first quarter of 2019. This tax
increase largely reflects the higher pre-tax income generated by
the Company’s Canadian subsidiary.
The Company’s cash and investment balance
totaled $176.2 million at March 31, 2020, compared to $189.8
million at December 31, 2019. For the year ended March 31,
2020, the Company generated $2.5 million in cash from operations
compared with $528,000 in the same period of 2019.
Full- Year 2020 Guidance
The Company is withdrawing its previously announced full-year
2020 financial guidance because of the unpredictable impact of the
COVID-19 global pandemic on its results of operations. Although the
Company may be able to capture new revenue opportunities from the
initiatives described above, the pandemic is also likely to affect
certain business lines negatively, and the extent of either effect
is impossible to estimate reliably at this time.
Financial Data
Condensed Consolidated Financial
Data(in thousands, except per-share
data)
(Unaudited)
|
Three Months Ended |
|
|
March 31, |
|
|
2020 |
|
|
2019 |
|
Results of Operations |
|
|
|
|
|
|
|
Net revenues |
$ |
31,596 |
|
|
$ |
30,122 |
|
Cost of products sold |
|
15,465 |
|
|
|
12,042 |
|
Gross profit |
|
16,131 |
|
|
|
18,080 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
5,644 |
|
|
|
4,371 |
|
Sales and marketing |
|
7,369 |
|
|
|
7,295 |
|
General and administrative |
|
10,054 |
|
|
|
8,930 |
|
Change in fair value of acquisition-related contingent
consideration |
|
1,110 |
|
|
|
1,295 |
|
Total operating expenses |
|
24,177 |
|
|
|
21,891 |
|
Operating loss |
|
(8,046 |
) |
|
|
(3,811 |
) |
Other income |
|
1,430 |
|
|
|
524 |
|
Loss before income taxes |
|
(6,616 |
) |
|
|
(3,287 |
) |
Income tax expense (benefit) |
|
712 |
|
|
|
(29 |
) |
Net loss |
$ |
(7,328 |
) |
|
$ |
(3,258 |
) |
Loss per share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.12 |
) |
|
$ |
(0.05 |
) |
Diluted |
$ |
(0.12 |
) |
|
$ |
(0.05 |
) |
Weighted average shares: |
|
|
|
|
|
|
|
Basic |
|
61,937 |
|
|
|
61,531 |
|
Diluted |
|
61,927 |
|
|
|
61,531 |
|
|
|
|
|
|
|
|
|
Summary of Net Revenues by Market and Product
(Unaudited)
|
|
|
|
Three Months Ended
March 31, |
|
|
Dollars |
|
|
|
|
Percentage of Total Net Revenues |
|
|
2020 |
|
2019 |
|
%Change |
|
|
2020 |
|
2019 |
|
Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
Infectious disease testing |
$ |
14,664 |
|
$ |
12,338 |
|
19 |
% |
|
46 |
% |
41 |
% |
Risk assessment testing |
|
3,000 |
|
|
2,836 |
|
6 |
|
|
9 |
|
9 |
|
Cryosurgical systems |
|
— |
|
|
2,575 |
|
(100 |
) |
|
— |
|
9 |
|
Molecular collection systems |
|
13,222 |
|
|
10,583 |
|
25 |
|
|
43 |
|
35 |
|
Net product and service revenues |
|
30,886 |
|
|
28,332 |
|
9 |
|
|
98 |
|
94 |
|
Royalty income |
|
446 |
|
|
1,084 |
|
(59 |
) |
|
1 |
|
4 |
|
Other |
|
264 |
|
|
706 |
|
(63 |
) |
|
1 |
|
2 |
|
Net revenues |
$ |
31,596 |
|
$ |
30,122 |
|
5 |
% |
|
100 |
% |
100 |
% |
|
* Note cryosurgical
systems business divested in August 2019. |
|
Three Months Ended |
|
|
March 31, |
|
|
2020 |
|
2019 |
|
%Change |
|
OraQuick®
Revenues |
|
|
|
|
|
|
|
|
Domestic HIV |
$ |
4,216 |
|
$ |
4,304 |
|
(2 |
)% |
International HIV |
|
6,949 |
|
|
4,001 |
|
74 |
|
Net HIV revenues |
|
11,165 |
|
|
8,305 |
|
34 |
|
Domestic HCV |
|
1,494 |
|
|
1,828 |
|
(18 |
) |
International HCV |
|
1,097 |
|
|
1,457 |
|
(25 |
) |
Net HCV revenues |
|
2,591 |
|
|
3,285 |
|
(21 |
) |
Net product revenues |
$ |
13,756 |
|
$ |
11,590 |
|
19 |
% |
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2020 |
|
2019 |
|
%Change |
|
Molecular Collection Systems Revenues |
|
|
|
|
|
|
|
|
Genomics |
$ |
9,135 |
|
$ |
8,047 |
|
14 |
% |
Microbiome |
|
1,645 |
|
|
1,609 |
|
2 |
|
Other product revenues |
|
27 |
|
|
210 |
|
(87 |
) |
Laboratory services |
|
2,415 |
|
|
717 |
|
237 |
|
Net product and service revenues |
|
13,222 |
|
|
10,583 |
|
25 |
|
Other |
|
582 |
|
|
1,306 |
|
(55 |
) |
Net revenues |
$ |
13,804 |
|
$ |
11,889 |
|
16 |
% |
|
Condensed Consolidated Balance Sheets
(Unaudited)
|
March 31,
2020 |
|
December 31,
2019 |
Assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
83,365 |
|
$ |
75,715 |
Short-term investments |
|
82,735 |
|
|
80,623 |
Accounts receivable, net |
|
27,861 |
|
|
36,948 |
Inventories |
|
22,694 |
|
|
23,155 |
Other current assets |
|
6,790 |
|
|
8,109 |
Property, plant and equipment,
net |
|
31,829 |
|
|
30,339 |
Intangible assets, net |
|
15,746 |
|
|
14,674 |
Goodwill |
|
34,544 |
|
|
36,201 |
Long-term investments |
|
10,070 |
|
|
33,420 |
Other non-current assets |
|
9,438 |
|
|
10,111 |
Total assets |
$ |
325,072 |
|
$ |
349,295 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
Accounts payable |
$ |
6,881 |
|
$ |
9,567 |
Deferred revenue |
|
4,312 |
|
|
3,713 |
Contingent consideration
obligation |
|
1,220 |
|
|
3,500 |
Other current liabilities |
|
13,926 |
|
|
15,933 |
Other non-current
liabilities |
|
8,581 |
|
|
9,437 |
Stockholders’ equity |
|
290,152 |
|
|
307,145 |
Total liabilities and stockholders’ equity |
$ |
325,072 |
|
$ |
349,295 |
Additional Financial Data (Unaudited)
|
Three Months Ended |
|
March 31, |
|
2020 |
|
2019 |
Capital expenditures |
$ |
2,595 |
|
$ |
2,628 |
Depreciation and
amortization |
$ |
2,197 |
|
$ |
1,726 |
Stock-based compensation |
$ |
1,376 |
|
$ |
1,231 |
Cash provided by operating
activities |
$ |
2,499 |
|
$ |
528 |
Conference Call
The Company will host a conference call and
audio webcast for analysts and investors to discuss the Company’s
2020 first quarter results, updated financial guidance, and certain
business developments, beginning today at 5:00 p.m. Eastern Time
(2:00 p.m. Pacific Time). On the call will be Dr. Stephen S. Tang,
President and Chief Executive Officer, and Roberto Cuca, Chief
Financial Officer. The call will include prepared remarks by
management and a question and answer session.
In order to listen to the conference call,
please dial 844-831-3030 (Domestic) or 315-625-6887 (International)
and reference Conference ID #5498040 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 13,
2020, by dialing 855-859-2056 (Domestic) or 404-537-3406
(International) and entering the Conference ID #5498040.
About OraSure Technologies
OraSure Technologies empowers the global
community to improve health and wellness by providing access to
accurate essential information. Together with its wholly-owned
subsidiaries (DNA Genotek, CoreBiome, Diversigen and Novosanis),
OraSure provides its customers with end-to-end solutions that
encompass tools, services and diagnostics. The OraSure family of
companies is a leader in the development, manufacture and
distribution of rapid diagnostic tests, sample collection and
stabilization devices, and molecular product and services solutions
designed to discover and detect critical medical conditions.
OraSure’s portfolio of products is sold globally to clinical
laboratories, hospitals, physician’s offices, clinics, public
health and community-based organizations, research institutions,
distributors, government agencies, pharma, commercial entities and
direct to consumers.
For more information on OraSure Technologies,
please visit www.orasure.com.
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 successfully
manage and integrate acquisitions of other companies in a manner
that complements or leverages our existing business, or otherwise
expands or enhances our portfolio of products and our end-to-end
service offerings, and the diversion of management’s attention from
our ongoing business and regular business responsibilities to
effect such integration; the expected economic benefits of
acquisitions (and increased returns for our stockholders),
including that the anticipated synergies, revenue enhancement
strategies and other benefits from the acquisitions may not be
fully realized or may take longer to realize than expected and our
actual integration costs may exceed our estimates; impact of
increased or different risks arising from the acquisition of
companies located in foreign countries; ability to market and sell
products, whether through our internal, direct sales force or third
parties; impact of significant customer concentration in the
genomics business; failure of distributors or other customers to
meet purchase forecasts, historic purchase levels or minimum
purchase requirements for our products; 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; the impact of the novel
coronavirus (“COVID-19”) pandemic on our business and our ability
to successfully develop new products, validate the expanded use of
existing collector products and commercialize such products for
COVID-19 tests; 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 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; 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 or urine
testing, collection or other products; market acceptance and uptake
of microbiome informatics, microbial genetics technology and
related analytics services; 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; impact of contracting with the U.S.
government; impact of negative economic conditions; 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 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 our Securities and Exchange Commission (“SEC”) filings,
including our registration statements, Annual Report on Form 10-K
for the year ended December 31, 2019, 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. Readers are cautioned not to place undue reliance on
the forward-looking statements. The forward-looking
statements are made as of the date of this press release and we
undertake no duty to update these statements.
Company Contacts:
Roberto Cuca |
Jeanne Mell |
Chief Financial Officer610-882-1820 |
VP Corporate
Communications484-353-1575 |
Investorinfo@orasure.com |
media@orasure.com |
www.orasure.com |
www.orasure.com |
OraSure Technologies (NASDAQ:OSUR)
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