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 three and nine months
ended September 30, 2015.
Financial Highlights
- Consolidated net revenues for the third quarter of 2015 were
$29.9 million, a 7% increase from the comparable quarter of 2014.
Consolidated net revenues for the nine months ended September 30,
2015 were $87.3 million, a 12% increase from the comparable period
of 2014.
- The Company’s molecular collection systems subsidiary, DNA
Genotek (“DNAG”), contributed $7.3 million in net revenues during
the third quarter of 2015, which represents a 7% increase over the
third quarter of 2014. Net revenues from this segment for the
nine months ended September 30, 2015 were $22.1 million, a 26%
increase from the comparable period in 2014.
- Net domestic revenues from sales of the Company’s OraQuick®
rapid HCV test were $1.9 million for the third quarter of 2015,
representing a 47% increase over the third quarter of 2014 and 13%
sequential growth from the second quarter of 2015. Net
domestic product revenues for this product were $4.8 million for
the nine months ended September 30, 2015, a 51% increase from the
comparable period in 2014. Total HCV-related revenues,
including exclusivity payments recognized under the HCV
co-promotion agreement with AbbVie, were $6.3 million and $17.5
million for the third quarter and nine months of 2015,
respectively, as compared to $5.2 million and $9.7 million for the
third quarter and nine months of 2014, respectively.
- Consolidated net income for the third quarter of 2015 was $1.5
million, or $0.03 per share on a fully-diluted basis, which
compares to consolidated net income of $1.1 million, or $0.02 per
share on a fully-diluted basis, for the third quarter of
2014. Consolidated net income for the nine months ended
September 30, 2015 was $3.6 million, or $0.06 per share on a
fully-diluted basis, which compares to a consolidated net loss of
$2.0 million, or $0.04 per share, for the comparable period of
2014. The Company’s bottom line results for the nine months
of 2014 included a $5.5 million payment received as a result of the
termination of the Company’s drug assay collaboration with Roche
Diagnostics, which was recorded as an offset to expenses in the
second quarter of 2014.
- Cash and short-term investments totaled $108.2 million and
working capital amounted to $112.1 million at September 30,
2015.
”We are pleased with the Company’s financial
results for the third quarter,” said Douglas A. Michels, President
and CEO of OraSure Technologies. “Our molecular collection
systems segment continued its solid performance with a second
consecutive quarter of more than $7 million in revenues. In
addition, our HCV business once again generated strong quarterly
growth on both a year-over-year basis and sequentially when
compared to the second quarter of this year. We expect these
businesses will continue to be the primary growth drivers for our
Company.”
Financial Results
Consolidated net product revenues for the third
quarter and first nine months of 2015 increased 5% and 3% over the
comparable periods of 2014, respectively, primarily as a result of
higher sales of the Company’s molecular collection systems,
OraQuick® HCV and Intercept® products. These increases were
partially offset by lower OraQuick® professional HIV product sales
in both periods and lower cryosurgical systems sales during the
nine-month period.
Consolidated other revenues for the third
quarter and first nine months of 2015 were $4.1 million and $11.5
million, respectively. Other revenues in the current quarter
included $3.4 million of exclusivity payments recognized under the
Company’s HCV co-promotion agreement with AbbVie and $750,000 of
Ebola-related funding received from the U.S. Department of Health
and Human Services Office of the Assistant Secretary for
Preparedness and Response’s Biomedical Advanced Research and
Development Authority (“BARDA”). Other revenue in the first
nine months of 2015 included $10.0 million of AbbVie exclusivity
payments and $1.5 million in BARDA funding. Other revenues in
the third quarter and first nine months of 2014 included $3.4
million and $4.2 million of AbbVie exclusivity payments,
respectively.
Consolidated gross margin for the three and nine
months ended September 30, 2015 was 69% and 67%,
respectively. Consolidated gross margin for the three and
nine months ended September 30, 2014 was 67% and 63%, respectively.
Gross margin for the current quarter increased primarily due to a
reduction in royalty expense and the increase in other revenues,
partially offset by the impact of a less favorable product mix.
Gross margin for the nine-month period improved largely due
to the $7.4 million increase in other revenues and a reduction in
royalty expense. Other revenues contributed approximately 500
and 200 basis points to gross margin for the nine months ended
September 30, 2015 and 2014, respectively.
Consolidated operating expenses increased to
$19.1 million during the third quarter of 2015 compared to $17.8
million in the comparable period of 2014. This increase was
largely due to costs associated with the AbbVie co-promotion
agreement along with higher legal costs, partially offset by lower
research and development expenses and a favorable change in the
exchange rate between the Canadian and U.S. dollar.
For the nine months ended September 30, 2015,
consolidated operating expenses were $54.4 million, an increase
from the $50.9 million reported for the nine months ended September
30, 2014. This increase was largely due to the absence of the
$5.5 million Roche termination payment received in 2014, higher
legal costs, increased research and development expenses, and costs
associated with the AbbVie co-promotion agreement, partially offset
by lower promotional expenses for the Company’s OraQuick® In-Home
HIV test and the impact of a favorable change in exchange
rates. Promotional expenses for the OraQuick® In-Home HIV
test were $1.3 million and $7.7 million for the first nine months
of 2015 and 2014, respectively.
The Company’s cash and short-term investment
balance totaled $108.2 million at September 30, 2015 compared to
$97.9 million at December 31, 2014. Working capital was
$112.1 million at September 30, 2015 compared to $104.8 million at
December 31, 2014. For the nine months ended September 30,
2015, the Company generated $15.1 million in cash from
operations.
Fourth Quarter 2015
Outlook
The Company expects consolidated net revenues to
range from $29.5 to $30.0 million and is projecting a consolidated
net income of between $0.03 and $0.04 per share.
Financial Data
Condensed Consolidated Financial Data |
|
(In thousands, except per-share data) |
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
Three months ended |
Nine months ended |
|
|
September 30, |
September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
Results of
Operations |
|
|
|
|
|
Net revenues |
$ |
29,861 |
|
$ |
27,845 |
|
$ |
87,337 |
|
$ |
77,783 |
|
|
Cost of products sold |
|
9,192 |
|
|
9,140 |
|
|
28,974 |
|
|
29,135 |
|
|
Gross profit |
|
20,669 |
|
|
18,705 |
|
|
58,363 |
|
|
48,648 |
|
|
Operating expenses: |
|
|
|
|
|
Research and development |
|
2,525 |
|
|
2,990 |
|
|
8,961 |
|
|
8,242 |
|
|
Sales and marketing |
|
9,677 |
|
|
9,216 |
|
|
26,465 |
|
|
30,828 |
|
|
General and administrative |
|
6,931 |
|
|
5,617 |
|
|
18,971 |
|
|
17,317 |
|
|
Gain on contract termination |
|
- |
|
|
- |
|
|
- |
|
|
(5,500 |
) |
|
Total operating expenses |
|
19,133 |
|
|
17,823 |
|
|
54,397 |
|
|
50,887 |
|
|
Operating income (loss) |
|
1,536 |
|
|
882 |
|
|
3,966 |
|
|
(2,239 |
) |
|
Other income |
|
81 |
|
|
268 |
|
|
395 |
|
|
244 |
|
|
Income (loss) before
income taxes |
|
1,617 |
|
|
1,150 |
|
|
4,361 |
|
|
(1,995 |
) |
|
Income tax expense
(benefit) |
|
147 |
|
|
10 |
|
|
810 |
|
|
(33 |
) |
|
Net income (loss) |
$ |
1,470 |
|
$ |
1,140 |
|
$ |
3,551 |
|
$ |
(1,962 |
) |
|
Earnings (loss) per
share: |
|
|
|
|
|
Basic |
$ |
0.03 |
|
$ |
0.02 |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
|
Diluted |
$ |
0.03 |
|
$ |
0.02 |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
Weighted average
shares: |
|
|
|
|
|
Basic |
|
56,482 |
|
|
56,018 |
|
|
56,427 |
|
|
55,897 |
|
|
Diluted |
|
56,692 |
|
|
56,666 |
|
|
56,900 |
|
|
55,897 |
|
|
|
|
|
|
|
|
Summary of Net Revenues by Market and Product
(Unaudited)
|
|
|
Three Months Ended September
30, |
|
|
Dollars |
|
Percentage of Total Net Revenues |
|
Market |
|
2015 |
|
|
2014 |
|
% Change |
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
Infectious disease
testing |
$ |
11,297 |
|
$ |
11,183 |
|
|
1 |
% |
|
38 |
% |
|
40 |
% |
|
Substance abuse
testing |
|
2,955 |
|
|
2,149 |
|
|
38 |
|
|
10 |
|
|
8 |
|
|
Cryosurgical
systems |
|
3,458 |
|
|
3,241 |
|
|
7 |
|
|
11 |
|
|
11 |
|
|
Molecular collection
systems |
|
7,329 |
|
|
6,867 |
|
|
7 |
|
|
25 |
|
|
25 |
|
|
Insurance risk
assessment |
|
675 |
|
|
1,007 |
|
|
(33 |
) |
|
2 |
|
|
4 |
|
|
Net product revenues |
|
25,714 |
|
|
24,447 |
|
|
5 |
|
|
86 |
|
|
88 |
|
|
Other |
|
4,147 |
|
|
3,398 |
|
|
22 |
|
|
14 |
|
|
12 |
|
|
Net revenues |
$ |
29,861 |
|
$ |
27,845 |
|
|
7 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
Nine Months Ended September
30, |
|
|
Dollars |
|
Percentage of Total Net Revenues |
|
Market |
|
2015 |
|
|
2014 |
|
% Change |
|
2015 |
|
|
2014 |
|
|
|
Infectious disease
testing |
$ |
34,585 |
|
$ |
34,914 |
|
|
(1 |
)% |
|
40 |
% |
|
45 |
% |
|
Substance abuse
testing |
|
7,584 |
|
|
6,187 |
|
|
23 |
|
|
9 |
|
|
8 |
|
|
Cryosurgical
systems |
|
8,956 |
|
|
12,128 |
|
|
(26 |
) |
|
10 |
|
|
15 |
|
|
Molecular collection
systems |
|
22,148 |
|
|
17,523 |
|
|
26 |
|
|
25 |
|
|
23 |
|
|
Insurance risk
assessment |
|
2,519 |
|
|
2,858 |
|
|
(12 |
) |
|
3 |
|
|
4 |
|
|
Net product revenues |
|
75,792 |
|
|
73,610 |
|
|
3 |
|
|
87 |
|
|
95 |
|
|
Other |
|
11,545 |
|
|
4,173 |
|
|
177 |
|
|
13 |
|
|
5 |
|
|
Net revenues |
$ |
87,337 |
|
$ |
77,783 |
|
|
12 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
September 30, |
September 30, |
HIV
Revenues |
|
2015 |
|
|
2014 |
|
% Change |
|
2015 |
|
|
2014 |
|
% Change |
|
|
|
|
|
|
|
Domestic |
$ |
5,548 |
|
$ |
7,231 |
|
|
(23 |
)% |
$ |
18,147 |
|
$ |
21,568 |
|
|
(16 |
)% |
International |
|
450 |
|
|
491 |
|
|
(8 |
) |
|
1,995 |
|
|
1,897 |
|
|
5 |
|
Domestic OTC |
|
1,642 |
|
|
1,368 |
|
|
20 |
|
|
4,923 |
|
|
4,991 |
|
|
(1 |
) |
Net product revenues |
$ |
7,640 |
|
$ |
9,090 |
|
|
(16 |
)% |
$ |
25,065 |
|
$ |
28,456 |
|
|
(12 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
September 30, |
September 30, |
HCV
Revenues |
|
2015 |
|
|
2014 |
|
% Change |
|
2015 |
|
|
2014 |
|
% Change |
|
|
|
|
|
|
|
Domestic |
$ |
1,914 |
|
$ |
1,301 |
|
|
47 |
% |
$ |
4,803 |
|
$ |
3,183 |
|
|
51 |
% |
International |
|
957 |
|
|
470 |
|
|
104 |
|
|
2,577 |
|
|
2,341 |
|
|
10 |
|
Net product revenues |
|
2,871 |
|
|
1,771 |
|
|
62 |
|
|
7,380 |
|
|
5,524 |
|
|
34 |
|
Amortization of
exclusivity payments |
|
3,397 |
|
|
3,398 |
|
|
- |
|
|
10,081 |
|
|
4,173 |
|
|
142 |
|
Net HCV-related revenues |
$ |
6,268 |
|
$ |
5,169 |
|
|
21 |
% |
$ |
17,461 |
|
$ |
9,697 |
|
|
80 |
% |
|
|
Three Months Ended |
Nine Months Ended |
|
September
30, |
September
30, |
Intercept®
Revenues |
|
2015 |
|
|
2014 |
|
% Change |
|
2015 |
|
|
2014 |
|
% Change |
|
|
|
|
|
|
|
Net Intercept®
revenues |
$ |
2,251 |
|
$ |
1,606 |
|
|
40 |
% |
$ |
5,764 |
|
$ |
4,473 |
|
|
29 |
% |
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
September
30, |
September
30, |
Cryosurgical
Systems Revenues |
|
2015 |
|
|
2014 |
|
% Change |
|
2015 |
|
|
2014 |
|
% Change |
|
|
|
|
|
|
|
Domestic
professional |
$ |
1,600 |
|
$ |
1,590 |
|
|
1 |
% |
$ |
3,268 |
|
$ |
4,601 |
|
|
(29 |
)% |
International
professional |
|
258 |
|
|
43 |
|
* |
|
757 |
|
|
581 |
|
|
30 |
|
Domestic
over-the-counter |
|
137 |
|
|
- |
|
* |
|
300 |
|
|
- |
|
* |
International
over-the-counter |
|
1,463 |
|
|
1,608 |
|
|
(9 |
) |
|
4,631 |
|
|
6,946 |
|
|
(33 |
) |
Net cryosurgical systems
revenues |
$ |
3,458 |
|
$ |
3,241 |
|
|
7 |
% |
$ |
8,956 |
|
$ |
12,128 |
|
|
(26 |
)% |
|
|
|
|
|
|
|
* Calculation is not
considered meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance
Sheets
(Unaudited) |
|
|
|
|
September 30, 2015 |
December 31, 2014 |
|
Assets |
|
|
|
|
$ |
100,677 |
|
$ |
92,867 |
|
|
Cash |
|
|
|
Short-term
investments |
|
7,512 |
|
|
5,000 |
|
|
Accounts receivable,
net |
|
17,089 |
|
|
16,138 |
|
|
Inventories |
|
14,985 |
|
|
15,763 |
|
|
Other current assets |
|
1,559 |
|
|
1,446 |
|
|
Property and equipment,
net |
|
17,800 |
|
|
17,934 |
|
|
Intangible assets,
net |
|
13,661 |
|
|
17,505 |
|
|
Goodwill |
|
18,974 |
|
|
21,734 |
|
|
Other non-current
assets |
|
1,589 |
|
|
1,246 |
|
|
Total assets |
$ |
193,846 |
|
$ |
189,633 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
Accounts payable |
$ |
6,964 |
|
$ |
7,148 |
|
|
Deferred revenue |
|
13,302 |
|
|
8,043 |
|
|
Other current
liabilities |
|
9,429 |
|
|
11,271 |
|
|
Other non-current
liabilities |
|
1,142 |
|
|
1,234 |
|
|
Deferred income taxes |
|
3,010 |
|
|
3,236 |
|
|
Stockholders’ equity |
|
159,999 |
|
|
158,701 |
|
|
Total liabilities and stockholders’
equity |
$ |
193,846 |
|
$ |
189,633 |
|
|
|
|
|
|
|
Nine months ended |
|
|
September
30, |
|
Additional
Financial Data
(Unaudited) |
|
2015 |
|
|
2014 |
|
|
|
|
|
|
Capital expenditures |
$ |
1,885 |
|
$ |
2,353 |
|
|
Depreciation and
amortization |
$ |
4,259 |
|
$ |
4,732 |
|
|
Stock-based
compensation |
$ |
4,543 |
|
$ |
4,284 |
|
|
Cash provided by operating
activities |
$ |
15,105 |
|
$ |
8,384 |
|
|
|
|
|
|
Conference Call
The Company will host a conference call and
audio webcast to discuss the Company’s 2015 third quarter financial
results, certain business developments and financial guidance for
the fourth quarter of 2015, beginning today at 5:00 p.m. Eastern
Time (2:00 p.m. Pacific Time). On the call will be Douglas A.
Michels, 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 #52009076 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 November 11, 2015, by dialing 855-859-2056 (Domestic) or
404-537-3406 (International) and entering the Conference ID
#52009076.
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 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; our ability to achieve financial and performance
objectives under the HCV co-promotion agreement with AbbVie;
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
DNAG to achieve its financial and strategic objectives and continue
to increase its revenues; 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, high unemployment and poor credit
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 or other
products; changes in market acceptance of products based on product
performance or other factors, including changes in CDC or other
testing guidelines, algorithms or other recommendations; 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; history of
losses and ability to achieve sustained profitability; ability to
utilize net operating loss carry forwards or other deferred tax
assets; volatility of OraSure’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 are discussed more
fully in the Company’s Securities and Exchange Commission
filings, including its registration statements, Annual Report on
Form 10-K for the year ended December 31, 2014, 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.
Ronald H. Spair
Chief Financial Officer
610-882-1820
Investorinfo@orasure.com
www.orasure.com
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