OSUR OraSure Technologies Inc

OraSure Technologies, Inc. (NASDAQ:OSUR), a market leader in oral fluid diagnostics, today announced record quarterly revenues of $21.4 million for the three months ended June 30, 2007, a 22% increase over the $17.6 million in revenues recorded for the three months ended June 30, 2006. Increased sales of the Company�s OraQuick ADVANCE� rapid HIV-1/2 antibody test, substance abuse testing products and international over-the-counter (�OTC�) cryosurgery products, together with an increase in funded research and development related to the Company�s rapid Hepatitis C (�HCV�) test, contributed to the increase in total revenues during the second quarter. The Company�s net income was $955,000 or $0.02 per share on a fully-diluted basis for the second quarter of 2007, compared to net income of $1.2 million, or $0.03 per share on a fully-diluted basis for the second quarter of 2006. This decrease is primarily the result of higher operating expenses during the current quarter, as described below. For the six months ended June 30, 2007, the Company recorded revenues of $41.5 million, an increase of 26% when compared to revenues of $32.8 million for the six months ended June 30, 2006. The Company recorded net income of $2.4 million, or $0.05 per share on a fully-diluted basis, for the six months ended June 30, 2007, compared to net income of $2.1 million, or $0.04 per share on a fully-diluted basis, during the six months ended June 30, 2006. Gross margin remained at 63% for both the three-month and six-month periods ended June 30, 2007 and 2006. Operating expenses for the second quarter of 2007 increased to $12.9 million from $9.7 million in the second quarter of 2006. Operating expenses for the six months ended June 30, 2007 were $24.8 million, compared to $18.4 million for the comparable period in 2006. These increases were primarily attributable to higher research and development costs associated with the product development and clinical work for an OraQuick ADVANCE� HIV test for home use and an OraQuick� HCV test for professional use, higher staffing related expenses, higher legal expenses, and additional consulting expenses related to long-range facilities planning and the implementation of the Company�s new enterprise resource planning system. �We are very pleased with the Company�s financial results in the second quarter,� said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. �Continued growth in infectious disease testing, substance abuse testing and international OTC cryosurgical systems revenues has resulted in yet another excellent quarter. We also made good progress during the quarter towards achieving our long-term strategic initiatives. We continue to believe that 2007 will be a very successful year for our Company, both financially and strategically.� Cash, cash equivalents and short-term investments totaled $89.1 million and working capital was $103.9 million at June 30, 2007, compared to $91.0 million and $96.0 million, respectively, at December 31, 2006. Cash flow from operations for the six months ended June 30, 2007 was $2.7 million, compared to $8.2 million for the comparable period in 2006. The decrease of $5.5 million was primarily the result of increases in accounts receivable and inventories, offset by an increase in accounts payable and accrued expenses during the current six-month period. 2007 Financial Guidance Based on the Company�s strong performance during the first six months of 2007 and expected increases in sales of OTC cryosurgery products, the Company expects revenues of $21.0 to $21.5 million in the third quarter and is increasing full-year 2007 revenue guidance to approximately $83.0 million. Fully diluted earnings per share are expected to range from breakeven to $0.01 per share in the third quarter and to be approximately $0.05 per share for the full year. Condensed Financial Data (In thousands, except per-share data and percentages) � Unaudited � Three months ended June 30, Six months ended June 30, 2007 2006 2007 2006 Results of Operations Revenues $ 21,352 $ 17,564 $ 41,461 $ 32,782 Cost of products sold � 7,889 � 6,532 � 15,474 � 12,151 Gross profit 13,463 11,032 25,987 20,631 Operating expenses: Research and development 3,304 1,748 6,224 3,397 Acquired in-process technology � 600 � 600 Sales and marketing 5,249 4,238 10,020 8,345 General and administrative � 4,325 � 3,143 � 8,562 � 6,100 Total operating expenses � 12,878 � 9,729 � 24,806 � 18,442 Operating income 585 1,303 1,181 2,189 Other income, net 969 896 3,358 1,687 Income tax provision � 599 � 991 � 2,098 � 1,768 Net income $ 955 $ 1,208 $ 2,441 $ 2,108 Earnings per share: Basic $ 0.02 $ 0.03 $ 0.05 $ 0.05 Diluted $ 0.02 $ 0.03 $ 0.05 $ 0.04 Weighted average shares: Basic � 46,215 � 45,902 � 46,165 � 45,871 Diluted � 46,629 � 46,731 � 46,592 � 46,783 Three months ended June 30, Dollars % Percentage ofTotal Revenues Market Revenues 2007 2006 Change 2007 2006 � Infectious disease testing $ 9,185 $ 7,561 21 % 43 % 43 % Substance abuse testing 4,396 4,039 9 21 23 Cryosurgical systems 5,772 4,580 26 27 26 Insurance risk assessment � 1,350 � 1,307 3 6 � 7 � Product revenues 20,703 17,487 18 97 99 Licensing and product development � 649 � 77 743 3 � 1 � Total revenues $ 21,352 $ 17,564 22 % 100 % 100 % � Six months ended June 30, Dollars % Percentage ofTotal Revenues Market Revenues 2007 2006 Change 2007 2006 � Infectious disease testing $ 18,117 $ 13,702 32 % 44 % 42 % Substance abuse testing 8,325 7,481 11 20 23 Cryosurgical systems 11,452 9,038 27 28 27 Insurance risk assessment � 2,239 � 2,394 (6 ) 5 � 7 � Product revenues 40,133 32,615 23 97 99 Licensing and product development � 1,328 � 167 695 3 � 1 � Total revenues $ 41,461 $ 32,782 26 % 100 % 100 % Three months endedJune 30, % Six months endedJune 30, % OraQuick� Revenues 2007 2006 Change 2007 2006 Change � Direct to U.S. Public Health $ 5,502 $ 4,061 35 % $ 9,846 $ 6,958 41 % Abbott 1,778 2,090 (15 ) 3,928 3,572 10 SAMHSA 5 � N/A 334 256 31 CDC 480 261 84 1,100 261 322 International � 514 � 230 123 � 1,260 � 791 60 Total OraQuick� revenues $ 8,279 $ 6,642 25 % $ 16,468 $ 11,838 39 % Three months endedJune 30, % Six months endedJune 30, % Intercept� Revenues 2007 2006 Change 2007 2006 Change � Workplace testing $ 1,977 $ 1,764 12 % $ 3,523 $ 3,044 16 % Criminal Justice 661 596 11 1,306 1,130 16 International 633 469 35 1,233 1,026 20 Direct � 264 � 217 22 � 466 � 354 32 Total Intercept� revenues $ 3,535 $ 3,046 16 % $ 6,528 $ 5,554 17 % Cryosurgical Systems Revenues Three months endedJune 30, % Six months endedJune 30, % � 2007 2006 Change 2007 2006 Change � Professional domestic $ 1,360 $ 1,313 4 % $ 2,413 $ 2,401 0 % Professional international 510 550 (7 ) 977 921 6 OTC domestic 983 2,137 (54 ) 3,133 3,956 (21 ) OTC international � 2,919 � 580 403 � 4,929 � 1,760 180 Total revenues $ 5,772 $ 4,580 26 % $ 11,452 $ 9,038 27 % Unaudited Balance Sheets June 30, 2007 December 31, 2006 Assets Cash, cash equivalents and short-term investments � $ 89,108 $ 91,001 Accounts receivable, net 14,848 10,357 Inventories 7,023 5,535 Current portion of deferred income taxes 5,291 3,676 Other current assets 1,765 1,989 Property and equipment, net 19,116 17,375 Deferred income taxes 16,776 19,846 Other non-current assets � 5,917 � 6,786 Total assets $ 159,844 $ 156,565 � Liabilities and Stockholders� Equity Current portion of long-term debt $ 591 $ 609 Accounts payable 4,379 3,312 Accrued expenses 9,198 12,659 Long-term debt, less current portion 9,985 10,030 Other liabilities 551 451 Stockholders� equity � 135,140 � 129,504 Total liabilities and stockholders� equity $ 159,844 $ 156,565 As of June 30, Additional Financial Data 2007 2006 Capital expenditures $ 2,598 $ 10,777 Depreciation and amortization $ 1,321 $ 896 Accounts receivable � days sales outstanding � 63 days 52 days Conference Call The Company will host a conference call and audio webcast today to discuss the Company's 2007 second quarter financial results, business developments and the Company�s 2007 outlook, beginning 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 Operating Officer and Chief Financial Officer. The call will include remarks by management and a question and answer session. In order to listen to the conference call, please dial 888-742-2024 (Domestic) or 706-643-0033 (International) and reference 6857742 or go to OraSure Technologies� web site, www.orasure.com, and click on the Investor Info link. 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 August 7, 2007, by dialing 800-642-1687 (Domestic) or 706-645-9291 (International) and entering the Conference ID #6857742. About OraSure Technologies OraSure Technologies develops, manufactures and markets oral fluid specimen collection devices and tests and other diagnostic products using its proprietary technologies, including immunoassays and other in vitro diagnostic tests and other medical devices. These products are sold in the United States and certain foreign countries to clinical laboratories, hospitals, clinics, community-based organizations and other public health organizations, distributors, government agencies, physicians� offices, and commercial and industrial entities. For more information on the Company, please visit www.orasure.com. Important Information This press release contains certain forward-looking statements, including with respect to revenues, net income and products. Actual results could be significantly different. Factors that could affect results include the ability to market and sell products; changes in relationships, including disputes or disagreements, with strategic partners and reliance on strategic partners for the performance of critical activities under collaborative arrangements; failure of distributors or other customers to meet purchase forecasts or minimum purchase requirements for the Company�s products; impact of competitors, competing products and technology changes; 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; continued bulk purchases by customers, including governmental agencies, and the ability to fully deploy those purchases in a timely manner; 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 product components; availability of related products produced by third parties or products required for use of our products; 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; history of losses and ability to achieve sustained profitability; volatility of our 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; loss or impairment of sources of capital; ability to meet financial covenants in agreements with financial institutions; ability to retain qualified personnel; exposure to product liability, patent infringement, 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; ability to complete consolidation or restructuring activities; ability to identify, complete and realize the full benefits of potential acquisitions; and general political, business and economic conditions. These and other factors are discussed more fully in the Securities and Exchange Commission (�SEC�) filings of OraSure Technologies, including its registration statements, its Annual Report on Form 10-K for the year ended December 31, 2006, its Quarterly Reports on Form 10-Q, and its other filings with the SEC. Although forward-looking statements help to provide complete 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.