OSUR OraSure Technologies Inc

OraSure Technologies (OSUR), a provider of medical devices and technologies to diagnose critical medical conditions, recently announced the availability of its OraQuick in-home HIV test at retail outlets and online, across the U.S.

The company gained the approval of the U.S. Food and Drug Administration (FDA) for the OraQuick HIV test in the second quarter of 2012. It is the first ever oral HIV test to be made available directly to consumers for in-home use. The in-home test is an over-the-counter version of OraQuick Advance which identifies HIV-1 and HIV-2 antibodies with an oral swab. In the professional market, OraSure has sold more than 25 million units of the tests.

The OraQuick in-home HIV test has been made available across the U.S. at more than 30,000 retail outlets. Along with Walgreen (WAG) and CVS Caremark (CVS) among others, OraSure has extended its association with large wholesalers such as McKesson (MCK) and AmerisourceBergen (ABC).

On its second quarter conference call, OraSure had said that it expects the test to be available at a retail price of $39. However, the company noted that the final price will be determined by the retailers.

According to Centers for Disease Control and Prevention, almost 1.2 million Americans are infected with HIV. Out of the infected population, 240,000 remain oblivious of their HIV status. This ignorance has led to an additional 50,000 new HIV infections each year. The nationwide availability of OraQuick in-home HIV test is a quantum leap in the fight against HIV and AIDS.

The U.S. market size for an in-home HIV test is estimated at roughly $500 million, annually. Given the sizeable market opportunity, OraSure is expected to bolster revenues from its infectious disease tests in the domestic market. The revenues from infectious disease testing decreased 8% year over year to $10.4 million (55% of total revenues), due to a decline in OraQuick sales in the most recent quarter. Revenues from domestic OraQuick HIV test sales dipped 16% year over year to $8.4 million.

In the end, the projected selling price for the OraQuick in-home HIV test and its acceptance by the high-risk target consumers could affect the commercial success of the product. Additionally, government funding will continue to affect OraSure’s performance in the public health market.

We currently have a ‘Neutral’ recommendation on OraSure, which carries a Zacks #3 Rank (short-term ‘Hold’ rating).

 
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