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, 2016.
Financial Highlights
- Consolidated net revenues for the third quarter of 2016 were
$32.3 million, an 8% increase from the third quarter of 2015.
Consolidated net revenues for the nine months ended September 30,
2016 were $92.7 million, a 6% increase from the comparable period
of 2015.
- Net revenues from international sales of the Company’s
OraQuick® HIV test were $1.1 million for the third quarter of 2016,
representing a 147% increase over the third quarter of 2015. Net
international revenues for the OraQuick® HIV test were $3.9 million
for the nine months ended September 30, 2016, a 97% increase from
the comparable period of 2015.
- Net molecular collection systems revenues were $8.3 million
during the third quarter of 2016, which represents a 14% increase
over the third quarter of 2015. Net molecular collection systems
revenues for the nine months ended September 30, 2016 were $23.6
million, a 7% increase from the comparable period in 2015.
- International sales of the Company’s OraQuick® rapid HCV test
were $1.3 million for the third quarter of 2016, representing a 35%
increase from the third quarter of 2015. International sales of the
HCV test for the nine months ended September 30, 2016 were $3.7
million, an increase of 44% from the comparable period of
2015.
- During the third quarter, the Company was awarded a contract
for up to $16.6 million in total funding 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”) related to the development of a
rapid Zika test.
- The Company secured a contract with a foreign government to
supply $18 million in diagnostic products, largely consisting of
OraQuick® rapid HCV tests. The first shipment of this product
is expected to occur in the fourth quarter of 2016 pending
completion of certain ancillary documents required under the
contract.
- Consolidated net income for the third quarter of 2016 was $6.2
million, or $0.11 per share on a fully-diluted basis, which
compares to consolidated net income of $1.5 million, or $0.03 per
share on a fully-diluted basis, for the third quarter of
2015. Consolidated net income for the nine months ended
September 30, 2016 was $12.5 million, or $0.22 per share on a
fully-diluted basis, which compares to consolidated net income of
$3.6 million, or $0.06 per share, for the comparable period of
2015.
- Cash and short-term investments totaled $121.2 million and
working capital amounted to $128.8 million at September 30,
2016.
“We are very pleased with the Company’s
financial performance for the third quarter, especially our strong
bottom line results,” said Douglas A. Michels, President and CEO of
OraSure Technologies. “We continue to build on numerous
international opportunities and have executed an $18 million
product supply agreement with a foreign government in support of a
country-wide HCV elimination program. Our molecular business
continues to generate impressive growth and we were successful in
obtaining government funding for continued work on our rapid Zika
test. We believe the progress we have made on these key objectives
has positioned us well for future success.”
Financial Results
Consolidated net product revenues for the third
quarter of 2016 decreased 1% from the comparable period of 2015
primarily as a result of the absence of sales of the Company’s
OraQuick® Ebola rapid antigen test, lower domestic sales of the
Company’s OraQuick® HIV and HCV products, and lower sales of the
Company’s cryosurgical systems and risk assessment products.
These lower sales were partially offset by higher sales of the
Company’s molecular collection systems products and increased
international OraQuick® HIV and HCV product sales.
Consolidated net product revenues for the first
nine months of 2016 increased 3% over the comparable periods of
2015, primarily as a result of higher international sales of the
Company’s OraQuick® HCV and HIV products, and higher sales of
the Company’s molecular collection systems and cryosurgical systems
products. These increases were partially offset by lower
domestic sales of the Company’s OraQuick® HIV products, lower sales
of the Company’s risk assessment products, and the absence of sales
of the Company’s OraQuick® Ebola Rapid Antigen test in the current
nine-month period.
Consolidated other revenues for the third
quarter and first nine months of 2016 were $6.8 million and $14.4
million, respectively. This compares to consolidated other revenues
for the third quarter and first nine months of 2015 of $4.1 million
and $11.5 million, respectively. Exclusivity revenues recognized
under the Company’s HCV co-promotion agreement with AbbVie for the
three and nine month periods ended September 30, 2016 were $6.1
million and $12.8 million, respectively. AbbVie exclusivity
revenues for the three and nine month periods ended September 30,
2015 were $3.4 million and $10.0 million, respectively. Other
revenues in the third quarter and first nine months of 2016 also
included $677,000 and $1.6 million, respectively, of funding
received from BARDA. Other revenues for the third quarter and
first nine months of 2015 included $750,000 and $1.5 million,
respectively, in BARDA funding.
Consolidated gross margin for the three and nine
months ended September 30, 2016 was 70% and 69%, respectively.
Consolidated gross margin for the three and nine months ended
September 30, 2015 was 69% and 67%, respectively. Gross
margin for the current quarter increased primarily due to higher
other revenues partially offset by a less favorable product
mix. Gross margin for the nine-month period increased largely
due to lower scrap and spoilage costs and the increase in other
revenues, partially offset by an unfavorable product mix.
Consolidated operating expenses decreased to
$16.5 million during the third quarter of 2016 compared to $19.1
million in the third quarter of 2015. For the nine months
ended September 30, 2016, consolidated operating expenses were
$50.9 million, a decrease from the $54.4 million reported for the
nine months ended September 30, 2015. The quarterly decrease
was largely due to lower costs associated with the AbbVie HCV
co-promotion agreement partially offset by increased research and
development expenses. The decrease in the nine-month period was
largely due to lower costs associated with the AbbVie co-promotion
agreement and lower research and development expenses, partially
offset by increased general and administrative expenses.
The Company’s cash and short-term investment
balance totaled $121.2 million at September 30, 2016 compared to
$101.3 million at December 31, 2015. Working capital was
$128.8 million at September 30, 2016 compared to $111.5 million at
December 31, 2015. For the nine months ended September 30,
2016, the Company generated $23.4 million in cash from
operations.
Fourth Quarter 2016
Outlook
The Company expects consolidated net revenues to
range from $34.50 to $35.25 million and is projecting consolidated
net income of $0.05 to $0.06 per share for the fourth quarter of
2016. This revenue guidance includes initial contributions
from the new $18 million foreign government HCV product supply
contract. However, OraSure will not commence shipment of product
until certain additional ancillary documents required under the
contract are completed. In addition, projected fourth quarter 2016
expenses will include $1.4 million in restructuring charges,
consisting largely of work-force reduction costs which include
severance and benefit expenses. Annual cost savings resulting from
this restructuring as well as the termination of the Company’s HCV
co-promotion agreement with AbbVie at year end are expected to be
$3.6 million, beginning in 2017.
Financial Data
Condensed Consolidated Financial Data |
(In thousands, except per-share data) |
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
September 30, |
|
|
September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
2016 |
|
|
|
2015 |
|
Results of
Operations |
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
32,251 |
|
|
$ |
29,861 |
|
|
|
$ |
92,699 |
|
|
$ |
87,337 |
|
Cost of products sold |
|
|
9,576 |
|
|
|
9,192 |
|
|
|
|
28,626 |
|
|
|
28,974 |
|
Gross profit |
|
|
22,675 |
|
|
|
20,669 |
|
|
|
|
64,073 |
|
|
|
58,363 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research and development |
|
|
3,196 |
|
|
|
2,525 |
|
|
|
|
8,547 |
|
|
|
8,961 |
|
Sales and marketing |
|
|
6,428 |
|
|
|
9,677 |
|
|
|
|
22,531 |
|
|
|
26,465 |
|
General and administrative |
|
|
6,907 |
|
|
|
6,931 |
|
|
|
|
19,803 |
|
|
|
18,971 |
|
Total operating expenses |
|
|
16,531 |
|
|
|
19,133 |
|
|
|
|
50,881 |
|
|
|
54,397 |
|
Operating income |
|
|
6,144 |
|
|
|
1,536 |
|
|
|
|
13,192 |
|
|
|
3,966 |
|
Other income
(expense) |
|
|
498 |
|
|
|
81 |
|
|
|
|
(34 |
) |
|
|
395 |
|
Income before income
taxes |
|
|
6,642 |
|
|
|
1,617 |
|
|
|
|
13,158 |
|
|
|
4,361 |
|
Income tax expense |
|
|
400 |
|
|
|
147 |
|
|
|
|
634 |
|
|
|
810 |
|
Net income |
|
$ |
6,242 |
|
|
$ |
1,470 |
|
|
|
$ |
12,524 |
|
|
$ |
3,551 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.11 |
|
|
$ |
0.03 |
|
|
|
$ |
0.23 |
|
|
$ |
0.06 |
|
Diluted |
|
$ |
0.11 |
|
|
$ |
0.03 |
|
|
|
$ |
0.22 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
55,653 |
|
|
|
56,482 |
|
|
|
|
55,549 |
|
|
|
56,427 |
|
Diluted |
|
|
56,524 |
|
|
|
56,692 |
|
|
|
|
56,271 |
|
|
|
56,900 |
|
|
Summary of Net Revenues by Market and Product
(Unaudited)
|
|
Three Months Ended September
30, |
|
|
|
|
Dollars |
|
|
|
|
Percentage of Total Net Revenues |
|
|
Market |
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infectious
disease testing |
$ |
10,412 |
|
|
$ |
11,297 |
|
|
|
(8 |
) |
% |
32 |
% |
|
38 |
% |
|
Risk
assessment testing |
|
3,481 |
|
|
|
3,630 |
|
|
|
(4 |
) |
|
|
11 |
|
|
12 |
|
|
Cryosurgical systems |
|
3,240 |
|
|
|
3,458 |
|
|
|
(6 |
) |
|
|
10 |
|
|
11 |
|
|
Molecular
collection systems |
|
8,327 |
|
|
|
7,329 |
|
|
|
14 |
|
|
|
26 |
|
|
25 |
|
|
|
Net product
revenues |
|
25,460 |
|
|
|
25,714 |
|
|
|
(1 |
) |
|
|
79 |
|
|
86 |
|
|
Other |
|
|
6,791 |
|
|
|
4,147 |
|
|
|
64 |
|
|
|
21 |
|
|
14 |
|
|
|
Net revenues |
$ |
32,251 |
|
|
$ |
29,861 |
|
|
|
8 |
|
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September
30, |
|
|
|
|
Dollars |
|
|
|
|
Percentage of Total Net Revenues |
|
|
Market |
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infectious
disease testing |
$ |
34,729 |
|
|
$ |
34,585 |
|
|
|
0 |
|
% |
|
37 |
% |
|
40 |
% |
|
Risk
assessment testing |
|
9,746 |
|
|
|
10,103 |
|
|
|
(4 |
) |
|
|
10 |
|
|
12 |
|
|
Cryosurgical systems |
|
10,162 |
|
|
|
8,956 |
|
|
|
13 |
|
|
|
11 |
|
|
10 |
|
|
Molecular
collection systems |
|
23,649 |
|
|
|
22,148 |
|
|
|
7 |
|
|
|
26 |
|
|
25 |
|
|
|
Net product
revenues |
|
78,286 |
|
|
|
75,792 |
|
|
|
3 |
|
|
|
84 |
|
|
87 |
|
|
Other |
|
|
14,413 |
|
|
|
11,545 |
|
|
|
25 |
|
|
|
16 |
|
|
13 |
|
|
|
Net revenues |
$ |
92,699 |
|
|
$ |
87,337 |
|
|
|
6 |
|
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
HIV
Revenues |
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
$ |
4,858 |
|
|
$ |
5,548 |
|
|
|
(12 |
) |
% |
|
$ |
16,446 |
|
|
$ |
18,147 |
|
|
|
(9 |
) |
% |
|
International |
|
1,110 |
|
|
|
450 |
|
|
|
147 |
|
|
|
|
3,934 |
|
|
|
1,995 |
|
|
|
97 |
|
|
|
Domestic OTC |
|
1,311 |
|
|
|
1,642 |
|
|
|
(20 |
) |
|
|
|
4,574 |
|
|
|
4,923 |
|
|
|
(7 |
) |
|
|
|
Net product revenues |
$ |
7,279 |
|
|
$ |
7,640 |
|
|
|
(5 |
) |
% |
|
$ |
24,954 |
|
|
$ |
25,065 |
|
|
|
0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
|
September
30, |
|
|
September
30, |
|
|
HCV
Revenues |
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
$ |
1,529 |
|
|
$ |
1,914 |
|
|
|
(20 |
) |
% |
|
$ |
5,218 |
|
|
$ |
4,803 |
|
|
|
9 |
|
% |
|
International |
|
1,293 |
|
|
|
957 |
|
|
|
35 |
|
|
|
|
3,722 |
|
|
|
2,577 |
|
|
|
44 |
|
|
|
|
Net product revenues |
|
2,822 |
|
|
|
2,871 |
|
|
|
(2 |
) |
|
|
|
8,940 |
|
|
|
7,380 |
|
|
|
21 |
|
|
|
Amortization of exclusivity payments |
|
6,114 |
|
|
|
3,397 |
|
|
|
80 |
|
|
|
|
12,837 |
|
|
|
10,081 |
|
|
|
27 |
|
|
|
|
Net HCV-related revenues |
$ |
8,936 |
|
|
$ |
6,268 |
|
|
|
43 |
|
% |
|
$ |
21,777 |
|
|
$ |
17,461 |
|
|
|
25 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September
30, |
|
|
September
30, |
|
Cryosurgical Systems Revenues |
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
2016 |
|
|
|
2015 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
professional |
$ |
1,456 |
|
|
$ |
1,600 |
|
|
|
(9 |
) |
% |
|
$ |
4,155 |
|
|
$ |
3,268 |
|
|
|
27 |
|
% |
International professional |
|
162 |
|
|
|
258 |
|
|
|
(37 |
) |
|
|
|
607 |
|
|
|
757 |
|
|
|
(20 |
) |
|
Domestic
OTC |
|
339 |
|
|
|
137 |
|
|
|
147 |
|
|
|
|
1,062 |
|
|
|
300 |
|
|
|
254 |
|
|
International OTC |
|
1,283 |
|
|
|
1,463 |
|
|
|
(12 |
) |
|
|
|
4,338 |
|
|
|
4,631 |
|
|
|
(6 |
) |
|
|
Net cryosurgical systems
revenues |
$ |
3,240 |
|
|
$ |
3,458 |
|
|
|
(6 |
) |
% |
|
$ |
10,162 |
|
|
$ |
8,956 |
|
|
|
13 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance
Sheets
(Unaudited) |
|
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
Assets |
|
|
|
|
|
$ |
113,536 |
|
|
$ |
94,094 |
|
|
Cash and cash
equivalents |
Short-term
investments |
|
7,618 |
|
|
|
7,225 |
|
|
Accounts receivable,
net |
|
15,471 |
|
|
|
19,265 |
|
|
Inventories |
|
12,070 |
|
|
|
13,242 |
|
|
Other current assets |
|
2,024 |
|
|
|
2,888 |
|
|
Property and equipment,
net |
|
20,069 |
|
|
|
20,083 |
|
|
Intangible assets,
net |
|
11,205 |
|
|
|
12,591 |
|
|
Goodwill |
|
19,243 |
|
|
|
18,250 |
|
|
Other non-current
assets |
|
2,322 |
|
|
|
1,683 |
|
|
Total assets |
$ |
203,558 |
|
|
$ |
189,321 |
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Accounts payable |
$ |
4,422 |
|
|
$ |
5,087 |
|
|
Deferred revenue |
|
7,911 |
|
|
|
9,735 |
|
|
Other current
liabilities |
|
9,618 |
|
|
|
10,412 |
|
|
Other non-current
liabilities |
|
2,289 |
|
|
|
1,768 |
|
|
Deferred income taxes |
|
2,836 |
|
|
|
2,883 |
|
|
Stockholders’ equity |
|
176,482 |
|
|
|
159,436 |
|
|
Total liabilities and stockholders’
equity |
$ |
203,558 |
|
|
$ |
189,321 |
|
|
|
|
Nine months ended |
|
September
30, |
|
Additional
Financial Data
(Unaudited) |
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Capital expenditures |
$ |
3,512 |
|
|
$ |
1,885 |
|
|
Depreciation and
amortization |
$ |
4,212 |
|
|
$ |
4,259 |
|
|
Stock-based
compensation |
$ |
4,437 |
|
|
$ |
4,543 |
|
|
Cash provided by operating
activities |
$ |
23,370 |
|
|
$ |
15,105 |
|
|
|
|
|
|
|
Conference Call
The Company will host a conference call and
audio webcast to discuss the Company’s 2016 third quarter financial
results, certain business developments and financial guidance for
the fourth quarter of 2016, 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 #85854320 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 9, 2016, by dialing 855-859-2056 (Domestic) or
404-537-3406 (International) and entering the Conference ID
#85854320.
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; 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
DNA Genotek 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 levels
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 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; 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 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 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, 2015, 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 Officer
610-882-1820
Investorinfo@orasure.com
www.orasure.com
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