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EX-99.2 - EX-99.2 - ORASURE TECHNOLOGIES INCd486244dex992.htm
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Exhibit 99.1

 

LOGO

Company Contact:    

 

Ronald H. Spair

Chief Financial Officer

610-882-1820

Investorinfo@orasure.com
www.orasure.com

OraSure Announces 2017 Third Quarter Financial Results

BETHLEHEM, PA – November 1, 2017 – (Globe Newswire) – 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, 2017.

Financial Highlights

 

    Consolidated net revenues for the third quarter of 2017 were $42.3 million, a 31% increase from the third quarter of 2016. Consolidated net product revenues were $41.2 million, representing a 62% increase over the third quarter of 2016.

 

    Consolidated net revenues for the nine months ended September 30, 2017 were $115.0 million, a 24% increase from the comparable period of 2016. Consolidated net product revenues were $111.8 million, representing a 43% increase over the first nine months of 2016.

 

    Net molecular collection systems revenues were $18.6 million during the third quarter of 2017, which represents a 123% increase over the third quarter of 2016. Net molecular collection systems revenues during the nine months ended September 30, 2017 were $45.3 million, a 92% increase from the comparable period in 2016.

 

    Total OraQuick® HCV sales of $8.0 million for the third quarter of 2017 increased 185% compared to the third quarter of 2016 and included a 376% increase in international sales of the product from the prior year quarter. OraQuick® HCV sales were $21.8 million in the first nine months of 2017, a 144% increase over the first nine months of 2016 and included a 325% increase in international sales of the product from the prior year period.


    Net revenues from international sales of the Company’s OraQuick® HIV products of $3.1 million increased 176% compared to the third quarter of 2016. Total international OraQuick® HIV sales for the nine months ended September 30, 2017 were $7.7 million, a 97% increase over the first nine months of 2016.

 

    Consolidated net income for the third quarter of 2017 was $5.8 million, or $0.09 per share on a fully diluted basis, which compares to consolidated net income of $6.2 million, or $0.11 per share on a fully diluted basis, for the third quarter of 2016. Consolidated net income for the nine months ended September 30, 2017 was $23.6 million, or $0.39 per share on a fully-diluted basis, which compares to consolidated net income of $12.5 million, or $0.22 per share, for the comparable period of 2016. Results for the first nine months of 2017 included a $12.5 million pre-tax gain related to a litigation settlement that was accounted for as a reduction of operating expenses.

 

    Cash and investments totaled $180.3 million and working capital amounted to $182.7 million at September 30, 2017.

“We are very pleased with the Company’s third quarter financial results,” said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. “Sales of our molecular collections products during the quarter were particularly strong and our infectious disease business experienced strong growth compared to the prior year quarter. We continue to deliver on our strategic growth priorities and we expect our strong performance to continue into the fourth quarter.”

Financial Results

Consolidated net product revenues for the third quarter of 2017 increased 62% over the comparable period of 2016. Consolidated net product revenues for the first nine months of 2017 increased 43% over the comparable period of 2016. These increases were primarily the result of higher sales of the Company’s molecular collections and OraQuick® HCV products and higher international sales of the OraQuick® HIV self-test, partially offset by lower domestic sales of the Company’s professional OraQuick® HIV product and lower cryosurgical product sales. Product revenues associated with the 2017 sales of the OraQuick® HIV self-test include $458,000 of support payments associated with the charitable support agreement with the Bill and Melinda Gates Foundation (“Gates Foundation”).

Consolidated other revenues for the third quarter and first nine months of 2017 were $1.2 million and $3.3 million, respectively. This compares to consolidated other revenues for the third quarter and first nine months of 2016 of $6.8 million and $14.4 million, respectively. Other revenues in the third quarter of 2017 included $939,000 of funding received from the U.S. Biomedical Advanced Research Development Authority (“BARDA”) and $218,000 in cost reimbursement under the Company’s charitable support agreement with the Gates Foundation. Other revenues in the third quarter of 2016 included $676,000 of BARDA funding and

 

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$6.1 million of exclusivity revenues recognized under the Company’s HCV co-promotion agreement with AbbVie, which terminated on December 31, 2016. Other revenues in the first nine months of 2017 included $3.1 million of BARDA funding and $218,000 of cost reimbursement under the Gates Foundation agreement. Other revenues in the first nine months of 2016 included $1.6 million of BARDA funding and $12.8 million of AbbVie exclusivity revenues.

Consolidated gross margin was 58% and 61% for the three and nine months ended September 30, 2017, respectively. Consolidated gross margin for the three and nine months ended September 30, 2016 was 70% and 69%, respectively. Gross margin for the current quarter and the first nine months of 2017 decreased primarily due to the absence of AbbVie exclusivity revenues during these periods, an increase in lower margin product sales, and higher scrap and spoilage costs.

Consolidated operating expenses increased to $17.3 million during the third quarter of 2017 compared to $16.5 million in the third quarter of 2016. For the nine months ended September 30, 2017, consolidated operating expenses were $40.4 million, a $10.5 million decrease from the $50.9 million reported for the nine months ended September 30, 2016. The quarterly increase was largely due to higher sales and marketing expenses resulting from higher staffing costs, higher external commissions to be paid to certain international distributors, and an increase in our allowance for doubtful accounts related to a genomics customer. The reduction in the nine-month period was primarily due to a $12.5 million gain on a litigation settlement reported earlier this year, the absence of costs associated with the AbbVie HCV co-promotion agreement, and lower legal fees partially offset by higher staffing costs.

Operating income increased 19% to $7.3 million in the third quarter of 2017 compared to $6.1 million in the third quarter of 2016. Operating income for the nine months ended September 30, 2017 was $30.1 million, a 128% increase over the comparable period in 2016.

The Company’s cash and investment balance totaled $180.3 million at September 30, 2017, compared to $120.9 million at December 31, 2016. Working capital was $182.7 million at September 30, 2017, compared to $139.1 million at December 31, 2016. For the nine months ended September 30, 2017, the Company generated $30.4 million in cash from operations.

Fourth Quarter 2017 Outlook

The Company expects consolidated net revenues to range from $45 million to $46 million and is projecting consolidated net income of $0.08 to $0.09 per share for the fourth quarter of 2017.

 

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Financial Data

 

Condensed Consolidated Financial Data

(In thousands, except per-share data)

 

Unaudited

 

     Three months ended      Nine months ended  
   September 30,      September 30,  
     2017      2016      2017     2016  

Results of Operations

          

Net revenues

   $ 42,314      $ 32,251      $ 115,036     $ 92,699  

Cost of products sold

     17,670        9,576        44,605       28,626  
  

 

 

    

 

 

    

 

 

   

 

 

 

Gross profit

     24,644        22,675        70,431       64,073  
  

 

 

    

 

 

    

 

 

   

 

 

 

Operating expenses:

          

Research and development

     3,228        3,196        9,536       8,547  

Sales and marketing

     7,162        6,428        21,541       22,531  

General and administrative

     6,935        6,907        21,777       19,803  

Gain on litigation settlement

     —          —          (12,500     —    
  

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses

     17,325        16,531        40,354       50,881  
  

 

 

    

 

 

    

 

 

   

 

 

 

Operating income

     7,319        6,144        30,077       13,192  

Other income (expense)

     113        498        676       (34
  

 

 

    

 

 

    

 

 

   

 

 

 

Income before income taxes

     7,432        6,642        30,753       13,158  

Income tax expense

     1,669        400        7,121       634  
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 5,763      $ 6,242      $ 23,632     $ 12,524  
  

 

 

    

 

 

    

 

 

   

 

 

 

Earnings per share:

          

Basic

   $ 0.10      $ 0.11      $ 0.40     $ 0.23  
  

 

 

    

 

 

    

 

 

   

 

 

 

Diluted

   $ 0.09      $ 0.11      $ 0.39     $ 0.22  
  

 

 

    

 

 

    

 

 

   

 

 

 

Weighted average shares:

          

Basic

     60,090        55,653        58,511       55,549  
  

 

 

    

 

 

    

 

 

   

 

 

 

Diluted

     62,172        56,530        60,569       56,273  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

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Summary of Net Revenues by Market and Product (Unaudited)

 

     Three Months Ended September 30,  
     Dollars            Percentage of
Total Net
Revenues
 

Market

   2017      2016      %
Change
    2017     2016  

Infectious disease testing

   $ 16,577      $ 10,412        59     39     32

Risk assessment testing

     3,149        3,481        (10     7       11  

Cryosurgical systems

     2,879        3,240        (11     7       10  

Molecular collection systems

     18,552        8,327        123       44       26  
  

 

 

    

 

 

      

 

 

   

 

 

 

Net product revenues

     41,157        25,460        62       97       79  

Other

     1,157        6,791        (83     3       21  
  

 

 

    

 

 

      

 

 

   

 

 

 

Net revenues

   $ 42,314      $ 32,251        31     100     100
  

 

 

    

 

 

      

 

 

   

 

 

 
     Nine Months Ended September 30,  
     Dollars            Percentage of
Total Net
Revenues
 

Market

   2017      2016      %
Change
    2017     2016  

Infectious disease testing

   $ 47,822      $ 34,729        38     42     37

Risk assessment testing

     9,517        9,746        (2     8       10  

Cryosurgical systems

     9,116        10,162        (10     8       11  

Molecular collection systems

     45,316        23,649        92       39       26  
  

 

 

    

 

 

      

 

 

   

 

 

 

Net product revenues

     111,771        78,286        43       97       84  

Other

     3,265        14,413        (77     3       16  
  

 

 

    

 

 

      

 

 

   

 

 

 

Net revenues

   $ 115,036      $ 92,699        24     100     100
  

 

 

    

 

 

      

 

 

   

 

 

 

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  

HIV Revenues

   2017      2016      %
Change
    2017      2016      %
Change
 

Domestic

   $ 3,622      $ 4,858        (25 )%    $ 12,401      $ 16,446        (25 )% 

International

     3,069        1,110        176       7,738        3,934        97  

Domestic OTC

     1,515        1,311        16       4,951        4,574        8  
  

 

 

    

 

 

      

 

 

    

 

 

    

Net product revenues

   $ 8,206      $ 7,279        13   $ 25,090      $ 24,954        1
  

 

 

    

 

 

      

 

 

    

 

 

    

 

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     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  

HCV Revenues

   2017      2016      %
Change
    2017      2016      %
Change
 

Domestic

   $ 1,889      $ 1,529        24   $ 5,980      $ 5,218        15

International

     6,154        1,293        376       15,817        3,722        325  
  

 

 

    

 

 

      

 

 

    

 

 

    

Net product revenues

     8,043        2,822        185       21,797        8,940        144  

Amortization of exclusivity payments

     —          6,114        (100     —          12,837        (100
  

 

 

    

 

 

      

 

 

    

 

 

    

Net HCV-related revenues

   $ 8,043      $ 8,936        (10 )%    $ 21,797      $ 21,777        0
  

 

 

    

 

 

      

 

 

    

 

 

    

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  

Cryosurgical Systems Revenues

   2017      2016      %
Change
    2017      2016      %
Change
 

Domestic professional

   $ 1,426      $ 1,456        (2 )%    $ 4,368      $ 4,155        5

International professional

     179        162        10       552        607        (9

Domestic OTC

     325        339        (4     957        1,062        (10

International OTC

     949        1,283        (26     3,239        4,338        (25
  

 

 

    

 

 

      

 

 

    

 

 

    

Net product revenues

   $ 2,879      $ 3,240        (11 )%    $ 9,116      $ 10,162        (10 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

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Condensed Consolidated Balance Sheets (Unaudited)

 

     September 30, 2017      December 31, 2016  
Assets      

Cash and cash equivalents

   $ 78,610      $ 109,790  

Short-term investments

     83,372        11,160  

Accounts receivable, net

     28,099        19,827  

Inventories

     16,859        11,799  

Other current assets

     2,395        3,865  

Property and equipment, net

     21,496        20,033  

Intangible assets, net

     8,972        10,337  

Goodwill

     20,257        18,793  

Long-term investments

     18,290        —    

Other non-current assets

     3,909        2,331  
  

 

 

    

 

 

 

Total assets

   $ 282,259      $ 207,935  
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Accounts payable

   $ 9,624      $ 4,633  

Deferred revenue

     1,186        1,388  

Other current liabilities

     15,813        11,314  

Other non-current liabilities

     3,928        2,304  

Deferred income taxes

     2,194        2,446  

Stockholders’ equity

     249,514        185,850  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 282,259      $ 207,935  
  

 

 

    

 

 

 

Additional Financial Data (Unaudited)

 

     Nine Months Ended  
   September 30,  
     2017      2016  

Capital expenditures

   $ 3,462      $ 3,512  

Depreciation and amortization

   $ 4,589      $ 4,152  

Stock-based compensation

   $ 5,213      $ 4,438  

Cash provided by operating activities

   $ 30,361      $ 25,180  

Conference Call

The Company will host a conference call and audio webcast for analysts and investors to discuss the Company’s 2017 third quarter financial results, certain business developments and financial guidance for the fourth quarter of 2017, 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.

 

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In order to listen to the conference call, please either dial 844-831-3030 (Domestic) or 315-625-6887 (International) and reference Conference ID #90105011 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 8, 2017, by dialing 855-859-2056 (Domestic) or 404-537-3406 (International) and entering the Conference ID #90105011.

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 U.S. Food and Drug Administration (“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; ability to meet increased demand for the Company’s products; impact of increased reliance on U.S. government contracts; failure of distributors or

 

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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 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; 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 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; ability to successfully renew contracts or enter into new contracts with existing customers; 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 (“SEC”) filings, including our registration statements, Annual Report on Form 10-K for the year ended December 31, 2016, 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.

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