OraSure Announces 2013 Second Quarter Financial Results

BETHLEHEM, Pa., Aug. 7, 2013 (GLOBE NEWSWIRE) -- OraSure Technologies, Inc. (Nasdaq:OSUR), a market leader in oral fluid diagnostics, today announced its consolidated financial results for the second quarter and six months ended June 30, 2013.

Financial Highlights
  • Consolidated net revenues for the second quarter of 2013 were $24.3 million, an 8% increase from the comparable quarter of 2012. Consolidated net revenues for the six months ended June 30, 2013 were $45.5 million, a 4% increase from the comparable period of 2012. During the quarter and the six month period, net product revenues increased 8% and 7%, respectively. These increases were primarily due to sales of the Company's OraQuick® In-Home HIV test and record sales from the Company's molecular collection systems subsidiary, DNA Genotek ("DNAG").  
  • Net revenues for the second quarter and first six months of 2013 included $2.1 million and $3.7 million in gross sales of the OraQuick® In-Home HIV test, respectively. These gross sales were reduced by customer allowances for cooperative advertising, cash discounts and other allowances, resulting in net revenues of $2.0 million and $3.4 million recorded in each respective period. There were no sales of this product in the comparable 2012 periods.  
  • Net revenues generated by DNAG during the second quarter of 2013 were $4.7 million, a 39% increase from the comparable period in 2012. DNAG net revenues during the six months ended June 30, 2013 were $8.6 million, a 29% increase from the comparable period in 2012. The increase in both periods was primarily the result of higher sales to commercial customers.  
  • Consolidated net loss for the second quarter of 2013 was $5.3 million, or $0.10 per share, which compares to a net loss of $3.6 million, or $0.07 per share, for the second quarter of 2012. Consolidated net loss for the six months ended June 30, 2013 was $15.5 million, or $0.28 per share, which compares to a net loss of $6.8 million, or $0.14 per share, for the comparable period of 2012. The net loss for the second quarter and first six months of 2013 included $5.4 million and $12.3 million in advertising and promotional expenses, respectively, associated with the Company's newly-launched OraQuick® In-Home HIV test.

"We are pleased with the Company's financial results for the second quarter," said Douglas A. Michels, President and CEO of OraSure Technologies, Inc. "A major contributor to this performance was the record level of revenues reported by our molecular collections subsidiary, DNA Genotek. We are also making good progress in commercializing the OraSure® In-Home HIV test, as we continue to refine our sales and marketing strategies to maximize the financial opportunity and health benefits offered by this important new product."

Financial Results

Consolidated net product revenues for the second quarter and six month period increased 8% and 7%, respectively, primarily as a result of the higher sales of the Company's molecular collection systems and infectious disease testing products. These increases were partially offset by lower sales of the Company's substance abuse testing, cryosurgical systems and insurance risk assessment products.

Consolidated licensing and product development revenues for the second quarter of 2013 remained relatively flat at $274,000 compared to $277,000 for the second quarter of 2012. Consolidated licensing and product development revenues for the six months ended June 30, 2013 decreased by $1.0 million, primarily due to the absence of a $1.0 million milestone payment received in the first quarter of 2012 under the Company's HCV collaboration agreement with Merck. No similar payment was received during 2013 because the collaboration agreement with Merck was terminated in November 2012.

Consolidated gross margin for the three and six months ended June 30, 2013 was 60% and 58%, respectively. Consolidated gross margin for the three and six months ended June 30, 2012 was 65%. The current quarter gross margin was negatively impacted by higher royalties paid on sales of the Company's OraQuick® HIV products and an unfavorable change in product mix. Gross margin for the current six month period was negatively impacted by the higher royalties, the absence of the $1.0 million HCV milestone payment, the change in product mix and an increase in scrap and spoilage costs as a result of production issues that were identified and corrected in the first quarter of 2013.  

Consolidated operating expenses increased to $20.0 million during the second quarter of 2013, from $18.2 million in the comparable period of 2012. For the six months ended June 30, 2013, consolidated operating expenses were $42.7 million, an increase over the $35.6 million reported for the six months ended June 30, 2012. These increases are primarily the result of higher promotional and advertising expenses associated with the Company's OraQuick® In-Home HIV test. The current quarter and six month period expenses included $5.4 million and $12.3 million of promotional and advertising costs related to this product compared to $1.6 million and $2.9 million spent in the second quarter and first six months of 2012, respectively.

For the three and six months ended June 30, 2013, the Company recorded a Canadian income tax benefit of $249,000 and $659,000, respectively, associated with the loss before income taxes and certain Canadian research and development and investment tax credits at DNAG.

The Company's cash balance totaled $77.0 million at June 30, 2013 compared to $87.9 million at December 31, 2012. Working capital was $91.7 million at June 30, 2013 compared to $103.5 million at December 31, 2012. For the six months ended June 30, 2013, the Company used $9.3 million to fund operations, including the advertising and promotional activities related to the OraQuick® In-Home HIV test. Cash used to fund operations in the second quarter of 2013 was $1.6 million.

Third Quarter 2013 Outlook

The Company expects consolidated net revenues to range from $24.0 to $24.5 million and is projecting a consolidated net loss of approximately $0.09 - $0.10 per share for the third quarter of 2013.

Financial Data
Condensed Consolidated Financial Data
(In thousands, except per-share data)
         
Unaudited
     
  Three months ended Six months ended
  June 30, June 30,
  2013 2012 2013 2012
Results of Operations        
Net revenues  $ 24,337  $ 22,616  $ 45,501  $ 43,560
Cost of products sold  9,838  7,917  18,973  15,129
Gross profit  14,499  14,699  26,528  28,431
Operating expenses:        
Research and development  2,693  3,113  6,050  6,556
Sales and marketing  12,369  9,014  26,243  16,888
General and administrative  5,013  6,112  10,400  12,178
Total operating expenses  20,075  18,239  42,693  35,622
Operating loss  (5,576)  (3,540)  (16,165)  (7,191)
Other income (expense)  42  (113)  (5)  (234)
Loss before income taxes  (5,534)  (3,653)  (16,170)  (7,425)
Income tax benefit  (249)  (91)  (659)  (611)
Net loss   $ (5,285)  $ (3,562)  $ (15,511)  $ (6,814)
Loss per share:        
Basic and Diluted  $ (0.10)  $ (0.07)  $ (0.28)  $ (0.14)
         
Weighted average shares:        
Basic and Diluted 55,559 48,235 55,504 48,021

Summary of Revenues by Market and Product (Unaudited)
  Three Months Ended June 30, 
  Dollars   Percentage of Total Net Revenues
Market 2013 2012 % Change 2013 2012
           
Infectious disease testing  $ 11,965  $ 10,387 15% 49% 46%
Substance abuse testing  2,113  2,888 (27) 9 13
Cryosurgical systems  4,177  4,503 (7) 17 20
Molecular collection systems  4,655  3,341 39 19 15
Insurance risk assessment  1,153  1,220 (5) 5 5
Net product revenues  24,063  22,339 8 99 99
Licensing and product development  274  277 (1) 1 1
Net revenues  $ 24,337  $ 22,616 8% 100% 100%
   
   
  Six Months Ended June 30, 
  Dollars   Percentage of Total Net Revenues
Market 2013 2012 % Change 2013 2012
           
Infectious disease testing  $ 22,654  $ 20,164 12% 50% 47%
Substance abuse testing  4,362  4,974 (12) 9 12
Cryosurgical systems  7,261  7,981 (9) 16 18
Molecular collection systems  8,586  6,638 29 19 15
Insurance risk assessment  2,162  2,320 (7) 5 5
Net product revenues  45,025  42,077 7 99 97
Licensing and product development  476  1,483 (68) 1 3
Net revenues  $ 45,501  $ 43,560 4% 100% 100%
     
     
  Three Months Ended Six Months Ended
  June 30,  June 30, 
OraQuick® Revenues 2013 2012 % Change 2013 2012 % Change
             
Domestic HIV  $ 8,088  $ 8,432 (4)%  $15,761  $ 16,580 (5)%
International HIV  745  744  --   1,300  1,403 (7)
Domestic HIV OTC  1,993  --  N/A  3,435  --  N/A
Domestic HCV  690  742 (7)  1,119  1,279  (13)
International HCV  247  212 17  486  493 (1)
Net OraQuick® revenues  $ 11,763  $ 10,130 16%  $22,101  $ 19,755 12%
     
     
  Three Months Ended Six Months Ended
  June 30,  June 30, 
Intercept® Revenues 2013 2012 % Change 2013 2012 % Change
             
Domestic  $ 1,342  $ 1,958 (31)%  $ 2,745  $ 3,482 (21)%
International  98  291 (66)  356  337 6
Net Intercept® revenues  $ 1,440  $ 2,249 (36)%  $ 3,101  $ 3,819 (19)%
     
     
  Three Months Ended Six Months Ended
  June 30,  June 30, 
Cryosurgical Systems Revenues 2013 2012 % Change 2013 2012 % Change
             
Professional domestic  $ 1,497  $ 1,944 (23)%  $ 2,388  $ 3,316 (28)%
Professional international  257  371 (31)  605  657 (8)
Over-the-Counter  2,423  2,188 11  4,268  4,008 6
Net cryosurgical systems revenues  $ 4,177  $ 4,503 (7)%  $ 7,261  $ 7,981 (9)%
     
     
Condensed Consolidated Balance Sheets (Unaudited) June 30, 2013 December 31, 2012
Assets    
Cash   $ 76,964  $ 87,888
Accounts receivable, net  15,355  17,545
Inventories  12,497  12,758
Other current assets  2,885  2,212
Property and equipment, net  18,138  18,546
Intangible assets, net  24,159  27,207
Goodwill  24,017  25,445
Other non-current assets  410  124
Total assets  $ 174,425  $ 191,725
     
Liabilities and Stockholders' Equity    
Accounts payable  $ 3,381  $ 3,380
Deferred revenue  4,400  5,580
Accrued expenses  8,196  7,960
Other non-current liabilities  383  89
Deferred income taxes  3,511  4,401
Stockholders' equity  154,554  170,315
Total liabilities and stockholders' equity  $ 174,425  $ 191,725
   
   
  Six months ended
  June 30, 
Additional Financial Data (Unaudited) 2013 2012
     
Capital expenditures  $ 1,092  $ 730
Depreciation and amortization  $ 3,221  $ 3,614
Stock based compensation  $ 2,835  $ 2,521
Cash used in operating activities  $ 9,278  $ 2,296

Conference Call

The Company will host a conference call and audio webcast to discuss the Company's 2013 second quarter financial results, business developments and financial guidance for the third quarter of 2013, 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, Ronald H. Spair, Chief Financial Officer and Chief Operating Officer, and Kathleen Weber, Senior Vice President and General Manager, Consumer Products. 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 877-348-9357 (Domestic) or 970-315-0488 (International) and reference Conference ID #19672741 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 August 14, 2013, by dialing 855-859-2056 (Domestic) or 404-537-3406 (International) and entering the Conference ID #19672741.

About OraSure Technologies

OraSure Technologies is a leader in the development, manufacture and distribution of oral fluid diagnostic and collection devices and other technologies designed to detect or diagnose critical medical conditions. Its innovative products include rapid tests for the detection of antibodies to HIV and HCV at the point of care and testing solutions for detecting various drugs of abuse. In July 2012, the Company received approval from the U.S. Food and Drug Administration to sell its OraQuick® In-Home HIV Test directly to consumers in the over-the-counter (OTC) market – making it the first and only rapid OTC HIV test approved in the U.S. In addition, the Company is a leading provider of oral fluid sample collection, stabilization and preparation products for molecular diagnostic applications. 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, and commercial and industrial entities. The Company's products enable healthcare providers to deliver critical information to patients, empowering them to make decisions to improve and protect their health. For more information on OraSure Technologies, please visit www.orasure.com.

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 an 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; 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 or minimum purchase requirements for the Company's products; impact of replacing distributors; inventory levels at distributors and other customers; ability to integrate and realize the full benefits of the Company's acquisition of DNA Genotek; ability of DNA Genotek to achieve its financial and strategic objectives; ability to identify, complete, integrate and realize the full benefits of future acquisitions; impact of competitors, competing products and technology changes; impact of the economic downturn, 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, including the OraQuick® In-Home HIV test; market acceptance of oral fluid testing or other products; changes in market acceptance of products based on product performance, extended shelf life or other factors; 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 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, 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 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, 2012, 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.
CONTACT: Ronald H. Spair         Chief Financial Officer         610-882-1820         Investorinfo@orasure.com         www.orasure.com

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