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Increased Testing Revenues Boost Opko Health Q2 Revenues 47 Percent

This story has been updated with information from the company's earnings call. 

NEW YORK – Opko Health reported after the close of the market on Thursday a 47 percent increase year over year in total revenues as service revenues grew 58 percent.

For the three months ended June 30, the Miami-based company reported total revenues of $442.4 million, up from $301.2 million a year ago. It missed the consensus Wall Street estimate of $456.4 million.

Service revenues shot up to $397.2 million from $251.0 million a year ago, largely due to increases in volumes of COVID-19, clinical, and genomic testing, while product revenues grew 22 percent to $35.7 million from $29.3 million and revenues from the transfer of intellectual property declined 55 percent to $9.5 million from $20.9 million.

During the second quarter of 2021, Opko subsidiary BioReference Laboratories' test volume increased 32 percent as it processed approximately 2.8 million COVID-19 PCR tests. Opko added it has the capacity to process more than 100,000 PCR tests per day currently. It also performed approximately 132,000 COVID-19 serology tests and has significant additional capacity.

In a conference call to discuss the firm's financial results, Jon Cohen, BioReference's executive chairman, said that while the firm has seen some demand for antibody testing, it hasn't been "what anybody would've predicted early on."

Phillip Frost, Opko's chairman and CEO, noted that BioReference's core business and specialty testing volumes were continuing to rebound to pre-pandemic levels. Cohen added that the progress was partially due to patients returning to doctors' offices for routine testing.

BioReference also announced during the quarter a deal with Royal Caribbean to provide COVID-19 testing for US-based crew and guests, the first COVID-19 testing program in the cruise industry, as well as an agreement with Major League Baseball to test players, staff, stadium employees, and league staff. It renewed previous COVID-19 testing agreements with Major League Soccer and the National Football League.

Demand for COVID-19 testing came largely from organizations interested in on-site surveillance and screening programs, Cohen said. However, he added that the lab has seen an increase in volumes in the past two weeks because of the rapidly spreading delta variant.

The company is currently averaging about 20,000 COVID-19 tests per day in July. Throughout the second quarter, the lab performed more than 240,000 point-of-care SARS-CoV-2 tests and has tested more than 650,000 students to date in its school testing programs.

Cohen added that the firm has seen almost no orders for combined SARS-CoV-2 and influenza tests, although that could change in the fall as flu season begins.

BioReference's core testing volume was up 55 percent in the second quarter compared to the prior-year period, with a particularly strong showing in the women's health specialty testing business, where clinical women's health business volumes increased by 25 percent and revenues increased by 35 percent compared to Q2 2020, Cohen said.

Clinical test volumes have been below historical levels but higher than 2020 volumes, Opko CFO Adam Logal said on the conference call. He added that the firm expects the base business to slowly return to its pre-pandemic volumes.

Oncology also saw significant growth compared to both 2020 and 2019 levels — solid tumor testing, hematological malignancies liquid tumor testing, and cancer genomics all more than doubled compared to pre-pandemic 2019 levels, while myeloid testing has more than tripled since 2019, Cohen said.

BioReference subsidiary GeneDx saw its volumes grow 84 percent, driven by demand for its exome test offerings, Cohen said.

The firm renewed its contract with UnitedHealthcare as part of its preferred lab network for an additional three years, he added. BioReference and GeneDx are also now testing providers for Highmark of Delaware, formerly exclusive to Laboratory Corporation of America.

The lab's Scarlet Health program, a digital health service for patients to receive phlebotomy services at their homes, is currently in 73 markets across the US. In June, the program was in 11 markets nationwide.

The firm increased its R&D spending 3 percent year over year to $18.2 million in Q2 2021 from $17.6 million and increased its SG&A costs 46 percent to $113.2 million from $77.7 million.

Opko had a net loss of $16.2 million, or $.03 per share, in the recently completed quarter compared to a profit of $33.7 million, or $.05 per share, a year ago. The Q2 2021 net loss included an $11.1 million non-cash, non-recurring loss due to the issuance of shares in connection with its $55.4 million convertible notes exchange in May. It slightly missed the consensus Wall Street estimate of a loss per share of $.02.

The company exited Q2 2021 with $65.8 million in cash and cash equivalents.

Logal said the firm expects revenues for the third quarter of 2021 to be between $270 million and $300 million, with revenues from services to be between $230 million and $270 million, product revenues between $30 million and $35 million, and other revenues between $3 million and $5 million. It expects between a net loss of $5 million to a net profit of $5 million.