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Opko Health Q1 Revenues Down 5 Percent

NEW YORK – Opko Health said after the close of the market on Wednesday that its first quarter revenues decreased 5 percent year over year.

For the three months ended March 31, the firm reported revenues of $211.5 million, down from $222.5 million in Q1 2019, and below the consensus Wall Street estimate of $216.9 million.

Service revenues were down 5 percent at $170.8 million from $178.9 million a year ago, and product revenues increased 23 percent to $31.1 million from $25.3 million, while revenues from the transfer of intellectual property declined 48 percent to $9.6 million from $18.3 million.

Opko processed nearly 16,000 4Kscore tests during the quarter, down 18 percent from Q1 2019.

In November, Medicare Administrative Contractor Novitas issued a final local coverage determination for the 4Kscore test under certain criteria. During the first quarter of 2020, Opko began its salesforce expansion for the test, but the COVID-19 pandemic led to a significant drop-off in orders, the company said. On a conference call to discuss the financial results, Executive VP of Administration Steve Rubin said the company expected a return to growth once stay-at-home orders were listed and noted Opko would continue to seek reimbursement from commercial payors.

CEO and Chairman Philip Frost said on the call that declines in physician office visits and elective medical procedures also negatively affected Opko's base testing business. Senior VP and CFO Adam Logal added that the diagnostics segment experienced a 60 percent decline in testing volumes in the last two weeks of March compared to the previous year, not including the offset from SARS-CoV-2 testing. Including SARS-CoV-2 testing, the overall volume decline was approximately 7 percent compared to the first quarter of 2019, Logal said.

Opko's BioReference Laboratories began offering PCR-based tests for SARS-CoV-2 in March and has run approximately 700,000 tests so far, with a daily capacity of 35,000 PCR-based tests. BioReference Executive Chairman Jon Cohen said the lab aims to reach 40,000 tests per day in the next week.

Last month, the lab also began offering antibody testing for the virus. Cohen said the company was primarily using Roche and DiaSorin's serology platforms, and the company expects to expand antibody testing capacity to 400,000 tests per day by mid-May.

Cohen noted on the call the company expects to announce new strategic partnerships with hospitals and large medical groups in the upcoming months.

Opko's GeneDx business saw 14 percent growth in its whole-exome sequencing volumes, while neuromuscular and neurodevelopment had a nearly 10 percent growth. Cohen attributed the growth to a more focused commercial strategy and increased sales force.

In Q1, the company's R&D costs decreased 40 percent year over year to $21.8 million from $36.5 million, while its SG&A spending also declined 20 percent to $76.1 million from $95.2 million.

Opko posted a net loss of $59.1 million, or $.09 per share, for Q1 2020, compared to a net loss of $80.8 million, or $.14 per share, in Q1 2019. It equaled the consensus Wall Street estimate of a loss of $.09 per share.

The company exited Q1 with $34.5 million in cash, cash equivalents, and marketable securities. Opko also accessed nearly $30 million of additional capital from the CARES Act after the quarter ended.

Logal said on the call the company was withdrawing its 2020 financial guidance due to uncertainty surrounding the COVID-19 pandemic. Previously, Opko expected full year 2020 revenues from services to be between $715 million and $740 million, product revenues to be between $130 million and $150 million, and revenues from the transfer of intellectual property to be between $20 million and $30 million.