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Opko Health Q1 Revenues More Than Double Due to COVID-19 Test Demand

Note: This story has been updated with additions from the company's earnings call.

NEW YORK – Opko Health said after the close of the market on Wednesday that its first quarter revenues more than doubled year over year.

For the three months ended March 31, the firm reported revenues of $545.2 million compared to $211.5 million in Q1 2020 and well above the consensus Wall Street estimate of $495.1 million.

Service revenues almost tripled to $507 million from $170.8 million a year ago, primarily due to COVID-19 testing. Product revenues increased 9 percent to $33.9 million from $31.1 million, while revenues from the transfer of intellectual property declined 55 percent to $4.3 million from $9.6 million due to a decrease in the amortization of payments from Pfizer regarding the growth hormone somatrogon.

Opko subsidiary BioReference Laboratories processed approximately 4.3 million COVID-19 PCR tests in the quarter and has the capacity to process more than 100,000 PCR tests per day. It also performed 200,000 COVID-19 serology tests. Since the start of the pandemic, BioReference has performed 14.1 million COVID-19 PCR tests and is averaging 40,000 to 50,000 tests per day, BioReference's chairman, Jon Cohen, said on a conference call to discuss Opko's financial results.

BioReference has signed COVID-19 testing deals with multiple major sports leagues, including the National Hockey League and National Basketball Association, and Cohen announced a new agreement to provide testing for players and staff of the Women's National Basketball Association. Across its sports portfolio, BioReference has provided 1 million PCR tests and 150,000 point-of-care tests in the first quarter, Cohen said.

As demand for diagnostic testing for SARS-CoV-2 decreases and shifts to demand for surveillance and screening testing, BioReference is prepared to continue its POC testing, Cohen said. The lab has added personnel for POC testing, developed a POC workflow for high-throughput events, and created custom proprietary software to schedule and report results for six different POC platforms, Cohen added.

Opko CFO Adam Logal said BioReference anticipates performing 3 million to 4 million COVID-19 tests during the second quarter of 2021, although the lab has capacity "well in excess of these levels." BioReference has already performed more than 1 million tests in the second quarter, he added.

As for its base business, Cohen said it continues to make progress to return to 2019 levels as more physicians' offices reopen. The lab added new business in women's health and oncology, and its liquid tumor hematology offerings have bounced back to pre-pandemic levels. Solid tumor offerings are almost back to pre-pandemic levels, and somatic genetic offerings have nearly doubled year over year. Larger accounts, such as hospitals and health systems, are seeing increases in inpatient visits month over month, and Cohen said he expects these trends to continue as vaccinations expand across the US.

Genetic testing from subsidiary GeneDx grew more than 10 percent in the first quarter compared to 2020 volumes driven by interest in its exome testing offerings and genome offerings across its recent client base.

Adult neurology testing is also growing and is expected to be a growth contributor as the year progresses despite reimbursement headwinds impacting revenue growth this quarter, Cohen said.

Logal said BioReference assumes its base business will remain at current levels during the second quarter.

In Q1, the company's R&D costs decreased 11 percent year over year to $19.3 million from $21.8 million, while its SG&A spending increased 48 percent to $112.3 million from $76.1 million.

Opko posted a net income of $31.1 million, or $.05 per share, for Q1 2021, compared to a net loss of $59.1 million, or $.09 per share, in Q1 2020. It equaled the consensus Wall Street estimate of a gain of $.05 per share.

The company exited Q1 with $89.5 million in cash, cash equivalents, and marketable securities. Opko has availability under its line of credit with JP Morgan of $64.7 million and an unutilized $100 million credit facility.

Logal said Opko expects revenues for the second quarter to be between $420 million and $490 million, with revenue from services between $385 million and $450 million. Revenue from products is expected to be between $30 million and $34 million, and other revenue is expected to be between $4 million and $6 million.