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Opko Health Q3 Revenues Up 87 Percent

NEW YORK – Opko Health reported after the close of the market on Thursday that its third quarter revenues were up 87 percent year over year, driven largely by COVID-19 testing volumes. Looking at this again, we should delete "increased" b/c it reads like we're saying the Covid testing increased from a year ago, which is impossible, of course.

For the three months ended Sept. 30, Opko's revenues were $428.1 million compared to $228.8 million in Q3 2019. It beat the consensus Wall Street estimate of $376.4 million.

The firm said it received $382.5 million in revenues from services in Q3 2020, up 111 percent from $181.1 million in the same quarter last year. It also received $28.7 million in revenues from products, an increase of nearly 10 percent from $26.2 million in Q3 2019. Licensing and intellectual property revenues were $16.9 million, down 21 percent from $21.5 million in the third quarter of 2019 partially due to a decrease "in the amortization of payments received from Pfizer with respect to somatrogon," the firm said in a statement.

Somatrogon is a human growth hormone being developed and commercialized by Opko and Pfizer for the treatment of growth hormone deficiency in children.

During the third quarter, Opko's subsidiary BioReference Laboratories processed 3.5 million COVID-19 PCR tests and 300,000 COVID-19 serology tests, with current capacity for PCR testing reaching 70,000 tests per day and serology capacity of 400,000 tests per day. On a conference call to discuss the firm's results, BioReference Chairman Jon Cohen said the firm expected its PCR testing capacity to increase to 100,000 tests per day in the next six weeks. He added that the firm will announce the launch of an at-home test kit for COVID-19 in the next few weeks, along with a quantitative antibody test.

Cohen noted that the supply chain issues that had plagued laboratories earlier in the pandemic had "absolutely stabilized," and he also emphasized that while more testing was available in general, the next phase for returning to work and school would require even more testing with "increasing demand."

CFO Adam Logal said the company is anticipating performing between 3.2 million and 3.8 million COVID-19 tests during the fourth quarter.

Cohen also said multiple states had been in contact with BioReference to say they were reaching their capacity and may need more tests, particularly in the Midwest.

Opko Chairman and CEO Philip Frost said BioReference's base business was recovering but still below pre-pandemic levels and added the company was hopeful it would return to those levels by the end of the year. According to the firm's 10-Q form filed with the US Securities and Exchange Commission, volumes in the diagnostics segment excluding COVID-19 were down 9 percent in the third quarter compared to the same quarter in 2019.

Cohen said the specimen volume has improved with the base business down only a "high single digit percentage" from pre-pandemic levels. Some subcategories of women's health testing had returned to pre-COVID-19 levels, he added.

Cohen also said BioReference subsidiary's GeneDx volumes had returned to pre-pandemic levels and emphasized an agreement inked in August with Pediatrix Medical Group to offer genomic sequencing for neonatal intensive care patients under the brand name Detect Genomix. GeneDx also launched GenomeXpress, a rapid sequencing test to determine variations in any part of the genome, including both protein-coding and non-coding regions, Cohen said.

Also, Opko subsidiary GenPath launched its OnkoSight Advanced next-generation sequencing tests. The assays are for a number of common cancers including prostate cancer, lung cancer, melanoma, chronic lymphoid neoplasms, and others, according to GenPath's website. 

Opko's pharma business saw prescriptions of its Rayaldee kidney disease drug increase 13 percent compared to Q3 2019, and revenues from the drug reached $8.1 million in the recently completed quarter compared to $7.4 million in the same quarter last year.

Opko's net income for Q3 2020 was $23.7 million, or $.04 per share, compared to a net loss of $62 million, or $.11 per share, in Q3 2019. The consensus Wall Street estimate was EPS of $.05.

The Miami-based company spent $18.5 million in R&D, down 38 percent from $30 million in Q3 2019. The company's SG&A costs were up 24 percent to $99.9 million from $80.5 million in the same quarter last year, due to higher variable billing and compensation costs from increased volume and collections during the quarter, as well as a $3 million one-time cost to launch the serology antibody test, the firm wrote in its 10-Q.

Opko reported $36.3 million in cash, cash equivalents, and marketable securities as of Sept. 30. The firm received a $10 million grant from the Coronavirus Aid, Relief, and Economic Security Act during the quarter.

On the call, Logal said Opko expects total fourth quarter revenues to be between $400 million and $430 million, revenues from services to be $370 million to $400 million, revenues from products to be $25 million to $30 million, and other revenues to range between $6 million and $8 million. The firm also expects costs and expenses to be between $380 million and $400 million, with an operating profit of $20 million to $30 million.