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Oxford Immunotec Q1 Revenues Relatively Flat

NEW YORK (360Dx) – Oxford Immunotec today reported relatively flat revenues for its first quarter compared to a year ago, primarily due to lower test utilization related to immigrant screening.

For the three months ended March 31, total revenues were $21.4 million, slightly down from $21.5 million a year ago, and above the consensus Wall Street estimate of $21.0 million.

Product revenues were $7.9 million, down 6 percent from $8.4 million in the prior-year period, primarily due to lower revenue in Asia because of order timing. Service revenues were $13.4 million, up 2 percent from $13.1 million, primarily driven by increased tuberculosis revenues in the US and the United Kingdom.

By disease indication, tuberculosis revenues were $18.9 million, up 2 percent from $18.5 million in Q1 2017, while the firm's tick-borne disease franchise posted $2.5 million in revenues, down 17 percent from $3.0 million a year ago.

"Our first quarter results were in line with our expectations, with immigration headwinds and severe winter weather in the US as well as unfavorable order timing in Asia, all contemplated in our revenue guidance,” Peter Wrighton-Smith, CEO of Oxford Immunotec, said in a statement. He said that he expects the company to continue its "long track record of strong revenue growth in the remaining quarters of 2018, while also advancing the company towards profitability.”

On a conference call to discuss the firm's financial results, Wrighton-Smith said that the firm has already begun scaling back its babesia blood screening business and is looking to exit the business, which was in line with comments on its previous earnings call for Q4 2017.

He noted that except for several non-recurring factors that negatively impacted growth, he remains encouraged that the firm's "overall account retention rates remain high," and "strong productivity in new account growth [is] being maintained."

"If you strip out immigration and weather [effects], TB-revenue growth would have been double digits," Wrighton-Smith said, adding that the year-over-year decline in revenues related to refugee testing is about $1 million per quarter.

In the tick-borne disease segment, business "is particularly weather dependent," and the firm does not see its performance within that segment in Q1, "as a good read-through for the rest of the year," he said. "We embark [upon] Q2 with a higher number of customers, stronger relationships, and more experience in the market than we had this time last year, and it gives us confidence that we will be able to grow [the tick-borne disease] business strongly in the remainder of 2018."

Wrighton-Smith said that in its new-customer base, the firm sees a trend toward testing for tick-borne co-infections rather than for Lyme disease alone. He added that the firm believes that it is "medically appropriate" that most tests screen for co-infections.

US revenue was $13.4 million in the first quarter of 2018, down 1 percent from $13.5 million in the prior-year period, primarily due to the impact of severe weather and lower sales of blood donor screening kits. Europe & rest of the world revenue was $2.3 million, up 28 percent compared to $1.8 million in the first quarter of 2017, driven by strong tuberculosis revenue growth in the UK and continental European markets. Asia revenue was $5.7 million, down 8 percent compared to $6.2 million in the first quarter of 2017.

The company's R&D spending decreased 3 percent year-over-year to $3.7 million from $3.8 million, while its SG&A costs fell 1 percent to $16.3 million from $16.5 million.

Oxford Immunotec posted a net loss of $10.3 million, or $.40 per share, compared to a net loss of $8.1 million, or $.36 per share, in Q1 2017, and beat the consensus Wall Street estimate of a loss per share of $.45. Excluding a $2.4 million credit recorded in the first quarter of 2017, net loss was "essentially flat" versus the prior-year period, the firm said.

It ended the quarter with $77.2 million in cash and cash equivalents.

The firm said that for full-year 2018, revenue is anticipated to be between $112 million and $115 million. Analysts on average expect revenues of $112.3 million for the year.

Piper Jaffray analyst William Quirk said in a research note today that while Oxford Immunotec's "results were again uninspiring, the business has several catalysts (largely outside the US) that should return the franchise to double-digit growth."

In early morning trading on the Nasdaq, Oxford Immunotec shares were down more than 1 percent at $12.69.