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SARS-CoV-2 Testing Drives Opko Health Q2 Revenues Up 33 Percent

NEW YORK – Opko Health reported after the close of the market on Thursday a 33 percent uptick year over year in total revenues as service revenues grew 40 percent.

For the three months ended June 30, the Miami-based company reported total revenues of $301.2 million, up from $226.4 million a year ago. It topped the consensus Wall Street estimate of $245.6 million.

Service revenues shot up to $251.0 million from $178.5 million a year ago, while product revenues grew 2 percent to $29.3 million from $28.7 million, and revenues from the transfer of intellectual property rose 9 percent to $20.9 million from $19.2 million.

In a statement, the firm said that its service revenues grew primarily due to increased SARS-CoV-2 testing volumes, offset partially by reduced clinical and genomic test volumes resulting from physician office closures and stay-at-home orders because of the coronavirus pandemic. On a conference call to discuss the financial results, Jon Cohen, executive chairman of Opko subsidiary BioReference Laboratories, said the base business had returned to about 80 percent of pre-COVID volumes. 

BioReference processed about 2.2 million COVID-19 molecular tests during the recently completed quarter, and the company currently has a capacity of more than 50,000 tests daily. Cohen said it has plans to scale up capacity to 100,000 tests per day in the next several weeks, although he said daily testing volumes were limited by supply constraints of reagents and consumables. BioReference has also provided 400,000 serology tests measuring SARS-CoV-2 antibodies.

CEO Phil Frost said the company had tried to modulate its capacity with demand so a backlog didn't develop and the firm could maintain its 72-hour turnaround time for COVID-19 testing. 

Opko also said that it had forged several testing partnerships with states, cities, professional sports associations, and healthcare organizations during the quarter, including the New York State Department of Health, New York City Health and Hospital Corporation, and MagnaCare. It additionally provided testing services for more than 500 drive-thru and retail testing sites throughout the country. Cohen noted that BioReference has also contracted with several colleges and universities to provide testing as schools open for the fall semester, saying "the demand, as you can imagine, continues to be enormous at every single sector across the economy."

Late last year, Opko's 4Kscore prostate cancer test received positive local coverage determination from Medicare administrative contractor Novitas. The 4Kscore test measures blood levels of four kallikrein protein markers, including total PSA, free PSA, intact PSA, and hK2, and combines the data with patient age, DRE, and prior biopsy history in an effort to reduce unnecessary biopsies. 

In Q2 2020 more than 8,400 4Kscore tests were performed in spite of the coronavirus pandemic that resulted in fewer patient visits and restricted access to physicians, the firm said. Medicare also granted a favorable decision on the company's appeal for reimbursement of 14,000 4Kscore tests performed in 2019 before the LCD went into effect, which resulted in an additional $10.9 million in revenue, CFO Adam Logal said. 

In recent weeks volume has increased as the economy has reopened and patients have resumed seeing their doctors, the company added.

Opko also said that it received a $6.2 million grant from the Coronavirus Aid, Relief, and Economic Security Act during the second quarter.

The firm reduced its R&D costs 38 percent year over year to $17.6 million in Q2 2020 from $28.3 million and lowered its SG&A spending 12 percent to $77.7 million from $88.5 million.

Opko had a profit of $33.7 million, or $.05 per share, in the recently completed quarter compared to a net loss of $59.8 million, or $.10 per share, a year ago. It beat the consensus Wall Street estimate of a loss per share of $.07.

The company exited Q2 2020 with $21.6 million in cash and cash equivalents.

Logal said the firm is forecasting daily COVID-19 testing between 45,000 and 55,000 during the third quarter, including both molecular and serology tests. He added that the demand for testing in July had led to higher volumes than any previous month.