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Opko Health Q1 Revenues Slide 4 Percent

NEW YORK (360Dx) – Opko Health said after the close of the market on Tuesday that its first quarter revenues decreased 4 percent year over year.

For the three months ended March 31, the firm reported revenues of $254.9 million, down from $266.4 million in Q1 2017, but above the consensus Wall Street estimate of $236.9 million

Service revenues were down 8 percent at $211.3 million from $228.6 million, while product revenues grew 26 percent to $27.9 million from $22.2 million, and revenues from the transfer of intellectual property inched up less than 1 percent to $15.7 million from $15.6 million.

On a conference call to discuss the financial results, Opko CFO Adam Logal said that the decrease in Q1 2018 revenues reflect an approximately 3 percent volume decrease at its clinical lab BioReference Laboratories and overall reimbursement pressures as a result of the Protecting Access to Medicare Act, implemented on Jan. 1, which reduced how much Medicare reimburses for many routine tests.

Those declines were partially offset by double-digit volume increases in Opko's genomic tests. Overall, reimbursements for the company's 4Kscore, which uses four prostate-specific biomarkers to measure the risk of aggressive prostate cancer, increased by about 26 percent, "in line with the approved PAMA pricing," Logal added.

Opko also said that 4Kscore test utilization during the recently completed quarter was up 13 percent from the year-ago period. In Q1 there were about 21,000 4Kscore tests performed, Opko Executive Vice President, Administration Steven Rubin said on the call. He added that Opko will continue direct-to-consumer outreach to drive adoption of the test, and a new dedicated men's urology division will be implemented to market and sell the 4Kscore, along with Opko's suite of urology lab services and inherited cancer urology panels.

Rubin also said that in Q1 2018, BioReference subsidiary GeneDx saw a 56 percent year-over-year spike in its exome-based testing volume. Testing volume across GeneDx's complete menu, meanwhile, was up 13 percent year over year.

Additionally, during the recently completed quarter, GeneDx "finalized its overhaul of all its panel-based tests and will roll out new series of tests across multiple clinical areas starting later this month," including tests for pulmonary, renal, skeletal, gastrointestinal, and other conditions, Rubin said.

In November, Opko submitted a premarket approval application for the Claros point-of-care PSA test to the US Food and Drug Administration and the company remains hopeful that approval will come this year, Rubin said.

A second product utilizing the Claros platform to measure testosterone is advancing toward a 510(k) submission later this year, Opko said. Rubin added that the firm is also working on a vitamin D assay for the platform and could explore developing a women's panel comprised mostly of hormones.

The company's R&D costs rose 24 percent year over year to $32.9 million from $26.6 million, while its SG&A spending was cut 17 percent to $91.5 million from $109.9 million.

Opko posted a net loss of $43.1 million, or $.08 per share, for Q1 2018, compared to a net loss of $34.5 million, or $.06 per share, in Q1 2017. It beat the consensus Wall Street estimate of a loss of $.13 per share.

The company exited Q1 with $99.9 million in cash, cash equivalents, and marketable securities.

Last week, Geoff Monk was appointed general manager with overall responsibility for BioReference Labs. On the call, Rubin noted Monk's previous experience at Quest Diagnostics.

"Mr. Monk's enviable track record of operational excellence and deep and highly relevant understanding of operations and business strategy in this industry will be important in allowing us to capitalize fully on the opportunities in this dynamic marketplace," he said.

For the second quarter, service revenues are expected to be in the range of $205 and $225 million, Logal said. Product revenues are expected to be between $25 million and $30 million, while revenues from the transfer of intellectual property is anticipated to be between $15 million and $20 million.