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Opko Health Q2 Revenues Fall 14 Percent

NEW YORK (360Dx) – Opko Health said after the close of market on Wednesday that its second quarter revenues dropped 14 percent year over year.

For the three months ended June 30, revenues were $226.4 million, down from $263.7 million for the same quarter last year, but above the Wall Street estimate of $225.6 million.

Service revenues were down 17 percent to $178.5 million from $216.1 million the year before. Product revenues were $28.7 million, up less than 1 percent from $28.5 million in Q2 2018. Other revenue including from transfer of intellectual property was essentially flat at $19.2 million, compared to $19.1 million in the year-ago quarter.

On a conference call following release of the results, Jon Cohen, executive chairman of Opko's BioReference Laboratories business, noted that the company's GeneDx business had a strong quarter, posting 16 percent growth in test volume and 12 percent growth in hospital- and health system-based orders.

He added that workflow changes have improved the thoughput of some GeneDx tests by 27 percent compared to Q2 2018.

Both GeneDx and BioReference were selected to be part of UnitedHealthcare's preferred lab network, Cohen noted. Both labs also became in-network providers with Humana during the quarter, providing access to 11 million patients.

Opko Chairman and CEO Phillip Frost highlighted on the call Medicare administrative contractor Novitas' proposed limited local coverage determination for the company's 4kscore prostate cancer test, which had previously been issued a non-coverage determination.

He added that Opko was now preparing an application for a premarket approval submission for the test with the US Food and Drug Administration. The company had submitted a de novo request to the FDA in June, but received feedback from the agency indicating that the PMA route would be more appropriate, Frost said.

Opko's pharma business saw prescriptions of its RAYALDEE kidney disease drug rise 92 percent compared to Q2 2018.

Opko CFO Adam Logal said the company anticipated Q3 2019 revenues of $215 million to $233 million and an operating loss of between $37 million and $65 million.

The company's net loss for the quarter rose to $59.8 million, or $.10 per share, compared to a net loss of $6.2 million, or $.01 per share, in the second quarter of 2018, beating analysts' consensus estimate of a loss of $.11 per share.

Logal noted that the widening net loss figure was driven by reimbursement cuts due to the Protecting Access to Medicare Act along with increased denial rates of clinical lab and genomic tests. He added that this was the first full quarter in which the company did not receive Medicare reimbursement for 4kscore tests and noted that Opko would not record revenue from 4kscore tests done for Medicare beneficiaries until the Novitas coverage decision became finalized, after which it would work with Medicare to adjudicate claims from the non-coverage period.

The company's R&D costs dropped 3 percent to $28.3 million from $29.2 million in the same quarter last year. Its SG&A expenses rose less than one percent year over year to $88.5 million from $87.7 million.

The company's cash, cash equivalents, and marketable securities at the end of the quarter were $111.1 million.

In Thursday morning trading on Nasdaq, Opko stock was up 1 percent to $1.97.