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Opko Q4 Revenues Slide 30 Percent

 

NEW YORK (360Dx) – Opko reported after the close of the market on Thursday that its fourth quarter revenues decreased 30 percent year over year.

 For the three months ended Dec. 31, 2017, total revenues came in a $193.7 million, compared to $275.5 million for the same quarter last year, and well short of the consensus Wall Street estimate of $301.4 million.

Services revenues fell 37 percent year over year to $148.1 million from $234.6 million for the same quarter last year. Revenues from products rose 67 percent to $33.8 million from $20.2 million in the same quarter last year, and revenues from the transfer of intellectual property dropped 43 percent to $11.8 million from $20.7 million in the fourth quarter of 2016.

Opko did not break out its diagnostic data for the past quarter, but chairman and CEO Phillip Frost acknowledged during a conference call that "there were a number of headwinds" at the company's BioReference Laboratories subsidiary.

In January, the company announced the resignation of BioReference CEO Gregory Henderson. Opko has interviewed several candidates for his replacement and expects to name a new CEO soon, according to Frost. In the interim, BioReference Laboratories is being managed by a team of department leaders.

In addition, implementation of a billing system at the clinical lab portion of BioReference Laboratories was problematic, according to Adam Logal, Opko senior vice president and chief financial officer.

"While we worked aggressively on claims in the billing process, we were not as successful as we anticipated in cash collections. As we completed our review of the year, it became clear that we would not realize the cash collections on those early claims, and as a result, changed our estimates which negatively affected our fourth quarter revenues," Logal said on the call.

BioReference's GeneDx business was a bright spot for the company, according to Steve Rubin, Opko executive vice president, administration, with a 49 percent year-over-year increase in exome-based testing volumes.

For Q4 2017 Opko's R&D expenses were $34.2 million, up 24 percent from $27.6 million during the year-ago period. Its SG&A expenses grew 3 percent year over year to $124.6 million from $120.5 million.

For the quarter, Opko recorded a net loss of $213.9 million, or $.38 per share, compared to a net loss of $13.7 million, or $.04 per share in Q4 2016. The consensus Wall Street estimate was for a loss of $.08 per share.

The company said the Q4 2017 loss included $147.7 million of non-recurring cash items, consisting of $73.3 million of revenue adjustments, a $61.2 million tax provision, and $13.2 million of intangible impairment related to Varubi, a NK-1 receptor antagonist used to prevent delayed nausea and vomiting related to chemotherapy, that Opko licensee Tesaro has recently announced plans to discontinue due to post marketing cases of allergic reaction.

For the full-year 2017, Opko's total revenues were trimmed 12 percent to $1.07 billion from $1.22 billion, and short of the analysts' average estimate of $1.18 billion.

Service revenues were down 12 percent to $889.1 million in 2017 from $1.01 billion in 2016, and product revenues were up 29 percent to $107.7 million from $83.5 million. IP-related revenues were down 44 percent to $70.7 million from $126.1 million.

For 2017, the firm posted a loss of $308.9 million, or $.55 per share, compared to a net loss of $25.1 million, or $.05 per share, in 2016. The consensus Wall Street estimate was for a loss of $.25 per share for 2017.

The company reported cash, cash equivalents, and marketable securities of $91.5 million as of December 31, 2017.

For Q1 2018, Opko said that it assumes volumes will grow at GeneDx, but that volume will decline approximately 3 percent at its core clinical lab. As a result, revenues for the quarter is expected to be in the range of $195 million to $215 million, based on new accounting rules that went into effect in January, Logal said. That would represent a drop of 14 percent to 6 percent from the year-ago period, which would have recorded revenues of $228 million under comparable accounting rules.