NEW YORK – Ortho Clinical Diagnostics reported after the close of the market on Thursday that its fourth quarter revenues rose 9 percent year-over-year.
For the three months ended Jan. 3, 2021, the Raritan, New Jersey-based firm reported revenues of $516.6 million compared to $473.7 million, and beating analysts' average estimate of $508 million.
The firm's Q4 core revenues rose 10 percent year over year to $501 million compared to $455.1 million a year ago, and its non-core revenues dropped 16 percent to $15.6 million compared to $18.6 million in the prior-year quarter. Ortho's core revenues consisted of sales from its Clinical Laboratory and Transfusion Medicine product portfolios.
The company continued to see strong momentum in its base business as reflected in its Q4 core revenues growth, Chris Smith, Ortho's chairman and CEO, said in a statement. "This was mainly driven by the continued double-digit growth in our integrated instrument installed base, as well as higher volumes in both the Clinical Laboratory and Transfusion Medicine product portfolios," he said.
Ortho, a pure-play diagnostics company, went public at $17 per share in January.
When it completed its IPO in early February 2021, it fully exercised an over-allotment option by the underwriters and raised approximately $1.4 billion in net proceeds that was used for debt reduction, Ortho said. It also created additional financial flexibility by amending its revolving credit facility in February, increasing it from $350 million to $500 million and extending the maturity date to 2026.
On a conference call to discuss the company's financial results, Ortho's CFO Joseph Busky said that in Q4, the company's Clinical Labs business rose 12 percent year over year on a constant currency basis to $334.8 million and its Transfusion Medicine business rose 3 percent year over year on a constant currency basis to $166.4 million.
Smith said on the call that standalone analyzers, usually used for clinical chemistry testing, represent about 75 percent of Ortho's installed base. He noted that the firm launched its first analyzer that integrated clinical chemistry and immunoassay testing about 10 years ago, and since then, Ortho has converted about 24 percent of its installed base to the integrated system.
"As we move one of our existing customers from standalone to integrated systems, we increase our annual revenue by 65 percent because we expand our menu offerings for not only chemistry but also immunoassay," he said. Converting a customer to an integrated system adds 13 years to the agreement, he added.
Smith further noted that the "significant deleveraging" of its balance sheet following the IPO allows Ortho to continue to grow its business "not only organically, but also in partnerships and potential M&A opportunities."
The company is monitoring adjacent markets for potential M&A. "Our first focus has always been on our hospital customers to help make sure they're taken care of," Michael Iskra, the firm's executive vice president of commercial excellence and strategy, said on the call. However, the move toward decentralized testing, driven in part by the coronavirus pandemic, "dovetails with some of the other things we've talked about, whether it's getting into molecular as an adjacency, or point of care."
The company posted a Q4 net loss of $40.9 million, or $.28 per share, compared to net income of $1.6 million, or $.01 per share, in Q4 2019. Ortho said its adjusted EPS was $.19, which missed the analysts' average estimate of $.20 per share.
In Q4, Ortho's Q4 R&D expenses rose 27 percent year over year to $30.8 million from $24.3 million and its selling, marketing, and administrative expenses rose 4 percent year over year to $141.7 million from $135.6 million.
For full fiscal year 2020, Ortho reported revenues of $1.77 billion, down 2 percent year over year from $1.80 billion, and beating analysts' average estimate of $1.76 billion.
Ortho's 2020 R&D expenses rose 15 percent year over year to $112.9 million from $98.0 million and its selling, marketing, and administrative expenses dropped 5 percent year over year to $489.6 million from $515.1 million.
The company reported a net loss for 2020 of $211.9 million, or $1.45 per share, compared to a net loss of $156.9 million, or $1.08 per share, in 2019. Adjusted EPS for the recently completed quarter was $.34, matching the consensus Wall Street estimate.
For full-year 2021, Ortho said it anticipates core revenues to be between $1.86 billion and $1.9 billion, with constant currency core revenue growth of between 7 percent and 9 percent, and adjusted EPS to be between $.57 and $.63.
Ortho ended 2020 with $132.8 million in cash and cash equivalents.
In a research note on Thursday, Barclays analyst Luke Sergott said he "believes momentum will continue in the company's key growth drivers, namely integrated instrument placements and expansion/growth geographically."
Ortho shares were up more than 8 percent to $18.38 in Friday morning trading on the Nasdaq.