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OraSure Technologies Q2 Revenues Drop 25 Percent, Miss Analysts Estimates

NEW YORK – OraSure Technologies reported after the close of the market on Wednesday that its second quarter revenues fell 25 percent year over year, with a decline in revenues for genomics and infectious disease testing products offsetting increased revenues in specimen collection devices.

For the three months ended June 30, the Bethlehem, Pennsylvania-based company reported revenues of $29.3 million, down from $38.8 million a year earlier and missing the analysts' average estimate of $32.8 million.

On a call to recap the earnings results, CEO Stephen Tang said OraSure expects to rebound from the revenue decline through COVID-19 assays currently being developed. "We believe the back half of the year is looking very strong," Tang said, adding, "We expect the company to post year-over-year revenue growth and to further execute on our innovation growth strategy."

The firm's product and service revenues for the quarter fell to $28.3 million from $37.3 million in Q2 2019.

Within products, molecular collections systems revenues rose 5 percent to $18.1 million from $17.3 million, including $8.5 million in sales of oral fluid collection devices for COVID-19 molecular testing.

Also within molecular collections systems, the firm saw a 59 percent decrease in revenues from microbiome products to $853,000 from $2.1 million, and a 53 percent decrease in genomics product revenues to $6.5 million from $13.9 million. Total laboratory service revenues increased 86 percent to $2.2 million from $1.2 million in the second quarter of 2019. Laboratory services include revenues generated by both of the company's laboratory service subsidiaries which are now operating under the Diversigen brand.

The firm's Q2 revenues from infectious disease testing fell 35 percent to $8.7 million from $13.3 million a year earlier. Its risk assessment testing revenues fell 51 percent to $1.5 million from $3.1 million, and its royalty income fell 35 percent to $727,000 from $1.1 million.

Within the firm's infectious disease testing revenues, sales of its OraQuick tests for HIV and HCV fell 35 percent to $8.5 million from $13.0 million in Q2 2019. Total OraQuick HIV sales fell 28 percent to $7.1 million from $9.9 million — domestic OraQuick HIV sales fell 28 percent to $3.2 million from $4.5 million and international OraQuick HIV sales fell 28 percent to $3.9 million from $5.4 million.

Total OraQuick HCV sales fell 55 percent to $1.4 million from $3.1 million in the year-ago quarter — domestic OraQuick HCV sales plummeted 64 percent to $757,000 from $2.1 million, and international OraQuick HCV revenues dropped 35 percent to $641,000 from $983,000.

OraSure's Q2 net loss for the second quarter of 2020 was $10.5 million, or $.16 per share, compared to a net income of $4.4 million, or $.07 per share, for the second quarter of 2019. Analysts had estimated a loss of $.09.

The firm's R&D expenses for the quarter rose 53 percent to $6.9 million from $4.5 million in Q2 2019 and its SG&A and marketing costs rose 36 percent to $20.4 million from $15.0 million.

OraSure ended the quarter with $173.9 million in cash and cash equivalents and $82.6 million in short-term investments. 

OraSure CFO Roberto Cuca noted on the call that while the firm is not providing formal guidance for the remainder of 2020 due to the uncertainty of the effect of the coronavirus pandemic on its operations, "We continue to anticipate that sales of our existing and new products for COVID-19 testing will offset the negative impact of the pandemic on our non-COVID-19 business.”

OraSure also said it is developing a COVID-19 rapid antigen in-home self-test and an ELISA-based oral fluid COVID-19 antibody test, both of which it expects to launch in the fourth quarter.

Specifically, Tang said on the call that the firm has pivoted from an oral fluid specimen to a lower nostril swab for the instrument-free antigen test, and is currently in clinical evaluations.

OraSure is scaling up manufacturing capacities for the test and will hire an additional 150 employees to support expansion. The firm has capacity to make 35 million OraQuick tests per year, Cuca said, with about half of this capacity dedicated to HIV, HCV, and Ebola testing. It has initiated installation of new manufacturing lines at its facilities in Bethlehem and in Thailand to expand to 55 million tests annually by Q1 next year, and 70 million by the third quarter.

OraSure intends to launch the antigen test in Q4 for clinician testing of symptomatic patients or those who are suspected of infection, with a subsequent EUA amendment for a prescription-use self-test, and finally an over-the-counter at-home self-test for asymptomatic people. The goal is for the first two to happen in the fourth quarter, "and the OTC claim to happen soon thereafter," Tang said.

The automated, oral fluid ELISA test will also launch in the fourth quarter. "For our antibody test, our current capacity is approximately 10 million units per year, of which about 3 million units are devoted to existing products," Cuca said. "We plan to double this capacity by installing lines at a third-party site ... by the fourth quarter of 2021."

Tang noted that the Q4 antigen test launch is expected in October, but will likely still overlap with school and workplace re-openings. "I don't think we are missing significant opportunity because I don't think there are any better solutions out there to mass test," Tang said. "This will be a first-of-its kind product — an instrument-free, rapid test — and I think there is plenty of room in the marketplace to have some very exciting opportunities of size."

OraSure's shares were down 30 percent at $13.68 in Thursday morning trading on the New York Stock Exchange.