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Ortho Clinical Diagnostics Q2 Revenues Rise 26 Percent

NEW YORK – Ortho Clinical Diagnostics reported after the close of the market on Wednesday that its second quarter revenues rose 26 percent year over year.

For the three months ended July 4, the Raritan, New Jersey-based firm reported revenues of $492.5 million compared to $390.5 million in Q2 2020, beating the Wall Street analysts' average estimate of $475.9 million.

The firm's Q2 core revenues, which exclude contract manufacturing and other licensing revenues, rose 26 percent year over year to $487.5 million compared to $386.2 million a year ago.

"We made meaningful progress during the quarter with strong organic revenue growth across each of our segments, and expansion of our menu with new, innovative assays as well as the launch of Ortho's Optix Reader, rounding out our Transfusion Medicine portfolio," Chris Smith, chairman and CEO of Ortho, said in a statement. The Optix Reader is a card reader to automate reaction grading.

Smith noted on a conference call to discuss its financial results that Ortho competes with its clinical chemistry and immunoassay, or IA, systems and tests in the clinical laboratory business, with an approximately $26 billion addressable market.

In the clinical laboratory business, "moving customers from a standalone analyzer to an integrated analyzer is fundamental to our growth strategy," he said. "In 2020, our clinical labs revenue mix was weighted heavily towards the clinical [chemistry] category with a 62 to 38 [percent] split, while the broader market was reversed with 68 percent of the revenues coming from the [immunoassays] business."

"We believe this mismatch between our revenue mix and the proportions in the broader market represents a significant growth opportunity for us to expand our IA market share and to grow our revenue," Smith said.

Ortho's diagnostics business excluding COVID-19 product revenues climbed 27 percent year over year in the second quarter, but COVID-19 assay sales are expected to decline in the second half of this year, Smith said.

During the second quarter, the company completed a securitization of its $75.0 million accounts receivable facility and reduced its leverage ratio.

The company posted a Q2 net loss of $20.0 million, or $.09 per share, compared to a net loss of $41.3 million, or $.28 per share, in Q2 2020. Ortho's adjusted earnings per share was $.16 and beat the analysts' average estimate of $.14.

The company's Q2 R&D expenses rose 18 percent year over year to $30.4 million from $25.8 million, and its selling, marketing, and administrative expenses rose 27 percent year over year to $138.7 million from $109.5 million.

Ortho revised its core revenue guidance for full-year 2021, and now expects revenues to be between $1.95 and $1.98 billion, up from a previously announced guidance of between $1.93 billion and $1.96 billion. It expects adjusted EPS will be between $.67 and $.72, up from a previous estimate of $.64 to $.69.

"The strong momentum and recovery seen across our core business, paired with the ongoing optimization of our operations, allows us to raise our guidance across all metrics included in our fiscal 2021 outlook," Joseph Busky, Ortho Clinical Diagnostics' CFO, said in a statement.

On the conference call, Busky said that its clinical labs business posted Q2 revenues of $325.1 million, an increase of 25 percent year over year from $260.3 million, and its transfusion medicine business posted revenues of $162.4 million, an increase of 29 percent year over year from $125.9 million.

Ortho ended Q2 with $200.9 million in cash and cash equivalents.

In Thursday morning trading on the Nasdaq, Ortho's shares were down more than 6 percent to $20.34.