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Oxford Immunotec Q3 Revenues Grow 32 Percent

NEW YORK – Oxford Immunotec said Tuesday that its third quarter revenues rose 32 percent year over year, driven in part by strong Asia-Pacific sales and an expanding tuberculosis testing market.

For the three months ended Sept. 30, the firm logged $21.2 million in revenues compared to $16.1 million in the year-ago quarter, beating analysts' average estimate for $20.3 million. On a constant currency basis, year-over-year revenue growth was 31 percent.

Q3 product sales rose 33 percent to $20.1 million from $15.1 million, primarily as a result of growth in the Asia-Pacific region and derived in particular from a normalizing of ordering patterns in Japan after a slow start to 2019, the Oxford, UK-based firm said.

Service revenues in the third quarter rose 15 percent to $1.1 million from $955,000, reflecting growth in tuberculosis testing volumes in the firm's UK service laboratory.

Oxford Immunotec completed the sale of its US laboratory services business in November 2018.  As such, total revenue, product revenue, and US revenues for Q3 2019 and Q3 2018 are not fully comparable, the firm noted. Total revenues, product revenues, and US revenues for Q3 2018 included sales to its former US laboratory services business at an intercompany transfer price that had been eliminated in consolidation, the firm said. Total revenues, product revenues, and US revenues for Q3 2019 included revenue from the firm's T-Spot.TB test kits and related accessories sold to Quest Diagnostics under the terms of a long-term supply agreement.

"The third quarter represents another quarter of strong revenue growth, and improving profitability," Peter Wrighton-Smith, CEO of Oxford Immunotec, said in a statement. "The company continues to see the global tuberculosis market expanding, and we are investing in both commercial resources and research and development to capitalize on this opportunity.”

In Q3, the firm reported $5.7 million in US revenues, up 99 percent from $2.9 million in the prior-year quarter. Its US revenues reflected an increase in tuberculosis testing volumes and a higher selling price as well as a comparison to 2018 sales to the firm's US laboratory services business at an intercompany transfer price formerly eliminated in consolidation.

Oxford Immunotec booked $2.7 million in Europe and the rest-of-the-world (ROW) revenues, up 19 percent from $2.3 million in the prior-year quarter. Higher revenues in Q3 2019 reflected continued strong growth in Russia and in the firm's UK service laboratory, Oxford Immunotec said.

The firm reported $12.8 million in Asia revenues, up 17 percent from $10.9 million a year ago, driven by growth in Japan.

Wrighton-Smith said during a conference call to discuss the company's financial results that in Q3 it saw strong growth in Russia as partnerships forged there began to achieve traction.

In recent times, the firm has also taken steps associated with partners in China.

In September, Oxford Immunotec announced that it had terminated an agreement with distributors of its tuberculosis-related products in China and Hong Kong due to undisclosed "material breaches" by the distributors in the performance of their obligations.

"We have now taken on direct relationships with our customers rather than having those customer relationships controlled by our former distributor," Wrighton-Smith said on the conference call. He added that the firm has agreed to terms with Shanghai Pharmaceutical as its nonexclusive third-party logistics provider in China.

In the US, Oxford Immunotec continues "to focus on the success of our relationship with Quest Diagnostics," Wrighton-Smith said. A principal rationale for the transaction with Quest was to "significantly increase the reach and competitiveness of T-Spot.TB in the US market," he said, adding that the strategy is now bearing fruit.

Quest continues to make progress on implementation, expanding availability of T-Spot.TB through its commercial team and its joint venture network, Wrighton-Smith said, adding that sales growth as a result of the partnership is increasingly coming from new ordering providers, primarily in physician offices.

Wrighton-Smith noted that in Europe, Oxford Immunotec has launched T-Cell Select, an immune cell separation reagent kit designed to simplify workflow, improve throughput, and reduce hands-on time and labor costs in performing the T-Spot.TB test.

The firm expects to begin clinical trials in the US soon in advance of a submission for US Food and Drug Administration approval, he said.

JP Morgan analyst Tycho Peterson said in a research note Tuesday that such an approval "should further facilitate [T-Spot.TB] market penetration down the road."

Oxford Immunotec reported Q3 net income of $717,000, or $.03 per share, compared to a net loss of $3.5 million, or $.13 per share, in the year-ago period. Pro forma EPS from continuing operations was $.04, beating analysts' expectations for a loss of $.03 per share.

Oxford Immunotec's Q3 R&D expenses were $1.6 million, down 11 percent from $1.8 million a year ago. Its SG&A expenses were $12.9 million, down 12 percent from $14.6 million in Q3 2018.

The company finished the quarter with $184.3 million in cash and cash equivalents.

The firm expects revenues of between $72 million and $73 million for full year 2019, and revenues of between $16.4 million and $17.4 million for Q4. It had previously announced that it anticipated full-year 2019 revenues of $71 million to $73 million. Prior to the release of the financial results, analysts on average were expecting full-year 2019 revenues of $72 million and Q4 revenues of $17.4 million.

In morning trading on the Nasdaq, Oxford Immunotec shares were up less than 1 percent at $16.28.