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OraSure Technologies, Inc. Announces 2014 Third Quarter Financial Results

Published: Nov 06, 2014

BETHLEHEM, Pa., Nov. 5, 2014 (GLOBE NEWSWIRE) -- OraSure Technologies, Inc. (Nasdaq:OSUR), a market leader in oral fluid diagnostics, today announced its consolidated financial results for the three and nine months ended September 30, 2014.

Financial Highlights

  • Consolidated net revenues for the third quarter of 2014 were $27.8 million, a 13% increase from the comparable quarter of 2013. Consolidated net revenues for the nine months ended September 30, 2014 were $77.8 million, an 11% increase from the comparable period of 2013.
     
  • Net revenues for the Company's OraQuick® rapid HCV test in the domestic marketplace were $1.3 million and $3.2 million for the third quarter and first nine months of 2014, respectively, representing a 99% and 80% increase over the third quarter and first nine months of 2013, respectively. 
     
  • Net revenues generated by DNAG were $6.9 million and $17.5 million for the third quarter and first nine months of 2014, respectively, representing a 38% and 29% increase over the third quarter and first nine months of 2013, respectively. 
     
  • Licensing and product development revenues were $3.4 million and $4.2 million for the quarter and nine months ended September 30, 2014, respectively, and represent the recognition of payments under the Company's' HCV collaboration with AbbVie. 
     
  • Consolidated net income for the third quarter of 2014 was $1.1 million, or $0.02 per share on a fully diluted basis, which compares to a net loss of $1.9 million, or $0.03 per share, for the third quarter of 2013. Consolidated net loss for the nine months ended September 30, 2014 was $2.0 million, or $0.04 per share, which compares to a net loss of $17.4 million, or $0.31 per share, for the comparable period of 2013. 
     
  • Cash resources totaled $98.9 million at September 30, 2014 and working capital amounted to $104.8 million.

"We are very pleased with the Company's financial performance for the third quarter," said Douglas A. Michels, President and CEO of OraSure Technologies. "Our molecular collection systems business achieved a record level of revenues, our OraQuick® HCV business has continued to grow and we reported a consolidated net profit for the second quarter in a row. We also continued to make great progress in the execution of our HCV collaboration with AbbVie, which will help drive continued growth in future periods."

Financial Results

Consolidated net product revenues for the third quarter of 2014 remained flat at $24.5 million. Consolidated net product revenues for the nine month period ended September 30, 2014 increased 6% over the prior year period, primarily as a result of higher sales of the Company's molecular collection systems, OraQuick® HCV and cryosurgical systems products. These increases were partially offset by lower sales of the OraQuick® professional HIV product and OraQuick® HIV In-Home test, and lower substance abuse and insurance risk assessment product sales.

Consolidated licensing and product development revenues for the third quarter and first nine months of 2014 were $3.4 million and $4.2 million, respectively. Consolidated licensing and product development revenues for the third quarter and first nine months of 2013 were $147,000 and $623,000, respectively. Licensing and product development revenues in 2014 represent the recognition of payments under the Company's HCV collaboration agreement with AbbVie. Licensing and product development revenues in 2013 represent royalties paid on domestic outsales of Merck's OTC cryosurgical wart removal product, pursuant to a license and settlement agreement that expired in 2013. 

Consolidated gross margin for the three and nine months ended September 30, 2014 was 67% and 63%, respectively. Consolidated gross margin for the three and nine months ended September 30, 2013 was 61% and 59%, respectively. Gross margin for the current quarter and nine-month period improved largely as a result of the higher licensing and product development revenues and a more favorable product mix resulting from higher margin DNAG sales.  

Consolidated operating expenses increased to $17.8 million during the third quarter of 2014 compared to $17.0 million in the comparable period of 2013. For the nine months ended September 30, 2014, consolidated operating expenses were $50.9 million, a decrease from the $59.7 million reported for the nine months ended September 30, 2013. The increase in the third quarter of 2014 was primarily related to higher research and development supply costs and higher staffing, legal and consulting expenses. The decrease for the nine-month period of 2014 was primarily due to a favorable $5.5 million contract termination payment from Roche Diagnostics, lower promotional expenses associated with the Company's OraQuick® In-Home HIV test and decreased research and development expenses due to lower clinical trial and staffing costs. Promotional expenses for the OraQuick® In-Home test were $7.7 million and $14.2 million for the first nine months of 2014 and 2013, respectively. General and administrative expenses in the nine-month period increased due to higher legal, staffing and consulting costs.

For the three and nine months ended September, 2014, the Company recorded Canadian income tax expense of $10,000 and a Canadian income tax benefit of $33,000, respectively. For the three and nine months ended September 30, 2013, the Company recorded Canadian income tax benefits of $127,000 and $786,000, respectively. The tax benefits were recorded as a result of certain Canadian research and development and investment tax credits and, for the 2013 periods, DNAG's loss before income taxes.

The Company's cash and short-term investment balance totaled $98.9 million at September 30, 2014 compared to $93.2 million in cash at December 31, 2013. Working capital was $104.8 million at September 30, 2014 compared to $100.6 million at December 31, 2013. For the nine months ended September 30, 2014, the Company's operations generated $8.4 million of cash.

Fourth Quarter 2014 Outlook

The Company expects consolidated net revenues to range from $28.0 to $28.5 million and is projecting a consolidated net loss of approximately $0.04 to $0.05 per share for the fourth quarter of 2014.

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