Post by icemandios on Aug 9, 2022 23:14:17 GMT
OraSure Reports 2Q22 Record Revenue of $80.2 Million Growing 39% Year-Over-Year
InteliSwab ® revenue of $43.1 million in Q2, up 95% sequentially with significant scaling in production
InteliSwab ® gross margins improve sequentially by over 2,000 basis points
GAAP gross margin of 34.4%, a decrease of 200 basis points sequentially; non-GAAP gross margins improve 250 basis points sequentially to 40.1% despite headwinds
Q2 GAAP EPS of ($0.26) and non-GAAP EPS of ($0.00)
Company expects to generate positive cash flow in the 4Q22
Announces strategic transformation, including appointment of new Chief Financial Officer and changes in the Board of Directors to occur in November
Management to Host Analyst/Investor Call and Webcast Today at 5:00 p.m. ET
BETHLEHEM, Pa., Aug. 09, 2022 (GLOBE NEWSWIRE) -- OraSure Technologies, Inc. (NASDAQ: OSUR), a leader in point-of-care and home diagnostic tests, specimen collection devices, and microbiome laboratory and analytical services, today announced its financial results for the three months ended June 30, 2022.
“This quarter we delivered strong revenue growth driven by InteliSwab ® which helped offset headwinds in our core business. We have commenced our strategic transformation with a three-part approach intended to strengthen our foundation, elevate our existing lines of business and accelerate growth. Our team also made significant progress in cost productivity and manufacturing efficiency priorities which we believe will lead to positive cash flow later this calendar year,” said OraSure President and CEO Carrie Eglinton Manner.
She continued, “Our teams are committed to innovating and operating with disciplined execution and accountability across the organization. We see an important strategic niche for OraSure as a Company leveraging our strengths in the face of current shifts in healthcare delivery. We are dedicated to facilitating testing and sample collection for patients at the point of care. In further evolving our organization’s strategic plan, we will provide updates on our progress. We are committed to driving sustained profitable growth over the long-term and to unlocking shareholder value.”
Financial Highlights
Net revenues for the second quarter of 2022 were $80.2 million, a 39% increase from the second quarter of 2021 and a new record for the Company.
Total revenues from the Company’s Diagnostic business unit were $60.4 million during the second quarter of 2022 and grew 213% relative to the same period last year. Revenue growth was driven by InteliSwab ® which grew 95% sequentially and offset a 10% decline in the base Diagnostic business.
Total product and service revenues for the Company’s Molecular Solutions business unit were $19.8 million during the second quarter of 2022, an increase of 1% sequentially and a decline of 48% from the second quarter of 2021. The reduction from 2Q21 was driven predominantly by changes in COVID-19 laboratory testing and the associated drop in the Company’s COVID-19 molecular collection kits.
GAAP gross margins in the quarter were 34.4% compared to 53.2% in the second quarter of last year. On a non-GAAP basis, gross margins this quarter improved 250 basis points sequentially to 40.1% based predominantly on improvements in InteliSwab ® manufacturing which offset the impact of product mix changes.
GAAP operating loss in the second quarter of 2022 was $21.3 million compared to operating income of $1.8 million in the second quarter of last year and GAAP operating loss of $16.0 million in the first quarter of 2022. The Company’s GAAP operating loss included the impact of the $3.8 million inventory reserve and $10.5 million in expenses tied to goodwill impairment and long-lived asset impairment. On a non-GAAP basis, the Company’s operating income improved by $5.2 million sequentially to a $1.4 million loss reflecting the significant improvements in InteliSwab ® gross margins and expense control.
Cash flow used in operations in the quarter was $9.7 million due mostly to working capital changes associated with the InteliSwab ® scale-up. Cash and investments totaled $95.8 million as of June 30, 2022.
Recent Business Highlights
InteliSwab ® COVID-19 Testing
InteliSwab ® revenue in the quarter grew to $43.1 million representing over 95% sequential growth relative to the first quarter.
Production volumes of InteliSwab ® scaled dramatically during the second quarter, and the Company has current capacity to produce approximately 1.6 million tests per week. The Company expects this capacity to nearly double by early 2023 given the opening of a new facility, hiring of new employees, and validation of additional production equipment.
Weekly production output for InteliSwab ® has increased approximately 14X since launch based upon dozens of processing step enhancements which have dramatically improved yield. Gross margins for InteliSwab ® improved by over 2,000 basis points in the quarter based upon these manufacturing efficiencies and better overhead absorption.
OraSure has now received more than $400 million in delivery orders from the US Defense Logistics Agency (DLA) under the Company’s procurement contract supporting the U.S. Department of Health and Human Services (HHS). The Company has been informed that HHS/DLA can continue to provide shipping instructions against these Delivery Orders past the contract expiration date of September 13, 2022.
Diagnostics Business Results (excluding InteliSwab ® )
Excluding InteliSwab ® revenue, Diagnostics base business revenue was $17.3 million in the quarter and declined 10% compared to the prior year quarter. Year-to-date Diagnostics base business revenue was relatively flat.
International Diagnostics revenue was $7.8M in Q2, a 9% decline compared to the prior year period. Over half of the international revenue decline was due to the one-time restock in Q2 2021 of HCV professional tests in Asia as COVID-19 receded. In addition, the expiration of the Bill and Melinda Gates Foundation subsidy for HIV self-tests occurred in the second quarter of last year. Excluding this subsidy international revenue declined 5% in the quarter.
U.S. Diagnostics revenue, excluding InteliSwab ® , declined 10% year-over-year due to the lapping of revenue associated with the Center for Disease Control’s, “Let’s Stop HIV Together,” home testing program in Q2 2021. This program procured our OraQuick ® HIV OTC tests and sent them to consumer’s homes in Q1 and Q2 of 2021.
Molecular Solutions
Core collection kits declined 21% in the quarter on a year-over-year basis, as expected following timing shifts which positively impacted Q1 results. YTD core collection kits were relatively flat and grew 1% sequentially relative to the first quarter.
Sales of OraSure’s sample collection devices for molecular/PCR COVID-19 testing decreased significantly year-over-year to $0.3 million in the second quarter of 2022 compared to $12.0 million in the prior year period. The decline is due to the continued transition to COVID-19 point of care solutions and decreases in laboratory testing following reimbursement changes.
Total microbiome revenue, including kits and services, was $3.0 million in the qua
rter and declined 45% relative to the second quarter of last year. During the quarter, kits and services revenue was negatively impacted by the timing of customer clinical trials, shifts in research funding and the market exit of a key customer.
Launched the new OMNIgene ® GUT RNA/DNA collection kits. This Research Use Only product, based on the OMNIgene ® Gut DNA kit, incorporates a newly developed & validated reagent to stabilize microbial DNA and RNA from human fecal samples.
Financial Guidance
The Company is guiding toward 3Q22 revenue of $90 to $95 million representing 67% to 76% growth relative to the third quarter of last year. The Company also anticipates continued improvements in gross margins, and improved cash flow from operations in the third quarter. As such, the Company is guiding to having positive cash flow from operations beginning in the fourth quarter of this fiscal year.
New Chief Financial Officer
OraSure has appointed Kenneth J. McGrath as the Company’s new Chief Financial Officer, effective August 8, 2022. Mr. McGrath replaces Scott Gleason, who has served as the interim Chief Financial Officer and will continue in his role leading Investor Relations and Corporate Communications going forward. Mr. McGrath joined Quest Diagnostics in February 2014 and most recently served as Vice President in Finance, where he led an organization responsible for over $7 billion in revenue. He helped build Quest’s Advanced Diagnostics business accelerating growth while improving profitability with expanded capabilities and new innovation. His expertise also includes value creation via partnerships and successfully assessing and integrating multiple acquisitions. Mr. McGrath’s finance operating responsibility also spanned information technology, R&D and medical functions, as well as commercial regions amongst other responsibilities. Prior to his time at Quest, Mr. McGrath held various leadership positions in finance operating roles at Johnson & Johnson Inc. He began his career at Ford Motor Company, received an M.B.A from the University of Michigan and a B.S from the University of Notre Dame, and is a CFA Charterholder.
Changes to Board of Directors
As part of OraSure’s strategic transformation, we are also announcing important changes to our Board of Directors. On August 8, 2022, each of Michael Celano, Chairman of the Board, Ronny Lancaster, and Eamonn Hobbs resigned from the Board, to be effective November 8, 2022. Upon the effectiveness of such resignations, we will reduce our Board size from 10 to 7. We thank Mr. Celano, Mr. Lancaster, and Mr. Hobbs for their many committed years of service.
In addition, effective November 8, 2022, Mara G. Aspinall will be appointed as Chair of the Board. Ms. Mara G. Aspinall, MBA, is a diagnostic industry leader and pioneer. Ms. Aspinall is Managing Director of Health Catalysts Group and BlueStone Venture Partners following her 30-year operating career in diagnostics where she served in many executive roles, including Chief Executive of Ventana Medical Systems, now Roche Tissue Diagnostics, as well as Genzyme Genetics. An author and frequent speaker, Ms. Aspinall co-founded the Biomedical Diagnostics Master Degree program at Arizona State University.
Inducement Awards
On August 8, 2022, OraSure granted Ken McGrath, OraSure’s newly appointed Chief Financial Officer, an inducement award of 131,883 shares of restricted stock. The restricted stock granted to Mr. McGrath will vest in three equal annual installments, on the first, second and third anniversaries of the grant date, subject in each case to Mr. McGrath’s continued employment through the relevant vesting date.
In addition, on August 8, 2022, OraSure granted Zachary Wert, the Company’s newly appointed Senior Vice President, Global Operations, an inducement award of 49,456 shares of restricted stock. The restricted stock granted to Mr. Wert will vest in full on August 8, 2023, subject to Mr. Wert’s continued employment through that date.
The inducement awards for each of Mr. McGrath and Mr. Wert were approved by OraSure’s Board of Directors, and were granted pursuant to Nasdaq Listing Rule 5635(c)(4), as an inducement material their acceptance of employment with OraSure.
10-Q
InteliSwab ® revenue of $43.1 million in Q2, up 95% sequentially with significant scaling in production
InteliSwab ® gross margins improve sequentially by over 2,000 basis points
GAAP gross margin of 34.4%, a decrease of 200 basis points sequentially; non-GAAP gross margins improve 250 basis points sequentially to 40.1% despite headwinds
Q2 GAAP EPS of ($0.26) and non-GAAP EPS of ($0.00)
Company expects to generate positive cash flow in the 4Q22
Announces strategic transformation, including appointment of new Chief Financial Officer and changes in the Board of Directors to occur in November
Management to Host Analyst/Investor Call and Webcast Today at 5:00 p.m. ET
BETHLEHEM, Pa., Aug. 09, 2022 (GLOBE NEWSWIRE) -- OraSure Technologies, Inc. (NASDAQ: OSUR), a leader in point-of-care and home diagnostic tests, specimen collection devices, and microbiome laboratory and analytical services, today announced its financial results for the three months ended June 30, 2022.
“This quarter we delivered strong revenue growth driven by InteliSwab ® which helped offset headwinds in our core business. We have commenced our strategic transformation with a three-part approach intended to strengthen our foundation, elevate our existing lines of business and accelerate growth. Our team also made significant progress in cost productivity and manufacturing efficiency priorities which we believe will lead to positive cash flow later this calendar year,” said OraSure President and CEO Carrie Eglinton Manner.
She continued, “Our teams are committed to innovating and operating with disciplined execution and accountability across the organization. We see an important strategic niche for OraSure as a Company leveraging our strengths in the face of current shifts in healthcare delivery. We are dedicated to facilitating testing and sample collection for patients at the point of care. In further evolving our organization’s strategic plan, we will provide updates on our progress. We are committed to driving sustained profitable growth over the long-term and to unlocking shareholder value.”
Financial Highlights
Net revenues for the second quarter of 2022 were $80.2 million, a 39% increase from the second quarter of 2021 and a new record for the Company.
Total revenues from the Company’s Diagnostic business unit were $60.4 million during the second quarter of 2022 and grew 213% relative to the same period last year. Revenue growth was driven by InteliSwab ® which grew 95% sequentially and offset a 10% decline in the base Diagnostic business.
Total product and service revenues for the Company’s Molecular Solutions business unit were $19.8 million during the second quarter of 2022, an increase of 1% sequentially and a decline of 48% from the second quarter of 2021. The reduction from 2Q21 was driven predominantly by changes in COVID-19 laboratory testing and the associated drop in the Company’s COVID-19 molecular collection kits.
GAAP gross margins in the quarter were 34.4% compared to 53.2% in the second quarter of last year. On a non-GAAP basis, gross margins this quarter improved 250 basis points sequentially to 40.1% based predominantly on improvements in InteliSwab ® manufacturing which offset the impact of product mix changes.
GAAP operating loss in the second quarter of 2022 was $21.3 million compared to operating income of $1.8 million in the second quarter of last year and GAAP operating loss of $16.0 million in the first quarter of 2022. The Company’s GAAP operating loss included the impact of the $3.8 million inventory reserve and $10.5 million in expenses tied to goodwill impairment and long-lived asset impairment. On a non-GAAP basis, the Company’s operating income improved by $5.2 million sequentially to a $1.4 million loss reflecting the significant improvements in InteliSwab ® gross margins and expense control.
Cash flow used in operations in the quarter was $9.7 million due mostly to working capital changes associated with the InteliSwab ® scale-up. Cash and investments totaled $95.8 million as of June 30, 2022.
Recent Business Highlights
InteliSwab ® COVID-19 Testing
InteliSwab ® revenue in the quarter grew to $43.1 million representing over 95% sequential growth relative to the first quarter.
Production volumes of InteliSwab ® scaled dramatically during the second quarter, and the Company has current capacity to produce approximately 1.6 million tests per week. The Company expects this capacity to nearly double by early 2023 given the opening of a new facility, hiring of new employees, and validation of additional production equipment.
Weekly production output for InteliSwab ® has increased approximately 14X since launch based upon dozens of processing step enhancements which have dramatically improved yield. Gross margins for InteliSwab ® improved by over 2,000 basis points in the quarter based upon these manufacturing efficiencies and better overhead absorption.
OraSure has now received more than $400 million in delivery orders from the US Defense Logistics Agency (DLA) under the Company’s procurement contract supporting the U.S. Department of Health and Human Services (HHS). The Company has been informed that HHS/DLA can continue to provide shipping instructions against these Delivery Orders past the contract expiration date of September 13, 2022.
Diagnostics Business Results (excluding InteliSwab ® )
Excluding InteliSwab ® revenue, Diagnostics base business revenue was $17.3 million in the quarter and declined 10% compared to the prior year quarter. Year-to-date Diagnostics base business revenue was relatively flat.
International Diagnostics revenue was $7.8M in Q2, a 9% decline compared to the prior year period. Over half of the international revenue decline was due to the one-time restock in Q2 2021 of HCV professional tests in Asia as COVID-19 receded. In addition, the expiration of the Bill and Melinda Gates Foundation subsidy for HIV self-tests occurred in the second quarter of last year. Excluding this subsidy international revenue declined 5% in the quarter.
U.S. Diagnostics revenue, excluding InteliSwab ® , declined 10% year-over-year due to the lapping of revenue associated with the Center for Disease Control’s, “Let’s Stop HIV Together,” home testing program in Q2 2021. This program procured our OraQuick ® HIV OTC tests and sent them to consumer’s homes in Q1 and Q2 of 2021.
Molecular Solutions
Core collection kits declined 21% in the quarter on a year-over-year basis, as expected following timing shifts which positively impacted Q1 results. YTD core collection kits were relatively flat and grew 1% sequentially relative to the first quarter.
Sales of OraSure’s sample collection devices for molecular/PCR COVID-19 testing decreased significantly year-over-year to $0.3 million in the second quarter of 2022 compared to $12.0 million in the prior year period. The decline is due to the continued transition to COVID-19 point of care solutions and decreases in laboratory testing following reimbursement changes.
Total microbiome revenue, including kits and services, was $3.0 million in the qua
rter and declined 45% relative to the second quarter of last year. During the quarter, kits and services revenue was negatively impacted by the timing of customer clinical trials, shifts in research funding and the market exit of a key customer.
Launched the new OMNIgene ® GUT RNA/DNA collection kits. This Research Use Only product, based on the OMNIgene ® Gut DNA kit, incorporates a newly developed & validated reagent to stabilize microbial DNA and RNA from human fecal samples.
Financial Guidance
The Company is guiding toward 3Q22 revenue of $90 to $95 million representing 67% to 76% growth relative to the third quarter of last year. The Company also anticipates continued improvements in gross margins, and improved cash flow from operations in the third quarter. As such, the Company is guiding to having positive cash flow from operations beginning in the fourth quarter of this fiscal year.
New Chief Financial Officer
OraSure has appointed Kenneth J. McGrath as the Company’s new Chief Financial Officer, effective August 8, 2022. Mr. McGrath replaces Scott Gleason, who has served as the interim Chief Financial Officer and will continue in his role leading Investor Relations and Corporate Communications going forward. Mr. McGrath joined Quest Diagnostics in February 2014 and most recently served as Vice President in Finance, where he led an organization responsible for over $7 billion in revenue. He helped build Quest’s Advanced Diagnostics business accelerating growth while improving profitability with expanded capabilities and new innovation. His expertise also includes value creation via partnerships and successfully assessing and integrating multiple acquisitions. Mr. McGrath’s finance operating responsibility also spanned information technology, R&D and medical functions, as well as commercial regions amongst other responsibilities. Prior to his time at Quest, Mr. McGrath held various leadership positions in finance operating roles at Johnson & Johnson Inc. He began his career at Ford Motor Company, received an M.B.A from the University of Michigan and a B.S from the University of Notre Dame, and is a CFA Charterholder.
Changes to Board of Directors
As part of OraSure’s strategic transformation, we are also announcing important changes to our Board of Directors. On August 8, 2022, each of Michael Celano, Chairman of the Board, Ronny Lancaster, and Eamonn Hobbs resigned from the Board, to be effective November 8, 2022. Upon the effectiveness of such resignations, we will reduce our Board size from 10 to 7. We thank Mr. Celano, Mr. Lancaster, and Mr. Hobbs for their many committed years of service.
In addition, effective November 8, 2022, Mara G. Aspinall will be appointed as Chair of the Board. Ms. Mara G. Aspinall, MBA, is a diagnostic industry leader and pioneer. Ms. Aspinall is Managing Director of Health Catalysts Group and BlueStone Venture Partners following her 30-year operating career in diagnostics where she served in many executive roles, including Chief Executive of Ventana Medical Systems, now Roche Tissue Diagnostics, as well as Genzyme Genetics. An author and frequent speaker, Ms. Aspinall co-founded the Biomedical Diagnostics Master Degree program at Arizona State University.
Inducement Awards
On August 8, 2022, OraSure granted Ken McGrath, OraSure’s newly appointed Chief Financial Officer, an inducement award of 131,883 shares of restricted stock. The restricted stock granted to Mr. McGrath will vest in three equal annual installments, on the first, second and third anniversaries of the grant date, subject in each case to Mr. McGrath’s continued employment through the relevant vesting date.
In addition, on August 8, 2022, OraSure granted Zachary Wert, the Company’s newly appointed Senior Vice President, Global Operations, an inducement award of 49,456 shares of restricted stock. The restricted stock granted to Mr. Wert will vest in full on August 8, 2023, subject to Mr. Wert’s continued employment through that date.
The inducement awards for each of Mr. McGrath and Mr. Wert were approved by OraSure’s Board of Directors, and were granted pursuant to Nasdaq Listing Rule 5635(c)(4), as an inducement material their acceptance of employment with OraSure.
10-Q