Post by luxetvox on Feb 28, 2024 16:42:39 GMT
Mike Petusky of Barrington is the only analyst who has focused on the most important issue at Opko, namely the money-hemorrhaging lab. Bill and I have discussed this in detail and continued Mike's line of questioning from a couple quarters ago during our call.
Mike either wasn't on yesterday's live call, or if he was he chose not to ask questions. In any case, he digested the FUBAR quarter the same way I did, and came to a similar conclusion. As Highskier pointed out in the shout box, Barrington lowered the PT to $1.50 from $2. I don't have access to the report, but The Fly reported this little summary:
OPK: Opko Health price target lowered to $1.50 from $2 at Barrington
Barrington lowered the firm's price target on Opko Health to $1.50 from $2 and keeps an Outperform rating on the shares. The company's Q4 results included a small sales beat and a slight shortfall in terms of earnings, the analyst tells investors in a research note. The firm says BRL's operating performance took a material step backwards in the quarter.
This is exactly what jumped out at me. Consider the following:
In Q4 2022, BRLI had an operating loss of $23.1 million.
In Q3 2023, BRLI had a $4.6 million increase in revenue from the prior quarter, Q2 2023. Operating loss for the unit in Q3 2023 was $29.1 million.
In reporting the BRLI results for Q4 2023 yesterday, Logal said this:
"We reported revenue for Q4 2023 of $124.2 million, compared with $139.4 million for the 2022 period. This decline primarily reflects lower COVID testing of $7.1 million, as well as a change to our estimated collections of $8.1 million, partially offset by increased testing volumes." What he didn't mention was that there was also a quarter over quarter decrease in Diagnostics revenue. Q3 2023 revenue for BRLI was $131.7 million, nearly $5 million more than Q2. But somehow revenue went DOWN in Q4, this despite Zerhouni saying that BRLI"...signed over 300 new accounts in the fourth quarter of 2023 with over 40,000 accessions, additional accessions. And we've also signed major oncology groups like the Virginia Oncology group with 90 oncologists..."
So, testing volume went up but revenue declined (what the hell does 'a change to our estimated collections of $8.1 million' actually mean? In English. And costs increased (to $166.4 million), both QoQ vs Q3 2023 ($160.8 million) and YoY vs Q4 2022 ($162.5 million). Yes, there were $4.7 million of non-recurring costs for 'severance and retention programs'. But, the cost structure is still not showing any material improvement; while revenue is going down, even though the customer base and volumes are going up. Can everyone see the disconnect here? Something doesn't add up.
So, even though Logal didn't declaratively state what the operating loss was for the quarter, I will....it was $42.2 million, $37.5 million without the non-recurring charges. But even the latter amount is $14.4 million more than the prior year Q4 period, and $8.4 million more on a sequential basis (vs Q3 2023).
This is what Petusky is talking about, and what Logal glossed over. I mean, who do these jokers think they're fooling. Then we have Elias saying: "The 4Kscore test volume has continued to perform, and we expect these volumes to continue..." WTF does that mean? How about putting some numbers on these 'performing volumes'.
We got a tiny bit more info on Rayaldee than usual, with Frost mentioning a 13% increase in revenue for 2023 vs the prior year. But can they please give us the numbers, is that so hard?
Back to BRLI, reiterating what he said at JPM, and to Bill and I during our call, Logal said: "For our Diagnostics segment, as Elias outlined, we are diligently working to align the business to achieve cash flow breakeven by the middle of 2024 and profitability by the end of the year." Here's what I want to know: how are we going to achieve 'cash flow breakeven' in 6 months when we start the year with a +/- $40 million operating deficit, and revenue trending down? That doesn't compute.
You want to know why the stock is at or near all time lows? You want to know why Frost needs to go? Look no further than the inscrutable information outlined above.
Mike either wasn't on yesterday's live call, or if he was he chose not to ask questions. In any case, he digested the FUBAR quarter the same way I did, and came to a similar conclusion. As Highskier pointed out in the shout box, Barrington lowered the PT to $1.50 from $2. I don't have access to the report, but The Fly reported this little summary:
OPK: Opko Health price target lowered to $1.50 from $2 at Barrington
Barrington lowered the firm's price target on Opko Health to $1.50 from $2 and keeps an Outperform rating on the shares. The company's Q4 results included a small sales beat and a slight shortfall in terms of earnings, the analyst tells investors in a research note. The firm says BRL's operating performance took a material step backwards in the quarter.
This is exactly what jumped out at me. Consider the following:
In Q4 2022, BRLI had an operating loss of $23.1 million.
In Q3 2023, BRLI had a $4.6 million increase in revenue from the prior quarter, Q2 2023. Operating loss for the unit in Q3 2023 was $29.1 million.
In reporting the BRLI results for Q4 2023 yesterday, Logal said this:
"We reported revenue for Q4 2023 of $124.2 million, compared with $139.4 million for the 2022 period. This decline primarily reflects lower COVID testing of $7.1 million, as well as a change to our estimated collections of $8.1 million, partially offset by increased testing volumes." What he didn't mention was that there was also a quarter over quarter decrease in Diagnostics revenue. Q3 2023 revenue for BRLI was $131.7 million, nearly $5 million more than Q2. But somehow revenue went DOWN in Q4, this despite Zerhouni saying that BRLI"...signed over 300 new accounts in the fourth quarter of 2023 with over 40,000 accessions, additional accessions. And we've also signed major oncology groups like the Virginia Oncology group with 90 oncologists..."
So, testing volume went up but revenue declined (what the hell does 'a change to our estimated collections of $8.1 million' actually mean? In English. And costs increased (to $166.4 million), both QoQ vs Q3 2023 ($160.8 million) and YoY vs Q4 2022 ($162.5 million). Yes, there were $4.7 million of non-recurring costs for 'severance and retention programs'. But, the cost structure is still not showing any material improvement; while revenue is going down, even though the customer base and volumes are going up. Can everyone see the disconnect here? Something doesn't add up.
So, even though Logal didn't declaratively state what the operating loss was for the quarter, I will....it was $42.2 million, $37.5 million without the non-recurring charges. But even the latter amount is $14.4 million more than the prior year Q4 period, and $8.4 million more on a sequential basis (vs Q3 2023).
This is what Petusky is talking about, and what Logal glossed over. I mean, who do these jokers think they're fooling. Then we have Elias saying: "The 4Kscore test volume has continued to perform, and we expect these volumes to continue..." WTF does that mean? How about putting some numbers on these 'performing volumes'.
We got a tiny bit more info on Rayaldee than usual, with Frost mentioning a 13% increase in revenue for 2023 vs the prior year. But can they please give us the numbers, is that so hard?
Back to BRLI, reiterating what he said at JPM, and to Bill and I during our call, Logal said: "For our Diagnostics segment, as Elias outlined, we are diligently working to align the business to achieve cash flow breakeven by the middle of 2024 and profitability by the end of the year." Here's what I want to know: how are we going to achieve 'cash flow breakeven' in 6 months when we start the year with a +/- $40 million operating deficit, and revenue trending down? That doesn't compute.
You want to know why the stock is at or near all time lows? You want to know why Frost needs to go? Look no further than the inscrutable information outlined above.