OraSure Announces 2014 Second Quarter Financial Results

OraSure Announces 2014 Second Quarter Financial Results

BETHLEHEM, Pa., Aug. 6, 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 six months ended June 30,
2014.

Financial Highlights

  *Consolidated net revenues for the second quarter of 2014 were $26.4
    million, an 8% increase from the comparable quarter of 2013. Consolidated
    net revenues for the six months ended June 30, 2014 were $49.9 million, a
    10% increase from the comparable period of 2013. These increases were
    primarily due to higher sales of the Company's OraQuick® HCV test, higher
    revenues from the Company's molecular collection systems subsidiary, DNA
    Genotek ("DNAG"), higher sales of the Company's cryosurgical systems
    products and higher licensing and product development revenues.
    
  *Net revenues for the Company's OraQuick® rapid HCV test were $2.2 million
    and $3.8 million for the second quarter and first six months of 2014,
    respectively, an increase of 134% from each of the comparable 2013
    periods. This growth reflects increasing demand for the product in both
    the domestic and international markets.
    
  *Net revenues generated by DNAG during the second quarter of 2014 were $4.9
    million, a 5% increase from the comparable period in 2013. DNAG net
    revenues during the six months ended June 30, 2014 were $10.7 million, a
    24% increase from the comparable period in 2013. The increase in the
    quarter was the result of higher sales to academic customers while the
    increase for the six month period was the result of higher sales to both
    commercial and academic customers.
    
  *Net cryosurgical systems revenues in the second quarter of 2014 were $4.9
    million, an 18% increase over the second quarter of 2013. This increase
    was primarily due to higher sales in the international over-the-counter
    ("OTC") market. Net cryosurgical systems revenues for the six months ended
    June 30, 2014 were $8.9 million, a 22% increase over the comparable period
    of 2013. This increase was primarily due to higher sales in both the U.S.
    professional market and the international OTC market.
    
  *Licensing and product development revenues were $775,000 for both the
    quarter and six months ended June 30, 2014, and represent the recognition
    of payments under the Company's' HCV collaboration with AbbVie. In
    exchange for exclusive promotion rights and certain services provided by
    the Company, the agreement with AbbVie provides for payments totaling up
    to $75.0 million over the life of the agreement, which runs through
    December 31, 2019. The first such payment of $15.0 million required under
    the agreement was received in July 2014. Licensing and product development
    revenues in 2013 represent royalties paid on domestic outsales of Merck's
    OTC cryosurgical wart removal product.
    
  *Consolidated net income for the second quarter of 2014 was $2.5 million,
    or $0.04 per share on a fully diluted basis, which compares to a net loss
    of $5.3 million, or $0.10 per share, for the second quarter of 2013.
    Consolidated net loss for the six months ended June 30, 2014 was $3.1
    million, or $0.06 per share, which compares to a net loss of $15.5
    million, or $0.28 per share, for the comparable period of 2013.The
    improvement in the Company's bottom line for the quarter and six month
    period resulted primarily from the inclusion of a $5.5 million payment due
    under the terms of the termination of a drug assay collaboration with
    Roche Diagnostics, the higher revenues in each period and lower
    promotional costs for the OraQuick® In-Home HIV Test.

"We are pleased with the Company's financial performance for the second
quarter and first six months of the year," said Douglas A. Michels, President
and CEO of OraSure Technologies."Sales of our OraQuick® HCV test were up
nicely and our molecular collection systems business showed continued growth
from the year ago periods.Significant effort is now being directed towards
the execution of our HCV collaboration with AbbVie.We expect this
collaboration will contribute substantially to our business in future
periods."

Financial Results

Consolidated net product revenues for the second quarter of 2014 increased 6%,
primarily as a result of higher sales of the Company's OraQuick® HCV,
cryosurgical systems, and molecular collection systems products. These
increases were partially offset by lower domestic sales of the OraQuick®
professional HIV product, OraQuick® In-Home HIV test and insurance risk
assessment products.

Consolidated net product revenues for the six month period ended June 30, 2014
increased 9% primarily as a result of higher sales of the Company's OraQuick®
HCV, molecular collection systems and cryosurgical systems products. These
increases were partially offset by lower domestic sales of the OraQuick®
professional HIV product and lower substance abuse and insurance risk
assessment product sales.

Consolidated licensing and product development revenues for the second quarter
and first six months of 2014 were $775,000. Consolidated licensing and product
development revenues for the second quarter and first six months of 2013 were
$274,000 and $476,000, respectively. Licensing and product development
revenues in 2014 represent the recognition of payments under the Company's HCV
collaboration with AbbVie. Licensing and product development revenues in 2013
represent royalties paid on domestic outsales of Merck's OTC cryosurgical wart
removal product.

Consolidated gross margin for the three and six months ended June 30, 2014 was
61% and 60%, respectively. Consolidated gross margin for the three and six
months ended June 30, 2013 was 60% and 58%, respectively.Gross margin for the
current quarter and six month period primarily benefited from a more favorable
product mix due to higher margin DNAG sales.

Consolidated operating expenses decreased to $13.5 million during the second
quarter of 2014 compared to $20.1 million in the comparable period of 2013.
For the six months ended June 30, 2014, consolidated operating expenses were
$33.1 million, a decrease from the $42.7 million reported for the six months
ended June 30, 2013.The decrease for the second quarter of 2014 was primarily
due to the inclusion of the $5.5 million Roche payment and lower promotional
expenses associated with the Company's OraQuick® In-Home HIV test. These
latter expenses totaled $3.0 million during the current quarter, compared to
$5.4 million in the second quarter of 2013.The decrease for the six month
period of 2014 was primarily due to the $5.5 million Roche payment, 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
$7.6 million and $12.3 million for the first six months of 2014 and 2013,
respectively. General and administrative expenses in the both the current and
six month periods increased due to higher legal, staffing and consulting
costs.

For the three and six months ended June 30, 2014, the Company recorded
Canadian income tax benefits of $174,000 and $43,000, respectively.For the
three and six months ended June 30, 2013, the Company recorded Canadian income
tax benefits of $249,000 and $659,000, respectively. The tax benefits were
recorded as a result of certain Canadian research and development and
investment tax credits and DNAG's loss before income taxes.

The Company's cash and short-term investment balance totaled $80.3 million at
June 30, 2014 compared to $93.2 million in cash at December 31, 2013.Working
capital was $101.1 million at June 30, 2014 compared to $100.6 million at
December 31, 2013.For the six months ended June 30, 2014, the Company used
$10.4 million to fund operations.

Third Quarter 2014 Outlook

The Company expects consolidated net revenues to range from $27.0 to $27.5
million and is projecting a consolidated net loss of approximately $0.04 to
$0.05 per share for the third quarter of 2014.

Financial Data


Condensed Consolidated Financial Data
(In thousands, except per-share data)
                                                               
Unaudited
                                                      
                                  Three months ended   Six months ended
                                  June 30,             June 30,
                                  2014      2013       2014       2013
Results of Operations                                           
Net revenues                       $26,401 $24,337  $49,938  $45,501
Cost of products sold              10,385   9,838     19,995    18,973
Gross profit                       16,016   14,499    29,943    26,528
Operating expenses:                                             
Research and development           2,771    2,693     5,252     6,050
Sales and marketing                10,272   12,369    21,612    26,243
General and administrative         5,976    5,013     11,700    10,400
Gain on contract termination       (5,500)  --       (5,500)   --
settlement
Total operating expenses           13,519   20,075    33,064    42,693
Operating income (loss)            2,497    (5,576)   (3,121)   (16,165)
Other income (expense)             (142)    42        (24)      (5)
Income (loss) before income taxes  2,355    (5,534)   (3,145)   (16,170)
Income tax benefit                 (174)    (249)     (43)      (659)
Net income (loss)                  $2,529  $(5,285) $(3,102) $(15,511)
Earnings (loss) per share:                                      
Basic                              $0.05   $(0.10)  $(0.06)  $(0.28)
Diluted                            $0.04   $(0.10)  $(0.06)  $(0.28)
                                                               
Weighted average shares:                                        
Basic                              55,907    55,559     55,846     55,504
Diluted                            57,243    55,559     55,846     55,504
                                                               

Summary of Revenues by Market and Product (Unaudited)

                              Three Months Ended June 30,
                              Dollars                     Percentage of
                                                            Total Net Revenues
Market                         2014      2013      % Change 2014      2013
                                                                 
Infectious disease testing     $12,668 $11,966 6%       47%       49%
Substance abuse testing        2,208    2,113    4        8         9
Cryosurgical systems           4,920    4,177    18       19        17
Molecular collection systems   4,896    4,654    5        19        19
Insurance risk assessment      934      1,153    (19)     4         5
Net product revenues           25,626   24,063   6        97        99
Licensing and product          775      274      183      3        1
development
Net revenues                   $26,401 $24,337 8%       100%      100%

                              
                              Six Months Ended June 30,
                              Dollars                     Percentage of
                                                            Total Net Revenues
Market                         2014      2013      % Change 2014      2013
                                                                 
Infectious disease testing     $23,732 $22,654 5%       47%       50%
Substance abuse testing        4,038    4,362    (7)      8         9
Cryosurgical systems           8,887    7,261    22       18        16
Molecular collection systems   10,655   8,586    24       21        19
Insurance risk assessment      1,851    2,162    (14)     4         5
Net product revenues           49,163   45,025   9        98        99
Licensing and product          775      476      63       2         1
development
Net revenues                   $49,938 $45,501 10%      100%      100%

                                                
                                                
                    Three Months Ended           Six Months Ended
                    June 30,                    June 30,
OraQuick^® Revenues  2014      2013      % Change 2014      2013      % Change
                                                                
Domestic HIV         $7,720  $8,088  (5)%     $14,339  $15,761 (9)%
International HIV    848      745      14       1,405    1,300    8
Domestic HIV OTC     1,669    1,993    (16)     3,622    3,435    5
Net HIV revenues     10,237   10,826   (5)      19,366   20,496   (6)
                                                                
Domestic HCV         1,221    690      77       1,884    1,119    68
International HCV    974      247      294      1,870    486      285
Net HCV revenues     2,195    937      134      3,754    1,605    134
                                                                
Net OraQuick®        $ 12,432 $ 11,763 6%       $ 23,120 $22,101 5%
revenues

                                                 
                                                 
                       Three Months Ended         Six Months Ended
                       June 30,                  June 30,
Intercept^® Revenues    2014     2013     % Change 2014     2013     % Change
                                                               
Domestic                $ 1,616 $ 1,342 20%      $ 2,866 $ 2,745 4%
International           33      98      (66)     73      356     (79)
Net Intercept® revenues $ 1,649 $ 1,440 15%      $ 2,939 $ 3,101 (5)%

                                                  
                                                  
                        Three Months Ended         Six Months Ended
                        June 30,                  June 30,
Cryosurgical Systems     2014     2013     % Change 2014     2013     % Change
Revenues
                                                                
Domestic professional    $ 1,469 $ 1,497 (2)%     $3,011 $2,388 26%
International            229     257     (11)     538     605     (11)
professional
International            3,222    2,423   33       5,338   4,268   25
over-the-counter
Net cryosurgical systems $ 4,920 $ 4,177 18%      $8,887 $7,261 22%
revenues

                                                        
                                                        
Condensed Consolidated Balance Sheets(Unaudited)        
                                                        
                                          June 30, 2014 December 31, 2013
Assets                                                  
                                                       
Cash                                       $75,832      $93,191
Short-term investments                     4,437        --
Accounts receivable, net                   14,152       12,957
Inventories                                13,229       11,444
Other current assets                       8,155        1,983
Property and equipment, net                18,471       17,933
Intangible assets, net                     20,443       22,226
Goodwill                                   23,674       23,782
Other non-current assets                   1,172        729
Total assets                               $179,565    $184,245
                                                       
Liabilities and Stockholders' Equity                    
Accounts payable                           $4,647      $4,834
Deferred revenue                           694          1,119
Accrued expenses                           9,366        13,032
Other non-current liabilities              1,157        677
Deferred income taxes                      3,413        3,437
Stockholders' equity                       160,288      161,146
Total liabilities and stockholders' equity $179,565    $184,245

                                     
                                     Six months ended
                                     June 30,
Additional Financial Data(Unaudited) 2014      2013
                                              
Capital expenditures                  $1,988  $1,092
Depreciation and amortization         $3,108  $3,221
Stock based compensation              $2,869  $2,835
Cash used in operating activities     $10,397 $9,278

Conference Call

The Company will host a conference call and audio webcast to discuss the
Company's 2014 second quarter financial results, certain business developments
and financial guidance for the third quarter of 2014, beginning today at 5:00
p.m. Eastern Time (2:00 p.m. Pacific Time). On the call will be Douglas A.
Michels, President and Chief Executive Officer and Ronald H. Spair, Chief
Financial Officer and Chief Operating Officer. The call will include prepared
remarks by management and a question and answer session.

In order to listen to the conference call, please either dial 844-831-3030
(Domestic) or 315-625-6887 (International) and reference Conference ID
#74668640 or go to OraSure Technologies' web site, www.orasure.com, and click
on the Investor Relations page. Please click on the webcast link and follow
the prompts for registration and access 10 minutes prior to the call. A replay
of the call will be archived on OraSure Technologies' web site shortly after
the call has ended and will be available for seven days. A replay of the call
can also be accessed until August 13, 2014, by dialing 855-859-2056 (Domestic)
or 404-537-3406 (International) and entering the Conference ID #74668640.

About OraSure Technologies

OraSure Technologies is a leader in the development, manufacture and
distribution of oral fluid diagnostic and collection devices and other
technologies designed to detect or diagnose critical medical conditions. Its
innovative products include rapid tests for the detection of antibodies to HIV
and HCV at the point of care and testing solutions for detecting various drugs
of abuse. The Company sells the OraQuick® In-Home HIV Test, the first and only
rapid HIV test approved by the U.S. Food and Drug Administration for sale to
the consumer over-the-counter market in the U.S. In addition, the Company is a
leading provider of oral fluid sample collection, stabilization and
preparation products for molecular diagnostic applications. OraSure's
portfolio of products is sold globally to various clinical laboratories,
hospitals, clinics, community-based organizations and other public health
organizations, research and academic institutions, distributors, government
agencies, physicians' offices, and commercial and industrial entities. The
Company's products enable healthcare providers to deliver critical information
to patients, empowering them to make decisions to improve and protect their
health. For more information on the Company, please visit www.orasure.com

Important Information

This press release contains certain forward-looking statements, including with
respect to expected revenues and earnings/loss per share. Forward-looking
statements are not guarantees of future performance or results. Known and
unknown factors that could cause actual performance or results to be
materially different from those expressed or implied in these statements
include, but are not limited to: ability to obtain, and timing and cost of
obtaining, necessary regulatory approvals for new products or new indications
or applications for existing products; ability to comply with applicable
regulatory requirements; ability to effectively resolve warning letters, audit
observations and other findings or comments from the FDA or other regulators;
changes in relationships, including disputes or disagreements, with strategic
partners or other parties and reliance on strategic partners for the
performance of critical activities under collaborative arrangements; our
ability to achieve financial and performance objectives under the HCV
collaboration with AbbVie; failure of distributors or other customers to meet
purchase forecasts, historic purchase levels or minimum purchase requirements
for our products; impact of replacing distributors; inventory levels at
distributors and other customers; ability of DNA Genotek to achieve its
financial and strategic objectives and continue to increase its revenues;
ability to identify, complete, integrate and realize the full benefits of
future acquisitions; impact of competitors, competing products and technology
changes; impact of negative economic conditions, high unemployment and poor
credit conditions; reduction or deferral of public funding available to
customers; competition from new or better technology or lower cost products;
ability to develop, commercialize and market new products,including the
OraQuick® In-Home HIV test; market acceptance of oral fluid testing or other
products; changes in market acceptance of products based on product
performance or other factors, including changes in CDC or other testing
guidelines, algorithms or other recommendations; ability to fund research and
development and other products and operations; ability to obtain and maintain
new or existing product distribution channels; reliance on sole supply sources
for critical products and components; availability of related products
produced by third parties or products required for use of our products;
history of losses and ability to achieve sustained profitability; ability to
utilize net operating loss carry forwards or other deferred tax assets;
volatility of OraSure's stock price; uncertainty relating to patent protection
and potential patent infringement claims; uncertainty and costs of litigation
relating to patents and other intellectual property; availability of licenses
to patents or other technology; ability to enter into international
manufacturing agreements; obstacles to international marketing and
manufacturing of products; ability to sell products internationally, including
the impact of changes in international funding sources and testing algorithms;
adverse movements in foreign currency exchange rates; loss or impairment of
sources of capital;ability to attract and retain qualified personnel;
exposure to product liability and other types of litigation; changes in
international, federal or state laws and regulations; customer consolidations
and inventory practices; equipment failures and ability to obtain needed raw
materials and components; the impact of terrorist attacks and civil unrest;
and general political, business and economic conditions. These and other
factors are discussed more fully in the Company's Securities and Exchange
Commission filings, including its registration statements, Annual Report on
Form 10-K for the year ended December 31, 2013, Quarterly Reports on Form
10-Q, and other filings with the SEC. Although forward-looking statements help
to provide information about future prospects, readers should keep in mind
that forward-looking statements may not be reliable. The forward-looking
statements are made as of the date of this press release and OraSure
Technologies undertakes no duty to update these statements.

CONTACT: Ronald H. Spair
         Chief Financial Officer
         610-882-1820
         Investorinfo@orasure.com
         www.orasure.com

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