OraSure Technologies, Inc. (NASDAQ:OSUR), a leader in point-of-care diagnostic tests and specimen collection devices, today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2016.
Financial Highlights
-- Consolidated net revenues for the fourth quarter of 2016 were $35.5 million, a 10% increase from the fourth quarter of 2015. Consolidated net revenues for the year ended December 31, 2016 rose to $128.2 million, a 7% improvement from 2015.
-- Net molecular collection systems revenues were $8.6 million during the fourth quarter of 2016, which represents a 10% increase over the fourth quarter of 2015. Net molecular collection systems revenues for the year ended December 31, 2016 were $32.2 million, an 8% improvement from 2015.
-- Net revenues from international sales of the Company's OraQuick HIV products were $1.3 million for the fourth quarter of 2016, representing a 217% increase over the fourth quarter of 2015. Net international HIV revenues were $5.2 million for the year ended December 31, 2016, a 118% increase from 2015.
-- International sales of the Company's OraQuick HCV test were $2.9 million for the fourth quarter of 2016, representing a 123% increase from the fourth quarter of 2015. International HCV sales for the year ended December 31, 2016 rose to $6.6 million, a 71% improvement from 2015.
-- During the fourth quarter of 2016, the Company made its first shipments of product, worth $1.9 million, under an $18 million supply contract with a foreign government, largely consisting of OraQuick HCV tests.
-- Consolidated net income for the fourth quarter of 2016 was $7.2 million, or $0.13 per share on a fully-diluted basis, which compares to consolidated net income of $4.6 million, or $0.08 per share on a fully-diluted basis, for the fourth quarter of 2015. Consolidated net income for the year ended December 31, 2016 was $19.7 million, or $0.35 per share on a fully-diluted basis, which compares to consolidated net income of $8.2 million, or $0.14 per share on a fully-diluted basis, for the comparable period of 2015.
-- Cash and short-term investments totaled $120.9 million and working capital amounted to $139.1 million at December 31, 2016.
"Our fourth quarter financial results exceeded expectations on the top and bottom lines," said Douglas A. Michels, President and CEO of OraSure Technologies. "A major contributor to growth during both the quarter and full-year period was our international business. Expanding international sales of our HIV self-test and HCV product is a critical component of OraSure's global growth strategy."
Financial Results
Consolidated net product revenues for the fourth quarter of 2016 approximated those of the same period in 2015, primarily as a result of higher international sales of OraQuick HIV and HCV tests and higher sales of the Company's molecular collection systems products, largely offset by lower domestic sales of the Company's OraQuick HIV and HCV products and lower OraQuick Ebola sales.
Consolidated net product revenues for the full year of 2016 increased 2% over 2015, primarily as a result of higher international sales of the Company's OraQuick HCV and HIV tests, and higher sales of the Company's molecular collection systems and cryosurgical systems products. These increases were partially offset by lower domestic sales of the Company's OraQuick HIV and Ebola products.
Consolidated other revenues for the fourth quarter and full year of 2016 were $6.9 million and $21.3 million, respectively. This compares to consolidated other revenues for the fourth quarter and full year of 2015 of $3.7 million and $15.3 million, respectively. Exclusivity revenues recognized under the Company's HCV co-promotion agreement with AbbVie for the three months and year ended December 31, 2016 were $6.1 million and $18.9 million, respectively. AbbVie exclusivity revenues for the three months and year ended December 31, 2015 were $3.4 million and $13.5 million, respectively. Other revenues in the fourth quarter and full-year of 2016 also included $747,000 and $2.3 million, respectively, of funding received from the U.S. Biomedical Advanced Research Development Authority ("BARDA"). Other revenues for the fourth quarter and full year of 2015 included $319,000 and $1.8 million, respectively, in BARDA funding.
Consolidated gross margin for the three months and year ended December 31, 2016 was 67% and 69%, respectively. Consolidated gross margin for the three months and year ended December 31, 2015 was 68% and 67%, respectively. Gross margin for the current quarter decreased due to a less favorable product mix and severance costs associated with a corporate restructuring plan implemented by the Company during the fourth quarter, partially offset by higher other revenues and improved overhead absorption. Gross margin for the full year improved primarily due to the increase in other revenues.
Consolidated operating expenses decreased to $16.9 million during the fourth quarter of 2016 compared to $17.8 million in the fourth quarter of 2015. For the year ended December 31, 2016, consolidated operating expenses were $67.8 million, a reduction from the $72.2 million reported for the year ended December 31, 2015. The quarterly decrease was largely due to lower detailing costs associated with the AbbVie HCV co-promotion agreement, lower commission costs, a decrease in bad debt expense, and a reduction in research and development expenses recorded as a result of a payment received to settle a claim against one of the Company's raw material suppliers. These decreases were partially offset by the corporate restructuring severance costs, increased legal fees, and higher staffing-related costs. The decrease in the full-year period was largely due to lower detailing costs associated with the AbbVie HCV co-promotion agreement and reduced research and development expenses due to the supplier settlement, partially offset by higher legal fees, severance costs, consulting fees and staffing-related expenses.
The Company's cash and short-term investment balance totaled $120.9 million at December 31, 2016, compared to $101.3 million at December 31, 2015. Working capital was $139.1 million at December 31, 2016, compared to $111.5 million at December 31, 2015. For the year ended December 31, 2016, the Company generated $22.8 million in cash from operations.
First Quarter 2017 Outlook
The Company expects consolidated net revenues to range from $31.0 to $31.5 million and is projecting consolidated net income of $0.17 to $0.18 per share for the first quarter of 2017. This guidance reflects the absence of revenues and costs associated with the AbbVie HCV co-promotion agreement, which terminated at the end of 2016, and a lower gross margin contribution from the increasing amount of international sales expected in 2017. The quarterly guidance also includes the after-tax impact of a $12.5 million litigation settlement recently announced by the Company.
Financial Data
View dataCondensed Consolidated Financial Data (In thousands, except per-share data) Unaudited Three months ended Year ended December 31, December 31, 2016 2015 2016 2015 Results of Operations Net revenues $ 35,499 $ 32,382 $ 128,198 $ 119,719 Cost of products sold 11,545 10,452 40,171 39,426 Gross profit 23,954 21,930 88,027 80,293 Operating expenses: Research and development 1,207 2,693 9,754 11,654 Sales and marketing 7,121 8,623 29,652 35,088 General and administrative 8,553 6,522 28,356 25,493 Total operating expenses 16,881 17,838 67,762 72,235 Operating income 7,073 4,092 20,265 8,058 Other income 92 379 58 774 Income before income taxes 7,165 4,471 20,323 8,832 Income tax (benefit) expense (31 ) (145 ) 603 665 Net income $ 7,196 $ 4,616 $ 19,720 $ 8,167 Earnings per share: Basic $ 0.13 $ 0.08 $ 0.35 $ 0.14 Diluted $ 0.13 $ 0.08 $ 0.35 $ 0.14 Weighted average shares: Basic 55,811 56,308 55,615 56,397 Diluted 57,232 56,678 56,513 56,846
Summary of Net Revenues by Market and Product (Unaudited)
View dataThree Months Ended December 31, Dollars Percentage of Total Net Revenues Market 2016 2015 % Change 2016 2015 Infectious disease testing $ 13,679 $ 14,546 (6 )% 39 % 45 % Risk assessment testing 3,322 3,381 (2 ) 9 10 Cryosurgical systems 3,071 2,964 4 9 9 Molecular collection systems 8,565 7,775 10 24 24 Net product revenues 28,637 28,666 (0 ) 81 88 Other 6,862 3,716 85 19 12 Net revenues $ 35,499 $ 32,382 10 % 100 % 100 %
View dataYear Ended December 31, Dollars Percentage of Total Net Revenues Market 2016 2015 % Change 2016 2015 Infectious disease testing $ 48,408 $ 49,129 (1 )% 38 % 41 % Risk assessment testing 13,068 13,485 (3 ) 10 11 Cryosurgical systems 13,234 11,920 11 10 10 Molecular collection systems 32,214 29,924 8 25 25 Net product revenues 106,924 104,458 2 83 87 Other 21,274 15,261 39 17 13 Net revenues $ 128,198 $ 119,719 7 % 100 % 100 %
View dataThree Months Ended Year Ended December 31, December 31, HIV Revenues 2016 2015 % Change 2016 2015 % Change Domestic $ 5,037 $ 6,809 (26 )% $ 21,482 $ 24,956 (14 )% International 1,314 415 217 5,248 2,410 118 Domestic OTC 1,747 2,069 (16 ) 6,320 6,992 (10 ) Net product revenues $ 8,098 $ 9,293 (13 )% $ 33,050 $ 34,358 (4 )% Three Months Ended Year Ended December 31, December 31, HCV Revenues 2016 2015 % Change 2016 2015 % Change Domestic $ 2,235 $ 2,698 (17 )% $ 7,453 $ 7,502 (1 )% International 2,908 1,306 123 6,630 3,884 71 Net product revenues 5,143 4,004 28 14,083 11,386 24 Amortization of exclusivity payments 6,114 3,397 80 18,951 13,479 41 Net HCV-related revenues $ 11,257 $ 7,401 52 % $ 33,034 $ 24,865 33 %
View dataThree Months Ended Year Ended December 31, December 31, Cryosurgical Systems Revenues 2016 2015 % Change 2016 2015 % Change Domestic professional $ 1,389 $ 1,043 33 % $ 5,545 $ 4,311 29 % International professional 165 157 5 771 916 (16 ) Domestic OTC 288 90 220 1,350 390 246 International OTC 1,229 1,674 (27 ) 5,568 6,303 (12 ) Net cryosurgical systems revenues $ 3,071 $ 2,964 4 % $ 13,234 $ 11,920 11 %
View dataCondensed Consolidated Balance Sheets (Unaudited) December 31, 2016 December 31, 2015 Assets $ 109,790 $ 94,094 Cash and cash equivalents Short-term investments 11,160 7,225 Accounts receivable, net 19,827 19,265 Inventories 11,799 13,242 Other current assets 3,865 2,888 Property and equipment, net 20,033 20,083 Intangible assets, net 10,337 12,591 Goodwill 18,793 18,250 Other non-current assets 2,331 1,683 Total assets $ 207,935 $ 189,321 Liabilities and Stockholders' Equity Accounts payable $ 4,633 $ 5,087 Deferred revenue 1,388 9,735 Other current liabilities 11,314 10,412 Other non-current liabilities 2,304 1,768 Deferred income taxes 2,446 2,883 Stockholders' equity 185,850 159,436 Total liabilities and stockholders' equity $ 207,935 $ 189,321
View dataYear ended December 31, Additional Financial Data (Unaudited) 2016 2015 Capital expenditures $ 4,381 $ 3,744 Depreciation and amortization $ 5,687 $ 5,696 Stock-based compensation $ 6,063 $ 6,045 Cash provided by operating activities $ 22,795 $ 15,773
Conference Call
The Company will host a conference call and audio webcast to discuss the Company's 2016 fourth quarter financial results, certain business developments and financial guidance for the first quarter of 2017, 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 #49022171 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 February 15, 2017, by dialing 855-859-2056 (Domestic) or 404-537-3406 (International) and entering the Conference ID #49022171.
About OraSure Technologies
OraSure Technologies is a leader in the development, manufacture and distribution of point-of-care diagnostic and collection devices and other technologies designed to detect or diagnose critical medical conditions. Its first-to-market, innovative products include rapid tests for the detection of antibodies to HIV and HCV on the OraQuickplatform, oral fluid sample collection, stabilization and preparation products for molecular diagnostic applications, and oral fluid laboratory tests for detecting various drugs of abuse. 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, commercial and industrial entities and consumers. The Company's products enable healthcare providers to deliver critical information to patients, empowering them to make decisions to improve and protect their health.
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