OraSure Technologies Announces Third Quarter Financial Results
Quarterly Revenues Increase 21% Over 2006
BETHLEHEM, Pa.--(BUSINESS WIRE)--Oct. 30, 2007--OraSure Technologies, Inc. (NASDAQ:OSUR), a market leader in oral fluid diagnostics, today announced quarterly revenues of $21.4 million for the three months ended September 30, 2007, a 21% increase over the $17.6 million in revenues recorded for the three months ended September 30, 2006. Increased sales of the Company's OraQuick ADVANCE(R) rapid HIV-1/2 antibody test and over-the-counter ("OTC") cryosurgery products, together with an increase in funded research and development related to the Company's rapid Hepatitis C ("HCV") test, contributed to the increase in total revenues during the third quarter.
The Company's net income was $4,000 representing break-even earnings per share on a fully-diluted basis for the third quarter of 2007, compared to net income of $2.1 million, or $0.05 per share on a fully-diluted basis for the third quarter of 2006. This decrease is the result of higher operating expenses during the current quarter, primarily research and development costs associated with the product development and clinical work for an OraQuick ADVANCE(R) HIV-1/2 test for home use and an OraQuick(R) HCV test for professional use, along with higher staffing-related expenses and higher legal expenses.
For the nine months ended September 30, 2007, the Company recorded revenues of $62.9 million, an increase of 25% over the $50.4 million in revenues recorded for the nine months ended September 30, 2006. The Company recorded net income of $2.4 million, or $0.05 per share on a fully-diluted basis, for the nine months ended September 30, 2007, compared to net income of $4.2 million, or $0.09 per share on a fully-diluted basis, during the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2007 included a $1.4 million pre-tax gain on sale of investment in a privately-held nonaffiliated company.
Gross margin for the quarter ended September 30, 2007 was 60%, compared to 64% for the same period in 2006. Gross margin for the first nine months of 2007 was 62% compared to 63% in 2006. The decrease in gross margin for the three month period was due to an increase in scrap expense, higher product support costs and a less favorable product mix.
Operating expenses for the third quarter of 2007 increased to $13.7 million from $8.8 million in the third quarter of 2006. Operating expenses for the nine months ended September 30, 2007 were $38.5 million, compared to $27.2 million for the comparable period in 2006.
"We are pleased with the Company's top line performance in the third quarter and that overall financial results are in line with expectations," said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. "We are particularly happy with the strong performance of our infectious disease testing and international OTC cryosurgical businesses. We continue to make good progress toward the achievement of our long-term strategic initiatives and look forward to closing out a successful 2007."
Cash flow from operations for the nine months ended September 30, 2007 was $7.8 million, compared to $14.1 million for the comparable period in 2006. The decrease of $6.3 million was primarily the result of lower net income and increases in accounts receivable and inventories, offset by an increase in accounts payable and accrued expenses during the current nine-month period.
Cash, cash equivalents and short-term investments totaled $92.3 million and working capital was $105.5 million at September 30, 2007, compared to $91.0 million and $96.0 million, respectively, at December 31, 2006.
2007 Financial Guidance
The Company expects revenues of $19.5 to $20.0 million in the fourth quarter and continues to expect approximately $83.0 million for the full-year 2007. Fully diluted earnings per share are expected to be breakeven in the fourth quarter and to be approximately $0.05 per share for the full year.
Condensed Financial Data
(In thousands, except per-share
data and percentages)
Unaudited
-------------------------------------
Three months ended Nine months ended
September 30, September 30,
------------------- -----------------
2007 2006 2007 2006
---------- -------- -------- --------
Results of Operations
Revenues $ 21,415 $ 17,639 $ 62,877 $50,421
Cost of products sold 8,647 6,365 24,122 18,516
---------- -------- -------- --------
Gross profit 12,768 11,274 38,755 31,905
---------- -------- -------- --------
Operating expenses:
Research and development 3,672 1,753 9,896 5,150
Acquired in-process
technology -- -- -- 600
Sales and marketing 4,979 3,632 14,999 11,977
General and administrative 5,074 3,410 13,637 9,510
---------- -------- -------- --------
Total operating expenses 13,725 8,795 38,532 27,237
---------- -------- -------- --------
Operating income(loss) (957) 2,479 223 4,668
Other income, net 1,085 920 4,443 2,607
Income tax provision 124 1,264 2,221 3,033
---------- -------- -------- --------
Net income $ 4 $ 2,135 $ 2,445 $ 4,242
========== ======== ======== ========
Earnings per share:
Basic $ -- $ 0.05 $ 0.05 $ 0.09
========== ======== ======== ========
Diluted $ -- $ 0.05 $ 0.05 $ 0.09
========== ======== ======== ========
Weighted average shares:
Basic 46,341 45,922 46,393 45,888
========== ======== ======== ========
Diluted 46,988 47,247 46,893 47,712
========== ======== ======== ========
Three months ended September 30,
------------------------------------------
Percentage of
Dollars Total Revenues
------------------- % --------------
Market Revenues 2007 2006 Change 2007 2006
--------- --------- ------- ------- ------
Infectious disease testing $ 8,233 $ 7,536 9% 38% 42%
Substance abuse testing 4,070 4,213 (3) 19 24
Cryosurgical systems 6,738 4,025 67 31 23
Insurance risk assessment 1,620 1,734 (7) 8 10
--------- --------- ------- ------
Product revenues 20,661 17,508 18 96 99
Licensing and product
development 754 131 476 4 1
--------- --------- ------- ------
Total revenues $ 21,415 $ 17,639 21% 100% 100%
========= ========= ======= ======
Nine months ended September 30,
-----------------------------------------
Percentage of
Dollars % Total Revenues
----------------- ---------------
Market Revenues 2007 2006 Change 2007 2006
-------- -------- ------- ------- -------
Infectious disease testing $ 26,350 $ 21,239 24% 42% 42%
Substance abuse testing 12,396 11,694 6 20 23
Cryosurgical systems 18,190 13,063 39 29 26
Insurance risk assessment 3,859 4,128 (7) 6 8
-------- -------- ------- -------
Product revenues 60,795 50,124 21 97 99
Licensing and product
development 2,082 297 601 3 1
-------- -------- ------- -------
Total revenues $ 62,877 $ 50,421 25% 100% 100%
======== ======== ======= =======
Three months ended Nine months ended
September 30, % September 30, %
------------------ -----------------
OraQuick(R)
Revenues 2007 2006 Change 2007 2006 Change
-------- -------- ------ -------- -------- ------
Direct to U.S.
Public Health $ 4,492 $ 3,837 17% $ 14,339 $ 10,794 33%
Abbott 2,159 1,651 31 6,087 5,224 17
SAMHSA 5 -- N/A 339 256 32
CDC 25 748 (97) 1,125 1,009 11
International 850 394 116 2,110 1,185 78
-------- -------- -------- --------
Total OraQuick(R)
revenues $ 7,531 $ 6,630 14% $ 24,000 $ 18,468 30%
======== ======== ======== ========
Three months ended Nine months ended
September 30, % September 30, %
------------------ -----------------
Intercept(R)
Revenues 2007 2006 Change 2007 2006 Change
--------- -------- ------ -------- -------- ------
Workplace testing $ 1,804 $ 1,679 7% $ 5,288 $4,675 13%
Criminal Justice 613 640 (4) 1,881 1,428 32
International 482 599 (20) 1,598 1,615 (1)
Direct 273 175 56 739 528 40
--------- -------- -------- --------
Total
Intercept(R)
revenues $ 3,172 $ 3,093 3% $ 9,506 $8,246 15%
========= ======== ======== ========
Three months ended Nine months ended
Cryosurgical
Systems September 30, % September 30, %
------------------ ------------------
Revenues 2007 2006 Change 2007 2006 Change
--------- -------- ------- --------- -------- ------
Professional
domestic $ 1,028 $ 1,755 (41)% $ 3,441 $ 4,156 (17)%
Professional
international 574 576 0 1,551 1,496 4
OTC domestic 2,453 -- N/A 5,587 3,956 41
OTC international 2,683 1,694 58 7,611 3,455 120
--------- -------- --------- --------
Total
Cryosurgical
revenues $ 6,738 $ 4,025 67% $ 18,190 $ 13,063 39%
========= ======== ========= ========
Unaudited
------------------------------------
Balance Sheets September 30, 2007 December 31, 2006
------------------ -----------------
Assets
---------------------------------
Cash, cash equivalents and short-
term investments $ 92,335 $ 91,001
Accounts receivable, net 12,014 10,357
Inventories 7,768 5,535
Current deferred income taxes 6,430 3,676
Other current assets 1,468 1,989
Property and equipment, net 20,218 17,375
Deferred income taxes 15,565 19,846
Other non-current assets 5,656 6,786
------------------ -----------------
Total assets $ 161,454 $ 156,565
================== =================
Liabilities and Stockholders'
Equity
---------------------------------
Current portion of long-term debt $ 557 $ 609
Accounts payable 4,395 3,312
Accrued expenses 9,552 12,659
Long-term debt 9,332 10,030
Other liabilities 380 451
Stockholders' equity 137,238 129,504
------------------ -----------------
Total liabilities and
stockholders' equity $ 161,454 $ 156,565
================== =================
Nine months ended September 30,
-------------------------------
Additional Financial Data 2007 2006
---------------- --------------
Capital expenditures $ 4,281 $ 11,552
Depreciation and amortization $ 1,997 $ 1,440
Accounts receivable - days sales
outstanding 52 days 53 days
Conference Call
The Company will host a conference call and audio webcast today to discuss the Company's 2007 third quarter financial results, business developments and the Company's 2007 outlook, beginning 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 Operating Officer and Chief Financial Officer. The call will include remarks by management and a question and answer session.
In order to listen to the conference call, please dial 888-742-2024 (Domestic) or 706-643-0033 (International) and reference 21207217 or go to OraSure Technologies' web site, www.orasure.com, and click on the Investor Info link. 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 November 5, 2007, by dialing 800-642-1687 (Domestic) or 706-645-9291 (International) and entering the Conference ID #21207217.
About OraSure Technologies
OraSure Technologies develops, manufactures and markets oral fluid specimen collection devices and tests and other diagnostic products using its proprietary technologies, including immunoassays and other in vitro diagnostic tests and other medical devices. These products are sold in the United States and certain foreign countries to clinical laboratories, hospitals, clinics, community-based organizations and other public health organizations, distributors, government agencies, physicians' offices, and commercial and industrial entities. 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 revenues, net income and products. Actual results could be significantly different. Factors that could affect results include the ability to market and sell products; changes in relationships, including disputes or disagreements, with strategic partners and reliance on strategic partners for the performance of critical activities under collaborative arrangements; failure of distributors or other customers to meet purchase forecasts or minimum purchase requirements for the Company's products; impact of competitors, competing products and technology changes; ability to develop, commercialize and market new products; market acceptance of oral fluid testing or other products; changes in market acceptance of products based on product performance; continued bulk purchases by customers, including governmental agencies, and the ability to fully deploy those purchases in a timely manner; 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 product components; availability of related products produced by third parties or products required for use of our products; 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; history of losses and ability to achieve sustained profitability; volatility of our stock price; uncertainty relating to patent protection; 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; loss or impairment of sources of capital; ability to meet financial covenants in agreements with financial institutions; ability to retain qualified personnel; exposure to patent infringement, 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; ability to complete consolidation or restructuring activities; ability to identify, complete and realize the full benefits of potential acquisitions; and general political, business and economic conditions. These and other factors are discussed more fully in the Securities and Exchange Commission ("SEC") filings of OraSure Technologies, including its registration statements, its Annual Report on Form 10-K for the year ended December 31, 2006, its Quarterly Reports on Form 10-Q, and its other filings with the SEC. Although forward-looking statements help to provide complete 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: OraSure Technologies, Inc.
Ronald H. Spair
Chief Financial Officer
610-882-1820
Investorinfo@orasure.com
www.orasure.com
SOURCE: OraSure Technologies, Inc.
