OraSure Announces Record Third Quarter Financial Results; Increases Full-Year Earnings Guidance
BETHLEHEM, Pa.--(BUSINESS WIRE)--Nov. 9, 2005--OraSure Technologies, Inc. (NASDAQ:OSUR), a market leader in oral fluid diagnostics, today announced record revenues of $18.1 million for the quarter ended September 30, 2005, representing a 28% increase over the $14.2 million in revenues recorded for the comparable period in 2004.
The Company's net income was $3.8 million, or $0.08 per share on a basic and fully-diluted basis, for the third quarter of 2005. These results compare to a net loss of $294,000, or $(0.01) per share on a basic and fully-diluted basis, reported for the third quarter of 2004.
For the nine months ended September 30, 2005, the Company had revenues of $51.3 million, a 29% increase over revenues of $39.8 million for the nine months ended September 30, 2004. The Company recorded net income of $6.8 million, or $0.15 per share on a basic and fully-diluted basis, for the nine months ended September 30, 2005, compared to a net loss of $314,000, or $(0.01) per share on a basic and fully-diluted basis, for the comparable period in 2004.
"We are certainly very pleased with the Company's financial results for the third quarter," said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. "Our performance this quarter was driven primarily by continued increases in sales to the infectious disease and substance abuse testing markets. As a result of our continued earnings growth, we are increasing full-year earnings per share guidance to $0.20 per share on a basic and fully-diluted basis, without giving effect to the impact of the potential recognition of a portion of a deferred tax asset."
The revenue increase for the third quarter was primarily attributable to increased sales of the Company's OraQuick(R) ADVANCE(TM) rapid HIV-1/2 antibody test and Intercept(R) oral fluid drug test.
Gross margin in the third quarter was 64% compared to 60% in the third quarter of 2004. Gross margin was positively affected by more efficient utilization of the Company's manufacturing facilities and lower inventory scrap expense.
Operating expenses for the third quarter of 2005 decreased to approximately $8.4 million from approximately $8.9 million in the comparable period in 2004. This decrease was primarily attributable to a reduction in research and development expenses and a reduction in consulting expenses, partially offset by increased charges for non-cash stock-based compensation. Operating expenses for the nine months ended September 30, 2005 were $25.2 million, compared to $24.2 million for the comparable period in 2004.
The Company's results for the nine months ended September 30, 2005 reflect a $1.5 million charge for a reserve related to the value of inventory and certain fixed assets for the UPlink(R) rapid point-of-care oral fluid drug detection system. Excluding this charge, the Company's net income for the nine months ended September 30, 2005 would have been approximately $8.3 million, or $0.18 per share on a basic and fully-diluted basis, and gross margin would have been 63%.
Cash, cash equivalents and short-term investments totaled approximately $75.3 million and working capital was approximately $80.0 million at September 30, 2005, compared to approximately $66.7 million and $68.9 million, respectively, at December 31, 2004.
Cash flow from operations was approximately $3.6 million for the third quarter of 2005, up substantially from the $342,000 reported for the third quarter of 2004. Cash flow from operations for the nine months ended September 30, 2005 was $8.5 million, compared to $2.2 million for the comparable period in 2004.
OraSure expects total revenues for 2006 to increase by 25% over 2005 levels. In addition, OraSure expects to achieve fully-taxed full-year net income for 2006 in the range of $0.18 to $0.20 per share, before giving effect to stock option expensing which will become effective in 2006 and will reduce GAAP earnings per share. The magnitude of the charge for stock option expensing will not be known or disclosed until the Company reports its full year 2005 financial results in February 2006.
Condensed Financial Data
(In thousands, except per-share
data and percentages)
Unaudited
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2005 2004 2005 2004
--------- -------- -------- --------
Results of Operations
Revenues $ 18,077 $14,176 $51,335 $39,799
Cost of products sold 6,432 5,722 20,773 16,437
--------- -------- -------- --------
Gross profit 11,645 8,454 30,562 23,362
Operating expenses:
Research and development 1,298 1,465 3,750 4,745
Sales and marketing 3,965 3,956 12,289 11,388
General and administrative 3,168 3,514 9,132 8,086
--------- -------- -------- --------
Total operating expenses 8,431 8,935 25,171 24,219
--------- -------- -------- --------
Operating income (loss) 3,214 (481) 5,391 (857)
Other income, net 594 187 1,421 543
--------- -------- -------- --------
Net income (loss) $ 3,808 $ (294) $ 6,812 $ (314)
========= ======== ======== ========
Basic and diluted earnings
(loss) per share $ 0.08 $ (0.01) $ 0.15 $ (0.01)
========= ======== ======== ========
Weighted average shares:
Basic 45,372 44,539 44,936 44,426
========= ======== ======== ========
Diluted 46,676 44,539 45,850 44,426
========= ======== ======== ========
Reconciliation of Non-GAAP Nine months ended
Financial Measures September 30,
-----------------
2005 2004
--------- -------
Net income (loss) - before UPlink(R)
charge $ 8,299 $ (314)
UPlink(R) charge 1,487 --
--------- -------
Net income (loss) - GAAP basis $ 6,812 $ (314)
--------- -------
Basic and diluted earnings
(loss) per share - before UPlink(R)
charge $ 0.18 $(0.01)
UPlink(R) charge 0.03 --
--------- -------
Basic and diluted earnings
(loss) per share - GAAP basis $ 0.15 $(0.01)
--------- -------
Gross margin - before UPlink(R)
charge 63% 59%
UPlink(R) charge 3% --
--------- -------
Gross margin - GAAP basis 60% 59%
--------- -------
Three months ended September 30,
---------------------------------------
Percentage of
Dollars % Total Revenues
----------------- --------------
Market Revenues 2005 2004 Change 2005 2004
-------- -------- ------ ------- ------
Infectious disease testing $ 7,037 $ 3,702 90% 39% 26%
Substance abuse testing 3,595 2,745 31 20 19
Cryosurgical systems 6,143 5,831 5 34 41
Insurance risk assessment 1,275 1,808 (29) 7 13
-------- -------- ------- ------
Product revenues 18,050 14,086 28 100 99
Licensing and product
development 27 90 (70) - 1
-------- -------- ------- ------
Total revenues $18,077 $14,176 28% 100% 100%
======== ======== ======= ======
Nine months ended September 30,
---------------------------------------
Percentage of
Dollars % Total Revenues
----------------- --------------
Market Revenues 2005 2004 Change 2005 2004
-------- -------- ------ ------- ------
Infectious disease testing $19,672 $11,009 79% 38% 28%
Substance abuse testing 10,060 7,329 37 20 18
Cryosurgical systems 16,002 15,162 6 31 38
Insurance risk assessment 5,364 5,997 (11) 11 15
-------- -------- ------- ------
Product revenues 51,098 39,497 29 100 99
Licensing and product
development 237 302 (22) - 1
-------- -------- ------- ------
Total revenues $51,335 $39,799 29% 100% 100%
======== ======== ======= ======
Balance Sheets September 30, 2005 December 31, 2004
------------------ -----------------
Assets
------
Cash, cash equivalents and short-
term investments $ 75,297 $ 66,723
Accounts receivable, net 10,233 7,074
Inventories 4,666 4,952
Other current assets 1,188 1,195
Property and equipment, net 5,536 5,551
Other non-current assets 3,519 2,569
------------------ -----------------
Total assets $ 100,439 $ 88,064
================== =================
Liabilities and
Stockholders' Equity
--------------------
Current portion of long-term debt $ 686 $ 1,123
Accounts payable 1,974 2,360
Accrued expenses 8,726 7,552
Long-term debt, less current
portion 933 1,334
Other liabilities 228 118
Stockholders' equity 87,892 75,577
------------------ -----------------
Total liabilities and
stockholders' equity $ 100,439 $ 88,064
================== =================
Non-GAAP Financial Measures
Net income (loss) - before UPlink(R) charge, earnings (loss) per share - before UPlink(R) charge, and gross margin - before UPlink(R) charge, each exclude the impact of the $1.5 million UPlink(R) charge. These financial measures should not be considered an alternative to net income (loss), earnings (loss) per share, or gross margin, respectively, which are indicators of operating performance determined in accordance with generally accepted accounting principles (GAAP). OraSure Technologies believes that net income (loss) - before UPlink(R) charge, earnings (loss) per share - before UPlink(R) charge, and gross margin - before UPlink(R) charge, although non-GAAP financial measures, are also useful and meaningful to investors because they provide investors with the Company's underlying earnings performance as another criterion in making their investment decisions. OraSure's management also uses these calculations in measuring certain corporate performance goals. Other companies may use different measures to present financial information.
Conference Call
The Company will host a conference call and audio webcast today to discuss the Company's third quarter 2005 financial results and to provide an update on major business objectives, 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 Financial Officer. The call will include remarks by management and a question and answer session.
In order to listen to the conference call, please either dial 888-742-2024 (Domestic) or 706-643-0033 (International), 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 14, 2005, by dialing 800-642-1687 (Domestic) or 706-645-9291 (International) and entering the Conference ID #1701906.
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, expenses and products. Actual results could be significantly different. Factors that could affect results include the ability to market products; impact of competitors, competing products and technology changes; ability to develop, commercialize and market new products; market acceptance of oral fluid testing products and other new products or technology; ability to fund research and development and other projects 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; ability to obtain, and timing of obtaining, necessary regulatory approvals; 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 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; loss or impairment of sources of capital; ability to meet financial covenants in agreements with financial institutions; ability to retain qualified personnel; exposure to product liability, patent infringement, and other types of litigation; changes in international, federal or state laws and regulations; changes in relationships with strategic partners and reliance on strategic partners for the performance of critical activities under collaborative arrangements; 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, 2004, 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, 610-882-1820
Investorinfo@orasure.com
www.orasure.com
SOURCE: OraSure Technologies, Inc.
