BETHLEHEM, Pa. – When President Joe Biden gave a shout out to OraSure Technologies during his visit to the Lehigh Valley last week, he wasn’t aware of the company’s second quarter financial results, which were released late Tuesday. If he was, Biden might have added a hip-hip-hooray.
Total net revenues for the second quarter and first six months of 2021 increased 97% and 91% respectively over the prior year periods. Operating income was positive in the periods compared to substantial losses in the 2020 periods. Earnings Per Share (EPS) also were positive for 2021’s first six months, but they missed analysts’ projections, which could cause the stock to fall Wednesday.
Nevertheless, OraSure management was pleased.
“This quarter, OraSure once again demonstrated strong financial performance highlighted by a recovery in our core business as the Company began to return to pre-pandemic revenue levels. Importantly, we have now received three EUAs (Emergency Use Authorizations) for our InteliSwab™ COVID-19 Rapid Tests, signed up two major distributors, and established a significant pipeline of sales inquiries. This represents a significant achievement as we continue to demonstrate the ability of the company to develop and launch new products,” said Stephen Tang, Ph.D., President and CEO of OraSure Technologies.
Tang expects InteliSwab tests to drive company sales in the future. He told analysts during a webcast that “we have over $25 million in inquiries for InteliSwab right now.”
The Food and Drug Administration has authorized these tests for Over-the-Counter use without a prescription. FDA has also authorized the InteliSwab ™ COVID-19 Rapid Test Pro for professional use in point of care (POC) CLIA (Clinical Laboratory Improvement Amendments)-waived settings, and the InteliSwab ™ COVID-19 Rapid Test Rx for Prescription Home Use.
OraSure says the OTC and POC tests can be used for those with or without symptoms, when tested twice over two to three days, with 24-36 hours between tests.
Due to the timing of EUA for InteliSwab™ and the time required for product relabeling, OraSure did not recognize InteliSwab™ sales in the second quarter of 2021.
Also, following discussions with the FDA and their de-prioritization of antibody testing in the U.S., OraSure has decided to no longer pursue EUAs for its oral fluid COVID-19 antibody test. The company will continue to offer the product for research use only and has several labs interested in COVID antibody surveillance and research applications.
To expand its manufacturing capacity, primarily to produce InteliSwab, OraSure increased capital expenditure from $6.037 million in the first half of 2020 to $22.929 million in 2021.
Net revenues for the second quarter of 2021 were $57.6 million, a 97% increase from the second quarter of 2020. Excluding COVID-19 product revenues, revenues for the quarter increased 122% year- over-year and 48% sequentially as the company began to return to pre-pandemic revenue levels.
Total revenues from the company’s Diagnostic business unit were $19.3 million during the second quarter of 2021 and grew 85% relative to the same period last year. Revenue growth was driven predominantly by higher global OraQuick® HIV and OraQuick® HCV sales as clinics returned to testing for these critical diseases, along with higher risk assessment testing due to an increase in workplace testing.
For the company’s Molecular Solutions business unit total product and service revenues were $38.3 million during the second quarter of 2021, an increase of 103% from the second quarter of 2020. The increase was driven by strengthening demand for genomic collection kits from commercial and academic customers, growth in microbiome collection kits and services, and modestly higher COVID-19 collection kit sales.
Gross margin percentage in the second quarter was 53.2% compared to 59.0% in the prior year. The company claims gross margins were negatively impacted by the build out of manufacturing capacity to support the InteliSwab™ COVID-19 Rapid Test launch as well as the higher mix of HIV testing revenue from international markets, which carries a lower gross margin than the corporate average.
Operating income in the second quarter was $1.8 million compared to a loss of $9.4 million in the second quarter of last year. Improved operating profit was driven by higher revenues and expense control with total operating expenses only increasing 8% year-over-year despite the 97% overall revenue growth.
Net loss for the second quarter of 2021 was $1.4 million, or $0.02 per share on a fully-diluted basis, compared to a net loss of $10.5 million, or $0.16 per share on a fully-diluted basis, for the second quarter of 2020. For the first six months, OraSure had net income of $2.41 million compared to a loss of $17.82 million in the same period of 2020.
OraSure Technologies was selected by the Centers for Disease Control and Prevention (CDC) to distribute 100,000 HIV self-test kits to individuals who request them. The program sent out OraQuick® In-Home HIV Tests, which allow an individual to detect antibodies to both HIV-1 and HIV-2 with an oral test, and provide results in 20 minutes, at home.
In the Molecular Solutions segment, a new study was published in Gynecologic Oncology where the data indicated the ability of Colli-Pee®, OraSure’s proprietary urine sample collection technology, to facilitate test results for human papilloma virus (HPV) using first-void urine samples from patients. In the study of approximately 500 women, the accuracy of testing utilizing Abbott’s RealTime High Risk HPV assay was statistically equivalent using Colli-Pee® first-void urine-based samples as compared to clinician collected cervical tissue cell samples.
“I’m extremely excited for the outlook for the next 12 months for OraSure,” Tang told the analysts. He continued, “As we look to the second half of the year we believe the business is well positioned for year-over-year growth given the commercial launch of InteliSwab™. We are responding to strong global customer interest for InteliSwab™ tests and anticipate exiting the year at a significant revenue run rate. Newer areas such as our microbiome kits and services business are becoming increasingly important to our growth story and achieved record revenue in the second quarter. Overall, we are highly focused on spurring innovation, strengthening our product pipeline, and deploying capital through strategically sound acquisitions that leverage our commercial infrastructure to drive long-term sustained growth and value for our stockholders.”
The company expects third quarter 2021 net revenues to range from $45 million to $50 million. The company has also provided guidance for InteliSwab™ for the full year stating that it now anticipates total InteliSwab™ sales through December 2021 of approximately $30 million with the preponderance of revenue coming in the fourth quarter of calendar year 2021. The company expects fiscal year 2021 total revenue of approximately $230 million.
Based in Bethlehem, Pennsylvania, OraSure Technologies (OSUR: NASDAQ), together with its wholly-owned subsidiaries, DNA Genotek, Diversigen, and Novosanis, provides its customers with end-to-end solutions that encompass tools, services and diagnostics. The OraSure family of companies develops, manufactures, and distributes rapid diagnostic tests, sample collection and stabilization devices, and molecular services solutions designed to discover and detect critical medical conditions.
OraSure’s portfolio of products is sold globally to clinical laboratories, hospitals, physician’s offices, clinics, public health and community-based organizations, research institutions, government agencies, pharma, commercial entities and direct to consumers.