OraSure Technologies, Inc. (NASDAQ:OSUR), a market leader in oral fluid
diagnostics, today announced revenues of $17.3 million for the three
months ended March 31, 2009, compared to $18.1 million recorded for the
three months ended March 31, 2008. Increased sales of the Company’s
OraQuick ADVANCE® rapid HIV-1/2 antibody test and
insurance risk assessment products during the first quarter 2009 were
offset by decreased sales of the Company’s cryosurgical systems and
substance abuse testing products and lower licensing and product
development revenue.
The Company recorded a net loss of $1.6 million, or $0.04 per share, for
the first quarter of 2009, compared to net income of $2.0 million, or
$0.04 per share on a fully-diluted basis, for the first quarter of 2008,
on a GAAP1 basis. The first quarter 2008 results include a
$4.9 million pre-tax gain related to a settlement and licensing
agreement entered into during that quarter. On a non-GAAP basis, the
Company would have reported a $2.1 million pre-tax loss in 2008
excluding the gain, compared to a pre-tax loss for the first quarter of
2009 of $1.6 million, an improvement of approximately $532,000 which is
largely attributable to a higher gross margin and an overall decrease in
operating expenses.
During the fourth quarter of 2008, the Company established a full
valuation allowance against its net deferred tax asset. As a result, the
Company will not record Federal income tax expense or benefit in 2009.
The Company incurred income tax expense of $732,000 for the three months
ended March 31, 2008.
Gross margin in the first quarter of 2009 was 64% compared with 59% in
the first quarter of 2008, due to improved margins derived from
implementing a direct sales model for the OraQuick ADVANCE®
HIV-1/2 test in the U.S. hospital market beginning in January 2009 and a
decrease in scrap and spoilage levels.
Operating expenses for the first quarter of 2009 decreased $823,000 to
$12.8 million, from $13.7 million in the comparable period in 2008. This
decrease was primarily attributable to a decrease in research and
development costs associated with the Company’s OraQuick® HCV
and OraQuick® HIV over-the-counter (“OTC”) clinical
development programs and lower staffing costs. Sales and marketing
expenses were also down in the first quarter of 2009 due to cost-cutting
measures in many categories, partially offset by an increase in staffing
costs required to implement the direct sales model for the hospital
market. General and administrative expenses were higher in the current
quarter due to an increase in legal fees related to pending patent
litigation.
“We are pleased with our performance during the first quarter of
2009, as we exceeded expectations on both the top and bottom lines,”
said Douglas A. Michels, President and Chief Executive Officer of
OraSure Technologies. “Sales of our OraQuick ADVANCE®
HIV-1/2 test remained strong, in part because of the successful
transition of the hospital market to a direct sales model. At the same
time, we continued advancing our two most critical clinical programs for
an OraQuick® HCV test and OraQuick® HIV OTC test.
Our first quarter performance is a great start to what we expect will be
a very successful 2009.”
Cash, cash equivalents and short-term investments totaled $78.6 million
and working capital was $90.1 million at March 31, 2009, compared to
$82.5 million and $90.9 million, respectively, at December 31, 2008.
Second Quarter 2009 Outlook
The Company expects total revenues for the second quarter of 2009 to
range from approximately $18.5 to $19.0 million. The Company is
currently projecting a loss per share for the second quarter of 2009 of
approximately $0.06 to $0.07.
Pending Litigation
The Company also announced today that the United States District Court
for the District of New Jersey issued an order denying, without
prejudice, the motion for summary judgment on infringement filed by
Inverness Medical and Church & Dwight against the Company in a pending
patent lawsuit. The plaintiffs were granted leave to reinstate their
motion upon completion of the Markman hearing where the Court will
define certain claims in the asserted patent. A Markman hearing has been
scheduled for August 12, 2009. The Company continues to believe that
none of its products, including the OraQuick ADVANCE®
HIV-1/2 test, infringe the patent or other intellectual property rights
of any party.
Financial Data
|
|
|
|
|
|
|
Condensed Financial Data
(In thousands, except per-share
data and percentages)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2009
|
|
2008
|
|
Results of Operations
|
|
|
|
|
|
Revenues
|
|
$
|
17,256
|
|
|
$
|
18,089
|
|
|
Cost of products sold
|
|
|
6,284
|
|
|
|
7,446
|
|
|
Gross profit
|
|
|
10,972
|
|
|
|
10,643
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
|
3,352
|
|
|
|
4,598
|
|
|
Sales and marketing
|
|
|
5,023
|
|
|
|
5,216
|
|
|
General and administrative
|
|
|
4,457
|
|
|
|
3,841
|
|
|
Total operating expenses
|
|
|
12,832
|
|
|
|
13,655
|
|
|
Operating loss
|
|
|
(1,860
|
)
|
|
|
(3,012
|
)
|
|
Other income, net
|
|
|
242
|
|
|
|
5,746
|
|
|
Pre-tax income (loss)
|
|
|
(1,618
|
)
|
|
|
2,734
|
|
|
Income tax provision
|
|
|
−
|
|
|
|
732
|
|
|
Net income (loss)
|
|
$
|
(1,618
|
)
|
|
$
|
2,002
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.04
|
)
|
|
$
|
0.04
|
|
|
Weighted average shares:
|
|
|
|
|
|
Basic
|
|
|
45,838
|
|
|
|
46,784
|
|
|
Diluted
|
|
|
45,838
|
|
|
|
47,268
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
The Company’s management considers the use of non-GAAP financial
measures helpful in assessing the Company’s current period’s financial
performance, especially in comparison to the same period of the prior
year. As such, the Company has presented non-GAAP income (loss) before
income taxes in the table below. While the Company believes that
disclosing the following non-GAAP financial measures allows for greater
transparency in the review of its underlying financial performance, it
does not consider such measures to be substitutes for, or superior to,
income (loss) before income taxes as determined in accordance with GAAP.
For purposes of calculating the non-GAAP loss before income taxes, the
Company excluded the $4.9 million pre-tax gain related to a settlement
and license agreement entered into during the first quarter of 2008,
since such a significant or comparable transaction did not occur during
the first quarter of 2009.
The following table reconciles the GAAP income (loss) before income
taxes to the non-GAAP income (loss) before income taxes for the periods
indicated, as well as the period-to-period change.
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Change
|
|
|
|
2009
|
|
2008
|
|
|
|
Income (loss) before income taxes, as reported under GAAP
|
|
$
|
(1,618
|
)
|
|
$
|
2,734
|
|
|
$
|
(4,352
|
)
|
|
Pre-tax gain adjustment
|
|
|
−
|
|
|
|
(4,884
|
)
|
|
|
4,884
|
|
|
Income (loss) before income taxes, non-GAAP
|
|
$
|
(1,618
|
)
|
|
$
|
(2,150
|
)
|
|
$
|
532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
Dollars
|
|
%
|
|
Total Revenues
|
|
Market Revenues
|
|
2009
|
|
2008
|
|
Change
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infectious disease testing
|
|
$
|
10,451
|
|
$
|
9,480
|
|
10
|
%
|
|
61
|
%
|
|
52
|
%
|
|
Substance abuse testing
|
|
|
2,690
|
|
|
3,277
|
|
(18
|
)
|
|
16
|
|
|
18
|
|
|
Cryosurgical systems
|
|
|
2,145
|
|
|
3,336
|
|
(36
|
)
|
|
12
|
|
|
18
|
|
|
Insurance risk assessment
|
|
|
1,635
|
|
|
1,543
|
|
6
|
|
|
9
|
|
|
9
|
|
|
Product revenues
|
|
|
16,921
|
|
|
17,636
|
|
(4
|
)
|
|
98
|
|
|
97
|
|
|
Licensing and product development
|
|
|
335
|
|
|
453
|
|
(26
|
)
|
|
2
|
|
|
3
|
|
|
Total revenues
|
|
$
|
17,256
|
|
$
|
18,089
|
|
(5
|
)%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
March 31,
|
|
%
|
|
OraQuick® Revenues
|
|
2009
|
|
2008
|
|
Change
|
|
|
|
|
|
|
|
|
|
Direct to U.S. Public Health
|
|
$
|
6,577
|
|
$
|
6,282
|
|
5
|
%
|
|
Hospital Market
|
|
|
2,722
|
|
|
1,925
|
|
41
|
|
|
International
|
|
|
459
|
|
|
646
|
|
(29
|
)
|
|
Total OraQuick® revenues
|
|
$
|
9,758
|
|
$
|
8,853
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
March 31,
|
|
%
|
|
Intercept® Revenues
|
|
2009
|
|
2008
|
|
Change
|
|
|
|
|
|
|
|
|
|
Workplace testing
|
|
$
|
857
|
|
$
|
1,016
|
|
(16
|
)%
|
|
Criminal justice
|
|
|
552
|
|
|
619
|
|
(11
|
)
|
|
International
|
|
|
523
|
|
|
525
|
|
−
|
|
|
Direct
|
|
|
168
|
|
|
271
|
|
(38
|
)
|
|
Total Intercept® revenues
|
|
$
|
2,100
|
|
$
|
2,431
|
|
(14
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
March 31,
|
|
%
|
|
Cryosurgical Systems Revenues
|
|
2009
|
|
2008
|
|
Change
|
|
|
|
|
|
|
|
|
|
Professional domestic
|
|
$
|
942
|
|
$
|
1,034
|
|
(9
|
)%
|
|
Professional international
|
|
|
629
|
|
|
737
|
|
(15
|
)
|
|
OTC domestic
|
|
|
57
|
|
|
−
|
|
−
|
|
|
OTC international
|
|
|
517
|
|
|
1,565
|
|
(67
|
)
|
|
Total cryosurgical systems revenues
|
|
$
|
2,145
|
|
$
|
3,336
|
|
(36
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheets
|
|
March 31, 2009
|
|
December 31, 2008
|
|
Assets
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
78,620
|
|
$
|
82,523
|
|
Accounts receivable, net
|
|
|
11,237
|
|
|
11,571
|
|
Inventories
|
|
|
9,917
|
|
|
10,704
|
|
Other current assets
|
|
|
1,642
|
|
|
1,418
|
|
Property and equipment, net
|
|
|
21,078
|
|
|
21,235
|
|
Other non-current assets
|
|
|
4,266
|
|
|
4,467
|
|
Total assets
|
|
$
|
126,760
|
|
$
|
131,918
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
553
|
|
$
|
558
|
|
Accounts payable
|
|
|
2,545
|
|
|
3,926
|
|
Accrued expenses
|
|
|
8,202
|
|
|
10,796
|
|
Long-term debt
|
|
|
8,167
|
|
|
8,301
|
|
Other liabilities
|
|
|
5
|
|
|
12
|
|
Stockholders’ equity
|
|
|
107,288
|
|
|
108,325
|
|
Total liabilities and stockholders’ equity
|
|
$
|
126,760
|
|
$
|
131,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
Additional Financial Data
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
453
|
|
$
|
755
|
|
Depreciation and amortization
|
|
$
|
848
|
|
$
|
691
|
|
Purchase and retirement of common stock
|
|
$
|
309
|
|
|
−
|
|
Cash flows used in operating activities
|
|
$
|
2,650
|
|
$
|
3,709
|
|
Accounts receivable – days sales outstanding
|
|
59 days
|
|
69 days
|
|
|
|
|
|
|
Conference Call
The Company will host a conference call and audio webcast to discuss the
Company’s 2009 first quarter financial results, business developments
and second quarter 2009 financial guidance, 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
888-742-2024 (Domestic) or 706-643-0033 (International) and reference
Conference ID #96095225, 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 May 13, 2009, by dialing 800-642-1687 (Domestic)
or 706-645-9291 (International) and entering the Conference ID #96095225.
About OraSure Technologies
OraSure Technologies develops, manufactures and markets oral fluid
specimen collection devices and tests and other diagnostic products
using 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, expenses, net income, earnings/loss
per share and products. Actual results could be significantly different.
Factors that could affect results include the ability to market and sell
products, whether through an internal, direct sales force or third
parties; ability to manufacture products in accordance with applicable
specifications, performance standards and quality requirements; 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 replacing
distributors and success of direct sales efforts; inventory levels at
distributors and other customers; 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 and extended shelf life; 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 and ability to utilize net operating loss carryforwards or
other deferred tax assets; volatility of the Company’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 changes in international funding sources; 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 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, 2008, 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.
1 GAAP is defined as U.S. Generally Accepted Accounting
Principles.
OraSure Technologies, Inc.
Ronald H. Spair
Chief Financial
Officer
610-882-1820
Investorinfo@orasure.com
www.orasure.com
