Full Press Release Details
BETHLEHEM, Pa., Nov. 4, 2009 (GLOBE NEWSWIRE) -- OraSure Technologies, Inc. (Nasdaq:OSUR), a market leader in oral fluid diagnostics, today announced revenues of $21.6 million for the three months ended September 30, 2009, compared to $16.9 million recorded for the three months ended September 30, 2008.
The revenue increase for the third quarter reflects double digit growth in sales of the Company's infectious disease testing, cryosurgical systems and insurance risk assessment testing products, partially offset by lower sales of its substance abuse testing products. A major contributor to the higher quarterly infectious disease testing revenues was the elimination of a $2.2 million backlog of orders for the Company's OraQuick(R) rapid HIV-1/2 test that existed as of June 30, 2009 as a result of manufacturing issues experienced by the Company during the second quarter. License and product revenues remained flat in the third quarter of 2009 compared to the third quarter of 2008.
The Company recorded net income of $1.8 million, or $0.04 per share on a fully diluted basis for the third quarter of 2009, compared to a net loss of $1.8 million, or $0.04 per share for the third quarter of 2008.
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 recorded an income tax benefit of $991,000 for the three months ended September 30, 2008.
"We are pleased with our third quarter results and especially with the strong growth experienced across multiple product lines," said Douglas A. Michels, President and CEO of OraSure Technologies. "Resolution of the OraQuick(R) manufacturing issue during the quarter allowed us to resume normal production and restore critical inventory levels of this important product. With that issue behind us, we continue to focus on accelerating the growth of our business and completion of our major clinical development programs as quickly as possible."
For the nine months ended September 30, 2009, the Company recorded revenues of $56.1 million, an increase of 4% compared to revenues of $53.9 million for the nine months ended September 30, 2008. The Company recorded a net loss of $5.0 million, or $0.11 per share, for the nine months ended September 30, 2009, compared to a net loss of $2.0 million, or $0.04 per share, for the nine months ended September 30, 2008, on a GAAP[1] basis. Results for the first nine months of 2009 included a $3.0 million pre-tax impairment charge related to the net book value of previously capitalized payments under a Hepatitis C ("HCV") patent license agreement. Results for the first nine months of 2008 included a $4.9 million pre-tax gain related to a lump sum payment received under a litigation settlement agreement entered into during that period. Excluding these items, the Company would have reported, on a non-GAAP basis, a $2.0 million pre-tax loss for the first nine months of 2009 compared to an $8.0 million pre-tax loss for the first nine months of 2008.
Gross margin in the third quarter of 2009 was 64% compared to 58% in the third quarter of 2008. Gross margin was favorably impacted in the current quarter primarily by increased absorption of the Company's fixed costs as a result of the return to full-scale manufacturing of the OraQuick(R) rapid HIV-1/2 test and replenishment of finished goods inventories for this product. Gross margin also benefited in the quarter by the Company's switch in January 2009 to a direct selling model in the U.S. hospital market.
Operating expenses for the third quarter of 2009 decreased to $12.1 million, from $13.0 million in the comparable period in 2008. This decrease was primarily attributable to a $1.2 million decrease in research and development costs associated with the Company's OraQuick(R) HCV and OraQuick(R) HIV OTC clinical development programs. Operating expenses for the nine months ended September 30, 2009 were $40.1 million, compared to $36.8 million for the comparable period in 2008. A $6.2 million decrease in research and development costs in the first nine months of 2009 was offset by the $3.0 million impairment charge described above and a $1.6 million increase in general and administrative expenses resulting primarily from higher legal fees related to pending patent infringement litigation. In addition, operating expenses for the nine months ended September 30, 2008 included the $4.9 million litigation settlement gain discussed above.
Cash, cash equivalents and short-term investments totaled $83.0 million and working capital was $92.1 million at September 30, 2009, compared to $82.5 million and $90.9 million, respectively, at December 31, 2008. Cash flow provided by operating activities for the nine months ended September 30, 2009 was $2.7 million, an improvement of $6.4 million when compared to the $3.7 million used in operating activities for the nine months ended September 30, 2008.
Fourth Quarter 2009 Outlook
The Company expects total revenues for the fourth quarter of 2009 to range from approximately $19.0 to $19.5 million. The Company is currently projecting a loss per share for the fourth quarter of 2009 of approximately $0.08 to $0.09. Research and development expenses are expected to increase during the fourth quarter due to higher costs associated with the OraQuick(R) HCV clinical studies. In addition, fourth quarter sales and marketing expenses are expected to increase as a result of product pre-launch activities and additional market research studies to be completed in the same period.
Condensed Financial Data
(In thousands, except per-share
data and percentages)
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
-------- -------- -------- --------
Results of Operations
Revenues $ 21,609 $ 16,860 $ 56,139 $ 53,895
Cost of products sold 7,706 7,145 21,384 22,393
-------- -------- -------- --------
Gross profit 13,903 9,715 34,755 31,502
-------- -------- -------- --------
Research and development 2,925 4,167 8,710 14,864
Sales and marketing 5,228 5,327 15,540 15,505
General and administrative 3,975 3,562 12,866 11,293
Litigation settlement -- -- -- (4,884)
Impairment of patent and
product rights -- -- 3,028 --
-------- -------- -------- --------
Total operating expenses 12,128 13,056 40,144 36,778
-------- -------- -------- --------
Operating income (loss) 1,775 (3,341) (5,389) (5,276)
Other income, net 24 588 411 2,194
-------- -------- -------- --------
Income (loss) before income
taxes 1,799 (2,753) (4,978) (3,082)
Income tax benefit -- (991) -- (1,079)
-------- -------- -------- --------
Net income (loss) $ 1,799 $ (1,762) $ (4,978) $ (2,003)
======== ======== ======== ========
Earnings (loss) per share:
Basic and Diluted $ 0.04 $ (0.04) $ (0.11) $ (0.04)
======== ======== ======== ========
Weighted average shares:
Basic 45,880 46,692 45,863 46,774
======== ======== ======== ========
Diluted 46,024 46,692 45,863 46,774
======== ======== ======== ========
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 loss before income taxes in the table below.
While the Company believes that disclosing the following non-GAAP financial measure 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, 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 $3.0 million pre-tax impairment of patent and product rights which occurred during the second quarter of 2009, as well as the $4.9 million pre-tax gain related to a lump sum payment received pursuant to a litigation settlement agreement entered into during the first quarter of 2008, since such significant or comparable transactions did not occur during the comparative periods.
The following table reconciles the GAAP loss before income taxes to the non-GAAP loss before income taxes for the periods indicated, as well as the period-to-period change.
September 30, Change
------------------ --------
Loss before income taxes, as reported
under GAAP $ (4,978) $ (3,082) $ (1,896)
Pre-tax impairment charge adjustment 3,028 -- 3,028
Pre-tax litigation settlement -- (4,884) 4,884
-------- -------- --------
Loss before income taxes, non-GAAP $ (1,950) $ (7,966) $ 6,016
======== ======== ========
Three months ended September 30,
---------------------------------------
Dollars % Total Revenues
------------------ -------------
Market Revenues 2009 2008 Change 2009 2008
-------- -------- ------ ------ -----
Infectious disease testing $ 13,540 $ 9,743 39% 63% 58%
Substance abuse testing 3,269 3,581 (9) 15 21
Cryosurgical systems 2,682 1,671 61 12 10
Insurance risk assessment 1,416 1,163 22 7 7
-------- -------- ------ -----
Product revenues 20,907 16,158 29 97 96
Licensing and product
development 702 702 -- 3 4
-------- -------- ------ -----
Total revenues $ 21,609 $ 16,860 28% 100% 100%
======== ======== ====== =====
Nine months ended September 30,
---------------------------------------
Dollars % Total Revenues
------------------ -------------
Market Revenues 2009 2008 Change 2009 2008
-------- -------- ------ ------ -----
Infectious disease testing $ 33,407 $ 29,260 14% 59% 54%
Substance abuse testing 8,890 10,554 (16) 16 20
Cryosurgical systems 7,728 7,726 -- 14 14
Insurance risk assessment 4,552 4,395 4 8 8
-------- -------- ------ -----
Product revenues 54,577 51,935 5 97 96
Licensing and product
development 1,562 1,960 (20) 3 4
-------- -------- ------ -----
Total revenues $ 56,139 $ 53,895 4% 100% 100%
======== ======== ====== =====
Three months ended Nine months ended
September 30, % September 30, %
------------------ ------------------