Q3 GAAP EPS of
Grew cash balance to
“We continue to make progress on our transformation journey by ‘innovating and operating with disciplined execution and accountability’. During the third quarter, we generated significant positive operating cash flow with margin expansion, driven by our enterprise-wide focus on operational efficiency. Looking ahead, we expect to deliver productivity gains across our organization as part of our focus on strengthening our foundation, and we remain confident that we will achieve our target of break-even in cash flow from operations for the core business by the end of 2024,” said
She continued, “We are focused on elevating our core growth, and we demonstrated solid progress in the third quarter with 7% core revenue growth on a year-over-year basis. We are investing in our innovation roadmap, organically and inorganically. The addition of four new offerings for international and substance abuse testing segments represents early progress in our portfolio expansion. External partnerships are a key element of our strategy to accelerate profitable growth and create shareholder value.”
Financial Highlights
Three Months Ended | Nine Months Ended | ||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||
Core Business 1 | $ | 38,988 | $ | 36,543 | 7 | % | $ | 113,476 | $ | 110,070 | 3 | % | |||||
COVID-19 | 50,199 | 79,920 | (37 | ) | 216,115 | 154,331 | 40 | ||||||||||
Total Net Revenue | $ | 89,187 | $ | 116,463 | (23 | )% | $ | 329,591 | $ | 264,401 | 25 | % |
(1) Includes diagnostics, molecular products and services, other products and services revenue, and non-product and services revenue.
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||
Net revenues | $ | 89,187 | $ | 116,463 | (23 | )% | $ | 329,591 | $ | 264,401 | 25 | % | |||||||||
Gross profit | 44,340 | 46,514 | (5 | ) | 136,526 | 98,610 | 38 | ||||||||||||||
Gross margin | 49.7 | % | 39.9 | % | 41.4 | % | 37.3 | % | |||||||||||||
Non-GAAP gross profit | 44,609 | 46,951 | (5 | ) | 146,752 | 104,900 | 40 | ||||||||||||||
Non-GAAP gross margin | 50.0 | % | 40.3 | % | 44.5 | % | 39.7 | % | |||||||||||||
Operating income (loss) | 10,894 | 866 | NM | 28,786 | (36,777 | ) | NM | ||||||||||||||
Operating margin | 12.2 | % | 0.7 | % | 8.7 | % | (13.9 | )% | |||||||||||||
Non-GAAP operating income (loss) | 20,568 | 11,694 | 76 | 59,952 | 3,948 | NM | |||||||||||||||
Non-GAAP operating margin | 23.1 | % | 10.0 | % | 18.2 | % | 1.5 | % | |||||||||||||
Net income (loss) | 11,159 | 5,595 | 99 | 33,582 | (32,934 | ) | NM | ||||||||||||||
Non-GAAP net income (loss) | 19,947 | 10,000 | 99 | 61,106 | (493 | ) | NM | ||||||||||||||
GAAP EPS | $ | 0.15 | $ | 0.08 | 88 | $ | 0.45 | $ | (0.45 | ) | NM | ||||||||||
Non-GAAP EPS | $ | 0.27 | $ | 0.14 | 93 | $ | 0.82 | $ | (0.01 | ) | NM |
NM – not meaningful
- Total net revenues for the third quarter of 2023 decreased 23% to
$89.2 million from$116 .5 million in the third quarter of 2022. - Core revenue (all revenue excluding COVID-19 revenue) of
$39.0 million in the third quarter increased 7% year-over-year. Core revenue growth was driven by strong HIV sales in theU.S. and international markets. Molecular products revenue in the third quarter increased 17% sequentially but decreased 4% on a year-over-year basis, which was in line with our expectations. - COVID-19 revenue of
$50 .2 million in the third quarter decreased 37% year-over-year. - GAAP gross margin percentage was 49.7% in the third quarter of 2023 compared to 39.9% in the third quarter of 2022. Non-GAAP gross margins in the third quarter of 2023 were 50.0% compared to 40.3% in the third quarter of 20221. Gross margins benefited from production efficiencies, cost reduction initiatives, lower manufacturing scrap expense, and changes to InteliSwab® packaging that were implemented during the first quarter of 2023.
- GAAP operating income in the third quarter of 2023 was
$10.9 million compared to$0.9 million in the third quarter of 2022. Non-GAAP operating income was$20.6 million in the third quarter of 2023 compared to$11 .7 million in the third quarter of 2022. - Cash, cash equivalents, and short-term investments increased to
$224 .9 million as ofSeptember 30, 2023 . The$39 .0 million increase in our cash balance during the third quarter of 2023 was primarily driven by our improved operational performance, including lower inventory levels. In addition, during the third quarter we received$6 .5 million from theU.S. government related to our manufacturing expansion contract.
Recent Business Highlights
- Received an award for
$5.7 million for future orders of InteliSwab® Covid-19 tests from theU.S. Department of Health and Human Services (HHS) through the Administration for Strategic Preparedness and Response (ASPR). The tests are available for free to households acrossthe United States as part of the reopening of COVIDtests.gov. - Received FDA approval in September for extension of InteliSwab® shelf-life from 18 months to 24 months.
- Established new distribution agreements to expand our product offerings in international infectious disease diagnostic testing and point-of-care substance abuse testing.
- Successfully completed the final milestones as part of our contract with the
Department of Defense related to the installation and testing of new equipment and automation capabilities at ourOpus Way facility inBethlehem, Pennsylvania . With this phase of the expansion completed, we expect to make further progress in consolidating our manufacturing footprint to drive operating efficiencies over the next few years. - On track to achieve operating cash flow break-even for the core business by the end of 2024.
Financial Guidance
The Company is guiding to Q4 2023 revenue of
1 For additional information on non-GAAP financial measures and a reconciliation of the GAAP financial results to non-GAAP financial results, see the schedules below. A description of the adjustments made to the GAAP financial measures is included at the end of the schedules.
Financial Data (Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Results of Operations | |||||||||||||||
Net revenues | $ | 89,187 | $ | 116,463 | $ | 329,591 | $ | 264,401 | |||||||
Cost of products and services sold | 44,847 | 69,949 | 193,065 | 165,791 | |||||||||||
Gross profit | 44,340 | 46,514 | 136,526 | 98,610 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 8,516 | 10,088 | 26,737 | 28,185 | |||||||||||
Sales and marketing | 8,736 | 13,474 | 29,413 | 37,875 | |||||||||||
General and administrative | 10,051 | 15,527 | 44,186 | 52,262 | |||||||||||
Loss on impairment | 6,183 | 6,559 | 7,503 | 17,101 | |||||||||||
Change in fair value of acquisition-related contingent consideration | (40 | ) | — | (99 | ) | (36 | ) | ||||||||
Total operating expenses | 33,446 | 45,648 | 107,740 | 135,387 | |||||||||||
Operating income (loss) | 10,894 | 866 | 28,786 | (36,777 | ) | ||||||||||
Other income | 2,612 | 3,586 | 6,752 | 5,467 | |||||||||||
Income (loss) before income taxes | 13,506 | 4,452 | 35,538 | (31,310 | ) | ||||||||||
Income tax expense (benefit) | 2,347 | (1,143 | ) | 1,956 | 1,624 | ||||||||||
Net income (loss) | $ | 11,159 | $ | 5,595 | $ | 33,582 | $ | (32,934 | ) | ||||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.15 | $ | 0.08 | $ | 0.46 | $ | (0.45 | ) | ||||||
Diluted | $ | 0.15 | $ | 0.08 | $ | 0.45 | $ | (0.45 | ) | ||||||
Weighted average shares: | |||||||||||||||
Basic | 73,453 | 72,616 | 73,298 | 72,448 | |||||||||||
Diluted | 74,349 | 72,785 | 74,197 | 72,448 |
Three Months Ended | Nine Months Ended | ||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||
$ | 50,145 | $ | 79,559 | (37 | )% | $ | 215,876 | $ | 144,809 | 49 | % | ||||||
Diagnostics | 19,551 | 12,288 | 59 | 56,475 | 37,759 | 50 | |||||||||||
Molecular Products | 15,238 | 15,829 | (4 | ) | 41,230 | 51,344 | (20 | ) | |||||||||
Other products and services | 3,192 | 2,827 | 13 | 9,279 | 8,895 | 4 | |||||||||||
Molecular Services | 834 | 1,957 | (57 | ) | 3,567 | 4,895 | (27 | ) | |||||||||
COVID-19 Molecular Products | 54 | 361 | (85 | ) | 239 | 9,522 | (97 | ) | |||||||||
Net product and services revenues | 89,014 | 112,821 | (21 | ) | 326,666 | 257,224 | 27 | ||||||||||
Non-product and services revenues | 173 | 3,642 | (95 | ) | 2,925 | 7,177 | (59 | ) | |||||||||
Net revenues | $ | 89,187 | $ | 116,463 | (23 | )% | $ | 329,591 | $ | 264,401 | 25 | % |
Condensed Consolidated Balance Sheets (Unaudited)
Assets | |||||
Cash and cash equivalents | $ | 217,533 | $ | 83,980 | |
Short-term investments | 7,358 | 26,867 | |||
Accounts receivable, net | 53,402 | 70,797 | |||
Inventories | 59,264 | 95,704 | |||
Other current assets | 18,907 | 47,842 | |||
Property, plant and equipment, net | 48,027 | 59,413 | |||
Intangible assets, net | 3,793 | 11,694 | |||
35,033 | 35,104 | ||||
Other noncurrent assets | 15,115 | 12,779 | |||
Total assets | $ | 458,432 | $ | 444,180 | |
Liabilities and Stockholders’ Equity | |||||
Accounts payable | $ | 14,966 | $ | 38,020 | |
Deferred revenue | 1,824 | 2,273 | |||
Other current liabilities | 24,157 | 28,770 | |||
Other non-current liabilities | 12,600 | 10,692 | |||
Stockholders’ equity | 404,885 | 364,425 | |||
Total liabilities and stockholders’ equity | $ | 458,432 | $ | 444,180 |
Additional Financial Data (Unaudited)
Nine Months Ended | ||||||
2023 | 2022 | |||||
Capital expenditures | $ | 9,018 | $ | 66,786 | ||
Proceeds from funding under government contract(1) | $ | 24,290 | $ | 37,756 | ||
Depreciation and amortization | $ | 17,372 | $ | 11,391 | ||
Stock-based compensation | $ | 7,602 | $ | 9,100 | ||
Cash provided by (used in) operating activities | $ | 100,217 | $ | (29,190 | ) |
(1) Proceeds represent reimbursements for capital expenditures, engineering consulting costs, and guaranteed profit to cover project management costs.
Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended | |||||||
2023 | 2022 | ||||||
OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | 33,582 | $ | (32,934 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Stock-based compensation | 7,602 | 9,100 | |||||
Depreciation and amortization | 17,372 | 11,391 | |||||
Loss on impairments | 7,503 | 17,101 | |||||
Other non-cash amortization | 3 | 411 | |||||
Provision for credit losses | (75 | ) | 974 | ||||
Unrealized foreign currency gain | (66 | ) | (396 | ) | |||
Interest expense on finance leases | 42 | 74 | |||||
Deferred income taxes | (490 | ) | 542 | ||||
Loss on sale of fixed assets | — | 729 | |||||
Change in the estimated fair value of acquisition-related contingent consideration | (99 | ) | (36 | ) | |||
Payment of acquisition-related contingent consideration | (19 | ) | — | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 17,468 | (19,152 | ) | ||||
Inventories | 36,425 | (26,240 | ) | ||||
Prepaid expenses and other assets | 10,530 | (5,990 | ) | ||||
Accounts payable | (25,122 | ) | 15,315 | ||||
Deferred revenue | (449 | ) | (312 | ) | |||
Accrued expenses and other liabilities | (3,990 | ) | 233 | ||||
Net cash provided by (used in) operating activities | 100,217 | (29,190 | ) | ||||
INVESTING ACTIVITIES: | |||||||
Purchases of short-term investments | (74,652 | ) | (22,873 | ) | |||
Proceeds from maturities and redemptions of short-term investments | 94,980 | 47,415 | |||||
Purchases of property and equipment | (4,517 | ) | (28,081 | ) | |||
Purchase of property and equipment under government contracts | (4,501 | ) | (38,705 | ) | |||
Proceeds from funding under government contract(1) | 24,290 | 37,756 | |||||
Net cash provided by (used in) investing activities | 35,600 | (4,488 | ) | ||||
FINANCING ACTIVITIES: | |||||||
Cash payments for lease liabilities | (835 | ) | (826 | ) | |||
Proceeds from exercise of stock options | 76 | 15 | |||||
Payment of acquisition-related contingent consideration | (46 | ) | (208 | ) | |||
Repurchase of common stock | (1,863 | ) | (2,008 | ) | |||
Net cash used in financing activities | (2,668 | ) | (3,027 | ) | |||
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH | 404 | (4,852 | ) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 133,553 | (41,557 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 83,980 | 116,762 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 217,533 | $ | 75,205 |
(1) Proceeds represent reimbursements for capital expenditures, engineering consulting costs, and guaranteed profit to cover project management costs.
Conference Call
The Company will host a conference call and audio webcast to discuss the Company’s third quarter 2023 results and certain business developments, beginning today at
A webcast of the conference call will be available on the investor relations page of OraSure’s website at https://orasure.gcs-web.com/events-and-presentations. Please click on the webcast link and follow the prompts for registration and access at least 10 minutes prior to the call. The webcast will be archived on OraSure’s website shortly after the call has ended and will be available for approximately 90 days. If a participant will be listen-only, they are encouraged to listen via the webcast.
To participate in the live conference call, please follow the link below to pre-register. After registering, you will be provided with your access details via email. It is recommended to dial in at least 15 minutes prior to the call start time.
https://register.vevent.com/register/BIadc801c7a1dd42f1bc673c7fe37f8d2d
About InteliSwab®
This product has not been FDA cleared or approved, but it has been authorized by the FDA under an EUA. The emergency use of this product has been authorized only for the detection of proteins from SARS-CoV-2, not for any other viruses or pathogens. This product is only authorized for the duration of the declaration that circumstances exist justifying the authorization of emergency use of in vitro diagnostics for detection and/or diagnosis of COVID-19 under Section 564(b)(1) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 360bbb- 3(b)(1), unless the declaration is terminated or authorization is revoked sooner.
Development of the InteliSwab® COVID-19 Rapid Test has been funded in whole or in part with federal funds from the
About
Forward Looking Statements
This press release contains certain forward-looking statements, including with respect to products, product development and manufacturing activities, regulatory submissions and authorizations, revenue growth, expected revenue from government orders, cost savings, cash flow, increasing margins and other matters. Forward-looking statements are not guarantees of future performance or results. Known and unknown factors that could cause actual performance or results to be materially different from those expressed or implied in these statements include, but are not limited to: our ability to satisfy customer demand; ability to reduce our spending rate, capitalize on manufacturing efficiencies and drive profitable growth; ability to achieve the anticipated cost savings as a result of our business restructuring; ability to market and sell products, whether through our internal, direct sales force or third parties; impact of significant customer concentration in the genomics business; failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for our products; ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements; 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; ability to effectively resolve warning letters, audit observations and other findings or comments from the FDA or other regulators; the impact of the novel coronavirus (“COVID-19”) pandemic on the Company's business, supply chain, labor force, ability to successfully develop new products, validate the expanded use of existing collector products, receive necessary regulatory approvals and authorizations and commercialize such products for COVID-19 testing, and demand for our COVID-19 testing products ; changes in relationships, including disputes or disagreements, with strategic partners or other parties and reliance on strategic partners for the performance of critical activities under collaborative arrangements; ability to meet increased demand for the Company’s products; impact of replacing distributors; inventory levels at distributors and other customers; ability of the Company to achieve its financial and strategic objectives and continue to increase its revenues, including the ability to expand international sales and the ability to continue to reduce costs; impact of competitors, competing products and technology changes; reduction or deferral of public funding available to customers; competition from new or better technology or lower cost products; ability to develop, commercialize and market new products; market acceptance of oral fluid or urine testing, collection or other products; market acceptance and uptake of microbiome informatics, microbial genetics technology and related analytics services; changes in market acceptance of products based on product performance or other factors, including changes in testing guidelines, algorithms or other recommendations by the
Statement Regarding Use of Non-GAAP Financial Measures
In this press release, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in
The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Non-GAAP financial results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Further, non-GAAP financial measures, even if similarly titled, may not be calculated in the same manner by all companies, and therefore should not be compared.
OraSure Technologies GAAP to Non-GAAP Reconciliation ($ in 000's)
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 89,187 | $ | 116,463 | $ | 329,591 | $ | 264,401 | |||||||
GAAP Cost of products and services sold | 44,847 | 69,949 | 193,065 | 165,791 | |||||||||||
GAAP Gross Margin | 49.7 | % | 39.9 | % | 41.4 | % | 37.3 | % | |||||||
Stock compensation | 137 | (114 | ) | 426 | 191 | ||||||||||
Amortization of acquisition-related intangible assets | 132 | 132 | 396 | 396 | |||||||||||
Reduction in workforce severance | — | — | 369 | — | |||||||||||
Transformation related expenses | — | 419 | 281 | 1,334 | |||||||||||
Accelerated depreciation | — | — | 6,950 | — | |||||||||||
Inventory reserve for excess levels | — | — | 1,804 | 4,369 | |||||||||||
Non-GAAP Cost of Goods Sold | 44,578 | 69,512 | 182,839 | 159,501 | |||||||||||
Non-GAAP Gross Margin | 50.0 | % | 40.3 | % | 44.5 | % | 39.7 | % | |||||||
GAAP Operating Income (Loss) | 10,894 | 866 | 28,786 | (36,777 | ) | ||||||||||
Stock compensation | 2,590 | 2,296 | 7,602 | 6,805 | |||||||||||
Amortization of acquisition-related intangible assets | 467 | 468 | 1,399 | 1,470 | |||||||||||
Reduction in workforce severance | — | — | 3,264 | — | |||||||||||
Accelerated depreciation | — | — | 6,950 | — | |||||||||||
Inventory reserve for excess levels | — | — | 1,804 | 4,369 | |||||||||||
Loss on impairment | 6,183 | 6,559 | 7,503 | 17,101 | |||||||||||
Transformation related expenses | 26 | 616 | 707 | 5,671 | |||||||||||
Executive severance expense | — | 558 | — | 3,550 | |||||||||||
Strategic alternative costs | — | — | — | 848 | |||||||||||
Government grant accounting | 448 | 331 | 2,036 | 947 | |||||||||||
Change in fair value of acquisition-related contingent consideration | (40 | ) | — | (99 | ) | (36 | ) | ||||||||
Non-GAAP Operating Income (Loss) | 20,568 | 11,694 | 59,952 | 3,948 | |||||||||||
GAAP Net Income (Loss) | 11,159 | 5,595 | $ | 33,582 | (32,934 | ) | |||||||||
Stock compensation | 2,590 | 2,296 | 7,602 | 6,805 | |||||||||||
Amortization of acquisition-related intangible assets | 467 | 468 | 1,399 | 1,470 | |||||||||||
Reduction in workforce severance | — | — | 3,264 | — | |||||||||||
Accelerated depreciation | — | — | 6,950 | — | |||||||||||
Inventory reserve for excess levels | — | — | 1,804 | 4,369 | |||||||||||
Loss on impairment | 6,183 | 6,559 | 7,503 | 17,101 | |||||||||||
Transformation related expenses | 26 | 616 | 707 | 5,671 | |||||||||||
Executive severance expense | — | 558 | — | 3,550 | |||||||||||
Strategic alternative costs | — | — | — | 848 | |||||||||||
Change in fair value of acquisition-related contingent consideration | (40 | ) | — | (99 | ) | (36 | ) | ||||||||
Tax effect of Non-GAAP adjustments | (438 | ) | (6,092 | ) | (1,606 | ) | (7,337 | ) | |||||||
Non-GAAP Net Income (Loss) | $ | 19,947 | $ | 10,000 | $ | 61,106 | $ | (493 | ) | ||||||
GAAP Earnings (Loss) Per Share: | $ | 0.15 | $ | 0.08 | $ | 0.45 | $ | (0.45 | ) | ||||||
Non-GAAP Earnings (Loss) Per Share: | $ | 0.27 | $ | 0.14 | $ | 0.82 | $ | (0.01 | ) | ||||||
Diluted Shares Outstanding | 74,349 | 72,785 | 74,197 | 72,448 |
Following is a description of the adjustments made to GAAP financial measures:
- Stock Compensation: non-cash equity-based compensation provided to
OraSure employees and directors excluding accelerated stock compensation as required under former employees’ employment agreements - Amortization of acquisition-related intangible assets: represents recurring amortization charges resulting from the acquisition of intangible assets associated with our business combinations
- Reduction in workforce severance: one-time termination benefits associated with the Company’s workforce reduction
- Inventory reserve for excess levels: reserves recorded for inventory balances that are deemed excess based on current forecasts and expirations dates
- Loss on impairment: charges related to the write down of Company’s PP&E, goodwill and intangible assets
- Transformation related expenses: transitory costs such as consulting and professional fees related to transformation initiatives
- Accelerated depreciation: reduction in the useful life of certain assets to fully depreciate those assets which were identified as having no future use beyond the period presented due to a manufacturing site closure
- Strategic alternative costs: one-time expenses such as legal and banking fees tied to the Company’s strategic alternative process
- Executive severance expenses: expenses tied to executive severance agreements including accelerated stock compensation
- Government contract accounting: As required under International Accounting Standard Board IAS 20, Accounting for Government Contracts and Disclosure of Government Assistance, our operating expenses associated with the
Department of Defense expansion contract are reflected in operating expenses with offsetting reimbursement reflected in other income - Change in fair value of acquisition-related contingent consideration: changes in the fair value of contingent consideration liability associated with estimate changes in reaching contingent consideration metrics
- Tax impact associated with non-GAAP adjustments – tax expense/(benefit) due to non-GAAP adjustments
A reconciliation of our non-GAAP measures to their most directly comparable GAAP measures can also be found at: https://orasure.gcs-web.com/gaap-non-gaap-reconciliation
Investor Contact: | Media Contact: |
Amy Koch | |
VP, Investor Relations | Director, Corporate Communications |
investorinfo@orasure.com | media@orasure.com |
Source:
2023 GlobeNewswire, Inc., source