OraSure Technologies, Inc. (NASDAQ:OSUR), a market leader in oral
fluid diagnostics, today announced revenues of $82.7 million and
$19.8 million for the year and quarter ended December 31, 2007,
respectively. This compares to revenues of $68.2 million and $17.7
million for the year and quarter ended December 31, 2006,
respectively. The Company reported net income of $2.5 million, or
$0.05 per share on a fully-diluted basis, for the full year 2007.
These results compare to net income of $5.3 million, or $0.11 per
share on a fully-diluted basis, for the full year 2006. Net income
for the full year 2007 included a $1.4 million pre-tax gain on sale
of an investment in a privately-held nonaffiliated company. For the
quarter ended December 31, 2007, the Company reported net income of
$27,000 representing break-even earnings per share on a
fully-diluted basis. These results compare to net income of $1.0
million, or $0.02 per share on a fully-diluted basis, for the
quarter ended December 31, 2006. For the year ended December 31,
2007, increased sales of the Company�s OraQuick� rapid HIV-1/2
antibody tests and over-the-counter (�OTC�) cryosurgery products,
together with an increase in funded research and development
related to the Company�s rapid Hepatitis C (�HCV�) test,
contributed to the 21% increase in total revenue. Revenue for the
quarter ended December 31, 2007 increased 12%, also as a result of
increased sales of the Company�s OraQuick� tests and OTC
cryosurgery products, as well as increased sales in the insurance
risk assessment market. These increases for the quarter were
partially offset by a decrease in sales of the Company�s Intercept�
oral fluid drug testing product compared to 2006. �We are pleased
with the robust revenue increase delivered in 2007, and in
particular with the continued growth of our infectious disease
business,� said Douglas A. Michels, President and Chief Executive
Officer of OraSure Technologies. �We believe the OraQuick� rapid
HIV test will continue to drive significant growth in the future.
During 2007, we also expanded our international business and
continued to build the groundwork for our future success by making
significant progress in the clinical development of a rapid HIV
test for home use and a rapid Hepatitis C test for professional
use.� The Company�s gross margins were 61% and 58% for the full
year 2007 and quarter ended December 31, 2007, respectively. Gross
margins decreased from 64% for the full year 2006 and from 65% for
the quarter ended December 31, 2006. The decrease in gross margin
for the year was largely due to an increase in inventory scrap
expenses, higher product support costs and a less favorable product
mix. The decrease for the fourth quarter was largely due to a less
favorable product mix and a higher unit cost associated with the
introduction of a new cryosurgical device in the European OTC
market. The 2006 fourth quarter and full year margins also
benefited from a favorable adjustment to royalty expense as the
result of a re-negotiated patent license. For the full year 2007,
operating expenses increased to $51.5 million from $37.9 million in
2006. Operating expenses for the quarter ended December 31, 2007
were $13.0 million, compared to $10.7 million for the comparable
period in 2006. These increases were primarily attributable to
higher research and development costs associated with the
development and clinical work for an OraQuick� rapid HIV test for
home use and an OraQuick� hepatitis C test for professional use,
higher staffing related costs and increased advertising
reimbursement expense related to the Company�s international OTC
cryosurgical product. Operating expenses for the full year 2007
were also higher due to increased legal expenses related to the
dispute with Prestige Brands, which was resolved in the fourth
quarter of 2007. Cash flow from operating activities was $11.5
million in 2007, compared to $16.9 million reported in 2006. The
decrease was primarily the result of lower net income and increases
in inventories and accounts receivable, partially offset by an
increase in accounts payable and accrued expenses. Cash, cash
equivalents and short-term investments totaled $95.6 million and
working capital was $105.6 million at December 31, 2007, compared
to $91.0 million and $96.0 million, respectively, at December 31,
2006. Full Year and First Quarter 2008 Outlook The Company expects
total revenues for 2008 to range from approximately $90.0 to $92.0
million. This projection does not include the amount payable under
the Schering-Plough settlement for past sales which will be
recorded as other income, nor does it include any contribution in
2008 from the reintroduction of a cryosurgical wart treatment
product in the U.S. OTC market or launch of an OTC cryosurgical
product line extension for which the Company is seeking FDA 510(k)
clearance. The timing and potential magnitude of any revenues from
these cryosurgical products are not predictable at this time. The
Company does not include items in its guidance unless it believes
the related revenues are likely to be achieved. The Company expects
to increase its Research and Development expenditures for 2008 to
approximately $21.0 million, representing an increase of $7.0
million or approximately $0.08 per share over 2007. As a result,
the Company expects to achieve fully diluted earnings per share for
2008 of approximately $0.05 to $0.07. For the first quarter of
2008, revenues are expected to range from approximately $18.0 to
$18.5 million with sequential growth in infectious disease and
substance abuse testing revenues compared to the fourth quarter of
2007, offset by lower cryosurgical revenues as a result of
seasonality and the absence of U.S. OTC cryosurgical sales. The
Company is currently projecting fully-diluted earnings per share
for the first quarter of 2008 of approximately $0.03 to $0.04. �
Condensed Financial Data (In thousands, except per-share data and
percentages) � Unaudited � � � Three months ended Year ended
December 31, December 31, 2007 2006 2007 2006 Results of Operations
Revenues $ 19,809 $ 17,734 $ 82,686 $ 68,155 Cost of products sold
� 8,281 � � 6,240 � 32,403 � � 24,756 Gross profit � 11,528 � �
11,494 � 50,283 � � 43,399 Operating expenses: Research and
development 4,240 2,898 14,136 8,648 Sales and marketing 5,063
3,945 20,062 15,921 General and administrative � 3,668 � � 3,885 �
17,304 � � 13,367 Total operating expenses � 12,971 � � 10,728 �
51,502 � � 37,936 Operating income (loss) (1,443 ) 766 (1,219 )
5,463 Other income, net � 1,070 � � 1,020 � 5,513 � � 3,599 Pre-tax
income (loss) (373 ) 1,786 4,294 9,062 Income tax provision
(benefit) � (400 ) � 761 � 1,821 � � 3,794 Net income $ 27 � $
1,025 $ 2,473 � $ 5,268 Earnings per share: Basic $ -- � $ 0.02 $
0.05 � $ 0.11 Diluted $ -- � $ 0.02 $ 0.05 � $ 0.11 Weighted
average shares: Basic � 46,625 � � 45,974 � 46,325 � � 45,910
Diluted � 47,336 � � 46,440 � 46,878 � � 46,580 � Three months
ended December 31, � � � Percentage of Dollars % Total Revenues
Market Revenues 2007 2006 Change 2007 � 2006 � Infectious disease
testing $ 9,444 $ 7,943 19 % 48 % 45 % Substance abuse testing
3,390 4,058 (16 ) 17 23 Cryosurgical systems 5,343 4,269 25 27 24
Insurance risk assessment � 1,605 � 1,437 12 8 � 8 � Product
revenues 19,782 17,707 12 100 100 Licensing and product development
� 27 � 27 � � � � � Total revenues $ 19,809 $ 17,734 12 % 100 % 100
% � � Year ended December 31, � � � Percentage of Dollars % Total
Revenues Market Revenues 2007 2006 Change 2007 � 2006 � Infectious
disease testing $ 35,791 $ 29,180 23 % 43 % 43 % Substance abuse
testing 15,789 15,752 � 19 23 Cryosurgical systems 23,533 17,333 36
28 25 Insurance risk assessment � 5,464 � 5,565 (2 ) 7 � 8 �
Product revenues 80,577 67,830 19 97 99 Licensing and product
development � 2,109 � 325 549 % 3 � 1 � Total revenues $ 82,686 $
68,155 21 % 100 % 100 % � Three months ended � � Year ended �
December 31, % December 31, % OraQuick� Revenues 2007 � 2006 Change
2007 � 2006 Change � Direct to U.S. Public Health $ 5,460 $ 4,475
22 % $ 19,799 $ 15,268 30 % Abbott 2,018 1,674 21 8,103 6,897 17
SAMHSA � 150 N/A 339 406 (17 ) CDC � 282 N/A 1,125 1,291 (13 )
International � 1,181 � 509 132 % � 3,291 � 1,694 94 Total
OraQuick� revenues $ 8,659 $ 7,090 22 % $ 32,657 $ 25,556 28 % �
Three months ended � � Year ended � December 31, % December 31, %
Intercept� Revenues 2007 � 2006 Change 2007 � 2006 Change �
Workplace testing $ 1,282 $ 1,871 (31 )% $ 6,650 $ 6,616 1 %
Criminal Justice 622 600 4 2,570 2,398 7 International 431 636 (32
) 2,188 2,314 (5 ) Direct � 264 � 200 32 � 1,003 � 728 38 Total
Intercept� revenues $ 2,599 $ 3,307 (21 )% $ 12,411 $ 12,056 3 % �
Three months ended � � Year ended � December 31, % December 31, %
Cryosurgery Revenues 2007 � 2006 Change 2007 � 2006 Change �
Professional domestic $ 1,806 $ 1,203 50 % $ 5,247 $ 5,360 (2 )%
Professional international 798 788 1 2,349 2,284 3 OTC domestic 650
1,216 (47 ) 6,237 5,174 21 OTC international � 2,089 � 1,062 97 �
9,700 � 4,515 115 % Total cryosurgery revenues $ 5,343 $ 4,269 25 %
$ 23,533 $ 17,333 36 % Balance Sheets � December 31, 2007 �
December 31, 2006 Assets Cash, cash equivalents and short-term
investments $ 95,566 $ 91,001 Accounts receivable, net 11,296
10,357 Inventories 9,410 5,534 Current deferred income taxes 5,061
3,676 Other current assets 2,744 1,990 Property and equipment, net
20,911 17,375 Deferred income taxes 17,266 19,846 Other non-current
assets � 5,387 � 6,786 Total assets $ 167,641 $ 156,565 �
Liabilities and Stockholders� Equity Current portion of long-term
debt $ 557 $ 609 Accounts payable 5,905 3,312 Accrued expenses
11,996 12,658 Long-term debt 8,818 10,031 Other liabilities 311 451
Stockholders� equity � 140,054 � 129,504 Total liabilities and
stockholders� equity $ 167,641 $ 156,565 � Year ended December 31,
Additional Financial Data 2007 � 2006 � Capital expenditures $
5,372 $ 12,643 Depreciation and amortization $ 2,736 $ 1,923
Accounts receivable � days sales outstanding 50 days 55 days
Conference Call The Company will host a conference call and audio
webcast to discuss the Company�s 2007 fourth quarter and full year
financial results, business developments and 2008 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 #32848688, 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 February 19, 2008, by
dialing 800-642-1687 (Domestic) or 706-645-9291 (International) and
entering the Conference ID #32848688. 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, net income and products. Actual results could be
significantly different. Factors that could affect results include
the ability to market and sell products; 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
competitors, competing products and technology changes; ability to
develop, commercialize and market new products; market acceptance
of oral fluid testing, rapid point-of-care testing or other
products; changes in market acceptance of products based on product
performance; 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 and legal
requirements; history of losses and ability to achieve sustained
profitability; volatility of our stock price; uncertainty relating
to patent protection; 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 or
investments; 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 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, 2006,
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.
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