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OraSure Technologies, Inc. Message Board

  • mill869 mill869 Jun 25, 2013 12:17 PM Flag

    Opinions - Is OSUR a viable buyout candidate at this time?

    Any of you knowledgeable stock guys have an opinion of this? Is OSUR currently a viable buyout candidate? If not, what would have to happen to make it one? If so, what would be a reasonable buyout stock price?

    Sentiment: Hold

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    • Thanks guys for voicing your opinions. I've always thought that the OTC HIV test (and hopefully soon the HCV test) would be very profitable with the right marketing and distribution approach. I therefore assumed that a large biomedical company would seize the potential and buy OSUR for something like $12 - $15 a share. Since the OTC HIV approval and the disappointing marketing and sales efforts, I have become less sure of this potential scenario. But I'm still hoping that 1) they get the HCV OTC approval, and 2) they get bought by a company that can capitalize on the two great OTC products. I hope I'm right but I'm less of a believer than I used to be!

      • 1 Reply to mill869
      • because of the public knowledge and fears, the OTC/HIV test should have been a winner at retail. lots of reasons why it's not, but imo there is absolutely no point in having an OTC/HCV test. HCV test is not something you can expect a retail customer to get motivated to buy, especially when they can just as easily get tested at their doctor and pay nothing.

        orasure must immediately increase marketing exposure for HIV testing, get the CDC to start funding TV ads, and get numerous non-paid celebrity spokespersons to urge more young people take HIV testing seriously. the current (boring) TV ads are clearly ineffective.

        after the massive share issue, my financial model says OSUR isn't worth more than $7-8 unless they blew out sales. with the $6M spending on marketing giving back only $1M sales, i had to drop my own valuation to around $5-6/share. however, if they keep losing $10M a quarter and burn thru cash... it won't even be worth $4. this once golden product is now sinking the ship. this stock could easily trade under book value before year-end because it's so out of favor with fund managers now. so sad to see the company mismanaged this way... CEO, CFO, and entire board need to go... and take that goober who conducted the shareholder's meeting with them :-)

        buying DNA Genotek was a bad move... the company should have kept their cash AND sold the wart business, keeping only the infectious disease testing segment. that would have at least preserved the possibility of a buyout.

    • in my opinion, no.

      there is zero benefit for a big pharma acquirer (i.e. making the HIV treatments) to also own the diagnostic test. orasure revenues on this side of the business are extremely slow growth an as we have seen for the past several years the company is not profitable. there are numerous domestic and international suppliers of simple fingerstick blood-based tests, so buying orasure simply to rebrand it has no real value... in fact, it could do significant harm... for example, assume GILD bought OSUR and then another HIV false-positive problem (it's already happened twice) occurs. such an event could negatively taint GILD's HIV drugs and costs them millions in lost sales and PR damage control.

      the only part of orasure that someone might want is the DNA Genotek business. that segment (which orasure recently bought) is profitable and offers synergy... e.g. see research on Google founder's wife's company related to genetic testing.

      OSUR has no new products in the pipeline that i can put faith in producing revenues to turn this company profitable. so what's left here to treat this like an unprofitable biotech with 10x potential ? nothing i can see unless OTC/HIV sales start banging out $20M+ a month. otherwise, this is a wart business + DND Genotek and must be valued more like a mature pharma company... and by that yardstick orasure isn't measuring up.

      i could be wrong, but having traded OSUR for nearly (but not quite) a decade, i don't believe OSUR is a good candidate for a buyout (takeover) with a premium. maybe a "let's just sellout and go drink at the beach" merger if CEO Michels decides to retire. you should only invest here if you hope for hedgefunds and HFT machines to pop the pps.

      gl/jmo

    • " Is OSUR currently a viable buyout candidate? '

      In my opinion yes...but only if management actively seeks suitors. The payoff would most probably be in shares of the acquiring company, and the price would depend on the number of interested parties. Any company currently making a bundle in US HIV drug sales would be the best target. They may think that though OMEX is all thumbs marketing it, they could do much better and therefore the over a million folks strolling around in the US unaware of their status would decline sharply..therefore more sales.

      That said, the board cautions are very well taken...with the exception of the statements that they would burn through their cash in a couple years. That ain't happening...but maybe in 3....

      Disclaimer, I bought a little OSUR stock not too long ago, and I am ALREADY a bona fide member of the disgruntled longs club....lol

      If you want a company valued well below ...20 % below...their cash level per share take a look at GENC...but be MIGHTY careful with that one...nobody yet trusts them to do anything worthwhile with the money. ( I watch that stock but do not own any...and its average volume is less than 8 thousand shares per day).

      • 1 Reply to treehousetimes
      • any "company currently making a bundle in US HIV drug sales" would probably not do a deal for anything but cash. makes no sense for someone like GILD to give shares instead of cash....shareholders generally don't like it either. a share swap would be more likely if the acquirer was of equal size or didn't have access to $200M cash. that pretty much excludes all big pharma don't you think?

        keep in mind that OSUR management are in their mid-50's, so they probably have very limited opportunity to get hired elsewhere and finish their careers. this is it for them and they are content to milk this company for the next decade. if they sold, most probably they would be let go with only the year of severance... but don't sell the company and they can earn / steal 10x that amount. what would you do in their situation at age 54-59 ? i know what i'd do.... keep sucking up those "performance" bonuses and FREE stock options :-)

        you mentioned "trust" and that's key... OSUR management has probably lost the trust of wallstreet due to years of under-performance. their ability to execute poorly has driven away many investors over the years. buy some shares in low $3's if you can and TRADE the technical bounce. but be careful #$%$&P could drop in september with FOMC and this stock could freefall down to where you really want to nibble. good luck.

 
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