OraSure drops on weak 4Q outlook

OraSure Technologies falls as 4th-quarter loss and revenue forecast worry Wall Street

Associated Press

NEW YORK (AP) -- Shares of OraSure Technologies Inc. fell Thursday after the test maker forecast weak fourth-quarter results.

THE SPARK: OraSure reported its third-quarter results after the market closed on Wednesday. The company lost $2.4 million, or 4 cents per share. A year ago OraSure took a bigger loss of $3.9 million, or 8 cents per share. Revenue edged up to $22.1 million from $21.7 million.

Analysts expected a bigger loss of 8 cents per share and $22.3 million in revenue, according to FactSet.

The Bethlehem, Pa., company expects a loss of 13 to 15 cents per share in the fourth quarter, on $20.5 million to $21 million in revenue. Analysts estimated a loss of 8 cents per share on $23.9 million in revenue, on average.

In the fourth quarter of 2011, OraSure had $23.7 million in revenue.

THE BIG PICTURE: OraSure makes diagnostic kits to detect HIV and drug use. In July it received Food and Drug Administration approval for the OraQuick In-Home HIV Test, the first at-home HIV test kit that does not require samples to be sent to a lab. It uses a saliva swab and returns results in about 20 minutes.

The company said the first shipments of the HIV test were made in the last week of September, the end of the third quarter. It has not yet recorded any revenue for it, but expects to get about $3.6 million from those shipments.

THE ANALYSIS: Citi Investment Research analyst Amit Bhalla said OraSure struggled with weak results from the diagnostic test business. However he said the early stages of the launch of the HIV test are on track, with the $3.6 million in deferred revenue suggesting about 142,000 tests have been sold to retailers. Bhalla said OraSure is forecasting a larger deficit because of expenses related to the launch. He kept a "Buy" rating on the stock.

Jefferies & Co. analyst Jon Wood said the company's fourth-quarter estimate "appears frightening on the surface" but doesn't affect the over-the-counter HIV test. He rates the shares an "Buy."

SHARE ACTION: OraSure lost $1.05, or 12.1 percent, to close at $7.61 on Thursday. The stock has lost 31.5 percent since the beginning of October. It traded as high as $14.01 just after the at-home HIV test was approved.

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