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OPKO Health (OPK) Loses 16.2% Despite In-Line Q3 Earnings

·4 min read

Shares of OPKO Health, Inc. OPK fell 16.2% on Oct 30 following the company's third-quarter 2020 results.

The company reported third-quarter 2020 adjusted earnings per share (EPS) of 4 cents per share, which matched the Zacks Consensus Estimate. Notably, the company had reported a loss of 11 cents in the prior-year quarter.

Third-quarter revenues of this Zacks Rank #4 (Sell) company were $428.1 million, which outpaced the Zacks Consensus Estimate by 14.1%. The top line also improved 87.1% on a year-over-year basis.

Segmental Revenues in Q3

Revenues from Services amounted to $382.5 million in the reported quarter, up 111.2% year over year. The upside can be attributed to the execution of OPKO Health’s testing strategy and sustained improvements on the return of its base business.

Revenues from Products rose 9.5% to $28.7 million. Per management, revenues from products include contributions from RAYALDEE worth $8.1 million.

OPKO Health, Inc. Price, Consensus and EPS Surprise

OPKO Health, Inc. Price, Consensus and EPS Surprise
OPKO Health, Inc. Price, Consensus and EPS Surprise

OPKO Health, Inc. price-consensus-eps-surprise-chart | OPKO Health, Inc. Quote

Revenues from Transfer of intellectual property totaled $16.9 million, down 21.4% year over year.

Per management, total RAYALDEE prescriptions reported by IQVIA improved 13% year over year in the third quarter. However, during the quarter under review, demand for RAYALDEE was impacted due to challenges in onboarding new patients resulting from COVID-19 pandemic.

Further, OPKO Health initiated a Phase 2 trial with RAYALDEE as a treatment for patients with mild-to moderate COVID-19. Also, OPKO Health’s commercial partner for RAYALDEE in Europe — Vifor Fresenius Medical Care Renal Pharma — attained marketing authorizations for RAYALDEE for the treatment of secondary hyperparathyroidism in adults with stage 3 or 4 chronic kidney disease (CKD) and vitamin D insufficiency in seven European countries.

Margin Analysis

Gross profit in the reported quarter was $155.3 million, up 78.7% from the prior-year quarter. Gross margin was 36.3% of net revenues, down 160 basis points (bps) year over year.

Selling, general and administrative expenses totaled $77.7 million, up 23.9% year over year. Research and development expenses amounted to $18.5 million, down 38.3% year over year.

Operating income in the third quarter was $21.9 million, against the year-ago quarter’s loss of $39 million.

Financial Update

The company exited the third quarter with cash, cash equivalents and marketable securities of $36.3 million, compared with $21.6 million on a sequential basis.

Guidance

In the quarter under review, OPKO Health refrained from issuing any guidance.

Summing Up

OPKO Health exited the third quarter on a mixed note. RAYALDEE has contributed significantly to the quarter under review. Further, the company’s utilization of the 4Kscore remains strong. Also, the company witnessed strong performance across two of its segments in the quarter under review.

Furthermore, BioReference Laboratories COVID-19 testing volume witnessed a significant increase in the third quarter.

Meanwhile, contraction in gross margin remains a woe. Further, OPKO Health faces cut-throat competition in the MedTech space.

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, Align Technology, Inc. ALGN and AngioDynamics, Inc. ANGO, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion surpassed the consensus mark by 10%.

AngioDynamics reported first-quarter fiscal 2021 adjusted earnings per share (EPS) of 2 cents against the Zacks Consensus Estimate of a loss per share of 6 cents. Revenues of $70.2 million beat the consensus mark by 6.9%.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which surpassed the Zacks Consensus Estimate by 281.4%. Revenues of $734.1 million outpaced the consensus mark by 38%.

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