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OPKO Health (OPK) Post In-Line Q1 Earnings, Revenues Top

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OPKO Health, Inc. OPK delivered loss per share of 8 cents in the first quarter of 2022 against earnings per share (“EPS”) of 5 cents in the year-ago period. The figure was in line with the Zacks Consensus Estimate.

Revenues in Detail

OPKO Health registered revenues of $329.2 million in the first quarter, down 39.6% year over year. The figure, however, exceeded the Zacks Consensus Estimate by 6.3%.

Lower revenues from the company’s Diagnostics segment dragged the overall top line.

Segmental Revenues

OPKO Health manages its operations through two reportable segments – Diagnostics and Pharmaceuticals.

Within the Diagnostics arm, revenues from services amounted to $286.6 million in the reported quarter, down 43.5% year over year, primarily due to a fall in COVID-19 testing volume and related reimbursement. However, this was partially offset by an improvement in genomic test reimbursement, and an increase in clinical and genomic test volumes.

BioReference Laboratories (“BRL”) processed approximately two million COVID-19 polymerase chain reaction tests in the first quarter of 2022, down 51.2% sequentially.

Within the Pharmaceuticals arm, revenues from products rose 7.9% to $36.6 million owing to the accelerating growth within OPKO Health’s international pharmaceutical businesses. Revenues from sales of RAYALDEE in the first quarter of 2022 were $5.1 million, down 12.1% from the prior-year period.

Revenues from the transfer of intellectual property and other totaled $6 million, up 39.5% year over year. This uptick reflects a milestone payment received for the launch of RAYALDEE in Europe, partially offset by lower Somatrogon research and development (R&D)-related revenues.

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

Margin Analysis

In the quarter under review, OPKO Health’s gross profit fell 53.1% to $85.3 million. Gross margin contracted by a huge 742 basis points (bps) to 25.9%.

Selling, general and administrative expenses rose 4.6% to $117.5 million. R&D expenses fell 5.2% year over year to $18.3 million. Adjusted operating expenses of $135.8 million increased 3.2% year over year.

Adjusted operating loss totaled $50.5 million against the prior-year quarter’s adjusted operating profit of $50.1 million.

Financial Position

OPKO Health exited the first quarter of 2022 with cash and cash equivalents of $102.3 million compared with $134.7 million at the end of 2021.

2022 Guidance

OPKO Health has reiterated its revenue outlook for full-year 2022.

The company continues to expect overall revenues for 2022 to be $1.1-$1.2 billion. The Zacks Consensus Estimate for the same currently stands at $1.20 billion, which matches the upper end of the company-provided guidance.

The full-year overall revenues include revenues from services of $810-$870 million (lower than the previously-expected $940 million-$1 billion), $145-$155 million in revenues from products (unchanged) and other revenues of $100-$110 million (up from the earlier projections of $18-$22 million).

OPKO Health expects to perform between 3-3.5 million COVID-19 diagnostic tests during 2022, including the two million tests already performed in the first three months of the year.

Our Take

OPKO Health exited the first quarter of 2022 with better-than-expected revenues and in-line earnings. Uptick in year-over-year Pharmaceuticals revenues is encouraging. Improvements in genomic test reimbursement and an increase in clinical and genomic test volumes are promising. In May, the company acquired ModeX Therapeutics, Inc., thereby gaining proprietary immunotherapy technology. During the reported quarter, Pfizer Inc. launched OPKO Health’s NGENLA (Somatrogon) injection in Germany, Japan, Canada and Australia, and is on track to make it available in the United States. Other developments like the launch of RAYALDEE in Germany and subsequently in Switzerland by OPKO Health’s licensee, Vifor Fresenius Medical Care Renal Pharma, raises our optimism about the stock.

OPKO Health’s strength in its women's health and oncology businesses also augurs well. Robust adoption of the company’s digital health services and newly-launched Scarlet platform also buoy our optimism.

However, year-over-year fall in the overall top line and continued loss per share are concerning. Lower Diagnostics revenues as lower BRL testing volumes are also worrying. Fall in RAYALDEE sales is another concern. Contraction of gross margin does not bode well for the company. Persistent operating loss for OPKO Health is another area of concern.

Zacks Rank and Key Picks

OPKO Health currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Omnicell, Inc. OMCL, AMN Healthcare Services, Inc. AMN and Masimo Corporation MASI.

Omnicell, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13.4%.

AMN Healthcare, sporting a Zacks Rank #1, reported first-quarter 2022 adjusted EPS of $3.49, which beat the Zacks Consensus Estimate by 7.4%. Revenues of $1.55 billion outpaced the consensus mark by 3.7%.

AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.6%.

Masimo reported first-quarter 2022 adjusted EPS of 93 cents, which surpassed the Zacks Consensus Estimate by 1.1%. Revenues of $304.2 million outpaced the Zacks Consensus Estimate by 3.6%. It currently carries a Zacks Rank #2.

Masimo has an earnings yield of 3.8% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average surprise being 4.4%.


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