OPKO Health (OPK) Q2 Earnings and Revenues Top Estimates
OPKO Health, Inc. OPK delivered a loss per share of 3 cents in the second quarter of 2023, narrower than the year-ago period’s loss of 14 cents. The figure was also narrower than the Zacks Consensus Estimate of a loss of 7 cents per share.
Revenues in Detail
OPKO Health registered revenues of $265.4 million in the second quarter, down 14.4% year over year. The figure, however, surpassed the Zacks Consensus Estimate by 39.4%.
Lower revenues from services 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 $127 million in the reported quarter, down 32% year over year, primarily due to a fall in COVID-19 testing volume and reimbursement. This compares to our projection of $130.3 million from services revenues in the second quarter.
BioReference Health processed approximately 33,000 COVID-19 polymerase chain reaction tests in the second quarter of 2023 (representing 1.5% of total testing volume), down 96.2% year over year.
Within the Pharmaceuticals arm, revenues from products rose 21.2% to $43.5 million, primarily on the back of sales in OPKO Health’s international operating companies and increased revenues from RAYALDEE sales. This compares to our projection of $35.9 million from product revenues in the second quarter.
Revenues from sales of RAYALDEE in the second quarter of 2023 were $7.7 million, up 24.2% from the prior-year period.
Revenues from the transfer of intellectual property and other totaled $94.9 million, up 8.8% from the prior-year period. The second-quarter revenues include $90 million, triggered by the FDA’s approval of NGENLA. This compares to our projection of $5 million of revenues from the transfer of intellectual property and other in the second quarter.
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 rose 9.4% to $126.5 million. The gross margin expanded by a huge 1036 basis points to 47.7%.
Selling, general and administrative expenses fell 21.4% to $79.8 million. Research and development expenses climbed 5.8% year over year to $18.2 million. Adjusted operating expenses of $98 million decreased 17.4% year over year.
Adjusted operating profit totaled $28.5 million against the prior-year quarter’s adjusted operating loss of $3.1 million.
Financial Position
OPKO Health exited second-quarter 2023 with cash and cash equivalents of $108.1 million compared with $110.8 million at the first-quarter end.
Cumulative net cash flow used in operating activities at the end of second-quarter 2023 was $23 million compared with $31.3 million a year ago.
Guidance
OPKO Health has provided its financial outlook for the third quarter of 2023.
For the quarter, it expects its total revenues to be between $165 million and $180 million. The Zacks Consensus Estimate for the same currently stands at $179.4 million.
OPKO Health expects its revenues from services to lie between $126 million and $135 million and revenues from product sales to be in the range of 32 million-$36 million. Other revenues are expected to be between $5 million and $10 million.
OPKO Health has also confirmed that it expects its COVID-19 testing volumes to remain an insignificant portion of its overall testing volumes. Management also assumes consistent core testing volumes with growth in OPKO Health’s higher-margin oncology and urology specialty lines of testing.
Our Take
OPKO Health exited the second quarter of 2023 with better-than-expected results. OPKO Health’s confirmation that NGENLA (somatrogon) has been approved in 44 markets, including the United States, Japan, EU Member States, Canada and Australia, looks promising. Also, its continued sales by Pfizer in more than 18 countries with expectations to launch in all priority international markets by the year-end raises our optimism about OPKO Health.
In June, OPKO Health, along with Pfizer, confirmed that the FDA had approved NGENLA (somatrogon-ghla), a once-weekly human growth hormone analog indicated for the treatment of pediatric patients aged three years and older having growth failure due to inadequate secretion of endogenous growth hormone. This looks promising as well.
Robust results from the Pharmaceuticals segment, with solid sales of RAYALDEE, are impressive. The company’s continued strength in its oncology business and the launch of CINtec PLUS Cytology, the only FDA-approved triage test in women's health in the last quarter, augur well. The expansion of the gross margin bodes well.
However, the dismal top-line and bottom-line performances were concerning. Lower Diagnostics revenues and lower BioReference testing volumes were also worrying. The persistent operating loss for OPKO Health also does not bode well for the company.
Zacks Rank and Other Key Picks
OPKO Health currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are DexCom, Inc. DXCM, Integer Holdings Corporation ITGR and Intuitive Surgical, Inc. ISRG.
DexCom, carrying a Zacks Rank of 2, reported second-quarter 2023 adjusted EPS of 34 cents, beating the Zacks Consensus Estimate by 54.6%. Revenues of $871.3 million outpaced the consensus mark by 4.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DexCom has a long-term estimated growth rate of 42.9%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 28.8%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 15.7%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.2%.
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