OPKO Health (OPK) Q3 Earnings Lag Estimates, Revenues Top
OPKO Health, Inc. OPK delivered a loss per share of 11 cents in the third quarter of 2023, flat compared with the year-ago period’s loss per share. However, the figure was wider than the Zacks Consensus Estimate of a loss of 9 cents per share.
Revenues in Detail
OPKO Health registered revenues of $178.6 million in the third quarter, down 0.6% year over year. The figure, however, surpassed the Zacks Consensus Estimate by 2.1%.
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 $131.7 million in the reported quarter, down 7.8% year over year, primarily due to lower COVID-19 testing volume and reimbursement. Clinical test reimbursement also decreased due to the mix of testing ordered, partially offset by an increase in clinical test volume. This compares to our projection of $131.3 million from services revenues in the third quarter.
Within the Pharmaceuticals arm, revenues from products rose 25.6% to $40.7 million, primarily on the back of higher sales in OPKO Health’s international operating companies and increased revenues from RAYALDEE sales. This compares to our projection of $41.6 million from product revenues in the third quarter.
Revenues from sales of RAYALDEE in the third quarter of 2023 were $7.3 million, up 5.8% from the prior-year period.
Revenues from the transfer of intellectual property and other totaled $6.2 million, up 37.8% from the prior-year period. This compares to our projection of $8 million of revenues from the transfer of intellectual property and other in the third 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 52.4% to $47.7 million. The gross margin expanded by a huge 929 basis points to 26.7%.
Selling, general and administrative expenses fell 9.3% to $72.3 million. Research and development expenses climbed 3.2% year over year to $19.4 million. Adjusted operating expenses of $91.7 million decreased 6.9% year over year.
Adjusted operating loss totaled $44 million compared with the prior-year quarter’s adjusted operating loss of $67.2 million.
Financial Position
OPKO Health exited third-quarter 2023 with cash and cash equivalents of $138.6 million compared with $108.1 million at the second-quarter end.
Cumulative net cash provided by operating activities at the end of third-quarter 2023 was $10.1 million against cumulative net cash used in operating activities of $63.6 million a year ago.
Guidance
OPKO Health has provided its financial outlook for the fourth quarter of 2023.
For the fourth quarter, it expects total revenues between $170 million and $180 million. The Zacks Consensus Estimate currently stands at $191.3 million.
OPKO Health expects its revenues from services to lie between $126 million and $132 million and revenues from product sales to be in the range of $33 million-$36 million. Other revenues are expected to be between $8 million and $12 million, inclusive of the estimated Pfizer gross profit share of $8 million to $10 million.
Our Take
OPKO Health exited the third quarter of 2023 with better-than-expected revenues. OPKO Health’s confirmation that NGENLA (somatrogon) has been approved in 48 markets, including the United States, Japan, EU Member States, Canada and Australia, looks promising. Also, its continued sales by Pfizer in more than 23 countries, including all priority global markets, raises our optimism about OPKO Health.
In September, BARDA awarded a contract to OPKO Health’s company, ModeX Therapeutics Inc., to advance a platform and specific therapeutic candidates designed to address a range of public health threats in viral infectious diseases. The same month, OPKO Health’s subsidiary, OPKO Biologics, Inc., entered into a Research Collaboration Agreement with Entera Bio Ltd. to develop oral peptide tablet formulations for obesity and intestinal malabsorption syndromes.
During the quarter, ModeX advanced its pipeline of antiviral and immune-oncology programs utilizing its next-generation multispecific antibodies. This month, OPKO Health presented positive late-breaking clinical data on RAYALDEE extended-release calcifediol. These look promising for the stock.
Robust results from the Pharmaceuticals segment, with solid sales of RAYALDEE, are impressive. The company’s continued strength in its oncology business and management’s confirmation that it has finalized new service agreements with several new-launch clients starting in the fourth quarter also augur well. The expansion of the gross margin bodes well.
However, the wider-than-expected loss per share and dismal top-line and bottom-line performances were concerning. Lower Diagnostics revenues were also worrying. The persistent operating loss for OPKO Health also does not bode well for the company.
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 Abbott Laboratories ABT, DexCom, Inc. DXCM and Integer Holdings Corporation ITGR.
Abbott, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.14 billion outpaced the consensus mark by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.8%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 47.1%. Revenues of $975 million surpassed the Zacks Consensus Estimate by 4%. It currently carries a Zacks Rank #2.
DexCom has a long-term estimated growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27, beating the Zacks Consensus Estimate by 20.9%. Revenues of $404.7 million surpassed the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.
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