OPKO Health's (OPK) Q4 Earnings Match Estimates, Revenues Top
OPKO Health, Inc. OPK delivered a loss per share of 9 cents in the fourth quarter of 2023, narrower than the year-ago period’s loss of 11 cents per share. The figure was in line with the Zacks Consensus Estimate of a loss of 9 cents per share.
Full-year loss per share was 25 cents, narrower than the loss of 46 cents per share at the end of the comparable 2022 period. The figure was in line with the Zacks Consensus Estimate of a loss of 25 cents per share.
Revenues in Detail
OPKO Health registered revenues of $181.9 million in the fourth quarter, down 1.9% year over year. The figure, however, surpassed the Zacks Consensus Estimate by 2%.
Lower revenues from services dragged the overall top line.
Full-year revenues were $863.5 million, reflecting a 14% decline from the comparable 2022 period. The figure, however, topped the Zacks Consensus Estimate by 0.4%.
Segmental Revenues
OPKO Health manages its operations through two reportable segments – Diagnostics and Pharmaceuticals.
Within the Diagnostics arm, revenues from services amounted to $124.2 million in the reported quarter, down 10.9% year over year, primarily resulting from lower clinical test reimbursement of $9 million due to the mix of testing ordered. This was partially offset by an increase of $0.9 million from higher clinical test volume. COVID-19 testing volume and reimbursement decreased $7.1 million due to higher utilization of antigen point-of-care diagnostic tests and a shift in customer mix. This compares to our projection of $130.7 million from services revenues in the fourth quarter.
Within the Pharmaceuticals arm, revenues from products rose 13.5% to $43 million, primarily on the back of growing sales from OPKO Health’s international operations, positive impacts by foreign currency fluctuations of approximately $1.3 million and increased revenues from RAYALDEE sales. This compares to our projection of $35.7 million from product revenues in the fourth quarter.
Revenues from sales of RAYALDEE in the fourth quarter of 2023 were $9.3 million, up 2.2% from the prior-year period.
Revenues from the transfer of intellectual property and other totaled $14.7 million, up 81.5% from the prior-year period. This compares to our projection of $11.3 million of revenues from the transfer of intellectual property and other in the fourth 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 declined 20.2% to $44.7 million. The gross margin contracted 563 basis points to 24.6%.
Selling, general and administrative expenses fell 1.5% to $72.9 million. Research and development expenses declined 0.5% year over year to $19.4 million. Adjusted operating expenses of $92.3 million decreased 1.3% year over year.
Adjusted operating loss totaled $47.6 million compared with the prior-year quarter’s adjusted operating loss of $37.5 million.
Financial Position
OPKO Health exited 2023 with cash and cash equivalents of $95.9 million compared with $153.2 million at 2022-end.
Guidance
OPKO Health has provided its financial outlook for the first quarter of 2024.
For the first quarter, it expects total revenues between $180 million and $185 million. The Zacks Consensus Estimate currently stands at $189.8 million.
OPKO Health expects its revenues from services to lie between $126 million and $130 million and revenues from product sales to be in the range of $36 million-$40 million. Other revenues are expected to be between $14 million and $18 million, inclusive of the estimated Pfizer gross profit share payments between $9 million and $11 million.
Our Take
OPKO Health exited the fourth quarter of 2023 with an in-line loss per share and better-than-expected revenues. Management’s confirmation that NGENLA (somatrogon) has been approved in more than 50 countries, including the United States, Japan, EU Member States, Canada and Australia, looks promising. OPKO Health’s acquired company, ModeX, advanced its pipeline of antiviral and immune-oncology programs. This also raises our optimism about the company.
BioReference Health’s continued implementation of initiatives to reduce costs and improve productivity and global e-commerce provider NextPlat Corp. launching an OPKO Health-branded online storefront on Alibaba's Tmall Global e-commerce platform in China are other notable developments during the quarter.
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 GenPath continued to launch innovative testing, including an expanded hematologic malignancy panel and introducing several new tests that will likely sustain growth of the GenPath oncology products, also augur well.
However, the dismal top-line and bottom-line performances were concerning. Lower Diagnostics revenues were also worrying. The contraction of the gross margin and the persistent operating loss for OPKO Health also do not bode well for the company.
Zacks Rank and Stocks to Consider
OPKO Health currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. COR, Elevance Health, Inc. ELV and Cardinal Health, Inc. CAH.
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted earnings per share (EPS) of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cencora has a long-term estimated growth rate of 8.6%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Elevance Health reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently flaunts a Zacks Rank #1.
Cardinal Health has a long-term estimated growth rate of 15.9%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.
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