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Why Is OPKO Health (OPK) Up 10.8% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for OPKO Health (OPK). Shares have added about 10.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is OPKO Health due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

OPKO Health Q3 Earnings Miss Estimates, Revenues Beat

OPKO Health, Inc. incurred adjusted loss of 11 cents per share in third-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 9 cents. The company had incurred a loss of 5 cents per share a year ago.

Third-quarter revenues of this Zacks Rank #2 (Buy) company totaled $228.8 million, which surpassed the Zacks Consensus Estimate by 1.9%. However, the top line declined 8.4% on a year-over-year basis.

Segmental Revenues in Q3

Revenues from Services grossed $181.1 million in the reported quarter, down 10.7% year over year.

Revenues from Products rose 3.1% to $26.2 million. Per management, revenues from products include $7.4 million contributions from RAYALDEE.

Revenues from Transfer of intellectual property came in at $21.5 million, down 0.5% year over year.

RAYALDEE Update

Per management, total RAYALDEE prescriptions reported by IQVIA improved 83% year over year in the third quarter. Further, the open-label Phase 2 trial for RAYALDEE in hemodialysis patients has been advancing and initial data is anticipated in first quarter 2020.

Margin Analysis

Gross profit in the reported quarter came in at $86.9 million, down 12.1% from the prior-year quarter. Gross margin was 37.9% of net revenues, declining 170 basis points (bps) year over year.

Selling, general and administrative expenses totaled $80.6 million, down 4.2% year over year. Research and development expenses amounted to $30 million, down 0.7% year over year.

Operating loss in the third quarter was $39 million, noticeably wider than the year-ago quarter’s loss of $33.5 million.

Guidance

OPKO Health did not issue any guidance. Nonetheless, the company estimates revenues from Services to range between $165 and $175 million (excluding any revenues from the 4kscore from Medicare beneficiaries).
Revenues from Products are anticipated in the range of $25-$29 million, including RAYALDEE to range between $8 million and $9 million.

Revenues from Transfer of intellectual property are projected in the range of $16-$18 million.

Costs and expenses are expected to range between $265 million and $275 million, with research and development expense estimated to be in the range of $28-$31 million. Based on these ranges, operating loss during the fourth quarter is anticipated to be in the range of $42- $69 million (including around $25 million of non-cash, depreciation and amortization).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -11.11% due to these changes.

VGM Scores

Currently, OPKO Health has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, OPKO Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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