OPKO Health (OPK) Q3 Earnings Miss Estimates, Revenues Beat

OPKO Health, Inc. OPK 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.

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

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).

Summing Up

OPKO Health exited the third quarter on a mixed note. Contribution from RAYALDEE has been significant in the quarter under review. Further, the company’s utilization of the 4Kscore remains strong, with nearly 18,000 tests registered in the third quarter.

Furthermore, OPKO Health and Pfizer announced positive top-line results from its pediatric global Phase 3 trial comparing once weekly somatrogon to once daily GENOTROPIN. Moreover, BioReference Laboratories continues to make progress toward its objective to boost both earnings and revenues.

Meanwhile, the company’s gross margin is under pressure at the moment. Moreover, the quarterly revenues dropped on a year-over-year basis. Sluggishness in the revenues from Services remains a concern. OPKO Health also faces cut-throat competition in the MedTech space.

Earnings of Other MedTech Majors at a Glance

Some other top-ranked stocks that reported solid results this earning season are Edwards Lifesciences EW, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Third-quarter net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the Zacks Consensus Estimate by 1.3%.

ResMed reported third-quarter 2019 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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