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OPKO Health (OPK) Q2 Earnings Top Estimates, Gross Margin Down
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OPKO Health, Inc. (OPK - Free Report) delivered a loss per share of a penny in the second quarter of 2024, narrower than the year-ago period’s loss of 3 cents per share and the Zacks Consensus Estimate of a loss of 9 cents per share.
Revenues in Detail
OPKO Health registered revenues of $182.2 million in the second quarter, down 31.3% year over year. The figure, however, missed the Zacks Consensus Estimate by 1.7%.
Lower revenues from products and transfer of intellectual property and other 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 $129.4 million in the reported quarter, up 1.9% year over year, primarily resulting from higher clinical test reimbursement. This was partially offset by lower clinical test volume. This compares to our projection of $128.8 million from services revenues in the second quarter.
Within the Pharmaceuticals arm, revenues from products declined 6.9% to $40.5 million, reflecting lower sales in OPKO Health’s international operating companies primarily due to foreign currency exchange fluctuations. This compares to our projection of $42.9 million from product revenues in the second quarter.
Revenues from sales of RAYALDEE in the second quarter of 2024 were $7.2 million, down 6.5% from the prior-year period.
Revenues from the transfer of intellectual property and other totaled $12.3 million (which included $5 million from the BARDA contract), down 87% from the prior-year period. The year-ago period’s revenues included milestone revenue of $90 million triggered by the FDA approval of NGENLA. This compares to our projection of $12.5 million in revenues from the transfer of intellectual property and other in the second quarter.
OPKO Health, Inc. Price, Consensus and EPS Surprise
In the quarter under review, OPKO Health’s gross profit declined 59.2% to $51.6 million. The gross margin contracted a huge 1934 basis points to 28.3%. We had projected 27.3% of gross margin in the second quarter of 2024.
Selling, general and administrative expenses fell 13.8% to $68.8 million. Research and development expenses increased 32.4% year over year to $24.1 million. Adjusted operating expenses of $92.9 million decreased 5.2% year over year.
Adjusted operating loss totaled $41.3 million against the prior-year quarter’s adjusted operating profit of $28.5 million.
Financial Position
OPKO Health exited second-quarter 2024 with cash and cash equivalents of $40.6 million compared with $75.6 million at the first-quarter end.
Cumulative net cash used in operating activities at the end of second-quarter 2024 was $62 million compared with $23 million in the year-ago period.
Guidance
OPKO Health has provided its financial outlook for the third quarter of 2024.
For the third quarter, it expects total revenues between $180 million and $185 million. The Zacks Consensus Estimate currently stands at $178.9 million.
OPKO Health expects its revenues from services to lie between $125 million and $129 million, including $24 million to $25 million from the assets that will be sold to Labcorp. Revenues from product sales are expected to be in the range of $40 million-$43 million. Other revenues are expected to be between $10 million and $14 million, inclusive of the Pfizer gross profit share, which is estimated to be between $7 million and $9 million.
Our Take
OPKO Health exited the second quarter of 2024 with a narrower-than-expected loss per share and encouraging Diagnostics revenues. Management’s confirmation that enrollment is currently underway in the MDX2001 Phase 1 trial for the treatment of solid tumor cancers and that NGENLA has been launched in all major markets raise our optimism about the company.
In March, OPKO Health entered into an agreement to sell BioReference Health’s laboratory testing businesses focused on clinical diagnostics and women’s health, excluding operations in New York and New Jersey. This transaction is expected to streamline BioReference Health’s laboratory services business while retaining its core operations to better position the division for sustained growth and profitability. This looks promising for the stock.
However, lower-than-expected revenues and dismal top-line performance were concerning. Lower Pharmaceuticals revenues and RAYALDEE sales 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 Abbott Laboratories (ABT - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2024 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion outpaced the consensus mark by 0.2%. 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 8.6%. ABT’s earnings surpassed estimates in three of the trailing four quarters and broke even once, the average surprise being 2.3%.
Quest Diagnostics reported second-quarter 2024 adjusted EPS of $2.35, beating the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2.
Quest Diagnostics has a long-term estimated growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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OPKO Health (OPK) Q2 Earnings Top Estimates, Gross Margin Down
OPKO Health, Inc. (OPK - Free Report) delivered a loss per share of a penny in the second quarter of 2024, narrower than the year-ago period’s loss of 3 cents per share and the Zacks Consensus Estimate of a loss of 9 cents per share.
Revenues in Detail
OPKO Health registered revenues of $182.2 million in the second quarter, down 31.3% year over year. The figure, however, missed the Zacks Consensus Estimate by 1.7%.
Lower revenues from products and transfer of intellectual property and other 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 $129.4 million in the reported quarter, up 1.9% year over year, primarily resulting from higher clinical test reimbursement. This was partially offset by lower clinical test volume. This compares to our projection of $128.8 million from services revenues in the second quarter.
Within the Pharmaceuticals arm, revenues from products declined 6.9% to $40.5 million, reflecting lower sales in OPKO Health’s international operating companies primarily due to foreign currency exchange fluctuations. This compares to our projection of $42.9 million from product revenues in the second quarter.
Revenues from sales of RAYALDEE in the second quarter of 2024 were $7.2 million, down 6.5% from the prior-year period.
Revenues from the transfer of intellectual property and other totaled $12.3 million (which included $5 million from the BARDA contract), down 87% from the prior-year period. The year-ago period’s revenues included milestone revenue of $90 million triggered by the FDA approval of NGENLA. This compares to our projection of $12.5 million in 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 declined 59.2% to $51.6 million. The gross margin contracted a huge 1934 basis points to 28.3%. We had projected 27.3% of gross margin in the second quarter of 2024.
Selling, general and administrative expenses fell 13.8% to $68.8 million. Research and development expenses increased 32.4% year over year to $24.1 million. Adjusted operating expenses of $92.9 million decreased 5.2% year over year.
Adjusted operating loss totaled $41.3 million against the prior-year quarter’s adjusted operating profit of $28.5 million.
Financial Position
OPKO Health exited second-quarter 2024 with cash and cash equivalents of $40.6 million compared with $75.6 million at the first-quarter end.
Cumulative net cash used in operating activities at the end of second-quarter 2024 was $62 million compared with $23 million in the year-ago period.
Guidance
OPKO Health has provided its financial outlook for the third quarter of 2024.
For the third quarter, it expects total revenues between $180 million and $185 million. The Zacks Consensus Estimate currently stands at $178.9 million.
OPKO Health expects its revenues from services to lie between $125 million and $129 million, including $24 million to $25 million from the assets that will be sold to Labcorp. Revenues from product sales are expected to be in the range of $40 million-$43 million. Other revenues are expected to be between $10 million and $14 million, inclusive of the Pfizer gross profit share, which is estimated to be between $7 million and $9 million.
Our Take
OPKO Health exited the second quarter of 2024 with a narrower-than-expected loss per share and encouraging Diagnostics revenues. Management’s confirmation that enrollment is currently underway in the MDX2001 Phase 1 trial for the treatment of solid tumor cancers and that NGENLA has been launched in all major markets raise our optimism about the company.
In March, OPKO Health entered into an agreement to sell BioReference Health’s laboratory testing businesses focused on clinical diagnostics and women’s health, excluding operations in New York and New Jersey. This transaction is expected to streamline BioReference Health’s laboratory services business while retaining its core operations to better position the division for sustained growth and profitability. This looks promising for the stock.
However, lower-than-expected revenues and dismal top-line performance were concerning. Lower Pharmaceuticals revenues and RAYALDEE sales 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 Abbott Laboratories (ABT - Free Report) , Quest Diagnostics Incorporated (DGX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2024 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion outpaced the consensus mark by 0.2%. 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 8.6%. ABT’s earnings surpassed estimates in three of the trailing four quarters and broke even once, the average surprise being 2.3%.
Quest Diagnostics reported second-quarter 2024 adjusted EPS of $2.35, beating the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2.
Quest Diagnostics has a long-term estimated growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.