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Opko Health Q4 Revenues More Than Double Thanks to COVID-19 Testing

NEW YORK -- Opko Health reported after the close of the market on Thursday that its fourth quarter revenues grew nearly 121 percent year over year.

For the three months ended Dec. 31, 2020, the company posted total revenues of $494.6 million, up from $224.3 million in the year-ago period and above the consensus Wall Street estimate of $443.1 million.

Product revenues decreased 4 percent year over year to $30.8 million from $32 million in Q4 2019, while service revenues increased 157 percent to $457.9 million from $177.9 million due to COVID-19 testing volume that was slightly offset by lower clinical test volume. Revenues from licensing and the transfer of intellectual property fell 59 percent to $5.9 million from $14.4 million.

Revenues for BioReference were $178 million in the fourth quarter of 2020, which exceeded guidance from the third quarter. BioReference volumes increased 170 percent in the fourth quarter compared to 2019, while COVID-19 PCR testing volume increased 24 percent over the third quarter of 2020. BioReference processed 4.3 million COVID-19 PCR tests during the quarter and can currently process more than 100,000 per day. It also performed 220,000 COVID-19 serology tests during the quarter.

Opko Chairman and CEO Phillip Frost said on a conference call to discuss the earnings that the firm saw record COVID-19 PCR testing volume during the fourth quarter but noted the base business stalled toward the end of the quarter due to the surge in COVID-19 across the US. Frost said he expects BioReference's base business to return to historical levels as the vaccine rollout continues.

BioReference Executive Chairman Jon Cohen said sample volume in the core business was down 7 percent in Q4 2020 compared to the fourth quarter of 2019. He said he expects the core business volume to remain 5 percent to 10 percent lower because patients are still reluctant to visit their doctors, although trends will likely improve at a moderate pace in the second half of the year.

GeneDx volumes were stable in the fourth quarter of 2020 compared to the year-ago period, Cohen added.

So far, BioReference has performed more than 12.5 million COVID-19 PCR tests and is currently averaging between 50,000 and 60,000 tests per day, although it has the capacity to run 100,000 tests each day, Cohen said. BioReference has performed 100,000 COVID-19 rapid tests for different clients to date, he added.

On the call, Cohen announced that BioReference has signed an agreement to provide testing for all 30 Major League Baseball teams, adding to its agreements with the National Football League, the National Basketball Association, the National Hockey League, and Major League Soccer.

Opko's R&D spending for Q4 2020 retreated 24 percent year over year to $17.5 million from $23 million, and its SG&A costs were up 29 percent to $101.8 million from $79.1 million.

For Q4 2020, Opko posted net income of $32.3 million, or $.05 per share, compared to a net loss of $112.4 million, or $.18 per share, in Q4 2019. Analysts' average estimate for net income per share was $.04.

The diagnostics segment had operating income during the fourth quarter of 2020 of $69.9 million dollars compared to a loss of $45.4 million in the same quarter of 2019. CFO Adam Logal said that diagnostics volumes overall increased 170 percent, although routine clinical testing was below historic levels. He added that Opko anticipates performing between 4.2 million and 4.8 million COVID-19 PCR and antibody tests in the first quarter of 2021.

However, Cohen noted that the demand for serology antibody tests for SARS-CoV-2 was still unknown because no one can predict how much of that testing will occur once the vaccine has been rolled out. He added that BioReference has "very large capacity" for antibody testing.

For full-year 2020, Opko's total revenues were up nearly 58 percent year over year to $1.44 billion from $901.9 million and above the consensus Wall Street estimate of $1.38 million.

Its product revenues were up 7 percent year over year to $120 million from $112.2 million. Service revenues increased 76 percent to $1.26 billion from $716.4 million, but licensing and the transfer of intellectual property revenues declined 27 percent to $53.2 million from $73.3 million.

Its R&D costs were down 36 percent year over year to $75.3 million from $117.9 million. Its SG&A costs were up 4 percent to $355.6 million from $343.3 million.

Opko's net income for 2020 was $30.6 million, or $.05 per share, up from a net loss of $314.9 million, or $.53 per share, in 2019. The consensus Wall Street estimate was for a profit of $.03 per share.

The company finished 2020 with $72.2 million in cash, cash equivalents, and marketable securities. Opko also has availability under its present line of credit with JP Morgan of $57.6 million and an unutilized $100 million credit facility.

For Q1 2021, Logal said Opko expects revenues to be between $450 million and $500 million dollars, with revenues from services between $420 million and $475 million, product revenues between $27 million and $32 million, and other revenues between $3 million and $6 million. Costs and expenses are expected to be between $430 million and $460 million, with an operating profit between $20 million and $40 million. Due to uncertainty because of the COVID-19 pandemic, Opko only provided guidance for the first quarter.

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