OPKO Health, Inc. (OPK Quick QuoteOPK - Free Report) delivered a loss per share of 12 cents in the first quarter of 2024, wider than the year-ago period’s loss of 2 cents per share. The figure missed the Zacks Consensus Estimate of a loss of 9 cents per share by 33.3%.

Revenues in Detail

OPKO Health registered sales of $173.7 million, down 26.9% year over year. The figure missed the Zacks Consensus Estimate by 5%.

Lower revenues from the transfer of intellectual property and others 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 $126.9 million, down 4.2% year over year, primarily resulting from lower clinical test volume. This compares with our projection of $126.1 million from services revenues.

The company entered into an agreement with Labcorp earlier this year to divest select assets of BioReference Health, which includes laboratory testing businesses focused on clinical diagnostics and women’s health for $237.5 million. The transaction is expected to close in the second half of 2024. BioReference Health will continue to offer oncology and urology diagnostic services nationwide, as well as maintain its full operations in New York and New Jersey.

Within the Pharmaceuticals arm, revenues from products declined 5.7% to $38.1 million, primarily driven by lower sales in OPKO’s international operating companies and foreign currency exchange fluctuations, partially offset by an increase in the sales of Rayaldee. This compares with our projection of $41.1 million from product revenues.

Revenues from sales of RAYALDEE in the first quarter were $6.9 million, up 4.5% from the prior-year period.

Revenues from the transfer of intellectual property and others totaled $8.7 million, down from $64.8 million in the prior-year period. This compares with our projection of $15.8 million in revenues. The company had recorded a significant $50 million upfront payment from Merck and a couple of other milestone payments worth $9.5 million, which were absent in the current quarter, thus leading to a decline.

Margin Analysis

OPKO Health’s gross profit declined 57.7% to $42 million. The gross margin contracted from 41.8% to 24.2%. The significant decline was primarily due to the absence of upfront payment from Merck.

Selling, general and administrative expenses fell 7.3% to $70.2 million. Research and development expenses declined 32.8% year over year to $21.9 million. Operating expenses of $113.5 million decreased 12.6% year over year.

Operating loss totaled $71.5 million compared with the prior-year quarter’s operating loss of $30.6 million.

Financial Position

OPKO Health exited the first quarter with cash and cash equivalents of $75.6 million compared with $95.9 million in 2023 end.

Guidance

OPKO Health has provided its financial outlook for the second quarter of 2024.

The company expects total revenues between $180 million and $185 million. The Zacks Consensus Estimate is currently $189.8 million.

OPKO Health expects its revenues from services to be between $126 million and $130 million and revenues from product sales to be in the range of $36-$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.

OPKO Health, Inc. Price, Consensus and EPS Surprise

OPKO Health, Inc. price-consensus-eps-surprise-chart | OPKO Health, Inc. Quote

Our Take

OPKO Health exited the first quarter of 2024 with dismal performance. However, management’s confirmation of NGENLA’s (somatrogon) approval 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.

The divestment of BioReference Health’s select assets seems encouraging as it will likely streamline the laboratory services business while retaining its core operations to better position the division for sustained growth and profitability.

However, the dismal top and bottom-line performances were concerning. Lower Diagnostics revenues were also worrying. The contraction of the gross margin and the persistent operating loss also do not bode well for the company.

Zacks Rank and Stocks to Consider

 OPKO Health currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN Quick QuoteALGN - Free Report) , Ecolab (ECL Quick QuoteECL - Free Report) and Boston Scientific Corporation (BSX Quick QuoteBSX - Free Report) .

Align Technology, currently carrying a Zacks Rank #2 (Buy), reported first-quarter adjusted earnings per share (EPS) of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.

Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.

Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.

Boston Scientific reported first-quarter adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the consensus estimate by 4.9%. It currently carries a Zacks Rank of 2.

Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.5%.