It has been about a month since the last earnings report for OPKO Health (OPK Quick QuoteOPK - Free Report) . Shares have added about 12.8% 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 the most recent earnings report in order to get a better handle on the important drivers.

OPKO Health's Q1 Earnings Miss Estimates, Sales Down Y/Y

OPKO Health 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.

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.

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. 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. R&D 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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, OPKO Health has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 these revisions has been net zero. It's no surprise OPKO Health has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

OPKO Health is part of the Zacks Medical - Instruments industry. Over the past month, Tandem Diabetes Care, Inc. (TNDM Quick QuoteTNDM - Free Report) , a stock from the same industry, has gained 23.5%. The company reported its results for the quarter ended March 2024 more than a month ago.

Tandem Diabetes Care reported revenues of $191.67 million in the last reported quarter, representing a year-over-year change of +13.2%. EPS of -$0.63 for the same period compares with -$0.63 a year ago.

Tandem Diabetes Care is expected to post a loss of $0.56 per share for the current quarter, representing a year-over-year change of -86.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Tandem Diabetes Care. Also, the stock has a VGM Score of F.