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OPKO Health (OPK) Earnings & Revenues Beat Estimates in Q2

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OPKO Health, Inc. (OPK - Free Report) reported second-quarter 2018 loss of 4 cents per share, narrower than the Zacks Consensus Estimate of a loss of 7 cents. The figure was flat with the year-ago quarter.

Revenues totaled $263.7 million, surpassing the Zacks Consensus Estimate of $260 million. However, on a year-over-year basis, revenues dropped 9.9%.

Over the past year, shares of OPKO Health have declined 14.6% compared with the industry’s fall of 5.1%.

The stock carries a Zacks Rank #3 (Hold).

Segment Details

The Florida-based diagnostics and pharmaceuticals company reports through three major segments — services, products and transfer of intellectual property.

Revenues from services grossed $216.1 million in the reported quarter, down 7.6% year over year.

Revenues from product inched down 1.7% to $28.5 million in the quarter. Per management, revenues from products include $4.8 million contribution from RAYALDEE.

Revenues from transfer of intellectual property came in at $19.1 million, down significantly from the year-ago quarter’s $29.7 million.

OPKO Health, Inc. Price, Consensus and EPS Surprise

 

Opko Health, Inc. Price, Consensus and EPS Surprise | Opko Health, Inc. Quote

RAYALDEE Update

Per management, total RAYALDEE prescriptions improved 467% in the second quarter on a year-over-year basis. The company’s Switzerland-based partner, Vifor Fresenius received approval from Health Canada to market RAYALDEE in the country. Management confirmed that RAYALDEE is currently available to 83% of the overall insured population and 53% of the Medicare population.

Margin Analysis

Gross profit in the reported quarter came in at $113.6 million, down 16% from the prior-year quarter. Gross margin was 43.1%, down 310 basis points (bps) in the quarter.

In the second quarter, OPKO Health incurred an operating loss of $5.1 million, which narrowed considerably from the year-ago quarter’s $25.8 million.

Guidance

OPKO Health did not provide any guidance for 2018.

However, for the third quarter of 2018, management expects revenues from services between $200 million and $220 million.

Product revenues are expected within $28-$32 million, including revenues for RAYALDEE between $5.7 million and $6.5 million.

Revenues from transfer of intellectual property are anticipated in the band of $80 million and $23 million.

Our Take

OPKO Health exited the second quarter on a solid note. While loss per share narrowed, revenues topped estimates. Contribution from RAYALDEE was significant. OPKO Health’s partner Vifor Fresenius Medical Care Renal Pharma recently received approval from Health Canada to market RAYALDEE in the country. Moreover, considerable increase in the company’s 4Kscore utilization is a positive. The company’s clinical development programs look promising with a robust pipeline of candidates. Several metabolic and endocrinology programs which are underway, are likely to provide OPKO Health a competitive advantage.

Meanwhile, the year-over-year decline in revenues is bothersome. The company’s core segmental revenues and margins also remain weak in the quarter. Moreover, the decline in R&D expenses indicates reduced focus on innovation. The company did not provide any outlook for 2018. Also, the continued operating losses do not provide any comfort.

Q2 Earnings of MedTech Majors at a Glance

A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Intuitive Surgical, Inc (ISRG - Free Report) , Illumina, Inc (ILMN - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .

Notably, each of the stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported adjusted earnings of $2.76 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate of $2.48. Adjusted earnings improved 38% year over year.

Illumina reported adjusted earnings of $1.43 per share, beating the consensus mark of $1.11.

Integer Holdings reported adjusted earnings of $1.06 per share in the second quarter of 2018, beating the Zacks Consensus Estimate of 90 cents.

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