OPKO Health (OPK) Q4 Earnings Miss Estimates, Revenues Top – February 28, 2022

OPKO Health, Inc. (PKO Free Report) posted a loss per share of 11 cents in the fourth quarter of 2021 compared to earnings per share (“EPS”) of 5 cents a year ago. The figure was wider than Zacks’ consensus estimate of a loss of 3 cents per share.

The adjusted loss per share for the full year was 5 cents, compared to EPS of 5 cents at the end of 2020. The Zacks consensus estimate for EPS for the full year was 4 cents.

Income in detail

OPKO Health reported revenue of $401.3 million in the fourth quarter, down 18.9% year-over-year. The figure exceeded Zacks’ consensus estimate of 19.9%.

Full-year revenue was $1.77 billion, reflecting a 23.6% improvement over 2020. The metric beat Zacks’ consensus estimate by 3.5%.

Segment revenues

OPKO Health manages its operations through two reportable segments: Diagnostics and Pharmaceuticals.

Within the Diagnostics business, Services revenue was $362.8 million in the current quarter, down 20.8% year-on-year, primarily due to lower the volume of COVID-19 tests.

BioReference Laboratories (“BRL”) processed approximately 2.7 million COVID-19 polymerase chain reaction (“PCR”) tests in Q4 2021, up 22.7% sequentially.

Within the Pharmaceuticals business, product revenue increased 14.6% to $35.3 million due to accelerating growth in OPKO’s international pharmaceutical business. RAYALDEE’s fourth quarter 2021 sales revenue was $7.7 million, down 23.8% from the prior year period, primarily due to challenges in onboarding new patients due to the pandemic.

Total RAYALDEE prescriptions decreased 24.2% year-over-year to approximately 11,450 in the fourth quarter.

Revenue from transfer of intellectual property and other totaled $3.2 million, down 45.8% year-on-year due to lower Somatrogon R&D-related revenue.

Margin analysis

In the quarter under review, OPKO Health’s gross profit fell 38.3% to $108.5 million. Gross margin contracted by 853 basis points (bps) to 27%.

Selling, general and administrative expenses increased 35.8% to $138.2 million. Research and development spending increased 20% year over year to $21 million. Adjusted operating expenses of $159.2 million increased 33.4% year over year.

The adjusted operating loss totaled $50.7 million compared to the prior year quarter adjusted operating profit of $56.6 million.

Financial situation

OPKO Health ended 2021 with cash and cash equivalents of $134.7 million, compared to $72.2 million at the end of 2020.

Orientation 2022

OPKO Health has launched its financial outlook for the year 2022.

The company expects overall revenue for 2022 to be between $1.1 billion and $1.2 billion. Zacks consensus estimate for the same currently stands at $1.23 billion.

Overall revenue for the full year includes services revenue of $940-1 billion, product revenue of $145-155 million, and other revenue of $18-22 million.

OPKO Health expects to perform between 2.2 and 2.6 million COVID-19 PCR, point-of-care and antibody tests in the year 2022.

Our opinion

OPKO Health ended the fourth quarter of 2021 with better than expected revenue. Pharmaceuticals’ year-over-year revenue growth is encouraging. The increase in volume in the urology sector is impressive. BRL’s strong COVID-19 testing volume in the reported quarter reinforces our optimism. Developments such as NGENLA (somatrogon) injection have obtained regulatory approvals in Europe, Japan, Australia and Canada for pediatric growth hormone deficiency and the FDA has approved the well’s premarket approval application of 4Kscore test auger for the company.

The launch of RAYALDEE in Germany by OPKO Health licensee Vifor Fresenius Medical Care Renal Pharma and the announcement of favorable initial results from a Phase 2 clinical trial evaluating RAYALDEE as a treatment for symptomatic outpatients with COVID- 19 in the quarter are other highlights.

However, the year-over-year decline in sales and overall income, as well as revenue from the Diagnostics branch, is concerning. The decline in income from the transfer of intellectual property and the like is also of concern. Another concern is the decline in prescriptions and total sales of RAYALDEE. The shrinking gross margin does not bode well for the company.

Zacks Ranking and Key Picks

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

Some top-ranked stocks in the broader medical field that have announced quarterly results are AMN Healthcare Services, Inc. (AMN free report), Allscripts Healthcare Solutions, Inc. (MDRX free report) and Henry Schein, Inc. (HSIC free report).

AMN Healthcare, posting a Zacks No. 1 ranking (Strong Buy), reported Q4 2021 Adjusted EPS of $2.95, which beat the Zacks consensus estimate by 14.3%. Revenue of $1.36 billion exceeded the consensus mark by 0.5%. You can see the full list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings have exceeded estimates for the past four quarters, with the average surprise being 20%.

Allscripts, sporting a No. 1 Zacks ranking, reported fourth-quarter 2021 adjusted EPS of 79 cents, which topped the Zacks consensus estimate of 154.8%. Revenue of $391.7 million topped the consensus mark by 0.1%.

Allscripts has an estimated long-term growth rate of 12.4%. MDRX earnings have exceeded estimates for the past four quarters, with the average surprise being 64.8%.

Henry Schein reported Q4 2021 Adjusted EPS of $1.07, which beat Zacks’ consensus estimate by 18.9%. Fourth-quarter revenue of $3.33 billion beat Zacks’ consensus estimate by 4.7%. He currently has a No. 1 Zacks rank.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC earnings beat estimates in past four quarters, average surprise 25.5%

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