OPKO Health, Inc. OPK delivered an earnings per share (EPS) of 3 cents in the third quarter of 2024 against the year-ago period’s loss of 11 cents per share and the Zacks Consensus Estimate of a loss of 10 cents per share.

OPK’s Revenues in Detail

OPKO Health registered revenues of $173.6 million in the third quarter, down 2.8% year over year. The figure missed the Zacks Consensus Estimate by 4.3%.

Lower revenues from products and services dragged the overall top line.

Shares of this company gained nearly 4.1% in yesterday’s after-hours trading.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

OPKO Health’s Segmental Revenues

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

Within the Diagnostics arm, revenues from services amounted to $121.3 million in the reported quarter, down 7.9% year over year. This was primarily due to lower clinical test volume, principally resulting from the Labcorp transaction and a reduction in reimbursement rates. This compares to our projection of $128.2 million from services revenues in the third quarter.

Within the Pharmaceuticals arm, revenues from products declined 3.8% to $39.1 million, reflecting lower Rayaldee sales and foreign currency exchange fluctuations. This compares to our projection of $39.9 million from product revenues in the third quarter.

Revenues from sales of RAYALDEE in the third quarter of 2024 were $5.8 million, down 20.5% from the prior-year period.

Revenues from the transfer of intellectual property and other totaled $13.2 million, up 111.6% from the prior-year period. This increase was primarily attributable to $5.5 million from the BARDA Contract. This compares to our projection of $13 million in revenues from the transfer of intellectual property and other in the third quarter.

OPK’s Margin Analysis

In the quarter under review, OPKO Health’s gross profit declined 15.8% to $40.1 million. The gross margin contracted 358 basis points to 23.1%. We had projected 29.7% of gross margin in the third quarter of 2024.

Selling, general and administrative expenses rose 35.9% year over year to $98.2 million. Research and development expenses increased 48% year over year to $28.8 million. Adjusted operating expenses of $126.9 million increased 38.5% year over year.

Adjusted operating loss totaled $86.8 million compared with the prior-year quarter’s adjusted operating loss of $43.9 million.

OPKO Health’s Financial Position

OPKO Health exited third-quarter 2024 with cash and cash equivalents of $406.4 million compared with $40.6 million at the second-quarter end.

Cumulative net cash used in operating activities at the end of third-quarter 2024 was $139.1 million against cumulative net cash provided by operating activities of $10.1 million in the year-ago period.

OPK’s Guidance

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

For the fourth quarter, it expects total revenues between $155 million and $160 million. The Zacks Consensus Estimate currently stands at $163.6 million.

OPKO Health expects its revenues from services to be between $95 million and $98 million. Revenues from product sales are expected to be in the range of $41 million-$44 million. Other revenues are expected to be between $13 million and $18 million, inclusive of the Pfizer gross profit share estimates between $8 and $10 million and BARDA revenues of $5 million to $8 million.

Our Take

OPKO Health exited the third quarter of 2024 with better-than-expected earnings and encouraging revenues from transfer of intellectual property and other. Management’s confirmation that enrollment and dosing is currently underway in the MDX2001 Phase 1 trial for the treatment of solid tumor cancers and announcement of promising results of an orally delivered oxyntomodulin analog raise our optimism about the company. The company has also been awarded $51 million of additional funding under an existing BARDA contract to develop COVID multispecific antibodies and to initiate an influenza program is also encouraging.

However, lower-than-expected revenues and dismal top-line performance were concerning. Lower revenues from products and services were also worrying. The decline in RAYALDEE sales was also disappointing. The contraction of the gross margin and the persistent operating loss for OPKO Health also do not bode well for the company.

OPKO Health’s Zacks Rank and Other Key Picks

OPK currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Quest Diagnostics, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2024 adjusted EPS of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.4%.

ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.

ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.4%.

Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

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