Orasure Technologies Inc--Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 2, 2005

 


 

OraSure Technologies, Inc.

(Exact Name of Registrant as Specified in Charter)

 


 

Delaware   001-16537   36-4370966

(State or Other Jurisdiction

of Incorporation)

  (Commission File Number)  

(I.R.S. Employer

Identification No.)

 

220 East First Street

Bethlehem, Pennsylvania

  18015-1360
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code: 610-882-1820

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 2.02 – Results of Operations and Financial Condition

 

On August 2, 2005, OraSure Technologies, Inc. issued a press release announcing its financial results for the quarter and six months ended June 30, 2005. A copy of the press release is attached as Exhibit 99 to this Form 8-K and is incorporated herein by reference.

 

Item 9.01 – Financial Statements and Exhibits

 

(c) Exhibits

 

Exhibit

Number


 

Description


99   Press Release dated August 2, 2005, announcing financial results of OraSure Technologies, Inc. for the quarter and six months ended June 30, 2005.

 

 

2


Signatures

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

    ORASURE TECHNOLOGIES, INC.
Date: August 2, 2005   By:  

/s/ Jack E. Jerrett


        Jack E. Jerrett
       

Senior Vice President, General Counsel

and Secretary

 

3


Index to Exhibits

 

Exhibit No.

 

Description


99   Press Release dated August 2, 2005, announcing financial results of OraSure Technologies, Inc. for the quarter and six months ended June 30, 2005.

 

4

Press Release

Exhibit 99

 

LOGO

 

Company Contact:

 

Ronald H. Spair

Chief Financial Officer

610-882-1820

Investorinfo@orasure.com

www.orasure.com

 

OraSure Announces Record Second Quarter Financial Results

 

- Increases Full-Year Earnings Guidance -

 

BETHLEHEM, PA – August 2, 2005 – (BW HealthWire) – OraSure Technologies, Inc. (Nasdaq NM:OSUR), a market leader in oral fluid diagnostics, today announced record revenues of $17.4 million for the quarter ended June 30, 2005, representing a 32% increase over the $13.2 million in revenues recorded for the comparable period in 2004.

 

The Company’s net income was $1.4 million, or $0.03 per share on a basic and fully-diluted basis, for the second quarter of 2005. These results compare to net income of $142,000, or $0.00 per share on a basic and fully-diluted basis, reported in the second quarter of 2004.

 

For the six months ended June 30, 2005, the Company had revenues of $33.3 million, a 30% increase over revenues of $25.6 million for the six months ended June 30, 2004. The Company recorded net income of $3.0 million, or $0.07 per share on a basic and fully-diluted basis, for the six months ended June 30, 2005, compared to a net loss of $20,000, or $(0.00) per share on a basic and fully-diluted basis, for the comparable period in 2004.

 

“We are extremely pleased with the Company’s financial results for the second quarter of 2005,” said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. “Our strong performance this quarter was driven primarily by increased sales to the infectious disease and substance abuse testing markets. I believe we are well positioned to achieve our financial goals for the full year. As a result of the earnings growth experienced, we are increasing our full-year earnings per share guidance to $0.14 to $0.16 per share on a basic and fully-diluted basis.”


The revenue increase for the second quarter was primarily attributable to increased sales of the Company’s OraQuick® ADVANCETM rapid HIV-1/2 antibody test and Intercept® oral fluid drug test. These increases were partially offset by lower sales to the cryosurgical systems market.

 

The Company’s second quarter results reflect a $1.5 million charge for a reserve related to the value of inventory and certain fixed assets for the UPlink® rapid point-of-care oral fluid drug detection system. During the first half of 2005, the Company explored the possible transition of UPlink® manufacturing to Dräger Safety, the Company’s distributor in the roadside testing market. The Company was not able to reach an agreement with Dräger Safety or determine an alternative outlet for this product and, therefore, has recorded a reserve against the carrying value of the related assets.

 

Excluding this charge, the Company’s net income was approximately $3.0 million, or $0.06 per share on a basic and fully-diluted basis, in the second quarter of 2005, and, for the six months ended June 30, 2005, the Company’s net income was approximately $4.5 million, or $0.10 per share on a basic and fully-diluted basis.

 

Gross margin in the second quarter was 54% compared to 58% in the second quarter of 2004. Excluding the UPlink® charge, gross margin was 63% for the quarter. The adjusted gross margin was positively affected by more efficient utilization of the Company’s manufacturing capacity.

 

Operating expenses for the second quarter of 2005 increased to approximately $8.5 million from approximately $7.7 million in the comparable period in 2004. This increase was primarily attributable to increased charges for non-cash stock-based compensation and higher staffing related charges in both the sales and marketing and general and administrative areas, partially offset by a reduction in research and development expenses. Operating expenses for the six months ended June 30, 2005 were $16.7 million, compared to $15.3 million for the comparable period in 2004.

 

Cash, cash equivalents and short-term investments totaled approximately $71.5 million and working capital equaled approximately $74.8 million at June 30, 2005, compared to approximately $66.7 million and $68.9 million, respectively, at December 31, 2004.

 

Cash flow from operations was approximately $4.3 million for the second quarter of 2005, up substantially from the $1.7 million reported for the second quarter of 2004. Cash flow from operations for the six months ended June 30, 2005 was $4.8 million, compared to $1.9 million for the comparable period in 2004.


Condensed Financial Data

(In thousands, except per-share data and percentages)

Unaudited

 

Results of Operations

 

     Three months ended
June 30,


    Six months ended
June 30,


 
     2005

   2004

    2005

   2004

 

Revenues

   $ 17,430    $ 13,215     $ 33,258    $ 25,623  

Cost of products sold

     7,970      5,525       14,340      10,715  
    

  


 

  


Gross profit

     9,460      7,690       18,918      14,908  

Operating expenses:

                              

Research and development

     1,254      1,514       2,453      3,281  

Sales and marketing

     4,456      3,781       8,324      7,431  

General and administrative

     2,788      2,446       5,964      4,572  
    

  


 

  


Total operating expenses

     8,498      7,741       16,741      15,284  
    

  


 

  


Operating income (loss)

     962      (51 )     2,177      (376 )

Other income, net

     481      193       827      356  
    

  


 

  


Net income (loss)

   $ 1,443    $ 142     $ 3,004    $ (20 )
    

  


 

  


Basic and diluted earnings (loss) per share

   $ 0.03    $ 0.00     $ 0.07    $ (0.00 )
    

  


 

  


Weighted average shares:

                              

Basic

     44,784      44,465       44,715      44,368  
    

  


 

  


Diluted

     45,872      45,334       45,475      44,368  
    

  


 

  


 

Reconciliation of Non-GAAP Financial Measures

 

     Three months
ended June 30,


    Six months ended
June 30,


 
     2005

    2004

    2005

    2004

 

Net income (loss) – before UPlink® charge

   $ 2,956     $ 142     $ 4,517     $ (20 )

UPlink® charge

     1,513       —         1,513       —    
    


 


 


 


Net income (loss) – GAAP basis

   $ 1,443     $ 142     $ 3,004     $ (20 )
    


 


 


 


Basic and diluted earnings (loss) per share – before UPlink® charge

   $ 0.06     $ 0.00     $ 0.10     $ (0.00 )

UPlink® charge

     0.03       —         0.03       —    
    


 


 


 


Basic and diluted earnings (loss) per share – GAAP basis

   $ 0.03     $ 0.00     $ 0.07     $ (0.00 )
    


 


 


 


Gross margin – before UPlink® charge

     63 %     58 %     61 %     58 %

UPlink® charge

     9 %     —         4 %     —    
    


 


 


 


Gross margin – GAAP basis

     54 %     58 %     57 %     58 %
    


 


 


 



Market Revenues

 

     Three months ended June 30,

 
     Dollars

  

%

Change


    Percentage of
Total Revenues


 
     2005

   2004

     2005

    2004

 

Insurance risk assessment

   $ 1,974    $ 1,905    4 %   11 %   14 %

Infectious disease testing

     7,509      3,970    89     43     30  

Substance abuse testing

     3,540      2,389    48     20     18  

Cryosurgical systems

     4,281      4,858    (12 )   25     37  
    

  

        

 

Product revenues

     17,304      13,122    32     99     99  

Licensing and product development

     126      93    35     1     1  
    

  

        

 

Total revenues

   $ 17,430    $ 13,215    32 %   100 %   100 %
    

  

        

 

 

Market Revenues

 

     Six months ended June 30,

 
     Dollars

  

%

Change


    Percentage of
Total Revenues


 
     2005

   2004

     2005

    2004

 

Insurance risk assessment

   $ 4,089    $ 4,190    (2 )%   12 %   16 %

Infectious disease testing

     12,635      7,307    73     38     29  

Substance abuse testing

     6,465      4,583    41     19     18  

Cryosurgical systems

     9,859      9,331    6     30     36  
    

  

        

 

Product revenues

     33,048      25,411    30     99     99  

Licensing and product development

     210      212    (1 )   1     1  
    

  

        

 

Total revenues

   $ 33,258    $ 25,623    30 %   100 %   100 %
    

  

        

 

 

Balance Sheets

 

     June 30,
2005


   December 31,
2004


Assets              

Cash, cash equivalents and short-term investments

   $ 71,463    $ 66,723

Accounts receivable, net

     8,753      7,074

Inventories

     4,127      4,952

Other current assets

     1,193      1,195

Property and equipment, net

     5,144      5,551

Other non-current assets

     2,172      2,569
    

  

Total assets

   $ 92,852    $ 88,064
    

  

Liabilities and Stockholders’ Equity              

Current portion of long-term debt

   $ 905    $ 1,123

Accounts payable

     2,009      2,360

Accrued expenses

     7,800      7,552

Long-term debt, less current portion

     993      1,334

Other liabilities

     250      118

Stockholders’ equity

     80,895      75,577
    

  

Total liabilities and stockholders’ equity

   $ 92,852    $ 88,064
    

  


Non-GAAP Financial Measures

 

Net income - before UPlink® charge, earnings (loss) per share - before UPlink® charge, and gross margin - - before UPlink® charge, each exclude the impact of the $1.5 million UPlink® charge. These financial measures should not be considered an alternative to net income (loss), earnings (loss) per share, or gross margin, respectively, which are indicators of operating performance determined in accordance with generally accepted accounting principles (GAAP). OraSure Technologies believes that net income (loss) - before UPlink® charge, earnings (loss) per share - before UPlink® charge, and gross margin—before UPlink® charge, although non-GAAP financial measures, are also useful and meaningful to investors because they provide investors with the Company’s underlying earnings performance as another criterion in making their investment decisions. OraSure’s management also uses these calculations in measuring certain corporate performance goals. Other companies may use different measures to present financial information.

 

Conference Call

 

The Company will host a conference call and audio webcast today to discuss the Company’s second quarter 2005 financial results and to provide an update on major business objectives, beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). On the call will be Douglas A. Michels, President and Chief Executive Officer, and Ronald H. Spair, Chief Financial Officer. The call will include remarks by management and a question and answer session.

 

In order to listen to the conference call, please either dial 888-742-2024 (Domestic) or 706-643-0033 (International), or go to OraSure Technologies’ Web site, www.orasure.com, and click on the Investor Info link. A replay of the call will be archived on OraSure Technologies’ web site shortly after the call has ended and will be available for seven days. A replay of the call can also be accessed until August 5, 2005, by dialing 800-642-1687 (Domestic) or 706-645-9291 (International) and entering the Conference ID #7819208.

 

About OraSure Technologies

 

OraSure Technologies develops, manufactures and markets oral fluid specimen collection devices and tests and other diagnostic products using its proprietary technologies, including immunoassays and other in vitro diagnostic tests and other medical devices. These products are sold in the United States and certain foreign countries to clinical laboratories, hospitals, clinics, community-based organizations and other public health organizations, distributors, government agencies, physicians’ offices, and commercial and industrial entities. For more information on the Company, please visit www.orasure.com.


Important Information

 

This press release contains certain forward-looking statements, including with respect to revenues, net income and products. Actual results could be significantly different. Factors that could affect results include the ability to market products; impact of competitors, competing products and technology changes; ability to develop, commercialize and market new products; market acceptance of oral fluid testing products and other new products or technology; ability to fund research and development and other projects and operations; ability to obtain and maintain new or existing product distribution channels; reliance on sole supply sources for critical product components; availability of related products produced by third parties; ability to obtain, and timing of obtaining, necessary regulatory approvals; ability to comply with applicable regulatory requirements; history of losses and ability to achieve sustained profitability; volatility of our stock price; uncertainty relating to patent protection and potential patent infringement claims; uncertainty and costs of litigation relating to patents and other intellectual property; availability of licenses to patents or other technology; ability to enter into international manufacturing agreements; obstacles to international marketing and manufacturing of products; ability to sell products internationally; loss or impairment of sources of capital; ability to meet financial covenants in agreements with financial institutions; ability to retain qualified personnel; exposure to product liability, patent infringement, and other types of litigation; changes in international, federal or state laws and regulations; changes in relationships with strategic partners and reliance on strategic partners for the performance of critical activities under collaborative arrangements; customer consolidations and inventory practices; equipment failures and ability to obtain needed raw materials and components; the impact of terrorist attacks and civil unrest; ability to complete consolidation or restructuring activities; ability to identify, complete and realize the full benefits of potential acquisitions; and general political, business and economic conditions. These and other factors are discussed more fully in the Securities and Exchange Commission (“SEC”) filings of OraSure Technologies, including its registration statements, its Annual Report on Form 10-K for the year ended December 31, 2004, its Quarterly Reports on Form 10-Q, and its other filings with the SEC. Although forward-looking statements help to provide complete information about future prospects, readers should keep in mind that forward-looking statements may not be reliable. The forward-looking statements are made as of the date of this press release and OraSure Technologies undertakes no duty to update these statements.

 

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