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): February 9, 2006
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) |
Registrants 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 February 9, 2006, OraSure Technologies, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 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
(d) Exhibits
Exhibit Number |
Description | |
99 | Press Release dated February 9, 2006, announcing financial results of OraSure Technologies, Inc. for the quarter and year ended December 31, 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: February 9, 2006 | 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 February 9, 2006, announcing financial results of OraSure Technologies, Inc. for the quarter and year ended December 31, 2005. |
4
EXHIBIT 99 |
Company Contact:
Ronald H. Spair
Chief Financial Officer
610-882-1820
Investorinfo@orasure.com
www.orasure.com
OraSure Announces Record Full Year Financial Results
-2005 Results Include $18.2 Million Tax Benefit -
BETHLEHEM, PA February 9, 2006 (HealthWire) OraSure Technologies, Inc. (NASDAQ: OSUR), a market leader in oral fluid diagnostics, today announced revenues of $69.4 million and $18.0 million for the year and quarter ended December 31, 2005, respectively. Full year 2005 revenues represent record revenues for the Company and a 28% increase over the $54.0 million in revenues recorded in 2004. Revenues for the quarter ended December 31, 2005 were 27% higher than those for the same period in 2004.
In the fourth quarter of 2005, the Company recorded a non-cash tax benefit of approximately $26.7 million for the recognition of a significant portion of a deferred tax asset, of which approximately $18.2 million was recorded as an income tax benefit, with the remainder recorded directly to stockholders equity. Including this income tax benefit, the Company reported net income of $27.4 million, or $0.59 per share on a fully-diluted basis, for the full year 2005, and net income of $20.6 million, or $0.44 per share on a fully-diluted basis, for the fourth quarter of 2005. These results compare to a net loss of $560,000, or $(0.01) per share on a fully-diluted basis, and a net loss of $245,000, or $(0.01) per share on a fully-diluted basis, for the full year and quarter ended December 31, 2004, respectively.
We are extremely pleased with the Companys financial results for the fourth quarter and full year 2005, said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. Our performance in 2005 was driven primarily by continued increases in sales to the infectious disease, substance abuse testing, and cryosurgical systems markets. Our success this past year has positioned us for continued growth in 2006 and beyond.
The increase in 2005 full year revenues was primarily the result of increased sales of the Companys OraQuick® ADVANCE rapid HIV-1/2 antibody test, Intercept® oral fluid drug test, and international over-the-counter cryosurgical products.
The Companys gross margin was 60% in 2005, up slightly from the 59% gross margin recorded in 2004. Gross margin was positively affected by more efficient utilization of the Companys manufacturing facilities and improved product supply terms, partially offset by a less favorable product sales mix and a $1.5 million charge for a reserve related to the value of inventory and certain fixed assets for the Companys UPlink® rapid point-of-care oral fluid drug detection system. For the fourth quarter of 2005, gross margin was 60%, which is consistent with the gross margin reported for the fourth quarter of 2004.
For the full year 2005, operating expenses increased slightly to $33.8 million from $33.2 million recorded in 2004. This increase was primarily attributable to increased charges for non-cash stock-based compensation and higher legal fees related to the Schering-Plough litigation, partially offset by a reduction in research and development, advertising, and consulting expenses. Operating expenses for the quarter ended December 31, 2005 were $8.6 million, compared to $9.0 million for the comparable period in 2004.
Excluding the $18.2 million income tax benefit and the $1.5 million charge related to the Companys UPlink® assets, net income for the full year 2005 would have been $10.8 million, or $0.23 per share on a fully-diluted basis, and gross margin would have been 62% for the year. Excluding the income tax benefit, the Companys net income for the fourth quarter of 2005 would have been $2.5 million, or $0.05 per share on a fully-diluted basis.
Cash, cash equivalents and short-term investments totaled $77.6 million and working capital was $90.7 million at December 31, 2005, compared to $66.7 million and $68.9 million, respectively, at December 31, 2004.
Cash flow from operations was $10.6 million in 2005, up substantially from the $3.4 million reported in 2004. For the quarter ended December 31, 2005, cash flow from operations was $2.1 million, compared to $1.2 million for the comparable period in 2004.
As previously announced, OraSure expects total revenues for 2006 to increase by 25% over 2005 levels. In addition, OraSure expects to achieve fully-taxed full-year net income for 2006 in the range of $0.13 to $0.15 per share, after giving effect to stock option expensing pursuant to the adoption of Statement of Financial Accounting Standards No. 123R. Stock option expensing is expected to reduce earnings per share determined under generally accepted accounting principles (GAAP) by $0.04 to $0.05, net of tax, in 2006.
Condensed Financial Data
(In thousands, except per-share data and percentages)
Unaudited
Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
2005 |
2004 |
2005 |
2004 |
|||||||||||||
Results of Operations |
||||||||||||||||
Revenues |
$ | 18,031 | $ | 14,209 | $ | 69,366 | $ | 54,008 | ||||||||
Cost of products sold |
7,201 | 5,706 | 27,974 | 22,143 | ||||||||||||
Gross profit |
10,830 | 8,503 | 41,392 | 31,865 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
1,518 | 1,317 | 5,269 | 6,062 | ||||||||||||
Sales and marketing |
3,772 | 3,767 | 16,060 | 15,154 | ||||||||||||
General and administrative |
3,358 | 3,919 | 12,490 | 12,006 | ||||||||||||
Total operating expenses |
8,648 | 9,003 | 33,819 | 33,222 | ||||||||||||
Operating income (loss) |
2,182 | (500 | ) | 7,573 | (1,357 | ) | ||||||||||
Other income, net |
725 | 255 | 2,146 | 797 | ||||||||||||
Income tax benefit |
17,729 | | 17,729 | | ||||||||||||
Net income (loss) |
$ | 20,636 | $ | (245 | ) | $ | 27,448 | $ | (560 | ) | ||||||
Earnings (loss) per share |
||||||||||||||||
Basic |
$ | 0.45 | $ | (0.01 | ) | $ | 0.61 | $ | (0.01 | ) | ||||||
Diluted |
$ | 0.44 | $ | (0.01 | ) | $ | 0.59 | $ | (0.01 | ) | ||||||
Weighted average shares: |
||||||||||||||||
Basic |
45,624 | 44,578 | 45,110 | 44,464 | ||||||||||||
Diluted |
47,030 | 44,578 | 46,147 | 44,464 | ||||||||||||
Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
2005 |
2004 |
2005 |
2004 |
|||||||||||||
Reconciliation of Non-GAAP Financial Measures |
||||||||||||||||
Net income (loss) before benefit and charge |
$ | 2,471 | $ | (245 | ) | $ | 10,767 | $ | (560 | ) | ||||||
Income tax benefit |
18,165 | | 18,165 | | ||||||||||||
UPlink® charge |
| | (1,484 | ) | | |||||||||||
Net income (loss) GAAP basis |
$ | 20,636 | $ | (245 | ) | $ | 27,448 | $ | (560 | ) | ||||||
Diluted earnings (loss) per share before benefit and charge |
$ | 0.05 | $ | (0.01 | ) | $ | 0.23 | $ | (0.01 | ) | ||||||
Income tax benefit |
0.39 | | 0.39 | | ||||||||||||
UPlink® charge |
| | (0.03 | ) | | |||||||||||
Diluted earnings (loss) per share GAAP basis |
$ | 0.44 | $ | (0.01 | ) | $ | 0.59 | $ | (0.01 | ) | ||||||
Gross margin before UPlink® charge |
60 | % | 60 | % | 62 | % | 59 | % | ||||||||
UPlink® charge |
| | (2 | )% | | |||||||||||
Gross margin GAAP basis |
60 | % | 60 | % | 60 | % | 59 | % | ||||||||
Market Revenues
Three months ended December 31, |
|||||||||||||||
Dollars |
% Change |
Percentage of Total Revenues |
|||||||||||||
2005 |
2004 |
2005 |
2004 |
||||||||||||
Infectious disease testing |
$ | 6,316 | $ | 4,517 | 40 | % | 35 | % | 32 | % | |||||
Substance abuse testing |
3,459 | 2,779 | 24 | 19 | 20 | ||||||||||
Cryosurgical systems |
6,742 | 5,031 | 34 | 37 | 35 | ||||||||||
Insurance risk assessment |
1,451 | 1,780 | (18 | ) | 8 | 12 | |||||||||
Product revenues |
17,968 | 14,107 | 27 | 99 | 99 | ||||||||||
Licensing and product development |
63 | 102 | (38 | ) | 1 | 1 | |||||||||
Total revenues |
$ | 18,031 | $ | 14,209 | 27 | % | 100 | % | 100 | % | |||||
Market Revenues |
|||||||||||||||
Year ended December 31, |
|||||||||||||||
Dollars |
% Change |
Percentage of Total Revenues |
|||||||||||||
2005 |
2004 |
2005 |
2004 |
||||||||||||
Infectious disease testing |
$ | 25,988 | $ | 15,526 | 67 | % | 37 | % | 29 | % | |||||
Substance abuse testing |
13,519 | 10,108 | 34 | 19 | 19 | ||||||||||
Cryosurgical systems |
22,744 | 20,193 | 13 | 33 | 37 | ||||||||||
Insurance risk assessment |
6,815 | 7,777 | (12 | ) | 10 | 14 | |||||||||
Product revenues |
69,066 | 53,604 | 29 | 99 | 99 | ||||||||||
Licensing and product development |
300 | 404 | (26 | ) | 1 | 1 | |||||||||
Total revenues |
$ | 69,366 | $ | 54,008 | 28 | % | 100 | % | 100 | % | |||||
Balance Sheets
December 31, 2005 |
December 31, 2004 | |||||
Assets | ||||||
Cash, cash equivalents and short-term investments |
$ | 77,620 | $ | 66,723 | ||
Accounts receivable, net |
11,602 | 7,074 | ||||
Inventories |
4,128 | 4,952 | ||||
Current portion of deferred tax asset |
6,504 | | ||||
Other current assets |
1,553 | 1,195 | ||||
Property and equipment, net |
5,815 | 5,551 | ||||
Deferred tax asset, less current portion |
20,205 | | ||||
Other non-current assets |
3,320 | 2,569 | ||||
Total assets |
$ | 130,747 | $ | 88,064 | ||
Liabilities and Stockholders Equity | ||||||
Current portion of long-term debt |
$ | 456 | $ | 1,123 | ||
Accounts payable |
2,547 | 2,360 | ||||
Accrued expenses |
7,734 | 7,552 | ||||
Long-term debt, less current portion |
884 | 1,334 | ||||
Other liabilities |
207 | 118 | ||||
Stockholders equity |
118,919 | 75,577 | ||||
Total liabilities and stockholders equity |
$ | 130,747 | $ | 88,064 | ||
Non-GAAP Financial Measures
Net income (loss) - before benefit and charge and diluted earnings (loss) per share - before benefit and charge, each exclude the impact of the $18.2 million income tax benefit and the $1.5 million UPlink® charge. Gross margin before UPlink® charge excludes the impact of the $1.5 million UPlink® charge. These financial measures should not be considered an alternative to net income (loss), diluted earnings (loss) per share, or gross margin, respectively, which are indicators of operating performance determined in accordance with GAAP. OraSure Technologies believes that net income (loss) - before benefit and charge, diluted earnings (loss) per share - before benefit and 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 Companys underlying earnings performance as another criterion in making their investment decisions. OraSures 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 to discuss the Companys fourth quarter and full year 2005 financial results and to provide an update on major business objectives, beginning today 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 February 16, 2006, by dialing 800-642-1687 (Domestic) or 706-645-9291 (International) and entering the Conference ID #4670366.
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.
- more -
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 or other products and changes in market acceptance based on product performance; continued bulk purchases by customers, including governmental agencies; ability to fund research and development and other products 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.
# # #