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): February 13, 2007

 


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 February 13, 2007, OraSure Technologies, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2006. 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 13, 2007, announcing financial results of OraSure Technologies, Inc. for the quarter and year ended December 31, 2006.


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 13, 2007   By:  

/s/ Jack E. Jerrett

    Jack E. Jerrett
   

Senior Vice President, General Counsel

and Secretary


Index to Exhibits

 

Exhibit No.  

Description

99   Press Release, dated February 13, 2007, announcing financial results of OraSure Technologies, Inc. for the quarter and year ended December 31, 2006.
Press Release

EXHIBIT 99

LOGO

Company Contact:

Ronald H. Spair

Chief Financial Officer

610-882-1820

Investorinfo@orasure.com

www.orasure.com

OraSure Announces 2006 Financial Results

BETHLEHEM, PA – February 13, 2007 – (HealthWire) – OraSure Technologies, Inc. (NASDAQ: OSUR), a market leader in oral fluid diagnostics, today announced revenues of $68.2 million and $17.7 million for the year and quarter ended December 31, 2006, respectively. This compares to revenues of $69.4 million and $18.0 million for the year and quarter ended December 31, 2005, respectively.

The Company reported net income of $5.3 million, or $0.11 per share on a fully-diluted basis, for the full year 2006, which includes $3.5 million for stock options required to be expensed under new accounting rules and a $3.8 million provision for income taxes. Excluding these two charges, net income for the full year 2006 would have been $12.5 million, or $0.26 per share on a fully-diluted basis. These results compare to net income of $27.4 million, or $0.59 per share on a fully-diluted basis, for the full year 2005, which included a favorable net tax benefit of $17.7 million or $0.38 per share. Excluding this net tax benefit, net income for the full year 2005 would have been $9.7 million, or $0.21 per share on a fully-diluted basis.

For the quarter ended December 31, 2006, the Company reported net income of $1.0 million, or $0.02 per share on a fully-diluted basis, which includes $0.7 million of stock option expense and a $0.8 million provision for income taxes. Excluding these two charges, net income for the quarter ended December 31, 2006 would have been $2.5 million, or $0.05 per share on a fully-diluted basis. These results compare to net income of $20.6 million, or $0.44 per share on a fully-diluted basis, for the quarter ended December 31, 2005, which included a favorable net tax benefit contribution of $17.7 million or $0.38 per share. Excluding this net tax benefit, net income for the quarter ended December 31, 2005 would have been $2.9 million, or $0.06 per share on a fully-diluted basis.


During 2006 the Company experienced continued growth in sales of its OraQuick ADVANCE® rapid HIV-1/2 antibody test and Intercept® oral fluid drug test, offset by lower sales of the Company’s over-the-counter cryosurgical and insurance risk assessment products.

“Strong performance from our infectious disease and substance abuse businesses was clearly the highlight in 2006,” said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. “We generated a strong bottom line and significant cash flow from operations, despite shortfalls in revenue from our over-the-counter cryosurgical product and the absence of new government orders for our OraQuick ADVANCE® test. We also made significant progress towards the submission of our OraQuick® HIV test to the FDA for over-the-counter approval and in the development of an OraQuick® rapid hepatitis C test for professional use. I believe we are well positioned to achieve our objectives for 2007 and beyond.”

The Company’s gross margin was 64% in 2006, up from the 60% in 2005. Gross margin was positively affected by the absence of a $1.5 million charge recorded in 2005 related to a reserve for UPlink® inventory.

For the full year 2006, operating expenses increased to $37.5 million from $33.9 million recorded in 2005. Operating expenses for the quarter ended December 31, 2006 were $10.7 million, compared to $8.6 million for the comparable period in 2005. These increases were primarily attributable to higher research and development costs associated with the development and clinical work for an OraQuick ADVANCE® HIV test for home use and an OraQuick® hepatitis C test for professional use, higher staffing related expenses and stock option expenses, partially offset by lower legal costs and reduced advertising reimbursement related to the Company’s North American over-the-counter cryosurgical product.

Cash, cash equivalents and short-term investments totaled $91.0 million and working capital was $96.2 million at December 31, 2006, compared to $77.6 million and $90.7 million, respectively, at December 31, 2005.

Cash flow from operating activities was $17.0 million in 2006, up substantially from the $10.4 million reported in 2005. For the quarter ended December 31, 2006, cash flow from operating activities was $2.9 million, compared to $2.1 million for the comparable period in 2005.


     Condensed Financial Data
(In thousands, except per-share
data and percentages)
Unaudited
 
     Three months ended
December 31,
    Year ended
December 31,
 
     2006     2005     2006     2005  

Results of Operations

        

Revenues

   $ 17,734     $ 18,031     $ 68,155     $ 69,366  

Cost of products sold

     6,240       7,201       24,756       27,974  
                                

Gross profit

     11,494       10,830       43,399       41,392  
                                

Operating expenses:

        

Research and development

     2,898       1,518       8,648       5,269  

Sales and marketing

     3,945       3,772       15,921       16,060  

General and administrative

     3,885       3,358       13,367       12,490  
                                

Total operating expenses

     10,728       8,648       37,936       33,819  
                                

Operating income

     766       2,182       5,463       7,573  

Other income, net

     1,020       725       3,599       2,146  
                                

Pre-tax income

     1,786       2,907       9,062       9,719  

Income tax provision (benefit)

     761       (17,729 )     3,794       (17,729 )
                                

Net income

   $ 1,025     $ 20,636     $ 5,268     $ 27,448  
                                

Earnings per share

        

Basic

   $ 0.02     $ 0.45     $ 0.11     $ 0.61  
                                

Diluted

   $ 0.02     $ 0.44     $ 0.11     $ 0.59  
                                

Weighted average shares:

        

Basic

     45,974       45,624       45,910       45,110  
                                

Diluted

     46,434       47,030       46,580       46,147  
                                
      Three months ended
December 31,
    Year ended
December 31,
 
     2006     2005     2006     2005  

Reconciliation of Non-GAAP Financial Measures

        

Net income – before charges

   $ 2,519     $ 2,907     $ 12,512     $ 9,719  

Stock option expense

     (733 )     —         (3,450 )     —    

Income tax provision (benefit)

     761       (17,729 )     3,794       (17,729 )
                                

Net income – GAAP basis

   $ 1,025     $ 20,636     $ 5,268     $ 27,448  
                                

Diluted earnings per share – before charges

   $ 0.05     $ 0.06     $ 0.26     $ 0.21  

Stock option expense

     (0.01 )     —         (0.07 )     —    

Income tax provision (benefit)

     (0.02 )     0.38       (0.08 )     0.38  
                                

Diluted earnings per share – GAAP basis

   $ 0.02     $ 0.44     $ 0.11     $ 0.59  
                                


     Three months ended December 31,  
     Dollars    %
Change
    Percentage of
Total Revenues
 
     2006    2005      2006     2005  

Market Revenues

            

Infectious disease testing

   $ 7,943    $ 6,316    26 %   45 %   35 %

Substance abuse testing

     4,058      3,459    17     23     19  

Cryosurgical systems

     4,269      6,742    (37 )   24     37  

Insurance risk assessment

     1,437      1,451    (1 )   8     8  
                            

Product revenues

     17,707      17,968    (1 )   100     99  

Licensing and product development

     27      63    (57 )   —       1  
                            

Total revenues

   $ 17,734    $ 18,031    (2 )%   100 %   100 %
                            

 

     Year ended December 31,  
     Dollars    %
Change
   

Percentage of

Total Revenues

 
      2006    2005      2006     2005  

Market Revenues

            

Infectious disease testing

   $ 29,180    $ 25,988    12 %   43 %   37 %

Substance abuse testing

     15,752      13,519    17     23     19  

Cryosurgical systems

     17,333      22,744    (24 )   25     33  

Insurance risk assessment

     5,565      6,815    (18 )   8     10  
                            

Product revenues

     67,830      69,066    (2 )   99     99  

Licensing and product development

     325      300    8     1     1  
                            

Total revenues

   $ 68,155    $ 69,366    (2 )%   100 %   100 %
                            

 

     Three months ended
December 31,
  

%
Change

    Year ended
December 31,
  

%
Change

 
      2006    2005      2006    2005   

OraQuick® Revenues

                

Direct to U.S. Public Health

   $ 4,475    $ 2,364    89 %   $ 15,268    $ 8,292    84 %

Abbott

     1,674      1,350    24       6,897      4,929    40  

SAMHSA

     150      1,155    (87 )     406      3,741    (89 )

CDC

     282      1    N/A       1,291      2,322    (44 )

International

     509      438    16       1,694      1,530    11  

Direct to Hospitals

     —        4    —         —        740    —    
                                

Total OraQuick® revenues

   $ 7,090    $ 5,312    33 %   $ 25,556    $ 21,554    19 %
                                


     Three months ended
December 31,
  

%

Change

   Year ended
December 31,
  

%

Change

      2006    2005       2006    2005   

Intercept® Revenues

                 

Workplace testing

   $ 1,871    $ 1,361    37%    $ 6,616    $ 5,661    17%

Criminal Justice

     600      697    (14)         2,398      2,269      6   

International

     636      554    15          2,314      1,956    18   

Direct

     200      189    6          728      563    29   
                                 

Total Intercept® revenues

   $ 3,307    $ 2,801    18%     $ 12,056    $ 10,449    15%
                                 
     Three months ended
December 31,
  

%

Change

   Year ended
December 31,
  

%

Change

      2006    2005       2006    2005   

Cryosurgery Revenues

                 

Professional domestic

   $ 1,203    $ 1,638    (27)%    $ 5,360    $ 5,888    (9)%

Professional international

     788      622    27           2,284      2,018    13     

OTC domestic

     1,216      1,160    5           5,174      10,560    (51)    

OTC international

     1,062      3,322    (68)          4,515      4,278    6     
                                 

Total cryosurgery revenues

   $ 4,269    $ 6,742    (37)%    $ 17,333    $ 22,744    (24)%
                                 

 

      December 31, 2006    December 31, 2005

Balance Sheets

     

Assets

     

Cash, cash equivalents and short-term investments

   $ 91,001    $ 77,620

Accounts receivable, net

     10,357      11,602

Inventories

     5,535      4,128

Current portion of deferred tax asset

     3,931      6,504

Other current assets

     1,990      1,553

Property and equipment, net

     17,375      5,815

Deferred tax asset, less current portion

     19,590      20,205

Other non-current assets

     6,786      3,320
             

Total assets

   $ 156,565    $ 130,747
             

Liabilities and Stockholders’ Equity

     

Current portion of long-term debt

   $ 609    $ 456

Accounts payable

     3,312      2,547

Accrued expenses

     12,658      7,734

Long-term debt, less current portion

     10,031      884

Other liabilities

     359      207

Stockholders’ equity

     129,596      118,919
             

Total liabilities and stockholders’ equity

   $ 156,565    $ 130,747
             


      December 31, 2006    December 31, 2005

Additional Financial Data

     

Capital expenditures

   $ 12,643    $ 2,048

Depreciation and amortization

   $ 1,923    $ 2,347

Accounts receivable – days sales outstanding

     55 days      61 days

Non-GAAP Financial Measures

Net income - before charges and diluted earnings per share - before charges, each exclude the impact of stock option expensing and income tax provisions. These financial measures should not be considered an alternative to net income or diluted earnings per share, respectively, which are indicators of operating performance determined in accordance with GAAP. OraSure Technologies believes that net income - before charges and diluted earnings per share - before charges, 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 to discuss the Company’s fourth quarter and full year 2006 financial results and to provide an update on major business objectives and financial guidance (including underlying assumptions) for 2007, 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 and Chief Operating Officer. The call will include prepared remarks by management and a question and answer session. A copy of the prepared remarks by management will be included in a Current Report on Form 8-K filed with the Securities and Exchange Commission during the call.

In order to listen to the conference call, please either dial 888-742-2024 (Domestic) or 706-643-0033 (International) and reference Conference ID #6554283, 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 20, 2007, by dialing 800-642-1687 (Domestic) or 706-645-9291 (International) and entering the Conference ID #6554283.


About OraSure Technologies

OraSure Technologies develops, manufactures and markets oral fluid specimen collection devices using proprietary oral fluid technologies, diagnostic products including immunoassays and other in vitro diagnostic tests, and other medical devices. These products are sold in the United States as well as internationally to various clinical laboratories, hospitals, clinics, community-based organizations and other public health organizations, distributors, government agencies, physicians’ offices, and commercial and industrial entities.

OraSure Technologies is the leading supplier of oral-fluid collection devices and assays to the life insurance industry and public health markets for the detection of HIV. In addition, the Company supplies oral-fluid testing solutions for drugs of abuse testing. For more information on the Company, please go to http://www.orasure.com.

Important Information

This press release contains certain forward-looking statements, including with respect to product purchases and testing initiatives. Actual results could be significantly different. Factors that could affect results include the ability to market and sell products; changes in relationships, including disputes or disagreements, with strategic partners and reliance on strategic partners for the performance of critical activities under collaborative arrangements; failure of distributors or other customers to meet purchase forecasts or minimum purchase requirements for the Company’s 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; changes in market acceptance of products based on product performance; continued bulk purchases by customers, including governmental agencies, and the ability to fully deploy those purchases in a timely manner; 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 or products required for use of our products; ability to obtain, and timing and cost of obtaining, necessary regulatory approvals for new products or new indications or applications for existing products; 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; 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, 2005, 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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