OraSure Technologies, Inc. (OSUR)

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OraSure Technologies, Inc. (OSUR)

Q2 2013 Earnings Conference Call

August 07, 2013 05:00 PM ET


Douglas A. Michels – President & CEO

Ronald H. Spair – COO & CFO

Kathleen Weber – SVP and General Manager of Consumer Products


Peter Lawson – Mizuho Securities Inc.

Spencer Nam – Janney Montgomery Scott LLC

Jose Haresco – JMP Securities

Mark Massaro – Canaccord Genuity

Shaun Rodriguez – Cowen and Company

Nicholas Jansen – Raymond James and Associates



Good afternoon everyone and welcome to OraSure Technologies 2013 Second Quarter Financial Results Conference Call and simultaneous webcast. As a reminder, today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer period. (Operator Instructions)

OraSure Technologies issued a press release at approximately 4:00 PM Eastern Time today regarding its 2013 second quarter results and certain other matters. The press release is available to you on our website atwww.orasure.com or by calling 610-882-1820. If you go to our website, the press release can be found by opening the Investor Relations page and clicking on the link for press releases. This call is also available real time on our website and will be archived there for seven days. Alternatively, you can listen to an archive of this call until midnight August 14, by calling 855-859-2056 for domestic or 404-537-3406 for international. The access code is 19672741.

With us today are Doug Michels, President and Chief Executive Officer; Ron Spair, Chief Operating Officer and Chief Financial Officer and Kathy Weber, Senior Vice President and General Manager Consumer Products. Doug and Ron will begin with opening statements, which will be followed with a question-and-answer session.

Before I turn the call over to Doug, you should know that this call may contain certain forward-looking statements, including statements with respect to revenues, expenses, profitability, earnings or loss per share, and other financial performance, product development, performance, shipments and markets, and regulatory filings and approvals.

Actual results could be significantly different. Factors that could affect results are discussed more fully in the company’s SEC filings including its registration statements, its annual report on Form 10-K for the year ended December 31, 2012, its quarterly reports on Form 10-Q, and its other SEC filings.

Although forward-looking statements help to provide complete information about future prospects, listeners should keep in mind that forward-looking statements may not be reliable. The company undertakes no obligation to update any forward-looking statements to reflect the events or circumstances after this call.

With that, I would like to turn the call over to Doug Michels.

Douglas A. Michels

Well, thanks Judy and good afternoon everyone and welcome to our call. The company delivered solid results for the second quarter. Both our top and bottom line results were better than expected and exceeded our guidance for the period. Consolidated net revenues were up 8% compared to 2012 and one reason for this growth was a 15% increase in our infectious disease sales primarily due to the contribution from our OraQuick In-Home HIV Test.

Our focus continues to be on implementing the most effective and efficient strategies for building awareness and demand for this new product.

In addition, our molecular collection systems business delivered a very strong quarter with almost 40% growth compared to the year-ago period. This part of the business is now up about 30% for the first six months of this year.

We are especially pleased with the performance of our molecular collection systems subsidiary DNA Genotek which reported record revenues. DNA Genotek delivered not only year-over-year growth for Q2 but also sequential growth from the first quarter. We expect continued strong growth from DNA Genotek for the rest of this year.

Ron will now provide a more detailed overview of our second quarter financial performance along with guidance for Q3. I will then give a business update and we will open the floor for your questions.

So, with that let me now turn the call over to Ron.

Ronald H. Spair

Thanks, Doug and good afternoon everyone. Our second quarter 2013 consolidated revenues were $24.3 million compared to $22.6 million reported in 2012. Our consolidated product revenues increased 8% as a result of the record sales from our molecular collection systems segment and higher sales of our infectious disease testing products. These increases were partially offset by lower sales of our substance abuse testing, cryosurgical systems and insurance risk assessment products.

Our infectious disease testing revenues were $12 million in the second quarter of 2013 compared to $10.4 million in the second quarter of 2012. The overall 15% increase was primarily the result of $2 million in net sales of our OraQuick In-Home HIV test which we began selling in the fourth quarter of 2012.

During the current quarter gross sales of our OraQuick In-Home HIV test were $2.1 million which were offset by $133,000 in customer allowances including co-operative advertising, cash discounts and other allowances. Net sales of this product included approximately 255,000 of direct sales to public health customers.

We anticipate that some public health entities may chose to use a portion of their funding to purchase our over-the-counter product in lieu of our Ora competitors professional product.

The increase in net revenues from our OraQuick In-Home HIV Test was partially offset by a decline in sales of our OraQuick HIV and HCV professional products.

Second quarter domestic HIV revenues were down $344,000 or 4% due to a timing of customer purchases and reductions in government funding.

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