Technology

Why Is OPKO Health (OPK) Down 0.8% Since Last Earnings Report?

A month has gone by since the last earnings report for OPKO Health (OPK). Shares have lost about 0.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is OPKO Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

OPKO Health (OPK) Reports Loss in Q4, Revenues from Products Weak

OPKO Health incurred adjusted loss of 8 cents per share in fourth-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 9 cents. The company had incurred a loss of 12 cents per share in the year-ago quarter.

On a GAAP basis, the company incurred a loss of 13 cents per share.

Revenues totaled $221.9 million, which missed the Zacks Consensus Estimate of $242 million. However, on a year-over-year basis, the top line increased 37.8%.

2018 at a Glance

Net revenues in 2018 totaled $990.3 million, up 2.5% on a year-over-year basis. Notably, this Florida-based diagnostics and pharmaceuticals company reports through three major segments — Services, Products and Transfer of intellectual property.

While revenues from services accounted for 82.1% of net revenues, the same from products accounted for 10.8%. Transfer of intellectual property accounted for 7.1% of net revenues.

Segment Revenues in Q4

Revenues from Services grossed $183.1 million in the reported quarter, up 53.4% year over year.

Revenues from Products decreased 24.9% to $25.4 million. Per management, revenues from products include $6 million contributions from RAYALDEE.

Revenues from Transfer of intellectual property came in at $13.4 million, up 71.8% year over year.

RAYALDEE Update

Per management, total RAYALDEE prescriptions reported by IQVIA improved 166% year over year in the fourth quarter. Further, management at OPKO Health announced that it partnered Vifor Fresenius and Japan Tobacco to develop RAYALDEE for patients with Stage 5 CKD who have secondary hyperparathyroidism (SHPT), vitamin D insufficiency and are undergoing regular hemodialysis. Notably, a Phase 2 trial is currently underway in the United States.

Margin Analysis

Gross profit in the reported quarter came in at $149.6 million, down 4.5% from the prior-year quarter. Gross margin was 32.6% of net revenues, up significantly year over year.

Selling, general and administrative expenses totaled $95.1 million, down 0.8% year over year. Research and development expenses amounted to $33.3 million, down 2.6% year over year.                

Adjusted operating loss in the fourth quarter was $56.1 million.

Guidance

For the first quarter of 2019, management expects revenues from Services between $175 million and $190 million.

Product revenues are expected within $28-$32 million, including revenues for RAYALDEE between $6.7 million and $7.5 million.

Revenues from Transfer of intellectual property are anticipated in the $15-$20 million band.

OPKO Health expects costs and expenses to be between $280 million and $290 million, including research and development expenses of $33-$38 million in the fourth quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -62.5% due to these changes.

VGM Scores

At this time, OPKO Health has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, OPKO Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.