• Total Revenue: $37.4 million in Q4 2024.
• Core Revenue: $36.5 million, a 10% year-over-year increase.
• Diagnostics Revenue: $18.8 million, a 9% year-over-year increase.
• Sample Management Solutions Revenue: $14.8 million, a 14% year-over-year increase.
• COVID-19 Products Revenue: $1 million in Q4 2024.
• Risk Assessment Testing Revenue: $2.1 million in Q4 2024.
• GAAP Gross Margin: 36.2% in Q4 2024.
• Non-GAAP Gross Margin: 40.1% in Q4 2024.
• GAAP Operating Expenses: $26 million in Q4 2024.
• GAAP Operating Loss: $12.4 million in Q4 2024.
• Non-GAAP Operating Loss: $6.7 million in Q4 2024.
• Cash and Cash Equivalents: $268 million at the end of Q4 2024.
• Q1 2025 Revenue Guidance: $27.5 million to $31.5 million.
• Q1 2025 Core Revenue Guidance: $27 million to $31 million.
• Q1 2025 Gross Margin Expectation: Low-40s percentage, with expansion expected throughout 2025.
• 2025 Adjusted Gross Margin Target: Increase towards 50% from 44.4% in 2024.

• Warning! GuruFocus has detected 5 Warning Signs with OSUR.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• OraSure Technologies Inc (NASDAQ:OSUR) delivered Q4 revenue in the top half of their guidance range, with core revenue growing 10% year over year.
• The acquisition of Sherlock Biosciences is expected to expand their innovation pipeline, particularly with a molecular diagnostics platform for rapid self-testing.
• FDA approval was secured for a labeling change to the OraQuick HIV self-test, increasing access for adolescents aged 14 and older.
• Positive cash flow from operations was generated in Q4, demonstrating progress in operating efficiency and cost savings initiatives.
• The international diagnostics business achieved record revenue in 2024, surpassing previous highs set in 2023.

Negative Points

• Uncertainty in international HIV testing programs due to administrative orders and funding freezes, particularly affecting PEPFAR-supported programs.
• Potential reductions in NIH research funding are creating uncertainty for academic and research organizations that utilize OraSure's sample management solutions.
• The risk assessment testing business is being exited, with related inventory reserves impacting gross margins.
• Gross margin was slightly below expectations due to a mix of lower than expected margins in the risk assessment business and higher scrap expenses.
• Elevated uncertainty in the market environment is affecting customer segments, with potential impacts on revenue from large consumer genomics customers.

Q & A Highlights

Q: Can you summarize the global uncertainty impact on OraSure, particularly regarding PEPFAR and academic funding? A: Carrie Eglinton Manner, President and CEO, explained that PEPFAR is the primary concern due to its funding uncertainty, despite a waiver being in place. The academic sector is more of a monitoring situation with no significant slowdown observed yet. PEPFAR's impact is included in Q1 guidance, with less than $1 million accounted for, while academic funding remains under observation.

Q: What is the status of the Sapphiros blood collection device approval? A: Carrie Eglinton Manner confirmed that the Sapphiros self-collected blood device is still progressing through the regulatory process, with expectations for approval within 2025.

Q: Can you elaborate on the BARDA contract and its financial implications? A: Carrie Eglinton Manner stated that the $7.5 million BARDA contract for the Marburg Virus Disease test is expected to be back-end loaded, with potential access to an additional $11 million based on milestones. The project builds on OraSure's expertise in haemorrhagic viruses and strengthens their relationship with BARDA.

Q: What caused the scrap expense in Q4, and how will gross margins improve in 2025? A: Kenneth McGrath, CFO, explained that the scrap expense was due to expired materials, which is not expected to recur. Gross margins are anticipated to improve through initiatives like smaller HIV packaging, automation processes, insourcing of manufacturing, and critical reagents, aiming for a 50% gross margin target.

Q: How does OraSure plan to handle potential tariffs in Canada, Mexico, or China? A: Carrie Eglinton Manner highlighted that OraSure has been reshoring operations to the US, including moving significant manufacturing from Canada, Thailand, and Belgium. This strategic move positions them well against potential tariff impacts, with scenario plans in place for any changes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.