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OPKO HEALTH, INC. (OPK)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue was $173.6M and diluted EPS was $0.03, versus $178.6M and $(0.11) in Q3 2023, as gains from the Labcorp asset sale and higher NGENLA/Genotropin profit share offset lower Diagnostics services revenue; operating income turned positive to $14.2M from a $(64.4)M loss a year ago .
  • Diagnostics services revenue fell to $121.3M due to lower test volume (Labcorp asset transfer mid‑quarter) and reimbursement pressure; severance (~$26.3M) and facility closure costs hit the quarter, though the $121.5M Labcorp gain produced $58.5M segment operating income .
  • Pharmaceuticals mixed: products revenue $39.1M (Rayaldee $5.8M) while “transfer of IP and other” rose to $13.2M (BARDA $5.5M); NGENLA/Genotropin profit share increased to $7.0M (press release; management cited $7.4M on the call) .
  • Liquidity substantially strengthened: cash $400.1M at 9/30 (plus $92.2M marketable securities and $43.7M restricted cash/escrow); $237.5M received from Labcorp and $250M non‑dilutive HCRx note provide runway and support buybacks ($100M authorization; 14.9M shares repurchased in Q3; 8.7M more through Nov 6; ~79M YTD) .
  • Q4 2024 guidance: total revenue $155–$160M; services $95–$98M; products $41–$44M; other $13–$18M (incl. Pfizer profit share $8–$10M; BARDA $5–$8M). Cost/expenses (ex‑nonrecurring) $200–$210M; R&D $28–$34M; D&A $22–$23M. Management targets Diagnostics breakeven run rate by year‑end and positive cash flow for 2025 with further cost actions .

What Went Well and What Went Wrong

What Went Well

  • Balance sheet/strategic actions: Closed $237.5M Labcorp asset sale, executed $250M HCRx note, and accelerated buybacks ($23.8M in Q3; total ~79M shares repurchased YTD), enabling capital returns and R&D funding .
  • NGENLA trajectory and BARDA funding: Gross profit share/royalty grew to $7.0M and BARDA awarded an additional $51M (total committed $110M, up to $205M) to expand COVID multi‑specifics and initiate flu program .
  • Diagnostics restructuring on track: Despite headwinds, the $121.5M Labcorp gain and cost initiatives (annualized ~$25M savings by YE’24; additional $20M targeted) support the path to breakeven run rate and 2025 positive cash flow; management reiterated Q4 revenue mix and cost ranges .
    • Quote: “We ended September with over $400 million in cash… We will also continue to fund our opportunistic equity and convertible note repurchases as a demonstration of our commitment to enhancing shareholder value.” – CFO Adam Logal .

What Went Wrong

  • Diagnostics underlying pressure: Services revenue fell to $121.3M on lower volume (Labcorp transition), rate cuts, and weather disruptions (two hurricanes in the Southeast), and included ~$30M non‑recurring costs (severance, facility closures, contractual volume shortfalls) .
  • Rayaldee softness: Rayaldee revenue declined to $5.8M (vs. $7.3M YoY) on higher co‑pay assistance and slightly fewer bottles shipped; management continues to work on clinical/real‑world evidence‑driven adoption, but near‑term uplift remains uncertain .
  • Higher R&D spend: Pharmaceuticals segment loss widened (op loss $(32.2)M) as ModeX programs advanced (Phase 1 MDX2001 dosing), lifting R&D to $28.8M; near‑term P&L dilution precedes potential value inflection in 2025–2026 .

Financial Results

Consolidated results (USD millions, except per-share). Periods oldest → newest.

MetricQ1 2024Q2 2024Q3 2024
Total Revenues$173.7 $182.2 $173.6
Operating Income (Loss)$(71.5) $(61.7) $14.2
Net Income (Loss)$(81.8) $(10.3) $24.9
Diluted EPS$(0.12) $(0.01) $0.03

Q3 year-over-year snapshot.

MetricQ3 2023Q3 2024
Total Revenues$178.6 $173.6
Net Income (Loss)$(84.5) $24.9
Diluted EPS$(0.11) $0.03

Segment and revenue mix (USD millions). Periods oldest → newest.

MetricQ1 2024Q2 2024Q3 2024
Diagnostics – Revenue from services$126.9 $129.4 $121.3
Pharmaceuticals – Revenue from products$38.1 $40.5 $39.1
Pharmaceuticals – Transfer of IP and other$8.7 $12.3 $13.2
NGENLA/Genotropin gross profit share/royalty$5.6 $6.3 $7.0

Key KPIs (USD millions unless noted). Periods oldest → newest.

KPIQ1 2024Q2 2024Q3 2024
Rayaldee revenue$6.9 $7.2 $5.8
Cash and cash equivalents (period end)$75.6 $40.6 $400.1

Notes:

  • Management cited NGENLA/Genotropin gross profit share of $7.4M on the call versus $7.0M in the press release; we present press‑release figures in tables and flag the discrepancy for context .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Total RevenuesQ3 2024$180–$185M (8/7 call) $173.6M (actual) Lower than guided
Services RevenueQ3 2024$125–$129M (incl. $24–$25M assets to be sold) $121.3M Lower (transition, rate pressure, hurricanes)
Product RevenueQ3 2024$40–$43M $39.1M Slightly below low end
Other Revenue (incl. Pfizer GPS)Q3 2024$10–$14M; Pfizer GPS $7–$9M $13.2M; Pfizer GPS $7.0M In range
Total RevenuesQ4 2024N/A$155–$160M New
Services RevenueQ4 2024N/A$95–$98M New
Product RevenueQ4 2024N/A$41–$44M New
Other RevenueQ4 2024N/A$13–$18M (Pfizer $8–$10M; BARDA $5–$8M) New
Cost & Expenses (ex‑nonrecurring)Q4 2024N/A$200–$210M New
R&DQ4 2024N/A$28–$34M (offset $5–$8M by BARDA) New
D&AQ4 2024N/A$22–$23M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Diagnostics restructuring/profitabilityTargeting cash breakeven run‑rate by mid‑2024 and profitability run‑rate by year‑end, contingent on Labcorp close; consolidating footprint, price increases; annualized savings ~$25M; one‑time costs ~$40M through 2028 .Closed Labcorp sale mid‑Q3; ~ $30M non‑recurring costs; reiterates breakeven run‑rate by YE and positive cash flow 2025; adds $20M further cost saves and $8–$10M 2025 revenue uplift from pricing .Improving execution with visibility to 2025 positive cash flow .
NGENLA trajectory/gross profit shareInventory accounting and margin scale‑up timing led to 2024 GPS guidance cut to $30–$40M; Q2 GPS $6.3M; ongoing global launch; adult/pediatric indications pursued (OPKO entitled to $100M milestones) .Q3 press‑release GPS $7.0M (management cited $7.4M); guides Q4 Pfizer GPS $8–$10M as manufacturing scale benefits emerge .Improving GPS run‑rate into Q4 .
BARDA/multi‑specific antibody platform$59M initial COVID program funding; potential up to $109M more; IND‑enabling work progressing .Additional $51M awarded; total committed $110M, potential up to $205M; supports COVID second antibody and launches influenza program .Strengthening non‑dilutive funding .
ModeX oncology (MDX2001)IND cleared; first patient expected imminently; basket trial design; partnerships possible .Phase 1 dosing underway; initial safety read ~1H25; expansion cohorts/data into 2026; platform attracting potential partners .Advancing to human data in 2025 .
Oxyntomodulin dual agonist (injectable/oral)Oral OXM/GLP‑2 tablet programs with Entera; prior PEG OXM Phase 2b efficacy noted .Positive PK/PD in oral OXM animal models; advancing both once‑weekly SC and once‑daily oral versions; potential differentiation in NASH .Pipeline momentum; preclinical to IND path .
Capital allocation/share repurchaseRefinanced converts; initiated $100M buyback; repurchased 55M shares early 2024; HCRx $250M royalty bond to fund R&D and buybacks .~$400M cash at 9/30; 14.9M shares repurchased in Q3; 24M through Nov 6; consider program expansion as appropriate .Continuing returns; potential program expansion .

Management Commentary

  • “We bolstered our balance sheet with significant cash infusions to ensure adequate funding for our pharmaceutical pipeline, and to return capital to our shareholders through a stock repurchase program.” – Phillip Frost, CEO .
  • “During the third quarter… we recorded a gain of $121.5 million on the [Labcorp] transaction… operating income of $58.5 million [Diagnostics]… We expect [Diagnostics] positive cash flow for the full year 2025… and an additional cost initiative targeting an additional $20 million of annualized cost savings.” – Adam Logal, CFO .
  • “Our collaboration with Entera Bio… could [deliver] the very first oral dual‑agonist GLP‑1/glucagon peptide… In vivo studies… showed a desirable PK profile and bioavailability that would support a once‑daily oral treatment regimen.” – Elias Zerhouni, Vice Chairman & President .
  • “MDX2001… Phase Ia… will take another 6 months to get a read about… safety… [then] expansion cohorts… towards the end of the first half of 2025.” – Elias Zerhouni .

Q&A Highlights

  • Oxyntomodulin strategy: Development proceeding in parallel for oral (with Entera) and weekly SC; oral form could have tolerability benefits; potential positioning in NASH given glucagon receptor expression in liver; partnering interest ongoing .
  • MDX2001 timelines and endpoints: Dose escalation across six levels with single‑patient cohorts, then 3‑patient expansion; initial safety/tolerability by late 1H25; efficacy signals and potential pivotal path post‑2026 depending on data .
  • EBV vaccine (MDX2201) with Merck: Merck is sponsor; decision to initiate studies rests with Merck; OPKO states no obstacles remaining before Merck decision .
  • BioReference profitability path: Non‑recurring restructuring enables profitability; no significant incremental investment required; focus on NY/NJ market efficiencies and oncology/urology growth .
  • Rayaldee: New data package aims to show delaying dialysis in CKD by reducing PTH over time; management expects adoption to be gradual as guidelines evolve .

Estimates Context

  • S&P Global consensus for Q3 2024 EPS and revenue was unavailable in our session; therefore, we cannot provide “vs. consensus” comparisons. Given company results and Q4 guidance (total revenue $155–$160M; services $95–$98M; cost/expenses $200–$210M ex‑nonrecurring), we expect Street models to reflect lower Diagnostics services run‑rate into Q4 offset by rising Pfizer gross profit share and BARDA contribution in “other” revenue .
  • We note management’s call‑out of rising NGENLA profit share ($7.0M press release; $7.4M management) and Q4 guide to $8–$10M, implying upward revision to “other” revenue in models .

Key Takeaways for Investors

  • Q3 inflection masked by one‑timers: Core Diagnostics remains pressured, but restructuring is advancing; the Labcorp gain produced positive operating income, and management re‑affirmed the path to breakeven run‑rate by YE and positive cash flow in 2025 .
  • Liquidity and capital returns are meaningful: ~$400M cash at 9/30 plus HCRx proceeds support ModeX R&D and continued buybacks; cumulative repurchases ~79M shares YTD and potential for authorization expansion .
  • NGENLA is ramping: Gross profit share increased into Q3 and is guided higher for Q4, with manufacturing scale benefits starting to flow; additional indications carry $100M potential milestones .
  • BARDA de‑risks ModeX spend: $51M incremental award (total committed $110M; up to $205M) funds COVID second multi‑specific and flu program, reducing cash burn for platform development .
  • Oncology optionality: MDX2001 first‑in‑human program is dosing; early safety read expected 1H25; partnering interest could provide strategic funding/validation ahead of later efficacy data .
  • Oxyntomodulin (obesity/NASH) is an emerging asset: Positive preclinical oral PK/PD data with Entera and continued weekly SC formulation work expand optionality in a large market, though clinical timelines remain pre‑IND .
  • Near‑term trading watch‑items: Q4 revenue mix and Diagnostics cost cadence versus guidance; Pfizer profit share trend; any updates from Merck on EBV clinical start; further buyback activity .

Additional Relevant Press Releases and Prior‑Quarter Context

  • $250M HCRx financing secured by NGENLA profit share (non‑dilutive) .
  • Entera/OPKO oral OXM preclinical PK/PD data supportive of IND‑enabling efforts .
  • Q2 2024: Revenue $182.2M; EPS $(0.01); Diagnostics services $129.4M; products $40.5M; IP/other $12.3M; guided Q3 revenue $180–$185M and Pfizer gross profit share $7–$9M (later landed in range) .
  • Q1 2024: Revenue $173.7M; EPS $(0.12); Diagnostics services $126.9M; products $38.1M; IP/other $8.7M; revised 2024 Pfizer gross profit share guidance due to inventory accounting .

Disclosures: Where consensus comparisons are not shown, S&P Global estimates were unavailable at the time of this analysis. All quantitative and qualitative claims above are sourced from company filings/press releases and the Q3 2024 earnings call transcript as cited.