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ORASURE TECHNOLOGIES INC (OSUR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 total net revenue was $29.9M, down 45% year-over-year as COVID-19 revenues fell 98%; core revenue was $29.5M, down 2% YoY, with Diagnostics up 8% and Sample Management Solutions (SMS) down 16% .
  • GAAP gross margin was 41.1% (vs. 44.5% YoY) and GAAP EPS was $(0.21); non-GAAP EPS was $(0.18) as management excluded stock comp, gain on sale of assets tied to risk assessment exit, and other items .
  • Guidance: Q2 2025 total revenue $28.5–$32.5M; core revenue $28–$32M; COVID-19 + risk assessment ≈$0.5M; Q2 gross margin “flat to up slightly” vs Q1, with operating efficiencies ramping in H2; Q2 core OpEx in low-$20M plus ~$10M innovation (including $7–$8M for Sherlock) .
  • Stock-relevant catalysts: $40M share repurchase authorization over two years; progress integrating Sherlock’s molecular diagnostics (CT/NG) platform toward 2025 submission; and diversification into B2B2C and international HCV/HIV channels amid funding uncertainty .

What Went Well and What Went Wrong

  • What Went Well

    • Diagnostics grew 8% YoY to $17.7M, supported by international demand, initial HCV self-test orders, and expanded ER use of HCV; management noted Q1 core revenue landed “above the midpoint of our guidance range” .
    • Strategic progress: accelerated in-sourcing of SMS manufacturing to Bethlehem, PA, “substantially complete by the end of Q2,” expected to drive efficiencies in H2 2025 .
    • Capital deployment: authorized $40M buyback over two years; CFO framed cadence as roughly $5M/quarter with a 30-day cooling-off period post-authorization .

  • What Went Wrong

    • COVID-19 revenue collapsed 98% YoY to $0.5M as the largest government contract ended in Q2 2024; total revenue fell 45% YoY, compressing gross margin and increasing operating loss .
    • SMS down 16% YoY to $9.1M due to a disrupted ordering pattern at a large consumer genomics customer; management expects “no volume in Q2” and has limited visibility beyond that .
    • U.S. public health funding uncertainty intensified: Together Take Me Home program expected to end after September 30 fiscal year; OTI booked ~$$1.5M in Q1 from TTTH and expects ~$4M in FY25 total; PEPFAR/NIH headwinds ~ $1.0M in Q1 and similar in Q2 .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$39.915 $37.445 $29.931
GAAP Diluted EPS ($USD)$(0.06) $(0.14) $(0.21)
Non-GAAP Diluted EPS ($USD)$(0.01) $(0.06) $(0.18)
GAAP Gross Margin (%)42.8% 36.2% 41.1%
GAAP Operating Income (Loss) ($USD Millions)$(6.0) $(12.4) $(17.8)
Non-GAAP Operating Income (Loss) ($USD Millions)$(2.7) $(6.7) $(15.3)
GAAP Net Income (Loss) ($USD Millions)$(4.5) $(10.8) $(16.0)

Segment breakdown (Q1 2025 vs Q1 2024):

Segment ($USD Millions)Q1 2024Q1 2025YoY Change
Diagnostics$16.380 $17.689 +8%
Sample Management Solutions$10.822 $9.110 (16%)
Risk Assessment Testing$2.080 $1.420 (32%)
COVID-19 Diagnostics$23.097 $0.457 (98%)
Other products & services$0.527 $0.321 (39%)
Molecular Services$0.873 $0.000 (100%)
Non-product & services$0.353 $0.934 +165%
Total Net Revenues$54.132 $29.931 (45%)

Operating expense breakdown (Q1 2025 vs Q1 2024):

OpEx ($USD Millions)Q1 2024Q1 2025
Research & Development$7.738 $9.603
Sales & Marketing$8.448 $6.859
General & Administrative$11.634 $14.102
Total Operating Expenses$31.158 $30.049

Cash flow & balance sheet KPIs:

KPIQ1 2024Q1 2025
Cash & Cash Equivalents ($USD Millions, quarter-end)$247.145 $247.569
Operating Cash Flow ($USD Millions)$6.739 $(19.733)
Capital Expenditures ($USD Millions)$1.579 $0.420
Weighted Avg Diluted Shares (Millions)73.947 74.867

Consensus vs actuals (S&P Global):

MetricConsensus (Q1 2025)Actual (Q1 2025)Surprise
Revenue ($USD Millions)$29.573*$29.931 +$0.358M (beat)*
EPS ($USD)$(0.205)*$(0.18) +$0.025 (beat)*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)Q2 2025N/A$28.5–$32.5 New
Core Revenue ($USD Millions)Q2 2025N/A$28–$32 New
COVID-19 + Risk Assessment ($USD Millions)Q2 2025N/A≈$0.5 New
Gross Margin (%)Q2 2025N/AFlat to up slightly vs Q1 New
Gross Margin (%)H2 2025N/AExpected expansion (volume growth, automation, consolidation, in-sourcing) New
Operating Expenses ($USD Millions)Q2 2025N/ACore OpEx low-$20M + $10M innovation (incl. $7–$8M Sherlock) New
Share Repurchases ($USD Millions)2025–2027N/AAuthorization up to $40M over ~2 years New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
International HCV self-testInitial international orders post-WHO PQ (Q3) ; not highlighted in Q4 PRAfrica pilot with National Health Ministry; only HCV self-test with WHO PQ Building, steady international demand
U.S. public health fundingElevated uncertainty for some customers (Q4) TTTH program ending FY on 9/30; ~$1.5M Q1, ~$4M FY25; broader CDC/HHS staffing cuts Worsening in U.S.; management seeking alternatives
Consumer genomics customerNot highlighted“No volume in Q2” expected; limited visibility; SMS otherwise grew ex this headwind Negative near-term headwind
Manufacturing in-sourcing (SMS)Operational efficiency progress (Q3) In-sourcing substantially complete by end of Q2; majority of SMS volume in PA by Q2 Ahead of schedule; supports H2 margin
TariffsNot highlightedMinimal impact given U.S./Canada concentration; limited exposure Monitored, low risk
Sherlock molecular diagnostics (CT/NG)Acquisition (Q4) with 2025 submission target Integration “off to a good start”; clinical trial accelerating; submission by year-end 2025 Advancing on plan
Capital deploymentNot highlighted$40M buyback authorization; approx $5M/quarter cadence discussed Shareholder-friendly signal

Management Commentary

  • CEO: “We reported revenue in Q1 that was in the top half of our guidance range for both total revenue and core revenue… OTI is positioned to deliver accelerated growth in our core business in the coming years” .
  • CEO: “Integration of Sherlock Biosciences is off to a good start… a low-cost disposable platform… advancing the clinical study for chlamydia and gonorrhea” .
  • CFO: “Non-GAAP gross margin was 41.7%… GAAP operating loss in Q1 was $17.8M… non-GAAP operating loss was $15.3M” .
  • CEO on funding: “Over the last few months, there has been disruption in USAID and PEPFAR-sponsored programs… international diagnostics remains stable at this time” .
  • CFO on buyback: “$40 million over 2 years… you can think of it as evenly being spread… $5 million a quarter” .

Q&A Highlights

  • International funding alternatives and HIV testing demand: Management described international revenue as “steady but flat” as funding resumes; multilateral programs more stable .
  • TTTH program impact: ~$4M FY25 revenue with ~$1.5M in Q1; remaining split Q2/Q3; termination expected end of Q3; exploring alternatives to continue work .
  • Consumer genomics customer: Expect “no volume in Q2”; visibility beyond Q2 limited; ex this disruption, SMS grew YoY .
  • Tariffs: No demand pull forward; minimal impact given in-sourcing; some inventory build late Q1 for shipment timing .
  • Capital deployment/M&A: Focused on buyback execution and targeting assets to accelerate innovation and revenue growth; strong balance sheet .

Estimates Context

  • Q1 2025: Revenue beat by ~$0.36M vs S&P Global consensus ($29.93M actual vs $29.57M estimate); EPS beat by ~$$0.025 ($-0.18 actual vs $-0.205 estimate). These modest beats were driven by Diagnostics strength and controlled gross margin amid COVID unwind and SMS headwinds . Values retrieved from S&P Global.*
  • Q2 2025: Company guides $28.5–$32.5M revenue and flat-to-slightly-up gross margin vs Q1; consensus at $30.36M revenue and $(0.204) EPS suggests the guidance range brackets consensus with funding/program uncertainties and SMS customer disruption already embedded.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Core Diagnostics resilience and international HCV momentum helped offset funding headwinds; however, U.S. public health cuts and the TTTH end-date create near-term overhang .
  • SMS transition to in-house manufacturing is on track sooner than planned, underpinning a credible margin expansion setup in H2 2025 as volumes normalize .
  • The large consumer genomics customer disruption is material (no Q2 volume); watch for signs of recovery or replacement demand from diversified customers and B2B2C channels .
  • Non-GAAP reporting excludes items like stock comp, gain on sale of discontinued assets, and contingent consideration; monitor reconciliation as management pursues restructuring and M&A .
  • Buyback authorization ($40M over 2 years) plus a strong cash position ($248M) provide downside support and optionality for tuck-ins that accelerate growth, notably in molecular diagnostics .
  • Near-term trading: expect sensitivity to updates on U.S. funding programs (CDC/PEPFAR), TTTH alternatives, and visibility on the genomics customer; medium-term thesis hinges on H2 margin trajectory, Sherlock’s CT/NG submission, and growth in OTI’s diversified end-markets .
  • Maintain focus on Q2 execution within guidance, H2 operating efficiencies, and catalyst path (Sherlock, new product launches, collaborations like Targeted Genomics/ORAcollect Dx) .