UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| | | | | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2023.March 31, 2024.
OR
| | | | | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________to _________ .
Commission File Number 001-16537
ORASURE TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
| | | | | |
Delaware | 36-4370966 |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
| | | | | |
220 East First Street, Bethlehem, Pennsylvania | 18015 |
(Address of Principal Executive Offices) | (Zip code) |
Registrant’s telephone number, including area code: (610) 882-1820
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, $0.000001 par value per share | | OSUR | | The NASDAQ Stock Market LLC |
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
Large accelerated filer | o | | Accelerated filer | x |
| | | | |
Non-accelerated filer | o | | Smaller reporting company | o |
| | | | |
| | | Emerging growth company | o |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 1, 2023,May 2, 2024, the registrant had 73,414,69573,959,289 shares of common stock, $0.000001 par value per share, outstanding.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the Federal securities laws. These may include statements about ourthe Company's expected revenues, earnings/losses per share, net income (loss), expenses, cash flow or other financial performance, or developments, clinical trial or development activities, expected regulatory filings and approvals, planned business transactions, views of future industry, competitive or market conditions, and other factors that could affect ourthe Company's future operations, results of operations or financial position. These statements often include words, such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “may,” “will,” “should,” “could,” or similar expressions.
Forward-looking statements are not guarantees of future performance or results. Known and unknown factors that could cause actual performance or results to be materially different from those expressed or implied in these statements include, but are not limited to:
•OurMarket acceptance of, and the Company's ability to market and sell, its products and services, whether through ourits internal, direct sales force or third parties;
•Our ability to fulfill our commitments under our contract with the U.S. government for InteliSwab® COVID-19 Rapid Tests;
•Failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for ourthe Company's products;
•Significant customer concentrations that exist or may develop in the future:future;
•OurThe Company's ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements;
•OurThe Company's ability to achieve the anticipated cost savings as a result of its business restructuring, including from in-sourcing third party manufacturing and exiting microbiome services;
•The Company's ability to obtain, and timing and cost of obtaining, necessary regulatory approvals for new products or new indications or applications for existing products; ability to comply with applicable regulatory requirements;
•OurThe Company's ability to effectively resolve warning letters, audit observations and other findings or comments from the U.S. Food and Drug Administration or other regulators;
•The impact of the COVID-19 pandemic on our business, supply chain and workforce;
•The impact of the U.S. government ending the COVID-19 related Public Health Emergency;
•Changes in relationships, including disputes or disagreements, with strategic partners or other parties and reliance on strategic partners for the performance of critical activities under collaborative arrangements;
•OurThe Company's ability to meet increased demand for ourits products;
•The impact of replacing distributors on ourthe Company's business;
•Inventory levels at distributors and other customers;
•OurThe Company's ability to achieve ourits financial and strategic objectives and continue to increase ourits revenues, including the ability to expand international sales;
•The impact of competitors, competing products and technology changes on ourthe Company's business;
•Reduction or deferral of public funding available to customers;
•Competition from new or better technology or lower cost products;
•OurThe Company's ability to develop, commercialize and market new products;
•Market acceptance of oral fluid or urine testing, collection or other products;The Company's ability to fulfill its commitments under its contract with the U.S. government for InteliSwab® COVID-19 Rapid Tests;
•Market acceptance and uptake of microbiome informatics, microbial genetics technology and related analytics services;
•Changes in market acceptance of products based on product performance or other factors, including changes in testing guidelines, algorithms or other recommendations by the Centers for Disease Control and Prevention (the "CDC") or other agencies; ability to fund research and development and other products and operations;
•OurThe Company's ability to obtain and maintain new or existing product distribution channels;
•Reliance on sole supply sources for critical products and components;
•Availability of related products produced by third parties or products required for use of ourthe Company's products;
•The impact of contracting with the U.S. government on ourthe Company's business;
•The impact of negative economic conditions on ourthe Company's business;
•OurThe Company's ability to maintain sustained profitability;
•OurThe Company's ability to increase ourits gross margins;
•The Company's ability to utilize net operating loss carry forwards or other deferred tax assets;
•Volatility of ourthe Company's stock price;
•Uncertainty relating to patent protection and potential patent infringement claims;
•Uncertainty and costs of litigation relating to patents and other intellectual property;
•Availability of licenses to patents or other technology;
•Ability to enter into international manufacturing agreements;
•Obstacles to international marketing and manufacturing of products;
•Our ability to sell products internationally, including theThe impact of changes in international funding sources and testing algorithms;algorithms on international sales;
•Adverse movements in foreign currency exchange rates;
•Loss or impairment of sources of capital;
•OurThe Company's ability to attract and retain qualified personnel;
•OurThe Company's exposure to product liability and other types of litigation;
•Changes in international, federal or state laws and regulations;
•Customer consolidations and inventory practices;
•Equipment failures and ability to obtain needed raw materials and components;
•The impact of terrorist attacks and civil unrest;
•The impact of cybersecurity incidents and other disruptions involving our computer systems or those of our third-party IT service providers; and
•General political, business and economic conditions, including interest rates and inflationary pressures and banking instability.pressures.
These and other factors that could affect ourthe Company's results are discussed more fully under the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any, in Part I, Item 1A of ourthe Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2023, and in other SEC filings.
Commission (the “SEC”) on March 11, 2024, and in other SEC filings. Although forward-looking statements help to provide information about future prospects, readers should keep in mind that forward-looking statements may not be reliable. Readers are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are made as of the date of this report and we undertakethe Company undertakes no duty to update these statements, unless we areit is required to do so by law. If we dothe Company does update one or more forward-looking statements, no inference should be drawn that weit will make updates with respect to other forward-looking statements or that weit will make any further updates to those forward-looking statements at any future time.
Investors should also be aware that while we do,the Company does, from time to time, communicate with securities analysts, it is against ourthe Company's policy to disclose any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agreethe Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, we havethe Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of OraSure.
Item 1. FINANCIAL STATEMENTS
ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per share amounts)
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
ASSETS | | | |
Current Assets: | | | |
Cash and cash equivalents | $ | 247,145 | | | $ | 290,407 | |
Short-term investments | 16,627 | | | — | |
Accounts receivable, net of allowance of $1,065 and $1,216 | 34,037 | | | 40,171 | |
Inventories | 43,180 | | | 47,614 | |
Prepaid expenses | 4,691 | | | 6,041 | |
Other current assets | 2,825 | | | 2,226 | |
Total current assets | 348,505 | | | 386,459 | |
Noncurrent Assets: | | | |
Property, plant and equipment, net of accumulated depreciation of $86,332 and $85,143 | 42,597 | | | 45,420 | |
Operating right-of-use assets, net | 10,570 | | | 12,270 | |
Finance right-of-use assets, net | 158 | | | 576 | |
Intangible assets, net of accumulated amortization of $33,261 and $33,649 | 1,010 | | | 1,206 | |
Goodwill | 35,172 | | | 35,696 | |
Investment in equity method investee | 28,333 | | | — | |
| | | |
Other noncurrent assets | 1,213 | | | 1,218 | |
Total noncurrent assets | 119,053 | | | 96,386 | |
TOTAL ASSETS | $ | 467,558 | | | $ | 482,845 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current Liabilities: | | | |
Accounts payable | $ | 12,683 | | | $ | 13,151 | |
Deferred revenue | 1,597 | | | 1,559 | |
Accrued expenses and other current liabilities | 12,715 | | | 22,710 | |
Finance lease liability | 517 | | | 539 | |
Operating lease liability | 1,593 | | | 1,577 | |
Total current liabilities | 29,105 | | | 39,536 | |
Noncurrent Liabilities: | | | |
Finance lease liability | 204 | | | 226 | |
Operating lease liability | 10,676 | | | 11,162 | |
Other noncurrent liabilities | 727 | | | 696 | |
Deferred income taxes | 595 | | | 554 | |
Total noncurrent liabilities | 12,202 | | | 12,638 | |
TOTAL LIABILITIES | 41,307 | | | 52,174 | |
Commitments and contingencies (Note 12) | | | |
STOCKHOLDERS' EQUITY | | | |
Preferred stock, par value $0.000001, 25,000 shares authorized, none issued | — | | | — | |
Common stock, par value $0.000001, 120,000 shares authorized, 73,959 and 73,528 shares issued and outstanding | — | | | — | |
Additional paid-in capital | 531,263 | | | 529,543 | |
Accumulated other comprehensive loss | (17,497) | | | (14,941) | |
Accumulated deficit | (87,515) | | | (83,931) | |
Total stockholders' equity | 426,251 | | | 430,671 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 467,558 | | | $ | 482,845 | |
See accompanying notes to the consolidated financial statements.
ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETSSTATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
ASSETS | | | |
Current Assets: | | | |
Cash and cash equivalents | $ | 185,936 | | | $ | 83,980 | |
Short-term investments | — | | | 26,867 | |
Accounts receivable, net of allowance of $1,908 and $2,365 | 52,750 | | | 70,797 | |
Inventories | 73,284 | | | 95,704 | |
Prepaid expenses | 5,248 | | | 6,273 | |
Other current assets | 24,349 | | | 41,569 | |
Total current assets | 341,567 | | | 325,190 | |
Noncurrent Assets: | | | |
Property, plant and equipment, net of accumulated depreciation of $84,423 and $69,881 | 49,282 | | | 59,413 | |
Operating right-of-use assets, net | 13,443 | | | 10,399 | |
Finance right-of-use assets, net | 803 | | | 1,293 | |
Intangible assets, net of accumulated amortization of $32,737 and $31,077 | 10,665 | | | 11,694 | |
Goodwill | 35,606 | | | 35,104 | |
Deferred tax asset | 1,230 | | | — | |
Other noncurrent assets | 998 | | | 1,087 | |
Total noncurrent assets | 112,027 | | | 118,990 | |
TOTAL ASSETS | $ | 453,594 | | | $ | 444,180 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current Liabilities: | | | |
Accounts payable | $ | 17,753 | | | $ | 38,020 | |
Deferred revenue | 1,841 | | | 2,273 | |
Accrued expenses and other current liabilities | 23,811 | | | 25,762 | |
Finance lease liability | 1,080 | | | 1,179 | |
Operating lease liability | 1,895 | | | 1,764 | |
Acquisition-related contingent consideration obligation | 40 | | | 65 | |
Total current liabilities | 46,420 | | | 69,063 | |
Noncurrent Liabilities: | | | |
Finance lease liability | 436 | | | 503 | |
Operating lease liability | 12,013 | | | 9,101 | |
Acquisition-related contingent consideration obligation | — | | | 99 | |
Other noncurrent liabilities | 586 | | | 581 | |
Deferred income taxes | — | | | 408 | |
Total noncurrent liabilities | 13,035 | | | 10,692 | |
TOTAL LIABILITIES | 59,455 | | | 79,755 | |
Commitments and contingencies (Note 12) | | | |
STOCKHOLDERS' EQUITY | | | |
Preferred stock, par value $0.000001, 25,000 shares authorized, none issued | — | | | — | |
Common stock, par value $0.000001, 120,000 shares authorized, 73,413 and 72,734 shares issued and outstanding | — | | | — | |
Additional paid-in capital | 523,861 | | | 520,446 | |
Accumulated other comprehensive loss | (14,559) | | | (18,435) | |
Accumulated deficit | (115,163) | | | (137,586) | |
Total stockholders' equity | 394,139 | | | 364,425 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 453,594 | | | $ | 444,180 | |
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
NET REVENUES: | | | | | | | |
Products and services | | | | | $ | 53,779 | | | $ | 152,914 | |
Other | | | | | 353 | | | 2,049 | |
| | | | | 54,132 | | | 154,963 | |
COST OF PRODUCTS AND SERVICES SOLD | | | | | 30,067 | | | 89,148 | |
Gross profit | | | | | 24,065 | | | 65,815 | |
OPERATING EXPENSES: | | | | | | | |
Research and development | | | | | 7,738 | | | 10,560 | |
Sales and marketing | | | | | 8,448 | | | 12,142 | |
General and administrative | | | | | 11,634 | | | 17,711 | |
Loss on impairments | | | | | 3,338 | | | 1,105 | |
Change in the estimated fair value of acquisition-related contingent consideration | | | | | — | | | (24) | |
| | | | | 31,158 | | | 41,494 | |
Operating income (loss) | | | | | (7,093) | | | 24,321 | |
OTHER INCOME | | | | | 3,491 | | | 2,673 | |
Income (loss) before income taxes | | | | | (3,602) | | | 26,994 | |
INCOME TAX BENEFIT | | | | | (18) | | | (225) | |
NET INCOME (LOSS) | | | | | $ | (3,584) | | | $ | 27,219 | |
| | | | | | | |
INCOME (LOSS) PER SHARE: | | | | | | | |
BASIC | | | | | $ | (0.05) | | | $ | 0.37 | |
DILUTED | | | | | $ | (0.05) | | | $ | 0.37 | |
WEIGHTED-AVERAGE SHARES OUTSTANDING: | | | | | | | |
BASIC | | | | | 73,947 | | | 73,112 | |
DILUTED | | | | | 73,947 | | | 73,966 | |
See accompanying notes to the consolidated financial statements.
ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONSCOMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands, except per share amounts)thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
NET REVENUES: | | | | | | | |
Products and services | $ | 84,738 | | | $ | 79,167 | | | $ | 237,652 | | | $ | 144,403 | |
Other | 703 | | | 1,064 | | | 2,752 | | | 3,535 | |
| 85,441 | | | 80,231 | | | 240,404 | | | 147,938 | |
COST OF PRODUCTS AND SERVICES SOLD | 59,070 | | | 52,434 | | | 148,218 | | | 95,842 | |
Gross profit | 26,371 | | | 27,797 | | | 92,186 | | | 52,096 | |
OPERATING EXPENSES: | | | | | | | |
Research and development | 7,661 | | | 9,463 | | | 18,221 | | | 18,097 | |
Sales and marketing | 8,535 | | | 11,684 | | | 20,677 | | | 24,401 | |
General and administrative | 16,424 | | | 17,579 | | | 34,135 | | | 36,735 | |
Loss on impairments | 215 | | | 10,542 | | | 1,320 | | | 10,542 | |
Change in the estimated fair value of acquisition-related contingent consideration | (35) | | | — | | | (59) | | | (36) | |
| 32,800 | | | 49,268 | | | 74,294 | | | 89,739 | |
Operating income (loss) | (6,429) | | | (21,471) | | | 17,892 | | | (37,643) | |
OTHER INCOME | 1,467 | | | 1,713 | | | 4,140 | | | 1,881 | |
Income (loss) before income taxes | (4,962) | | | (19,758) | | | 22,032 | | | (35,762) | |
INCOME TAX (BENEFIT) EXPENSE | (166) | | | (1,169) | | | (391) | | | 2,767 | |
NET INCOME (LOSS) | $ | (4,796) | | | $ | (18,589) | | | $ | 22,423 | | | $ | (38,529) | |
| | | | | | | |
INCOME (LOSS) PER SHARE: | | | | | | | |
BASIC | $ | (0.07) | | | $ | (0.26) | | | $ | 0.31 | | | $ | (0.53) | |
DILUTED | $ | (0.07) | | | $ | (0.26) | | | $ | 0.30 | | | $ | (0.53) | |
WEIGHTED-AVERAGE SHARES OUTSTANDING: | | | | | | | |
BASIC | 73,324 | | | 72,496 | | | 73,219 | | | 72,361 | |
DILUTED | 73,324 | | | 72,496 | | | 74,115 | | | 72,361 | |
| | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
NET INCOME (LOSS) | | | | | $ | (3,584) | | | $ | 27,219 | |
OTHER COMPREHENSIVE INCOME | | | | | | | |
Currency translation adjustments | | | | | (2,556) | | | 797 | |
Unrealized gain on marketable securities | | | | | — | | | 220 | |
COMPREHENSIVE INCOME (LOSS) | | | | | $ | (6,140) | | | $ | 28,236 | |
See accompanying notes to the consolidated financial statements.
ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)CASH FLOWS
(Unaudited)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
NET INCOME (LOSS) | $ | (4,796) | | | $ | (18,589) | | | $ | 22,423 | | | $ | (38,529) | |
OTHER COMPREHENSIVE INCOME | | | | | | | |
Currency translation adjustments | 2,859 | | | (4,349) | | | 3,656 | | | (2,593) | |
Unrealized gain on marketable securities | — | | | 82 | | | 220 | | 156 | |
COMPREHENSIVE INCOME (LOSS) | $ | (1,937) | | | $ | (22,856) | | | $ | 26,299 | | | $ | (40,966) | |
| | | | | | | | | | | |
| For the Three Months Ended March 31, |
| 2024 | | 2023 |
OPERATING ACTIVITIES: | | | |
Net income (loss) | $ | (3,584) | | | $ | 27,219 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
Stock-based compensation | 2,968 | | | 2,655 | |
Depreciation and amortization | 2,725 | | | 3,696 | |
Loss on impairments | 3,338 | | | 1,105 | |
Other non-cash amortization | 6 | | | — | |
Provision for credit losses | (85) | | | (67) | |
Unrealized foreign currency (gain) loss | (119) | | | 44 | |
Interest expense on finance leases | 7 | | | 15 | |
Deferred income taxes | 53 | | | — | |
| | | |
Change in the estimated fair value of acquisition-related contingent consideration | — | | | (24) | |
Payment of acquisition-related contingent consideration | — | | | (19) | |
Changes in assets and liabilities: | | | |
Accounts receivable | 6,199 | | | (36,613) | |
Inventories | 4,337 | | | 18,540 | |
Prepaid expenses and other assets | 603 | | | 5,299 | |
Accounts payable | (68) | | | (12,097) | |
Deferred revenue | 47 | | | (279) | |
Accrued expenses and other liabilities | (9,688) | | | (3,472) | |
Net cash provided by operating activities | 6,738 | | | 6,002 | |
INVESTING ACTIVITIES: | | | |
Purchases of short-term investments | (25,850) | | | (22,330) | |
Purchase of equity method investee | (28,333) | | | — | |
Proceeds from maturities and redemptions of short-term investments | 9,234 | | | 27,304 | |
Purchases of property and equipment | (1,579) | | | (1,191) | |
Purchase of property and equipment under government contracts | — | | | (2,767) | |
| | | |
Net cash provided by (used in) investing activities | (46,528) | | | 1,016 | |
FINANCING ACTIVITIES: | | | |
Cash payments for lease liabilities | (50) | | | (148) | |
Proceeds from exercise of stock options | 215 | | | 66 | |
Payment of acquisition-related contingent consideration | — | | | (46) | |
Repurchase of common stock | (1,462) | | | (1,203) | |
Net cash used in financing activities | (1,297) | | | (1,331) | |
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH | (2,175) | | | 527 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (43,262) | | | 6,214 | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 290,407 | | | 83,980 | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 247,145 | | | $ | 90,194 | |
| | | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
Cash (refunds) paid for income taxes | $ | 592 | | | $ | (10) | |
Non-cash investing and financing activities | | | |
Accrued property and equipment purchases | $ | 471 | | | $ | 733 | |
| | | |
| | | |
See accompanying notes to the consolidated financial statements.
ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands) | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2023 | | 2022 |
OPERATING ACTIVITIES: | | | |
Net income (loss) | $ | 22,423 | | | $ | (38,529) | |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | | | |
Stock-based compensation | 5,012 | | | 6,804 | |
Depreciation and amortization | 14,011 | | | 7,464 | |
Loss on impairments | 1,320 | | | 10,542 | |
Other non-cash amortization | 1 | | | 313 | |
Provision for credit losses | (478) | | | (152) | |
Unrealized foreign currency gain (loss) | 106 | | | (62) | |
Interest expense on finance leases | 28 | | | 55 | |
Deferred income taxes | (1,815) | | | 361 | |
Loss on sale of fixed assets | — | | | 718 | |
Change in the estimated fair value of acquisition-related contingent consideration | (59) | | | (36) | |
Payment of acquisition-related contingent consideration | (19) | | | — | |
Changes in assets and liabilities: | | | |
Accounts receivable | 18,652 | | | (18,646) | |
Inventories | 22,556 | | | (18,179) | |
Prepaid expenses and other assets | 5,495 | | | (4,416) | |
Accounts payable | (22,187) | | | 11,485 | |
Deferred revenue | (450) | | | (252) | |
Accrued expenses and other liabilities | (1,326) | | | (2,959) | |
Net cash provided by (used in) operating activities | 63,270 | | | (45,489) | |
INVESTING ACTIVITIES: | | | |
| | | |
Proceeds from maturities and redemptions of investments | 27,305 | | | 23,017 | |
Purchases of property and equipment | (2,893) | | | (25,440) | |
Purchase of property and equipment under government contracts | (4,034) | | | (33,803) | |
Proceeds from funding under government contract | 17,793 | | | 33,962 | |
Net cash provided by (used in) investing activities | 38,171 | | | (2,264) | |
FINANCING ACTIVITIES: | | | |
Cash payments for lease liabilities | (320) | | | (392) | |
Proceeds from exercise of stock options | 66 | | | 15 | |
Payment of acquisition-related contingent consideration | (46) | | | (208) | |
Repurchase of common stock | (1,663) | | | (1,954) | |
Net cash used in financing activities | (1,963) | | | (2,539) | |
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH | 2,478 | | | (311) | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 101,956 | | | (50,603) | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 83,980 | | | 116,762 | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 185,936 | | | $ | 66,159 | |
| | | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
Cash paid for income taxes | $ | 623 | | | $ | 9,107 | |
Non-cash investing and financing activities | | | |
Accrued property and equipment purchases | $ | 314 | | | $ | 1,900 | |
Accrued property and equipment purchases under government contracts | $ | — | | | $ | 2,023 | |
Unrealized gain on marketable securities | $ | — | | | $ | 156 | |
See accompanying notes to the consolidated financial statements.
ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Unaudited)
(in thousands, except per share amounts, unless otherwise indicated)
1. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation.
The accompanying interim unaudited consolidated financial statements include the accounts of OraSure Technologies, Inc. (“OraSure”) and its wholly-owned subsidiaries, DNA Genotek Inc. (“DNAG”), Diversigen, Inc. (“Diversigen”), and Novosanis NV (“Novosanis”). All intercompany transactions and balances have been eliminated. References herein to “we,” “us,” “our,” or the “Company” mean OraSure and its consolidated subsidiaries, unless otherwise indicated. The unaudited financial statements, in the opinion of management, include all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the Company's financial position and results of operations for these interim periods. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.2023. Results of operations for the three and six months ended June 30, 2023March 31, 2024 are not necessarily indicative of the results of operations expected for the full year.
Summary of Significant Accounting Policies.
There have been no changes to the Company's significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended December 31, 20222023 that have had a material impact on the consolidated financial statements and related notes except as discussed herein. See Note 11 for the discussion regarding the change in business segments.
Cash Equivalents & Short-Term Investments.
The Company considers all investments in debt securities to be available-for-sale securities. These securities consist of guaranteed investment certificates and corporate bonds purchased with maturities greater than ninety days. Securities with maturities ninety days or less are considered cash equivalents. Available-for-sale securities are carried at fair value, based upon quoted market prices, with unrealized gains and losses, if any, reported in stockholders’ equity as a component of accumulated other comprehensive loss.
The Company records an allowance for credit loss for its available-for-sale securities when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, the Company reviews factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, the Company’s intent to sell or the likelihood that it would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made.
The following is a summary of the Company's available-for-sale securities:securities (in thousands):
| | Amortized Cost | | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
March 31, 2024 | |
Guaranteed investment certificates | |
Guaranteed investment certificates | |
Guaranteed investment certificates | |
| | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| December 31, 2022 | | | | | | | |
Guaranteed investment certificates | $ | 22,109 | | | $ | — | | | $ | — | | | $ | 22,109 | |
Corporate bonds | 4,978 | | | — | | | (220) | | | 4,758 | |
Total | |
Total | |
Total | Total | $ | 27,087 | | | $ | — | | | $ | (220) | | | $ | 26,867 | |
| At March 31, 2024, maturities of the Company's available-for-sale securities were as follows: | |
At March 31, 2024, maturities of the Company's available-for-sale securities were as follows: | |
At March 31, 2024, maturities of the Company's available-for-sale securities were as follows: | |
| Less than one year | |
| Less than one year | |
| Less than one year | |
Greater than one year | |
The Company had no available-for-sale securities as of December 31, 2023.
Fair Value of Financial Instruments.
As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their respective fair values based on their short-term nature.
Fair value measurements of all financial assets and liabilities that are being measured and reported on a fair value basis are required to be classified and disclosed in one of the following three categories:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
All of the Company's available-for-sale corporate bonds are measured as Level 2 instruments and the Company's available-for-sale guaranteed investment certificates are measured as Level 1 instruments as of DecemberMarch 31, 2022.2024.
Included in cash and cash equivalents at June 30, 2023March 31, 2024 and December 31, 2022,2023 was $6,928$114.1 million and $1,730$112.7 million, respectively, invested in money market funds. These money market funds have investments in U.S. government securities and are measured as Level 1 instruments. Included in cash and cash equivalents at June 30,March 31, 2024 and December 31, 2023 was $22,642$53.6 million and $71.7 million, respectively, of guaranteed investment certificates, which are also measured as Level 1 instruments.
In January 2024, the Company lead the Series B financing and have entered wide-ranging strategic distribution agreements with KKR Sapphiros L.P. ("Sapphiros"), a privately held consumer diagnostic portfolio company and certain of its related entities. Through this relationship, the Company expects to be able to offer a more comprehensive range of low-cost diagnostic test and molecular sample management solutions to the Company's customers globally. The Company has funded $28.3 million for an interest in Sapphiros, with an aggregate commitment of up to $30.0 million to be funded by June 2024, contingent on certain terms and conditions being met. The Company has recorded the investment using the equity method in accordance with Accounting Standards Codification Topic 323, Investments-Equity Method and Joint Ventures - Overall. The investment in Sapphiros L.P. of $28.3 million as of March 31, 2024 is included in the equity method investee line of the Company's balance sheet and is measured as Level 3 investments. There is no similar investment as of December 31, 2023.
The Company offers a nonqualified deferred compensation plan for certain eligible employees and members of its Board of Directors. The assets of the plan are held in the name of the Company at a third-party financial institution. Separate accounts are maintained for each participant to reflect the amounts deferred by the participant and all earnings and losses on those deferred amounts. The assets of the plan are held in mutual funds and company stock. The fair value of the plan assets as of June 30, 2023both March 31, 2024 and December 31, 20222023 was $644 and $747, respectively,$0.8 million and was calculated using the quoted market prices of the assets as of those dates. All investments in the plan are classified as trading securities and measured as Level 1 instruments. The fair value of plan assets is included in both current assets and noncurrent assets with the same amount included in accrued expenses and other noncurrent liabilities in the accompanying consolidated balance sheets.
Foreign Currency Translation. Transactions
Net foreign exchange gains and (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $(492)$0.2 million and $783$(0.05) million for the three months ended June 30,March 31, 2024 and 2023, respectively.
Impairment of Long-Lived Assets
Long-lived assets, which include property, plant and 2022, respectively. Net foreign exchange gainsequipment, definite-lived intangible assets, as well as right-of-use assets (ROU assets) of operating and (losses) resultingfinance leases, are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company assesses the recoverability of the Company's long-lived assets by determining whether the carrying value of such assets can be recovered through the sum of the undiscounted future cash flows expected to be generated from foreign currency transactionsthe use and eventual disposition of the asset. If indicators of impairment exist, the Company measures the amount of such impairment by comparing the carrying value of the assets to the fair value of these assets, which is generally determined based on the present value of the expected future cash flows associated with the use of the assets. Expected future cash flows reflect the Company's assumptions about selling prices, volumes, costs and market conditions over a reasonable period of time.
The Company identified a triggering event to test for the sixrecoverability of all the property, plant, and equipment and ROU assets of both the Diversigen and Novosanis subsidiaries during the three months ended June 30, 2023March 31, 2024, given the Company's decision to initiate a strategic plan to transition away from the microbiome molecular sequencing services business and 2022close its Belgian operations. The Company performed an undiscounted cash flow analysis and determined the carrying values of the property, plant and equipment and ROU assets could not be recovered through the sum of the undiscounted future cash flows and were $(542)impaired. During the three months ended March 31, 2024 the Company recognized aggregate pre-tax impairment charges of $1.2 million and $54,$0.3 million to its operating and finance ROU assets, respectively. These charges are reported in the Company's consolidated statement of operations. The impact of the impairments on the Company's property, plant, equipment for the three months ended March 31, 2024 is discussed further in Note 4.
Accumulated Other Comprehensive Loss. Changes
Change in accumulated other comprehensive loss by component is listed below.below (in thousands):
| | | | | | | | | | | | | | | | | |
| Foreign Currency | | Marketable Securities | | Total |
Balance at December 31, 2022 | $ | (18,215) | | | $ | (220) | | | $ | (18,435) | |
Other comprehensive gain | 3,656 | | | 220 | | | 3,876 | |
Balance at June 30, 2023 | $ | (14,559) | | | $ | — | | | $ | (14,559) | |
| | | | | | | | | | | | | | | |
| Foreign Currency | | | | Total |
Balance at December 31, 2023 | $ | (14,941) | | | | | $ | (14,941) | |
Other comprehensive loss | (2,556) | | | | | (2,556) | |
Balance at March 31, 2024 | $ | (17,497) | | | | | $ | (17,497) | |
Recent Accounting Pronouncements
Immaterial CorrectionIn March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update ("ASU") No. 2024-01, Topic 718, Compensation-Stock Compensation. The purpose of Errors. Inventories, accounts payablethis update was to provide illustrative examples to demonstrate how an entity should apply guidance to determine whether profits interests and cost of productssimilar awards should be accounted for in accordance with Topic 718. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2024, and services were reduced by $528, $1,329interim periods within those fiscal periods. The amendments may be applied prospectively or retrospectively, and $801, respectively, as of and forearly adoption is permitted. Management is evaluating the year ended December 31, 2022 to correct forimpact on the accounting of a vendor rebate earned in 2022. The tax impact of the vendor rebate was negligible. This correction was deemed to be immaterial to theCompany's consolidated financial statements as of and for the year ended December 31, 2022. For the three and six months ended June 30, 2022, cost of products and services sold was reduced by $213 and $240, respectively. The respective operating activities on the consolidated statement of cash flows for the six months ended June 30, 2022 has also been adjusted. Furthermore, stockholder's equity at June 30, 2022 has been adjusted to reflect the reduction in cost of products and services sold.statements.
Reclassification. Certain prior period amounts have been reclassified to conform to current year presentations.For the three and six months ended June 30, 2022, $395 and $616 of research and development expenses were reclassified to other income in relation to the U.S. Department of Defense (the “DOD”) engineering consulting costs further described in Note 2. This reclassification was made to conform to the presentation in our Annual Report on Form 10-K for the year ended December 31, 2022.
Change in Accounting Estimate. During the three months ended June 30, 2023, the Company shortened the useful lives of machinery and equipment utilized for InteliSwab® production in Thailand. This reduction in useful lives resulted in $6,900 of accelerated depreciation during the three months ended June 30, 2023, recorded in cost of products and services sold.
2. Government Capital Contracts
In September 2021, the Company entered into an agreement for $109,000$109.0 million in funding from the DOD,U.S. Department of Defense (the "DOD"), in coordination with the Department of Health and Human Services, to build additional manufacturing capacity in the United States for its InteliSwab® COVID-19 Rapid Tests as part of the nation’s pandemic preparedness plan. Funding will be paid to the
Company based on achievement of milestones through December 2023 for the design, acquisition, installation, qualification and acceptance of the manufacturing equipment, as set forth in the agreement. In accordance with the milestone payment schedule, 15% of the total willwas not bebilled and funded until the completion of the final validation testing, which is scheduled to occuroccurred in lateOctober 2023. The Company began making payments to vendors for the capital project during the fourth quarter of 2021. The Company began receiving funds from the DOD in January 2022 and has received $78,124,$109.0 million as of June 30,December 31, 2023. The remaining $30,876 is expected to be collected duringIn connection with the remaindercompletion of 2023.the contract in the fourth quarter of 2023, all funds were received.
Activity for these capital contracts is accounted for pursuant to International Accounting Standards ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance,.as there is not direct US GAAP guidance for this type of transaction. Funding received in relation to capital-related costs incurred for government contracts is recorded as a reduction to the cost of property, plant and equipment and reflected within investing activities in the consolidated statements of cash flows; and associated unpaid liabilities and government proceeds receivable are considered non-cash changes in such balances within the operating section of the consolidated statements of cash flows.
Amounts earned for the Company's guaranteed profit which coverscovered project management costs arewere recognized straight-line in other income over the term of the government contract. Any amount received in excess of the guaranteed profit discussed above will be recorded in other income at time of payment. The Company recognized $561 ofno such income which is reported as other income in the Company's consolidated statement of operations for bothduring the three months ended June 30, 2023March 31, 2024 and 2022. The Company recognize $1,123 of such income, for both$0.6 million during the sixthree months ended June 30, 2023 and 2022.March 31, 2023.
The DOD also reimbursesreimbursed the Company for certain engineering consulting costs. These expenses are reflected in research and development expenses as incurred with the corresponding reimbursementamount presented in other income. ForThe Company
recognized no such costs during the three months ended June 30, 2023March 31, 2024 and 2022, $537 and $395, respectively, were recorded in research and development and other income. For$1.1 millionduring the sixthree months ended June 30, 2023 and 2022, $1,588 and $616, respectively, were recorded in research and development and other income.
The balances corresponding to government contracts included in the Company's consolidated balance sheet are as follows:
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Other current assets: | | | |
Billed receivables | $ | — | | | $ | — | |
Unbilled receivables | 15,429 | | | 27,013 | |
Total other current assets | 15,429 | | | 27,013 | |
Accrued expenses and other current liabilities | $ | (118) | | | $ | (318) | |
March 31, 2023.The activity corresponding to the government contracts included in the Company's consolidated statements of cash flows for the cumulative period ended December 31, 2023 is as follows:follows (in thousands):
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Cost of assets, cumulative | $ | 87,057 | | | $ | 83,359 | |
Reduction for funding earned to date, not yet received | (8,402) | | | (22,497) | |
Reduction for funding received to date | (78,655) | | | (60,862) | |
Total property, plant and equipment, net | $ | — | | | $ | — | |
| | | | | | | | | |
| | | December 31, |
| | | 2023 |
Cost of assets, cumulative | | | $ | 86,993 | |
| | | |
Reduction for funding received to date | | | (86,993) | |
Total property, plant and equipment, net | | | $ | — | |
3. Inventories (in thousands)
| | June 30, | | December 31, |
| 2023 | | 2022 |
| March 31, | | | March 31, | | December 31, |
| 2024 | | | 2024 | | 2023 |
Raw materials | Raw materials | $ | 29,647 | | | $ | 42,445 | |
Work in process | Work in process | 1,885 | | | 2,335 | |
Finished goods | Finished goods | 41,752 | | | 50,924 | |
| $ | 73,284 | | | $ | 95,704 | |
| $ | |
4. Property, Plant and Equipment, net (in thousands)
| | June 30, | | December 31, |
| 2023 | | 2022 |
| March 31, | | | March 31, | | December 31, |
| 2024 | | | 2024 | | 2023 |
Land | Land | $ | 1,118 | | | $ | 1,118 | |
Buildings and improvements | Buildings and improvements | 35,765 | | | 35,582 | |
Machinery and equipment | Machinery and equipment | 65,204 | | | 60,725 | |
Computer equipment and software | Computer equipment and software | 17,065 | | | 16,681 | |
Furniture and fixtures | Furniture and fixtures | 4,100 | | | 4,064 | |
Construction in progress | Construction in progress | 10,453 | | | 11,124 | |
| 133,705 | | | 129,294 | |
| 128,929 | |
Accumulated depreciation | Accumulated depreciation | (84,423) | | | (69,881) | |
| $ | 49,282 | | | $ | 59,413 | |
| $ | |
During the sixthree months ended June 30,March 31, 2024, the Company initiated a strategic plan to transition away from the microbiome molecular sequencing services business and to exit operations at its Belgium location. As a result of these decisions, the Company determined that the carrying values of all the property, plant, and equipment of its Diversigen and Novosanis subsidiaries were not recoverable and recorded an aggregate pre-tax asset impairment charge of $1.8 million during the three months ended March 31, 2024.
During the three months ended March 31, 2023, the Company determined several manufacturing lines will not be utilized due to changes in forecasted demand for the products the equipment is intended to produce. Additionally, the Company elected not to proceed with certain leasehold improvements to its research and development laboratories. As a result of these decisions,this decision, the Company determined that the carrying valuesvalue of the equipment and leasehold improvements made to date arewas not recoverable and recorded an aggregate pre-tax asset impairment charge of $1,320$1.1 million during the sixthree months ended June 30,March 31, 2023.
Due to the extremely specialized nature of the equipment and various market data points, the estimated fair value was zero. These charges are reported within loss on impairments in the consolidated statementstatements of operations.
5. Accrued Expenses and other current liabilitiesOther Current Liabilities (in thousands)
| | June 30, | | December 31, |
| 2023 | | 2022 |
| March 31, | | | March 31, | | December 31, |
| 2024 | | | 2024 | | 2023 |
Payroll and related benefits | Payroll and related benefits | $ | 11,028 | | | $ | 14,103 | |
Professional fees | Professional fees | 7,038 | | | 4,685 | |
Sales tax payable | Sales tax payable | 1,321 | | | 1,519 | |
Other | Other | 4,424 | | | 5,455 | |
| $ | 23,811 | | | $ | 25,762 | |
| $ | |
6. Termination Benefits
2023 Reduction in Workforce
During the first and second quarters of 2023, the Company executed a reduction in workforce. This was accounted for pursuant to Accounting Standards Codification ("ASC") 420, Exit or Disposal Cost Obligations.
The expensecharges for termination benefits included in the Company's consolidated statements of operations are as follows:follows (in thousands):
| | Three Months Ended June 30, 2023 | | Six months ended June 30, 2023 |
| For the Three Months Ended March 31, | | | For the Three Months Ended March 31, |
| 2024 | | | 2024 | | 2023 |
Cost of products and services sold | Cost of products and services sold | $ | 334 | | | $ | 369 | |
Research and development | Research and development | — | | | 566 | |
Sales and marketing | Sales and marketing | 95 | | | 1,543 | |
General and administrative | General and administrative | 201 | | | 787 | |
Total | $ | 629 | | | $ | 3,264 | |
| $ | |
As of June 30, 2023March 31, 2024 the Company had $1,591$0.1 million accrued and had paid $1,674$3.2 million related to the reduction in workforce. No additional expense was incurred during the three months ended March 31, 2024. The Company expects this plan to be completed by September 30, 2024.
Q1 2024 Reduction in Workforce
During the three months ended March 31, 2024, the Company executed a reduction in workforce largely affect its COVID-19 manufacturing workforce. This was accounted for pursuant to Accounting Standards Codification ("ASC") 420, Exit or Disposal Cost Obligations. The charges for termination benefits included in the Company's consolidated statements of operations are as follows (in thousands):
| | | | | |
| For the Three Months Ended March 31, |
| 2024 |
Cost of products and services sold | $ | 231 | |
Research and development | 87 | |
Sales and marketing | 69 | |
General and administrative | 17 | |
Total | $ | 404 | |
As of March 31, 2024 the Company had $0.3 million accrued and had paid $0.1 million related to the reduction in workforce. The Company expects this plan to be completed by December 31, 2024.
7. Revenues
Revenues by product line. The following table represents total net revenues by product line:line (in thousands):
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
COVID-19 (1) | COVID-19 (1) | $ | 47,507 | | | $ | 43,378 | | | $ | 165,916 | | | $ | 74,411 | |
HIV | HIV | 15,964 | | | 10,357 | | | 29,868 | | | 18,523 | |
Molecular Products (2) | 13,050 | | | 17,581 | | | 25,992 | | | 35,514 | |
Molecular Sample Management Solutions (2) | |
HCV | HCV | 3,870 | | | 3,691 | | | 7,056 | | | 6,948 | |
Risk assessment testing | 2,358 | | | 2,630 | | | 4,986 | | | 5,191 | |
Risk assessment testing (3) | |
Molecular Services | Molecular Services | 1,354 | | | 1,204 | | | 2,733 | | | 2,938 | |
Other product and service revenues | Other product and service revenues | 635 | | | 326 | | | 1,101 | | | 878 | |
Net product and services revenues | Net product and services revenues | 84,738 | | | 79,167 | | | 237,652 | | | 144,403 | |
Other non-product revenues (3) | 703 | | | 1,064 | | | 2,752 | | | 3,535 | |
Non-product and services revenues (4) | |
Net revenues | Net revenues | $ | 85,441 | | | $ | 80,231 | | | $ | 240,404 | | | $ | 147,938 | |
(1)Includes COVID-19 Diagnostics and COVID-19 Molecular Products.
(2)Includes Genomics, and Microbiome and Novosanis Products.product revenues.
(3)Other non-productIncludes substance abuse testing products.
(4)Non-product and services revenues include funded research and development contracts, royalty income and grant revenues.
Revenues by geographic area. The following table represents total net revenues by geographic area, based on the location of the customer:customer (in thousands):
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
United States | United States | $ | 73,871 | | | $ | 70,320 | | | $ | 218,890 | | | $ | 128,307 | |
Europe | Europe | 2,453 | | | 2,436 | | | 4,305 | | | 6,722 | |
Other regions | Other regions | 9,117 | | | 7,475 | | | 17,209 | | | 12,909 | |
| $ | 85,441 | | | $ | 80,231 | | | $ | 240,404 | | | $ | 147,938 | |
| | | | | $ | |
Customer and Vendor Concentrations. At June 30, 2023,March 31, 2024, one non-commercial customer accounted for 47%29% of the Company's consolidated accounts receivable. The same non-commercial customer accounted for more than 57%40% of the Company's consolidated accounts receivable as of December 31, 2022.2023. The same non-commercial customer also accounted for 56% of net consolidated revenues for both the three months ended June 30, 202340% and 2022, respectively. The same non-commercial customer also accounted for 70% and 39%78% of net consolidated revenues for the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively.
The Company currently purchases certain products and critical components of its products from sole-supply vendors. If these vendors are unable or unwilling to supply the required components and products, the Company could be subject to increased costs and substantial delays in the delivery of its products to its customers. Third-party suppliers also manufacture certain products. The Company's inability to have a timely supply of any of these components and products could have a material adverse effect on its business, as well as its financial condition and results of operations.
Deferred Revenue. The Company records deferred revenue when funds are received prior to the recognition of the associated revenue. Deferred revenue as of June 30, 2023March 31, 2024 and December 31, 20222023 included customer prepayments of $1,285$1.3 million and $1,533,$1.2 million, respectively. Deferred revenue as of June 30, 2023March 31, 2024 and December 31, 20222023 also included $556$0.3 million and $740,$0.4 million, respectively, associated with a long-term contract that has variable pricing based on volume. The average price over the life of the contract was determined and revenue is recognized at that average price. Deferred revenue recognized for the three months ended March 31, 2024, and 2023, was $0.7 million and $0.9 million, respectively.
8. Income Taxes
The components of income tax expense (benefits)(benefit) are as follows:follows (in thousands):
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
State income tax expense (benefit) | State income tax expense (benefit) | $ | 1,481 | | | $ | 183 | | | $ | 1,257 | | | $ | 400 | |
Foreign income tax expense (benefit) | Foreign income tax expense (benefit) | (1,648) | | | (1,352) | | | (1,648) | | | 665 | |
Foreign withholding tax | Foreign withholding tax | — | | | — | | | — | | | 1,702 | |
| $ | (166) | | | $ | (1,169) | | | $ | (391) | | | $ | 2,767 | |
| | | | | $ | |
During the three months ended March 31, 2024 and 2023, the Company recorded an income tax benefit of $0.0 million and $0.2 million, respectively. The income tax benefit for the three months ended March 31, 2024and 2023 is primarily composed of a U.S. state tax benefit.
Income taxes for the first six months of 2022 includes $1,702 of Canadian withholding tax on the repatriation of $65,000 of unremitted earnings from Canada to the United States. The increase in state tax expense in 2023 compared to 2022 is a result of the increase in projected income before taxes to be generated by the Company's U.S. operations. Conversely, the increase in foreign tax benefit in 2023 compared to 2022 is a result of the decrease in projected income before taxes expected to be generated by the Company's Canadian subsidiary.
Tax expense reflects taxes due to the taxing authorities and the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting and tax purposes, and net operating loss and tax credit carryforwards. The significant components of the Company's total deferred tax assetliability as of June 30, 2023 relate to foreign net operating losses. The significant components of the Company's total deferred tax liabilityMarch 31, 2024 and at December 31, 20222023 relate to the tax effects of the basis difference between the intangible assets acquired in its acquisitions for financial reporting and for tax purposes along with basis differences arising from accelerated tax depreciation of fixed assets.
A valuation allowance is recorded to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized. A full valuation allowance was recorded on the Company’s U.S. deferred tax assets as of June 30, 2023March 31, 2024 and December 31, 2022.2023.
9. Income (Loss) Per Share
Basic income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed in a manner similar to basic earnings (loss) per share except that the weighted-average number of shares outstanding is increased to include incremental shares from the assumed vesting or exercise of dilutive securities, such as common stock options, unvested restricted stock or performance stock units, unless the impact is antidilutive. The number of incremental shares is calculated by assuming that outstanding stock options were exercised and unvested restricted shares and performance stock units were vested, and the proceeds from such exercises or vesting were used to acquire shares of common stock at the average market price during the reporting period. Basic and dilutive computations of net loss per share are the same in periods in which a net loss exists as the dilutive effects of excluded items would be anti-dilutive.
For the three months ended June 30,March 31, 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,697 shares, were excluded from the computation of diluted loss per share. For the three months ended March 31, 2023 outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 9662,237 shares, were excluded from the computation of diluted loss per share. For the six months ended June 30, 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 2,030 sharesrespectively, were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive.
would have been anti-dilutive. For the three and six months ended June 30, 2022, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 226 and 381 shares, respectively, were excluded from the computation of diluted loss per share.
10. Stockholders’ Equity
Reconciliation of the changes in stockholder'sstockholders' equity for the three and six months ended June 30,March 31, 2024 and 2023 and 2022. :
| | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| Shares | | Amount | |
Balance at December 31, 2022 | 72,734 | | $ | — | | | $ | 520,446 | | | $ | (18,435) | | | $ | (137,586) | | | $ | 364,425 | |
| Common Stock | | | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| Shares | |
Balance at December 31, 2023 | |
Balance at December 31, 2023 | |
Balance at December 31, 2023 | |
Common stock issued upon exercise of options | Common stock issued upon exercise of options | 12 | | — | | | 66 | | | — | | | — | | | 66 | |
Vesting of restricted stock and performance stock units | 737 | | — | | | — | | | — | | | — | | | — | |
Purchase and retirement of common shares | (229) | | — | | | (1,203) | | | — | | | — | | | (1,203) | |
Stock-based compensation | — | | — | | | 2,655 | | | — | | | — | | | 2,655 | |
Net income | — | | — | | | — | | | — | | | 27,219 | | | 27,219 | |
Currency translation adjustments | — | | — | | | — | | | 797 | | | — | | | 797 | |
Unrealized gain on marketable securities | — | | — | | | — | | | 220 | | | — | | | 220 | |
Balance at March 31, 2023 | 73,254 | | $ | — | | | $ | 521,964 | | | $ | (17,418) | | | $ | (110,367) | | | $ | 394,179 | |
| Vesting of restricted stock and performance stock units | Vesting of restricted stock and performance stock units | 241 | | — | | | — | | | — | | | — | | | — | |
Purchase and retirement of common shares | Purchase and retirement of common shares | (82) | | — | | | (460) | | | — | | | — | | | (460) | |
Stock-based compensation | Stock-based compensation | — | | — | | | 2,357 | | | — | | | — | | | 2,357 | |
Net loss | Net loss | — | | — | | | — | | | — | | | (4,796) | | | (4,796) | |
Currency translation adjustments | Currency translation adjustments | — | | — | | | — | | | 2,859 | | | — | | | 2,859 | |
Unrealized gain on marketable securities | |
Balance at March 31, 2024 | |
| Balance at June 30, 2023 | 73,413 | | $ | — | | | $ | 523,861 | | | $ | (14,559) | | | $ | (115,163) | | | $ | 394,139 | |
|
| | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| Shares | | Amount | |
Balance at December 31, 2021 | 72,069 | | $ | — | | | $ | 511,063 | | | $ | (10,077) | | | $ | (120,453) | | | $ | 380,533 | |
| Common Stock | | | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| Shares | |
Balance at December 31, 2022 | |
Balance at December 31, 2022 | |
Balance at December 31, 2022 | |
Common stock issued upon exercise of options | Common stock issued upon exercise of options | 2 | | — | | | 15 | | | — | | | — | | | 15 | |
Vesting of restricted stock and performance stock units | Vesting of restricted stock and performance stock units | 352 | | — | | | — | | | — | | | — | | | — | |
Purchase and retirement of common shares | Purchase and retirement of common shares | (116) | | — | | | (1,049) | | | — | | | — | | | (1,049) | |
Stock-based compensation | Stock-based compensation | — | | — | | | 3,524 | | | — | | | — | | | 3,524 | |
Net loss | — | | — | | | — | | | — | | | (19,940) | | | (19,940) | |
Net income | |
Currency translation adjustments | Currency translation adjustments | — | | — | | | — | | | 1,756 | | | — | | | 1,756 | |
Unrealized gain on marketable securities | Unrealized gain on marketable securities | — | | — | | | — | | | 74 | | | — | | | 74 | |
Balance at March 31, 2022 | 72,307 | | $ | — | | | $ | 513,553 | | | $ | (8,247) | | | $ | (140,393) | | | $ | 364,913 | |
Common stock issued upon exercise of options | 407 | | — | | | — | | | — | | | — | | | — | |
Vesting of restricted stock and performance stock units | (142) | | — | | | (905) | | | — | | | — | | | (905) | |
Stock-based compensation | — | | — | | | 3,280 | | | — | | | — | | | 3,280 | |
Net loss | — | | — | | | — | | | — | | | (18,589) | | | (18,589) | |
Currency translation adjustments | — | | — | | | — | | | (4,349) | | | — | | | (4,349) | |
Unrealized gain on marketable securities | — | | — | | | — | | | 82 | | | — | | | 82 | |
Balance at June 30, 2022 | 72,572 | | $ | — | | | $ | 515,928 | | | $ | (12,514) | | | $ | (158,982) | | | $ | 344,432 | |
Balance at March 31, 2023 | |
|
11. Business Segments
The Company is organized on the basis of products and services under a new organizational structure. All products and services reside under the same reporting hierarchy. Historically there was separate management leading the Company's Diagnostics and Molecular Solutions businesses. In February 2023, the Company announced a corporate restructuring to combine the commercial and innovation teams across the Diagnostics and Molecular Solutions segments into one operating segment with sales, marketing, product development and research teams covering all product lines and reporting to a Chief Product Officer. Resources are allocated and performance is assessed on a consolidated basis by our Chief Executive Officer, whom we have determined to be our Chief Operating Decision Maker ("CODM"). The CODM reviews the business based on individual product success. Therefore, our historical reportable segments, Diagnostics and Molecular Solutions are now considered one reportable segment and there will no longer be a distinction between Diagnostics and Molecular Solutions, only the Company holistically.
12. Commitments and Contingencies
Litigation
From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, the outcomes of such actions, either individually or in the aggregate, are not expected to have a material adverse effect on the Company's future financial position or results of operations.
In JuneMarch 2021, the Company filed a complaint against Spectrum Solutions, LLC ("Spectrum") in the United States District Court for the Southern District of California alleging that certain saliva collection devices manufactured and sold by Spectrum infringe a patent held by DNAG. Spectrum has filed an answer to the initial complaint, asserting that its device does not infringe the Company's patent and that the Company's patent is invalid. In August 2021, the Company amended its complaint to add a second patent to this litigation. Spectrum responded to the Company's amended complaint and asserted counterclaims for inequitable conduct and antitrust violations with respect to one of the patents in the litigation and subsequently filed a request for review of the second patent at the Patent and Trademark Office ("PTO"), which was granted by the PTO. The District Court issued multiple pretrial orders, resolving the infringement, antitrust, and inequitable
conduct claims without trial. First, the District Court granted Spectrum’s motion for summary judgment of noninfringement, holding that Spectrum’s saliva collection devices are not “kits for collecting and preserving a biological sample,” among other rulings. The Company has appealed the grant of summary judgment to the Court of AppealAppeals on June 8, 2023. The appeal is pending, with oral argument expected in the second half of 2024. Second, the District Court denied Spectrum’s motion to amendsupplement its allegations of alleged antitrust violations, finding that if such an amendment were allowed,
Spectrum’s claims would not survive a motion for summary judgment. Spectrum thereafter withdrew its antitrust and inequitable conduct counterclaims. Spectrum did not appeal the District Court's denial of its motion to amend. Both parties have filed motions seeking sanctionsOn February 7, 2024, the PTO issued a Final Written Decision regarding the second patent in the District Court. Anlitigation, holding that claims 1, 3-8, 11 and 12 of U.S. Patent No. 11,002,646 B2 are unpatentable. On March 8, 2024, the Company filed a Request for Rehearing by the Director of the PTO of the Final Written Decision. On March 27, 2024, the Company's Request for Rehearing was denied. The Company is considering its appellate options. On September 15, 2023, Spectrum filed a separate petition for inter partes review is currently pending beforeof a third patent, which DNAG did not assert in the District Court. On March 26, 2024, the PTO regarding the second asserted patent.issued a Decision Granting Institution of
Inter Partes Review and scheduled oral argument for January 14, 2025.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of ourthe Company's financial condition and results of operations should be read in conjunction with (i) ourthe Company's unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) ourthe Company's audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations included in ourthe Company's Annual Report on Form 10-K for the year ended December 31, 20222023 filed with the Securities and Exchange Commission on March 3, 2023.11, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to ourthe Company's plans and strategy for ourits business and impact and potential impacts on ourits business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including, without limitation, those factors set forth in the “Risk Factors” section of ourthe Company's Annual Report on Form 10-K for the year ended December 31, 20222023 and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q, ourthe Company's actual results or timing of certain events could differ materially from the results or timing described in, or implied by, these forward-looking statements.
Business Overview
OraSure Technologies transforms health through powerful insight by providing access to accurate, essential information. In 2022, our business consisted of two segments: our “Diagnostics” segment, and our “Molecular Solutions” segment. In February 2023, we announced a corporate restructuring to combine the commercial and innovation teams across the two segments into one business unit with sales, marketing, product development, and research teams covering multiple product lines. This change is intended to accelerate innovation, enhance customer experience and result in operational synergies.
The Company's business consists of the development, manufacture, marketing and sale of simple, easy to use diagnostic products and specimen collection devices using the Company's proprietary technologies, as well as other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types. The Company's diagnosticThese products includesinclude tests for diseases including COVID-19, HIV and Hepatitis C that are performed on a rapid basis at the point of care, and tests for drugs of abuse that are processed in a laboratory. These products are sold in the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations, and other public health organizations, distributors, government agencies, physicians’ offices, and commercial and industrial entities. The Company's COVID-19 and HIV products are also sold in a consumer-friendly format in the over-the-counter (“OTC”) market in the U.S. and, in the case of the HIV product, as a self-test to individuals in a number of other countries.countries, including as an oral swab in-home test for HIV-1 and HIV-2 in Europe.
The Company's business also includes molecular collection kitssample management solutions and services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers. TheseThe revenues from sample management solutions are derived from product sales to commercial customers and sales into the academic and research markets. Customers span the disease risk management, diagnostics, pharmaceutical, biotech, companion animal and environmental markets. The Company has also developed collection devices for the emerging microbiome market, which focuses on studying microbiomes and their effect on human and animal health. The Company also has a urine collection device which allows for the volumetric collection of first void urine. This product is in its early stages, and initial sales are occurring primarily through distributors and collaborations in the liquid biopsy and sexually transmitted disease markets. Additionally, the Company offers laboratory and analyticalbioinformatics services for both genomics and microbiome customers to more fully meet their needs.customers. These services are primarily provided to pharmaceutical, biotech companies, and research institutions.
Recent Developments
Novosanis
During the three months ended March 31, 2024, the Company made a strategic decision to commence wind-down of its operations at its Novosanis subsidiary located in Belgium. The Company intends to continue to sell and manufacture its Colli-Pee® product under the DNAG product line of collection devices. In addition, during the three months ended March 31, 2024, the Company initiated steps to wind down and exit the molecular services business offered by its Diversigen subsidiary while providing transition continuity for clients. This business contributed $0.9 million to revenues during the three months ended March 31, 2024 and contributed $4.5 million for the full year of 2023.
Sapphiros
In January 2024, the Company announced that it is leading the Series B financing and have entered wide-ranging strategic distribution agreements with KKR Sapphiros L.P. ("Sapphiros"), a privately held consumer diagnostics portfolio company based in Boston, and certain of its related entities. Through this strategic relationship, the Company expects to be able to
offer a more comprehensive range of low-cost diagnostic tests and molecular sample management solutions to the Company's customers globally.
The Company has funded approximately $28.3 million an interest in Sapphiros, with an aggregate commitment of up to $30.0 million to be funded by June 2024, contingent on certain terms and conditions being met.
Results of Operations
ThreeFor the three months ended June 30, 2023March 31, 2024 compared to June 30, 2022.March 31, 2023.
CONSOLIDATED NET REVENUES
The table below shows an outline of total consolidated net revenues (dollars in thousands) for the three months ended June 30, 2023March 31, 2024 and June 30, 2022:2023:
| | Three Months Ended June 30, |
| Dollars | | % Change | | Percentage of Total Net Revenues |
| 2023 | | 2022 | | 2023 | | 2022 |
| Three Months Ended March 31, | | | Three Months Ended March 31, |
| Dollars | | | Dollars | | % Change | | Percentage of Total Net Revenues |
| 2024 | | | 2024 | | 2023 | | | 2024 | | 2023 |
COVID-19 Diagnostics | COVID-19 Diagnostics | $ | 47,477 | | | $ | 43,114 | | | 10 | % | | 56 | % | | 54 | % | COVID-19 Diagnostics | $ | 23,097 | | | $ | | $ | 118,254 | | | (80) | | (80) | % | | 43 | % | | 76 | % |
Diagnostics (1) | Diagnostics (1) | 19,834 | | | 14,048 | | | 41 | | | 23 | | | 18 | |
Molecular Products | 13,050 | | | 17,581 | | | (26) | | | 15 | | | 22 | |
Other products and services (2) | 2,993 | | | 2,956 | | | 1 | | | 4 | | | 4 | |
Molecular Sample Management Solutions (2) | |
Other products and services (3) | |
Molecular Services | Molecular Services | 1,354 | | | 1,204 | | | 12 | | | 2 | | | 2 | |
COVID-19 Molecular Products | COVID-19 Molecular Products | 30 | | | 264 | | | (89) | | | — | | | — | |
Net product and services revenues | Net product and services revenues | 84,738 | | | 79,167 | | | 7 | | | 99 | | | 99 | |
Non-product and services revenues | 703 | | | 1,064 | | | (34) | | | 1 | | | 1 | |
Non-product and services revenues (4) | |
Net revenues | Net revenues | $ | 85,441 | | | $ | 80,231 | | | 6 | % | | 100 | % | | 100 | % | Net revenues | $ | 54,132 | | | $ | | $ | 154,963 | | | (65) | | (65) | % | | 100 | % | | 100 | % |
(1)Includes HIV and HCV product revenues.
(2)Includes Genomics, Microbiome and Novosanis product revenues.
(3)Includes Risk assessment testing and other product and services revenues.
(4)Non-product and services revenues include funded research and development contracts, royalty income and grant revenues.
Product and Services Revenues
Consolidated net revenues increased 6%decreased 65% to $85.4$54.1 million for the three months ended June 30, 2023March 31, 2024 from $80.2$155.0 million for the three months ended June 30, 2022.March 31, 2023.
COVID-19 Diagnostics revenues increaseddecreased by 10%80% to $47.5$23.1 million for the three months ended June 30, 2023March 31, 2024 compared to $43.1$118.3 million in three months ended June 30, 2022March 31, 2023 due to increaseddecreased sales of the Company's InteliSwab® tests through its U.S. government procurement contracts. We expect this decline in revenue to continue throughout 2024 due to the fulfillment of these contracts and lower overall demand for COVID-19 testing.
Sales of the Company's Diagnostics products increased 41%decreased 4% to $19.8$16.4 million for the three months ended June 30, 2023March 31, 2024 from $14.0$17.1 million for the three months ended June 30, 2022.March 31, 2023. This increasedecrease in revenues was primarily driven by higher sales of the Company's OraQuick® In-Home HIV tests in support of the CDC's "Together Take Me Home" HIV self-test program which commenced during the first quarter of 2023, and higher sales of the Company's OraQuick® HIV Self-Test in international markets due to customer ordering patterns.
Molecular ProductsSample Management Solutions revenues decreased 26%16% to $13.1$10.8 million for the three months ended June 30, 2023March 31, 2024 from $17.6$12.9 million for the three months ended June 30, 2022.March 31, 2023. Sales of the Company's Molecular Products are being impacted by macro-economic factorsreduced consumer demand for products in which our genomics collection devices are used, economic pressures and reduction on funding for programs in which our collection devices are used, and the overall decline in the markets in which its customers operate and as a result one of the Company's largest customers scaled down purchasing after they reorganized their business in the second half of 2022.microbiome market.
Other products and services revenues remained flat at $3.0decreased 17% to $2.6 million for the three months ended June 30, 2023 and 2022.
Molecular Services revenues, which are largely derivedMarch 31, 2024 from the Company's laboratory services, increased 12% to $1.4$3.1 million for the three months ended June 30, 2023 from $1.2 million for the three months ended June 30, 2022. The increase in services revenues was largely due to the timing of work performed for certain clinical studies.
Sales of the Company's COVID-19 Molecular Products collection kits decreased by 89% to $30.0 thousand for the three months ended June 30, 2023 from $0.3 million for the three months ended June 30, 2022 due to decline in demand for COVID PCR testing given the availability of rapid antigen tests.March 31, 2023.
Non-productMolecular Services revenues, which are derived from the Company's microbiome molecular sequencing services, decreased 37% to $0.9 million for the three months ended March 31, 2024 from $1.4 million for the three months ended March 31, 2023. The decrease in services revenues was largely due to discontinuance of customer's clinical trial projects.
Non-Product and Services Revenues
Non-product and services revenues decreased 34%83% to $0.7$0.4 million for the three months ended June 30, 2023March 31, 2024 from $1.1$2.0 million for the three months ended June 30, 2022March 31, 2023 as a result lower funding for research and development activities largely as a result of lower royalty income.the end of our agreement with Biomedical Advanced Research Authority ("BARDA") which provided funding to obtain clearance of a premarket notification ("510(k)") and Clinical Laboratory Improvement Amendments of 1988 ("CLIA") waiver of our InteliSwab® tests. The Company has communicated to BARDA that it does not intend to pursue further development of this clearance.
CONSOLIDATED OPERATING RESULTS
Consolidated gross profit margin decreasedincreased to 31%44.5% for the three months ended June 30, 2023March 31, 2024 from 35%42.5% for the three months ended June 30, 2022.March 31, 2023. This declineincrease in margins was driven by $7.0 million of accelerated depreciation recordedincreased average selling price on InteliSwab® sales and lower scrap expense. These improvement in the quarter associated with the wind-down of InteliSwab® manual assembly in Thailand as we on-shore and automate manufacturing of this product at our Pennsylvania facilities. This negative impact to margins waswere partially offset by a cost savings associated with the InteliSwab® packaging redesign, reductiondecrease in scrap expense and lower freight costs.non-product revenues which contribute 100% to gross margin.
Consolidated operating loss for the three months ended June 30, 2023March 31, 2024 was $6.4$7.1 million, a $15.0$31.4 million improvementdecline from the $21.5$24.3 million operating lossincome reported for the three months ended June 30, 2022.March 31, 2023. Results for the three months ended June 30, 2023March 31, 2024 were positivelynegatively impacted by reducedlower revenues and higher impairment losses offset by increased gross profit margins and lower operating expense and lower impairment losses.spend. Results for the three months ended June 30, 2022March 31, 2024 included $10.5$3.3 million of impairment losses compared to $0.2$1.1 million for the three months ended June 30,March 31, 2023. Impairment losses in the first quarter of 2024 were comprised of the impairment of Novosanis and Diversigen property plant and equipment, including leased assets while impairment losses in 2023 were associated with idle manufacturing lines.
Operating expenses in the secondfirst quarter of 2023,2024, excluding the impairment charge, decreased $6.1$12.6 million compared to the secondfirst quarter of 20222023 reflecting the impact of ourthe Company's cost saving measures and headcount reductions.
Research and development expenses decreased 19%27% to $7.7 million for the three months ended June 30, 2023March 31, 2024 from $9.5$10.6 million for the three months ended June 30, 2022March 31, 2023 largely due to a decrease in employee costs associated with a reduction in headcount, decrease in spend on COVID-19 product development, and lowerno related project management fees for our $109 million manufacturing support costs.expansion contract which ended during the fourth quarter of 2023.
Sales and marketing expenses decreased 27%30% to $8.5$8.4 million for the three months ended June 30, 2023March 31, 2024 from $11.7$12.1 million for the three months ended June 30, 2022March 31, 2023 due to lower employee costs associated with a decrease in headcount, lowerand decreased spend on advertising marketing and sales meeting spend, and a decrease in our reserve for expected credit losses.consulting fees.
General and administrative expenses decreased 7%34% to $16.4$11.6 million for the three months ended June 30, 2023March 31, 2024 from $17.6$17.7 million for the three months ended June 30, 2022March 31, 2023 largely due to lower severancelegal fees and accelerated stock compensation expense associated with our former general counsel's employment and termination agreements,lower staffing costs due to a decreasereduction in headcount, lower consulting fees associated with project management of our $109 million manufacturing expansion contract, lower board of director fees associated with less board members and a decrease in accounting and recruitment fees. These decreases in expense were partially offset by increased legal fees.headcount.
All of the above contributed to the Company's operating loss of $6.4$7.1 million for the three months ended June 30, 2023,March 31, 2024, which included a non-cash impairment charge of $0.2$3.3 million, non-cash charges of $10.3$2.7 million for depreciation and amortization, and $2.4non-cash charges of $3.0 million for stock-based compensation. The Company's operating lossincome of $21.5$24.3 million for the three months ended June 30, 2022March 31, 2023 included a non-cash impairment charge of $10.5$1.1 million, non-cash charges of $3.8$3.7 million for depreciation and amortization, and $3.3$2.7 million for stock-based compensation.
OTHER INCOME
Other income for the three months ended June 30, 2023March 31, 2024 was $1.5$3.5 million compared to $1.7$2.7 million for the three months ended June 30, 2022.March 31, 2023. This decreaseincrease is largely due to higher foreign currency losses offset by higher interest income.
CONSOLIDATED INCOME TAXES
The Company continues to believe the full valuation allowance established against its total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. For the three months ended June 30,March 31, 2024 and 2023, the Company recorded a U.S. state income tax benefit of $0.2 million. For the three months ended March 31, 2024 the state tax benefit was partially offset by foreign tax expense of $1.5 million compared to $0.2 millionmillion. No foreign taxes were recorded for the three months ended June 30, 2022 andMarch 31, 2023 due to it being more likely than not that the Canadian subsidiary would not produce sufficient income to receive a foreign tax benefit of $1.6 million for the three months ended June 30, 2023 comparedyear to $1.4 million expense for the three months ended June 30, 2022. U.S. tax expense is higher due to increased projected earnings while decreased foreign earnings resulted in the foreign tax benefit.
Results of Operations
Six months ended June 30, 2023 compared to June 30, 2022.
CONSOLIDATED NET REVENUES
The table below shows an outline of total consolidated net revenues (dollars in thousands) for the six months ended June 30, 2023 and June 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| Dollars | | % Change | | Percentage of Total Net Revenues |
| 2023 | | 2022 | | | 2023 | | 2022 |
COVID-19 Diagnostics | $ | 165,731 | | | $ | 65,250 | | | 154 | % | | 69 | % | | 44 | % |
Diagnostics (1) | 36,924 | | | 25,471 | | | 45 | | | 16 | | | 17 | |
Molecular Products | 25,992 | | | 35,514 | | | (27) | | | 11 | | | 24 | |
Other products and services (2) | 6,087 | | | 6,069 | | | — | | | 3 | | | 4 | |
Molecular Services | 2,733 | | | 2,938 | | | (7) | | | 1 | | | 2 | |
COVID-19 Molecular Products | 185 | | | 9,161 | | | (98) | | | — | | | 6 | |
Net product and services revenues | 237,652 | | | 144,403 | | | 65 | | | 99 | | | 98 | |
Non-product and services revenues | 2,752 | | | 3,535 | | | (22) | | | 1 | | | 2 | |
Net revenues | $ | 240,404 | | | $ | 147,938 | | | 63 | % | | 100 | % | | 100 | % |
(1)Includes HIV and HCV product revenues.
(2)Includes Risk assessment testing and other product and services revenues.
Product and Services Revenues
Consolidated net product and services revenues increased 63% to $240.4 million for the six months ended June 30, 2023 from $147.9 million for the six months ended June 30, 2022. The Company expects total net product and services revenues for the second half of 2023 to be lower than the first half of 2023 as demand for its COVID-19 Diagnostic product has declined from the levels experienced in the first quarter of 2023 and the second half of 2022.
COVID-19 Diagnostics revenues increased by 154% to $165.7 million for the six months ended June 30, 2023 compared to $65.3 million for the six months ended June 30, 2022 due to increased sales of the Company's InteliSwab® tests through its government procurement contracts.
Sales of the Company's Diagnostics products increased 45% to $36.9 million for the six months ended June 30, 2023 from $25.5 million for the six months ended June 30, 2022. This increase in revenues was primarily driven by higher sales of the Company's OraQuick® In-Home HIV tests in support of the CDC's "Together Take Me Home" HIV self-test program which commenced during the first quarter of 2023, and higher sales of the Company's OraQuick® HIV Self-Test in international markets due to customer ordering patterns.
Molecular Products revenues decreased 27% to $26.0 million for the six months ended June 30, 2023 from $35.5 million for the six months ended June 30, 2022. Sales of the Company's Molecular Products are being impacted by macro-economic factors in the markets in which its customers operate. One of the Company's largest customers scaled down purchasing after they reorganized their business in the second half of 2022 and certain other customers placed large orders in the first half of 2022 that have not been repeated in the six months ending June 30, 2023. Furthermore revenues are impacted by customer ordering patterns whereby customers purchased at the end of 2022 and did not require further inventory in the first half of 2023.
Other products and services revenues were largely flat at $6.1 million for the six months ended June 30, 2023 and 2022.
Molecular Services revenues, which are largely derived from the Company's laboratory services, decreased 7% to $2.7 million for the six months ended June 30, 2023 from $2.9 million for the six months ended June 30, 2022. The decline in services revenues was the direct result of loss of two customers in 2022. One customer ceased operations in 2022 and the
other deprioritized microbiome studies. These decreases were offset by higher revenues generated by certain customer contracts due to the timing of work performed for certain clinical studies.
Sales of the Company's COVID-19 Molecular Products collection kits decreased significantly by 98% to $0.2 million for the six months ended June 30, 2023 from $9.2 million for the six months ended June 30, 2022 due to decline in demand for COVID PCR testing given the availability of rapid antigen tests.
Non-product and services revenues decreased 22% to $2.8 million for the six months ended June 30, 2023 from $3.5 million for the six months ended June 30, 2022 as a result of lower royalty income.
CONSOLIDATED OPERATING RESULTS
Consolidated gross profit margin increased to 38% for the six months ended June 30, 2023 from 35% for the six months ended June 30, 2022. This improvement in margins was driven by InteliSwab® sales which generated higher margins due to reduced costs associated with the correction of manufacturing inefficiencies which occurred during the first quarter of 2022, a packaging change implemented during the first quarter of 2023, and lower freight charges. Lower scrap expense in the first half of 2023 compared to the first half of 2022 also contributed to the margins improvement. These improved margins were partially offset by $7.0 million of accelerated depreciation recorded in the second quarter of 2023 associated with the wind-down of InteliSwab® manual assembly in Thailand as we on-shore and automate the manufacturing of this product at our Pennsylvania facilities and lower COVID-19 Molecular Products revenue which historically generated higher margins.
Consolidated operating income for the six months ended June 30, 2023 was $17.9 million, a $55.5 million increase from the $37.6 million operating loss reported for the six months ended June 30, 2022. Results for the six months ended June 30, 2023 were positively impacted by the increase in revenues and gross margins described above and were positively impacted by reduced operating expense and lower impairment losses. Results for the six months ended June 30, 2022 included $10.5 million of impairment losses compared to $1.3 million for the six months ended June 30, 2023.
Operating expenses in the six months ended June 30, 2023, excluding the impairment charge, decreased $6.2 million compared to the first half of 2022. Research and development expenses increased to $18.2 million for the six months ended June 30, 2023 from $18.1 million for the six months ended June 30, 2022.
Sales and marketing expenses decreased 15% to $20.7 million for the six months ended June 30, 2023 from $24.4 million for the six months ended June 30, 2022 due to a decrease in our reserve for expected credit losses and lower advertising, marketing, sales meeting, and consulting spend.
General and administrative expenses decreased 7% to $34.1 million for the six months ended June 30, 2023 from $36.7 million for the six months ended June 30, 2022 largely due to lower severance and stock compensation expense and recruitment fees. In the first half of 2022, the Company incurred high severance and stock compensation expense associated with the accelerated vesting of shares under our former CEO's and general counsel's employment agreements and higher recruitment expense associated with the new CEO search. Also contributing to the decrease in expense was lower consulting fees, lower board of director fees, due to fewer board members, and lower sales tax penalties. These decreases in expense were partially offset by increased legal fees.
All of the above contributed to the Company's operating income of $17.9 million for the six months ended June 30, 2023, which included a non-cash impairment charge of $1.3 million largely related to equipment that will no longer be used in production, non-cash charges of $14.0 million for depreciation and amortization, and $5.0 million for stock-based compensation. The Company's operating loss of $37.6 million for the six months ended June 30, 2022 included a non-cash impairment charge of $10.5 million, non-cash charges of $7.5 million for depreciation and amortization, and $6.8 million for stock-based compensation.
OTHER INCOME
Other income for the six months ended June 30, 2023 was $4.1 million compared to $1.9 million for the six months ended June 30, 2022. This increase is largely due to higher interest income and higher reimbursement of costs incurred under our DOD expansion contract which are presented in research and development expenses.
CONSOLIDATED INCOME TAXES
The Company continues to believe the full valuation allowance established against its total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. For the six months ended June 30, 2023, the Company recorded U.S. state tax expense of $1.3 million compared to $0.4 million for the six months ended June 30, 2022 and a foreign tax benefit of $1.6 million for the six months ended June 30, 2023 compared to foreign tax expense of $0.7 million for the six months ended June 30, 2022. The 2022 foreign tax expense is also comprised of $1.7 million of withholding taxes associated with our repatriation of $65.0 million of cash from Canada to the United States. The 2023 U.S. state tax expense is higher due to higher expected US earnings while foreign income tax expense is lower due to lower expected foreign earnings.
date loss.
Liquidity and Capital Resources
| | June 30, 2023 | | December 31, 2022 |
| | (In thousands) |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| (in thousands) | | | (in thousands) |
Cash and cash equivalents | Cash and cash equivalents | $ | 185,936 | | | $ | 83,980 | |
Available-for-sale securities | — | | | 26,867 | |
Short-term investments | |
Working capital | Working capital | 295,147 | | | 256,127 | |
The Company's cash and cash equivalents and available-for-sale securities increasedshort-term investments decreased to $185.9$263.8 million at June 30, 2023March 31, 2024 from $110.8$290.4 million at December 31, 2022. $72.12023. $84.5 million or 39%32% of the $185.9$263.8 million in cash and cash equivalents and short-term investments is held by DNAG, the Company's Canadian subsidiary. In 2022, the Company repatriated $65.0 million of cash into the United States and incurred $1.7 million of Canadian withholding tax. Further repatriation of cash from Canada into the United States could have additional adverse tax consequences. It is still the Company's intention going forward to continue to permanently reinvest the historical undistributed earnings of our foreign subsidiaries.
The Company's working capital increaseddecreased to $295.1$319.4 million at June 30, 2023March 31, 2024 from $256.1$346.9 million at December 31, 2022.2023. Working capital increaseddecreased primarily due to the increasedecrease in cash and cash equivalents and lower accounts payable balances.equivalents. Working capital is primarily a function of sales, purchase volumes, inventory requirements, and vendor payment terms.
Analysis of Ourthe Company's Cash Flows
Operating Activities
During the sixthree months ended June 30, 2023,March 31, 2024, net cash provided by operating activities was $63.3$6.7 million. Cash flows from operations can be significantly impacted by factors such as timing of receipt from customers, inventory purchases, and payments to vendors. The Company's net incomeloss of $22.4$3.6 million included non-cash charges of depreciation and amortization expense of $14.0$2.7 million, stock-based compensation expense of $5.0 million, impairment charges taken for idle equipment of $1.3$3.0 million, and a non-cash deferred tax benefitimpairment losses of $1.8$3.3 million. Cash provided by the working capital accounts included a decrease in inventory of $22.6 million as we fulfilled demand for our InteliSwab® product in the first half of the year, a decrease in accounts receivable of $18.7$6.2 million largely associated with lower overall sales and collections of moniesbalances due, from the U.S. government for InteliSwab®shipments, a $5.5 million decrease in prepaid and other assetsinventory of $4.3 million as the Company received payment offulfilled demand for its Employee Retention Credit filed for in 2021. Offsetting these increases in cash is a decrease in accounts payable of $22.2 millionInteliSwab® product, and a decrease in accrued expenses of $1.3 million.$9.7 million as the Company paid out year end bonuses in March 2024.
Investing Activities
Net cash provided byused in investing activities was $38.2$46.5 million for the sixthree months ended June 30, 2023,March 31, 2024, which reflects proceeds from the maturities of investments of $27.3$9.2 million, $17.8offset by $25.9 million in reimbursement received under our $109purchases of investments. Investing activities also include a $28.3 million contract with the U.S. government offset by $4.0 million to build additional manufacturing capacity as required by the contract,investment in Sapphiros, and $2.9$1.6 million to acquire property and equipment to support the normal operations of the business.
Financing Activities
Net cash used in financing activities was $2.0$1.3 million for the sixthree months ended June 30, 2023,March 31, 2024, which is largely comprised of $1.7$1.5 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted shares awarded to the Company's employees.
Resources
The Company expects existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements over the next twelve months. The Company's cash requirements, however, may vary materially from those now planned due to many factors, including, but not limited to, the timing of reimbursement under its $109 million DOD contract, the scope and timing of future strategic acquisitions, the progress of its research and development programs, the scope and results of clinical testing, the cost of any future litigation, the magnitude of capital expenditures, changes in existing and potential relationships with business partners, the timing and cost of obtaining regulatory approvals, the timing and cost of future stock purchases, the costs
involved in obtaining and enforcing patents, proprietary rights and any necessary licenses, the cost and timing of expansion of sales and marketing activities, market acceptance of new products, competing technological and market developments, the impact of the current economic environment and other factors.
A summary of the Company's obligations to make future payments under contracts existing at December 31, 20222023 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of its Annual Report on Form 10-K for the year ended December 31, 2022.2023. As of June 30, 2023,March 31, 2024, there were no significant changes to this information.
Critical Accounting Policies and Estimates
A more detailed review of the Company's critical accounting policies is contained in its Annual Report on Form 10-K for the year ended December 31, 20222023 filed with the SEC. No material changes have been made to such critical accounting policies during the sixthree months ended June 30, 2023.
March 31, 2024.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the Company's assessment of its sensitivity to market risk since its presentation set forth in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," in its Annual Report on Form 10-K for the year ended December 31, 2022.2023.
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of June 30, 2023.March 31, 2024. Based on that evaluation, the Company’s management, including such officers, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2023March 31, 2024 to provide reasonable assurance that material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 was accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and was recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
(b) Changes in Internal Control Over Financial Reporting. There was no change in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2023March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, based upon the advice of counsel, the outcomes of such actions are not expected, individually or in the aggregate, to have a material adverse effect on the Company's future financial position or results of operations.
Spectrum Patent Litigation
In JuneMarch 2021, the Company filed a complaint against Spectrum Solutions, LLC ("Spectrum") in the United States District Court for the Southern District of California alleging that certain saliva collection devices manufactured and sold by Spectrum infringe a patent held by DNAG. Spectrum has filed an answer to the initial complaint, asserting that its device does not infringe the Company's patent and that the Company's patent is invalid. In August 2021, the Company amended its complaint to add a second patent to this litigation. Spectrum responded to the Company's amended complaint and asserted counterclaims for inequitable conduct and antitrust violations with respect to one of the patents in the litigation and subsequently filed a request for review of the second patent at the Patent and Trademark Office ("PTO"), which was granted by the PTO. The District Court issued multiple pretrial orders, resolving the infringement, antitrust, and inequitable conduct claims without trial. First, the District Court granted Spectrum’s motion for summary judgment of noninfringement, holding that Spectrum’s saliva collection devices are not “kits for collecting and preserving a biological sample,” among other rulings. The Company has appealed the grant of summary judgment to the Court of AppealAppeals on June 8, 2023. The appeal is pending, with oral argument expected in the second half of 2024. Second, the District Court denied Spectrum’s motion to amendsupplement its allegations of alleged antitrust violations, finding that if such an amendment were allowed, Spectrum’s claims would not survive a motion for summary judgment. Spectrum thereafter withdrew its antitrust and inequitable conduct counterclaims. Spectrum did not appeal the District Court's denial of its motion to amend. Both parties have filed motions seeking sanctionsOn February 7, 2024, the PTO issued a Final Written Decision regarding the second patent in the District Court. Anlitigation, holding that claims 1, 3-8, 11 and 12 of U.S. Patent No. 11,002,646 B2 are unpatentable. On March 8, 2024, the Company filed a Request for Rehearing by the Director of the PTO of the Final Written Decision. On March 27, 2024, the Company's Request for Rehearing was denied. The Company is considering its appellate options. On September 15, 2023, Spectrum filed a separate petition for inter partes review is currently pending beforeof a third patent, which DNAG did not assert in the District Court. On March 26, 2024, the PTO regarding the second asserted patent.issued a Decision Granting Institution of Inter Partes Review and scheduled oral argument for January 14, 2025.
Item 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in Item 1A, entitled “Risk Factors,” in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, other than as set forth below.
An Impairment of Goodwill Could Reduce our Earnings.2023.
Throughout the year, we consider whether any events or changes in the business environment have occurred which indicate that goodwill may be impaired. For example, a significant decline in the closing share price of our common stock and market capitalization may suggest that the fair value of our reporting unit has fallen below its carrying amount, indicating that an interim goodwill impairment test is required. We monitor changes in our stock price during interim periods between annual goodwill impairment tests and consider overall stock market conditions, the underlying reasons for the decline in our stock price, the significance of the decline, and the duration of time that our securities have been trading at a lower value.
While our stock price has experienced volatility, we have experienced a decline in its market capitalization as a result of a decline in our stock price. As of July 31, 2023 our market value was $346.5 million which is below our carrying value. If our stock price remains at such levels or deteriorates, our goodwill may be determined to be impaired and we would record a non-cash impairment charge, which could have a material adverse effect on our consolidated balance sheet, results of operations or our stock price
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total number of shares purchased | | | Average price paid per Share | | Total number of shares purchased as part of publicly announced plans or programs | | Maximum number (or approximate dollar value) of shares that may yet be repurchased under the plans or programs (1, 2) |
April 1, 2023 - April 30, 2023 | | 7,945 | | (3) | | $ | 2.77 | | | — | | | 11,984,720 | |
May 1, 2023 - May 31, 2023 | | 86,825 | | (3) | | $ | 1.96 | | | — | | | 11,984,720 | |
June 1, 2023 - June 30, 2023 | | 64,353 | | (3) | | $ | 4.10 | | | — | | | 11,984,720 | |
| | 159,123 | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total number of shares purchased | | | Average price paid per Share | | Total number of shares purchased as part of publicly announced plans or programs | | Maximum number (or approximate dollar value) of shares that may yet be repurchased under the plans or programs (1, 2) |
January 1, 2024 - January 31, 2024 | | 59,151 | | (3) | | $ | 8.19 | | | — | | | $ | 11,984,720 | |
February 1, 2024 - February 29, 2024 | | 55,620 | | (3) | | $ | 7.40 | | | — | | | $ | 11,984,720 | |
March 1, 2024 - March 31, 2024 | | 78,707 | | (3) | | $ | 7.18 | | | — | | | $ | 11,984,720 | |
| | 193,478 | | | | | — | | |
(1)On August 5, 2008, the Company's Board of Directors approved a share repurchase program pursuant to which the Company is permitted to acquire up to $25.0 million of outstanding shares. This share repurchase program may be discontinued at any time.
(2)This column represents the amount that remains available under the $25.0 million repurchase plan, as of the period indicated. The Company has made no commitment to purchase any shares under this plan.
(3)Pursuant to the OraSure Technologies, Inc. Stock Award Plan, and in connection with the vesting of restricted and performance shares, these shares were retired to satisfy minimum tax withholdings.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. MINE SAFETY DISCLOSURES
Not applicable
Item 5. OTHER INFORMATION
On May 25, 2023, Kathleen Weber, our Chief Product Officer, adopted a trading arrangement (the “Trading Plan”) intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c) with respect to the sale of up to an aggregate of 64,129 shares of our common stock between August 30 and May 17, 2024 pursuant to the terms of the Trading Plan. The Trading Plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider transactions.
The number of shares to be withheld, and thus the exact number of shares to be sold pursuant to Ms. Weber’s Trading Plan, can only be determined upon the occurrence of the future vesting events. For purposes of this disclosure, without subtracting any shares to be withheld upon future vesting events, the aggregate number of shares to be sold pursuant to Ms. Weber’s 10b5-1 Plan is 64,129 shares.None
Item 6. EXHIBITS
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Exhibit Number | | Exhibit |
| | |
10.1** | | Amended and Restated OraSure Technologies, Inc. 2000 Stock Award Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K as filed. |
| | |
31.1* | | |
| | |
31.2* | | |
| | |
32.1*+ | | |
| | |
32.2*+ | | |
| | |
101.INS | | Inline XBRL Instance Document – the Instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
| | |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| | |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| | |
101.LAB | | Inline XBRL Taxonomy Extension Labels Linkbase Document |
| | |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| | |
104 | | Cover Page from Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in exhibits 101). |
______________________
*Filed herewith
**Management contract or compensatory plan or arrangement.
+This certification is deemed not filed for purposes of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | |
| ORASURE TECHNOLOGIES, INC. |
| | |
| | /s/ Kenneth J. McGrath |
Date: August 4, 2023May 9, 2024 | | Kenneth J. McGrath |
| | Chief Financial Officer |
| | (Principal Financial Officer) |
| | |
| | /s/Michele M. Anthony |
Date: August 4, 2023May 9, 2024 | | Michele M. Anthony |
| | Senior Vice President, Controller and Chief Accounting Officer |
| | (Principal Accounting Officer) |