Why Is OPKO Health (OPK) Down 4.2% Since Last Earnings Report?

It has been about a month since the last earnings report for OPKO Health (OPK). Shares have lost about 4.2% in that time frame, outperforming the S&P 500.

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

OPKO Health Q4 Loss Narrower Than Estimates, Sales Up

OPKO Health, Inc. incurred adjusted loss of 6 cents per share in the fourth quarter of 2019, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The company had incurred a loss of 8 cents a year ago.

For 2019, loss per share was 53 cents compared with a loss of 27 cents a year ago. The figure was wider than the Zacks Consensus Estimate of a loss of 43 cents.

Fourth-quarter revenues of this Zacks Rank #3 (Hold) company totaled $224.3 million, which surpassed the Zacks Consensus Estimate by 3.5%. Also, the top line rose 1.1% on a year-over-year basis.

Revenues were $901.9 million, down 8.9%. The metric however outpaced the Zacks Consensus Estimate of $894.4 million.

Segmental Revenues in Q4

Revenues from Services grossed $177.9 million in the reported quarter, down 2.8% year over year.

Revenues from Products rose 26% to $32 million. Per management, revenues from products include $7.4-million contributions from RAYALDEE.

Revenues from Transfer of intellectual property came in at $14.4 million, up 7.5% year over year.

RAYALDEE Update

Per management, total RAYALDEE prescriptions reported by IQVIA improved 89% year over year in the fourth quarter. Further, the open-label Phase 2 trial for RAYALDEE in hemodialysis patients has been progressing and the initial data is anticipated in first-quarter 2020.

Margin Analysis

Gross profit in the reported quarter came in at $82 million, up 13.4% from the prior-year quarter. Gross margin was 36.6% of net revenues, expanding 400 basis points (bps) year over year.

Selling, general and administrative expenses totaled $79.1 million, down 16.8% year over year. Research and development expenses amounted to $23 million, down 30.9% year over year.

Operating loss in the fourth quarter was $112.4 million, noticeably wider than the year-ago quarter’s loss of $76.1 million.

Guidance

OPKO Health did not issue any guidance. Nonetheless, the company estimates revenues from Services between $168 million and $173 million in the first quarter of 2020. For the full year, revenues are expected within $715-$740 million.

Revenues from Products are anticipated in the range of $30-$32 million in the first quarter. This includes revenues from RAYALDEE between $9.3 million and $10.5 million. Full-year revenues are expected between $130 million and $150 million.

Revenues from Transfer of intellectual property are projected in the range of $20-$30 million for 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -16.67% due to these changes.

VGM Scores

Currently, OPKO Health has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

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