OraSure Technologies, Inc. Q3 FY2025 earnings call

• OraSure continues to advance strategic transformation and aims for growth in 2026.
• Q3 total revenue was $27.1 million, core revenue $27.0 million.
• International Diagnostics signed an agreement to acquire BioMedomics, adding Sickle SCAN for sickle cell disease.
• U.S. Diagnostics faces challenges with public health customer staffing and budget uncertainty but sees traction in syndemic approach and nonpublic health markets.
• Sample Management revenues mixed, with Q3 increase but Q4 expected decline, but positioned for growth in 2026.
• Pipeline of innovation includes blood collection tube for proteomics, Colli-Pee urine collection for STI and liquid biopsy, and Sherlock Molecular Diagnostics Rapid Test platform for CT/NG.

Total revenue for Q3 was $27.1 million, with core revenue at $27.0 million. Diagnostic revenue was $14.5 million, representing a significant portion of the total, and Sample Management revenue was $10.3 million. For the full year 2025, International Diagnostics revenue is expected to be in the low to mid-$30 million range, a ~20% decline from 2024. U.S. Diagnostics is expected to generate low to mid-$30 million in revenue, a low single-digit percentage decline from 2024. Sample Management revenue is expected to be in the high $30 million range for the full year, approximately flat compared to 2024 excluding the impact of a large consumer genetics customer.

• Fourth quarter revenue guided to $25 million to $28 million, including less than $100,000 of COVID-19 testing revenues.
• Gross margin percentage in Q4 expected in the low 40% range, slightly lower than Q3 due to seasonality and mix.
• Core operating expenses in Q4 expected at approximately $20 million, plus $10 million in innovation investments, including $7 million to $8 million related to Sherlock.

• Key end markets remain mixed with elevated uncertainty related to funding for public health programs and research, and government shutdowns.
• Dependence on specific customers and potential impact of their ordering patterns on revenue.

Q: Discuss the BioMedomics acquisition and what attracted OraSure to the asset.

A: It's a tuck-in acquisition aligning with international portfolio, targeting underserved markets for rapid diagnostic testing, leveraging OraSure's relationships and distribution to expand Sickle SCAN. Also, expected strong return on invested capital with breakeven cash flow and leveraging existing capabilities.

Q: Highlight puts and takes around gross margins and OpEx.

A: Gross margins in Q3 better than expected due to lower scrap and operational efficiencies. OpEx in line with spend. Q4 gross margin expected lower due to mix, seasonality, and more international revenue mix; core business breakeven with spend on innovation like Sherlock clinical trial submission