OPKO Health(US:OPK)2022-11-07 16:00Revenue Performance - Revenue from services for the three months ended September 30, 2022, decreased by approximately $197.3 million, or 58%, compared to the same period in 2021, primarily due to lower demand for COVID-19 testing [262]. - Total revenues for the three months ended September 30, 2022, were $179.7 million, a decrease of $206.1 million, or 53%, from $385.8 million in the same period in 2021 [262]. - Total revenues for the nine months ended September 30, 2022 decreased by 50% to $616.3 million compared to $1.2 billion in 2021, primarily due to lower demand for COVID-19 testing [289]. - Revenue from services decreased by approximately $628.1 million, with a significant drop in COVID-19 testing revenue contributing $467.9 million to this decline [289]. - Total revenues for Q3 2022 were $36.9 million, down 19% from $45.7 million in Q3 2021, driven by a 12% decline in product revenue and a 49% decrease in revenue from the transfer of intellectual property [272]. Cost and Expenses - Cost of revenue for the three months ended September 30, 2022, decreased by $95.0 million, or 39%, compared to the same period in 2021, attributed to a decline in COVID-19 test volumes [268]. - Selling, general and administrative expenses for the three months ended September 30, 2022, were $57.7 million, down from $83.7 million in the same period in 2021, reflecting cost-reduction initiatives [269]. - Selling, general and administrative expenses decreased to $231.7 million from $260.9 million, reflecting cost-reduction initiatives and decreased expenses related to the GeneDx Transaction [295]. - Research and development expenses decreased to $10.4 million from $13.5 million, primarily due to the GeneDx Transaction and reduced development of clinical testing services [296]. - Research and development expenses decreased to $1.4 million in Q3 2022 from $5.9 million in Q3 2021, primarily due to reduced clinical services development at BioReference and the GeneDx Transaction [270]. Testing and Clinical Volume - Clinical test volume decreased by $12.3 million for the three months ended September 30, 2022, compared to the same period in 2021 [264]. - BioReference performed 0.2 million molecular tests and 0.1 million serology antibody tests during the three months ended September 30, 2022, compared to 2.2 million molecular tests and 0.2 million serology tests in the same period in 2021 [263]. - Clinical test volume decreased by $21.3 million and clinical test reimbursement fell by $51.7 million due to changes in the mix of testing ordered [290]. Financial Position and Cash Flow - Cash and cash equivalents as of September 30, 2022, were approximately $180.8 million, with cash used in operations amounting to $63.6 million [316]. - As of September 30, 2022, total commitments under the Credit Agreement were $66.3 million, with $21.9 million drawn and a weighted average interest rate of approximately 5.4% [324]. - The company anticipates that cash and cash equivalents, along with available credit, will meet operational and debt service needs beyond the next 12 months, although future cash requirements may vary [329]. - As of September 30, 2022, the total contractual obligations amount to $395.1 million, with $112.8 million due in the remaining three months of 2022 [333]. Regulatory and Compliance - Regulatory applications for Somatrogon (hGH-CTP) have been submitted to several countries, with marketing authorization granted in the European Union and Japan for pediatric patients [251]. - The company entered into a five-year Corporate Integrity Agreement with the Office of Inspector General, effective July 14, 2022, which imposes compliance and auditing requirements [355]. - Non-compliance with the CIA could lead to monetary penalties or exclusion from Federal Health Care Programs, adversely affecting the company's profitability and financial condition [355]. Investment and Other Income - Other income (expense), net for Q3 2022 was $36.7 million, including a $30.6 million expense from the decrease in fair value of the Sema4 investment [284]. - Other income (expense), net for the nine months ended September 30, 2022, was $111.1 million, significantly increasing from an expense of $16.1 million in 2021, largely due to a decrease in the fair value of the Sema4 investment [313]. - Gain on sale of assets for the nine months ended September 30, 2022 was $15.4 million due to the GeneDx Transaction [298]. Debt and Interest - Interest expense decreased to $3.0 million in Q3 2022 from $4.3 million in Q3 2021, primarily due to the adoption of ASU 2020-06 affecting the 2025 Notes [282]. - Interest expense for the nine months ended September 30, 2022, was $8.8 million, down from $14.6 million in 2021, primarily due to the adoption of ASU 2020-06 [311]. - The company has convertible notes totaling $212.4 million, with fixed interest rates of 3%, 5%, and 4.5% for the 2033 Senior Notes, 2023 Convertible Notes, and 2025 Notes respectively [346]. Foreign Exchange and Risk Management - Approximately 22.0% of revenue for the nine months ended September 30, 2022, was denominated in currencies other than the U.S. Dollar, impacting financial results due to exchange rate fluctuations [259]. - The company is exposed to foreign currency exchange risks, primarily with the Chilean Peso, Mexican Peso, and Euro, affecting portions of its revenues [340]. - The company utilizes foreign exchange forward contracts to hedge against foreign currency risks, which helps offset gains and losses from currency fluctuations [342].