OPKO Health(US:OPK)2025-07-31 20:12PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited condensed consolidated financial statements and notes detail its financial position, performance, cash flows, accounting policies, debt, and strategic alliances Condensed Consolidated Financial Statements The company's financial position reflects decreased total assets and revenues, a significantly widened net loss in Q2 2025, and increased cash used in operating activities Condensed Consolidated Balance Sheet Highlights (As of June 30, 2025) | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Cash, cash equivalents and current restricted cash | 271,718 | 431,936 | | Total current assets | 583,333 | 662,089 | | Total assets | 1,972,989 | 2,200,212 | | Total current liabilities | 171,181 | 193,096 | | Total liabilities | 676,085 | 834,764 | | Total shareholders' equity | 1,296,904 | 1,365,448 | Condensed Consolidated Statement of Operations Highlights | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | 156,807 | 182,186 | 306,759 | 355,872 | | Operating loss | (59,981) | (61,670) | (127,148) | (133,143) | | Net loss | (148,441) | (10,305) | (216,054) | (92,141) | | Loss per share, basic and diluted | (0.19) | (0.01) | (0.31) | (0.13) | Condensed Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (117,974) | (62,001) | | Net cash provided by (used in) investing activities | 37,694 | (11,557) | | Net cash (used in) provided by financing activities | (83,511) | 18,498 | | Net decrease in cash, cash equivalents and restricted cash | (160,220) | (55,305) | Notes to Condensed Consolidated Financial Statements Notes detail healthcare operations, oncology diagnostics sale, debt exchanges, strategic alliances, and a material tax assessment contingency - The company entered into an agreement with Labcorp to sell its oncology diagnostics business for up to $225 million, with the transaction expected to close in the second half of 2025, and these assets are now classified as held for sale3233 - In April 2025, the company exchanged $159.2 million of its 2029 Convertible Notes for 121.4 million shares of common stock and $63.5 million in cash, resulting in a total charge of $91.7 million116 - The collaboration with BARDA was expanded, increasing the total contract value to $110.0 million, with a potential value of up to $205 million if all options are exercised, recognizing $13.5 million in revenue for H1 2025187191 - A significant legal contingency exists with the Israel Tax Authority, which issued an assessment of approximately $246 million against a subsidiary, which the company is appealing146 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial results, highlighting revenue decline from divestitures, a widened net loss, and sufficient liquidity for the next 12 months Results of Operations Q2 2025 consolidated revenues decreased 14% due to Diagnostics divestitures, Pharmaceuticals revenue grew 6%, and the net loss significantly widened primarily from increased interest expense Consolidated Results of Operations (Q2 2025 vs. Q2 2024) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $156,807 | $182,186 | $(25,379) | (14)% | | Loss from operations | $(59,981) | $(61,670) | $1,689 | 3% | - Diagnostics segment revenue decreased by 21.9% in Q2 2025, primarily due to the absence of revenue from lab operations sold to Labcorp in September 2024, though its operating loss improved by 32% to $18.2 million due to cost reductions and divestiture245 - Pharmaceuticals segment revenue increased by 6% in Q2 2025, driven by a 22% rise in intellectual property revenue from the BARDA contract and commercial milestones, but operating loss widened by 16% to $28.7 million due to increased R&D expenses252253 - Interest expense for Q2 2025 surged to $70.3 million from $8.2 million in Q2 2024, mainly due to the amortization of $54.7 million in unamortized debt discount and $4.4 million in debt issuance costs from the Note Exchange Transactions261 Liquidity and Capital Resources As of June 30, 2025, the company held $285.4 million in cash, with management deeming liquidity sufficient for over 12 months, supported by asset sales and potential milestones - The company held $285.4 million in cash, cash equivalents, and restricted cash as of June 30, 2025, with cash used in operations for H1 2025 at $118.0 million291 - The company expects to receive up to $225 million in cash from the sale of its oncology business to Labcorp, expected to close in the second half of 2025294 - Significant potential future cash inflows include up to $860.0 million in milestones from the Merck agreement and up to $275.0 million from the Pfizer agreement, in addition to tiered royalties303304 Contractual Obligations as of June 30, 2025 (in thousands) | Obligation Type | Total | Due in < 1 Year | Due in 1-3 Years | Due in 3-5 Years | Due Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt (Notes, Mortgages, Lines of Credit) | $344,793 | $14,921 | $1,131 | $80,416 | $248,325 | | Operating & Finance Leases | $52,465 | $6,075 | $10,283 | $6,742 | $29,365 | | Open Purchase Orders | $32,740 | $27,366 | $5,374 | $0 | $0 | | Interest Commitments | $16,530 | $2,368 | $9,322 | $4,840 | $0 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are foreign currency exchange rates, with 24.5% of H1 2025 revenue in foreign currencies, and interest rates, managed through short-term investments - Foreign currency risk is significant, with 24.5% of revenue in H1 2025 denominated in currencies other than the USD, primarily the Chilean Peso and Euro, mitigated by foreign exchange forward contracts319322 - Interest rate risk exposure relates to $285.4 million in cash/investments and $12.5 million outstanding on variable-rate lines of credit, managed by maintaining short-term maturities for investments323324 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report327 - There were no changes to the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls328 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section details the company's legal matters, including an appeal against a $246 million tax assessment and a 5-year Corporate Integrity Agreement - The company is appealing a tax assessment of approximately $246 million issued by the Israel Tax Authority against its subsidiary, OPKO Biologics146 - The company and its subsidiary BioReference are subject to a 5-year Corporate Integrity Agreement (CIA) with the OIG-HHS, effective July 2022, to resolve an investigation into past billing practices147149 Item 1A. Risk Factors The company reports no material changes to its risk factors from those previously disclosed in its Annual Report and Q1 2025 Form 10-Q - There have been no material changes to the company's risk factors from those previously disclosed330 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 13.6 million shares for $18.3 million under a $200 million program, with $141.5 million remaining Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | May 2025 | 9,646,344 | $1.31 | $12.6M | | June 2025 | 4,000,000 | $1.36 | $5.4M | | Total Q2 | 13,646,344 | $1.34 | $18.3M | - The stock repurchase program was increased by $100.0 million on April 4, 2025, bringing the total authorized amount to $200 million, with $141.5 million remaining available for repurchase as of June 30, 2025331 Other Disclosures (Items 3, 4, 5, 6) This section confirms standard corporate disclosures, including no defaults on senior securities, no mine safety disclosures, and no Rule 10b5-1 trading plan changes - The company reported no defaults upon senior securities332 - No officers or directors adopted or terminated a Rule 10b5-1 trading plan during the quarter ended June 30, 2025335