OPKO Health(US:OPK)2022-05-10 03:11Financial Data and Key Metrics Changes - The Diagnostics segment reported revenue of $286 million for Q1 2022, down from $507 million in the same period of 2021, reflecting decreasing testing levels [19] - The consolidated results showed an operating loss of $72.4 million for Q1 2022, compared to operating income of $38.4 million in 2021 [23] - Net loss for Q1 2022 was $55.4 million or $0.08 per diluted share, compared to net income of $31.1 million or $0.05 per share in the prior year [23] Business Line Data and Key Metrics Changes - BioReference Laboratories saw a 4% increase in clinical base business volume compared to Q4 2021, driven by preferred status with UnitedHealthcare and Aetna [11] - Noninvasive prenatal testing in women's health grew by 219% year-over-year, with an increase of almost 16,000 samples [11] - Oncology business increased by 5% year-over-year, surpassing pre-pandemic volumes, particularly in hematology and cancer genetics [12] Market Data and Key Metrics Changes - COVID-19 PCR tests performed in Q1 2022 totaled 2 million, down from 2.7 million in Q4 2021, with stable daily testing volumes due to ongoing surveillance [14] - Point-of-care COVID testing remains strong, with over 1.6 million tests performed to date, including events like the Super Bowl and NBA All-Star game [14] Company Strategy and Development Direction - The acquisition of ModeX Therapeutics is seen as a transformative step, focusing on developing innovative immunotherapies for cancer and infectious diseases [7][8] - The company aims to leverage its partnership with Pfizer to enhance its product offerings, particularly with the launch of Neglina in major markets [8] - The Reach initiative is targeting $40 million in cost reductions through over 100 separate initiatives to improve operational efficiency [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of rising labor costs on margins during Q1 2022, particularly due to the Omicron variant surge [19] - The company expects to perform between 3 and 3.5 million COVID diagnostic tests in 2022, with no anticipated new surge in testing [24] - Revenue guidance for 2022 is projected to be between $1.1 billion to $1.2 billion, reflecting a focus on core clinical laboratory business improvement [25] Other Important Information - The ModeX acquisition involved a total payment of $287 million in OPKO shares, with principal sellers agreeing to a four-year lock-up [18] - The company reported a significant increase in SG&A expenses due to investments in the GeneDx commercial team and Scarlet Health digital platform [21] Q&A Session Summary Question: How should R&D spend be viewed going forward? - Management indicated that ModeX programs are not significantly expensive compared to clinical products, with a modest increase in overall R&D spending planned for 2022 [28] Question: Are there updates on the Somatrogon gross profit share in Japan and Europe? - The gross profit share in Japan is expected to start in Q2 2022, while pricing in Europe may take about a year from initial approvals [32] Question: Is the ModeX acquisition closed? - The acquisition was confirmed to have closed on the same day as the call [34] Question: When should the $85 million milestone from Pfizer and Sema4's $18 million be expected on the income statement? - Both amounts are expected to be recognized in the second quarter [35] Question: Can you provide clarity on the cost of service versus product revenue? - Management confirmed that the cost to serve on BioReference was impacted by labor costs [38]