SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 5, 2003
OraSure Technologies, Inc.
--------------------------------------------
(Exact name of issuer as specified in charter)
DELAWARE 001-16537 36-4370966
(State or Other (Commission (I.R.S. Employer
Jurisdiction file Identification
of Incorporation or number) Number)
Organization)
220 East First Street
Bethlehem, Pennsylvania 18015-1360
(Address of principal executive offices)
(610) 882-1820
(Registrant's telephone number, including area code)
Item 5 - Other Events.
On February 5, 2003, OraSure Technologies, Inc. (the "Company" or "OraSure")
announced total revenues of $32.0 million for the full year 2002 and $8.25
million for the quarter ended December 31, 2002. Full year 2002 revenues reflect
a 2% decline from the $32.6 million in revenues recorded for 2001. Revenues for
the quarter ended December 31, 2002, were 2% higher than those for the same
period of 2001.
The Company's net loss was $3.3 million, or $(0.09) per share, for the full year
2002 and $82,000, or $(0.00) per share, for the fourth quarter of 2002, a penny
better than street estimates. These results represent an improvement from the
net loss of $3.7 million, or $(0.10) per share, for the full year 2001 and the
net loss of $2.3 million, or $(0.06) per share, for the fourth quarter of 2001.
The decline in 2002 full year revenues was primarily the result of a $1.2
million decrease in license and product development revenues, partially offset
by higher product revenues. Product revenues were $31.7 million for the full
year 2002 and $8.25 million for the quarter ended December 31, 2002,
representing increases of 2% and 5%, respectively, over the comparable 2001
periods.
The Company's gross margin for the full year 2002 decreased from 62% to 60%
compared to 2001, primarily as a result of lower license and development
revenues. This was partially offset by a more favorable product mix and the
impact of the Company's ongoing cost savings efforts. For the fourth quarter of
2002, the Company's gross margin increased from 53% to 58% as compared to the
fourth quarter of 2001. The gross margin in 2001 was negatively impacted by a
$600,000 inventory reserve recorded in the fourth quarter of that year.
For the full year 2002, operating expenses declined 8% from the $24.6 million
recorded in 2001, which included $450,000 in restructuring charges. Operating
expenses for the quarter ended December 31, 2002 declined 28% from a year ago to
$4.9 million. These declines were the result of cost savings generated by
workforce reductions, and lower relocation, travel, legal and consulting
expenses.
Cash and short-term investments were $14.9 million and working capital was $18.9
million at December 31, 2002. The Company's total debt outstanding at December
31, 2002 amounted to $4.5 million. Cash flow from operations improved from a use
of $5.3 million in 2001 to a use of $0.5 million in 2002, an improvement of $4.8
million for the year.
"During 2002, we achieved an historic milestone for the Company with the
approval of the OraQuick(R) HIV-1 test in the fourth quarter which, when
combined with the recent CLIA waiver, establishes this product as a significant
commercial opportunity for years to come," said Mike Gausling, President and CEO
of OraSure Technologies. "On the infrastructure side, we focused on streamlining
our cost structure and lowering our operating expense levels. This led to a $4.8
million improvement in our cash flow from operations over 2001 and positive cash
flow from operations for the final three quarters of 2002. At December 31, 2002,
our balance sheet was strong and we are well positioned to support our product
initiatives in 2003."
Condensed Financial Data
(In thousands, except per-share data)
(Unaudited)
Three months ended Year ended
December 31, December 31,
--------------------------- -----------------------------
2002 2001 2002 2001
---- ---- ---- ----
Results of Operations
Revenues $ 8,248 $ 8,063 $ 32,010 $ 32,573
Cost of products sold 3,445 3,754 12,889 12,334
------------- ------------ ------------ --------------
Gross margin 4,803 4,309 19,121 20,239
Operating expenses 4,926 6,802 22,662 24,121
Restructuring - related costs - - - 450
------------- ------------ ------------ --------------
Operating loss (123) (2,493) (3,541) (4,332)
Other income (expense), net 41 190 198 604
------------- ------------ ------------ --------------
Net loss $ (82) $ (2,303) $ (3,343) $ (3,728)
============= ============ ============ ==============
Net loss per common share:
Basic and diluted $ (0.00) $ (0.06) $ (0.09) $ (0.10)
============= ============ ============ ==============
Weighted average number of common
shares outstanding:
Basic and diluted 37,863 37,246 37,583 36,868
============= ============ ============ ==============
Balance Sheets 12/31/02 12/31/01
-------- --------
Assets
------
Cash and short-term investments $ 14,908 $ 15,191
Accounts receivable, net 5,198 6,058
Inventories 4,088 4,445
Other current assets 926 1,114
Property and equipment, net 7,428 7,800
Other non-current assets 3,137 2,625
------------- ------------
Total assets $ 35,685 $ 37,233
============= ============
Liabilities and Stockholders' Equity
------------------------------------
Current portion of long-term debt $ 1,066 $ 1,058
Accounts payable 1,802 2,874
Accrued expenses 3,321 3,112
Long-term debt, less current portion 3,409 3,586
Other liabilities 68 62
Stockholders' equity 26,019 26,541
------------- ------------
Total liabilities and stockholders' equity $ 35,685 $ 37,233
============= ============
Revenue Summary By Principal Markets
(Dollars in thousands, unaudited)
% Percentage of
Dollars Change Total Revenues
------------------------------------------------------------
Three Months Ended December 31, 2002 2001 2002 2001
---- ---- ---- ----
Product Revenues
Insurance risk assessment $ 3,131 $ 2,333 34% 38% 29%
Infectious disease testing 1,517 1,569 (3)% 18% 20%
Substance abuse testing 1,666 2,043 (18)% 20% 25%
Physicians' office therapies 1,932 1,944 (1)% 24% 24%
----------- ----------- ---------- ----------
8,246 7,889 5% 100% 98%
License and product development 2 174 (99)% 0% 2%
----------- ----------- ---------- ----------
Total revenues $ 8,248 $ 8,063 2% 100% 100%
=========== =========== ========== ==========
% Percentage of
Dollars Change Total Revenues
------------------------------------------------------------
Year Ended December 31, 2002 2001 2002 2001
---- ---- ---- ----
Product Revenues
Insurance risk assessment $ 12,030 $ 11,713 3% 38% 36%
Infectious disease testing 6,063 5,754 5% 19% 18%
Substance abuse testing 6,434 6,955 (7)% 20% 21%
Physicians' office therapies 7,165 6,674 7% 22% 20%
----------- ----------- ---------- ----------
31,692 31,096 2% 99% 95%
License and product development 318 1,477 (79)% 1% 5%
----------- ----------- ---------- ----------
Total revenues $ 32,010 $ 32,573 (2)% 100% 100%
=========== =========== ========== ==========
Item 9 - Regulation FD Disclosure.
On February 5, 2003, the Company announced that it expects 2003 revenues to grow
approximately 25% over 2002, primarily as a result of the introduction of the
OraQuick(R) HIV-1 test, expansion of Intercept(R) drug testing, and broader
distribution of Histofreezer(R), and expects to fill the Company's product
pipeline further as a result of the FDA submission of the UPlink(TM) drugs of
abuse panel. Additionally, the Company projects profitability in the second half
of 2003 and for the year as a whole.
The Company's ability to achieve the financial results projected for 2003 is
dependent on several factors, including the timely receipt of regulatory
approvals, market acceptance of new products such as OraQuick(R), and the
continued performance of the Company's distributors and other business partners.
The foregoing discussion contains certain forward-looking statements, including
with respect to revenues, earnings, markets, regulatory submissions and
products. Actual results could be significantly different. Factors that could
affect results include the ability to market products; impact of competitors,
competing products and technology changes; ability to develop, commercialize and
market new products; market acceptance of oral fluid testing or other products;
ability to fund research and development and other projects and operations;
ability to obtain and timing of obtaining necessary regulatory approvals;
ability to develop product distribution channels; uncertainty relating to patent
protection
and potential patent infringement claims; ability to enter into international
manufacturing agreements; obstacles to international marketing and manufacturing
of products; ability to sell products internationally; loss or impairment of
sources of capital; exposure to product liability and other types of litigation;
changes in international, federal or state laws and regulations; changes in
relationships with strategic partners and reliance on strategic partners for the
performance of critical activities under collaborative arrangements; changes in
accounting practices or interpretation of accounting requirements; customer
inventory practices and consolidations; equipment failures and ability to obtain
needed raw materials and components; the impact of terrorism and civil unrest;
and general business, political and economic conditions. These and other factors
are discussed more fully in the Securities and Exchange Commission filings of
OraSure Technologies, including its registration statements, its Annual Report
on Form 10-K for the year ended December 31, 2001, and its most recent Quarterly
Report on Form 10-Q. Although forward-looking statements help to provide
complete information about future prospects, readers should keep in mind that
forward-looking statements may not be reliable. The forward-looking statements
are made as of the date of this press release and OraSure Technologies
undertakes no duty to update these statements.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
OraSure Technologies, Inc.
Date: February 6, 2003 By: /s/ Jack E. Jerrett
-----------------------------------------
Jack E. Jerrett
Senior Vice President, General Counsel
and Secretary