OraSure Technologies Inc.

11/05/2025 | Press release | Distributed by Public on 11/05/2025 16:23

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with (i) the Company's unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) the Company's audited consolidated financial statements and
related notes and management's discussion and analysis of financial condition and results of operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 7, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to the Company's plans and strategy for its business and impact and potential impacts on its business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including, without limitation, those factors set forth in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 and the "Risk Factors" section of subsequent Quarterly Reports on Form 10-Q, the Company's actual results or timing of certain events could differ materially from the results or timing described in, or implied by, these forward-looking statements.
Business Overview
The Company's business consists of the development, manufacture, marketing and sale of simple, easy to use diagnostic products and specimen collection devices using the Company's proprietary technologies, as well as other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types. These products include tests for diseases including HIV, Hepatitis C, Syphilis, and COVID-19 that are performed on a rapid basis at the point of care. These products are sold in the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations, and other public health organizations, distributors, government agencies, physicians' offices, and commercial and industrial entities. The Company's HIV and COVID-19 products are also sold in a consumer-friendly format in the over-the-counter ("OTC") market in the U.S. and, in the case of the HIV product, as a self-test to individuals in a number of other countries, including as an oral swab in-home test for HIV-1 and HIV-2 in Europe.
The Company's business also includes sample management solutions and services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers. The revenues from sample management solutions are derived from product sales to commercial customers and sales into the academic and research markets. Customers span the disease risk management, diagnostics, pharmaceutical, biotech, companion animal and environmental markets. The Company has also developed collection devices for the emerging microbiome market, which focuses on studying microbiomes and their effect on human and animal health. The Company also has a urine collection device which allows for the volumetric collection of first void urine. This product is in its early stages, and initial sales are occurring primarily through distributors and collaborations in the liquid biopsy and sexually transmitted disease markets.
Recent Developments
Risk Assessment Testing
In the third quarter of 2024, the Company announced the discontinuance of sales of its risk assessment product line which was completed in the second quarter of 2025. Sales of its risk assessment products did not contribute to revenues during the three months ended September 30, 2025. Sales of its risk assessment products contributed $1.9 million to revenues during the three months ended September 30, 2025 and 2024. Sales of its risk assessment products contributed $1.9 million and $6.3 million to revenues during the nine months ended September 30, 2025 and 2024, respectively. During the first quarter of 2025, the Company sold certain assets that made up the risk assessment product line including certain intellectual property, contracts, permits, and equipment.
Acquisition of BioMedomics, Inc.
On November 5, 2025, the Company signed a definitive merger agreement ( the "Agreement") with BioMedomics, Inc. ("BioMedomics"), pursuant to which BioMedomics will become a wholly-owned subsidiary of the Company. The closing of the foregoing transaction is subject to various customary conditions, and is expected to occur within the fourth quarter of 2025. The upfront purchase price is $4.0 million in cash, adjusted for certain transaction costs, indebtedness, holdback amounts and working capital adjustments. In addition, pursuant to the Agreement, the Company has agreed to pay certain contingent consideration based on achievement of defined revenue targets by December 31, 2031. Under certain circumstances, the original BioMedomics shareholders may opt to forgo a portion of the final revenue milestone, and instead choose either (i) different revenue milestones related to sales of certain products currently in development by BioMedomics (the "BM Pipeline Products"), or (ii) to share in a portion of the proceeds in the event that the Company enters into a disposition of any of the BM Pipeline Products on or prior to December 31, 2030.
Results of Operations
All dollar amounts in tables are presented in thousands.
For the three months ended September 30, 2025 compared to September 30, 2024.
CONSOLIDATED NET REVENUES
The table below shows total consolidated net revenues for the three months ended September 30, 2025 and 2024:
For the Three Months Ended September 30,
Dollars % Change Percentage of Total Net Revenues
2025 2024 2025 2024
Diagnostics (1)
$ 14,499 $ 22,023 (34) % 54 % 55 %
Sample Management Solutions (2)
10,306 12,806 (20) 38 32
Other products and services (4)
442 748 (41) 2 2
COVID-19 Diagnostics 89 2,155 (96) - 5
Risk Assessment Testing(3)
- 1,911 (100) - 5
Molecular Services - 9 (100) - -
Net product and services revenues 25,336 39,652 (36) 94 99
Non-product and services revenues(5)
1,749 263 565 6 1
Net revenues $ 27,085 $ 39,915 (32) % 100 % 100 %
(1)Includes HIV, HCV, Syphilis, and SureQuick®product revenues.
(2)Includes Genomics, Microbiome, and Colli-Pee®product revenues.
(3)Includes COVID-19 Sample Management Solutions product revenues.
(4)Includes substance abuse testing product revenues.
(5)Includes funded research and development contracts, royalty income and grant revenues.
Product and Services Revenues
Consolidated net revenues decreased 32% to $27.1 million for the three months ended September 30, 2025 from $39.9 million for the three months ended September 30, 2024.
Sales of the Company's Diagnostics products decreased 34% to $14.5 million for the three months ended September 30, 2025 from $22.0 million for the three months ended September 30, 2024. This decrease in revenues is largely due to lower international HIV revenues driven by reduced funding and customer ordering patterns. Sales of domestic HIV also declined driven by reduced funding and due to a decrease in orders under the Together Take Me Home program.
Sample Management Solutions revenues decreased 20% to $10.3 million for the three months ended September 30, 2025 from $12.8 million for the three months ended September 30, 2024. Sales of the Company's genomics products are being impacted by a large customer's bankruptcy proceedings.
Risk Assessment revenue decreased 100% to nil for the three months ended September 30, 2025 from $1.9 million for the three months ended September 30, 2024. The Company discontinued this line of business at the end of 2024 and business wound down in early 2025.
COVID-19 Diagnostics revenues decreased 96% to $0.09 million for the three months ended September 30, 2025 compared to $2.2 million for the three months ended September 30, 2024 due to decreased sales of the Company's InteliSwab®tests through its U.S. government procurement contracts. We expect this level of revenue to continue throughout the remainder of 2025 and for the foreseeable future due to the fulfillment of these contracts and lower overall demand for COVID-19 testing.
Non-Product and Services Revenues
Non-product and services revenues increased 565% to $1.7 million for the three months ended September 30, 2025 from $0.3 million for the three months ended September 30, 2024 primarily due to the recognition of revenue under funded R&D contracts that were assumed by the Company as a result of the Sherlock acquisition at the end of 2024 as well as an increase in funded R&D under other BARDA contracts.
CONSOLIDATED OPERATING RESULTS
Consolidated gross profit margin increased to 43.5% for the three months ended September 30, 2025 compared to 42.8% for the three months ended September 30, 2024. The largest drivers of the margin increase were an improved product mix of higher margin product sales and higher non-product revenues which contribute 100% to gross margin. Offsetting these increases in gross margin was lower manufacturing absorption as a result of lower sales volume and higher scrap expense in the quarter.
Consolidated operating loss for the three months ended September 30, 2025 was $16.1 million compared to a $6.0 million operating loss reported for the three months ended September 30, 2024. The higher operating loss reported in the third quarter of 2025 was largely a result of lower revenues coupled with an increased spend on clinical trials.
Research and development expenses increased 80% to $10.1 million for the three months ended September 30, 2025 from $5.6 million for the three months ended September 30, 2024 largely due to higher spend incurred for clinical trials associated with the Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG) device and additional R&D operational expense layered in from the acquired Sherlock companies.
Sales and marketing expenses decreased 17% to $6.3 million for the three months ended September 30, 2025 from $7.6 million for the three months ended September 30, 2024 due to lower employee costs as a result of reduced headcount from reduction in force initiatives taken in 2024.
General and administrative expenses increased 13% to $11.1 million for the three months ended September 30, 2025 from $9.8 million for the three months ended September 30, 2024 largely due an increase in legal fees and additional general and administrative costs incurred from the newly acquired Sherlock companies.
During the three months ended September 30, 2025, the Company recorded a non-cash adjustment of $0.4 million, reflecting the change in the estimated fair value of the Sherlock acquisition-related contingent consideration. The Sherlock acquisition was completed in December 2024 and there was no comparable amount in the third quarter of 2024.
All of the above contributed to the Company's operating loss of $16.1 million for the three months ended September 30, 2025, which included non-cash charges of $2.8 million for stock-based compensation, $2.5 million for depreciation and amortization, and $0.4 million for the change in the estimated fair value of acquisition-related contingent consideration. The Company's operating loss of $6.0 million for the three months ended September 30, 2024 included non-cash charges of $2.9 million for stock-based compensation, and $3.0 million for depreciation and amortization.
CONSOLIDATED INCOME TAXES
The Company continues to believe the full valuation allowance established against its total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. For the three months ended September 30, 2025 and 2024, the Company recorded income tax expense of $47.0 thousand and $0.7 million, respectively. The decrease in the income tax expense is largely due to lower pre-tax earnings in both state and foreign jurisdictions.
Results of Operations
For the nine months ended September 30, 2025 compared to September 30, 2024.
CONSOLIDATED NET REVENUES
The table below shows an outline of total consolidated net revenues for the nine months ended September 30, 2025 and 2024:
For the Nine Months Ended September 30,
Dollars % Change Percentage of Total Net Revenues
2025 2024 2025 2024
Diagnostics (1)
$ 51,410 $ 57,162 (10) % 58 % 39 %
Sample Management Solutions (2)
29,271 36,237 (19) 33 24
Risk Assessment Testing(3)
1,866 6,265 (70) 2 4
Other products and services (4)
1,059 1,838 (42) 1 1
COVID-19 Diagnostics 574 44,186 (99) 1 30
Molecular Services - 1,692 (100) - 1
Net product and services revenues 84,180 147,380 (43) 95 99
Non-product and services revenues(5)
4,078 1,002 307 5 1
Net revenues $ 88,258 $ 148,382 (41) % 100 % 100 %
(1)Includes HIV, HCV, Syphilis, and SureQuick®product revenues.
(2)Includes Genomics, Microbiome, and Colli-Pee®product revenues.
(3)Includes substance abuse testing product revenues.
(4)Includes COVID-19 Sample Management Solutions product revenues.
(5)Includes funded research and development contracts, royalty income, and grant revenues.
Product and Services Revenues
Consolidated net revenues decreased 41% to $88.3 million for the nine months ended September 30, 2025 from $148.4 million for the nine months ended September 30, 2024.
Sales of the Company's Diagnostics products decreased 10% to $51.4 million for the nine months ended September 30, 2025 from $57.2 million for the nine months ended September 30, 2024. This decrease in revenues is largely due to lower international HIV revenues primarily driven by a decrease in funding and customer ordering patterns in Africa and Asia. Lower sales of the Company's HIV domestic product due to a decrease in overall funding impacting HIV programs also contributed to the decline in diagnostic revenues. Offsetting these decreases in revenues is an increase in Syphilis revenue resulting from the launch in the second quarter of 2024.
Sample Management Solutions revenues decreased by 19% to $29.3 million for the nine months ended September 30, 2025 compared to $36.2 million for the nine months ended September 30, 2024. Sales of the Company's Sample Management Solutions are being impacted by a large customer's bankruptcy.
COVID-19 Diagnostics revenues decreased 99% to $0.6 million for the nine months ended September 30, 2025 from $44.2 million for the nine months ended September 30, 2024 due to decreased sales of the Company's InteliSwab®tests through its U.S. government procurement contracts. The Company experienced a significant decline in COVID-19 revenues during 2024 due to the fulfillment of these contracts and lower overall demand for COVID-19 testing, and expects further declines in 2025.
Risk Assessment testing revenues decreased 70% to $1.9 million for the nine months ended September 30, 2025 from $6.3 million for the nine months ended September 30, 2024. The Company discontinued this line of business at the end of 2024 and the business wound down in early 2025.
Molecular Services revenues, which were largely derived from the Company's microbiome molecular sequencing services, were nil for the nine months ended September 30, 2025 compared to $1.7 million for the nine months ended September 30, 2024. The decrease in services revenues was due to the decision to exit this line of business.
Non-Product and Services Revenues
Non-product and services revenues increased 307% to $4.1 million for the nine months ended September 30, 2025 from $1.0 million for the nine months ended September 30, 2024 primarily due to the recognition of revenue under funded R&D contracts that were assumed by the Company as a result of the Sherlock acquisition at the end of 2024 as well as an increase in funded R&D under other BARDA contracts.
CONSOLIDATED OPERATING RESULTS
Consolidated gross profit margin decreased to 42.2% for the nine months ended September 30, 2025 from 44.4% for the nine months ended September 30, 2024. The largest driver of the margin decline was a negative product mix driven by lower InteliSwab® sales that generate higher gross margins and lower genomics sales that also generate higher gross margins. The termination of the microbiome molecular sequencing services business which historically dragged down the gross margin rate helped to improve the gross margin rate during the period along with the higher non-product revenues which contribute 100% to gross margin.
Consolidated operating loss for the nine months ended September 30, 2025 was $51.9 million, compared to a $15.8 million operating loss reported for the nine months ended September 30, 2024. Results for the nine months ended September 30, 2025 were negatively impacted by the decrease in revenues, lower gross margins earned on the revenues and by higher operating expenses. Results for the nine months ended September 30, 2025 included change in the estimated fair value of acquisition-related contingent consideration of $1.6 million offset by gain on sale of assets of $1.0 million. Results for the nine months ended September 30, 2024 included impairment charges of $4.4 million.
Research and development expenses increased 56% to $31.1 million for the nine months ended September 30, 2025 from $20.0 million for the nine months ended September 30, 2024 largely due to higher spend incurred for clinical trials for the Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG) device and additional R&D operational expense layered in from the acquired Sherlock companies.
Sales and marketing expenses decreased 19% to $19.5 million for the nine months ended September 30, 2025 from $24.0 million for the nine months ended September 30, 2024 primarily due to decreased employee costs associated with a reduction in headcount, and lower advertising and bad debt expense.
General and administrative expenses increased 14% to $37.9 million for the nine months ended September 30, 2025 from $33.3 million for the nine months ended September 30, 2024 largely due to higher legal fees relating to the NowDx litigation (discussed further in Note 12, Commitments and Contingencies, to the consolidated financial statements included herein) and costs associated with the Sherlock acquisition. Also contributing to the higher expenses were increased severance, accounting fees, and operating expenses associated with the Company's acquisition of Sherlock in December 2024.
All of the above contributed to the Company's operating loss of $51.9 million for the nine months ended September 30, 2025, which included non-cash charges of $8.7 million for stock-based compensation, $7.8 million for depreciation and amortization, and $1.6 million for change in the estimated fair value of acquisition-related contingent consideration. The Company's operating loss of $15.8 million for the nine months ended September 30, 2024 included a non-cash charge of $9.2 million for stock-based compensation, $8.4 million for depreciation and amortization, and impairment charges of $4.4 million.
CONSOLIDATED OTHER INCOME
Other income for the nine months ended September 30, 2025 was $5.7 million compared to $9.3 million for the nine months ended September 30, 2024. The decrease in other income is primarily due to lower interest income and foreign currency losses in 2025 versus foreign currency gains in 2024.
CONSOLIDATED INCOME TAXES
The Company continues to believe the full valuation allowance established against its total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. Although the Company has achieved U.S. cumulative pre-tax earnings based on a rolling three year window the Company has not achieved a level of sustained profitability that would, in its judgment, support the release of the valuation allowance. For the nine months ended September 30, 2025 and 2024, the Company recorded income tax expense of $1.6 million and $1.0 million, respectively. The increase in income tax expense is largely due to recording an uncertain tax position for certain US tax matters, including penalties and interest in 2025 offset by lower pre-tax earnings in foreign jurisdictions in 2025 as compared to 2024.
Liquidity and Capital Resources
September 30, 2025 December 31, 2024
(in thousands)
Cash and cash equivalents $ 216,478 $ 267,763
Working capital 242,763 299,737
The Company's cash and cash equivalents decreased to $216.5 million at September 30, 2025 from $267.8 million at December 31, 2024. $84.7 million, or 39%, of the Company's $216.5 million in cash, cash equivalents and available-for-sale securities is held by DNAG, the Company's Canadian subsidiary.
The Company's working capital decreased to $242.8 million at September 30, 2025 from $299.7 million at December 31, 2024. Working capital is primarily a function of sales, purchase volumes, inventory requirements, and vendor payment terms.
Analysis of the Company's Cash Flows
Operating Activities
During the nine months ended September 30, 2025, net cash used in operating activities was $40.0 million. Cash flows from operations can be significantly impacted by factors such as timing of receipt from customers, inventory purchases, and payments to vendors. The Company's net loss of $49.4 million included non-cash charges of stock-based compensation expense of $8.7 million and depreciation and amortization expense of $7.8 million, a loss on equity investment of $1.7 million, change in estimated fair value of acquisition-related contingent consideration of $1.6 million and other non-cash charges aggregating to $1.2 million.
Cash used by the Company's working capital accounts included a decrease in accrued expenses and other liabilities of $5.3 million largely consisting of the payment of year-end bonuses in March 2025, an increase in prepaid expenses and other assets of $1.9 million as the Company is prepaying for clinical trials, a decrease of $1.7 million in accounts payable, and a decrease in deferred revenue of $1.1 million as work on grant projects is completed and earned. Offsetting these uses of cash is a decrease in inventory of $0.9 million as the Company experienced a decline in sales.
Investing Activities
Net cash used in investing activities was $2.4 million for the nine months ended September 30, 2025, associated with proceeds from sale of property and equipment offset by the acquisition of new property and equipment.
Financing Activities
Net cash used in financing activities was $11.8 million for the nine months ended September 30, 2025, which was largely comprised of $10.0 million to repurchase common stock and $1.8 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted stock awarded to the Company's employees.
Resources
The Company's contractual obligations are included in Note 12 of its consolidated financial statements. The Company expects existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements over the next twelve months. The Company's cash requirements, however, may vary materially from those now planned due to many factors, including, but not limited to, the scope and timing of future strategic acquisitions, the progress of its research and development programs, the scope and results of clinical testing, the cost of any future litigation, the magnitude of capital expenditures, changes in existing and potential relationships with business partners, the timing and cost of obtaining regulatory approvals, the timing and cost of future stock purchases, the costs involved in obtaining and enforcing patents, proprietary rights and any necessary licenses, the cost and timing of expansion of sales and marketing activities, market acceptance of new products, competing technological and market developments, the impact of the current economic environment and other factors.
Critical Accounting Policies and Estimates
A more detailed review of the Company's critical accounting policies is contained in its Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC. No material changes have been made to such critical accounting policies during the nine months ended September 30, 2025.
OraSure Technologies Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 22:23 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]