OraSure (OSUR) Q2 Revenue Falls 43%

OraSure Technologies (OSUR 4.67%), a diagnostics and sample collection device company, released its second quarter 2025 results on August 5, 2025. The earnings showed that GAAP revenue was $31.2 million, slightly above the $30.36 million GAAP Wall Street estimate. Non-GAAP earnings per share (EPS) stood at $(0.19), improving on the consensus estimate of $(0.21) (non-GAAP). However, this result reflected a sharp drop in GAAP revenue, which decreased 43% from the prior year and a significant swing to operating losses (GAAP). The quarter’s performance was better than expected by analysts, with both non-GAAP EPS and GAAP revenue exceeding analyst estimates, but overall financials remained pressured as the company continues to transition beyond pandemic-driven revenue peaks and adapts to a shifting funding and customer landscape.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Understanding OraSure Technologies’ Business and Strategic Focus

OraSure Technologies is known for developing and supplying rapid diagnostic tests and sample collection devices. Its portfolio includes self-tests for infectious diseases—such as the OraQuick® In-Home HIV test, the only U.S. over-the-counter oral HIV self-test—as well as tools for consumer genomics, blood and urine sample collection, and laboratory research.

The company’s recent focus revolves around innovation, expanding its diagnostic platform, and navigating regulatory requirements. It is investing in new products, such as molecular diagnostics for sexually transmitted infections, following its acquisition of Sherlock Biosciences. Core business success factors now include bringing new tests to market, differentiating its technology, and diversifying the customer base while efficiently managing manufacturing and supply chain transitions into its Pennsylvania facilities.

Quarter Highlights: Financial and Operational Developments

During the quarter, the company reported a sharp fall in overall revenue (GAAP) compared with the prior year, dropping by 43%. This headline decline mostly reflected the loss of COVID-19–related sales, which fell to near zero as pandemic-driven demand ended. At the same time, revenue from risk assessment testing and molecular services, both of which the company has now exited, slowed to minimal levels.

Looking closer at its segments, the core diagnostics portfolio saw an increase in revenue of 3%, totaling $19.2 million. This category includes test kits for infectious disease and other clinical applications. However, sample management solutions—devices and kits used by researchers and genomics companies—fell 22% to $9.9 million (GAAP). The primary driver here was a steep reduction in orders from a single consumer genomics customer, which management flagged as a major concentration risk. Excluding this impact, growth was seen across the broader customer base in this segment.

Margins were squeezed throughout the business compared to the prior year period. Gross margin (GAAP) dropped compared to the prior year as the mix of revenue shifted away from higher-margin COVID-19 products and international markets contributed a larger share. Operating income swung to a loss, with the non-GAAP figure at $(13.2) million versus a profit a year ago. Higher research and development (R&D) expenses—up 73% compared to the prior year—fueled by investments in new product development and clinical trials, also weighed on profitability. General and administrative spending climbed compared to the prior year, further reflecting the ongoing restructuring and launch investments.

One-time and nonrecurring items were present, notably costs associated with restructuring and exit from certain segments. Non-GAAP results excluded these items. Meanwhile, the company began executing a $40 million share repurchase plan, spending $5 million to buy back 1.8 million shares.

Cash and liquidity drew attention, with $234.6 million in cash and equivalents at quarter-end, but negative operating cash flow (GAAP) of $30 million for the first half of 2025. Management continued to highlight “prudent capital allocation” to maintain investment in key growth programs, while operational efficiency initiatives—like insourcing U.S. manufacturing—are expected to drive improvement over the medium term.

Product innovation and launches featured prominently. The company introduced HEMAcollect PROTEIN, a new blood collection device designed to stabilize proteins for research, and advanced Sherlock’s molecular diagnostics platform with a new test for chlamydia and gonorrhea moving toward FDA submission. Key agreements with GeneDx and new product launches in sample collection for saliva and urine (like ORAcollect and Colli-Pee devices) remained on track, supporting plans for future portfolio expansion and regulatory clearance in multiple regions.

Looking Ahead: Guidance and What to Watch

Management’s outlook signals ongoing revenue pressure, with projected GAAP sales in a range of $27 million to $30 million. No revenue bounce for COVID-19 testing was expected. Instead, it indicated that gross margin (GAAP) may stay flat or improve slightly in the second half of 2025 as production efficiencies and higher volumes emerge.

Investors should watch for the pace of diversification in the customer base, progress in bringing new diagnostic products to market, and The end of the CDC’s Together Take Me Home HIV testing initiative, which is expected to bring in approximately $4 million in revenue before the program ends at the close of Q3 2025, is set to weigh on future quarters. Continued cash burn and dependence on public health and consumer genomics funding add risk. Management remains focused on executing its innovation and portfolio strategy, but near-term visibility is limited.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.