Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Opko Health Inc. Stock Lost Some More Ground Today

By Cory Renauer - Mar 2, 2017 at 4:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The beleaguered pharmaceutical and diagnostics company's latest earnings report failed to please investors.

What happened

Shares of multinational pharmaceutical and diagnostics company Opko Health, Inc. (OPK -1.94%) are feeling the heat after reporting fourth-quarter and full-year 2016 earnings. Despite a major thumping late last year, the stock gave up another 10.5% as of 3:31 p.m. on Thursday.

So what 

Revenue for the year jumped to $1.22 billion from $492 million last year. That looks great on the surface, but the top-line growth is largely due to the $1.5 billion acquisition of BioReference Labs in mid-2015.

Downward sloping chart with a question mark at the end.

Image source: Getty Images.

Investors weren't too impressed with last year's net loss of about $25.1 million in light of taking on the big diagnostics company that was supposed to drive profit growth. Those hoping for some early signs of a successful launch for Rayaldee were also disappointed when the company didn't break out any sales data.

Now what

To be fair, Rayaldee didn't launch until November. That said, Opko claimed its addressable market could be as large as $12 billion, although most analysts predict peak annual sales of the kidney disease drug to top out at about $500 million. The company did tell investors that it had secured coverage for about 60% of U.S. patients already. All eyes will be on this drug's sales next time the company reports to see which end of the enormous sales estimate appears more likely.

Another revenue stream that's had a hard time delivering on its promise is the prostate cancer screen known as the 4Kscore. The company had once predicted annual revenue of around $300 million based on about 1 million tests performed each year at a cost of $300 per test. Again, Opko didn't break out 4Kscore sales figures. More than a year after its launch 18,000 tests ordered in the fourth quarter, though, suggests the company overestimated its potential as well.

Until Opko can show some clear signs it can live up to expectations, it's probably best to watch from the sidelines.

Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

OPKO Health, Inc. Stock Quote
OPKO Health, Inc.
$2.53 (-1.94%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.