What happened

Shares of Opko Health Inc. (NASDAQ:OPK), a company with pharmaceutical and diagnostic operations, continued its months-long slide following a gloomy first-quarter earnings report. According to data from S&P Global Market Intelligence, the stock dipped 18.8% during the month of May.

So what 

It's been nearly two years since Opko Health acquired America's third largest clinical laboratory business for about $1.5 billion. Impatient investors were hoping for signs of profitability that the company didn't deliver during its first-quarter earnings report. Opko's net loss widened to $31.0 million during the first three months of the year, from $12.0 during the same period last year.  

Frustrated investor with head on table in front of a downward sloping stock chart.

Image source: Getty Images.

Although the flagship prostate cancer diagnostic that Opko paid dearly for is gaining popularity, the segment as a whole isn't delivering on the bottom line. Despite a year-over-year increase of over 100% in 4Kscore tests ordered, operating losses from the diagnostic segment widened a bit further to $3.1 million during the first three months of the year.

Investors were also perturbed by the slow launch of Rayaldee, a formulation of vitamin D approved for treating a handful of thyroid related disorders. Although the commercial launch began in November, the company didn't recognize any revenue from the product in the first quarter.

Now what

The deferred revenue balance related to Rayaldee was just $2.1 million, which isn't what you'd expect from a drug with peak annual sales estimates above the $1 billion mark. The launch has been disappointing, but I wouldn't close the door on Rayaldee just yet. The company is still making strides to secure reimbursement of the drug and highlight its advantages over standard treatments.

Although I'm not optimistic about Opko's chances of turning its low-margin diagnostics business into a cash cow, the company still might have a shot with HGH-CTP, a long-acting human growth hormone candidate it's developing in partnership with Pfizer. What look like outliers in a placebo control group rendered a late-stage clinical trial a failure and tanked Opko Health stock last December.

The company will try to submit an application for HGH-CTP to the FDA despite the statistical failure. If the Agency accepts the outlier analysis the company intends to include with the submission, the beaten-down stock could perk up yet again.

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.