What happened

OraSure Technologies (NASDAQ:OSUR) is up 16.5% at 12:08 p.m. EDT after reporting stellar second-quarter earnings Wednesday afternoon.

So what

Revenue was up 28% year over year. More impressively, there was a 42% jump in product sales, which factors out the loss of revenue from its HCV co-promotion agreement with AbbVie (NYSE:ABBV) that ended at the end of last year as well as funding from the U.S. Biomedical Advanced Research Development Authority.

Molecular collections systems contributed much of that gain, increasing 90% year over year as the company sold more of its Oragene products to commercial customers. Its OraQuick HCV test also saw sales jump substantially, up 138% year over year, thanks to a 268% increase in international sales.

On the bottom line, OraSure earned $5.4 million, or $0.09 per share, a 29% year-over-year increase.

Paper with a description of hepatitis C typed on it with eye glasses laying on it

Image source: Getty Images.

Now what

Management is guiding for revenue of $40.5 million to $41.5 million in the third quarter, a 25% jump from the third quarter of 2016 at the low end of guidance. Earnings are expected to be in the range of $0.09 to $0.10 per share, a slight decrease from the $0.11 per share earned in the third quarter of 2016.

The discrepancy between substantial revenue growth and a lack of earnings growth likely has to do with a larger share count and increased taxes. A large contribution of "other income" in the year-ago quarter also helped boost earnings per share.

Overall, OraSure looks like it's in good shape, although one thing investors should watch is the company's margins as it increases international sales. The company struck a deal with the Bill and Melinda Gates Foundation in which the foundation will pay OraSure to provide its OraQuick HIV Self-Test in 50 developing countries at an affordable price. Depending on what the affordable price is and how much it gains back from the Gates Foundation, investors may see less of the increased revenue trickling down to the earnings line.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.