What happened

Shares of OraSure Technologies (NASDAQ:OSUR), a healthcare company focused on diagnostic products and specimen-collection devices, dropped after the company reported third-quarter earnings. As of 1:45 p.m. EDT on Thursday, they were down 26%.

So what

Here are the key takeaways from the company's third quarter:

  • Revenue jumped 31% to $42.3 million. That was better than the $40.8 million that Wall Street had projected and also exceeded guidance.
  • Net molecular collection systems revenue jumped 123% to $18.6 million, while OraQuick HCV sales jumped 185% to $8 million. These strong results were offset by lower sales of the company's OraQuick HIV and cryosurgical products. In total, consolidated net product revenues increased 62% year over year, which is impressive considering that the company lost pharma giant AbbVie as a promotional partner last year.
  • Net income was $5.8 million, or $0.09 per share. While this figure was down slightly from the year-ago period, it matched the guidance that management had laid out. It also met market-watchers' expectations.

CEO Douglas Michels stated that he was "pleased" with the company's results and offered investors the following commentary: "Sales of our molecular collections products during the quarter were particularly strong and our infectious disease business experienced strong growth compared to the prior year quarter. We continue to deliver on our strategic growth priorities and we expect our strong performance to continue into the fourth quarter."

Turning to guidance, here's what management told investors to expect for the upcoming quarter:

  • Revenue will land between $45 million and $46 million. That's more than $5 million above what Wall Street was projecting.
  • Net income per share will be $0.08 to $0.09. That matches expectations.

All in all, the headline numbers from this quarter looked good. So why did shares fall? The most likely answer is that the company's valuation had simply gotten ahead of itself. As of yesterday, OraSure's stock had more than doubled since the start of the year. Perhaps traders were secretly expecting that the company would crush expectations once again instead of just matching them.

Man standing by an arrow that has crashed through the floor

Image source: Getty Images.

Now what

It's been a heck of a good year for OraSure's investors, and management's forward guidance suggests that the good times to continue to roll. If you are bullish on the long-term potential of this company and have been waiting patiently for an opportunity to get in, today's drop just might be your opportunity to act.

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.