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Who OPKO Health Is Tanking Today

By Brian Feroldi - Updated Apr 19, 2019 at 11:06AM

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Traders didn't like the company's fourth-quarter results. Should you?

What happened

After reporting fourth-quarter results, shares of OPKO Health ( OPK 2.85% ), a healthcare company focused on diagnostics and pharmaceutical products, slumped as much as 11% in afternoon trading on Thursday. The stock was down about 8% as of 3:25 p.m. EST.

So what

Here's a review of the key numbers from the quarter:

  • Revenue grew 38%, to $221.9 million. That was well below the $245.3 million that Wall Street was expecting.
  • Net loss was $76.1 million, or $0.13 per share. This figure was worse than the $0.09 net loss that was expected. It's worth noting that it includes a number of one-time and non-cash charges. For comparison, the year-ago period featured a net loss of $217.9 million, or $0.39 per share.
  • Cash balance was $96.5 million at year-end. This figure doesn't include the proceeds from a $200 million debt offering that was performed in February.
Woman at laptop with her hand on her face and looking distressed.

Image source: Getty Images.

Here's the guidance that's being shared for the first quarter of 2019:

  • Services revenue is expected to land between $175 million and $190 million. The midpoint of this range represents a decrease that's being blamed on reimbursement declines and changes in volume.
  • Product revenue is expected to land between $25 million and $28 million. 
  • Revenues from the transfer of intellectual property are expected to be between $15 million and $20 million.
  • When added together, total revenue is expected to land between $215 million and $238 million. That's well below the $277.5 million that Wall Street was expecting.
  • Costs are expected to range between $280 million and $290 million.

Given the light results and downbeat guidance, it isn't hard to figure out why shareholders of this beaten-down stock are having another bad day.

Check out the latest OPKO earnings call transcript.

Now what

OPKO has been under a lot of selling pressure over the last couple of months. That makes sense when considering:

  • The SEC has accused OPKO's billionaire CEO Phillip Frost of market manipulation
  • Its partner Tesaro (NASDAQ: TSRO) pulled a licensed drug call Varubi off the market over safety concerns.
  • Sales of Opko's hyperparathyroidism drug Rayaldee have been disappointing.

When you add these issues to today's disappointing results, it makes sense why shares are trading near a multiyear low. 

Shares might prove to be a value at these levels, but I'm not the type of investor who likes to go bottom fishing. For that reason, I'm content to keep far away until the situation improves considerably.

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.

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Stocks Mentioned

OPKO Health, Inc. Stock Quote
OPKO Health, Inc.
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