What happened

Shares of Opko Health (OPK -0.41%) were sinking 11.2% as of 3:18 p.m. EDT on Wednesday. The drop came after the healthcare company reported first-quarter results Tuesday evening that came in well below Wall Street expectations.

So what

One disappointing quarter isn't too much to get stirred up about. However, Opko Health's fourth-quarter update in February also caused its share price to fall. And the reasons for Opko stock sinking then are the same reasons it sank today.

A businessman looking at a line chart plunging downward

Image source: Getty Images.

The problem is that the company's revenue continues to slide. Opko reported a 12.7% year-over-year revenue decrease in its first-quarter results. This trickled down to the company's bottom line, with a wider net loss than the prior-year period.

Opko Health CEO Phillip Frost pointed out two key issues in his comments during the company's Q1 conference call. Frost said that the 4Kscore Test, which helps detect the possibility of prostate cancer, "hit a stumbling block" when a Medicare contractor, Novitas Solutions, decided not to cover the test. He also noted that the company's BioReference Laboratories business "suffered a bit from lower reimbursements."

The bright spot in Opko's Q1 results was that prescriptions for secondary hyperparathyroidism drug Rayaldee more than doubled year over year. However, Frost acknowledged that sales for the drug "have grown, but a bit more slowly than hoped."

Now what

There are several ways that Opko Health could turn things around. The company has requested that Novitas reconsider its negative local coverage determination for 4Kscore. And while Opko can't do much about the reimbursement headwinds for BioReference Labs, it is reducing costs in the segment and has made progress in winning spots in payer networks.

Sales for Rayaldee could be boosted if the drug wins approval in Europe. Opko's partner, Vifor Fresenius, filed for European regulatory approval last month. Opko has also expanded its sales team for Rayaldee. But whether all of these efforts put Opko Health back on the right track remains to be seen.