What happened

You wouldn't expect a company that missed estimates in its latest quarter to jump in price across the subsequent trading days. But that's been the situation with Opko Health's (OPK -2.34%) shares since the healthcare diagnostics company reported its second-quarter results after market hours last Friday. Counterintuitively, week-to-date, as of Thursday afternoon, Opko stock was up by almost 10%, according to S&P Global Market Intelligence.

So what

There was no ambiguity -- Opko fell notably short of expectations for the period. A sharp decline in demand for COVID-19 testing solutions resulted in revenue tumbling by 30% year over year to land at just under $310 million. Not to be outdone, the company's net income deepened considerably. It fell to almost $102 million, or $0.14 per share, from the year-ago quarter's mere $16-million deficit.

Analysts were expecting better performance -- much better. On average, they were modeling just shy of $327 million for revenue and a $0.01 per share profit on the bottom line.

Opko's steep drop in the diagnostics segment (53% year over year to just under $187 million) was worse than many projected, but it wasn't a shock. The coronavirus pandemic has shown signs of playing out recently, and many people are no longer as concerned about catching the coronavirus. Relatively high vaccination rates also help.

Meanwhile, Opko's second-most important business (pharmaceuticals) actually held up rather well. Yes, the segment's take increased only marginally, by less than 1%, but this occurred despite a steep fall in the company's South American sales due to unfavorable foreign exchange rates.

All told, pharmaceuticals brought in nearly $36 million. That's nowhere near enough to make up for the diagnostics decline, but it's sufficient to keep hope alive for the company. This isn't a one-trick pony dependent only on diagnostics; it's a company that has a comparatively small yet lively pharmaceuticals operation to fall back on.

Now what

Nevertheless, those top- and bottom-line developments weren't exactly encouraging. Investors would do well to watch how Opko continues to develop its pharmaceuticals business since the once-insatiable demand for COVID-19 diagnostics will likely keep fading.