OraSure (OSUR) Q1 2026 Earnings Transcript

DATE

May 6, 2026, 5 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Carrie Eglinton Manner
• Chief Financial Officer — Kenneth J. McGrath

TAKEAWAYS

• Total Revenue -- $27.9 million, representing a 4% sequential increase.
• Diagnostics Segment Revenue -- $16.9 million, up 12% from the prior quarter, with a balanced split between U.S. and international markets.
• Sample Management Solutions Revenue -- $9.1 million, remaining flat sequentially.
• GAAP Gross Margin -- 42.3%, up from 41.1% in the first quarter of 2025, attributed to insourcing production into Pennsylvania facilities.
• Non-GAAP Gross Margin -- 43.4%, compared to 41.7% in fiscal Q1 2025.
• GAAP Operating Loss -- $23.3 million for the quarter.
• Non-GAAP Operating Loss -- $19 million for the quarter.
• R&D Expense -- $13.7 million, reflecting increased investment in product launch preparation, and production readiness for CT and G test, and COLI P device.
• Sales and Marketing Expense -- $6.8 million for the quarter.
• General and Administrative Expense -- $14.6 million, with the increase driven by severance, proxy-related services, and annual accrual reset for performance incentives.
• Cash and Cash Equivalents -- $177 million at quarter-end, with no outstanding debt.
• Operating Cash Flow -- Negative $14 million, aligning with prior expectations.
• Share Repurchase -- $5 million used to repurchase 1.8 million shares during the quarter; $20 million returned to shareholders over the past four quarters (totaling 7.1 million shares).
• Q2 Revenue Guidance -- Expected in the range of $27 million to $30 million, with minimal contribution from COVID-19 testing.
• Q2 Gross Margin Outlook -- Management expects gross margin in the upcoming quarter to be similar to Q1.
• Q2 Operating Expense Outlook -- Projected to be in the high $20 millions, excluding stock compensation, and including non–run-rate expenses.
• Q3 Operating Expense Outlook -- Expected to decline further to the mid-$20 millions, as non–run-rate expenses abate.
• Upcoming Product Launches -- Two FDA-clearance submissions are under review: a rapid self-test for chlamydia and gonorrhea (CT and G), and the COLI P at-home urine collection device for STIs; both targeted for midyear clearance, and expected revenue ramp in the second half.
• International Nearshoring Progress -- Initial orders delivered to a nearshoring partner; additional orders anticipated from other partners in the second half; management describes revenue potential as "in the millions."
• Gross Margin Expansion Drivers -- Operational efficiencies from manufacturing insourcing, and increased volume; offsetting factors may include product mix and market dynamics.
• Strategic Capital Deployment -- Management continues to explore both organic and inorganic growth opportunities, targeting high-value markets.

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RISKS

• Academic and government demand for Sample Management Solutions remains subdued due to a "continued slow pace of NIH research grant funding," partially offsetting commercial growth.
• Management acknowledged that during initial ramp phases of new product launches (CT and G, COLI P), "you do not have as strong margins," leading to short-term margin pressure.
• General and administrative expense increased sequentially due to "nonrecurring items," including severance and proxy-related costs, although these are expected to normalize in subsequent quarters.
• Operating cash flow was negative $14 million, and management guided a return to breakeven operating cash flow "as we enter 2027," implying continued near-term cash usage.

SUMMARY

OraSure Technologies (NASDAQ:OSUR) management reported sequential revenue growth of 4% and gross margin growth in fiscal Q1 2026, with diagnostics revenue growing 12% sequentially and outpacing the flat Sample Management Solutions segment. The upcoming product pipeline includes two FDA submissions slated for midyear clearance, with management stating a second-half revenue ramp from these launches. Cash reserves remain robust following share repurchases, but operating losses persist as the company invests in growth and innovation initiatives.

• Management highlighted "significant opportunity in rebuilding momentum in health program implementation in countries around the globe," through ongoing international nearshoring partnerships.
• Leadership confirmed that near-term operating margins may be pressured during initial scaling of new products, but expect "in the fullness of time" both CT and G, and COLI P products to be accretive to overall margins.
• The integration of recently acquired Biomedomics, and expanded reach of Sickle SCAN, were cited as catalysts for international diagnostics market penetration.
• CEO Eglinton Manner stated, "we are accelerating profitable growth through investments in R&D targeting high-value growth markets, as well as acquisitions and partnerships that leverage our existing capabilities and provide an attractive risk-adjusted ROI."
• Management reiterated that HIV testing programs remain a key priority for U.S. public health customers, supporting continued diagnostics demand.

INDUSTRY GLOSSARY

• Nearshoring: Strategy of relocating manufacturing or assembly operations geographically closer to target markets, often in partnership with local entities, to streamline supply chains and better serve in-country customers.
• CT and G: Abbreviation for Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (G), two common sexually transmitted infections targeted by rapid molecular diagnostics.
• Syndemic Approach: Coordinated diagnostic and management strategy addressing multiple concurrent or overlapping health conditions—in this context, rapid testing for HIV, HCV, and syphilis.
• Sample Management Solutions: Segment encompassing OraSure's products and services for collection, stabilization, and transportation of biological specimens used primarily in genetic and molecular testing.

Full Conference Call Transcript

Carrie Eglinton Manner, our President and Chief Executive Officer, and Kenneth J. McGrath, our Chief Financial Officer. As a reminder, today's webcast is being recorded; the recording can be found on our Investor Relations website. Before we begin, you should know that this call may contain certain forward-looking statements including statements with respect to revenues, expenses, profitability, earnings or loss per share, and other financial performance, product development, performance, shipments and markets, business plans, regulatory filings and approvals, expectations and strategies. Actual results could be significantly different.

Factors that could affect results are discussed more fully in OraSure Technologies, Inc.’s SEC filings, its annual report on Form 10-K for the year ended 12/31/2025, its quarterly reports on Form 10-Q, and its other SEC filings. Although forward-looking statements help to provide more complete information about future prospects, listeners should keep in mind that forward-looking statements are based solely on information available to management as of today. OraSure Technologies, Inc. undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. With that, I am pleased to turn the call over to Carrie.

Carrie Eglinton Manner: Thanks, Jason, and thank you to everyone for joining us today. Today, I will discuss some highlights from Q1 and provide updates on our key priorities for 2026. Overall, we continue to advance our strategic transformation and execute with discipline as we focus on driving growth in 2026 and beyond. We have delivered meaningful progress over the last few years and continue strengthening our foundation, including leveraging our manufacturing capabilities and capacity to drive gross margin expansion while also streamlining our cost structure. We are elevating our core growth by expanding and diversifying our product portfolio and customer relationships, while several of our key end markets adapt to an evolving funding environment.

Ultimately, we are accelerating profitable growth through investments in R&D targeting high-value growth markets, as well as acquisitions and partnerships that leverage our existing capabilities and provide an attractive risk-adjusted ROI. We are also preparing for several near-term catalysts for growth, including our two product launches planned for midyear: one, our rapid molecular self-test for chlamydia and gonorrhea, also known as CT and G; and two, our COLI P at-home urine collection device for sexually transmitted infections, or STIs. Looking at our Q1 results, total revenue was $27.9 million, which was above the midpoint of our guidance range, and we generated solid gross margin expansion.

In our International Diagnostics business, we made significant progress on our initiatives to establish closer relationships with some of our distribution partners in Africa and their in-country value-added assembly and manufacturing, also known as nearshoring. During Q1, we delivered on initial orders to one of our nearshoring partners. We anticipate initial orders from other partners in the second half of the year, and we believe this trend represents a significant opportunity in rebuilding momentum in health program implementation in countries around the globe. Additionally, our international team is building positive momentum with the integration of Biomedomics into our sales channel and in expanding the reach of Sickle SCAN into new markets through our relationships with national health programs.

In our U.S. diagnostics business, our public health customers are stabilizing as they adapt to the current budget environment. In general, HIV testing programs remain a key priority for state and local public health agencies to control the spread of the virus and to manage downstream costs in the health care system. We are also seeing traction in demand resulting from our syndemic approach that leverages our portfolio of rapid tests across multiple conditions, including HIV, HCV, and syphilis, to deliver value and ease of use for customers.

Switching gears to Sample Management Solutions, we are seeing gradual improvement with commercial customers, including advanced genetic testing labs, driven by increasing utilization of precision medicine that leverages genetic insights to identify risk factors for cancer and other conditions, as well as diagnosis of rare diseases. During Q1, growth in commercial segments was offset by muted demand in academic and government markets related to the continued slow pace of NIH research grant funding. That said, we remain confident that the sample management business is positioned to deliver growth in 2026 and beyond, as genomic end segments gradually return to stronger growth.

Next, I will transition to our innovation and product pipeline, which includes several important near-term catalysts for growth in attractive markets, as well as our pipeline of earlier-stage opportunities in high-value growth markets. From a regulatory standpoint, our two applications for FDA clearances are in the review process. We continue to anticipate midyear clearances and expect that revenue from product launches will ramp in the second half of the year. As a reminder, our two submissions were for our over-the-counter rapid self-test for CT and G that is built on the SHERLOC molecular diagnostic platform, and our COLI P device for STIs.

The COLI P submission, which includes its proprietary stabilization chemistry, covers multiple STI indications and is being pursued in collaboration with a leading diagnostic platform provider. These two submissions, with their potential clearances, reflect our progress on our innovation roadmap and demonstrate how we are advancing our vision to help decentralize diagnostics and connect people to care that is more accessible, convenient, affordable, and private. With that, I will turn the call over to Ken to discuss our financial results and guidance.

Kenneth J. McGrath: Thanks, Carrie. Total revenue in the first quarter was $27.9 million and grew 4% on a sequential basis. Diagnostic products generated $16.9 million of revenue in Q1, with a fairly even split between U.S. and international revenue. Diagnostics revenue grew 12% on a sequential basis. Sample Management Solutions revenue in Q1 was $9.1 million, which was basically flat on a sequential basis. Our GAAP gross margin in the first quarter was 42.3% compared to 41.1% in Q1 2025, and non-GAAP gross margin in Q1 increased to 43.4% compared to 41.7% in Q1 2025. Gross margin expansion was driven by operating efficiencies, largely related to our initiatives to insource production from third-party contract manufacturers into our Pennsylvania facilities.

This transition leverages our advanced manufacturing capabilities and capacity developed during the COVID-19 pandemic. Looking at GAAP operating expenses in Q1, R&D expense was $13.7 million, sales and marketing expense was $6.8 million, and general and administrative expense was $14.6 million. The increase in R&D was primarily driven by investments in activities related to launch preparation and production readiness for our CT and G test and our COLI P device, including studies gathering data that we believe will position us for a successful commercial go-to-market launch. We expect our R&D expense to taper down during Q2 and Q3.

Looking at G&A expense, the sequential increase in Q1 was primarily driven by nonrecurring items, including severance expense related to a reduction in force in February, professional services related to our proxy, and the annual reset of accruals for performance-based incentive compensation programs. We expect G&A expense to decline to more normalized levels beginning in Q3 following the conclusion of the nonrecurring items I mentioned. Non-cash stock compensation expense in the first quarter was $2.8 million, and depreciation and amortization expense was $2.3 million. Our GAAP operating loss in Q1 was $23.3 million, and our non-GAAP operating loss was $19 million.

Moving to our balance sheet, we ended the quarter with zero debt and total cash and cash equivalents of $177 million. During the first quarter, we deployed $5 million to repurchase 1.8 million shares of our common stock. Over the last four quarters, we have returned $20 million of capital to shareholders through the repurchase of 7.1 million shares. Consistent with our balanced capital deployment strategy, we continue to evaluate organic and inorganic opportunities that can accelerate our profitable growth in high-value markets and leverage our existing capabilities. Operating cash flow in the first quarter was negative $14 million, which was consistent with our expectations.

As we discussed in February, we expect to return to breakeven from an operating cash flow standpoint as we enter 2027. This view is supported by our outlook for revenue growth, including contributions from our anticipated product launches, as well as our continued focus on delivering cost savings and operating efficiencies. Moving to guidance, we expect revenue in the second quarter of $27 million to $30 million, which includes a negligible amount of revenue for COVID-19 testing. We expect our gross margin in Q2 to be similar to Q1. We anticipate our operating expense will be in the high $20 millions in Q2, which includes non–run-rate expenses and excludes stock compensation.

Then we expect operating expenses to decline further to the mid-$20 millions in Q3 as non–run-rate expenses wind down. With that, I will turn the call back to Carrie to conclude.

Carrie Eglinton Manner: Thanks, Ken. As we move through 2026, OraSure Technologies, Inc. is positioned to accelerate our growth as we approach a series of regulatory and commercial milestones, and we continue to transform our business as we deliver on our strategy to decentralize diagnostics. We are excited about all of our opportunities, near term and long term, to expand our portfolio with our innovative product pipeline and our ability to leverage our manufacturing capabilities and capacity, as we work to create value for our customers and all shareholders. With that, I am pleased to turn the call over to the operator for Q&A.

Operator: We will now open the call for questions. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Patrick Donnelly from Citi. Your line is now open.

Analyst: Hi. This is Brandon on for Patrick. Thank you so much for taking our questions, and congrats on the quarter. I first want to start on the nearshoring initiatives. Great to see orders kind of start to come through there. I was wondering if you would be able to size those and, down the line as more are added, what those could potentially turn into from a revenue standpoint? And then also along those lines, can you talk about what the pipeline looks like to add more sites to that program?

Carrie Eglinton Manner: Thanks, Brandon. As far as nearshoring, we are really excited about the opportunity. For background, this is something that we have been working with these countries for several years to put in place. We said it was significant; we have not given an exact number as far as dollars, but you can imagine “in the millions” is significant for us. Not all relationships will be in that range, but we are seeing good progress as we continue to advance conversations and initiate nearshoring opportunities with other countries as well.

Analyst: Thank you. And then to touch on the margins, it is good to see the first quarter come in ahead of expectations. Should we view this as a new baseline for gross margins? And is there more internal insourcing or similar initiatives that you are planning on implementing to further that margin expansion?

Kenneth J. McGrath: Yes, thanks. As we said, Q2 will be similar to Q1. The tailwinds for improving our margins are our operational efficiencies, which you may recall we have discussed in the past where we consolidated our manufacturing into some core operation facilities. As we take advantage of those operating efficiencies overall and our improved absorption, and in addition as we increase our volumes, we will continue to see improvements in our gross margin. That could be offset, obviously, from time to time by mix and other dynamics that play out within our margins, but we are encouraged by the strong tailwinds that we have.

Operator: One moment for our next question. The next question comes from the line of Mac Etok from Stephens. Your line is now open.

Mac Etok: Hey, good afternoon, and thank you. On the outlet for the CT and G test, as you approach the launch of these products, I assume the commercial teams are already advancing discussions around agreements and partnerships. What progress have you made on that front so far, and how should we think about the early commercialization traction there?

Carrie Eglinton Manner: Hi, Mac. You are right that when you have the product launch expectation, everybody starts gearing up. There is an important distinction to be made, of course, with FDA-cleared products: unlike research-use-only, you really cannot premarket. We do, of course, understand market interest and opportunity in infectious disease, in STIs, and in sample and urine collection because we have such strong portfolios there today. We have done good market research, we stay very connected to these customers, and we are thinking about the kinds of conversations you can have ahead of time, which are really about how the whole test-to-treat system would work upon clearance.

Those dialogues—all within bounds—give a sense for the enthusiasm and interest to make STI testing private, convenient, affordable, and accessible, and to make urine self-collection something that can be done outside of a doctor’s office. With the FDA process, we are also very smart and compliant around not premarketing.

Mac Etok: Fair enough, I appreciate the color there. And then maybe following up on the margin question: as you think about the launch of some of these products in the pipeline, should we expect any near-term volatility or decremental margins as we think about near-term margin progression?

Kenneth J. McGrath: What we have said for CT and G is that, in the fullness of time, it will be accretive to our overall margins. But to your point, there is a ramp-up; when your volumes start out lower, you do not have as strong margins. We will experience some of that as we ramp. For our COLI P device, similarly, we expect margins in the fullness of time to be equal to or accretive to our overall current margins. But there is that ramp-up period, as we increase volumes and achieve full absorption over time.

Carrie Eglinton Manner: Thanks, Mac.

Operator: Thank you. I am showing no further questions at this time. I would now like to turn the call back to Carrie for closing remarks.

Carrie Eglinton Manner: Thanks, and thank you to everyone for joining us. We hope you have a great day, and with that, we will close the call. Thanks.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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