OraSure Technologies Q1 Earnings Call Highlights

Key Points

• OraSure reported Q1 revenue of $27.9 million (up 4% sequentially) with diagnostics up 12%, and improved gross margins to 42.3% GAAP (43.4% non‑GAAP) driven by insourcing manufacturing; management expects Q2 margins to be similar to Q1.
• The company is awaiting FDA review of two planned mid‑year launches — an OTC rapid molecular CT/NG self‑test (Sherlock platform) and the Colli‑Pee at‑home urine collection device — and anticipates both products will begin contributing revenue in the second half of 2026, though early ramping may pressure margins before becoming accretive.
• OraSure posted a Q1 GAAP operating loss of $23.3 million but finished the quarter with $177 million in cash and zero debt, repurchased $5 million of stock in Q1 (about $20 million over the past year), expects to return to break‑even operating cash flow entering 2027, and guided Q2 revenue of $27–30 million.

OraSure Technologies NASDAQ: OSUR reported first-quarter 2026 revenue of $27.9 million, topping the midpoint of its prior guidance range, as the company pointed to improving gross margins, ongoing cost actions, and preparations for two planned mid-year product launches that management expects to begin contributing revenue in the second half of the year.

Quarterly performance and business trends

Chief Financial Officer Ken McGrath said total revenue was $27.9 million in the first quarter, up 4% sequentially. Diagnostic products generated $16.9 million, with a “fairly even split between U.S. and international revenue,” and diagnostics revenue rose 12% sequentially. Sample management solutions revenue was $9.1 million, which McGrath described as “basically flat on a sequential basis.”

President and Chief Executive Officer Carrie Eglinton Manner said the company continues to “advance our strategic transformation and execute with discipline,” including efforts to leverage manufacturing capacity to expand gross margins while streamlining costs. She also said OraSure is “elevating our core growth by expanding and diversifying our product portfolio and customer relationships” as several end markets adapt to a changing funding environment.

In international diagnostics, Manner highlighted progress with “distribution partners in Africa” tied to “in-country value-added assembly and manufacturing, also known as nearshoring.” She said OraSure delivered on initial orders to one nearshoring partner in the quarter and anticipates initial orders from other partners in the second half of the year.

In the U.S. diagnostics business, Manner said public health customers are stabilizing as they adjust to current budgets, and that HIV testing “remain[s] a key priority for state and local public health agencies.” She also said the company is seeing demand for its “syndemic approach” that leverages rapid tests across conditions including HIV, hepatitis C (HCV), and syphilis.

In sample management solutions, Manner said the company is seeing “gradual improvement with commercial customers,” including advanced genetic testing labs tied to increased utilization of precision medicine and rare disease diagnostics. However, she said 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.”

Gross margin improvement and manufacturing initiatives

OraSure reported GAAP gross margin of 42.3% in the first quarter, up from 41.1% in the year-ago period. Non-GAAP gross margin was 43.4% compared to 41.7% a year earlier. McGrath attributed the expansion to “operating efficiencies,” primarily related to insourcing production from third-party contract manufacturers into the company’s Pennsylvania facilities—capacity developed during the COVID pandemic.

Asked on the call whether first-quarter margins represent a new baseline, McGrath said the company expects second-quarter gross margin to be “similar to Q1.” He added that improved absorption from consolidated manufacturing and higher volumes could support margin improvement over time, while noting mix and other factors could still cause periodic variation.

Pipeline and regulatory updates ahead of mid-year launches

Manner reiterated that OraSure is preparing for “two product launches planned for mid-year”: an over-the-counter rapid molecular self-test for chlamydia and gonorrhea (CT/NG) built on the Sherlock molecular diagnostics platform, and the Colli-Pee at-home urine collection device for sexually transmitted infections. She said both FDA clearance applications are currently under review and the company continues to anticipate mid-year clearances, with revenue expected to ramp in the second half of the year.

Manner said the Colli-Pee submission includes proprietary stabilization chemistry and “covers multiple STI indications,” and is being pursued “in collaboration with a leading diagnostics platform provider.” She described the submissions as progress toward a strategy to decentralize diagnostics and connect people to care that is “more accessible, convenient, affordable, and private.”

During Q&A, management addressed commercialization planning for the CT/NG test and Colli-Pee, while emphasizing limits on pre-marketing prior to FDA clearance. Responding to a question from Stephens analyst Mac Etoch, management said the company is staying connected to customers and focusing on conversations around how “the whole test-to-treat system would work upon clearance,” while remaining “smart and compliant around not pre-marketing.”

McGrath also discussed expected margin dynamics as new products scale. He said OraSure expects CT/NG to be accretive to overall margins “in the fullness of time,” but that there may be pressure early in the ramp as volumes start lower. He offered a similar expectation for the Colli-Pee device, with margins equal to or accretive to current levels over time as volumes rise and absorption improves.

Expenses, cash position, and capital deployment

OraSure posted a GAAP operating loss of $23.3 million in the first quarter and a non-GAAP operating loss of $19.0 million. McGrath said first-quarter GAAP operating expenses included R&D of $13.7 million, sales and marketing of $6.8 million, and general and administrative expense of $14.6 million.

McGrath said the rise in R&D was driven primarily by launch preparation and production readiness for CT/NG and Colli-Pee, including studies intended to support commercial go-to-market efforts. He said the company expects R&D expense to “taper down during Q2 and Q3.”

G&A increased sequentially due to “non-recurring items,” including severance related to a February reduction in force, professional services related to the company’s proxy, and the annual reset of incentive compensation accruals. McGrath said G&A is expected to decline to more normalized levels beginning in the third quarter as those items roll off.

On the balance sheet, OraSure ended the quarter with “zero debt” and $177 million in cash and cash equivalents. The company used $5 million during the quarter to repurchase 1.8 million shares. McGrath said that over the last four quarters OraSure has returned $20 million to shareholders through repurchases totaling 7.1 million shares, while continuing to evaluate organic and inorganic opportunities that could accelerate profitable growth in “high-value markets.”

Operating cash flow was negative $14 million in the first quarter, which McGrath said was consistent with expectations. He reiterated a view shared in February that the company expects to return to break-even operating cash flow “as we enter 2027,” supported by anticipated revenue growth including contributions from planned launches and ongoing cost savings.

Second-quarter outlook and nearshoring commentary

For the second quarter, McGrath guided to revenue of $27 million to $30 million, which includes a “negligible amount of revenue for COVID-19 testing.” He said gross margin in Q2 is expected to be similar to Q1. Operating expense is projected to be in the “high $20 million range” in Q2 (excluding stock compensation) and to decline to the “mid $20 millions” in Q3 as non-run-rate expenses wind down.

On nearshoring, Citi’s Brendan (on for Patrick Donnelly) asked management to size early orders and discuss the pipeline. McGrath said the company has not provided an exact dollar figure but suggested the opportunity is meaningful, saying investors can “imagine in the millions is significant for us,” while adding that not all relationships will be at that level. He said the company is seeing progress as it continues conversations and initiates nearshoring opportunities with additional countries.

Manner closed the call by saying OraSure is positioned to “accelerate our growth as we approach a series of regulatory and commercial milestones” and remains focused on transforming the business and executing its strategy to decentralize diagnostics.

About OraSure Technologies NASDAQ: OSUR

OraSure Technologies, Inc is a Bethlehem, Pennsylvania–based diagnostic and medical device company specializing in the development, manufacture and commercialization of point-of-care and self-testing products. Founded in 1988, OraSure has built a portfolio of oral fluid and other non-invasive specimen collection technologies that support the detection of infectious diseases, drugs of abuse, and health and wellness biomarkers.

The company's flagship product, the OraQuick® rapid HIV test, was the first Food and Drug Administration–approved over-the-counter oral fluid test for the detection of HIV-1/2 antibodies.

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