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Expectations Might Be Overly Optimistic For OraSure As It Approaches The Billion Dollar Club

Paul Nouri, CFP profile picture
Paul Nouri, CFP


  • Shares of OSUR have so far doubled in 2017 on the heels of a series of contract wins and newfound profitability.
  • While two segments are providing a halo effect for the trading multiple of the entire company, its remaining segments are struggling.
  • A sum-of-the-parts analysis shows why the company's 40x forward earnings multiple (excluding net cash) is not warranted.

OraSure (NASDAQ:OSUR) is a diagnostic company whose fortunes have been volatile over its years in existence. The company sells point-of-care infectious disease tests, primarily for HIV and HCV, employment and insurance screening tests and molecular sample collection systems. Going forward, its research efforts are focused on validating and gaining broad approval for Zika and Ebola tests. The following is a sum-of-the-parts analysis of the company. For our valuation, we use price to sales as the primary valuation methodology because the company's core businesses (excluding DNA Genotek) have not historically been profitable, and are not currently profitable, when excluding exclusivity payments.

ChartOSUR data by YCharts

Mature Segments

Domestic Point-of-Care HIV Testing (2016 sales $28 million)

The company's point-of-care HIV product has long differentiated itself as more convenient than its peers' blood based tests and even one competitor's more cumbersome saliva based solution. However, that hasn't stopped the company's sales in this segment from declining each year since 2009. The primary reason for the decline is that the segment has become more competitive since 2009. In 2013, Trinity Biotech (TRIB) received approval for the HIV-2 claim, matching its P-O-C competitors at the time. Then, in 2014, Alere (ALR) received approval for the first and only point-of-care HIV test that detects the p24 antigen, which is able to detect the presence of HIV weeks earlier than the traditional HIV 1/2 antibody tests that all of the primary point-of-care competitors offer. Factions in the infectious disease community contend that ALR's test is not as sensitive as lab based tests, renewing a push for lab based testing overall. Further, there has been literature stating that saliva-based HIV testing is inferior to blood based tests, possibly contributing to lower demand and creating greater pricing pressure on OSUR's tests. Finally in the summer of 2016, Chembio (

This article was written by

Paul Nouri, CFP profile picture
Paul has been managing Noble Equity Fund, LP, a healthcare-focused hedge fund, since January of 2008. In addition, he manages Noble Advisors, LLC, a Registered Investment Advisor. Prior to this, he worked on the sell side at Sidoti & Co. and Deutsche Bank covering various industries. Mr. Nouri graduated from Rensselaer Polytechnic Institute, in 2005, with a Bachelors of Science in Finance and graduated from Yale School of Management in 2017 with a MBA.

Analyst’s Disclosure: I am/we are short OSUR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

We are short OraSure and long Trinity Biotech.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (8)

27 Aug. 2020
Just took a -20% hit today so far. Anyone knows why? Big dip.
28 Aug. 2020
@Paul Nouri, CFP Thank you! 

Looks like OSUR is not as nimble as Abbot. They are developing an at home COVID test, but it seems it will still take them a few more months.
Paul Nouri, CFP profile picture
Well...the bar is higher for an at home test. I'm not sure if the EUA changes requirements, but when OSUR got approval for the at home HIV test, performance had to be extremely good and the company had to have a full time customer support center for people. ABTs test is going to be used at Doctors offices and similar settings. I would think that the way to get back to normal in the country is at home tests, so I am personally looking forward to see if OSUR or any of their competitors can pull it off.
Paul Nouri, CFP profile picture
Post Earnings Update on the blog:

easydom profile picture
"Since August 2016, as shares of OraSure have risen from $7 to today's $17, more than 2 million insider shares have been sold by insiders across the board, representing approximately half of the insider ownership." This is the smartest action this management ever took. What a clown collection here, especially the BOD.

I sold back in March after I finally got back in the black - took 11 very long years.

This company should have been bought out long ago and the product suite driven by a far more responsible and capable organization.
someconcerns profile picture
When I saw that management had unloaded as many shares as it did (I track insider sales daily) I sold enough of my shares so I'm now playing with house money. Since then, we have had the Gates Foundation news and more strength. Watching and waiting.
Prime Day sales of 23andMe DNA kits were huge, the kit has been a #1 seller on Amazon for a while.
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