ORASURE TECHNOLOGIES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Exhibit 99.2
ORASURE TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On August 15, 2019, OraSure Technologies, Inc. (the “Company”) entered into an asset purchase agreement (the “Agreement”) between the Company and CryoConcepts, LP (“CryoConcepts”), pursuant to which the Company has agreed to sell certain assets associated with the Company’s cryosurgical systems business (the “Business”), including the Company’s professional Histofreezer product line and several private label cryosurgical products sold in the consumer market, along with related patents and trademarks, customer contracts and goodwill associated with the Business, for an aggregate purchase price of $12.0 million in cash (the “Sale”).
The Company will recognize a gain as a result of the Sale, which is currently estimated at approximately $10.5 million before income taxes. The estimated gain represents the excess of: (i) the proceeds of the Sale over (ii) the estimated carrying value of the assets of the Company sold to CryoConcepts at August 15, 2019 and estimated transaction costs.
The unaudited pro forma consolidated financial information of the Company presented below was derived from the Company’s historical consolidated financial statements and is presented to give effect to the Sale. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2019 assumes the Sale occurred on that date. The unaudited pro forma condensed consolidated statement of income for the six months ended June 30, 2019 assumes the Sale occurred on January 1, 2019 and the unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2018 assumes the Sale occurred on January 1, 2018.
The unaudited pro forma consolidated financial statements are presented for illustrative and informational purposes only and are not intended to represent or be indicative of the Company’s consolidated results of operations or financial position that would have been reported had the Sale been completed as of the dates presented, and should not be taken as a representation of the Company’s future consolidated results of operations or financial condition. The historical financial statements have been adjusted in the unaudited pro forma financial information to give effect to pro forma events that are: (i) directly attributable to the Sale; and (ii) factually supportable. The pro forma adjustments are based upon information available to management and assumptions that management believes are reasonable and appropriate under the circumstances; actual amounts may differ from these estimated amounts. The pro forma adjustments are described in the notes and the unaudited pro forma consolidated financial information should be read in conjunction with the related notes.
The unaudited pro forma consolidated financial information should also be read in conjunction with the historical consolidated financial statements and accompanying notes of the Company included in the Company’s 2018 Annual Report filed on Form 10-K and its Quarterly Report for the quarterly period ended June 30, 2019, filed on Form 10-Q.
ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2019
(in thousands, except per share amounts)
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As Reported |
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Cyrosurgical Systems Business Disposition |
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Pro Forma Adjustments |
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Pro Forma |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ |
72,567 |
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$ |
— |
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$ |
12,000 |
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(1) |
$ |
84,567 |
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Short-term investments |
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74,446 |
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— |
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— |
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74,446 |
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Accounts receivable, net of allowance for doubtful accounts of $571 |
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29,390 |
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— |
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— |
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29,390 |
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Inventories |
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25,670 |
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(1,320 |
) |
(2) |
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— |
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24,350 |
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Prepaid expenses and other current assets |
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7,185 |
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— |
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— |
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7,185 |
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Total current assets |
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209,258 |
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(1,320 |
) |
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12,000 |
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219,938 |
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Noncurrent Assets: |
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Property, plant and equipment, net |
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27,793 |
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— |
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(2) |
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— |
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27,793 |
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Intangible assets, net |
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12,472 |
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— |
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— |
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12,472 |
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Goodwill |
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29,280 |
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— |
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— |
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29,280 |
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Long-term investments |
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39,555 |
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— |
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— |
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39,555 |
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Other noncurrent assets |
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9,107 |
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— |
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— |
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9,107 |
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Total noncurrent assets |
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118,207 |
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— |
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— |
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118,207 |
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TOTAL ASSETS |
$ |
327,465 |
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$ |
(1,320 |
) |
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$ |
12,000 |
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$ |
338,145 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts payable |
$ |
10,956 |
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$ |
— |
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$ |
250 |
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(3) |
$ |
11,206 |
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Deferred revenue |
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3,914 |
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— |
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— |
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3,914 |
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Accrued expenses and other current liabilities |
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9,832 |
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(52 |
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(4) |
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— |
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9,780 |
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Acquisition-related contingent consideration obligation |
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5,249 |
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— |
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— |
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5,249 |
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Total current liabilities |
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29,951 |
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(52 |
) |
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250 |
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30,149 |
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Noncurrent Liabilities: |
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Acquisition-related contingent consideration obligation |
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649 |
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— |
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— |
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649 |
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Other noncurrent liabilities |
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7,734 |
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— |
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— |
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7,734 |
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Deferred income taxes |
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910 |
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— |
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— |
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910 |
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Total noncurrent liabilities |
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9,293 |
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— |
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— |
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9,293 |
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TOTAL LIABILITIES |
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39,244 |
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(52 |
) |
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250 |
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39,442 |
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STOCKHOLDERS' EQUITY |
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Preferred stock, par value $.000001, 25,000 shares authorized, none issued |
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— |
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— |
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— |
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— |
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Common stock, par value $.000001, 120,000 shares authorized, 61,725 shares issued and outstanding |
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— |
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— |
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— |
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— |
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Additional paid-in capital |
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399,585 |
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— |
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— |
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399,585 |
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Accumulated other comprehensive loss |
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(13,315 |
) |
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— |
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— |
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(13,315 |
) |
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Accumulated deficit |
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(98,049 |
) |
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(1,268 |
) |
(5) |
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11,750 |
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(5) |
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(87,567 |
) |
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Total stockholders' equity |
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288,221 |
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(1,268 |
) |
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11,750 |
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298,703 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
327,465 |
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$ |
(1,320 |
) |
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$ |
12,000 |
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$ |
338,145 |
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See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. |
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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30, 2019
(in thousands, except per share amounts)
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As Reported |
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Cyrosurgical Systems Business Disposition |
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Pro Forma |
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NET REVENUES: |
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Products and services |
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$ |
65,599 |
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$ |
(6,093 |
) |
(6) |
$ |
59,506 |
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Other |
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3,349 |
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— |
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3,349 |
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68,948 |
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(6,093 |
) |
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62,855 |
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COST OF PRODUCTS SOLD |
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25,850 |
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(2,057 |
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(7) |
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23,793 |
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Gross profit |
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43,098 |
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(4,036 |
) |
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39,062 |
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OPERATING EXPENSES: |
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Research and development |
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8,906 |
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(47 |
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(8) |
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8,859 |
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Sales and marketing |
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14,982 |
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(862 |
) |
(9) |
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14,120 |
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General and administrative |
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16,192 |
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— |
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16,192 |
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Change in the estimated fair value of acquisition-related contingent consideration |
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1,544 |
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— |
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1,544 |
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41,624 |
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(909 |
) |
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40,715 |
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Operating income (loss) |
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1,474 |
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(3,127 |
) |
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(1,653 |
) |
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OTHER INCOME |
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1,048 |
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— |
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1,048 |
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Income (loss) before income taxes |
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2,522 |
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(3,127 |
) |
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(605 |
) |
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INCOME TAX EXPENSE |
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1,382 |
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(52 |
) |
(10) |
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1,330 |
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NET INCOME (LOSS) |
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$ |
1,140 |
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$ |
(3,075 |
) |
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$ |
(1,935 |
) |
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EARNINGS (LOSS) PER SHARE: |
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BASIC |
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$ |
0.02 |
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$ |
(0.03 |
) |
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DILUTED |
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$ |
0.02 |
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$ |
(0.03 |
) |
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SHARES USED IN COMPUTING EARNINGS PER SHARE: |
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BASIC |
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61,621 |
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61,621 |
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DILUTED |
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62,191 |
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62,191 |
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See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. |
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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2018
(in thousands, except per share amounts)
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As Reported |
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Cyrosurgical Systems Business Disposition |
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Pro Forma |
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NET REVENUES: |
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Products and services |
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$ |
165,428 |
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$ |
(10,767 |
) |
(6) |
$ |
154,661 |
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Other |
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|
16,315 |
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— |
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|
16,315 |
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181,743 |
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(10,767 |
) |
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170,976 |
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COST OF PRODUCTS SOLD |
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68,130 |
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(3,428 |
) |
(7) |
|
64,702 |
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Gross profit |
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|
113,613 |
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(7,339 |
) |
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|
106,274 |
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OPERATING EXPENSES: |
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Research and development |
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|
16,250 |
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— |
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(8) |
|
16,250 |
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Sales and marketing |
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|
30,609 |
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(1,547 |
) |
(9) |
|
29,062 |
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General and administrative |
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|
38,325 |
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|
|
— |
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|
38,325 |
|
|
|
|
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|
85,184 |
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(1,547 |
) |
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|
83,637 |
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Operating income |
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|
28,429 |
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(5,792 |
) |
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|
22,637 |
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OTHER INCOME |
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|
3,287 |
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|
|
— |
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|
3,287 |
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Income before income taxes |
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|
31,716 |
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(5,792 |
) |
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|
25,924 |
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INCOME TAX EXPENSE |
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|
11,320 |
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(11 |
) |
(10) |
|
11,309 |
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NET INCOME |
|
$ |
20,396 |
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|
$ |
(5,781 |
) |
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$ |
14,615 |
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EARNINGS PER SHARE: |
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BASIC |
|
$ |
0.33 |
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$ |
0.24 |
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DILUTED |
|
$ |
0.33 |
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$ |
0.23 |
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SHARES USED IN COMPUTING EARNINGS PER SHARE: |
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BASIC |
|
|
61,112 |
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|
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|
61,112 |
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DILUTED |
|
|
62,532 |
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|
62,532 |
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See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. |
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NOTES AND MANAGEMENT’S ASSUMPTIONS TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
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(1) |
Reflects the cash consideration received by the Company pursuant to the Agreement. |
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(2) |
Reflects the removal of inventory and fully-depreciated fixed assets sold with the Business. |
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(3) |
Represents the accrual for estimated transaction fees. |
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(4) |
Represents the reduction in the tax accrual associated with the removal of the operating results of the Business. |
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(5) |
Reflects the estimated net gain on the sale of the Business and the conveyed assets. This estimated gain has not been reflected in the pro forma consolidated statement of income as it is considered to be nonrecurring in nature. |
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(6) |
Adjustment to remove revenues associated with the Business. |
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(7) |
Adjustment to remove the cost of manufacturing the Cryosurgical Systems products. |
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(8) |
Adjustment to remove regulatory costs. |
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(9) |
Adjustment to remove direct sales and marketing costs associated with the Business including the costs associated with two employees transferred to CryoConcepts, LP. |
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(10) |
Adjustment to reflect the income tax impact as a result of the removal of the operating results of the Business. |