OPKO Health's Strategic Asset Sale to Labcorp: A Financial Boost and Strong Analyst Expectations

OPKO Health plans to sell its BioReference Health oncology and clinical testing segment to Labcorp, yielding over $25 million in annual savings. Analysts project a strong potential upside in OPKO's stock price, with a favorable average target of $3.09, representing a 141.41% increase from the current price. Six brokerage firms have a "Buy" rating for OPKO, and the GF Value estimates a slight downside of 4.69%.

OPKO Health, Inc. (OPK) has outlined its strategic initiatives for the remainder of 2025, including the pending sale of BioReference Health's oncology and related clinical testing business to Labcorp. The sale is expected to yield over $25 million in annualized cost savings, according to the company's Q2 2025 earnings call [1]. This transaction aims to monetize certain assets while sharpening BioReference's focus on its core testing business and improving its financial profile.

The company's Chairman and CEO, Phillip Frost, highlighted the continued strong performance of OPKO's Latin American business and its Irish contract pharmaceutical development and manufacturing unit, despite facing foreign currency headwinds. Frost also noted significant progress in the company's pharmaceutical pipeline, including ModeX programs in Phase I and a key partnership with Merck for the Phase I EBV vaccine trial. Additionally, OPKO is advancing both injectable and oral formulations of OPK-88006 for obesity and MASH with Entera Bio, and collaborating on a GLP-2 candidate for short bowel syndrome.

Dr. Elias Adam Zerhouni, President and Vice Chairman, announced that BioReference's headcount stands at approximately 1,900, with an expected reduction to 1,450–1,500 by Q4 post-transaction. The FDA approved a supplemental application for the 4Kscore test, enabling its use without digital rectal examination information, which is expected to provide further opportunities for growth.

OPKO's CFO, Adam E. Logal, provided full-year 2025 guidance: total revenue between $640 million and $660 million, with revenue from services of $405 million to $425 million, product revenue of $160 million to $170 million, and other revenue of $65 million to $75 million. Total costs and expenses are expected to be between $835 million and $865 million, excluding $15 million to $20 million of one-time restructuring costs for the Diagnostics business. Logal also highlighted a $100 million gain on the oncology transaction, which will reduce operating expenses and increase operating income in the quarter when the deal closes.

OPKO's Q2 2025 financial results showed a net loss of $148.4 million or ($0.19) per share, compared to $10.3 million or $0.01 per share in Q2 2024, reflecting a $92 million expense related to the convertible note exchange this quarter and a $60 million gain in the prior year from an investment. The company ended the quarter with approximately $285 million in cash, cash equivalents, and restricted cash.

Analysts have a neutral to slightly positive sentiment towards OPKO, with questions focused on growth prospects, margin improvement, and pipeline differentiation. The company's stock price has been volatile, with a slight downside estimate of 4.69% by GF Value. Six brokerage firms have a "Buy" rating for OPKO, with a favorable average target of $3.09, representing a 141.41% increase from the current price.

References:
[1] https://seekingalpha.com/news/4476199-opko-health-outlines-640m-660m-2025-revenue-target-as-bioreference-sale-and-pipeline-advances
[2] https://www.nasdaq.com/articles/opk-stock-slips-following-q2-earnings-miss-gross-margin-expands