OraSure Technologies Faces Investor Pressure Amid Rejected Buyout Offer and Financial Challenges

OraSure Technologies, a prominent infectious disease testmaker, is encountering increased pressure from investors following a rejected buyout offer and a significant drop in stock price over the past year. The company's situation has sparked discussions about potential changes to its board of directors and raised questions about its future direction.

Investor Activism and Buyout Rejection

Altai Capital Management, a hedge fund, has recently increased its stake in OraSure from 3% to 5%, signaling a growing interest in the company's governance. According to reports from Reuters, Altai is eyeing the seats of two directors up for reelection next year, with the possibility of proposing Altai founder Rishi Bajaj as a candidate.

This move comes in the wake of OraSure's rejection of an unsolicited cash offer from healthcare entrepreneur Ron Zwanziger. The proposal, valued between $3.50 and $4 per share, was turned down over the summer when OraSure's stock was trading around or below $3. Following the rejection, Zwanziger reportedly sent a letter to OraSure suggesting he might pursue an "adversarial path" if a deal could not be reached.

Financial Performance and Strategic Initiatives

OraSure's financial performance has been a point of concern for investors. The company's most recent earnings report in August revealed a 43% year-over-year decline in second-quarter net revenues, dropping to $31.2 million from $54.3 million in the previous year.

In response to these challenges, OraSure's management has outlined several strategic initiatives. President and CEO Carrie Eglinton stated, "Our team is focused on advancing our innovation roadmap, as well as expanding our commercial reach and diversifying our client relationships in new segments under the leadership of our Chief Commercial Officer, Anne Messing, as we prepare to launch several new products."

Acquisition and Product Development

In late 2024, OraSure made a strategic move by acquiring CRISPR-based test developer Sherlock Biosciences for $5 million in upfront cash. The acquisition primarily focused on Sherlock's combined test for chlamydia and gonorrhea, which is currently undergoing clinical testing. OraSure expects to submit this test for FDA review by the end of 2025. The deal also included provisions for over $20 million in regulatory milestone payments and royalties.

This acquisition aligns with OraSure's efforts to expand its product portfolio, which already includes rapid home and point-of-care tests for various infectious diseases such as COVID-19, hepatitis C, Ebola virus, and sexually transmitted infections like HIV and syphilis.