After increasing its stake in the infectious disease testmaker last year, Altai Capital Management is now pushing OraSure Technologies to consider the sale of its entire business, along with a shift in its M&A strategy.
The hedge fund on Tuesday published a letter sent to the company’s board, citing years-long declines in OraSure’s stock price and the slowing of its core diagnostic sales in a post-COVID world.
Back in January, Altai put forward two candidates for election to the board of directors at this year’s annual meeting. They include Rishi Bajaj, Altai’s founder, president and chief investment officer, and John Bertrand, co-founder and CEO of Digital Diagnostics, who has previously served as an executive at Epic and as an advisor and board member at multiple investment firms and medtech companies.
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In the letter, Bajaj said OraSure exited the pandemic with a windfall from selling COVID tests and $290 million in cash on its balance sheet. He criticized some of the company’s main investments in 2024, saying they have yet to pay off—namely, $30 million to support the series B round of the diagnostic startup Sapphiros, netting it future distribution rights, and a commitment of at least $25 million to acquire the CRISPR test developer Sherlock Biosciences.
Bought for just $5 million upfront—after the former Fierce 15 winner raised more than $100 million in venture capital during its lifetime—Sherlock has been working on a combined test for the sexually transmitted infections chlamydia and gonorrhea, seen as a potential $1.5 billion market. That diagnostic is currently undergoing FDA review, with a decision expected before the end of June, according to Altai.
“If elected, John Bertrand and I will evaluate Sherlock’s prospects with open minds,” Bajaj wrote. “We would be delighted to change our assessment if the facts change for the better. But hope is not a strategy, and it is certainly not a reason to deny shareholders a voice on this Board.”
Altai has estimated that OraSure has spent about a quarter of its cash since 2023 while quarterly core revenues declined by about 20% during the same time, with its portfolio of rapid home and point-of-care tests spanning STIs as well as the Ebola virus and hepatitis C. The firm grew its stake last year to about 5.2%, up from around 3%.
In its most recent fourth-quarter results, OraSure posted a 22% decline in its core business and a 14% drop for the year, for totals of $26.7 million and $112.5 million, respectively.
OraSure was also the target of a separate takeover attempt in 2025 by healthcare entrepreneur Ron Zwanziger, who was rebuffed after offering between $3.50 and $4 per share, according to a report last August from Reuters.
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Altai said OraSure should hang up the for-sale sign, while also attempting to acquire established businesses to help scale up its commercial reach.
“We believe OraSure is worth significantly more in a sale than as a standalone company,” Bajaj wrote in the letter this week. “We value each component separately: the cash on its balance sheet, the current operating business, and the potential value of recent investments and acquisitions.”
“At present, much of the value in OraSure’s share price simply reflects its cash balance. We believe the remaining operating business, including its underutilized manufacturing facility, could be worth between $145 million and $241 million to a strategic buyer,” he added, or between $4.54 to $6.60 per share, for a 42% to 107% premium.
