On August 13, OPKO Health (NASDAQ:OPK) expanded its financing relationship with HealthCare Royalty, a business of KKR, issuing an additional $125 million in senior secured notes secured by the royalty stream tied to mazdutide, the GLP-1 drug OPKO licensed to Eli Lilly and now collects royalties on in China. The notes mature in 2044, matching the maturity of OPKO’s original HCRx notes, and hand the company fresh capital without selling a single new share.
Cash Without Giving Up The Upside
The structure is the interesting part. Total payments under the expanded deal are capped at 1.5 times the amount OPKO actually receives, and once that cap is hit, OPKO keeps the future royalty economics on that stream for itself. Mazdutide is commercialized in China by Innovent Biologics, and OPKO earns royalties on those sales through its Eli Lilly license, having recorded its first mazdutide royalty revenue in 2025 after the drug’s China launch. CEO Phillip Frost called mazdutide “a promising opportunity in China” within OPKO’s partnered portfolio.
The rest of the business is also trending in the right direction. On July 27, OPKO reported second-quarter revenue of $163.5 million, up from $156.8 million a year earlier, and a net loss of $8.4 million, or a penny a share, a sharp improvement from the $148.4 million loss in the same 2025 quarter. IP and other revenue jumped to $46.1 million from $15 million, helped by $29.4 million tied to an amended Nicoya agreement covering Rayaldee’s rollout in China, alongside a growing NGENLA profit share and combined Eli Lilly and Regeneron revenue of $4.3 million. Behind that, OPKO’s ModeX unit kept multiple antibody programs moving through early clinical trials.
Where The Growth Isn’t
The diagnostics segment tells a different story. Revenue there fell to $74.5 million in the second quarter from $101.1 million a year earlier, largely because OPKO sold its oncology assets to Labcorp in September 2025. That segment only turned a profit this quarter because of an $18.1 million earnout tied to that same sale, not from underlying demand. Revenue tied to OPKO’s BARDA contract also slipped to $5.0 million from $6.5 million a year ago.
The mazdutide notes deal cuts both ways, too. Financing against a royalty stream that only began generating revenue in 2025 means OPKO is trading a still-young income source for cash now, and until the 1.5 times cap is repaid, a meaningful share of that stream’s near-term value belongs to HealthCare Royalty rather than OPKO. Meanwhile, the company kept buying back stock, spending $13.2 million on repurchases in the quarter, even while it was still posting a net loss, with cash and marketable securities totaling $314.4 million as of June 30.
A Market Still Split
Hedge fund ownership in OPKO ticked up to 21 funds in the most recent quarter from 20 the quarter before, a modest gain in institutional interest. Short sellers, though, have positioned more heavily, with 8.33% of the float sold short, a level that points to a real bear camp rather than routine hedging. That split, rising fund interest against elevated short interest, suggests the market hasn’t settled on which side of OPKO’s story to believe.
What Happens Next
OPKO’s mazdutide notes deal is a bet that trading away near-term royalty upside for non-dilutive cash today is worth it, especially since the company keeps the long-term economics once the 1.5 times cap is satisfied. For that bet to pay off, mazdutide sales in China need to keep scaling past their 2025 launch. For skeptics, the story is simpler: diagnostics revenue is shrinking post-Labcorp, BARDA revenue is fading, and OPKO is still not profitable even after a much narrower second-quarter loss. Both threads are visible in the same set of numbers, and neither has resolved yet.
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