Good afternoon, everyone, and welcome to the OraSure Technologies 2019 Third Quarter Financial Results Conference Call and Simultaneous Webcast. As a reminder, today's conference is being recorded. Once the follow-up is completed, a questioner can rejoin the queue for further questions. OraSure Technologies issued a press release at approximately 4 pm Eastern Time today regarding its 2019 Q3 financial results and certain other matters. The press release is available on our website at www.orasure.com or by calling 610-882-1820.
If you go to our website, the press release can be found by opening the Investor Relations page and clicking on the link for press releases. With us today are Doctor. Stephen Tang, President and Chief Executive Officer and Mr. Roberto Cuca, Chief Financial Officer. Doctor.
Tang and Mr. Cuca will begin with opening statements, which will be followed with a question and answer session. Before I turn the call over to Tang, you should know that this call may contain certain forward looking statements, including statements with respect to revenues, expenses, profitability, earnings or loss per share and other financial performance, product development, performance, shipments and markets, business plans, regulatory filings and approvals, expectations and strategies. Actual results could be significantly different. Factors that could affect results are discussed more fully in the company's SEC filings, including its registration statements, its annual report on Form 10 ks for the year ended December 31, 2018, its quarterly reports on Form 10 Q and its other SEC filings.
Although forward looking statements help to provide complete information about future prospects, listeners should keep in mind that forward looking statements are based solely on information available to management as of today. The company undertakes no obligation to update any forward looking statements to reflect events or circumstances after this call. With that, I would like to turn the call over to Doctor. Stephen Tang.
Thank you, Gene. Good evening, everyone, and welcome to our call. During today's call, we would like to address 2 subjects that are most likely top of mind. The first is an update on the implementation of our innovation growth strategy, where I will outline our ongoing efforts to position OraSure to capitalize on some of the fastest growing segments within the molecular and diagnostic markets. Secondly, we will break down our financial performance for the Q3 and provide an updated guidance.
The information we share today will provide context and demonstrate that our business is largely on track with the exception of consumer genomics. The announcement earlier today that we have signed an agreement to acquire Diversigen is yet another example of the progress we're making in executing our growth strategy. Diversigen is an exceptional company and a proven leader in the microbiome laboratory and analytics services industry. This acquisition will further strengthen our microbiome business and improve our ability to provide customers with industry leading end to end microbiome products and service offerings. With over $200,000,000 in cash on the balance sheet as of the end of Q3, we are well positioned to make further additions to the company.
We believe OraSure is at the forefront of several nascent but large growth opportunities. Another recent strategic step was the sale of our cryosurgery systems business, which we announced in August. The divestiture has allowed us to shed non strategic business line, prioritize our product portfolio and refocus our resources on growing our core molecular solutions and infectious disease businesses. Turning to the quarter, as I said, the trends we have outlined on prior calls, particularly those affecting the consumer genomics market continue to impact our business. Overall, however, our business continues to perform largely as expected.
Revenues came in a bit below our guidance. However, this was primarily caused by a timing issue, specifically 3 HIV Self Test orders valued at $1,900,000 could not be delivered until the 1st week of October because of unexpected logistical delays. Otherwise, the business performed as reflected in our guidance. As reported in prior calls, our genomic testing business remains healthy. Apart from the previously discussed single large customer that changed its promotional strategy, this business grew by strong double digits in the 3rd quarter.
The microbiome market continues to shine with a very robust performance in the Q3. We continue to expect revenue growth in the double digit range for the remainder of this year. Our integration of Novus, Sanus and CoreBiome, which we acquired in January, is nearing completion and we are seeing increasing contributions from both companies. We are also far along in planning the integration of Diversigen into our microbiome services business. On the infectious disease front, our HIV Self Test business performed very well during the Q3.
We generated revenue growth of 36% over the prior year quarter despite the slippage of the orders I just mentioned. We continue to project double digit revenue growth for our international HIV franchise through the remainder of this year, primarily due to sales of our Self Test. And finally, although not usually a focus of our earnings calls, our risk assessment testing business for drug abuse grew 17% in the Q3 compared to the prior year period. We are optimistic about the future prospects for this business. As you may have seen, new federal drug testing guidelines were recently issued, which authorized the use of oral fluids in drug testing for federally regulated markets for the first time.
We believe these guidelines will open up a large potential market for us that we are currently not serving. And with that, I'll now turn the call over to Roberto for his financial review. I will then provide some additional commentary on our business and then we'll take your questions.
Thanks, Steve, and good evening, everyone. Our net revenues decreased 22 percent to $36,000,000 from $45,900,000 reported in the Q3 of 2018. Our net products and services revenues decreased 19 percent to $35,300,000 compared to the prior year period. Our molecular net revenues, including other revenues, decreased 31 percent to $18,300,000 in the 3rd quarter compared to $26,600,000 in 2018. Royalty income declined 33 percent to $758,000 in the Q3 of 2019 from $1,100,000 in the same period of 2018.
This also represents a sequential decline from the Q2 of 2019 of 32% versus a 46% sequential decline from the Q2 to the Q3 of 2018. Molecular product revenues decreased 32 percent to $17,400,000 in the Q3 of 2019 compared to $25,500,000 in the Q3 of 2018. Sales of our genomic products declined 41 percent to $14,100,000 largely due to lower customer demand, primarily from a large customer consumer genomics customer that changed its promotional strategy, which impacted its purchasing patterns. Notably, excluding this single customer, genomic product revenues grew 30% compared to the Q3 of 2018. Microbiome sales increased 81 percent to $3,100,000 from $1,700,000 in the Q3 of last year, primarily due to the inclusion of lab services revenues generated by our newly acquired subsidiary CoreBiome, but also from healthy double digit organic growth.
Domestic HIV sales decreased 4% to $4,300,000 in the Q3 of 2019 compared to $4,500,000 in the Q3 of 2018, largely due to lower sales of our over the counter product. International HIV sales increased 36 percent to $5,900,000 from $4,300,000 in the Q3 of 2018 due to higher sales of our HIV Self Test into Africa, notwithstanding the shipping challenges with 3 international orders that Steve described. All three of these shipments were completed in the 1st week of October. Domestic HCV sales decreased 4% in the Q3 of 2019 to $2,000,000 from $2,100,000 in the prior year period, largely due to the timing of customer orders. International HCV sales in the Q3 of 2019 decreased 3 percent to $1,100,000 from $1,200,000 in the same period of 2018, primarily due to lower sales into the Middle East, partially offset by sales growth in Asia.
Other revenues were $4,000,000 in the current quarter compared to $10,900,000 in the prior year. The decrease is largely due to the lower royalty income I mentioned earlier and decreases in BARDA funding and cost reimbursement under our charitable support agreement with the Gates Foundation. The reduced BARDA funding reflects the conclusion of our projects under this program and our rotation of R and D resources to projects that are aligned with our long term growth strategy. Gross profit percentage for the Q3 of 2019 was 60% compared to 62% reported for the Q3 of 2018. The decline in gross profit percentage is directly related to the decline in other revenues, which contribute 100 percent to the gross profit percentage and to the lower margins generated by CoreBiome and Novosanis, partially offset by lower royalty and freight costs during the quarter.
Our operating expenses for the Q3 of 2019 were $8,600,000 compared to $17,700,000 in the comparable period of 2018. Operating expenses in the Q3 of 2019 included a pretax gain on the sale of the cryosurgical systems business of 10 point $2,000,000 $2,400,000 of non cash acquisition related contingent consideration benefits, offset by the incremental operating expenses generated by CoreBiome and Novosanis and $443,000 of acquisition related transaction costs. As a reminder, we provide EPS guidance that does not include the impact of changes in the fair value of acquisition related contingent consideration and acquisition related transition costs transaction costs since these items cannot be estimated. There were no similar acquisition related costs in the Q3 of 2018. In the Q3 of 2019, we recorded income tax expense of $1,200,000 compared to $3,300,000 in the same period last year.
The decline in tax expense reflects the lower pretax earnings generated by our Canadian subsidiary and the results generated by Novosanis. We reported net income of $13,100,000 or $0.21 per share for the Q3 of 2019 compared to net income of $8,100,000 or $0.13 per share for the Q3 of 2018. We continue to maintain a solid cash and liquidity position. Our cash and investments balance at September 30, 2019 was $201,200,000 compared to $201,300,000 at December 31, 2018. During the Q1 of 2019, we used $13,200,000 of cash to acquire CoreBiome Novosanis, and in the Q3 2019, we received $12,000,000 in proceeds from the sale of our cryosurgical systems business.
Cash generated by operating activities through the 1st 9 months of 2019 was $10,800,000 compared to $20,800,000 in the same period of 2018. Turning to guidance. For the full year of 2019, we are projecting revenues of $150,000,000 to $153,000,000 and net income of $0.28 to $0.31 per share. These projections do not account for the impact of changes in the fair value of acquisition related contingent consideration or potential business development transaction costs since the full extent of those items cannot be determined at this time. The decrease in projected revenues and EPS from our prior guidance is driven primarily by revised expectations for our genomics collection device sales with a smaller contribution from international sales of HIV testing devices.
As many of you know, during the Q3, the U. S. Justice Department indicted 35 individuals accused of offering fraudulent genetic testing primarily to seniors in order to collect insurance. This had little effect on any of our customers in the Q3, but has created enough uncertainty in the market that customers have signaled the likelihood of lower orders in the Q4. Additionally, the media attention this has drawn can create mistrust and cynicism towards genetic testing and maybe contributing to the more general slowdown that we and others are seeing in the broader consumer genomics space.
Based on discussions with customers and the trends we saw persisting in the Q3, we have lowered our forecast for genomics revenues in the Q4. The revision to our expectations for international HIV testing sales is the result of forecasted slippage of an order from the Q4 of this year into next year. Note that this is unconnected to the $1,900,000 in orders that moved from the 3rd to the 4th quarter of this year. The 4th quarter slippage is related to the increasing expansion of our sales outside the original STAR Country markets. Under STAR, the ordering and shipping processes were consistent from country to country with long predictable lead times.
As we've expanded our sales outside of the original star countries, we've expanded the addressable markets for our products considerably, but we've also increased exposure to significant variability in ordering and shipping processes and timelines between markets. Once each new market is established, the process will stabilize and be more predictable, but we are experiencing some delays in planned orders in the meantime. We're of course disappointed that we have had to make this change. Nonetheless, to the extent that all of our infectious disease and some of our genomics reduction was due to timing of sales, we continue to be confident in the underlying health of our business. Moreover, in light of our ongoing success with regards to business development opportunities, the continued expansion of our self test markets in Africa, the growth we continue to see in the disease risk management submarket of the genomics business and the strength of the microbiome product and services markets, we remain very optimistic about our future prospects.
With that, I'll turn the call back to Steve.
Thanks, Roberto. I'll first focus on our Molecular Solutions business. As mentioned in my opening remarks and in Roberto's report, both the positive and negative trends that impact our genomics business are continuing. On the one hand, we see many signs of growth in our genomics business despite the impact of a single large consumer genomics customer. Product revenues excluding this one customer were up 30% in the 3rd quarter compared to 2018.
We are also seeing consistent growth in the number of new commercial genomics customers being added to our business. Importantly, we continue to see growth in a number of disease risk management companies adopting our FDA cleared collection devices for clinical applications. Overall, there seems to be an uptick in the use of FDA cleared devices and platforms in the genomics testing market. We believe this is being driven at least in part by the FDA's efforts enforce the need for using cleared devices in clinical genomic testing applications. As we have shared in the past, we have an active regulatory program to bolster our global growth.
We are also actively working with several customers to obtain FDA clearance for their tests. This type of collaboration is important in that it strengthens our regulatory position and deepens our relationships with emerging clinical test providers. Despite the underlying strength in much of genomics, the ancestry or genealogy testing segment within the consumer genomics market continues to decline and is impacting our product revenues and royalty income. As we have noted in previous calls, over time, we expect that other submarkets within genetic testing, most notably disease risk management augmented by animal health and lifestyle genomics will eventually offset these declines. So in summary, despite the challenges in this consumer genomics market, we continue to believe that our overall genomics business is healthy and offers great opportunity.
Excluding the large customer that has negatively impacted this business, we continue to believe that genomics will deliver double digit growth for the remainder of this year. Another bright spot is the microbiome business, which delivered a strong 3rd quarter. New customer acquisitions grew by double digits compared to the Q3 of 2018. Overall, the Microbiome business, including both products and services, was up 81% over the same quarter of 2018, with the highest growth rates coming from Asia Pacific and European markets. This growth was driven by a 53% increase in product revenue and a 152% increase in service revenue during the Q3 compared to 2018 as a result of our acquisition of CoreBiome.
I would note that the Q3 We are clearly starting to see the impact of our CoreBiome acquisition, both in terms of revenue generation and the expansion of our microbiome offerings. In fact, CoreBiome was recently chosen as the sequencing and custom bioinformatics partner for the development of a new microbiome diagnostic test. In addition, members of the CoreBiome and Scientific team recently published a peer reviewed longitudinal multi omic study of the Avian microbiome that integrates host gene expression with the microbiome to measure the effects of alternate treatments to antibiotics. We believe the acquisition of Diversigen will provide significant benefits and further strengthen our position and presence in the microbiome arena. Diversitin is truly a pioneer in providing solutions for sequencing, analysis and consulting focused on the microbiome of living organisms and environments.
They have developed state of the art techniques to extract high quality nucleic acids from a variety of sample types for metagenomics analysis using technology license from the Baylor College of Medicine. Their strength, expertise, regulatory status and focus on superior customer service have been key factors in establishing a leadership position in the industry with an impressive customer list that includes many of the top 10 pharma companies in the world along with a leading microbiome therapeutics provider. Divercident was the 1st company to establish microbiome protocols in accordance with the College of American Pathologists, CAP Accreditation and Clinical Laboratory Improvements Amendments of 1988 CLIA guidelines. Approximately 90% of Diversus' business is from big pharma and the leading microbiome therapeutic company is also a top customer. The powerful combination of Diversus' strength, expertise and focus on customer service along with CoreBiome's technical innovation and microbiome analysis and DNA Genitec's proven microbiome sample collection and stabilization devices will give us industry leading product and service offerings from sampling to rich analytics that can provide actionable insights.
Collectively, Diversigen and CoreBiome represent over 100 person years of microbiome experience and 300 scientific publications on the microbiome. We are very excited about expanding our presence within the microbiome service market and look forward to aligning and growing these businesses in 2020 beyond. In addition to our new products and services focused on the microbiome, we continue to see significant growth potential in the broader field of multiomics. As I've described in previous calls, this emerging area of life science and data analytics provides a multifactorial examination of an individual's health by examining the different ohms, including the microbiome in the genome. Our initial entry into multiomics materialized with a number of our existing human genomics customers adding a microbiome component to their studies and offerings.
Year to date, we have seen a 35% increase in the number of customers who are using both genomics and microbiome kits, and we expect this trend to continue. Finally, there have been continued positive developments in Novosanis' urine collection business. As I noted in our last call, Novosanis entered into an nonexclusive agreement with FujiRibio for the distribution of the COLLE P collection device for use with Fuji ReVio's InnoLipa HPV Genotyping Extra2 assay. The assay has now been CE IVD marked for use with COLOP collected firstborn urine samples. During the Q3, NovoSeven has completed development and launched 2 new versions of its Colopy collection device that allow the collection of either a smaller or larger volume for firstborn urine as compared to the original 20 milliliter device.
These new versions will now enable Novusanis to expand the use of the Colopy device with additional applications in the area of infectious disease and oncology. The smaller version captures up to 10 milliliters of urine and is compatible with many high throughput instruments, therefore offering improved lab workflow and collection for a biomarker rich urine sample. The larger version captures the first 45 milliliters of firstborn urine, supports multi omic testing and can be used to solve issues related to low In our last call, we mentioned the Colopy device being used with a lab developed test offered by Bio Techne called Xdx Prostate in Telescore or EPI, which allows a physician to predict if a patient's presenting for internal biopsy does not have a high grade prostate cancer. Bio Techne recently announced the issuance of a local insurance coverage decision for the EPI test for men who are considered to be or being considered for initial prostate biopsy. This decision enables Medicare reimbursement for the test and is effective for tests administered on or before December 1st excuse me, on or after December 1st.
Bio Techne also notes that its EPI test has received FDA breakthrough designation and is included in the National Comprehensive Cancer Network guidelines for early detection in men for both initial and repeat biopsy. This is obviously good news and it's evidence of how COLO P device can be used with this and other LTD applications in the future. Turning now to infectious disease. The Q3 was a good one for our HIV franchise. Global revenues were up 16% when compared to 2018, driven primarily by a 36% increase in international HIV Self Test sales.
We sold $1,900,000 in self test orders had to be moved too early in Q4 as a result of unexpected logistical issues. As you know, we previously participated in the STAR or Self Test Africa program, which has been largely been completed. We continue to see new country registrations for our self test in countries outside the STAR program. To date, we have received 19 registrations, 2 since our last earnings call and there are 13 additional submissions pending. One recent important registration for our self test is in Nigeria.
We expect to receive their initial scale up order in the Q4 and we believe the Nigerian program will eventually be one of the largest programs deploying our tests. We're also participating in the formal launch of HIV Self Testing in Uganda with the full support of the Ministry of Health's permanent secretary and U. S. Aid. Plans for deployment of our self test are underway and we expect our initial shipment to go out this quarter.
We recently received a change notification from the World Health Organization, WHO, to add a pediatric test claim to both our prequalified professional HIV test and our HIV Self Test. These new claims will allow us to participate with PEPFAR in the ROAM action plan for pediatric HIV, a program intended to enhance and expand pediatric diagnostic testing for HIV around the world. They should also give us a competitive advantage for these products in an increasing competitive marketplace. While good news, these new claims alone do not drive further adoption of our products. We still need evidence of the utility of pediatric testing for HIV in order to drive investment by international funding sources.
Those impact studies are now underway with monies provided by the Center For Disease Control and Protection, CDC. We expect these changes to eventually allow doctors with our professional test and parents and guardians with our self test to test children as young as age 2. On the domestic front, the U. S. Department of Health and Human Services has proposed a new initiative called Ending the HIV Epidemic: A Plan for America, with the goal of ending HIV in the U.
S. Within 10 years. The Plan for America will leverage highly successful programs, resources and infrastructure for HIV prevention, diagnosis, treatment and outbreak response and to coordinate action across several federal agencies. The initial focus of this initiative will be in communities that are now hardest hit by the HIV epidemic. Since much of the initial work will occur outside of clinics and hospitals, we believe our OraQuick in home HIV test, which is the only FDA approved test of its kind for home use, can play an important role in outreach programs to achieve the goals of this initiative.
Funding in the amount of $291,000,000 is currently in the administration's 2020 budget and is working its way through congressional approval process. The CDC is beginning to put plans in place to begin execution in 2020. So in short, we remain optimistic about the overall long term potential for our HIV franchise and we are projecting double digit growth in international HIV revenues for the full year. Turning briefly to HCV. Revenues from this part of the business were down for both international and domestic markets due to a mix of reasons.
However, we expect to see ongoing funding and demand for our HCV product in future quarters and we continue to expect our HCV franchise to contribute growth to our infectious disease business going forward. Another area I want to touch on is risk assessment testing, which includes our oral fluid drug testing product line. Under long awaited oral fluid drug testing guidelines recently announced by the Substance Abuse and Mental Health Service Administration, SAMHSA, oral fluid drug testing is now permitted in federally regulated markets. Oral drug testing allows for better differentiating between recent drug use and historic use to effectively determine potential impairment on the job. The guidelines stipulate test parameters in oral fluid collection device requirements that manufacturers have to meet to be able to sell their products into the regulated markets.
We have finalized the design of an oral fluid collection device that we believe will meet these requirements and are working with Thermo Fisher to develop automated drug test assays that meet these new requirements. In addition, laboratories interested in being an accredited oral fluid testing facility under the guidelines can begin making their applications beginning on January 1, 2020. It is estimated that the implementation of the new guidelines will take 18 months. SAMHSA expects that approximately 25% to 30% of federally funded regulated drug testing will eventually be oral fluids, which translates into roughly 12,000,000 tests per year at the low end of the range. This obviously is a positive development and we believe it could have a significant impact on our risk assessment testing business.
The last point I want to mention is the FDA's recent decision to grant 510 clearance for our Oripip rapid Ebola test. This test can be used with blood samples from living individuals and oral fluid samples taken from recently deceased individuals. The clearance came through the FDA breakthrough device programs that allows for expedited clearance for the treatment or diagnosis of life threatening or irreversibly debilitating diseases. The claims for our tests are limited to individuals who meet certain criteria indicating they may be infected, so the test will not be available for the general screening of individuals who do not meet these criteria. This is the 1st and only rapid Ebola test to be cleared for sale in the U.
S. And should be commercially available in the Q1 of 2020. We continue to believe that the largest opportunity for this product will be outside the U. S. And that the CDC and WHO will be the primary purchaser of this product.
We are currently in discussions with these organizations to understand their potential short and long term needs for the test. In closing, despite the slowdown in our consumer genomics market overshadowing many positive developments of the company, we continue to make demonstrable progress in executing against our innovation driven growth strategy. We have improved our competitive profile and expanded our addressable markets by adding new capabilities and those efforts will continue. So far, we completed 3 acquisitions this year and divested a non strategic business line. We are confident that our strategy will allow us capitalize on multiple large opportunities, which are still in their early days.
Our strong balance sheet affords us the ability to continue acquiring additional products and services to augment our current capabilities. Our pipeline of acquisition candidates remains robust. We expect continued growth from both our global HIV and HCV franchises and believe our Molecular Solutions business is healthy and well positioned to leverage a number of growth opportunities. We expect the growth from these burgeoning areas be more evident as the impact of consumer genomics rolls out of our quarter to quarter comparisons beginning in 2020. And with that, we'll now take your
Your first question comes from Brandon Couillard from Jefferies.
Hey, thanks. Good afternoon.
Hi, Brandon.
Roberto, maybe start with you. Just in terms of the guidance, I mean, you came out in mid August and kind of pointed to the $160,000,000 to $165,000,000 revenue for the year, now kind of lowering that range by about $10,000,000 or so. Could you sort of articulate what exactly has changed? I mean, I know you spoke to the one HIV self test that order that got pushed out of the 4th quarter, but help us sort of understand the moving parts in the business as it's transpired over the last 2 months? And then also, if you could help us bridge the delta in the EPS guidance range relative to the figure you put out in mid August.
Sure. So I'll start with the EPS range. So that's pretty much a direct result of the change in the revenue forecast with a little bit of cost savings in the back part of the year. So there's nothing there's nothing hidden in there, really, it's just the revenues. As far as the change in the revenue guidance, the $10 or so 1,000,000 of production, as we said, a small part of that was an order a larger order in HIV Self Test International.
The remainder though is in the consumer genomics business. And as we said in the prepared remarks, that DOJ initiative, which didn't which occurred in the Q3, but didn't affect our Q3 sales has, based on our conversations with customers, is likely to affect the Q4. And additionally, we're seeing just in general greater overhang in that business. And so the general business all around the DOJ affected business has come down.
Got you. And then, any chance you could sort of share with us what you're embedding for the DNA Genentech business in the Q4? And as you look out to next year, assuming that one large customer kind of only maintains their minimum orders as they have through this year, shouldn't should we expect that business to maybe return to double digit growth as you've kind of articulated it being at least through the Q3?
So as you correctly as you pointed out, we did say that our guidance for the year included an assumption that, that business would that the largest company would largest customer would order at their contractual minimums for the year. If they do continue to order at their contractual minimums next year, that large part of the business is likely to be flattish. And so the question then is what happens with the remainder of the business? As we pointed out, through the Q3 of this year, excluding that largest customer, we did see pretty healthy double digit revenue growth from the other parts of the business. And we've often pointed to disease risk management as a source for that growth and our expectation that, that will be a continued source for growth.
So we would consider just the 2 we would expect to still see outside of that one big customer growth, particularly driven by that disease risk management business. The question is, would they together average to more than double digits? And we haven't provided guidance on that. We have said though that disease risk management is a smaller part of the business right now.
Sorry. And then any color you can share in terms of the moving parts on the Q4 guide, which does imply about a $10,000,000 step up sequentially?
So the continued growth that we see sequentially or we expect to see is the traditional seasonality in the consumer genomics business that's driven by holiday gift giving around the end of the year. If you do some Internet searches, you'll see that there's a lot of advertising going on in support of that even still this year. And that may actually be a bit more there may be a bit more investment into that than we otherwise would have expected given that one of the 2 largest players in that space has put out a new offering. The other thing that we that drives our expectation of the step up in the Q4 over the Q3 is, as we pointed out, we did get 2 additional country approvals in Africa for sales of our products. I think every quarter, we list the number of countries that we've had approved and the number that we have pending.
As Steve mentioned, Nigeria was one of those big countries. And as we've described in the past, when a country issues approval for registration approval and begins eradication program initiatives, they typically start with a large stocking order and then move to smaller sustaining refilling orders. So given the timing of that approval, the Nigerian approval, we do expect that their first order will be coming in, in the 4th quarter will be delivered in the 4th quarter. Got you.
I'll follow the rules and jump back in the queue. Thanks.
Thanks.
Your next question comes from John Hsu from Raymond James.
Good afternoon. Hi, Roberto. If you could just stay on the 4th quarter guide for a second. Just to be clear, you mentioned Nigeria, you expect initial order in the Q4 and then Uganda, I believe, shipments as well. But you also talked about this dynamic where the lead times have lengthened a bit.
So I guess could you help us think about how risk adjusted the Q4 guide is for those dynamics specifically?
Yes. So we are in discussion with ministries of health about their eradication programs and plans before they issue the regulatory approval for the product. So we have our plans in place. They have purchase orders ready to go. So notwithstanding that, this is a non star program country and so uses a different ordering pathway, we did actually have reasonable amount of visibility into both of those programs orders.
So we believe that there's lower risk of slippage, although there's always some, but we've essentially begun working on those orders even already. So, the risk around those two orders is actually, a bit less than the risk of the order that slipped from the Q4 into the Q1 of next year, where that Ministry of Health has not fully completed the ordering process.
Okay. Then on the SAMHSA guidelines, it sounds like that's a pretty nice opportunity for you.
Just to be clear, is
there any work that needs to be done for you to participate in that market? If so,
when do you expect to be,
I guess, game ready to address that opportunity?
Yes, John. I think it is a big opportunity for us. I think as you know, typically drugs abuse testing is done with urine samples today and those urine samples unfortunately have been subject to adulteration and the chain of custody of samples is always a difficult challenge. So using oral fluids, it makes compliance and the chain of custody much easier and tighter. And for us, it's developing the collection device and then coupling it with assays.
And as I mentioned in my remarks, working with Thermo Fisher to develop those assays. So the timeline for implementation is set to begin January 1, 2020 and run 18 to 24 months. And so we'll be working with Thermo on those assays, which we believe will give us a strong competitive position in the marketplace to capitalize on this beginning in 2021 midyear and beyond.
Okay, great. And then last one just on the Diversagen. Could you maybe expand a little bit on the strategic benefits? And then Roberto, anything you can share with us regarding financial impact in the near term?
Sure. I think it's clear that with Diversigen, it will help enhance OraSure's standing as a microbiome service market leader by combining the capabilities with CoreBiome. It's really a great combination of diverses and track record and in particular customer focus. 90% of their customers are pharma companies. They clearly have been cultivating the customer relationship for a long period of time.
And because they got into the market 3 years before CoreBiome, their sales and marketing as you would expect is a bit more mature. Having said that, CoreBiome's technical innovation and analysis and DNA Genotec's sampling kits give us and our customers now industry leading workflows that span sampling to the actual result or statistics that we deliver to the customer. So we're essentially uniting the pioneers and the people who are charting a path in the future by these 2 great founding organizations, 1 founded by Dan Knights at CoreBiome and the other by Joe at Diversigen. So this from our perspective creates for us the opportunity to become the premier provider of microbiome services in the industry as it scales. That means higher throughput, higher complexity, faster turnaround, bigger data sets and increased regulatory scrutiny.
Those are all the defining factors of our competitive advantage.
And John, on the financial impacts, we expect that for the full year, including the part of the year for which we didn't own them, they will have revenues on the order of both CoreBiome and Novosanis combined for 2019. But because we'll only be owning them for about 7 weeks of the year, the effect on our P and L will be nominal on the revenue line and the bottom line. But as a reminder, as we've said about our acquisition strategy in general, we target companies that will be accretive to our growth rate. So those revenues are things are revenues that we expect to grow faster than the average of the existing company today.
Great. Thank you so much.
Thank you, John. Thanks, John.
Your next question comes from Brandon Couillard from Jefferies.
All right. Guys, just had a question about Ancestry. They're launching a new health service with Quest using saliva. Just curious if you can confirm whether or not that product is a spit kit from DNA Genotec or it actually includes a royalty? I know you've had some litigation with them related to a new service offering that they were planning on launching.
Any color you can share with us on that?
Well, as far as we know, if they continue to use the device that they currently use on the marketplace, which relies on our patents and they'll continue to pay a royalty to us. We do not yet have any visibility on any new kits they may be offering for commercialization. And obviously, our settlement with them from 2017 has a provision for arbitration, as you mentioned, and we believe we'll get a decision on that sometime in
2020. And to be clear, Brandon, they do not use our DNA Genotex Spit Kit, but the kit that they have been using to date is one that's subject to the royalty that we settled under our agreement with them.
Okay. And then on the Versagen, the earn out, just curious why it's tied to 2019 revenues rather than 2020? And then secondly, the contingent consideration reversal in the quarter, does that mean or suggest that CoreBiome and Novosanis maybe aren't ramping to deal models?
So on the first issue, I think what we were looking for is firmness in revenue for 2019 for Diversigen, which has embedded in a number of customer relationships, which we believe will be scalable into 2020. And so having that assurance for 2019 was very important to us. And as Roberto was saying, we believe that they will grow in the short and
the long term remarkably. And with regard to the contingent consideration change, so that is tied to revised forecasts for the 2 acquisitions, 1 or both of them. We haven't disclosed which. And as a reminder, there are payouts associated with both 2019 2020 with 1 or more of those company acquisitions. But yes, the revision to the forecast is what drove those value revaluations of the contingent consideration.
Super. Thank you.
I am showing no further questions at this time. That brings to an end the Q and A session of today's call. I will now turn the call over to Doctor. Tang for closing remarks.
Well, we thank you very much for participating in today's call and for your continued interest in OraSure. Have a pleasant afternoon and evening. Thank you.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may now disconnect.