* Altai says OraSure ( OSUR ) is worth more sold than operating as

a standalone company

* Altai pressing for board seats after nominating two

directors in January

* Altai says board failed to prevent missteps, pushes for

new directors

(Adds comments from company in paragraph 9, stock price in

paragraph 11)

By Svea Herbst-Bayliss

NEW YORK, March 17 (Reuters) - Activist investor Altai

Capital Management called on OraSure Technologies ( OSUR ) to

explore a sale, saying the medical device maker could fetch

double its current share price.

The hedge fund also said it would like board seats to

supervise a strategic review process and that it plans to press

on with its proxy fight if no settlement is reached, according

to a statement that confirms an earlier story by Reuters.

"OraSure ( OSUR ) is worth significantly more in a sale than as a

standalone company," Altai's President and Chief Investment

Officer Rishi Bajaj wrote to OraSure's ( OSUR ) board on Tuesday.

"After deducting transaction costs, we estimate OraSure ( OSUR ) is

worth $4.54 to $6.60 per share if sold - a 42% to 109% premium

to today's price," Bajaj wrote.

OraSure ( OSUR ) has seen its stock price tumble 73% over the last

five years as demand for COVID-19 rapid antigen tests has

fallen.

Altai, which owns approximately 5% of OraSure ( OSUR ), is ratcheting

up pressure after months of talks with management and the board

fizzled, Bajaj wrote, asking again that the company invite him

and one other executive to join the six-person board.

OraSure's ( OSUR ) fourth-quarter revenue fell 29% from the previous

year, the company said in February, adding that it anticipates

U.S. regulatory clearance for new diagnostic products in 2026.

Shareholders have sent OraSure's ( OSUR ) shares up some 18% since

Altai officially nominated Bajaj and industry executive John

Bertrand to the board in mid-January.

OraSure ( OSUR ) said in a statement on Tuesday that the company

continues to "successfully execute a focused strategy designed

to improve operating performance, strengthen margins, and

position the business for revenue acceleration and long-term

value." It added that its entire board has been refreshed over

the last six years and has made "multiple settlement offers".

Earlier this year, prominent healthcare entrepreneur Ron

Zwanziger reconfirmed to the company that he would like to buy

OraSure ( OSUR ), according to sources familiar with the matter but not

authorized to discuss it publicly. In June, Zwanziger proposed

buying the Bethlehem, Pennsylvania-based company for $3.50 to $4

a share but was rebuffed, Reuters reported.

OraSure ( OSUR ) stock fell nearly 5% on Tuesday to close at $2.98.

Zwanziger and Altai are not working together, the two sides

have said.

In the letter, Bajaj said new directors are needed because

the company has "dramatically underperformed." He also

criticized the board for failing to hold management to account

for the share price drop, noting that the bulk of Chief

Executive Carrie Eglinton Manner's compensation is not tied to

the company's share price performance.

He also criticized the company's acquisition of Sherlock

Biosciences in 2024 to expand its molecular diagnostics

innovation pipeline and its investment in Sapphiros for

exclusive distribution rights to the company's next-generation

products.

OraSure ( OSUR ) said in 2024 that Sherlock would help expand its

portfolio of rapid diagnostics for sexually transmitted

infections and that testing for Chlamydia trachomatis and

Neisseria gonorrhea represented a market of more than $1.5

billion. It said at the time the tests still needed regulatory

approval.

Considering OraSure ( OSUR ) is operating at approximately 30%

manufacturing capacity, according to statements from OraSure ( OSUR )

Chief Financial Officer Kenneth McGrath on a recent earnings

call, Bajaj said it would have made more sense to buy an

established business that can absorb the capacity instead of

"early-stage ventures with no near-term production volumes,"

like Sherlock.

"It is imperative for the Company to reduce its cash burn

and safeguard itself against further misuses of cash, including

additional value-destructive investments and acquisitions," the

letter said.

Point-of-care diagnostic companies offer accurate results in

real time to measure cholesterol, and detect flu and pregnancy,

for example. But the industry remains highly fragmented with

companies such as Abbott Laboratories ( ABT ), Danaher ( DHR ),

Siemens, Roche and Thermo Fisher Scientific ( TMO )

capturing the biggest market share.