Biodesix, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Biodesix develops and commercializes diagnostic tests, primarily for lung disease, and provides testing and research services to biopharmaceutical customers. COVID-19 testing was also a significant business during the period.
Financial performance
| Metric | Q2 2021 | Q2 2020 | First half 2021 | First half 2020 |
|---|---|---|---|---|
| Revenue | $11.9 million | $4.2 million | $40.8 million | $9.3 million |
| Operating loss | $10.6 million | $5.6 million | $16.2 million | $14.0 million |
| Net loss | $11.4 million | $8.3 million | $18.4 million | $18.0 million |
| Operating cash used | Not separately stated for the quarter | Not separately stated for the quarter | $10.2 million | $8.8 million |
- Q2 revenue rose 180% year over year; first-half revenue increased 337%. Diagnostic revenue was $10.8 million in Q2 and $38.0 million for the first half; services revenue was $1.0 million and $2.7 million, respectively.
- Q2 revenue included $6.1 million from COVID-19 testing, $4.8 million from lung diagnostics, and $1.0 million from services. COVID-19 testing revenue was 74% below Q1 2021; lung diagnostic revenue grew 20% sequentially.
- Expenses increased alongside revenue and investment: Q2 direct costs rose 278%, R&D 58%, and sales, marketing, general and administrative expense 67% year over year. Approximate gross margin, calculated as revenue less direct costs divided by revenue, was 40% in Q2 2021 versus 56% in Q2 2020.
- Cash and cash equivalents were $56.3 million at June 30, down from $62.1 million at December 31, 2020. First-half investing cash use was $0.9 million; financing activities provided $5.2 million. Cash, cash equivalents and restricted cash totaled $56.4 million at period-end.
- Debt carrying value was $33.1 million, including a $30 million term loan and a $3.1 million PPP loan. Total current liabilities were $21.3 million; total current assets were $68.5 million. Management said cash and expected operating receipts should cover anticipated needs for at least 12 months.
Changes, outlook and risks
- Revenue growth chiefly reflected COVID-19 testing, which launched in 2020, alongside recovery in lung testing and growth in biopharmaceutical services. The Big Ten Conference contract, a major revenue source, expired June 30, 2021; the conference accounted for 40% of Q2 revenue and 53% of first-half revenue. Medicare reimbursement accounted for 56% of revenue in both periods.
- In March 2021, the company refinanced its prior debt with a $30 million Silicon Valley Bank term loan, repaid the 2018 notes, and recorded a $0.7 million extinguishment loss. The new loan has a floating rate of at least 5.25%, interest-only payments through February 2024 after achievement of a revenue milestone, and principal payments thereafter through March 2026. The company reported covenant compliance at June 30.
- Biodesix met the gross-margin milestone tied to its 2018 Integrated Diagnostics acquisition. In an August 2021 amendment, it agreed to pay $37 million in installments from January 2022 through July 2023 rather than issue shares. The obligation was reflected as $8.6 million current and $23.2 million non-current at quarter-end; the amendment is a subsequent event.
- Management expected COVID-19 testing revenue to decline as immunizations increased, while anticipating further recovery in lung diagnostics and biopharmaceutical activity in the second half of 2021. The company planned to double its dedicated sales force during 2021 and accelerate a liquid-biopsy NGS test launch to Q1 2022. No specific financial guidance was provided.
- Key risks include persistent operating losses and cash use; dependence on reimbursement, customer adoption and concentrated customers; possible decline in COVID testing; pandemic-related disruption to lung testing and clinical trials; reliance on single-source suppliers; and debt covenants and the substantial acquisition-related cash obligation. PPP forgiveness was applied for in July 2021, but approval was not assured. No material litigation was reported.
Investor verification points
- Track revenue mix, test volumes and margins as COVID-19 testing declines and lung diagnostics recover; assess the effect of the Big Ten contract’s expiration.
- Review collections, cash burn, liquidity-covenant headroom and capacity to meet the $37 million payment schedule alongside term-loan obligations.
- Confirm the outcome of the PPP forgiveness application and monitor reimbursement, customer concentration, and progress on the planned NGS launch.