Bionano Genomics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Bionano sells its Saphyr optical genome mapping system, consumables and related services, and provides diagnostic testing through Lineagen, acquired in August 2020.
Financial performance
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Total revenue | $3.17 million | $1.14 million |
| Gross profit / margin | $1.04 million / 32.9% | $0.28 million / 24.6% |
| Operating expenses | $12.21 million | $10.04 million |
| Operating loss | $11.16 million | $9.76 million |
| Net loss | $9.95 million | $10.51 million |
| Net loss per share, diluted | $0.04 | $0.30 |
| Cash used in operations | $13.90 million | $8.03 million |
| Cash and cash equivalents, March 31 | $362.06 million | $8.14 million |
Revenue grew 178.9% year over year: product revenue rose 108.4% to $2.05 million, while service and other revenue rose to $1.12 million, including $851,000 from Lineagen. The company shipped 11 Saphyr systems versus five a year earlier, ending the quarter with an installed base of 107, and sold 2,603 flow cells, up 275%. Growth was also geographically broad, with EMEIA revenue increasing to $1.59 million from $390,000.
Gross margin improved, but operating loss widened 14.4% as operating expenses increased 21.5%, primarily reflecting higher SG&A and Lineagen-related headcount. Net loss narrowed partly because Bionano recorded a $1.78 million gain from forgiveness of its PPP loan; this was a non-recurring benefit. Operating cash use increased by $5.9 million year over year, which management primarily attributed to Lineagen-related headcount costs.
Liquidity, debt and capital
At March 31, cash was $362.1 million and working capital was $363.1 million. Total liabilities were $22.1 million, including $14.9 million of long-term debt carrying value; the PPP loan was forgiven in full. The Innovatus term loans carry a stated 10.25% rate, with the company electing a lower cash rate plus capitalized interest; the disclosed effective rate, including debt issuance costs, was 16.7%. Principal payments are scheduled to begin in April 2022. A $5.0 million revolving credit facility had no outstanding borrowings and is scheduled to expire in March 2024. The debt is secured by substantially all company assets, including intellectual property, and carries financial covenants.
Financing activities generated $337.5 million in net cash, mainly from two January public offerings and ATM sales, plus warrant and option exercises. The quarter included issuance of 78.0 million shares in the offerings, net of issuance costs, and 10.7 million shares from warrant exercises. Common shares outstanding increased to 278.8 million from 190.0 million at year-end 2020. A new Cowen ATM permits up to $350 million of stock sales; no shares had been issued under it as of the filing.
Outlook, risks and notable items
- Management expects available cash to fund operations, obligations and capital investments for at least the next 12 months, but expects continued net losses for the foreseeable future. No specific revenue or earnings guidance was provided.
- Management said COVID-19 restrictions and reduced customer activity negatively affected Q1 results; the duration and future financial effects remain uncertain. Risks include customer demand, supply-chain disruption and access to customer sites.
- The company remained in compliance with Innovatus covenants at March 31, 2021, but prior covenant breaches required waivers. Future noncompliance could lead to accelerated repayment or enforcement against pledged assets.
- Disclosure controls were deemed ineffective because of a material weakness in financial reporting resources and segregation of duties. Remediation, including external consultants and hiring, was in progress but not complete; no material misstatements were identified.
- Management reported no material pending litigation or material loss exposure. The Lineagen purchase accounting remained subject to final working-capital adjustments.
- After quarter-end, on May 12, 2021, the company granted 820,000 RSUs to its CEO and COO, including CEO awards tied in part to revenue targets.
Important facts for investors to verify
- Whether revenue growth and Saphyr utilization continue, and how much growth is attributable to Lineagen versus the existing business.
- Whether gross-margin improvement persists as product and service mix changes, and whether operating expenses and cash burn rise further.
- Actual cash runway relative to management’s 12-month assessment, and any future equity issuance under the $350 million Cowen ATM and resulting dilution.
- Debt covenant compliance, repayment requirements and the lender’s collateral and default rights.
- Progress in remediating the material weakness and the impact of COVID-19, supplier constraints, regulatory requirements and reimbursement on operations.