Bionano Genomics, Inc. annual report, FY2022

Bionano Genomics, Inc. — FY 2022 Form 10-K

Reporting period: Fiscal year ended December 31, 2022. The filing is an annual report, not a standalone fourth-quarter financial report; it provides a few Q4 operating measures but no clear standalone Q4 income statement or cash-flow values.

Business context and reporting period

Bionano sells optical genome mapping (OGM) systems and consumables, genomic analysis software, nucleic-acid purification systems, and laboratory testing and analysis services. Its key offerings include the Saphyr system, NxClinical software, Bionano Laboratories services, and—following its November 2022 acquisition of Purigen—the Ionic Purification system. Most OGM products are marketed for research use only.

Financial and operating metrics

• Revenue grew 55%. Product revenue rose 61% to $20.4 million; service and other revenue rose 39% to $7.4 million. Software revenue was $5.1 million, up from $1.0 million, primarily reflecting a full year of BioDiscovery contribution.
• Instruments generated $8.6 million and consumables $6.7 million. The Saphyr installed base reached 240 at year-end, up from 164. Q4 flowcells sold were 4,781, up approximately 49% year over year; full-year flowcells sold increased 23% to 15,375.
• R&D expense increased 118% to $49.0 million; selling, general and administrative expense increased 51% to $88.6 million. Higher compensation, headcount, development and acquisition-related costs contributed to the wider operating loss.
• At year-end, cash and cash equivalents were $5.1 million, available-for-sale investments were $108.1 million, and working capital was $121.4 million. Total assets were $307.5 million, total liabilities $58.1 million, and stockholders’ equity $249.4 million.
• The company used $124.8 million in operating cash and received $23.0 million from financing activities, principally ATM share sales. Investing activities provided $82.8 million, largely reflecting net sales and maturities of investments, partly offset by the Purigen acquisition.
• The Innovatus term loan had been paid off in 2021; no term-loan balance is reported at year-end 2022. Balance-sheet financing obligations include lease liabilities of approximately $11.7 million and acquisition-related contingent consideration of $22.4 million, including $9.4 million current.

Material changes versus the prior comparable period

• Revenue growth was driven by instrument placements, consumables and the expanded software contribution. Product gross margin improved to 22% from 17%, but total gross margin slipped to 21% from 22%; service and other gross margin fell to 20% from 32%.
• Net loss increased by $60.2 million and operating cash use increased by $52.9 million, reflecting higher operating expenses and growth-related spending. Stock-based compensation rose to $22.4 million from $9.7 million.
• Cash and investments together declined from approximately $250.6 million to $113.2 million. The company acquired Purigen for an estimated purchase price of $44.9 million, including $32.0 million upfront cash and estimated contingent consideration.
• Common shares outstanding increased to 297.2 million at year-end from 289.6 million a year earlier. The company also reported approximately 306.2 million shares outstanding as of March 6, 2023.

Outlook, risks, contingencies and unusual items

• Going concern: Management said existing resources would not be sufficient for the 12 months following issuance of the report and disclosed substantial doubt about the company’s ability to continue as a going concern without additional financing. The auditor’s report includes a going-concern uncertainty paragraph while giving an unmodified opinion on the financial statements.
• Outlook: No specific revenue or earnings guidance is provided. Management expects continued operating losses and anticipates higher R&D and selling, general and administrative expenses in 2023. It expects to seek additional capital through equity, debt or other arrangements; financing availability, timing and terms are uncertain.
• Financing and dilution: The Cowen ATM raised approximately $23.1 million gross in 2022. The filing reports approximately 9.5 million shares sold under the ATM after year-end for approximately $15.2 million gross. The ATM was amended in March 2023 to provide for up to $200 million of sales going forward, subject to its terms and available capacity.
• Acquisition contingencies: BioDiscovery has a $10.0 million commercial milestone payment that management considered highly likely to be achieved. Purigen has two milestones with potential payments totaling up to $32.0 million. Their fair values rely on estimates and are remeasured over time.
• Principal risks: Continued cash burn and financing dependence; uncertain adoption and reimbursement for OGM and diagnostic services; regulatory uncertainty for RUO products and laboratory-developed tests; competition; integration and execution risks from acquisitions; and reliance on single or limited-source manufacturers and suppliers. The company also cites supply-chain, inflation, geopolitical and COVID-related uncertainties.
• The company reported no material legal proceedings. Its financial statements include no standalone EBITDA figure; the filing text does not provide a clear value for it.

Important facts for investors to verify

• How quickly cash, investments and working capital are being used, and whether subsequent financing is sufficient to address the disclosed going-concern uncertainty.
• Actual post-year-end ATM proceeds, shares issued, remaining ATM capacity and the resulting dilution.
• Whether Saphyr placements translate into sustained consumables use and improving gross margins, particularly given the reported flowcell-yield issues.
• Progress on Purigen and BioDiscovery integration, and the timing and likelihood of acquisition milestone payments.
• Clinical evidence, regulatory status and reimbursement progress needed to expand OGM beyond research use and support laboratory testing revenue.