Quanterix Corporation — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Unaudited results are compared with the corresponding 2020 periods. Quanterix develops and sells ultra-sensitive Simoa protein-detection platforms, instruments, assays, consumables and related research services.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Total revenue | $25.4 million | $13.1 million | $52.6 million | $28.9 million |
| Gross profit / gross margin | $13.9 million / 55% | $5.2 million / 40% | $30.2 million / 57% | $12.0 million / 42% |
| Operating expenses | $27.5 million | $17.4 million | $53.7 million | $36.0 million |
| Operating loss | $(13.7) million | $(12.2) million | $(23.5) million | $(23.9) million |
| Net loss | $(11.9) million | $(12.3) million | $(22.0) million | $(23.9) million |
| Net loss per share, diluted | $(0.33) | $(0.43) | $(0.62) | $(0.85) |
- Q2 product revenue rose 175% to $18.7 million; service and other revenue declined 11% to $5.6 million. Six-month product revenue increased 122% to $36.9 million, while service and other revenue was essentially flat at $12.1 million.
- Cash and cash equivalents were $430.8 million at June 30, 2021; including restricted cash, total cash was $432.2 million. Total assets were $528.0 million and stockholders’ equity was $466.0 million. Accumulated deficit was $269.8 million.
- Six-month operating cash use was $23.8 million, versus $20.6 million a year earlier. Investing cash use was $2.1 million, including $7.3 million of property and equipment purchases offset by $5.2 million in RADx grant proceeds. Financing provided $275.7 million, primarily from the February public offering.
- Outstanding debt was approximately $7.7 million. Scheduled principal installments began July 1, 2021, with final principal and end-of-term payment due October 1, 2021. Current liabilities were $37.7 million versus current assets of $476.4 million.
Material changes and notable items
- Total revenue grew 93% in Q2 and 82% for the first half, mainly as customer sites reopened after COVID-19 shutdowns, enabling instrument installations and increasing consumables sales from a larger installed base.
- Gross margin improved year over year, which management attributed to manufacturing efficiencies and higher average instrument selling prices; RADx grant revenue also contributed to the reported margin improvement.
- Operating expenses increased with higher research and development spending, including work under the NIH RADx program, and headcount additions to support growth. Selling, general and administrative expense rose 59% in Q2 and 47% for the first half.
- Other income included approximately $2.1 million related to an employee retention tax credit under the CARES Act. This non-operating item helped reduce reported net loss; operating losses remained substantial.
- The company raised $269.7 million net through a February 2021 underwritten offering of 4.1 million shares, increasing shares outstanding and diluting existing holders.
Outlook, risks and contingencies
- No specific revenue or earnings guidance was provided. Management expects significant expenses and operating losses to continue at least through the next 24 months, with spending increasing as the company expands sales, marketing, R&D, staffing and manufacturing capacity.
- Management said current cash, commercial-sale proceeds and interest income should meet anticipated operating cash requirements for at least the next 12 months. This is a forward-looking estimate subject to risks and assumptions.
- COVID-19-related customer and supplier disruptions had eased by Q2, but management warned challenges could persist or increase if variants prompt renewed shutdowns.
- The NIH RADx Workplan 2 award has a total value of $18.2 million, with funding tied to milestones and a contract period through September 2021. The filing cautions that the company may not meet all milestones or receive the full award. The company recognized $3.2 million in grant revenue in the first half of 2021.
- The company was pursuing FDA EUA extensions for its SARS-CoV-2 tests, including additional sample types and asymptomatic testing, and evaluating home collection and pooling. Regulatory outcomes and demand remain uncertain.
- Quanterix reported no material pending litigation, no material changes to previously disclosed risk factors, and effective disclosure controls. It stated there were no significant subsequent events through the filing date.
Important facts for investors to verify
- Whether product and consumables growth persists after customer operations normalize, and how much reflects instrument placements versus recurring consumables.
- Whether improved gross margins continue without relying on grant revenue or unusually favorable mix and pricing.
- The timing and amount of RADx milestone funding, and the status and commercial prospects of COVID-19 test authorizations.
- Cash burn, planned spending and the stated liquidity runway, particularly as management expects ongoing losses and higher operating expenses.
- Completion of the scheduled debt repayments by October 2021 and the effects of the 2021 equity issuance on share count and dilution.