Quanterix Corporation — Q1 2020 Form 10-Q
Business context and reporting period. Quanterix develops and sells ultra-sensitive Simoa protein-detection platforms, assays, consumables and research services. This unaudited filing covers the three months ended March 31, 2020, with comparisons to Q1 2019. The period reflects the ongoing COVID-19 pandemic and the integration of UmanDiagnostics, acquired in 2019.
Key financial metrics
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Total revenue | $15.7 million | $12.3 million; up 27% |
| Product revenue | $9.8 million | $9.5 million; up 3% |
| Service and other revenue | $5.8 million | $2.8 million; up 107% |
| Gross profit / gross margin | $6.8 million / 43% | $6.0 million / 49% |
| Operating expenses | $18.5 million | $15.4 million |
| Operating loss | $11.7 million | $9.4 million |
| Net loss | $11.6 million; $0.41 per share | $9.4 million; $0.42 per share |
| Cash used in operating activities | $13.2 million | $5.4 million |
| Cash and cash equivalents at quarter-end | $96.4 million | $109.2 million at December 31, 2019 |
| Debt, net of current portion | $7.6 million | $7.6 million at December 31, 2019 |
Cash, cash equivalents and restricted cash totaled $97.4 million at March 31, 2020. Current assets were $122.5 million and current liabilities $18.0 million. The balance sheet also included $23.0 million of lease liabilities following adoption of the lease accounting standard. Total liabilities were $51.3 million; stockholders’ equity was $119.0 million.
Material changes versus the prior comparable period
- Revenue rose $3.4 million, led by a $3.0 million increase in service and other revenue, primarily from greater Accelerator Laboratory activity. Product revenue grew only 3%; consumables revenue was essentially flat year over year.
- Gross margin declined to 43% from 49%. Management attributed the deterioration principally to acquisition-related intangible amortization and inventory valuation adjustments, alongside higher product and service costs.
- Operating expenses increased 21%, including higher R&D headcount, organizational expansion, headquarters lease costs and stock-based compensation. Net loss widened by $2.2 million.
- Operating cash use increased to $13.2 million from $5.4 million. Cash and cash equivalents fell $12.8 million from year-end.
- The company adopted ASC 842 on January 1, 2020, recognizing $12.2 million of right-of-use assets and lease liabilities of approximately $22.8 million at adoption. The quarter-end lease liability was $23.0 million.
Outlook, risks and unusual items
- COVID-19: Customer-site access restrictions delayed instrument installations, while laboratory interruptions affected consumables demand. Quanterix expected these challenges to continue until affected customers resumed normal operations. The company expanded Accelerator Laboratory capacity to support customers and clinical trials, and was developing COVID-19-related research assays; potential revenue benefits were uncertain.
- Liquidity outlook: Management said existing cash, commercial revenue and interest income were expected to fund anticipated operating needs for at least 12 months. It also expected significant expenses and operating losses for at least the next 24 months. These are forward-looking estimates subject to risk; no specific revenue or earnings guidance was provided.
- Debt and commitments: Approximately $7.7 million of principal and end-of-term charges were scheduled for 2021. Under the STRATEC supply agreement, a shortfall against minimum unit purchases could result in a fee estimated at $9.1 million if no further units were purchased; the company said it expected to meet the commitment and had not accrued the potential amount.
- Other items: Q1 included $0.4 million of Uman-related inventory step-up amortization. Foreign-currency translation reduced comprehensive income by $1.0 million. The company reported no material pending litigation and no significant subsequent events through the filing date.
- The filing cautions that forward-looking statements are uncertain and identifies COVID-19 effects, market adoption, competition, regulatory requirements and access to financing as factors that could affect results. It reported effective disclosure controls and no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether COVID-19-related site access and laboratory disruptions persist, and how they affect instrument installations, consumables sales and service demand.
- Whether service revenue growth and Accelerator Laboratory utilization can be sustained, and whether product gross margins recover as acquisition-related costs roll off.
- Whether operating cash burn remains consistent with management’s stated minimum 12-month liquidity outlook and expected operating losses over the next 24 months.
- Progress toward satisfying STRATEC’s minimum-purchase requirements and the remaining potential exposure under that agreement.
- The final valuation and amortization assumptions for Uman acquisition assets, which were described as provisional, and the impact of outstanding equity awards on future dilution.