Alpha Teknova, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The filing reports annual results; it does not provide a clear standalone fourth-quarter financial summary. Teknova manufactures research and clinical-grade reagents for life-sciences customers, primarily in the United States.
Financial results and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $41.4 million | $36.9 million |
| Gross profit / margin | $17.5 million / 42.2% | $17.6 million / 47.8% |
| Operating loss | $49.7 million | $12.0 million |
| Net loss | $47.5 million | $9.8 million |
| Cash used in operating activities | $27.4 million | $9.1 million |
| Cash used in investing activities | $28.1 million | $17.5 million |
- Revenue grew 12.3%. Lab Essentials revenue rose 16.9% to $31.8 million and Clinical Solutions rose 24.3% to $8.4 million. Sample Transport revenue fell to $6,000 from $1.5 million after the company stopped producing and marketing those products.
- Gross margin fell 5.6 percentage points, mainly because labor and supplies costs increased as a share of revenue. Operating expenses rose 126.6% to $67.1 million, including higher R&D, sales and marketing, and general and administrative spending.
- FY2022 included noncash impairment charges of $16.6 million for goodwill and $4.2 million for manufacturing equipment. The goodwill charge followed a significant decline in the share price and market capitalization; the equipment impairment followed a decision to stop using and developing certain machinery.
- Cash and cash equivalents were $42.2 million at year-end, down from $87.5 million; working capital was $50.3 million. Property, plant and equipment purchases were $28.1 million. Financing provided $10.3 million, primarily from $10.1 million of debt proceeds.
- Year-end long-term debt, net, was $22.0 million; gross principal was $22.1 million. The $57.1 million credit facility comprises a $52.1 million term loan and a $5.0 million revolver, but additional term-loan tranches are subject to lender discretion and facility conditions. Operating lease liabilities totaled $20.3 million.
Changes, outlook and key risks
- Management attributed revenue growth in the two principal product categories mainly to higher average revenue per customer. The largest customer, a distributor, represented 15% of FY2022 revenue, down from 18% in FY2021. Three suppliers accounted for 63% of inventory purchases.
- The company invested in expanded manufacturing capacity; its new Hollister facility began operating for research-grade products in December 2022. In February 2023, it reduced its workforce by about 40 positions, estimating approximately $4 million in annual savings and $0.8 million in associated costs.
- Management said year-end cash and the credit facility were expected to fund operating and capital needs for at least 12 months, but also said it could not guarantee continued covenant compliance, additional financing, expense control, or revenue growth. No specific revenue or earnings guidance is provided in the filing.
- In March 2023, a credit amendment increased the term-loan margin to 7.00%, the revolver margin to 4.00%, and the SOFR floor to 4.50%; it also raised the exit fee to 8.5%. The amendment lowered the 2023 minimum trailing-12-month revenue covenant to $42 million and imposed a $10 million minimum-cash covenant. The filing says future borrowing tranches remain at lender discretion.
- In March 2023, Teknova entered an at-the-market stock sales agreement allowing sales of up to $50 million in gross proceeds, subject to applicable offering limits; the prospectus supplement then covered $14.5 million. Equity issuance could dilute shareholders.
- Major risks include continuing losses and cash use, margin pressure, customer and supplier concentration, uncertain biotech funding and order timing, manufacturing scale-up and quality execution, and variable-rate secured debt. The company depends on maintaining ISO 13485:2016 certification; its then-current certification was due to expire July 25, 2023 absent a successful audit.
- Management concluded internal control over financial reporting was ineffective at year-end due to an unremediated material weakness in income-tax accounting resources and controls. The auditor gave an unqualified opinion on the financial statements but did not attest to internal-control effectiveness. The company reported no material legal proceedings.
Important facts for investors to verify
- Whether operating cash burn and capital spending moderate, and whether the stated liquidity runway holds under actual revenue and expense trends.
- Current debt balances, interest costs, covenant compliance, lender discretion over undrawn tranches, and the effect of the amended cash and revenue covenants.
- Progress in remediating the income-tax control weakness and maintaining ISO 13485:2016 certification.
- Whether revenue growth in Lab Essentials and Clinical Solutions persists amid customer funding pressure, concentrated customers, and the decline of COVID-related Sample Transport sales.
- Actual savings and one-time costs from the workforce reduction, and any shares sold under the ATM program and resulting dilution.