Business context and reporting period
This is Fluidigm Corporation’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2021. The filing identifies the registrant as Fluidigm Corporation (Nasdaq: FLDM), although the request metadata names Standard BioTools Inc. Fluidigm sells life-sciences research and clinical-laboratory instruments, consumables, reagents, software and services, with mass cytometry and microfluidics product lines.
Key financial metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $28.5 million | $39.9 million | $92.3 million | $93.5 million |
| Operating loss | $19.6 million | $5.5 million | $56.2 million | $34.1 million |
| Net loss | $13.8 million | $6.0 million | $49.8 million | $35.0 million |
| Loss per share, diluted | $0.18 | $0.08 | $0.66 | $0.49 |
| Product and service gross margin | 46.9% | 58.9% | 51.0% | 55.6% |
| Cash used in operations | — | — | $37.1 million | $11.7 million |
Quarterly revenue fell 28% year over year; nine-month revenue declined 1%. Product and service gross profit was $13.1 million for Q3 and $45.0 million for the nine-month period. The company recorded a $5.0 million surplus of NIH contract funding as non-operating income in Q3 and year to date.
At September 30, 2021, cash and cash equivalents were $29.3 million, versus $68.5 million at year-end 2020; total assets were $282.2 million and stockholders’ equity was $99.3 million. Current liabilities were $47.3 million. The filing reports working capital, excluding deferred revenue and restricted cash, of $39.0 million, down from $76.9 million at year-end.
Debt included $55.6 million principal of convertible notes and a $10.0 million term loan; carrying values were $54.1 million and $10.0 million, respectively. The $15 million revolving facility had no borrowings and $10.3 million available. The facility is secured by substantially all assets other than intellectual property and requires a minimum Adjusted Quick Ratio of 1.25 to 1.00.
Material changes versus the prior comparable period
- Q3 product revenue declined 25%, including a 57% drop in microfluidics instrument revenue and a 34% decline in microfluidics consumables. Management attributed the weakness primarily to lower COVID-19 testing demand.
- Q3 mass cytometry product and service revenue increased 10%, supported by the CyTOF XT launch in May 2021. For the nine months, product and service revenue rose 9% in mass cytometry and 6% in microfluidics.
- Q3 revenue fell particularly sharply in the Americas, down 45%; EMEA revenue rose 14%. Nine-month EMEA revenue increased 21%, while Americas and Asia-Pacific declined 9% and 8%, respectively.
- Q3 product and service margin fell 12.0 percentage points. Management cited lower COVID-19 consumables sales, product mix, lower consumables capacity utilization, lower mass cytometry instrument prices and fixed costs on a smaller revenue base.
- Operating expenses increased 8% in Q3 and 15% year to date, while operating losses widened. Cash used in operations increased substantially year over year.
- Cash and cash equivalents decreased $39.2 million over the first nine months. The company drew a new $10 million term loan in August 2021; the revolving facility maturity was extended to August 2023.
Outlook, management commentary, risks and unusual items
- Management said COVID-19 testing demand slowed as vaccines and alternative testing options became more available, and lowered its 2021 revenue expectations for COVID-19 testing products. The filing provides no quantified company-wide revenue or earnings guidance.
- Supply-chain constraints, component shortages, China import-tax exemption delays and COVID-related shutdowns in Japan constrained Q3 results; some customer orders could not be fulfilled. Management expected to work through orders over the next few quarters, but warned that continued disruption could impede deliveries.
- The company said existing cash and revolving-credit availability were expected to cover working capital and capital expenditure needs for at least 12 months, but also cited lower-than-expected operating cash generation and said additional capital might be needed. Equity financing could dilute shareholders; debt financing could add covenants.
- Management was reviewing strategic alternatives, cost and capital structure, operations and supply chain, with outside financial, operating and legal advisers. It also noted possible cost-control measures and reductions or deferrals of capital expenditures and development activity.
- The NIH RADx contract is worth up to $34 million subject to milestones. Remaining milestones were due by year-end 2021. The NIH may terminate for convenience; failure to meet contract requirements may reduce funding or expose the company to damages. Management said it was compliant and did not expect to pay liquidated damages.
- COVID-related EUAs for the company’s assay and collection kit are tied to the public-health emergency and may end or be revoked. Other principal risks include sustained losses, limited-source suppliers, manufacturing concentration, competition, convertible-debt obligations, potential dilution and regulatory uncertainty.
- A securities class action seeks unspecified damages. The court had dismissed an earlier complaint with leave to amend; a second amended complaint was filed in September 2021, and the company moved to dismiss it in October. The company said it intended to defend the case vigorously.
- Unusual or nonrecurring items include the $5 million NIH surplus funding recognized in other income, insurance-claim income of about $0.3 million in Q3 and $0.5 million year to date, and the prior-year $3.1 million license revenue from an IP settlement that did not recur in 2021.
Most important facts an investor should verify
- Confirm the registrant and security identity: this filing is for Fluidigm Corporation, ticker FLDM, notwithstanding the Standard BioTools metadata.
- Track whether COVID-testing demand, supply constraints, China import-tax issues and Japan shutdowns continue to affect revenue, orders and margins.
- Assess cash burn and financing needs against the company’s 12-month liquidity statement, credit-facility availability and covenant compliance.
- Verify completion and acceptance of NIH milestones, remaining funding, and the treatment and timing of deferred grant income.
- Review the strategic-alternatives process, any cost reductions or financing actions, and potential effects on operations and shareholder dilution.
- Monitor the securities litigation and the company’s convertible notes, including conversion, repurchase and maturity provisions.