Fluidigm Corporation (FLDM) — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. The filing is by Fluidigm Corporation; the supplied company metadata identifies Standard BioTools Inc., so investors should verify the issuer and ticker for the intended filing.
Business context and results
Fluidigm develops instruments, consumables, reagents and software for life-sciences research and clinical applications. Results reflect a recovering core business, growth in consumables and services, and declining demand for COVID-19 testing products.
| Metric | Q2 2021 | Q2 2020 | First half 2021 | First half 2020 |
|---|---|---|---|---|
| Revenue | $31.0m (+19%) | $26.1m | $63.8m (+19%) | $53.7m |
| Product and service gross margin | 50.1% | 52.5% | 53.0% | 53.1% |
| Operating loss | $17.3m | $13.7m | $36.6m | $28.7m |
| Net loss | $17.1m | $13.0m | $36.0m | $29.0m |
| Loss per share, diluted | $0.23 | $0.18 | $0.48 | $0.41 |
| Operating cash flow | Not presented quarterly in this filing | $(27.6)m | $(7.1)m |
Financial position and material changes
- Revenue growth came mainly from product and service sales: Q2 product revenue rose 30% and service revenue 29%. Consumables increased 41% in Q2 and 61% for the first half; first-half instrument revenue was down 1%.
- Q2 margin fell 2.4 percentage points. Management attributed pressure chiefly to excess and obsolete COVID-test inventory provisions, lower average selling prices for mass-cytometry instruments and higher service costs. First-half margin was nearly flat year over year.
- Operating expenses rose 16% in Q2 and 19% in the first half, including higher research and development and selling, general and administrative costs. The net loss widened year over year.
- Cash and cash equivalents were $30.9m at June 30, down from $68.5m at year-end 2020; working capital excluding deferred revenue and restricted cash was $11.4m, versus $49.9m. First-half investing cash outflow was $9.1m, including $11.1m of capital expenditures, primarily for NIH-supported capacity expansion.
- Convertible-note carrying value was $53.9m, principally $55.0m principal of 5.25% notes due December 2024. No revolver borrowings were outstanding at June 30; reported availability was approximately $10.9m in MD&A (the note gives $11.0m).
- Assets totaled $289.3m and stockholders’ equity $109.5m at June 30. Accumulated deficit was $712.7m. No goodwill or intangible-asset impairment was recorded.
Outlook, risks and unusual items
- Management said COVID-19 testing demand had slowed and anticipated further decline in related revenue. The company lowered its 2021 revenue expectations; it did not provide a revised numerical revenue forecast in the supplied filing text.
- Management expected the improving non-COVID base business, including the May 2021 launch of CyTOF XT, to offset some testing-related weakness. It expected product and service margins to be pressured in the second half by product transition and mix, and cash use to be lower than in the first half as inventory declines and RADx capital spending winds down.
- Management believed existing cash and available facilities would fund working-capital and capital-expenditure needs for at least 18 months, while warning that weaker operating cash flow or higher spending could require additional financing.
- The NIH RADx contract provides up to $34.0m subject to milestones. At June 30, $31.4m of milestones were considered reasonably assured and $28.2m was recorded as deferred grant income. NIH may terminate for convenience; specified delays caused by Fluidigm could trigger liquidated damages. The company reported compliance and no expectation of such damages.
- On August 2, 2021, after quarter-end, Fluidigm amended its SVB facility: it extended the $15.0m revolver to August 2023 and added a $10.0m term-loan facility, of which $5.0m was drawn. The amendment added a minimum adjusted quick ratio covenant of 1.25:1. The term loan bears interest at the greater of prime plus 0.75% or 4.00%, plus a final payment equal to 6.5% of each advance’s original principal.
- A securities class action seeking unspecified damages remained pending; on August 4, 2021, the court granted defendants’ motion to dismiss with leave to amend. Other disclosed risks include persistent losses, COVID-19 uncertainty, competition, reliance on limited-source suppliers and manufacturing sites, regulatory limits on COVID-19 EUA products, debt and liquidity needs, and foreign-exchange exposure.
Important facts for investors to verify
- Confirm that this Fluidigm filing is the intended filing for Standard BioTools Inc. and the requested period.
- Track the pace of COVID-19 revenue declines against growth in the base business, especially consumables, services and CyTOF XT placements.
- Monitor inventory reserves, gross-margin trends, cash burn and the company’s ability to meet its stated liquidity runway.
- Review NIH milestone completion, grant recognition and related capital spending, plus compliance with the new SVB covenant and term-loan repayment terms.
- Check the status and potential financial consequences of the securities lawsuit and the duration of FDA emergency authorizations for COVID-19 products.