Fluidigm Corporation (Nasdaq: FLDM) — Q1 2021 Form 10-Q
The filing identifies the issuer as Fluidigm Corporation; the reporting period is the three months ended March 31, 2021. Fluidigm develops and sells life-sciences instruments, consumables, reagents and services for research and clinical applications. Amounts below are in U.S. dollars.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 | Change or context |
|---|---|---|---|
| Revenue | $32.8 million | $27.6 million | Up 19% |
| Product revenue | $24.7 million | $19.0 million | Up 30%; consumables rose 79%, while instruments fell 19% |
| Service revenue | $6.3 million | $5.2 million | Up 21% |
| Operating loss | $19.3 million | $14.9 million | Operating margin approximately -59%, versus -54% |
| Net loss | $18.8 million | $16.0 million | Basic and diluted loss per share: $0.25 versus $0.23 |
| Product and service gross margin | 55.7% | 53.8% | Improved 1.9 percentage points |
| Operating cash flow | $(12.9) million | $(4.3) million | Cash use increased |
| Cash and cash equivalents | $49.7 million | $68.5 million at Dec. 31, 2020 | Restricted cash was an additional $1.0 million |
At March 31, 2021, working capital excluding deferred revenue and restricted cash was $57.0 million, down from $76.9 million at year-end. The company reported $13.2 million available under its revolving credit facility, with no borrowings outstanding. Convertible notes had a $53.8 million net carrying value ($55.6 million principal); operating lease liabilities totaled $40.4 million. Capital expenditures were $6.9 million, primarily for Singapore production expansion.
Material changes versus the prior period
- Revenue growth was led by microfluidics consumables, particularly COVID-19-related demand. Microfluidics product and service revenue increased 85%; mass cytometry product and service revenue declined 6%, including a 34% decline in mass cytometry instruments.
- Q1 2020 included $3.1 million of license revenue from an intellectual-property settlement; there was no comparable license revenue in Q1 2021. Q1 2021 instead included $1.5 million of development revenue from an OEM agreement.
- Product and service gross margin improved as fixed depreciation and amortization was spread over higher revenue, partly offset by pricing and product-mix effects. Operating expenses rose 22%, including higher compensation, development costs and stock-based compensation.
- Cash and cash equivalents declined $18.8 million during the quarter. Operating cash use increased, and the company spent more on capital expenditures than in Q1 2020.
Outlook, commentary and risks
- Management lowered its 2021 revenue expectations and expects COVID-19 testing revenue to decline in each subsequent quarter of 2021 as demand slows. It expects improvement in the non-COVID base business to partially offset that decline. The filing gives no specific revised revenue target or quantified guidance.
- Management said it is focused on cost containment, margin improvement, cost-effective funding for product development and mitigating cash use. It believed existing cash, cash equivalents and investments would cover working capital and capital expenditure needs for at least 18 months, while warning that lower cash generation or higher spending could require additional capital.
- The NIH RADx contract provides for up to $34.0 million subject to milestones. At quarter-end, $29.9 million of milestone value was considered reasonably assured; $28.0 million was recorded as deferred grant income, and $2.5 million was a grant receivable. NIH may terminate the contract, and milestone delivery, compliance and timing remain relevant risks.
- COVID-19 assay and collection-kit authorizations are Emergency Use Authorizations that are tied to the public-health emergency. The company disclosed risks if demand declines, authorizations end or regulatory requirements change.
- A putative securities class action seeks unspecified damages and names the company, its CEO and CFO. The company filed a motion to dismiss after quarter-end and stated it intended to defend the action vigorously.
- Other notable risks include continuing losses, dependence on COVID-related demand and research budgets, manufacturing concentration in Singapore and Canada, limited-source suppliers, foreign-exchange exposure, convertible-debt dilution and litigation. Management reported disclosure controls were effective and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether COVID-19-related demand declines as management expects, and whether growth in the base business offsets it.
- Updated revenue expectations, gross-margin trends and plans for operating-expense and cash management; the filing provides no numerical 2021 revenue guidance.
- Progress against NIH milestones, funding received and remaining, and any changes to contract compliance or timing.
- Cash burn, capital spending, revolving-credit availability and the assumptions behind management’s stated 18-month liquidity outlook.
- Developments in the securities litigation, EUA status and any material manufacturing or supplier disruptions.