Quanterix Corporation — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023; filed August 8, 2023. Quanterix develops ultra-sensitive Simoa digital immunoassay platforms, sells instruments and consumables, and provides laboratory research services.
Financial performance and liquidity
Amounts below are in millions of dollars except per-share data and percentages.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $31.0 | $23.5 | $59.5 | $53.1 |
| Gross profit / GAAP gross margin | $19.1 / 61.7% | $8.7 / 37.1% | $36.1 / 60.6% | $23.3 / 43.9% |
| Operating expenses | $28.7 | $33.7 | $55.0 | $66.4 |
| Operating loss | $(9.6) | $(25.0) | $(19.0) | $(43.1) |
| Net loss / diluted loss per share | $(6.1) / $(0.16) | $(24.9) / $(0.67) | $(12.2) / $(0.33) | $(43.1) / $(1.17) |
| Operating cash flow | Not separately reported | Not separately reported | $(8.9) | $(29.6) |
- Q2 product revenue was $19.7 million and service revenue was $10.6 million. For the first half, product revenue was $39.0 million and service revenue was $19.1 million.
- Non-GAAP gross margin, which reclassifies shipping and handling costs from operating expenses to cost of sales, was 56.4% in Q2 and 54.8% for the first half, versus 29.1% and 37.0%, respectively, in 2022.
- At June 30, cash and cash equivalents were $329.5 million; current assets were $379.1 million and current liabilities $31.9 million. Total liabilities were $73.9 million, including $43.4 million of operating lease liabilities. The balance sheet reports no funded debt.
- Cash, cash equivalents and restricted cash declined by $9.0 million in the first half. Capital expenditures were $0.8 million; financing provided $0.7 million.
Changes versus the prior comparable periods
- Q2 revenue rose 32%; first-half revenue rose 12%. Higher consumables sales, pricing, Accelerator Laboratory revenue, and collaboration/license revenue contributed. Instrument sales declined, partly offsetting product growth.
- Q2 and first-half losses narrowed substantially, reflecting higher gross profit, lower operating expenses, and higher interest income earned on cash. First-half interest income was $7.3 million versus $0.6 million in 2022.
- Operating expenses fell 15% in Q2 and 17% in the first half, primarily following the 2022 workforce reduction. Lower product costs also reflected improved inventory management and lower instrument sales.
Outlook, commentary, risks and unusual items
- Management expects lower instrument demand in certain markets to continue through the remainder of 2023. No specific revenue, margin, or earnings guidance is provided.
- The company expects continued significant expenses and operating losses at least through the next 24 months. Management believes cash and expected product and service receipts will meet anticipated operating cash needs for at least 12 months from the filing date; this depends on assumptions and actual cash use could be higher.
- The 2022 restructuring eliminated 119 positions; management estimates approximately $25 million in annualized operating expense savings. The company is not using its Bedford, Massachusetts office and laboratory facilities and is evaluating alternatives, including subleasing. It recorded $1.9 million of related other lease costs in the first half of 2023.
- In July 2023, after quarter-end, Quanterix launched LucentAD, a blood-based test to assist evaluation of patients with cognitive symptoms. The test has not been cleared or approved by the FDA.
- Q2 revenue included $1.0 million of non-cash consideration from UltraDx shares, recognized after a financing condition was met; the shares were valued using comparable transaction pricing and are a Level 3 investment. Revenue also included a one-time $0.5 million Abbott option-expiration item. These items are not necessarily recurring.
- One customer represented more than 10% of revenue in both the quarter and first half, and one customer represented more than 10% of gross receivables at June 30. The filing does not identify the customer in the supplied text.
- Management reported material weaknesses in internal control over financial reporting and concluded disclosure controls were not effective as of June 30. Remediation was underway but had not operated long enough to be considered complete. The company reported no pending or threatened litigation expected to have a material adverse effect.
Important facts for investors to verify
- Whether consumables and service growth can offset the stated weakness in instrument demand, and whether the Q2 margin improvement is sustainable.
- Actual operating cash burn relative to management’s 12-month liquidity estimate, including working-capital needs and continued lease costs.
- Progress in product quality and assay redevelopment, restructuring savings, and the plan for the unused Bedford facilities.
- LucentAD’s commercial uptake, regulatory status, and any related investment or commercialization costs.
- Identity and credit exposure of the concentrated customer, and valuation or realization of the UltraDx shares.
- Remediation and independent testing of the disclosed material weaknesses in financial reporting controls.