Quanterix Corporation — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Quanterix develops and sells Simoa digital immunoassay platforms, related products, and research services. Figures below are in millions of dollars unless otherwise noted.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $26.6 | $27.7 | $79.7 | $80.3 |
| Gross profit / margin | $10.9 / 41% | $15.2 / 55% | $34.2 / 43% | $45.5 / 57% |
| Operating loss | $(36.6) | $(15.2) | $(79.7) | $(38.7) |
| Net loss | $(35.1) | $(15.7) | $(78.1) | $(37.7) |
| Net loss per share | $(0.95) | $(0.43) | $(2.12) | $(1.05) |
- Q3 product revenue was $17.7 million, down 14%; service and other revenue was $8.4 million, up 42%, largely reflecting the new Eli Lilly collaboration. Nine-month product revenue fell 8% to $53.1 million, while service and other revenue rose 43% to $25.7 million.
- Cost of goods and services rose 26% in Q3 and 31% year to date. Management cited inventory reserves, manufacturing and consumables quality challenges, and discontinued products as factors in product costs and weaker gross margin.
- Cash and cash equivalents were $343.7 million at September 30, 2022, versus $396.5 million at year-end 2021. Nine-month operating cash use was $44.2 million; investing cash use was $9.6 million; financing provided $1.6 million. Cash, cash equivalents, and restricted cash declined $52.2 million to $346.3 million.
- Total current assets were $386.8 million and current liabilities $28.6 million. The balance sheet reports no notes payable; the prior note payable matured in Q4 2021. Lease liabilities totaled $43.0 million, including $42.2 million long term. Total assets were $446.7 million and stockholders’ equity $372.8 million.
Material changes and unusual items
- Revenue was nearly flat for the first nine months, but revenue mix shifted: lower product sales and grant revenue were substantially offset by higher service revenue. Grant revenue fell to $0.4 million year to date from $4.2 million, as the RADx grant ended and the ADDF grant began.
- Q3 included $3.4 million of restructuring expense, an $8.2 million non-cash goodwill impairment that eliminated the remaining goodwill, and $8.7 million of long-lived-asset impairment. The latter included $7.7 million related to Bedford facilities and $1.0 million of software costs.
- The August restructuring eliminated 119 positions. The company began an assay redevelopment program and decided not to use its newly leased Bedford office and laboratory space; it is assessing sublease or termination alternatives. The new lease has an initial payment term of eight years and nine months.
- Management expects approximately $25 million in annualized operating-expense savings from the restructuring, but cautions that savings and other benefits are not assured. The company expects significant expenses and operating losses to continue for at least the next 24 months.
Outlook, risks, and contingencies
- Management said current cash, commercial sales, and interest income should fund anticipated operating cash needs for at least the next 12 months. This is an estimate subject to risks; future funding needs depend on executing the restructuring, product acceptance and quality, development costs, collaborations, and regulatory requirements.
- Management identified ongoing consumables manufacturing and quality challenges and production management to address them. It expects initial progress on assay improvements in 2022 and program completion in 2023; the anticipated product and quality benefits may not be achieved on schedule or at all.
- Other risks include failure to realize restructuring savings, disruption from workforce reductions, possible additional restructuring costs, and uncertainty around the Bedford lease. The filing states the company was not party to material legal proceedings and did not identify material pending litigation.
- Customer concentration warrants attention: the filing reports that one customer represented 14.1% of Q3 revenue and 11.1% of nine-month revenue; two customers individually represented 13.4% and 10.1% of gross receivables at quarter-end.
Key facts for investors to verify
- Whether consumables quality improves and product revenue and gross margin recover.
- Whether the restructuring delivers the estimated $25 million annualized savings, and whether further costs or operational disruption arise.
- What the company does with the Bedford facilities and the resulting lease and cash obligations.
- Cash burn and runway relative to management’s at-least-12-month liquidity estimate, given continuing losses and planned investment.
- Revenue concentration and the timing and durability of Lilly collaboration revenue.