Quanterix Corporation — Q1 2018 Form 10-Q
Reporting period: Three months ended March 31, 2018; comparisons are with the three months ended March 31, 2017. Quanterix sells Simoa digital immunoassay instruments, consumables and research services. It acquired Aushon Biosystems on January 30, 2018.
Financial performance
| Metric | Q1 2018 | Q1 2017 | Change |
|---|---|---|---|
| Total revenue | $7.521 million | $5.338 million | +40.9% |
| Product revenue | $4.745 million | $3.425 million | +38.5% |
| Service and other revenue | $2.507 million | $1.644 million | +52.5% |
| Collaboration and license revenue | $0.269 million | $0.269 million | No change |
| Gross profit / gross margin | $3.172 million / 42.2% | $2.360 million / 44.2% | Margin down about 2.0 percentage points |
| Operating loss | $7.163 million | $6.056 million | Loss widened |
| Net loss | $7.202 million | $6.391 million | Loss widened 12.7% |
| Net loss per share, basic and diluted | $0.33 | $3.18 | Not directly comparable |
Product growth reflected more instrument sales and higher consumables sales as the installed base expanded. Service growth reflected greater use of the Simoa Accelerator Laboratory. The lower gross margin was attributed to costs related to the SR-X launch and Aushon acquisition. R&D expense declined 14.3% to $3.644 million, mainly as SR-X development was completed; SG&A rose 60.6% to $6.691 million, reflecting added personnel, public-company costs, acquisition-related items, amortization and stock compensation. The per-share comparison is affected by the 2017 preferred-stock structure and the IPO conversion to common shares.
Cash, liquidity and debt
- Cash and cash equivalents were $65.231 million at March 31, 2018, down from $79.682 million at year-end 2017. Current assets were $76.617 million and current liabilities $22.790 million.
- Operating cash use was $10.061 million, versus $3.992 million in Q1 2017. Investing cash use was $3.449 million, including Aushon acquisition spending; financing cash use was $0.941 million. Cash declined by $14.451 million during the quarter.
- Debt was $8.463 million, classified as current at quarter-end; scheduled debt principal payments, including end-of-term amounts, totaled $8.591 million through 2019. No further amounts were available under the facility.
- Management believes cash, commercial receipts and interest income will fund anticipated operating needs for at least 24 months. It also expects significant expenses and operating losses to continue at least through the next 24 months.
Material changes, outlook and risks
- Aushon was acquired for $4.0 million of consideration: $3.2 million paid at closing and $0.8 million payable after six months, subject to adjustments. The preliminary allocation included $2.950 million of intangible assets and $1.308 million of goodwill; the valuation remained subject to finalization.
- Management expects expenses to increase as it expands sales, R&D, staffing and infrastructure. Consumables are expected to become a more important, comparatively stable revenue contributor as the instrument base grows; management expects lower consumables revenue per SR-X instrument than per HD-1.
- The STRATEC supply agreement could require a fee of $11.9 million if minimum unit purchases are not met, based on the shortfall at quarter-end and assuming no further purchases. The company believes it will meet the commitment and recorded no accrual. It also owes $1.5 million for additional development work expected to be completed in 2018.
- The bioMérieux collaboration is expected to run through 2019; $1.9 million remained deferred at quarter-end. The company noted that adoption of revenue standard Topic 606 in 2019 could affect recognition if performance obligations remain open.
- Management reported no material subsequent events, no material legal proceedings, no material changes to previously disclosed risk factors, and effective disclosure controls. The filing identifies risks including uncertain product adoption, competition, future funding needs and potential dilution or restrictive financing terms.
Important facts for investors to verify
- Whether revenue growth and consumables demand persist, and whether gross margins recover as SR-X and Aushon costs develop.
- Cash burn and the assumptions supporting management’s stated 24-month liquidity outlook.
- Debt repayment timing and the potential exposure under the STRATEC minimum-purchase commitment.
- Final Aushon purchase accounting, integration results and the conditions on the remaining $0.8 million payment.
- The timing and revenue-recognition impact of the bioMérieux arrangement and Topic 606 adoption.