Fluidigm Corporation (now identified in the request as Standard BioTools Inc.) — Q3 2019 Form 10-Q
Filing identity: The supplied filing is for Fluidigm Corporation, not a registrant named Standard BioTools Inc. It covers the quarter and nine months ended September 30, 2019; filed November 7, 2019. Amounts below are in U.S. dollars.
Business context and reporting period
Fluidigm developed and sold life-science research tools, including mass cytometry and microfluidics instruments, consumables, and related services. It reported one operating segment and continued to incur significant losses.
Financial performance and liquidity
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | $26.5m | $29.0m | $84.8m | $80.6m |
| Gross profit / margin | $14.0m / 53.0% | $15.8m / 54.6% | $46.4m / 54.7% | $42.8m / 53.1% |
| Operating loss | $13.8m | $11.6m | $42.7m | $37.0m |
| Net loss | $12.9m | $14.8m | $52.1m | $44.2m |
| Net loss per share, diluted | $0.19 | $0.38 | $0.79 | $1.13 |
| Cash used in operating activities | Not presented quarterly | $29.7m | $24.6m |
- Q3 revenue fell 9% year over year: instrument revenue declined 34%, partly offset by 11% growth in consumables and 19% growth in service revenue.
- Nine-month revenue grew 5%, with higher mass cytometry instrument and consumables sales partly offset by lower microfluidics revenue. Nine-month operating expenses increased 11%, including a 14% increase in selling, general and administrative expense.
- At September 30, cash and cash equivalents were $25.9m and short-term investments were $36.9m; restricted cash was another $2.1m. The company reported $9.0m available under its revolving facility, with no borrowings outstanding.
- Convertible debt was $49.9m net carrying value ($51.25m principal), down from $172.1m net at December 31, 2018. Stockholders’ equity was $162.6m; accumulated deficit was $611.0m.
- Operating lease liabilities totaled $6.8m. A new headquarters lease expected to begin in early 2020 was projected to add approximately $47.4m in right-of-use assets and lease liabilities.
Material changes, outlook, and risks
- In Q1 2019, the company converted and retired $150.0m principal of 2018 convertible notes into approximately 19.5m shares, recognizing a $9.0m extinguishment loss. The conversion reduced interest expense but increased shares outstanding.
- Management said existing cash, cash equivalents, and short-term investments were expected to fund working capital and capital expenditure needs at least through December 31, 2020. This was not a revenue or earnings forecast; the filing provides no specific revenue or profit guidance.
- Management attributed Q3’s lower gross margin to lower plant utilization, weaker service margins, and an inventory reserve for low-volume microfluidic instruments. Year-to-date margin improved with higher capacity utilization, partly offset by inventory reserves.
- Key disclosed risks include continued losses and negative operating cash flow, variable instrument sales and customer research budgets, competition, manufacturing and single-source supplier dependence, foreign-exchange exposure, and potential future financing needs. Holders of the remaining 2014 notes may require cash repurchase in 2021 and later specified years.
- The company disclosed a March 2019 ransomware incident affecting certain IT systems. It believed systems were restored without significant business-data loss or disclosure; estimated remediation costs were approximately $0.1m net of insurance, with further security work anticipated.
- Management stated disclosure controls were effective as of September 30, 2019. It believed pending legal matters were not expected to have a material adverse effect, while noting litigation outcomes are uncertain.
Important facts for investors to verify
- Confirm the issuer and security being analyzed: this filing identifies the registrant as Fluidigm Corporation and ticker FLDM.
- Track instrument demand, especially mass cytometry, and whether consumables and service growth can offset instrument volatility.
- Assess cash burn against management’s stated funding horizon, and consider the 2020 facility maturity, 2021 noteholder put date, and planned headquarters lease obligations.
- Review the effect of the note conversion and equity awards on share count, and monitor progress on profitability, margins, and operating expenses.
- Check subsequent disclosures for developments concerning the ransomware incident, manufacturing transition, and any material legal or contingent liabilities.