Filing summary
Entity note: The filing provided is Fluidigm Corporation’s Form 10-K, not a filing under the name Standard BioTools Inc. Confirm that this is the intended issuer. The report covers the fiscal year ended December 31, 2018; fourth-quarter figures are unaudited.
Business context and reporting period
Fluidigm develops and sells life-science research instruments, consumables and services using mass cytometry and microfluidics technologies. Its systems support protein analysis, genomics, PCR, sequencing preparation and single-cell research. Products are labeled for research use only. More than half of 2018 revenue came from outside the United States.
Financial performance and liquidity
Amounts below are in millions of dollars except per-share data.
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Revenue | $113.0 | $101.9 |
| Gross profit / gross margin | $61.6 / 54.6% | $52.0 / 51.0% |
| Operating loss | $(48.2) | $(58.4) |
| Net loss | $(59.0) | $(60.5) |
| Net loss per share | $(1.49) | $(1.84) |
| Operating cash flow | $(25.2) | $(24.1) |
| Cash and cash equivalents at year-end | $95.4 | $58.1 |
| Working capital, excluding deferred revenue | $101.0 | $71.6 |
| Convertible notes, carrying value | $172.1 | $195.2 |
FY 2018 revenue grew 11%, led by instruments (+7%), consumables (+15%) and services (+11%). International revenue was $64.8 million, or 57% of total revenue. Research and development expense was $30.0 million, down 3%; selling, general and administrative expense was essentially flat at $79.8 million. The company remained loss-making, with an accumulated deficit of $558.9 million.
Fourth-quarter 2018 revenue was $32.3 million, versus $27.7 million in Q4 2017. Net loss was $14.8 million, compared with $10.5 million; loss per share was $0.36, compared with $0.27. The filing does not provide a clear fourth-quarter gross margin.
Material changes versus prior periods
- Revenue reversed its 2% decline in 2017, rising 11% in 2018. Mass-cytometry instrument and consumables sales were key growth drivers; microfluidic instrument sales were softer.
- Gross margin improved 3.6 percentage points to 54.6%, mainly from better manufacturing utilization, product mix and fixed-cost absorption.
- Operating loss narrowed by $10.2 million, while net loss improved by $1.5 million. Higher interest expense—$13.9 million versus $5.8 million—partly offset the operating improvement, largely because of non-cash debt discount amortization on the 2018 notes.
- Cash increased by $37.3 million, principally reflecting approximately $59.5 million in net proceeds from a December 2018 stock offering. Operating cash use remained substantial.
- The company exchanged $150 million of 2014 convertible notes for 2018 notes. After year-end, all approximately $150 million of 2018 notes were converted into about 19.4 million common shares; approximately $51.3 million principal of 2014 notes remained outstanding. The conversions materially increased the share count.
Outlook, risks and unusual items
- Management stated that existing cash, cash equivalents and investments were expected to fund working capital and capital expenditures for at least 18 months. No specific revenue or earnings guidance was provided.
- Management cited cost-saving and operational-efficiency measures, including workforce and facility rationalization and consolidation of North American production activities in Canada. It said continued R&D investment remained important.
- Risks include recurring losses and negative operating cash flow, competitive and market-acceptance pressures, variable customer research budgets and long sales cycles, reliance on sole- or limited-source suppliers, and manufacturing concentration in Singapore and Canada.
- At December 31, 2018, the company had $51.3 million principal amount of 2014 notes outstanding and a $15 million secured revolving facility, with no amounts drawn and $12.3 million of availability. The 2014 notes include holder repurchase dates beginning in 2021. The company also disclosed $282.9 million of contractual obligations, including debt principal and interest.
- A ransomware incident in early March 2019, after the reporting date, affected certain IT systems. The company estimated costs of approximately $1.5 million, believed it had restored systems without significant business-data loss, and was seeking insurance recovery; monitoring and remediation continued.
- Adoption of the new lease standard in 2019 was expected to add $8–$11 million of operating lease liabilities and $6–$9 million of right-of-use assets. The 2018 adoption of the revenue standard had no material overall impact.
- The auditor gave an unqualified opinion on the financial statements and concluded internal control over financial reporting was effective as of year-end.
Important facts for investors to verify
- Whether Fluidigm Corporation is the intended issuer given the Standard BioTools Inc. request metadata.
- The post-year-end conversion’s final share count, dilution and resulting debt balance, alongside the remaining 2014 notes’ repurchase terms.
- Cash-burn trends and whether the stated 18-month liquidity outlook remains adequate, including any future financing needs.
- Whether revenue growth and gross-margin gains persist, particularly in mass cytometry, consumables and international markets.
- The ultimate cost, insurance recovery and any data-disclosure consequences of the March 2019 ransomware incident.
- The effect of lease-standard adoption and the company’s ability to manage manufacturing, supplier, regulatory and competitive risks.