Business context and reporting period
The filing is Fluidigm Corporation’s unaudited Form 10-Q for the quarter ended June 30, 2016, covering the three and six months then ended. The request metadata names STANDARD BIOTOOLS INC.; the filing itself identifies the registrant as Fluidigm Corporation. Fluidigm develops and sells life-science instruments, consumables, and services focused on single-cell analysis and genomics.
Financial performance and position
Amounts below are in millions of dollars except per-share data and percentages.
| Metric | Q2 2016 | Q2 2015 | First half 2016 | First half 2015 |
|---|---|---|---|---|
| Revenue | $28.2 | $28.6 | $57.2 | $55.3 |
| Operating loss | $(18.1) | $(14.7) | $(37.0) | $(28.7) |
| Net loss | $(18.6) | $(15.2) | $(38.5) | $(31.2) |
| Net loss per share | $(0.64) | $(0.53) | $(1.33) | $(1.09) |
| Product margin | 55% | 57% | 56% | 58% |
| Service margin | 63% | 72% | 65% | 72% |
- Q2 product revenue declined 4% to $24.7 million; service revenue rose 17% to $3.4 million. First-half product revenue rose 1% to $50.1 million and service revenue rose 25% to $6.9 million.
- Q2 revenue from Research customers’ products fell 13% to $15.5 million, primarily on lower C1 instrument revenue; Applied customers’ product revenue increased 19% to $9.3 million. In the first half, Research product revenue declined 6%, while Applied product revenue grew 14%.
- Q2 selling, general and administrative expense increased 12% to $23.8 million; first-half expense increased 19% to $49.3 million. Management attributed the increase chiefly to investment in global commercial infrastructure and higher headcount and compensation costs.
- Cash and cash equivalents were $35.9 million and investments were $50.5 million at June 30, 2016. Operating cash use was $15.1 million in the first half, versus $17.6 million a year earlier. Investing activities provided $21.5 million, including investment maturities and a $2.3 million Verinata payment; financing provided $0.1 million.
- Total liabilities were $257.8 million, including $194.8 million of convertible notes, net. The notes have $201.3 million principal, bear 2.75% interest, and mature in 2034. Total assets were $342.0 million and stockholders’ equity was $84.3 million.
Changes, outlook, and key risks
- Compared with the prior periods, first-half revenue grew modestly, but operating and net losses widened. Product and service margins both declined. Management cited lower instrument selling prices and production volumes, as well as higher service labor, travel, and material costs.
- Management said existing cash, cash equivalents, and investments should meet working-capital and capital-expenditure needs for at least 18 months. It also cautioned that weaker-than-expected operating cash generation or higher costs could require additional capital; no specific revenue or earnings guidance is provided.
- Management expects continued investment in research and development and commercial infrastructure, and anticipates SG&A expense may rise as the business expands. Capital spending is also expected to support manufacturing capacity, demonstration equipment, and systems.
- Product risk includes a reported performance issue with certain C1 IFCs when chambers contain more than one cell. One redesigned IFC had been released; additional redesigns were expected later in 2016, subject to development and timing risks.
- Other highlighted risks include intense competition and variable customer demand; dependence on sole- or single-source suppliers and concentrated manufacturing sites; the ongoing relocation of Canadian proteomics manufacturing; foreign-exchange exposure; and possible impairment of substantial goodwill and developed technology. The company also noted Brexit-related uncertainty.
- Legal proceedings are described as arising in the ordinary course; management did not believe currently pending matters would materially adversely affect the company. The filing reports no off-balance-sheet arrangements and states that disclosure controls were effective at June 30, 2016.
Important facts for investors to verify
- Confirm the issuer identity: the filing is for Fluidigm Corporation, despite the request metadata naming Standard Biotools Inc.
- Track whether revenue growth can improve while operating losses and cash use decline, particularly given falling Research instrument sales and continued SG&A investment.
- Monitor C1 IFC redesign progress, customer impact, and the timing and costs of the Canadian manufacturing relocation.
- Assess liquidity against the stated 18-month runway, operating cash burn, lease and capital commitments, and the terms and eventual repurchase provisions of the convertible notes.
- Review product-margin trends, inventory and receivables, and impairment indicators for the $104.1 million goodwill and $85.4 million net developed technology balances.