Fluidigm Corporation (now identified in request metadata as Standard BioTools Inc.) — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019; comparative period is Q1 2018. The filing is issued under the name Fluidigm Corporation and reports life-sciences research instruments, consumables, and services.
Financial performance and liquidity
| Metric | Q1 2019 | Q1 2018 / comparison |
|---|---|---|
| Revenue | $30.1 million | $25.2 million; up 19% |
| Gross profit / margin | $17.0 million / 56.4% | $13.4 million / 53.2% |
| Operating expenses | $31.2 million | $26.1 million; up 20% |
| Operating loss | $(14.2) million | $(12.6) million |
| Net loss / diluted loss per share | $(25.5) million / $(0.44) | $(13.2) million / $(0.34) |
| Cash used in operating activities | $(20.1) million | $(16.2) million |
| Cash, cash equivalents, and short-term investments | $75.1 million at March 31 | Cash and equivalents were $95.4 million at December 31, 2018 |
- Instrument revenue rose 71% to $12.8 million, principally on higher Helios and Hyperion Imaging System sales. Consumables declined 7% to $12.0 million; service revenue increased 11% to $5.3 million.
- Revenue growth was strongest in Asia-Pacific, up 51%; EMEA revenue declined 4%. Japan contributed 13.4% of quarterly revenue. Weaker foreign exchange reduced revenue by approximately $0.4 million.
- Gross margin improved 3.2 percentage points, attributed to better service margins, higher plant utilization, and fixed-cost absorption; a higher instrument mix partly offset the improvement.
- Cash and equivalents were $65.6 million, with $9.5 million of short-term investments. Cash declined $29.8 million during the quarter. The company cited $13.7 million of availability under its revolving facility, with no borrowings outstanding.
- The remaining convertible notes had $51.25 million principal outstanding. The company reported $49.8 million net carrying value. It had $182.2 million of stockholders’ equity and $109.2 million of total liabilities at quarter-end.
Material changes and notable items
- All $150 million principal of the 2018 convertible notes was converted or called for conversion into approximately 19.46 million common shares. The company recorded a $9.0 million extinguishment loss. Shares issued and outstanding increased from 49.3 million at year-end to 69.0 million at March 31.
- SG&A rose 21% to $22.8 million, including higher compensation, business-development, and advertising costs. R&D increased 15% to $8.4 million.
- The company adopted ASC 842 lease accounting, recognizing $9.2 million of lease liabilities and $7.4 million of right-of-use assets at adoption. A new headquarters lease expected to begin in Q1 2020 is expected to add about $32 million in lease assets and liabilities at commencement.
- Deferred revenue was $18.4 million at March 31. Some service-contract purchase orders may be canceled before the service period begins, so disclosed expected contract revenue is subject to change.
Outlook, risks, and contingencies
- Management stated that cash, cash equivalents, and investments were expected to fund working-capital and capital-expenditure needs for at least 18 months. This is not a revenue or earnings forecast; the filing provides no specific numerical operating guidance.
- The company continued to report operating and net losses and negative operating cash flow. Management cautioned that weaker sales or higher spending could require additional capital.
- In early March 2019, the company experienced a ransomware attack affecting certain IT systems. It estimated related costs at approximately $1.5 million, had recovered a portion through insurance, and was continuing response and security-improvement work. It said it believed business data was restored without significant loss and confidential data was not lost or disclosed, while continuing to monitor the matter.
- Key disclosed risks include variable demand and product mix, dependence on mass cytometry growth, competition and pricing pressure, customer research-budget reductions, manufacturing and sole-source supplier interruptions, foreign-exchange exposure, cybersecurity, and possible future financing needs. The company also identified potential impairment risk related to goodwill and intangible assets.
- Management said pending legal matters were not currently believed likely to have a material adverse effect, while noting litigation outcomes are uncertain. The filing describes indemnification obligations but does not provide a clear maximum exposure.
Important facts for investors to verify
- Whether instrument-led revenue growth continues and whether consumables revenue and customer pull-through recover.
- Whether gross-margin improvement persists as product mix, manufacturing utilization, and service costs change.
- Cash burn, financing needs, revolver availability and covenants, and the cash repurchase provisions on the remaining 2014 notes, including the first holder put date in February 2021.
- The final costs and any data, legal, or operational consequences of the ransomware incident, including insurance recoveries.
- The expected commencement, obligations, and financial effects of the new headquarters lease.
- The extent of dilution from the note conversion and future equity compensation; confirm share counts and subsequent-period changes.