Quanterix Corporation — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020. Unaudited results; comparisons are with the corresponding 2019 periods. Quanterix develops Simoa ultra-sensitive immunoassay platforms and related products and research services, primarily for life-sciences research.
Financial results and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Total revenue | $13.1 million | $13.5 million | $28.9 million | $25.9 million |
| Gross profit / margin | $5.2 million / 40% | $6.9 million / 51% | $12.0 million / 42% | $12.9 million / 50% |
| Operating loss | $12.2 million | $10.5 million | $23.9 million | $19.9 million |
| Net loss | $12.3 million | $10.6 million | $23.9 million | $20.0 million |
| Net loss per share | $0.43 | $0.46 | $0.85 | $0.88 |
| Operating cash flow | Not separately reported for the quarter | $(20.6) million | $(12.8) million |
Q2 product revenue was $6.8 million, down 23%; service and other revenue was $6.3 million, up 33%. For the first half, product revenue declined 9% to $16.6 million, while service and other revenue rose 60% to $12.1 million. First-half collaboration and license revenue was $0.2 million.
At June 30, cash and cash equivalents were $88.8 million, plus $1.0 million of restricted cash. Current assets were $114.2 million and current liabilities $18.9 million. Total debt was $7.6 million, with principal payments scheduled in 2021; operating lease liabilities totaled $23.2 million. Stockholders’ equity was $111.0 million and accumulated deficit $240.2 million.
Material changes versus prior period
- Q2 revenue declined 3%, as lower product sales—especially consumables—more than offset higher research-services revenue. First-half revenue grew 12%, driven by Accelerator Laboratory services, despite lower product revenue.
- Gross margin fell to 40% in Q2 and 42% for the first half, versus 51% and 50%, respectively. Management cited a less favorable product mix, greater service-laboratory utilization, and amortization of Uman acquisition-related inventory adjustments and intangible assets.
- First-half net loss widened by $3.9 million, to $23.9 million. Operating expenses rose 10% to $36.0 million, including higher R&D and SG&A costs.
- First-half operating cash use increased by $7.8 million to $20.6 million; cash and cash equivalents declined $20.3 million from year-end 2019. Capital expenditures were $1.4 million, down from $9.8 million in the prior-year period, which included headquarters improvements.
Outlook, risks and unusual items
- COVID-19 restricted access to customer sites and delayed instrument installations, while interruptions at customer laboratories reduced consumables demand. Management expected these challenges to continue until affected customers returned to normal operations.
- Quanterix expanded Accelerator Laboratory capacity to support disrupted customer operations and clinical trials. It also described potential COVID-19 research opportunities, including development work on SARS-CoV-2 antibody and antigen assays; these were opportunities, not quantified guidance.
- The company reported no specific revenue or earnings guidance. It expects significant expenses and operating losses at least through the next 24 months, but stated that existing cash, commercial receipts and interest income should cover anticipated operating cash requirements for at least 12 months. That estimate is subject to risks, including the pandemic and customer adoption.
- Quanterix reported no material pending litigation and no significant subsequent events through the filing date. It said it had met the STRATEC minimum purchase requirement as of June 30, 2020 and did not accrue potential shortfall costs.
- Adoption of the lease accounting standard on January 1, 2020 brought operating lease right-of-use assets and liabilities onto the balance sheet. The filing reported effective disclosure controls and no material changes to internal control over financial reporting.
Investor verification points
- Track recovery in instrument installations and consumables orders as customer laboratories and sites resume normal activity.
- Assess whether increased Accelerator Laboratory revenue can be sustained and whether the resulting service mix supports improved gross margins.
- Monitor cash burn, cash balance and the stated minimum 12-month liquidity outlook against the company’s planned expense growth.
- Review progress and commercial prospects for COVID-19 assay development, while distinguishing development plans from realized revenue.
- Verify the scheduled 2021 debt payments and ongoing lease commitments, and monitor execution of the HD-X, SP-X and consumables growth strategy.