Business context and reporting period
This filing is Fluidigm Corporation’s Form 10-K for the fiscal year ended December 31, 2019, filed February 27, 2020; it also reports fourth-quarter results. The filing identifies the issuer as Fluidigm Corporation (Nasdaq: FLDM), not Standard BioTools Inc. Fluidigm develops and sells life-science research instruments, consumables, software and services, including mass cytometry and microfluidics products.
Key financial metrics
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $117.2 million | $113.0 million |
| Gross profit / margin | $64.3 million / 54.8% | $61.6 million / 54.6% |
| Operating loss | $51.8 million | $48.2 million |
| Net loss | $64.8 million | $59.0 million |
| Operating cash flow | $(35.2) million | $(25.2) million |
| Cash, cash equivalents and short-term investments | $58.6 million | $95.4 million |
| Net carrying value of convertible notes | $53.8 million | $172.1 million |
At December 31, 2019, working capital excluding deferred revenue was $74.0 million; the company also had $2.1 million of restricted cash and $8.9 million available under its revolving credit facility. Total assets were $264.8 million and stockholders’ equity was $153.6 million. Fourth-quarter revenue was $32.4 million and net loss was $12.7 million.
Material changes versus the prior comparable period
- Revenue rose 4%, reflecting higher mass-cytometry instrument, consumables and service revenue, partly offset by weaker microfluidics sales. Instrument revenue increased 10% to $50.0 million; consumables declined 6% to $45.4 million; service revenue increased 10% to $21.3 million.
- Regional results diverged: Americas revenue decreased 8% to $47.0 million, EMEA increased 9% to $40.0 million, and Asia-Pacific increased 20% to $30.2 million. International customers accounted for 63% of revenue, versus 57% in 2018.
- Gross margin improved slightly to 54.8%, supported by capacity utilization and spreading fixed costs over higher revenue, partly offset by inventory reserves, product mix and lower mass-cytometry selling prices.
- Operating expenses increased 6% to $116.1 million. R&D rose 5% to $31.6 million; SG&A rose 6% to $84.5 million.
- Net loss increased by $5.8 million, despite lower interest expense, principally reflecting $12.0 million of losses on debt extinguishment. Operating cash outflow widened by $10.0 million.
Outlook, commentary, risks and unusual items
- Management said existing cash, cash equivalents and investments were expected to fund working-capital and capital-expenditure needs for at least 18 months, while noting that continued losses or higher-than-expected expenses could require additional financing. No numerical revenue or earnings guidance is provided.
- The company continued to invest in product development and introduced new assays, software, imaging panels and an RNA-sequencing library-preparation product during 2019. Management characterized continued R&D investment as important to competitiveness and indicated such expenses could rise.
- Convertible debt restructuring materially changed the capital structure: $150.0 million of 2018 Notes converted into approximately 19.5 million shares; a $55.0 million 5.25% convertible-note issue was used largely to retire $50.2 million principal of 2014 Notes. About $1.1 million principal of 2014 Notes remained. The new notes mature in December 2024 and have an initial conversion price of approximately $2.90 per share.
- The revolving credit facility had no borrowings at year-end, but $8.9 million of availability and a scheduled August 2020 maturity. It is secured by substantially all assets other than intellectual property and includes covenants.
- Major risks include sustained losses and cash burn, reliance on research budgets and acceptance of newer products, intense competition, dependence on limited-source suppliers and concentrated manufacturing in Singapore and Canada, foreign-exchange exposure, and potential regulatory changes affecting research-use-only products. The filing also identifies the novel coronavirus outbreak as a potential source of operational disruption.
- A ransomware incident in March 2019 encrypted certain systems; the company said it restored operations without significant business-data loss and did not believe confidential data was disclosed. Net incident costs were approximately $0.1 million after insurance.
- The company recognized a $0.4 million impairment of patents and licenses. InstruNor AS was acquired after year-end, in January 2020, for approximately $7.2 million in cash and stock. A new approximately 10-year headquarters lease is expected to commence in 2020.
- The independent auditor gave unqualified opinions on the financial statements and internal control over financial reporting. Management also concluded disclosure controls and financial-reporting controls were effective at year-end.
Important facts for investors to verify
- Confirm the issuer and security being analyzed: this 2019 filing is for Fluidigm Corporation (FLDM); the supplied company metadata names Standard BioTools Inc.
- Review the sustainability of revenue growth and consumables pull-through, particularly the microfluidics trend and regional performance.
- Assess the pace of operating cash burn against available liquidity, expected lease commitments and the 18-month funding estimate.
- Check the terms, conversion dilution and maturity obligations of the 2019 Notes, and the status or renewal of the revolving facility that matured in August 2020.
- Evaluate whether the InstruNor acquisition and product launches contribute revenue or alter costs, and monitor supplier, manufacturing, cybersecurity and COVID-related risks.