Quanterix Corporation — Q2 2019 Form 10-Q
Business context and reporting period. Quanterix develops and sells ultra-sensitive Simoa protein-detection platforms, instruments, assay kits, consumables, and research services. The report covers the quarter and six months ended June 30, 2019; financial statements are unaudited. The SP-X planar-array instrument entered full commercial launch in April 2019.
Financial performance
| Metric | Q2 2019 | Q2 2018 | Six months 2019 | Six months 2018 |
|---|---|---|---|---|
| Revenue | $13.5m | $8.6m | $25.9m | $16.2m |
| Gross profit | $6.9m | $4.0m | $12.9m | $7.1m |
| Gross margin | 51.2% | 46.0% | 50.0% | 44.2% |
| Operating expenses | $17.4m | $11.3m | $32.8m | $21.6m |
| Operating loss | $(10.5)m | $(7.3)m | $(19.9)m | $(14.5)m |
| Net loss | $(10.6)m | $(7.3)m | $(20.0)m | $(14.5)m |
| Net loss per share | $(0.46) | $(0.34) | $(0.88) | $(0.67) |
- Q2 product revenue increased 68.8% to $8.8m; service and other revenue rose 50.0% to $4.8m. There was no collaboration and license revenue, compared with $0.3m a year earlier.
- For the first half, product revenue grew 84.2% to $18.3m and service and other revenue grew 32.9% to $7.6m; collaboration and license revenue was zero versus $0.5m.
- Management attributed product growth to instrument sales and a larger installed base driving consumables demand; service growth reflected increased Accelerator Laboratory activity. Gross margin improved in both comparison periods.
- SG&A increased 77.2% in Q2 and 74.8% in the first half, driven by hiring, public-company costs, the new headquarters lease, stock compensation, Aushon-related costs, and other growth-related expenses. Q2 and first-half results included about $0.9m of Uman acquisition costs.
Cash, liquidity, debt, and balance sheet
- At June 30, cash and cash equivalents were $72.0m; restricted cash was $1.0m. Total current assets were $92.4m and current liabilities $17.0m.
- First-half operating cash use was $12.8m, investing cash use $9.8m, and financing cash provided $50.3m. Financing included $48.0m net proceeds from the at-the-market offering. Capital spending included substantial new-headquarters leasehold improvements.
- Total reported debt was approximately $7.6m, comprising $7.5m long-term and $0.1m current. The loan has an 8.25% minimum interest rate; principal payments are deferred until July 2021, with maturity extended to October 2021. No additional borrowing was available under the facility.
- Management said available cash was expected to fund the current operating plan for at least 12 months after filing; the MD&A estimates liquidity would last into at least the third quarter of 2020. The company expects continued operating losses and higher expenses, and may need additional financing.
Material changes, outlook, and risks
- In June, Quanterix sold about 2.2m shares through its ATM program for $49.7m gross and $48.0m net proceeds, increasing shares outstanding. About $150m remained available under its shelf registration after the ATM sale.
- After quarter-end, the company completed its UmanDiagnostics acquisition for $22.5m: $16.0m cash and 191,154 shares valued at $6.5m. Uman supplies Nf-L antibodies and ELISA kits. The purchase-price allocation was preliminary and incomplete at filing.
- Management expects significant expenses and operating losses at least through the next 24 months; no specific revenue or earnings guidance was provided. Future funding needs depend on product acceptance, commercialization costs, R&D, regulatory requirements, collaborations, and competition.
- Minimum future rent payments under leases totaled $38.4m. The STRATEC supply agreement could entail a $10.7m shortfall fee if minimum unit purchases are not met; the company expected to meet the commitment and had not accrued the potential payment.
- The filing reports no material pending or threatened litigation and no material changes to previously disclosed risk factors, apart from risks related to integrating Uman and managing expanded operations. ASC 606 adoption had no material effect on revenue recognition for current contracts.
Most important facts for investors to verify
- Whether instrument placements, especially SP-X, translate into sustained consumables and service revenue growth.
- Whether gross-margin improvement can continue while the company scales, and whether rapid SG&A growth moderates.
- Cash burn and liquidity runway following the $16.0m cash payment for Uman, including integration costs and capital needs.
- Uman’s final purchase-price allocation, integration progress, and contribution to revenue and operating results.
- Share dilution from equity compensation and future financing, as well as compliance with STRATEC purchase commitments and long-term lease obligations.