Biodesix, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; comparison is with fiscal 2021. Biodesix is a diagnostic testing and services company focused primarily on lung disease, using blood-based tests and a proprietary AI platform. It reports one operating segment. Diagnostic testing accounted for 90% of revenue in both 2022 and 2021.
Financial performance
| Metric | FY 2022 | FY 2021 | Change |
|---|---|---|---|
| Revenue | $38.2 million | $54.5 million | Down 30% |
| Lung diagnostic revenue | $29.3 million | $18.7 million | Up 57% |
| COVID-19 testing revenue | $5.2 million | $30.2 million | Down 83% |
| Services revenue | $3.7 million | $5.6 million | Down 34% |
| Gross profit / gross margin | $24.1 million / 63% | — / 44% | Margin up 19 percentage points |
| Operating expenses, excluding direct costs | $74.6 million | $64.9 million | Up 15% |
| Loss from operations | $50.6 million | $40.9 million | Loss increased 24% |
| Net loss | $65.4 million | $43.2 million | Loss increased 52% |
| Net loss per share, basic and diluted | $1.55 | $1.58 | Loss per share narrowed slightly |
| Cash used in operating activities | $45.0 million | $28.2 million | Use increased $16.8 million |
| Cash and cash equivalents at year-end | $43.1 million | $32.7 million | Up $10.4 million |
At December 31, 2022, total assets were $92.9 million, current assets $53.3 million, current liabilities $22.8 million, and total liabilities $72.3 million. The company reported $30.0 million of principal outstanding under its Perceptive term loan; the balance-sheet carrying amount of notes payable, net of discounts and costs, was $25.1 million. Total contingent consideration was $29.0 million. The filing reports $134.6 million of contractual obligations, including borrowings and interest, contingent consideration, and operating leases.
Material changes and notable items
- Lung diagnostic growth was led by increased adoption of Nodify Lung tests and GeneStrat NGS. Fourth-quarter lung diagnostic revenue was $8.2 million, up 51% year over year, and the company reported its highest number of tests delivered to date.
- The sharp fall in COVID-19 revenue reflected lower demand, expired significant contracts, increased vaccination, and wider availability of at-home tests. COVID-19 revenue was immaterial in the fourth quarter.
- Gross margin improved mainly because sales shifted toward higher-margin lung diagnostics and away from lower-margin COVID-19 testing.
- Sales, marketing, general and administrative expense rose 22%, primarily due to higher compensation, expanded sales-team headcount, and commercial activities. Research and development expense rose 2%.
- Net loss included a $7.0 million loss on extinguishment of liabilities, versus a $2.3 million gain in 2021, and $8.1 million of interest expense. The company also recorded $6.0 million of share-based compensation.
- Common shares outstanding increased from 30.8 million at year-end 2021 to 77.6 million at year-end 2022, primarily reflecting equity financing. The November public offering and related subscription agreements raised approximately $40.6 million gross; the Perceptive facility funded $30.0 million. The company used about $23.9 million of November financing proceeds to repay prior debt.
Liquidity, outlook and risks
Going concern: The auditor and management state that substantial doubt exists about Biodesix’s ability to continue as a going concern for at least one year after the financial statements were issued. Although the company ended 2022 with $43.1 million of cash and was in compliance with loan covenants at year-end, management expects it may be unable to maintain those covenants during the next 12 months without additional capital or a waiver. Additional financing is not assured. If funding is unavailable, the company may substantially limit operations, including reducing hiring, workforce, compensation, capital spending, or other costs.
Debt and liquidity: The Perceptive senior secured facility provides up to $50.0 million, with $30.0 million funded and two additional $10.0 million tranches subject to conditions including revenue milestones. It has a stated interest rate of one-month term SOFR (with a 3% floor) plus 9%, an interest-only structure, and a November 2027 maturity. It includes minimum-cash and revenue covenants and restrictions on specified corporate actions. The company also has substantial future contingent consideration payments to Indi and long-term lease commitments.
Management outlook: The filing provides no specific numerical revenue or earnings guidance. Management expects operating losses to continue in the near term while investing in growth, and expects COVID-19 testing demand to remain substantially below its 2021 peak. It intends to grow lung diagnostics, expand payer coverage and sales capacity, develop additional tests, and pursue biopharmaceutical services and partnerships.
Key risks and contingencies: Risks include continued losses and capital needs, covenant compliance, market adoption and reimbursement of lung tests, payer and customer concentration, competition, reliance on single-source suppliers, changing regulation of laboratory-developed tests, possible expiration or revocation of COVID-19 EUAs, clinical-study delays, and privacy or cybersecurity incidents. Management reported no current legal proceedings expected to have a material adverse effect. Disclosure controls and internal control over financial reporting were assessed as effective; the auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Liquidity runway, covenant headroom, revenue milestones, and availability and terms of any additional financing or Perceptive loan tranches.
- Quarterly lung-test volumes, reimbursement collections, payer coverage, and whether lung diagnostic growth can offset continued COVID-19 revenue decline.
- Timing and cash requirements for Indi contingent consideration, including scheduled payments and the approximately $6.1 million exit fee.
- Progress and outcomes of key clinical studies and pipeline tests, including ALTITUDE, INSIGHT, and the status of the suspended BEACON-Lung study.
- Expected costs, tenant-improvement reimbursements, and lease obligations associated with the planned Louisville headquarters move.
- Potential dilution from outstanding options, restricted stock units, warrants, and remaining ATM and Lincoln Park equity-facility capacity.