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Accelerate Diagnostics Reports Fourth Quarter 2019 Financial Results

TUCSON, Ariz., Feb. 27, 2020 /PRNewswire/ -- Accelerate Diagnostics, Inc. (Nasdaq: AXDX) today announced financial results for the fourth quarter and full year ended December 31, 2019.

Accelerate Diagnostics, Inc. (PRNewsfoto/Accelerate Diagnostics)

"Our contracted instrument trajectory continued over the course of 2019 as we doubled our global contracted instrument base by signing 304 instruments, including 137 units during the fourth quarter. Our full-year revenue was short of expectations as multi-site customers in the U.S. have taken longer than anticipated to go live and begin generating consumable revenue," said Jack Phillips, president and chief executive officer of Accelerate Diagnostics, Inc. "One of my initial areas of focus was to evaluate and re-engineer our go-live process, and I am confident the resulting improvements will help relieve our 255 U.S. instrument backlog and make the process quicker and more predictable. For clinically live accounts, I am encouraged that annual annuities are approximately $45k, proving to be predictable, and these customers are enthusiastic about the outcomes they are realizing."

Fourth Quarter 2019 Highlights

  • Added 137 net new commercially contracted instruments, compared to 133 in the fourth quarter of 2018.
  • Net sales of $3.5 million, compared to $1.8 million in the fourth quarter of 2018, or 94% year-over-year growth.
  • Gross margin was 44% for the quarter, compared to 29% in the fourth quarter of 2018. This increase was the result of lower consumable production costs per unit as production volumes increase. Certain perishable raw materials exceeded expiration and required disposal in the quarter. Excluding the impact of this charge, gross margin for the fourth quarter was 51%.
  • Research and development (R&D) costs for the quarter were $6.2 million, compared to $6.9 million in the fourth quarter of 2018. We expected this spend to remain relatively flat on a year-over-year basis, as our R&D programs remain consistent.
  • Selling, general, and administrative expenses for the quarter were $13.6 million, compared to $13.4 million in the fourth quarter of 2018. These expenses remained relatively unchanged on a year-over-year basis.
  • Net loss was $21.3 million in the fourth quarter, or $0.39 per share, which included $3.2 million in non-cash stock-based compensation expense.
  • Net cash used in the quarter was $13.5 million, and the company ended the quarter with total cash, investments, and cash equivalents of $108.5 million.

Full Year 2019 Highlights

  • Added 304 net new commercially contracted instruments year to date, compared to 202 in 2018.
  • Net sales of $9.3 million, compared to $5.7 million in 2018, or 63% year over year growth.
  • Gross margin was 47%, compared to 44% in 2018. This increase was the result of lower consumable production costs per unit as production volumes increase. Certain perishable raw materials exceeded expiration and required disposal in the fourth quarter. Excluding the impact of this charge, gross margin for the year was 53%.
  • Selling, general, and administrative expenses were $51.9 million, compared to $55.2 million in 2018. This decrease was driven by lower stock-based compensation expense in the current year.
  • Research and development (R&D) costs were $25.3 million, compared to $27.6 million in 2018. We expected this spend to remain relatively flat on a year-over-year basis, as our R&D programs remain consistent.
  • Net loss was $84.3 million, or $1.55 per share, which included $12.6 million in non-cash stock-based compensation expense.
  • Net cash used was $58.0 million, and the company ended the year with total cash, investments, and cash equivalents of $108.5 million.

Full financial results for the quarter and year ending December 31, 2019 will be filed on Form 10-K through the Securities and Exchange Commission's (SEC) website at http://www.sec.gov.

Audio Webcast and Conference Call

The company will host a conference call at 4:30PM ET today to review its first quarter results. To listen to the conference call, dial +1.877.883.0383 and enter the conference ID: 2860141. International participants may dial +1.412.902.6506. Please dial in 10 to 15 minutes prior to the start of the conference call. A replay of the call will be available by telephone at +1.877.344.7529 (U.S.) or +1.412.317.0088 (international) using replay code 10138283 until May 19, 2020.

This conference call will also be webcast and can be accessed from the "Investors" section of the company's website at axdx.com/investors. A replay of the audio webcast will be available until May 19, 2020.

About Accelerate Diagnostics, Inc.

Accelerate Diagnostics, Inc. is an in vitro diagnostics company dedicated to providing solutions for the global challenges of antibiotic resistance and sepsis. The Accelerate Pheno® system and Accelerate PhenoTest® BC kit combine several technologies aimed at reducing the time clinicians must wait to determine the most optimal antibiotic therapy for deadly infections. The FDA cleared system and kit fully automate the sample preparation steps to report phenotypic antibiotic susceptibility results in approximately 7 hours direct from positive blood cultures. Recent external studies indicate the solution offers results 1-2 days faster than existing methods, enabling clinicians to optimize antibiotic selection and dosage specific to the individual patient days earlier.

The "ACCELERATE DIAGNOSTICS" and "ACCELERATE PHENO" and "ACCELERATE PHENOTEST" and diamond shaped logos and marks are trademarks or registered trademarks of Accelerate Diagnostics, Inc.

For more information about the company, its products and technology, or recent publications, visit axdx.com.

Forward-Looking Statements

Certain of the statements made in this press release are forward looking, such as those, among others, about the company's placement trajectory, our belief that our re-engineered go-live process will make our implementation process quicker and more predictable, thereby relieving our backlog, our belief that annual annuities will average approximately $45,000, our expectation that customers will be enthusiastic about clinical results, and our expectation that R&D expenses will be relatively flat from 2019 to 2020. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Information about the risks and uncertainties faced by Accelerate Diagnostics is contained in the section captioned "Risk Factors" in the company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2020, and in any other reports that the company files with the Securities and Exchange Commission. The company's forward-looking statements could be affected by general industry and market conditions. Except as required by federal securities laws, the company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties or other contingencies.

ACCELERATE DIAGNOSTICS, INC.

CONSOLIDATED

BALANCE SHEETS

(in thousands, except share data)



December 31,


2019

2018

ASSETS



Current assets:



Cash and cash equivalents

$

61,014


$

66,260


Investments

47,437


100,218


Trade accounts receivable

3,222


1,860


Inventory

8,059


7,746


Prepaid expenses

955


980


Other current assets

1,165


576


Total current assets

121,852


177,640


Property and equipment, net

7,905


7,303


Right of use assets

3,917



Other non-current assets

750


322


Total assets

$

134,424


$

185,265





LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Accounts payable

$

2,351


$

1,322


Accrued liabilities

3,828


4,962


Accrued interest

1,262


1,262


Deferred revenue

271


217


Current operating lease liability

450



Total current liabilities

8,162


7,763


Non-current operating lease liability

3,579



Other non-current liabilities

19


53


Convertible notes

130,043


120,074


Total liabilities

141,803


127,890





Commitments and contingencies






Stockholders' equity (deficit):



Preferred shares, $0.001 par value;



5,000,000 preferred shares authorized and none outstanding as of December 31, 2019 and 2018



Common stock, $0.001 par value;



85,000,000 common shares authorized with 54,708,792 shares issued and outstanding on December 31, 2019 and 75,000,000 common shares authorized with 54,231,876 shares issued and outstanding on December 31, 2018

55


54


Contributed capital

452,344


432,885


Treasury stock

(45,067)


(45,067)


Accumulated deficit

(414,653)


(330,348)


Accumulated other comprehensive loss

(58)


(149)


Total stockholders' equity (deficit)

(7,379)


57,375


Total liabilities and stockholders' equity (deficit)

$

134,424


$

185,265



See accompanying notes to consolidated financial statements.

 

ACCELERATE DIAGNOSTICS, INC.

CONSOLIDATED

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)



Years Ended December 31,


2019

2018

2017

Net sales

$

9,297


$

5,670


$

4,177






Cost of sales

4,897


3,187


1,002


Gross profit

4,400


2,483


3,175






Costs and expenses:




Research and development

25,345


27,638


22,301


Sales, general and administrative

51,886


55,214


45,058


Total costs and expenses

77,231


82,852


67,359






Loss from operations

(72,831)


(80,369)


(64,184)






Other income (expense):




Interest expense

(14,256)


(10,113)



Foreign currency exchange loss

(124)


(450)


(75)


Interest and dividend income

2,809


2,845


908


Other expense, net

(14)


(28)


(184)


Total other income (expense), net

(11,585)


(7,746)


649






Net loss before income taxes

(84,416)


(88,115)


(63,535)


Benefit (provision) for income taxes

111


(211)


(493)


Net loss

$

(84,305)


$

(88,326)


$

(64,028)






Basic and diluted net loss per share

$

(1.55)


$

(1.62)


$

(1.18)


Weighted average shares outstanding

54,506


54,494


54,073






Other comprehensive loss:




Net loss

$

(84,305)


$

(88,326)


$

(64,028)


Net unrealized gain (loss) on available-for-sale investments

193


23


(117)


Foreign currency translation adjustment

(102)


(172)


321


Comprehensive loss

$

(84,214)


$

(88,475)


$

(63,824)



See accompanying notes to consolidated financial statements.

 

ACCELERATE DIAGNOSTICS, INC.

CONSOLIDATED

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(in thousands)



Shares

Common
Stock
Amount

Contributed
Capital

Accumulated
Deficit

Treasury
stock

Accumulated
Other
Comprehensive 
Income (Loss)

Total
Stockholders'
Equity (Deficit)

Balances, January 1, 2017

51,516


$

52


$

255,257


$

(177,289)


$


$

(204)


$

77,816


Net loss




(64,028)




(64,028)


Issuance of common stock

3,085


3


83,221





83,224


Exercise of options and warrants

1,045


1


6,605





6,606


Issuance of common stock under employee purchase plan

28



597





597


Unrealized loss on available-for-sale securities






(117)


(117)


Foreign currency translation adjustment






321


321


Cumulative impact of accounting change




(655)




(655)


Equity-based compensation



14,940





14,940


Balances, December 31, 2017

55,674


56


360,620


(241,972)




118,704


Net loss




(88,326)




(88,326)


Exercise of options and restricted stock awards issued

382



3,749





3,749


Issuance of common stock under employee purchase plan

35



583





583


Unrealized gain on available-for-sale securities






23


23


Foreign currency translation adjustment






(172)


(172)


Repurchase of common stock under Prepaid Forward contract

(1,859)


(2)




(45,067)



(45,069)


Issuance of convertible note



53,283





53,283


Cumulative impact of accounting change




(50)




(50)


Equity-based compensation



14,650





14,650


Balances, December 31, 2018

54,232


54


432,885


(330,348)


(45,067)


(149)


57,375


Net loss




(84,305)




(84,305)


Issuance of common stock

56



1,000





1,000


Exercise of options and restricted stock awards issued

396


1


5,364





5,365


Issuance of common stock under employee purchase plan

25



458





458


Unrealized gain on available-for-sale securities






193


193


Foreign currency translation adjustment






(102)


(102)


Equity-based compensation



12,637





12,637


Balances, December 31, 2019

54,709


$

55


$

452,344


$

(414,653)


$

(45,067)


$

(58)


$

(7,379)



See accompanying notes to consolidated financial statements.

 

ACCELERATE DIAGNOSTICS, INC.

CONSOLIDATED

STATEMENT OF CASH FLOWS

(in thousands)



Years Ended December 31,


2019

2018

2017

Cash flows from operating activities:




Net loss

$

(84,305)


$

(88,326)


$

(64,028)


Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation and amortization

2,602


2,561


2,196


Amortization of investment discount

(427)


(621)


326


Equity-based compensation expense

12,618


14,422


13,933


Amortization of debt discount and issuance costs

9,969


6,849



Loss on disposal of property and equipment

837


678


240


(Increase) decrease in assets:




Accounts receivable

(1,362)


86


(1,912)


Inventory

(3,655)


(4,223)


(7,759)


Prepaid expense and other assets

(752)


(250)


(459)


Increase (decrease) in liabilities:




Accounts payable

988


(748)


1,064


Accrued liabilities

(1,327)


1,426


596


Accrued interest


1,262



Deferred revenue and income

54


(904)


36


Deferred compensation

(34)


32


21


Net cash used in operating activities

(64,794)


(67,756)


(55,746)


Cash flows from investing activities:




Purchases of equipment

(330)


(998)


(2,966)


Purchase of marketable securities

(50,226)


(120,556)


(82,333)


Proceeds from sales of marketable securities

14,500


3,000


11,522


Maturities of marketable securities

88,867


98,416


48,049


Net cash provided by (used in) investing activities

52,811


(20,138)


(25,728)


Cash flows from financing activities:




Proceeds from issuance of common stock

1,458


583


83,821


Proceeds from exercise of options and warrants

5,365


3,749


6,606


Proceeds from issuance of convertible note


171,500



Prepayment of forward stock repurchase transaction


(45,069)



Payment of debt issuance costs


(4,992)



Net cash provided by financing activities

6,823


125,771


90,427






Effect of exchange rate on cash

(86)


(130)


316






Increase (decrease) in cash and cash equivalents

(5,246)


37,747


9,269


Cash and cash equivalents, beginning of period

66,260


28,513


19,244


Cash and cash equivalents, end of period

$

61,014


$

66,260


$

28,513



See accompanying notes to consolidated financial statements.

 

ACCELERATE DIAGNOSTICS, INC.

CONSOLIDATED

STATEMENT OF CASH FLOWS (CONTINUED)

(in thousands)



Years Ended December 31,


2019

2018

2017

Non-cash investing activities:




Transfer of instruments from inventory to property and equipment

$

3,361


$

4,767


$


Supplemental cash flow information:




Interest paid

$

4,288


$

2,001


$


Income taxes paid, net of refunds

$

41


$

651


$



See accompanying notes to consolidated financial statements.

 

SOURCE Accelerate Diagnostics, Inc.

For further information: Investor Inquiries: Laura Pierson, Accelerate Diagnostics, +1 520 365-3100, investors@axdx.com; Media Contact: Andrew Chasteen, Accelerate Diagnostics, +1 520 365-3100, achasteen@axdx.com