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Accelerate Diagnostics Reports Third Quarter 2021 Financial Results

TUCSON, Ariz., Nov. 9, 2021 /PRNewswire/ -- Accelerate Diagnostics, Inc. (Nasdaq: AXDX) today announced preliminary financial results for the third quarter for the period ended September 30, 2021, which remain subject to quarter end closing adjustments.

"The resurgence of COVID hospitalizations impacted our commercial execution in the quarter," commented Jack Phillips, Chief Executive Officer of Accelerate Diagnostics, Inc.  "Despite this recurring impediment to closing new accounts, I am pleased our team continued to build our funnel of prospective customers, and advance our development of Arc and Pheno 2.0."

Third Quarter 2021 Highlights

  • Added 3 contracted instruments and brought 11 instruments live in the U.S. in the quarter.
  • Ended the third quarter with 304 U.S. clinically live and revenue-generating instruments, with another 86 U.S. contracted instruments in the process of being implemented and not yet revenue-generating.
  • Net sales were $3.1 million, compared to $3.6 million in the third quarter of 2020, or a 13% decline.  Excluding instrument revenues, the business grew by 25% during this same period.
  • Gross margin was 32% for the quarter, compared to 36% in the third quarter of 2020.  The decline in gross margins resulted from escalating inflation to manufacturing costs and other factors.
  • Selling, general, and administrative (SG&A) costs for the quarter were $10.8 million, compared to $11.5 million from the same quarter of the prior year. SG&A costs for the quarter excluding non-cash stock-based compensation were $7.5 million, compared to $8.3 million from the same quarter of the prior year. This decrease was the result of the ongoing benefits from cost-cutting efforts put in place during 2020. 
  • Research and development (R&D) costs for the quarter were $4.7 million, compared to $5.0 million from the same quarter of the prior year. R&D costs excluding non-cash stock-based compensation expense for the quarter were $4.4 million, compared to $3.7 million from the quarter of the prior year. This increase was the result of progress in our Arc and Pheno 2.0 development programs and associated investment. 
  • Net loss was $9.0 million in the third quarter, resulting in $0.15 net loss per share. Net loss excluding non-cash stock-based compensation expense for the third quarter was $5.4 million.
  • Net cash used in the quarter excluding financing was $12.3 million.
  • Reduced outstanding debt during the quarter by $51 million dollars, a 30% reduction.
  • Ended the quarter with total cash, investments, and cash equivalents of $57.0 million.

Year-to-date 2021 Highlights

  • Net sales were $8.4 million year-to-date, compared to $8.1 million from the same period of 2020, or an 5% increase.  Instrument revenue declined, while consumable revenue grew by 24% over this period.
  • Gross margin was 35% year-to-date, compared to 41% from the same period in 2020.  The decline in gross margins resulted from ongoing pandemic-related impacts to manufacturing costs and other factors.
  • Selling, general, and administrative (SG&A) costs year-to-date were $37.7 million, compared to $35.7 million from the same period of the prior year. SG&A costs excluding non-cash stock-based compensation were $23.2 million year to date, compared to $26.5 million from the same period of the prior year. This decrease was the result of the ongoing benefits from cost-cutting efforts put in place during 2020. 
  • Research and development (R&D) costs were $17.3 million year to date, compared to $16.2 million from the same period of the prior year. R&D costs excluding non-cash stock-based compensation expense were $13.0 million year to date, compared to $13.4 million from the same period of the prior year. This decrease was the result of improved internal efficiencies, partially offset by increased investment in our Arc and Pheno 2.0 development programs. 
  • Net loss was $54.9 million year to date, resulting in $0.91 net loss per share. Net loss excluding non-cash stock-based compensation expense was $35.8 million.
  • Net cash used excluding financing was $33.9 million

The foregoing preliminary financial results are subject to final quarter-end adjustment in the Form 10-Q for the quarter ended September 30, 2021. The Company expects to file the Form 10-Q by November 15, 2021, through the Securities and Exchange Commission's (SEC) website at http://www.sec.gov.

Audio Webcast and Conference Call

To listen to the 2021 third quarter financial results, call by phone, +1.877.883.0383 and enter Elite Entry Number: 7399350. International participants may dial +1.412.902.6506. Please dial in 10–15 minutes prior to the start of the conference. A replay of the call will be available by telephone at +1.877.344.7529 (U.S.) or +1.412.317.0088 (International) using the replay code 10160827 until November 30, 2021. 

This conference call will also be webcast and can be accessed from the company's website at ir.axdx.com. A replay of the audio webcast will be available until February 9, 2022.

Use of Non-GAAP Financial Measures

This press release contains certain financial measures that are not recognized measures under accounting principles generally accepted in the United States of America ("GAAP"), which include SG&A, R&D, and Net income (loss) amounts excluding stock-based compensation expenses. 

Our management and board of directors use expenses excluding the cost of stock-based compensation to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operating and financing plans. Accordingly, we believe that expenses excluding the cost of stock-based compensation provides useful information for investors in understanding and evaluating our operating results in the same manner as our management and our board of directors. Expenses excluding the cost of stock-based compensation is a non-GAAP financial measure and should be considered in addition to, not as superior to, or as a substitute for, SG&A expenses, R&D expenses, and net income (loss) reported in accordance with GAAP. The following tables present a reconciliation of SG&A expenses, R&D expenses and net income (loss) excluding stock-based compensation to comparable GAAP measures for the periods indicated:


Three Months Ended September 30,


Nine Months Ended September 30,


(in thousands)


(in thousands)


2021

2020


2021

2020

Sales, general and administrative

$

10,806


$

11,465



$

37,744


$

35,738


Non-cash equity-based compensation as a component of sales, general and administrative

3,281


3,208



14,461


9,235


Sales, general and administrative less non-cash equity-based compensation

$

7,525


$

8,257



$

23,283


$

26,503





Three Months Ended September 30,


Nine Months Ended September 30,


(in thousands)


(in thousands)


2021

2020


2021

2020

Research and development

$

4,712


$

5,001



$

17,341


$

16,191


Non-cash equity-based compensation as a component of research and development

266


1,349



4,340


2,807


Research and development less non-cash equity-based compensation

$

4,446


$

3,652



$

13,001


$

13,384





Three Months Ended September 30,


Nine Months Ended September 30,


(in thousands)


(in thousands)


2021

2020


2021

2020

Loss from operations

$

(14,532)


$

(15,165)



$

(52,148)


$

(48,618)


Non-cash equity-based compensation as a component of loss from operations

3,629


4,676



19,058


12,291


Loss from operations less non-cash equity-based compensation

$

(10,903)


$

(10,489)



$

(33,090)


$

(36,327)


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 or may have forward looking implications. Examples of such forward looking statements or implications include Mr. Phillip's statements regarding our building funnel of prospective customers, and advancements in our development of Arc and Pheno 2.0. 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 March 2, 2021, 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.

CONDENSED CONSOLIDATED

BALANCE SHEETS

(in thousands, except share data)



September 30,

December 31,


2021

2020


Unaudited


ASSETS

Current assets:



Cash and cash equivalents

$

35,725


$

35,781


Investments

21,299


32,488


Trade accounts receivable

2,269


1,550


Inventory

9,732


9,216


Prepaid expenses

978


1,172


Other current assets

1,513


1,780


Total current assets

71,516


81,987


Property and equipment, net

5,143


6,135


Right of use assets

2,679


3,183


Other non-current assets

1,823


2,120


Total assets

$

81,161


$

93,425



LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:



Accounts payable

$

2,330


$

1,290


Accrued liabilities

3,572


2,991


Accrued interest

143


1,262


Deferred revenue

469


376


Current portion of long-term debt

352


553


Current operating lease liability

645


497


Total current liabilities

7,511


6,969


Non-current operating lease liability

2,569


3,063


Other non-current liabilities

678


335


Long-term debt

72


4,659


Convertible notes

110,078


141,211


Total liabilities

$

120,908


$

156,237


Commitments and contingencies



Stockholders' deficit:



Preferred shares, $0.001 par value;



5,000,000 preferred shares authorized with 2,636,364 shares issued and outstanding on September 30, 2021 and 5,000,000 preferred shares authorized with zero shares issued and outstanding on December 31, 2020

3



Common stock, $0.001 par value;



100,000,000 common shares authorized with 64,937,030 shares issued and outstanding on September 30, 2021 and 85,000,000 common shares authorized with 57,607,939 shares issued and outstanding on December 31, 2020

65


58


Contributed capital

553,134


475,072


Treasury stock

(45,067)


(45,067)


Accumulated deficit

(547,865)


(492,966)


Accumulated other comprehensive income

(17)


91


Total stockholders' deficit

(39,747)


(62,812)


Total liabilities and stockholders' deficit

$

81,161


$

93,425


 

ACCELERATE DIAGNOSTICS, INC.

CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Unaudited

(in thousands, except per share data)



Three Months Ended


Nine Months Ended


September 30,

September 30,


September 30,

September 30,


2021

2020


2021

2020

Net sales

$

3,122


$

3,588



$

8,439


$

8,056








Cost of sales

2,136


2,287



5,502


4,745


Gross profit

986


1,301



2,937


3,311








Costs and expenses:






Research and development

4,712


5,001



17,341


16,191


Sales, general and administrative

10,806


11,465



37,744


35,738


Total costs and expenses

15,518


16,466



55,085


51,929








Loss from operations

(14,532)


(15,165)



(52,148)


(48,618)








Other income (expense):






Interest expense

(4,211)


(3,955)



(12,477)


(11,540)


Gain on extinguishment of debt

9,840




9,840



Foreign currency exchange gain (loss)

(78)


229



(238)


191


Interest income


149



55


753


Other income (expense), net

(5)


(15)



69


(82)


Total other income (expense), net

5,546


(3,592)



(2,751)


(10,678)








Net loss before income taxes

(8,986)


(18,757)



(54,899)


(59,296)


Provision for income taxes






Net loss

$

(8,986)


$

(18,757)



$

(54,899)


$

(59,296)








Basic and diluted net loss per share

$

(0.15)


$

(0.33)



$

(0.91)


$

(1.07)


Weighted average shares outstanding

61,146


56,560



60,250


55,617








Other comprehensive loss:






Net loss

$

(8,986)


$

(18,757)



$

(54,899)


$

(59,296)


Net unrealized (loss) gain on debt securities available-for-sale

(3)


(117)



(21)


62


Foreign currency translation adjustment

(27)


71



(87)


90


Comprehensive loss

$

(9,016)


$

(18,803)



$

(55,007)


$

(59,144)


 

ACCELERATE DIAGNOSTICS, INC.

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Unaudited

(in thousands)



Nine Months Ended


September 30,

September 30,


2021

2020

Cash flows from operating activities:



Net loss

$

(54,899)


$

(59,296)


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



Depreciation and amortization

1,875


2,270


Amortization of investment discount

153


43


Equity-based compensation

19,058


12,291


Amortization of debt discount and issuance costs

9,250


8,256


(Gain) loss on disposal of property and equipment

(202)


546


Contributions to deferred compensation plan

(343)


(248)


Gain on extinguishment of debt

(10,680)



(Increase) decrease in assets:



Accounts receivable

(719)


532


Inventory and instruments in property and equipment

(527)


(1,734)


Prepaid expense and other

860


(1,267)


Increase (decrease) in liabilities:



Accounts payable

1,017


76


Accrued liabilities, and other

(436)


(759)


Accrued interest

(1,059)


(1,071)


Deferred revenue and income

93


67


Deferred compensation

343


240


Net cash used in operating activities

(36,216)


(40,051)





Cash flows from investing activities:



Purchases of equipment

(202)


(1,364)


Purchases of marketable securities

(22,345)


(44,589)


Maturities of marketable securities

33,601


41,707


Net cash provided by investing activities

11,054


(4,246)





Cash flows from financing activities:



Proceeds from issuance of common and preferred stock

22,640



Proceeds from exercise of options

1,456


4,458


Proceeds from issuance of common stocks under employee purchase plan

245


296


Proceeds from debt


5,552


Payment of debt

(6)


(13)


Transaction costs related to debt exchange not yet paid

840



Net cash provided by financing activities

25,175


10,293





Effect of exchange rate on cash

(69)


19





Increase (decrease) in cash and cash equivalents

(56)


(33,985)


Cash and cash equivalents, beginning of period

35,781


61,014


Cash and cash equivalents, end of period

$

35,725


$

27,029





Nine Months Ended


September 30,

September 30,


2021

2020

Non-cash investing activities:



Net transfer of instruments from inventory to property and equipment

$

508


$

1,284


Supplemental cash flow information:



Interest paid

$

4,288


$

4,288


Income taxes paid, net of refunds

$


$

46


Extinguishment of Convertible Senior Notes through issuance of common stock

$

34,545


$



See accompanying notes to condensed consolidated financial statements.

 

SOURCE Accelerate Diagnostics, Inc.

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