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Accelerate Diagnostics Reports Third Quarter 2023 Results

TUCSON, Ariz., Nov. 9, 2023 /PRNewswire/ -- Accelerate Diagnostics, Inc. (Nasdaq: AXDX) today announced financial results for the third quarter ended September 30, 2023.

"During the quarter we made significant advances with our Wave program," commented Jack Phillips, Chief Executive Officer of Accelerate Diagnostics, Inc.  "We are getting results well within current standard of care methods to provide same-shift patient results, which gives us confidence our innovative technology will provide same-shift clinical impact."

Third Quarter 2023 Operating Highlights:

  • Wave Beta modules are operational in our lab delivering on our key product requirements: goal of time-to-result of less than 4.5 hours on average, high through-put sample processing, random access for continuous sample loading and platform scalability.
  • Added six contracted Pheno instruments during the quarter, ending the quarter with 339 U.S. clinically live Pheno revenue-generating instruments and another 70 U.S. contracted Pheno instruments in the process of being implemented.
  • Secured more than twenty existing U.S. Pheno customers to multi-year contract extensions for rapid positive blood culture susceptibility testing during the quarter.

Third Quarter 2023 Financial Highlights:

  • Net sales for the third quarter ended September 30, 2023 were $3.3 million, compared to $3.0 million in the third quarter of the prior year, a 10% increase. This increase was primarily driven by capital equipment sales in the quarter.
  • Gross margin was approximately 3% for the quarter, compared to 21% in the third quarter of the prior year. This decrease was driven primarily by a non-cash write-down of $1.2 million of excess inventory.
  • Selling, general, and administrative (SG&A) costs for the quarter were $7.8 million, compared to $8.3 million for the same quarter of the prior year. This decrease was the result of lower employee-related expenses.
  • Research and development (R&D) costs for the quarter were $7.0 million, compared to $7.3 million from the same quarter of the prior year. This decrease was driven by a reduction in third-party spend related to the development of our next generation AST platform.
  • Net income was $0.9 million in the third quarter, resulting in basic and diluted earnings per share of $0.06. Our positive net income was driven by a fair-value adjustment of the derivative liability related to our convertible notes.
  • Net cash used in the quarter excluding financing activities was $9.6 million and the Company ended the quarter with total cash, investments and cash equivalents $21.2 million.

Year-to-date 2023 Financial Highlights:

  • Net sales were $9.0 million year-to-date, compared to $9.8 million from the same period of the prior year, or an 8% decrease driven by lower capital instrument sales in 2023 compared to the prior year.
  • Gross margin was approximately 20% for the quarter, reflecting the non-cash write-down of $1.2 million of excess inventory recorded during the period, compared to 25% in the third quarter of the prior year.
  • Selling, general, and administrative (SG&A) costs year-to-date were $25.4 million, compared to $30.4 million for the same period of the prior year.
  • Research and development (R&D) costs were $19.8 million year to date, compared to $20.9 million from the same period of the prior year.
  • Net cash used excluding financing activities was $38.4 million.

Full financial results for the quarter ending September 30, 2023 will be filed on Form 10-Q through the Securities and Exchange Commission's (SEC) website at http://www.sec.gov.

Audio Webcast and Conference Call

To listen to the 2023 third quarter financial results on Thursday, November 9, 2023, at 4:30 p.m. Eastern Time, call by phone, +1.877.883.0383 and enter Elite Entry Number: 9121489. 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 6290760 until November 30, 2023.

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 November 30, 2023.

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 loss from operations 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)


2023

2022

2023

2022

Sales, General and Administrative

$            7,761

$            8,255

$          25,432

$          30,422

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

1,488

911

2,647

6,557

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

$            6,273

$            7,344

$          22,785

$          23,865







Three Months Ended September 30,

Nine Months Ended September 30,


(in thousands)

(in thousands)


2023

2022

2023

2022

Research and Development

$            6,996

$            7,285

$          19,783

$          20,885

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

269

151

1,130

1,052

Research and development less non-
cash equity-based compensation

$            6,727

$            7,134

$          18,653

$          19,833







Three Months Ended September 30,

Nine Months Ended September 30,


(in thousands)

(in thousands)


2023

2022

2023

2022

Loss from operations

$         (14,650)

$        (14,961)

$         (43,298)

$         (48,845)

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

1,815

1,229

4,023

8,179

Loss from operations less non-cash
equity-based compensation

$         (12,835)

$        (13,732)

$         (39,275)

$         (40,666)

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 and the related conference call are forward-looking or may have forward-looking implications, such as, among others: the company's future development plans and growth strategy, including plans and objectives relating to its future operations, products and performance; projections as to when certain key business milestones may be achieved; expectations regarding the potential or benefits of the company's products and technologies; projections of future demand for the company's products; the company's continued investment in new product development to both enhance its existing products and bring new ones to market; the company's expectations relating to current supply chain impacts and inflationary pressures; the company's expectations regarding its commercial partnerships, such as with Becton, Dickinson and Company, including anticipated benefits from such collaboration; the company's expectations and plans relating to regulatory approvals; and the company's liquidity and capital requirements.  Actual results or developments may differ materially from those projected or implied in these forward-looking statements due to significant risks and uncertainties, including, but not limited to: volatility throughout the global economy and the related impacts to the businesses of the company's suppliers and customers, such as customer demand fluctuations, supply chain constraints and inflationary pressures, as well as difficulties in resolving the company's continuing financial condition and ability to obtain additional capital to meet its financial obligations.  Other important factors that could cause the company's actual results to differ materially from those in its forward-looking statements include those discussed in the company's filings with the Securities and Exchange Commission (the "SEC"), including in the "Risk Factors" sections of the company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings with the SEC. 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,


2023

2022


Unaudited


ASSETS

Current assets:



Cash and cash equivalents

$20,162

$34,905

Investments

989

10,656

Trade accounts receivable, net

2,666

2,416

Inventory

3,553

5,194

Prepaid expenses

1,435

818

Other current assets

3,638

2,025

Total current assets

32,443

56,014

Property and equipment, net

2,609

3,478

Finance lease assets, net

1,807

2,422

Operating lease right of use assets, net

1,352

1,859

Other non-current assets

1,113

1,242

Total assets

$39,324

$65,015

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:



Accounts payable

$4,812

$4,501

Accrued liabilities

3,437

2,682

Accrued interest

1,186

472

Deferred revenue

596

547

Current portion of convertible notes

726

56,413

Finance lease, current

468

1,113

Operating lease, current

963

829

Derivative liability

25,598

Total current liabilities

37,786

66,557

Finance lease, non-current

270

782

Operating lease, non-current

816

1,545

Deferred income, non-current

1,090

Other non-current liabilities

1,068

874

Accrued interest related-party

663

Long-term debt related-party

16,858

Convertible notes, non-current

33,327

Total liabilities

$74,357

$87,279




Stockholders' deficit:



Preferred shares, $0.001 par value;



5,000,000 preferred shares authorized with no shares issued and outstanding on

September 30, 2023 and 5,000,000 preferred shares authorized with 3,954,546 

shares issued and outstanding on December 31, 2022

4

Common stock, $0.001 par value;



450,000,000 common shares authorized with 14,504,695 shares issued and
outstanding on September 30, 2023 and 200,000,000 common shares authorized
with 9,747,755 shares issued and outstanding on December 31, 2022

14

10

Contributed capital

666,239

630,428

Treasury stock

(45,067)

(45,067)

Accumulated deficit

(655,859)

(607,239)

Accumulated other comprehensive loss

(360)

(400)

Total stockholders' deficit

(35,033)

(22,264)

Total liabilities and stockholders' deficit

$39,324

$65,015


See accompanying notes to condensed consolidated financial statements.

 

 

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,


2023

2022


2023

2022

Net sales

$3,299

$2,960


$9,032

$9,780







Cost of sales:






Cost of sales

2,008

2,381


5,931

7,318

Inventory write-down

1,184


1,184

Total cost of sales

3,192

2,381


7,115

7,318







Gross profit

107

579


1,917

2,462







Costs and expenses:






Research and development

6,996

7,285


19,783

20,885

Sales, general and administrative

7,761

8,255


25,432

30,422

Total costs and expenses

14,757

15,540


45,215

51,307







Loss from operations

(14,650)

(14,961)


(43,298)

(48,845)







Other income (expense):






Interest expense

(2,205)

(203)


(3,798)

(1,833)

Interest expense related-party

(495)


(1,817)

(495)

Gain (loss) on extinguishment of debt

51


(6,499)

3,565

(Loss) on extinguishment of debt related party


(6,755)

Gain on fair value adjustment

18,056


13,026

Foreign currency exchange gain

(428)

(261)


(170)

(221)

Interest income

246

73


921

151

Other (expense) income, net

(29)

(49)


56

(206)

Total other income (expense), net

15,691

(935)


(5,036)

961







Net income (loss) before income taxes

1,041

(15,896)


(48,334)

(47,884)

Provision for income taxes

(131)


(286)

Net income (loss)

$910

$(15,896)


$(48,620)

$(47,884)







Basic net income (loss) per share

$0.06

$(1.83)


$(4.13)

$(6.21)

Basic weighted average shares outstanding

14,433

8,701


11,777

7,705







Dilutive net income (loss) per share

$0.06

$(1.83)


$(4.13)

$(6.21)

Dilutive weighted average shares outstanding

14,553

8,701


11,777

7,705







Other comprehensive loss:






Net income (loss)

$910

$(15,896)


$(48,620)

$(47,884)

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

48


28

(84)

Foreign currency translation adjustment

293

139


12

(101)

Comprehensive income (loss)

$1,203

$(15,709)


$(48,580)

$(48,069)


See accompanying notes to condensed consolidated financial statements.

 

ACCELERATE DIAGNOSTICS, INC.

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Unaudited

(in thousands)



Nine Months Ended


September 30,

September 30,


2023

2022

Cash flows from operating activities:



Net loss

$(48,620)

$(47,884)

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



Depreciation and amortization

2,434

2,207

Amortization of investment discount

94

Equity-based compensation

4,023

8,179

Amortization of debt discount and issuance costs

2,060

386

Amortization of debt discount related-party

1,033

275

Loss on disposal of property and equipment

134

74

Unrealized (gain) loss on equity investments

(61)

206

Loss (gain) on extinguishment of debt

6,499

(3,565)

Loss on extinguishment of debt with related party

6,755

Gain on fair value adjustments

(13,026)

Inventory write-down

1,184

(Increase) decrease in assets:



Contributions to deferred compensation plan

(174)

Accounts receivable

(250)

(73)

Inventory

298

(245)

Prepaid expense and other

956

(491)

Increase (decrease) in liabilities:



Accounts payable

218

1,221

Accrued liabilities and other

67

1,153

Accrued interest

1,738

(785)

Accrued interest to related-party

784

220

Deferred revenue and income

1,139

73

Deferred compensation

194

(49)

Net cash used in operating activities

(32,441)

(39,178)




Cash flows from investing activities:



Purchases of equipment

(925)

(446)

Purchase of marketable securities

(27,506)

Maturities of marketable securities

9,695

34,527

Net cash provided by investing activities

8,770

6,575




Cash flows from financing activities:



Proceeds from issuance of common stock to related party

4,000

Proceeds from issuance of common stock

32,872

Payments on finance leases

(1,357)

(1,109)

Proceeds from exercise of options

7

Proceeds from issuance of common stock under employee purchase plan

184

Proceeds from issuance of 5.00% Notes

10,000

Transaction costs related to debt and equity issuances

(3,731)

(192)

Payment of debt

(6)

Net cash provided by financing activities

8,912

31,756

 

ACCELERATE DIAGNOSTICS, INC.

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS (CONTINUED)

Unaudited

(in thousands)



Nine Months Ended


September 30,

September 30,


2023

2022

Effect of exchange rate on cash

16

(64)




Decrease in cash and cash equivalents

(14,743)

(911)

Cash and cash equivalents, beginning of period

34,905

39,898

Cash and cash equivalents, end of period

$20,162

$38,987




Non-cash investing activities:



Net transfer of instruments from inventory to property and equipment

$343

$(78)




Non-cash financing activities:



Extinguishment of 2.50% Notes through issuance of common stock

$—

$10,180

Capital contribution from the exchange of secured note and accrued interest through
the issuance of common stock with related party

$25,363

$29,847

Exchange of 2.50% Notes and accrued interest for 5.00% Notes

$56,893

$—

Debt premium on issuance of 5.00% Notes

$6,023

$—

Derivative liability

$38,160

$—

2.50% Notes extinguished in connection with exchange transaction

$—

$49,624

Fair value of new note issued in connection with the exchange transaction

$—

$16,024

Fair value of common stock warrant issued in connection with the exchange transaction

$—

$3,753

Extinguishment of 5.00% Notes through issuance of common stock

$330

$—

Extinguishment of derivative liability in connection with extinguishment of 5.00% Notes

$380

$—

Issuance of common stock in connection with extinguishment of 5.00% Notes

$658

$—




Supplemental cash flow information:



Interest paid

$—

$2,214


See accompanying notes to condensed consolidated financial statements.

 

SOURCE Accelerate Diagnostics, Inc.

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