Quanterix(QTRX) - 2020 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for Quanterix Corporation Item 1. Financial Statements This section presents Quanterix Corporation's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and comprehensive notes Unaudited Condensed Consolidated Balance Sheets Total assets decreased to $162.9 million, while total liabilities rose to $51.9 million, leading to a decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $88,806 | $109,155 | | Total current assets | $114,238 | $132,661 | | Total assets | $162,940 | $169,951 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $18,897 | $19,833 | | Long term lease liabilities | $22,458 | $— | | Total liabilities | $51,906 | $41,293 | | Total stockholders' equity | $111,034 | $128,658 | | Total liabilities and stockholders' equity | $162,940 | $169,951 | Unaudited Condensed Consolidated Statements of Operations Q2 2020 revenue decreased 3% to $13.1 million with a wider net loss, while year-to-date revenue grew 11.5% to $28.9 million, also with an increased net loss Statements of Operations Summary (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $6,790 | $8,776 | $16,623 | $18,322 | | Service and other revenue | $6,317 | $4,760 | $12,079 | $7,550 | | Total revenue | $13,130 | $13,536 | $28,857 | $25,872 | | Gross profit | $5,213 | $6,931 | $12,026 | $12,936 | | Loss from operations | $(12,201) | $(10,514) | $(23,929) | $(19,873) | | Net loss | $(12,302) | $(10,563) | $(23,912) | $(19,968) | | Net loss per share | $(0.43) | $(0.46) | $(0.85) | $(0.88) | Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $20.6 million, while investing cash outflow decreased and financing cash inflow significantly dropped Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(20,600) | $(12,820) | | Net cash used in investing activities | $(1,361) | $(9,830) | | Net cash provided by financing activities | $1,476 | $50,272 | | Net (decrease) increase in cash | $(20,485) | $27,622 | | Cash at end of period | $89,806 | $73,051 | Notes to Condensed Consolidated Financial Statements Detailed notes explain business operations, accounting policies, revenue recognition, the UmanDiagnostics acquisition, and the adoption of ASC 842 - The company develops and sells ultra-sensitive digital immunoassay platforms based on its proprietary "Simoa" technology for life sciences research and diagnostics, with key products including the Simoa HD-X, SR-X, and SP-X instruments[23][24] - On January 1, 2020, the company adopted the new lease accounting standard, ASC 842, resulting in the recognition of operating lease Right-of-Use (ROU) assets of $12.2 million and operating lease liabilities of $22.8 million on the balance sheet[46][50] - The acquisition of UmanDiagnostics AB was completed on August 1, 2019, for an aggregate purchase price of $21.2 million, securing a long-term supply of critical Nf-L antibodies[26][122] Disaggregated Revenue by Geography - Six Months Ended June 30, 2020 (in thousands) | Revenue Type | North America (NA) | EMEA | Asia Pacific | Total | | :--- | :--- | :--- | :--- | :--- | | Product revenues | $7,631 | $6,336 | $2,656 | $16,623 | | Service and other revenues | $9,846 | $1,486 | $747 | $12,079 | | Collaboration and license revenue | $144 | $11 | $— | $155 | | Total | $17,621 | $7,833 | $3,403 | $28,857 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, attributing Q2 revenue decrease and year-to-date increase to COVID-19 impacts on product and service revenues, and details liquidity and capital resources - The COVID-19 pandemic has had a mixed impact on the business, negatively affecting instrument and consumables revenue but partially offset by increased demand for services from the company's Accelerator Laboratory[147][148][155] - As of June 30, 2020, the company had cash and cash equivalents of $88.8 million, which management believes will be sufficient to meet operating cash requirements for at least the next 12 months[150][202] Results of Operations Q2 2020 total revenue decreased 3% to $13.1 million, while year-to-date total revenue increased 12% to $28.9 million, both periods showing gross margin contraction Revenue Comparison - Q2 2020 vs Q2 2019 (in thousands) | Revenue Stream | Q2 2020 | Q2 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $6,790 | $8,776 | $(1,986) | (23)% | | Service and other revenue | $6,317 | $4,760 | $1,557 | 33% | | Total revenue | $13,130 | $13,536 | $(406) | (3)% | Revenue Comparison - YTD 2020 vs YTD 2019 (in thousands) | Revenue Stream | YTD 2020 | YTD 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $16,623 | $18,322 | $(1,699) | (9)% | | Service and other revenue | $12,079 | $7,550 | $4,529 | 60% | | Total revenue | $28,857 | $25,872 | $2,985 | 12% | - Gross margin declined in both the three and six-month periods of 2020 compared to 2019, primarily due to a higher proportion of instrument sales versus consumables, and amortization costs from the Uman acquisition-related inventory and intangible assets[156][165] - SG&A expenses decreased by $0.3 million for Q2 2020 year-over-year, mainly because the prior-year period included $0.9 million in acquisition costs for Uman[159] Liquidity and Capital Resources Liquidity is primarily from equity offerings and debt, with $112.5 million raised in 2019 and $20.6 million net cash used in operations for H1 2020 - In 2019, the company raised a total of $112.5 million in net proceeds from two equity offerings: an "at-the-market" offering ($48.0 million) and an underwritten public offering ($64.5 million)[174][175] Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(20,600) | $(12,820) | | Net cash used in investing activities | $(1,361) | $(9,830) | | Net cash provided by financing activities | $1,476 | $50,272 | - The company has a loan agreement with Hercules Capital, with an amendment in April 2019 extending the interest-only payment period through July 1, 2021, and the maturity date to October 1, 2021[185] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures have occurred since the 2019 Annual Report on Form 10-K - There were no material changes to the company's market risk disclosures as of June 30, 2020[212] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2020[213] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[214] PART II — OTHER INFORMATION This section covers legal proceedings, risk factors, and a list of exhibits filed with the quarterly report Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - As of the filing date, Quanterix is not involved in any material legal proceedings[217] Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the prior 2019 Annual Report and Q1 2020 Quarterly Report - No material changes to the company's risk factors have occurred since the filing of the Q1 2020 10-Q[218] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data - The exhibits filed with this report include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, as well as XBRL data files[225]