Sophia Genetics(SOPH) - 2023 Q3 - Quarterly Report

Unaudited Interim Condensed Consolidated Financial Statements Unaudited Interim Condensed Consolidated Statements of Loss Revenue grew 32.6% to $45.3 million, with net loss decreasing 25.3% to $54.9 million Consolidated Statement of Loss Highlights (in USD thousands) | Metric | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $45,323 | $34,176 | +32.6% | | Gross Profit | $31,014 | $21,624 | +43.4% | | Operating Loss | $(55,879) | $(72,739) | -23.2% | | Loss for the period | $(54,920) | $(73,478) | -25.3% | | Basic and diluted loss per share | $(0.85) | $(1.15) | -26.1% | Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss Total comprehensive loss improved to $52.9 million, driven by reduced net loss and positive currency translation Consolidated Statement of Comprehensive Loss (in USD thousands) | Metric | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :--- | :--- | :--- | | Loss for the period | $(54,920) | $(73,478) | | Currency translation differences | $2,269 | $(10,249) | | Total comprehensive loss for the period | $(52,934) | $(81,274) | Unaudited Interim Condensed Consolidated Balance Sheets Total assets decreased to $205.9 million due to reduced cash, with liabilities rising and equity falling to $158.4 million Key Balance Sheet Items (in USD thousands) | Asset/Liability/Equity | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $132,767 | $161,305 | | Total assets | $205,852 | $243,838 | | Total liabilities | $47,413 | $43,708 | | Total equity | $158,439 | $200,130 | Unaudited Interim Condensed Consolidated Statements of Changes in Equity Total equity decreased from $200.1 million to $158.4 million, primarily due to a $54.9 million net loss Equity Reconciliation for Nine Months Ended Sep 30, 2023 (in USD thousands) | Description | Amount | | :--- | :--- | | Equity as of January 1, 2023 | $200,130 | | Loss for the period | $(54,920) | | Other comprehensive income | $1,986 | | Share-based compensation | $11,036 | | Other transactions with owners | $207 | | Equity as of September 30, 2023 | $158,439 | Unaudited Interim Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $37.3 million, with cash decreasing to $132.8 million Net Cash Flow Summary (in USD thousands) | Cash Flow Activity | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash flows used in operating activities | $(37,283) | $(59,764) | | Net cash flow provided from investing activities | $10,569 | $29,835 | | Net cash flow used in financing activities | $(2,311) | $(988) | | Cash and cash equivalents at end of the period | $132,767 | $157,827 | Notes to the Unaudited Interim Condensed Consolidated Financial Statements Detailed disclosures cover company background, accounting policies, revenue, balance sheet, and income statement items Note 1: Company Information SOPHiA GENETICS SA, a Swiss cloud-native software company, reduced D&O insurance cash from $30 million to $15 million - The company is a cloud-native software company in the healthcare space, commercializing its SOPHiA DDM™ platform for analyzing complex multimodal datasets[17] - In June 2023, the company reduced the designated cash set aside for its Directors and Officers Insurance Policy from $30 million to $15 million[24] - As of September 30, 2023, the company held 11,766,158 treasury shares, a significant increase from 2,257,163 held a year prior, primarily for administering equity incentive programs[33] Note 2: Fair Value Financial assets and liabilities' carrying amounts approximate fair values as of September 30, 2023, with no significant changes - The carrying amount of financial assets and liabilities, including cash, accounts receivable, and accounts payable, is a reasonable approximation of their fair value as of September 30, 2023[35] Note 3: Financial Risk Management The company faces credit, liquidity, and market risks, with no significant changes in risk management since year-end 2022 - The company is exposed to credit, funding, liquidity, and market risks, with no significant changes in its risk management approach since December 31, 2022[36] Note 4: Segment Reporting The company operates as a single segment, with the CEO reviewing financial information on a consolidated basis - The company operates in a single operating segment, and its performance is assessed as a whole by the senior management team led by the CEO[37] Note 5: Revenue Revenue primarily from SOPHiA DDM™ Platform, with EMEA contributing 71% and NORAM 16%, both showing strong growth Revenue by Geographic Region (in USD thousands) | Region | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | YoY Growth | | :--- | :--- | :--- | :--- | | EMEA | $32,378 | $25,288 | +28.0% | | NORAM | $7,268 | $4,656 | +56.1% | | LATAM | $3,062 | $2,189 | +39.9% | | APAC | $2,615 | $2,043 | +28.0% | | Total | $45,323 | $34,176 | +32.6% | Revenue by Stream (in USD thousands) | Revenue Stream | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :--- | :--- | :--- | | SOPHiA DDM Platform | $44,331 | $32,884 | | Workflow equipment and services | $992 | $1,292 | Note 6: Accounts Receivable Net accounts receivable increased to $9.8 million from $6.6 million, driven by a rise in accrued contract revenue Accounts Receivable Breakdown (in USD thousands) | Component | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Accounts receivable | $4,631 | $6,060 | | Accrued contract revenue | $6,064 | $1,499 | | Allowance for expected credit losses | $(1,056) | $(1,095) | | Net accounts receivable | $9,781 | $6,649 | Note 7: Loss Per Share Loss per share improved to $0.85 from $1.15 for the nine months ended September 30, 2023, on 64.6 million shares Loss Per Share Calculation | Metric | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :--- | :--- | :--- | | Net loss attributed to shareholders (USD thousands) | $(54,920) | $(73,478) | | Weighted average number of shares in issue | 64,607,758 | 64,058,859 | | Basic and diluted loss per share | $(0.85) | $(1.15) | Note 8: Leases In June 2023, a 108-month lease for new R&D office space in France recorded a $2.3 million right-of-use asset and liability - On June 1, 2023, the company entered into a 108-month lease for office space in Bidart, France, to support R&D expansion, recording a right-of-use asset and lease liability of $2.3 million[43] Note 9: Borrowings A revolving credit facility of up to CHF 5.0 million with Credit Suisse had no outstanding borrowings as of September 30, 2023 - The company has a credit facility of up to CHF 5.0 million with Credit Suisse, with no borrowings outstanding as of September 30, 2023[44] Note 10: Share-based Compensation Share-based compensation expense totaled $11.04 million, consistent with prior year, largely from general and administrative functions Share-based Compensation Expense (in USD thousands) | Department | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :--- | :--- | :--- | | Research and development | $2,489 | $1,732 | | Sales and marketing | $794 | $1,175 | | General and administrative | $7,753 | $8,110 | | Total | $11,036 | $11,017 | Note 11: Related Party Transactions Key management compensation increased to $11.0 million from $9.1 million, driven by higher salaries and share-based compensation Key Management Compensation (in USD thousands) | Compensation Type | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :--- | :--- | :--- | | Salaries and other short-term benefits | $2,814 | $1,613 | | Share-based compensation expense | $7,713 | $7,061 | | Total | $10,994 | $9,109 | Note 12: Events After the Reporting Date No material subsequent events requiring recognition or disclosure were identified after the reporting date through November 7, 2023 - There were no material events after the reporting date that required recognition or disclosure in the financial statements[49]