Accelerate Diagnostics(US:AXDX)2023-11-08 16:00Financial Performance - For the three months ended September 30, 2023, net sales increased to $3,299,000, an 11% increase compared to $2,960,000 for the same period in 2022[260] - For the nine months ended September 30, 2023, net sales decreased to $9,032,000, an 8% decrease from $9,780,000 in the same period in 2022[261] - Gross profit for the three months ended September 30, 2023, was $1,349 thousand, a decrease of 81% compared to $746 thousand in the same period in 2022[266] - Gross margin for the three months ended September 30, 2023, was 3%, down from 20% in the same period in 2022, primarily driven by excess inventory write-downs[266] - The company reported other income of $15,691 thousand for the three months ended September 30, 2023, compared to other expense of $(935) thousand in the same period in 2022, primarily due to a fair-value adjustment of the derivative liability related to convertible notes[276] - The company had a net loss of $48.6 million and negative cash flows from operations of $32.4 million for the nine months ended September 30, 2023[280] - Loss from operations for the three months ended September 30, 2023, was $(14,650) thousand, a decrease of 2% compared to $(14,961) thousand in the same period in 2022[274] Cost of Sales and Expenses - Total cost of sales for the three months ended September 30, 2023, increased to $3,192,000, a 34% increase from $2,381,000 in the same period in 2022[262] - An inventory write-down of $1,184,000 was recorded for the three months ended September 30, 2023, representing a 100% increase as it was not present in the same period in 2022[262] - Non-cash equity-based compensation as a component of cost of sales decreased to $58,000 for the three months ended September 30, 2023, a 65% decrease from $167,000 in the same period in 2022[262] - Total cost of sales for the three months ended September 30, 2023, decreased compared to the same period in 2022, primarily due to lower service contract-related costs and lower net book values of instruments sold[265] - Research and development expenses for the three months ended September 30, 2023, decreased by 4% to $6,996 thousand compared to $7,285 thousand in the same period in 2022[268] - Sales, general and administrative expenses for the three months ended September 30, 2023, decreased by 6% to $7,761 thousand compared to $8,255 thousand in the same period in 2022[271] Cash Flow and Financial Position - As of September 30, 2023, the Company had $21.2 million in cash and cash equivalents, a decrease of $24.4 million from $45.6 million at December 31, 2022[284] - Net cash used in operating activities for the nine months ended September 30, 2023, was $32.4 million, an improvement of $6.7 million compared to $39.2 million in the same period of 2022[296] - Net cash provided by investing activities was $8.8 million for the nine months ended September 30, 2023, primarily from maturities of marketable securities[298] - The Company has substantial doubt about its ability to continue as a going concern due to inadequate financial resources to fund forecasted operating costs for at least twelve months from the filing date[290] - The Company’s total material cash requirements as of September 30, 2023, amounted to $95.3 million, with significant obligations due in 2026[291] Debt and Financing Activities - The Company entered into a forbearance agreement with holders of approximately 85% of its outstanding 2.50% Convertible Senior Notes due 2023 on March 9, 2023[281] - The Company completed restructuring transactions on June 9, 2023, exchanging approximately $55.9 million of 2.50% Notes for approximately $56.9 million of newly issued 5.00% Senior Secured Convertible Notes due 2026[283] - The Company issued $66.9 million aggregate principal amount of 5.00% Notes, which mature on December 15, 2026, and bear interest at a rate of 5% per annum, payable in kind[300] - The Company is exploring additional funding through potential equity and/or debt financing arrangements, but there is no assurance that necessary financing will be available[286] - The Company has a non-cancellable purchase obligation with a supplier to acquire raw materials for a total commitment of $11.9 million, with delivery due by March 15, 2027[291] - As of September 30, 2023, approximately $0.7 million aggregate principal amount of 2.50% Notes remains outstanding and in default, accruing interest at 2.5% per annum[305] - The Company has $66.2 million aggregate principal amount of 5.00% Notes outstanding as of September 30, 2023[305] Product Development and Market Activities - The Accelerate PhenoTest BC Kit was launched in July 2021, enhancing the company's product offerings for rapid antibiotic susceptibility testing[250] - The Accelerate Arc system and BC Kit were commercialized in March and May 2022, automating the clean-up and concentration of microbial cells from positive blood culture samples[251] - The company is in discussions with the FDA regarding the regulatory pathway for the Accelerate Arc Products, which has temporarily halted U.S. sales and marketing efforts[253] - A sales and marketing agreement with Becton Dickinson was entered into in August 2022 to leverage their global sales team and reduce marketing expenses[254] - The company continues to invest in new product development, focusing on enhancing existing products and developing a next-generation AST platform[255] Equity and Share Transactions - The Company completed a public offering of approximately 1.8 million shares at a price of $20.00 per share on August 23, 2022, resulting in net proceeds of approximately $32.9 million[305] - The Company entered into a securities purchase agreement on June 9, 2023, with the Schuler Trust for the potential purchase of approximately 1.4 million shares valued at $7.20 per share for an aggregate of $10.0 million[307] - During the nine months ended September 30, 2023, no shares were sold under the at-the-market equity offering program, leaving $39.1 million available for future sales[309] - Approximately $55.9 million aggregate principal amount of 2.50% Notes were exchanged for approximately $56.9 million aggregate principal amount of 5.00% Notes in connection with Restructuring Transactions[304] - The Company issued approximately 3.4 million shares of common stock to repurchase the Secured Note, plus accrued interest, during the Restructuring Transactions[304] - As of September 30, 2023, the Company had no off-balance sheet arrangements[310] - The Company has historically completed multiple equity raises through sales of its common stock and Series A Preferred Stock in both public and private offerings[305]