Quanterix(QTRX) - 2023 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited consolidated financial statements for Quanterix Corporation as of June 30, 2023, show a slight decrease in total assets to $429.2 million from $434.2 million at year-end 2022, with total revenues of $59.5 million and a reduced net loss of $12.2 million for the six months ended June 30, 2023 Consolidated Balance Sheets As of June 30, 2023, the company's total assets were $429.2 million, a slight decrease from $434.2 million at December 31, 2022, with cash and cash equivalents at $329.5 million, total liabilities at $73.9 million, and total stockholders' equity at $355.4 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $329,525 | $338,740 | | Total current assets | $379,058 | $381,403 | | Total assets | $429,210 | $434,199 | | Liabilities & Equity | | | | Total current liabilities | $31,947 | $30,958 | | Total liabilities | $73,854 | $75,259 | | Total stockholders' equity | $355,356 | $358,940 | Consolidated Statements of Operations For Q2 2023, total revenues increased 32% to $31.0 million, and net loss significantly reduced to $6.1 million from $24.9 million in Q2 2022, while for the six-month period, revenues grew 12% to $59.5 million, and net loss narrowed to $12.2 million from $43.1 million Q2 2023 vs Q2 2022 Performance (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Total Revenues | $31,029 | $23,500 | | Gross Profit | $19,138 | $8,711 | | Loss from Operations | $(9,561) | $(24,959) | | Net Loss | $(6,064) | $(24,902) | | Net Loss per Share | $(0.16) | $(0.67) | H1 2023 vs H1 2022 Performance (in thousands, except per share data) | Metric | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Total Revenues | $59,485 | $53,052 | | Gross Profit | $36,064 | $23,270 | | Loss from Operations | $(18,981) | $(43,146) | | Net Loss | $(12,167) | $(43,055) | | Net Loss per Share | $(0.33) | $(1.17) | Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operating activities significantly reduced to $8.9 million from $29.6 million in the prior-year period, primarily due to a lower net loss, with cash, cash equivalents, and restricted cash at $332.2 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,869) | $(29,635) | | Net cash used in investing activities | $(784) | $(5,934) | | Net cash provided by financing activities | $690 | $1,190 | | Net decrease in cash | $(8,963) | $(34,379) | Notes to Consolidated Financial Statements The notes provide detailed information on the company's accounting policies and financial activities, highlighting strong growth in consumables and research services, $1.4 million in revenue from its UltraDx agreement in H1 2023, and the impact of the 2022 restructuring plan - The company's business is centered on its proprietary "Simoa" digital immunoassay platforms for ultra-sensitive protein biomarker detection, serving life sciences research and diagnostics, and also provides contract research services through its CLIA-certified Accelerator Laboratory[29][30] Disaggregated Revenue for Six Months Ended June 30, 2023 (in thousands) | Revenue Type | North America | EMEA | Asia Pacific | Total | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $20,454 | $12,439 | $6,086 | $38,979 | | Service Revenue | $15,380 | $2,880 | $871 | $19,131 | | Collaboration/License | $997 | $0 | $0 | $997 | | Grant Revenue | $378 | $0 | $0 | $378 | | Total Revenues | $37,209 | $15,319 | $6,957 | $59,485 | - In Q2 2023, the company received one million ordinary shares of UltraDx valued at $1.0 million as part of the UltraDx Agreement, which was recognized as revenue[48][49] - The company recognized $3.0 million in revenue from the Lilly Collaboration Agreement in H1 2023, compared to $5.4 million in H1 2022[52] - As of June 30, 2023, there was $39.8 million of total unrecognized stock-based compensation expense, expected to be recognized over a weighted-average period of 2.9 years[82] - The 2022 Restructuring Plan led to a $25.6 million impairment charge in 2022, including $8.2 million for goodwill, with no further impairment charges recorded in H1 2023 and a restructuring reserve of $0.3 million remaining at June 30, 2023[109][110] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 12% revenue growth in the first six months of 2023 to increased sales of consumables and higher average selling prices, with significant improvement in operating and net loss due to the 2022 Restructuring Plan, and believes current liquidity is sufficient for at least the next 12 months - The company launched LucentAD in July 2023, a blood-based biomarker test to aid in evaluating patients with cognitive symptoms consistent with early Alzheimer's disease[128] - The Restructuring Plan initiated in August 2022 is expected to yield annualized operating expense savings of approximately $25 million[141] - Management believes that current cash and cash equivalents of $329.5 million, along with cash from sales, will be sufficient to meet operating cash requirements for at least the next 12 months[171][182] Comparison of Results of Operations for the Three Months Ended June 30, 2023 and 2022 In Q2 2023, total revenues increased 32% to $31.0 million, with gross profit surging 120% to $19.1 million and operating expenses decreasing 15% to $28.7 million, leading to a 62% reduction in loss from operations to $9.6 million Q2 2023 vs Q2 2022 Results (in thousands) | Item | Q2 2023 | Q2 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $31,029 | $23,500 | 32% | | Gross Profit | $19,138 | $8,711 | 120% | | Total Operating Expenses | $28,699 | $33,670 | (15)% | | Loss from Operations | $(9,561) | $(24,959) | 62% | - The increase in product revenue was primarily due to higher consumables sales, increased average selling prices, and a $1.0 million one-time revenue from UltraDx shares, which offset lower instrument sales[144] - The decrease in operating expenses was primarily due to reductions in headcount from the Restructuring Plan, with R&D down 10% and SG&A down 20%[150][151] Comparison of Results of Operations for the Six Months Ended June 30, 2023 and 2022 For H1 2023, total revenues grew 12% to $59.5 million, gross profit increased 55% to $36.1 million, and total operating expenses fell 17% to $55.0 million, resulting in a 56% reduction in operating loss to $19.0 million H1 2023 vs H1 2022 Results (in thousands) | Item | H1 2023 | H1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $59,485 | $53,052 | 12% | | Gross Profit | $36,064 | $23,270 | 55% | | Total Operating Expenses | $55,045 | $66,416 | (17)% | | Loss from Operations | $(18,981) | $(43,146) | 56% | - Cost of product revenue decreased 31% to $14.3 million due to improved inventory management and lower instrument sales[163] - R&D and SG&A expenses decreased by 22% and 19% respectively, primarily due to headcount reductions from the Restructuring Plan[164][165] Liquidity and Capital Resources The company's principal source of liquidity is its $329.5 million in cash and cash equivalents as of June 30, 2023, with net cash used in operating activities for H1 2023 significantly improving by 70% to $8.9 million, and management believing current capital is sufficient for at least the next 12 months Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(8,869) | $(29,635) | 70% | | Net cash used in investing activities | $(784) | $(5,934) | 87% | | Net cash provided by financing activities | $690 | $1,190 | (42)% | - The company's future funding requirements depend on market acceptance of products, costs of sales and R&D, and the success of its restructuring and assay improvement programs[183] Quantitative and Qualitative Disclosures About Market Risk The company states that as of June 30, 2023, there have been no material changes to the market risk information from what was described in its Annual Report on Form 10-K for the year ended December 31, 2022 - There were no material changes to the company's market risk disclosures as of June 30, 2023, compared to the end of 2022[197] Controls and Procedures Management concluded that due to previously disclosed material weaknesses in internal control over financial reporting, the company's disclosure controls and procedures were not effective as of June 30, 2023, with a remediation plan underway, though financial statements are believed to be fairly presented - Management concluded that disclosure controls and procedures were not effective at a reasonable assurance level as of June 30, 2023, due to ongoing remediation of material weaknesses identified as of December 31, 2022[198][202] - The company is actively implementing a remediation plan, which includes hiring a Corporate Controller, engaging accounting and third-party consultants, enhancing the ERP system, and providing regular training to finance personnel[205] - Management will not consider the material weaknesses remediated until the new controls have operated effectively for a sufficient period of time[207] PART II — OTHER INFORMATION Legal Proceedings As of June 30, 2023, Quanterix was not a party to any legal proceedings that would be expected to have a material adverse effect on its financial condition or results of operations - The company is not currently party to any pending or threatened litigation expected to have a material adverse effect on its financials[211] Risk Factors The company reports no material changes to the risk factors described in its Annual Report on Form 10-K for the year ended December 31, 2022 - As of the filing date, there were no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K[213] Other Information On August 4, 2023, the Board of Directors adopted amended and restated bylaws addressing SEC Rule 14a-19 (universal proxy rule) and modifying stockholder meeting adjournment procedures, with no directors or officers adopting or terminating Rule 10b5-1 trading plans during Q2 2023 - On August 4, 2023, the company's Board of Directors approved and adopted amended and restated bylaws[217] - The bylaw amendments address new SEC universal proxy rules (Rule 14a-19) and update stockholder meeting adjournment procedures per Delaware law[217] - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the three months ended June 30, 2023[219] Exhibits This section lists the exhibits filed with the Form 10-Q, including the Restated Bylaws, certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files - Filed exhibits include the Restated Bylaws (Exhibit 3.2), Sarbanes-Oxley Act Section 302 and 906 certifications, and XBRL interactive data files[221]