Accelerate Diagnostics Reports Third Quarter 2019 Financial Results

TUCSON, Ariz., Nov. 7, 2019 /PRNewswire/ -- Accelerate Diagnostics, Inc. (Nasdaq: AXDX) today announced financial results for the third quarter ended September 30, 2019.

"Our placement and revenue results for the third quarter came in below our expectations due to an elongated sales cycle and the timing of commercial go-lives during the quarter," said Larry Mehren, president and chief executive officer of Accelerate Diagnostics, Inc. "However, we saw several encouraging signs of improvement during the quarter, including a record number of go-lives in September, an increasingly robust sales funnel and continued progress with our respiratory trial and in China. As momentum in placements and go-lives continues to improve, we remain on pace to achieve the low end of our 300-400 placement target. Looking ahead, we acknowledge the need for greater consistency and predictability in our results, and we are focused on improving our commercial execution under Jack Phillip's leadership, as we continue our pursuit of bringing Accelerate's life-saving technology to as many patients as possible worldwide."

Third Quarter 2019 Highlights

    --  Added 37 net new commercially contracted instruments, compared to 29 in
        the third quarter of 2018.
    --  Net sales of $2.3 million, compared to $1.4 million in the third quarter
        of 2018. Instrument revenue decreased year-over-year, reflecting the
        Company's introduction of a reagent rental business model in September
        of 2018. Consumable revenue grew by over 175% as compared to the third
        quarter of 2018 and by approximately 15% over the prior quarter.
    --  Gross margin was 51% for the quarter, compared to 50% in the third
        quarter of 2018. This small increase was the result of lower consumable
        production costs per unit as production volumes increase.
    --  Selling, general, and administrative expenses for the quarter were $12.7
        million, compared to $12.2 million in the third quarter of 2018. This
        increase was driven by higher non-cash equity-based compensation
        expense.
    --  Research and development (R&D) costs for the quarter were $6.1 million,
        compared to $7.9 million in the third quarter of 2018.  This decrease
        was the result of lower employee non-cash equity-based compensation
        expense.
    --  Net loss was $20.4 million in the third quarter, or $0.37 per share,
        which included $3.1 million in non-cash stock-based compensation
        expense.
    --  Net cash used in the quarter was $15.9 million, and the company ended
        the quarter with total cash, investments, and cash equivalents of $122.0
        million.

Year-to-Date 2019 Highlights

    --  Added 167 net new commercially contracted instruments year to date,
        compared to 69 for the same period from 2018.
    --  Net sales of $5.8 million, compared to $3.8 million for the same period
        from 2018. Consumable revenue grew by over 150% through the first three
        quarters of 2019, compared to the same period in the prior year.
    --  Gross margin was 50%, compared to 51% for the same period from 2018.
        This small decrease was the result of inventory timing items that did
        not repeat in the current year. After normalizing for the effect of
        these pre-FDA instrument inventory previously written off to R&D, gross
        margin improved by 500 basis points year-to-date due to higher
        consumable production levels.
    --  Selling, general, and administrative expenses were $38.3 million year to
        date, compared to $41.8 million for the same period from 2018. This
        decrease was driven by lower stock-based compensation expense in the
        current year.
    --  Research and development (R&D) costs were $19.1 million year to date,
        compared to $20.7 million for the same period from 2018. This decrease
        was the result of lower employee non-cash equity-based compensation
        expense.
    --  Net loss was $63.0 million year to date, or $1.16 per share, which
        included $9.4 million in non-cash stock-based compensation expense.
    --  Net cash used year to date was $44.5 million, and the company ended the
        quarter with total cash, investments, and cash equivalents of $122.0
        million.

Full financial results for the quarter ending September 30, 2019 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

The company will host a conference call at 4:30PM ET today to review its first quarter results. To participate in the conference call, dial +1.877.883.0383 and enter the conference ID: 2508360. International participants may dial +1.412.902.6506. Please dial in 10 to 15 minutes prior to the start of the conference call. A replay of the call will be available by telephone at +1.877.344.7529 (U.S.) or +1.412.317.0088 (international) using replay code 10136055 until November 28, 2019.

This conference call will also be webcast and can be accessed from the "Investors" section of the company's website at axdx.com/investors. A replay of the audio webcast will be available until November 28, 2019.

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(TM) system and Accelerate PhenoTest(TM) 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

This press release contains forward-looking statements, which are subject to risks and uncertainties, including those described in our periodic reports and other filings with the U.S. Securities and Exchange Commission (the "SEC"). Examples of forward-looking statements include our belief that our fourth quarter momentum and sales will enable us to achieve the low end of our range for 2019 placements, and the implication that new sales management will lead to improved sales execution. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Anticipated results only reflect information available to us at this time and may differ from actual results. Except as required by federal securities laws, we undertake no obligation to update or revise these forward-looking statements to reflect new events, uncertainties or other contingencies.


                                           
           
              ACCELERATE DIAGNOSTICS, INC.


                                             
            
              CONDENSED CONSOLIDATED


                                                  
            
              BALANCE SHEET


                                             
            (in thousands, except share data)




                                                       September 30,                       December 31,


                                                                2019                                2018

                                                                                                    ---

                                                    Unaudited


                                                     
            
              ASSETS



     Current assets:


      Cash and cash
       equivalents                                                                     $
            92,938              $
       66,260



     Investments                                             28,978                                        100,218


      Trade accounts
       receivable                                              2,642                                          1,860



     Inventory                                                7,881                                          7,746


      Prepaid expenses                                         1,163                                            980


      Other current assets                                       793                                            576



      Total current assets                                   134,395                                        177,640


      Property and
       equipment, net                                          8,566                                          7,303


      Right of use assets                                      3,834


      Other non-current
       assets                                                    483                                            322



     Total assets                                                                    $
            147,278             $
       185,265



                                         
         
              LIABILITIES AND STOCKHOLDERS' EQUITY



     Current liabilities:


      Accounts payable                                                                  $
            2,281               $
       1,322


      Accrued liabilities                                      2,985                                          4,962


      Accrued interest                                           191                                          1,262


      Deferred revenue                                           250                                            217


      Current operating
       lease liability                                           421



      Total current
       liabilities                                             6,128                                          7,763


      Non-current operating
       lease liability                                         3,458


      Other non-current
       liabilities                                                28                                             53


      Convertible notes                                      127,444                                        120,074


      Total liabilities                                                               $
            137,058             $
       127,890




     Commitments and contingencies





     Stockholders' equity:


      Preferred shares, $0.001 par value;


      5,000,000 preferred
       shares authorized and
       none outstanding as
       of September 30, 2019
       and December 31, 2018                                       -



     Common stock, $0.001 par value;


      85,000,000 common
       shares authorized                     December 31, 2018
       with 54,641,187
       shares issued and
       outstanding on
       September 30, 2019
       and 75,000,000 common
       shares authorized
       with 54,231,876
       shares issued and
       outstanding on                                             55                                             54


      Contributed capital                                    448,609                                        432,885


      Treasury stock                                        (45,067)                                      (45,067)


      Accumulated deficit                                  (393,318)                                     (330,348)


      Accumulated other
       comprehensive loss                                       (59)                                         (149)


      Total stockholders'
       equity                                                 10,220                                         57,375



      Total liabilities and
       stockholders' equity                                                           $
            147,278             $
       185,265

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,


                                                      2019                             2018                                                 2019                             2018

                                                                                                                                                                           ---

                   Net sales                                             $
              2,271                                                                    $
              1,355                              $
          5,827      $
           3,848




                   Cost of sales                     1,117                                          680                                                                                2,940       1,889



     Gross profit                                   1,154                                          675                                                                                2,887       1,959




                   Costs and expenses:


      Research and development                       6,064                                        7,891                                                                               19,145      20,734


      Sales, general and
       administrative                               12,743                                       12,153                                                                               38,302      41,835



      Total costs and expenses                      18,807                                       20,044                                                                               57,447      62,569





      Loss from operations                        (17,653)                                    (19,369)                                                                            (54,560)   (60,610)




                   Other income (expense):


      Interest expense                             (3,598)                                     (3,357)                                                                            (10,585)    (6,720)


      Foreign currency exchange
       loss                                           (89)                                       (133)                                                                               (142)      (331)


      Interest income                                  676                                          908                                                                                2,329       1,983


      Other expense, net                               (9)                                                                                                                            (12)       (25)



      Total other expense, net                     (3,020)                                     (2,582)                                                                             (8,410)    (5,093)





      Net loss before income
       taxes                                      (20,673)                                    (21,951)                                                                            (62,970)   (65,703)


      Benefit (provision) for
       income taxes                                    239                                        (147)                                                                                          (432)



     Net loss                                                        $
              (20,434)                                                                $
              (22,098)                          $
          (62,970)   $
          (66,135)





      Basic and diluted net
       loss per share                                                   $
              (0.37)                                                                  $
              (0.41)                            $
          (1.16)     $
          (1.21)


      Weighted average shares
       outstanding                                  54,553                                       54,145                                                                               54,456      54,591




                   Other comprehensive loss:



     Net loss                                                        $
              (20,434)                                                                $
              (22,098)                          $
          (62,970)   $
          (66,135)


      Net unrealized gain
       (loss) on available-
       for-sale investments                             10                                            1                                                                                  229        (54)


      Foreign currency
       translation adjustment                        (113)                                        (26)                                                                               (139)      (105)



      Comprehensive loss                                              $
              (20,537)                                                                $
              (22,123)                          $
          (62,880)   $
          (66,294)

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,


                                                                        2019                                     2018

                                                                                                                 ---

                   Cash flows from operating activities:



     Net loss                                                                                  $
              (62,970)             $
        (66,135)


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


      Depreciation and
       amortization                                                    1,862                                               1,749


      Amortization of investment
       discount                                                        (400)                                              (413)


      Equity-based compensation                                        9,409                                              12,476


      Amortization of debt
       discount and issuance costs                                     7,370                                               4,529


      Loss on disposal of property
       and equipment                                                     577                                                 540



     (Increase) decrease in assets:


      Accounts receivable                                              (782)                                                506



     Inventory                                                      (3,286)                                            (5,206)


      Prepaid expense and other                                        (319)                                              (212)



     Increase (decrease) in liabilities:



     Accounts payable                                                   788                                               (524)


      Accrued liabilities, and
       other                                                         (2,115)                                               (18)



     Accrued interest                                               (1,071)                                                191


      Deferred revenue and income                                         33                                               (918)


      Deferred compensation                                             (25)                                                  5



      Net cash used in operating
       activities                                                   (50,929)                                           (53,430)


                   Cash flows from investing activities:


      Purchases of equipment                                           (148)                                              (842)


      Purchase of marketable
       securities                                                   (20,710)                                          (115,634)


      Proceeds from sales of
       marketable securities                                          13,400                                               3,000


      Maturities of marketable
       securities                                                     78,922                                              74,496



      Net cash provided by (used
       in) investing activities                                       71,464                                            (38,980)


                   Cash flows from financing activities:


      Proceeds from issuance of
       common stock                                                    1,363                                                 447


      Proceeds from exercise of
       options                                                         4,879                                               3,710


      Proceeds from issuance of
       convertible note                                                    -                                            171,500


      Prepayment of forward stock
       repurchase transaction                                              -                                           (45,069)


      Payment of debt issuance
       costs                                                               -                                            (4,992)



      Net cash provided by
       financing activities                                            6,242                                             125,596




      Effect of exchange rate on
       cash                                                             (99)                                               (77)




      Increase in cash and cash
       equivalents                                                    26,678                                              33,109


      Cash and cash equivalents,
       beginning of period                                            66,260                                              28,513



      Cash and cash equivalents,
       end of period                                                                              $
              92,938                $
        61,622

See accompanying notes to condensed consolidated financial statements.

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SOURCE Accelerate Diagnostics, Inc.