PR Newswire | Nov 9, 2021 04:06PM EST

11/09 15:05 CST

Accelerate Diagnostics Reports Third Quarter 2021 Financial Results TUCSON, Ariz., Nov. 9, 2021

TUCSON, Ariz., Nov. 9, 2021 /PRNewswire/ -- Accelerate Diagnostics, Inc. (Nasdaq: AXDX) today announced preliminary financial results for the third quarter for the period ended September 30, 2021, which remain subject to quarter end closing adjustments.

"The resurgence of COVID hospitalizations impacted our commercial execution in the quarter," commented Jack Phillips, Chief Executive Officer of Accelerate Diagnostics, Inc. "Despite this recurring impediment to closing new accounts, I am pleased our team continued to build our funnel of prospective customers, and advance our development of Arc and Pheno 2.0."

Third Quarter 2021 Highlights

* Added 3 contracted instruments and brought 11 instruments live in the U.S. in the quarter. * Ended the third quarter with 304 U.S. clinically live and revenue-generating instruments, with another 86 U.S. contracted instruments in the process of being implemented and not yet revenue-generating. * Net sales were $3.1 million, compared to $3.6 million in the third quarter of 2020, or a 13% decline. Excluding instrument revenues, the business grew by 25% during this same period. * Gross margin was 32% for the quarter, compared to 36% in the third quarter of 2020. The decline in gross margins resulted from escalating inflation to manufacturing costs and other factors. * Selling, general, and administrative (SG&A) costs for the quarter were $10.8 million, compared to $11.5 million from the same quarter of the prior year. SG&A costs for the quarter excluding non-cash stock-based compensation were $7.5 million, compared to $8.3 million from the same quarter of the prior year. This decrease was the result of the ongoing benefits from cost-cutting efforts put in place during 2020. * Research and development (R&D) costs for the quarter were $4.7 million, compared to $5.0 million from the same quarter of the prior year. R&D costs excluding non-cash stock-based compensation expense for the quarter were $4.4 million, compared to $3.7 million from the quarter of the prior year. This increase was the result of progress in our Arc and Pheno 2.0 development programs and associated investment. * Net loss was $9.0 million in the third quarter, resulting in $0.15 net loss per share. Net loss excluding non-cash stock-based compensation expense for the third quarter was $5.4 million. * Net cash used in the quarter excluding financing was $12.3 million. * Reduced outstanding debt during the quarter by $51 million dollars, a 30% reduction. * Ended the quarter with total cash, investments, and cash equivalents of $57.0 million.

Year-to-date 2021 Highlights

* Net sales were $8.4 million year-to-date, compared to $8.1 million from the same period of 2020, or an 5% increase. Instrument revenue declined, while consumable revenue grew by 24% over this period. * Gross margin was 35% year-to-date, compared to 41% from the same period in 2020. The decline in gross margins resulted from ongoing pandemic-related impacts to manufacturing costs and other factors. * Selling, general, and administrative (SG&A) costs year-to-date were $37.7 million, compared to $35.7 million from the same period of the prior year. SG&A costs excluding non-cash stock-based compensation were $23.2 million year to date, compared to $26.5 million from the same period of the prior year. This decrease was the result of the ongoing benefits from cost-cutting efforts put in place during 2020. * Research and development (R&D) costs were $17.3 million year to date, compared to $16.2 million from the same period of the prior year. R&D costs excluding non-cash stock-based compensation expense were $13.0 million year to date, compared to $13.4 million from the same period of the prior year. This decrease was the result of improved internal efficiencies, partially offset by increased investment in our Arc and Pheno 2.0 development programs. * Net loss was $54.9 million year to date, resulting in $0.91 net loss per share. Net loss excluding non-cash stock-based compensation expense was $35.8 million. * Net cash used excluding financing was $33.9 million

The foregoing preliminary financial results are subject to final quarter-end adjustment in the Form 10-Q for the quarter ended September 30, 2021. The Company expects to file the Form 10-Q by November 15, 2021, through the Securities and Exchange Commission's (SEC) website at http://www.sec.gov.

Audio Webcast and Conference Call

To listen to the 2021 third quarter financial results, call by phone, +1.877.883.0383 and enter Elite Entry Number: 7399350. International participants may dial +1.412.902.6506. Please dial in 10-15 minutes prior to the start of the conference. A replay of the call will be available by telephone at +1.877.344.7529 (U.S.) or +1.412.317.0088 (International) using the replay code 10160827 until November 30, 2021.

This conference call will also be webcast and can be accessed from the company's website at ir.axdx.com. A replay of the audio webcast will be available until February 9, 2022.

Use of Non-GAAP Financial Measures

This press release contains certain financial measures that are not recognized measures under accounting principles generally accepted in the United States of America ("GAAP"), which include SG&A, R&D, and Net income (loss) amounts excluding stock-based compensation expenses.

Our management and board of directors use expenses excluding the cost of stock-based compensation to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operating and financing plans. Accordingly, we believe that expenses excluding the cost of stock-based compensation provides useful information for investors in understanding and evaluating our operating results in the same manner as our management and our board of directors. Expenses excluding the cost of stock-based compensation is a non-GAAP financial measure and should be considered in addition to, not as superior to, or as a substitute for, SG&A expenses, R&D expenses, and net income (loss) reported in accordance with GAAP. The following tables present a reconciliation of SG&A expenses, R&D expenses and net income (loss) excluding stock-based compensation to comparable GAAP measures for the periods indicated:

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) (in thousands)

2021 2020 2021 2020

Sales, general and administrative $ 10,806 $ 11,465 $ 37,744 $ 35,738

Non-cash equity-basedcompensation as a component of 3,281 3,208 14,461 9,235sales, general and administrative

Sales, general and administrativeless non-cash equity-based $ 7,525 $ 8,257 $ 23,283 $ 26,503compensation

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) (in thousands)

2021 2020 2021 2020

Research and development $ 4,712 $ 5,001 $ 17,341 $ 16,191

Non-cash equity-basedcompensation as a component of 266 1,349 4,340 2,807research and development

Research and development lessnon-cash equity-based $ 4,446 $ 3,652 $ 13,001 $ 13,384compensation

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) (in thousands)

2021 2020 2021 2020

Loss from operations $ (14,532) $ (15,165) $ (52,148) $ (48,618)

Non-cash equity-basedcompensation as a component of 3,629 4,676 19,058 12,291loss from operations

Loss from operations lessnon-cash equity-based $ (10,903) $ (10,489) $ (33,090) $ (36,327)compensation

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(r) system and Accelerate PhenoTest(r) 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

Certain of the statements made in this press release are forward looking or may have forward looking implications. Examples of such forward looking statements or implications include Mr. Phillip's statements regarding our building funnel of prospective customers, and advancements in our development of Arc and Pheno 2.0. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Information about the risks and uncertainties faced by Accelerate Diagnostics is contained in the section captioned "Risk Factors" in the company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 2, 2021, and in any other reports that the company files with the Securities and Exchange Commission. The company's forward-looking statements could be affected by general industry and market conditions. Except as required by federal securities laws, the company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties or other contingencies.

ACCELERATE DIAGNOSTICS, INC.

CONDENSED CONSOLIDATED

BALANCE SHEETS

(in thousands, except share data)

September December 30, 31,

2021 2020

Unaudited

ASSETS

Current assets:

Cash and cash equivalents $ 35,725 $ 35,781

Investments 21,299 32,488

Trade accounts receivable 2,269 1,550

Inventory 9,732 9,216

Prepaid expenses 978 1,172

Other current assets 1,513 1,780

Total current assets 71,516 81,987

Property and equipment, net 5,143 6,135

Right of use assets 2,679 3,183

Other non-current assets 1,823 2,120

Total assets $ 81,161 $ 93,425

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accounts payable $ 2,330 $ 1,290

Accrued liabilities 3,572 2,991

Accrued interest 143 1,262

Deferred revenue 469 376

Current portion of long-term debt 352 553

Current operating lease liability 645 497

Total current liabilities 7,511 6,969

Non-current operating lease liability 2,569 3,063

Other non-current liabilities 678 335

Long-term debt 72 4,659

Convertible notes 110,078 141,211

Total liabilities $ 120,908 $ 156,237

Commitments and contingencies

Stockholders' deficit:

Preferred shares, $0.001 par value;

5,000,000 preferred shares authorized with 2,636,364shares issued and outstanding on September 30, 2021 and 3 -5,000,000 preferred shares authorized with zero sharesissued and outstanding on December 31, 2020

Common stock, $0.001 par value;

100,000,000 common shares authorized with 64,937,030shares issued and outstanding on September 30, 2021 and 65 5885,000,000 common shares authorized with 57,607,939shares issued and outstanding on December 31, 2020

Contributed capital 553,134 475,072

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

Accumulated deficit (547,865) (492,966)

Accumulated other comprehensive income (17) 91

Total stockholders' deficit (39,747) (62,812)

Total liabilities and stockholders' deficit $ 81,161 $ 93,425

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,

2021 2020 2021 2020

Net sales $ 3,122 $ 3,588 $ 8,439 $ 8,056

Cost of sales 2,136 2,287 5,502 4,745

Gross profit 986 1,301 2,937 3,311

Costs and expenses:

Research and development 4,712 5,001 17,341 16,191

Sales, general and administrative 10,806 11,465 37,744 35,738

Total costs and expenses 15,518 16,466 55,085 51,929

Loss from operations (14,532) (15,165) (52,148) (48,618)

Other income (expense):

Interest expense (4,211) (3,955) (12,477) (11,540)

Gain on extinguishment of debt 9,840 - 9,840 -

Foreign currency exchange gain (loss) (78) 229 (238) 191

Interest income - 149 55 753

Other income (expense), net (5) (15) 69 (82)

Total other income (expense), net 5,546 (3,592) (2,751) (10,678)

Net loss before income taxes (8,986) (18,757) (54,899) (59,296)

Provision for income taxes - - - -

Net loss $ (8,986) $ (18,757) $ (54,899) $ (59,296)

Basic and diluted net loss per share $ (0.15) $ (0.33) $ (0.91) $ (1.07)

Weighted average shares outstanding 61,146 56,560 60,250 55,617

Other comprehensive loss:

Net loss $ (8,986) $ (18,757) $ (54,899) $ (59,296)

Net unrealized (loss) gain on debt securities available-for-sale (3) (117) (21) 62

Foreign currency translation adjustment (27) 71 (87) 90

Comprehensive loss $ (9,016) $ (18,803) $ (55,007) $ (59,144)

ACCELERATE DIAGNOSTICS, INC.

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

Unaudited

(in thousands)

Nine Months Ended

September 30, September 30,

2021 2020

Cash flows from operating activities:

Net loss $ (54,899) $ (59,296)

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

Depreciation and amortization 1,875 2,270

Amortization of investment discount 153 43

Equity-based compensation 19,058 12,291

Amortization of debt discount and issuance costs 9,250 8,256

(Gain) loss on disposal of property and equipment (202) 546

Contributions to deferred compensation plan (343) (248)

Gain on extinguishment of debt (10,680) -

(Increase) decrease in assets:

Accounts receivable (719) 532

Inventory and instruments in property and equipment (527) (1,734)

Prepaid expense and other 860 (1,267)

Increase (decrease) in liabilities:

Accounts payable 1,017 76

Accrued liabilities, and other (436) (759)

Accrued interest (1,059) (1,071)

Deferred revenue and income 93 67

Deferred compensation 343 240

Net cash used in operating activities (36,216) (40,051)

Cash flows from investing activities:

Purchases of equipment (202) (1,364)

Purchases of marketable securities (22,345) (44,589)

Maturities of marketable securities 33,601 41,707

Net cash provided by investing activities 11,054 (4,246)

Cash flows from financing activities:

Proceeds from issuance of common and preferred stock 22,640 -

Proceeds from exercise of options 1,456 4,458

Proceeds from issuance of common stocks under employee purchase plan 245 296

Proceeds from debt - 5,552

Payment of debt (6) (13)

Transaction costs related to debt exchange not yet paid 840 -

Net cash provided by financing activities 25,175 10,293

Effect of exchange rate on cash (69) 19

Increase (decrease) in cash and cash equivalents (56) (33,985)

Cash and cash equivalents, beginning of period 35,781 61,014

Cash and cash equivalents, end of period $ 35,725 $ 27,029

Nine Months Ended

September 30, September 30,

2021 2020

Non-cash investing activities:

Net transfer of instruments from inventory to property and equipment $ 508 $ 1,284

Supplemental cash flow information:

Interest paid $ 4,288 $ 4,288

Income taxes paid, net of refunds $ - $ 46

Extinguishment of Convertible Senior Notes through issuance of common stock $ 34,545 $ -

See accompanying notes to condensed consolidated financial statements.

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SOURCE Accelerate Diagnostics, Inc.