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Accelerate Diagnostics, Inc (AXDX)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 net sales were $3.0M (-9% YoY) with gross margin improving sharply to 29% from 3% a year ago, driven by mix and absence of prior-year inventory write-down; net loss was $14.6M (-$0.59 EPS) .
  • WAVE clinical trial progressed as planned; management expects FDA submission in Q1 2025 with an ~9-month review timeline, framing the next major catalyst .
  • Arc received FDA 510(k) clearance; commercial launch underway with BD, though management declined to guide on Arc revenue contributions given early launch dynamics .
  • Cash usage fell to ~$5.5M in Q3 (net of financing) and management reiterated ~$5M quarterly burn guidance; company anticipates runway through YE 2025 assuming contingent partnership payments .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion to 29% (vs. 3% LY) on mix and no inventory write-down; consumables grew ~9% YoY, highlighting improved unit economics and recurring revenue resilience .
  • WAVE clinical trial on track with strong reliability; “We anticipate submitting to the FDA in Q1 of 2025 with a review timeline of approximately 9 months” .
  • Arc 510(k) clearance and positive customer receptivity; “Customer receptivity is high…turn MALDI into a rapid ID solution for labs is resonating quite well” .

What Went Wrong

  • Total net sales declined YoY ($3.0M vs. $3.3M) on lower instrument sales, demonstrating near-term capital sales headwinds despite consumable growth .
  • Continued GAAP losses (-$14.6M; -$0.59 EPS), with high interest expense and fair value adjustments impacting below-the-line items .
  • No financial guidance for Arc ramp or revenue; reliance on contingent cash inflows and a sizable stockholders’ deficit highlight balance sheet risk until WAVE and Arc scale .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Net Sales ($USD Millions)$2.921 $2.986 $2.975
Gross Profit ($USD Millions)$0.723 $0.676 $0.856
Gross Margin (%)25.0% 23.0% 28.8% (~29%)
Loss from Operations ($USD Millions)$(10.156) $(8.606) $(8.618)
Net Income (Loss) ($USD Millions)$(16.965) $(11.588) $(14.639)
EPS (Basic, $)$(0.88) $(0.50) $(0.59)
Operating Expenses ($USD Millions)Q1 2024Q2 2024Q3 2024
SG&A$5.706 $5.379 $5.636
R&D$5.173 $3.903 $3.838
Non-GAAP (Company-reported reconciliations) ($USD Millions)Q1 2024Q2 2024Q3 2024
SG&A less SBC$4.846 $4.611 $4.673
R&D less SBC$4.794 $3.739 $3.656
Loss from operations less SBC (and inv. write-down where applicable)$8.859 $7.640 $7.463

KPIs

KPIQ1 2024Q2 2024Q3 2024
Clinically live revenue-generating Pheno instruments (U.S.)348 350 352
Contracted instruments in implementation (U.S.)75 74 77
% of U.S. Pheno customers secured via contract extensions ahead of WAVE~70% ~75% ~75%
Consumables YoY growth+7% +12% +9%
Cash & Cash Equivalents ($USD Millions)$14.606 $8.588 $19.691
Cash Used (net of financing) ($USD Millions)~$9.0 ~$8.7 ~$5.5

Notes:

  • Segment breakdown: Company does not provide segment reporting in Q3 materials .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
WAVE FDA Submission TimingRegulatory“Later this year” (FY2024) Q1 2025; ~9-month FDA review timeline Lowered (timing pushed)
Cash Burn TargetOngoing~$5M/quarter target (set in Q2) ~$5M/quarter reiterated Maintained
Liquidity RunwayThrough 2025“Fund through 2025” after $15M raise Sufficient operating cash through YE 2025, contingent on contractual payments Maintained (with caveat)
Arc Revenue Guidance2025+None“Too early to provide guidance” Maintained (no guidance)
U.S. Pheno Customer Contract Extensions (ahead of WAVE)Pre-Launch~70% (Q1) ~75% (Q2–Q3) Raised (Q1→Q2), Maintained (Q2→Q3)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2024)Trend
WAVE clinical performance & timelinePreclinical success; EA/CA ~95%; clinical trial start imminent (Q2) Clinical trial on track; external sites performing to expectations; FDA submission Q1’25; ~9-month review Advancing; timeline clarified to Q1’25 submission
Arc progressFDA submission in review; Bruker collaboration positive (Q1) 510(k) clearance; early launch with BD; high customer receptivity; no revenue guidance Commercialization begins; adoption signs positive
Commercial strategy & customer conversionContract extensions, installed base growth; BD placements (Q1–Q2) Majority of existing Pheno customers expected to convert to WAVE post-approval Conversion narrative strengthening
Cash burn & liquidityTargeting ~$5M/quarter; incremental financing to fund through 2025 (Q2) Cash used down to ~$5.5M; reiterate ~$5M target; runway through YE 2025 with contingent payments Cost discipline improving; runway reiterated
Technology positioning (MALDI vs. syndromic)Optionality: MALDI rapid via Arc; syndromic molecular ID pairing with WAVE (Q1) Labs can pair existing ID (MALDI or syndromic) with WAVE rapid AST; Arc automates MALDI prep Consistent; operationalization underway

Management Commentary

  • “We anticipate submitting to the FDA in Q1 of 2025 with a review timeline of approximately 9 months.” — Jack Phillips, CEO .
  • “Customer receptivity is high…turn MALDI into a rapid ID solution for labs is something that’s resonating quite well.” — Jack Phillips (Arc launch) .
  • “Gross margin was approximately 29% for the quarter…driven by both product mix as well as an inventory write-down in the prior period.” — David Patience, CFO .
  • “We see a $5 million per quarter use of cash on a go-forward basis…we are focused on that every single day.” — David Patience .

Q&A Highlights

  • WAVE conversion plan: Management expects to “convert the majority of our existing Pheno customers to WAVE once we launch,” supported by ongoing education and long-term contracts .
  • Arc commercialization: Sales force fully trained; strong early interest; management declined to give financial guidance given early launch .
  • Cash burn and 2025 outlook: Q3 cash used improved with working capital gains; company remains focused on ~$5M/quarter burn; runway through YE 2025 with contingent payments .

Estimates Context

  • Wall Street consensus estimates via S&P Global for AXDX could not be retrieved due to missing mapping in our SPGI/CIQ system. As a result, revenue and EPS consensus comparisons are unavailable at this time. Values would normally be retrieved from S&P Global; consensus data was unavailable.
  • Given the lack of consensus, we cannot assess beats/misses vs. Street for Q3 2024. Focus remains on YoY/QQ trends and qualitative catalysts [GetEstimates error noted].

Key Takeaways for Investors

  • Margin trajectory improved meaningfully (29% in Q3 vs. 23% in Q2), with consumables growing and Opex trending down; watch sustainability as WAVE ramps .
  • Regulatory catalyst path is defined: WAVE FDA submission planned for Q1 2025 with ~9-month review; stock sensitivity likely around submission and FDA interactions .
  • Arc is a near-term commercial lever post-510(k), enabling rapid MALDI ID; early interest positive, but lack of financial guidance suggests gradual ramp risk; monitor BD channel execution .
  • Liquidity improved Q3 (cash to $19.7M); burn trending toward ~$5M/quarter target; runway through YE 2025 assumes contingent inflows—track partner payments and working capital .
  • Installed base and contract extensions provide a conversion foundation (≈75% of U.S. Pheno customers secured), potentially smoothing initial WAVE uptake once approved .
  • Balance sheet remains levered with stockholders’ deficit; below-the-line items (interest expense, fair value adjustments) can drive EPS volatility—focus on operating metrics and cash burn .
  • Trading setup: near-term narrative likely driven by Arc adoption evidence and WAVE clinical/filing milestones; lack of Street estimates reduces “beat/miss” catalysts, increasing importance of qualitative updates .