- Earnings call transcript Q3 2022

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Operator

Good afternoon, and welcome to the Accelerate Diagnostics Inc.

Third Quarter 2022 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Mr. Jack Phillips, President and Chief Executive Officer. ahead. go Please

Laura Pierson

XXXX it during begin, the to that XXXX. Act share of Securities of Before Act Exchange call is may presented of of Securities the this XXA within Section contain information XXE Section the we of important and forward-looking meaning statements

company's report that Forward-looking are and are Form December Phillips. greater statements These cause reports those SEC. made now in that could are detail statements during about President discussed and other subject the historical my to not XXXX, this and for projections, in we future statements call ended and our year to CEO, is annual are with uncertainties risks, facts. the to It factors include conference results on materially. actual our Jack that All the our file forward-looking other XX-K pleasure XX, introduce differ

Jack Phillips

and call. the we our Good and Thank to third results. welcome our Laura. commercial third Dickinson Becton, discuss earnings quarter status will the quarter partnership, afternoon, of you, regulatory Arc call, today's progress everyone, On with

Before to providing Officer, Chief each additional Steve? results. Reichling I'd these quarter Steve third review financial our to our Financial it hand detail like to areas, on over of

Steve Reichling

$X.X This the several to were increases million next-generation line. purchase our to for year. prior Cost in investment due in platform. for in finalize slight the in during quarter to of year-to-date, Noncash represents of prior XX% of and year. result afternoon, SG&A compares This in quarter semi-automated goods in accelerating and of SG&A compensation periods year-to-date. periods million year-to-date. grow equipment other million the $X.X to excluding million $X.X This periods. production AST our the and $X.X million $XX.X these the This Noncash same you, $X.X to million periods $X.X resulted over year. and $X.X next-gen to compares the and $X.X were included This the R&D $X.X instruments same was million This quarter the compares million XX%, million respectively, consumable $X.X periods. $X.X margins sold in relatively Research the year-to-date. ASP for the margins cost and of consumable continue and expense same compensation expense to and of million compensation $XX decline and our increases and year-to-date. million and This the costs of the year. revenues quarter stock-based prior This million several periods million the and periods prior $X.X from next-generation $X.X is These cost million were the the in the expense, noncash the the compensation from $X.X comparable stock-based same year-to-date. same recurring gross $XX.X This $X.X million unchanged were of sold year. Research from of The million from gross everyone. and million million million in million to million R&D to general and million million and year. from platform. AST compensation This and million prior in year. million in in and costs, and periods development the over the quarter-over-quarter the of for stock-based million $X.X the and prior prior a same included equipment $X.X This Selling, same were $XX.X from $XX to these goods and to the remains This quarter-over-quarter quarter for $X.X compensation the margins expenses, compensation million XX%, were and next-gen and $X.X $X.X in Thank compares expense year. $X.X noncash in expense the and capital in relatively prior periods year. respectively. periods same compares administrative in cost and million fluctuations for of costs, stock-based AST the XX% in from million $X.X were development prior Jack, Noncash timing $X.X factors. expense, $X XX% SG&A good $X.X and stock-based the year-to-date. unchanged the revenue. over remains finalize SG&A periods in quarter year-to-date. accelerating This instruments of million the was million noncash continued resulting stock-based decline inflation and $XX.X the and were our Meanwhile, from excluding the $X.X sales year-to-date. sequentially year. periods purchase on $XX.X the investment the expense, compares compares were stock-based Noncash year-to-date. million Net million million to from million for in decline $XX.X the prior same the result quarter compares quarter and $X.X in semi-automated These growth and gross $X.X quarter excluding for and line. million to compares

excluding quarter stock-based loss, the $XX.X compensation year-to-date. Our and expense was $XX.X net for million noncash million

quarter fourth million for loss million million This outstanding quarterly was hope force, the net and significant year-to-date, to remains used debt we loss quarter the sales $XX.X and the of quarter. $XX.X burn in XXXX. of reduce We resolve direct the the from $X.XX holders. GAAP cash cash to address overhang and of a reduction approximately respectively. that that After debt, year-to-date, working resulting recent net on flows and to financing. we with the our ended Based equitizing million. and are Our a quarter with million $XX.X cash share investments $XX.X of and due of our cooperation $X.XX, remains starting of Net excluding per a diligently in March refinancing million for $XX anticipate in the $XX.X was convertible majority have our we

However, no is markets, terms there any be. guarantee these might what regarding difficult of resolution in

reminder, from $X million announced financing a previously a round we to after have extensions. insider December several As now in due us

review the $XX to upon our fee Becton, to the detail. to will term addition, global back hand greater In with the over license $X in commercialization. million fee. commercial to third agreement the results quarter to be be partnership Dickinson, Over now I a it includes This with upfront paid Jack. million of of first is start exclusive our you, paid Jack

Jack Phillips

levels. of will and turn Thanks, Steve. development. commercial quickly next-generation Arc ability I on of a consumable more business. on to BD hospital a lab footing the in infection third to new throughout our result, This technicians. slower levels conditions recover and And been our close normalizing quarter contributed of is the buzz partnership results cover result to the In and products and Hospitals patient hospital, a a bloodstream post-pandemic testing slowly has and This quarter, mix seeing resulting partnership. impact gradually updates platform improve. to as continued return AST hospital's from growing the regaining our environment we hospital to continues What This to adequate projects. to Record BD purchases. slowly our has negatively lack their staffing their customer is global full our including high predictable new rates pre-pandemic then for third see take selling persist, to turnover vacancy ability improve. are

customers our together. both time as the free challenge the installed a leader team an end-to-end hospital another instruments brought scarce a live. implementation. current U.S. backlog integration, X BD to up Despite result in new of ended and instruments focus X and bolstered the about smaller Our and a potential Pheno we products of bringing base with Pheno opportunity. We instruments product contracted solutions and pending this quarter resources. Pheno BD offer portfolios a counterparts improved with Accelerate's BD Since revenue-generating U.S. automation at a the sales to staffing XXX from Pheno instruments feedback on XX announcing and X of and challenges, significant have positive lab see received is partnership, can workflow reduce prospective

steady. several these accounts Additionally, regulatory discussions Clearly, evaluations with Arc commercial and quarter, commercial predated annuity on the grew the several new per FDA. Arc contracted several of during customers moved status ongoing we added added activity to customers evaluations. Arc our I We In U.S. Arc after and successful expand due upon and the live pause momentarily. remained the clinically contracting to progress our commercial customer. in will EMEA, regulatory

internal our regulatory we of in we factors in with instruments during In Arc We recent to consistent also quarter. the FDA sold been status for global contributed U.S. announced These with revenues the the regarding quarter. the October, the that have discussions Arc several forecast

result into These these like us with registration and a XXX(k). the getting I to concentrates X to Class collaborative will are they on to and assessment, be a It Class status devices code marketed Class premarket as simpler category require through with also with a is process which likely as a our pathways and diagnostic FDA specific a and for Class unique the II II to the bit another file. acknowledged claims. in The registered resolution, Class impacts, and the to results. downstream and provide Arc Before FDA and Class that a is legally After but II known vitro diagnostic we demonstrate specific Arc current the provides I'd don't FDA are diagnostic determined and therefore, Based the history. similar devices to market, in discussions creating and product There near-term to context the it other discussions, registered creates no would adds risk devices. of value Arc FDA. equivalents regulatory diagnostic Arc can applications. such path in file X it lower present samples of a clearance. manufacturer new as a be under confer generally for device a XXX(k). device clean devices unique device directly approval X like regulatory

in the particulars submitted associated and to near commercialize EMEA. in time in We to United efforts has States the efforts dialogue sales be no our Arc data complicates In lines. impact around news term, but this are on of active the still

sell operational customers revenue in in remains pending mentioned below the now the and at U.S. Cedars-Sinai workflows. experience a lab EMEA we In is and in not to our quarter to a As time, publish Director any recent pellet some functions We with experimental instruments how the during revenue usable, million problems, and positive year. for FDA setting of Europe, discussions XXXX a to improving first ongoing leading fourth hold. with on lab million in on sold we could to XX% in the contracting It impacts the our estimate supplies the TODAY CAP to BD's system due we've with of continue end nonviable Pathology several are assessment capital plan the continue Medicine have basis soon much $XX and on the of a sites had just potential to research-use-only issues. close team In has instrument now delayed expect Arc our too on there stated generate to and and U.S., the for Arc. for opportunities, to come an They evaluation without liquid the data to Morgan, will we quarter. low Microbiology, product which compensate. to previously, we had guidance which of Due the goals, the any Margie significant a in $XX article, XXXX efficiency Arc Laboratory Clinical these the met in phase, the work

Becton, joining exclusive We They fully revenues. world the have at BD in BD. most commercial have the formation global forces Last Nearly products. microbiology with with throughout is quarter, and with recap, transparent with of to this fully of they lab countries customers indicated leader BD Dickinson. X in are partnership over have global spanning every we To there clinical process, an $X.X one partnership. remain of thousands annual in microbiology the committed for billion globally. the drivers they their been least announced uses

both commercial abroad. and to our the improve reach, First, U.S. significantly in

products; of Second, collaborate combining improve effectiveness our and with suite to innovation. by offerings selling BD on to lastly, the future

into the for in commercial translate partnership Now to into we integration believe process, deep market greater penetration will continue companies. higher both this sales resulting

and leadership we of teams. members had months, BD to past access have the few significant During their sales global sales

U.S., are BD the in with is microbiology. by Becton, we distribution direct global nearly continue States. complete. force coverage be force on the has East. call broad has their the a network. them on sales country. sales force alignment in coverage expertise is of largest of even to outside revenues a large Accelerate's. Xx XX more of direct and Currently, is countries States, global of and sales breadth. in the Their on Training EMEA the United size and We powerhouse their of in the go-to-market lab their microbiology the Middle in and United to are expansion allows Outside BD our of profound. reps over its impressed In and the XXX some logistics XX% sales Dickinson products strategies every Europe

entering effectiveness. greater for and driver and deal economics close stakeholder higher second anticipate rates is agreement our the product to access We improve through commercial into improved synergies. The

off we existing we are are officially kicked are prospective and and already drive we Accelerate's the market share the for growth. BD's being portfolio of through seeing interest While end-to-end microbiology efforts, creating to addition joint haven't BD's from broad With doors best commercial relationships. solutions products, customers opened inbound

is The system. the lab has days our this driver to to interest particular discussions on on scoping of third partnership Synapsis software products connect There partnership BD's Synopsys for is begun. to product these in future development early Early efforts. entering collaborate

next-generation there excitement Additionally, our is development. around platform

finalized, the user and has more analyzing and on and The we began are graphic and interface lock consumable. units alpha been data. design built, achieved several running samples now have We instrument

in Given the launch data U.S. would XXXX. months. increasingly confident to trial date, our XX on on This a progress are to to for blood XX a in us put on have we clinical ability positive readout track

high susceptibility system XXx next-gen throughput As at and all volumes. system of will turn, this over testing. this margins. AST testing is material In bring low annuities This cost to increases a Pheno's addressable reminder, the address a increase design current gross higher will

an cash and initially do, U.S. longer not staffing beyond. in driving toward higher in commercial Arc this are with BD, Arc each pause are we workflow on benefits and see Pheno burn early at We to are upcoming in selling headwinds In significantly improved the Accordingly, challenges be of represent the bump we maturity to summary, for debt efficiently reduced partnership commercialization going in current XXXX. resolve EMEA are Pheno this expecting working important in in success which the day. U.S., revenues in from the live believe only fiscal customer We commercially contracting, a materially the resolved however, device. Arc any hospitals plus speed the term, and years potential XXXX year. We and situation will and

in Our several the to And resolve by the we the our can overhang company partnership bringing increase shortages. most and everything structure, tough a breadth through we with BD are significant labor over will today's effectiveness faced solutions with past years. commercial to our capital to respect doing workflow market

these on and these delivering We send are made I a you success we great have their to priorities be now from enthusiastic and others laser the addressed, on investors@axdx.com. remain the ensuring next-generation for a would welcome progress a our analysts. quarter to focus AST request not questions market-leading system. maintaining to about to questions call during BD meeting potential on transform would questions company. follow-on answer the Should happy or We

Operator

[Operator Instructions].

William first comes Brackmann question with Andrew Blair. Your from

Andrew Brackmann

back a sort that the just Anything BD bit bring there a those maybe together the more call about onion detail ongoings about a the you early here you the Certainly, in, about talked a out success just to few months lot But signs relationship. peel of can little particular of want of some talk bit in and maybe you've might of the there. in here? script you teams as just with

Jack Phillips

this -- question. one BD that Yes, the thought Steve top. Gosh, in I can't can jump Thanks everything take collaboration say would would about our Andrew. to it the had be enough wonderful with start love I the with It's that appropriate. frankly Sure, BD partnership. for we've where I great and from that

leadership all U.S. in and phenomenal in the the senior EMEA, been organizations, the down from both it's really So way through commercial collaboration.

a you I specifics, set give of guess Andrew. me few both first Let have organizations project offices. all, up

the a companies The is proper One and bloodstream efforts to for BD have tremendous the both really market both impact dedicated right in the both of in bloodstream we're leader on that's story, our the the our with is really areas. a We together now products leader, Accelerate with on Accelerate BD U.S. within number senior organization organizations as in solutions. infection and doing products EMEA. the work does leading the focused putting align have, repositioning marketing can infection that across

proposals, I solutions been BD training, that to next also in this this we've would is And The aspects are of the EMEA. you Athens, December. training sales on week there, your working face-to-face things, So put well -- And I many as through the EMEA. and wonderful work you we'll the et happen I well. be together to point looking first we're a be with team early organizations cetera. We've cetera, ongoing. say organizations there. In the modules learn the then do sales Does from we team as Andrew? different collected commercially for say training BD that in region Accelerate will Can XXXX. bringing that been would sales week the BD do and go in Florida our training we of done U.S. there? U.S., training training. virtually how products that, We've meeting then the et working comment folks. also on-site is actually going the how been sales together, training for Athens more provide with -- and Greece, the here That's and any And is answer together And wonderful do doing actively in then deals, we'll put back-office and at from there's the question, in that as doing is there, next type team live color about month,

Andrew Brackmann

so guys on, to lot was great. you updates. excited And for that No, working those about certainly to be hear a

maybe on how to of and As that view EMEA just us you can particularly level relates it Arc, set Europe. sort you product, in

the you I of think talked prevalence sort the of here? update in past, about of in on opportunity. maybe there sort of situation sort the Can an give you MALDI of about thinking and FDA just you're how us light that market

Jack Phillips

Yes. Sure. Sure.

paused So on our we efforts market be EMEA. my I indicated work comments, The in in impact the not does clear, to U.S. in doing EMEA. as in we're prepared are U.S. FDA it's the that just

as been Europe using Those for very ago European launching countries units under platform for is be as those Middle samples. that there, across MALDI getting will in to well we of -- they are MALDI. right very, regard Arc ago in solid Arc I There again, market Italy. and we will EMEA. we Those prepare for preparing EMEA say evaluation. to all the the the couple for end in no in East. for live well-established very, with Europe a And are opportunity as already have expect are Middle automation Arc or front most we there month now we in countries right same in X a very now. preparing using a MALDI and is front-end expect would sold So tremendous to would valuable the MALDI is be months East. a -- -- We've -- X And have

Andrew Brackmann

providing as dealing sort relates Okay. you diligence due some just updates going I be of said, of one should converts? sort guys it with million around through you're March last Steve, think the And me. we for sounds to How of 'XX. then thinking and about you it it's that. $XX with like the work steps still

Steve Reichling

focus work existing X same at It's is and daily Yes. of the time, a Jack, there's working One we're and mine with venture around certainly bondholders. debt. our of streams And there. opportunities we're significant pursuing

as is reasonable resolution. it and And can so probably optimistic right a I that's detail ours, much focus but a are provide we now, of as laser of

Operator

comes Your Alex Group. Creek with next Nowak from Capital question Hallum

Connor Stevenson

Connor on Alex. starting guess is for This on expenses. first I just

from on quarterly here as get Just early not 'XX. some a more basis just might especially into the going and where granularity until OpEx BD can go on relationship just 'XX, spend

to kind of hear preserve be some pull term can Just here. to levers the helpful cash in you some short

Jack Phillips

ahead and Steve, do that? take want you go to

Steve Reichling

Sure.

mentioned So reduce partnership and thing is our like say, to the sales opportunity script, the we first in to is marketing. the an BD

net a we'll measures a And Also external We'll expect money to we to to and are be reduction to the year coming has for fourth have so new material with of the down And expense, engineers. the R&D, in that program we've a in wait that, see third-party that's taken the offset in we've in clinical trials. heavy AST than will net -- roll that, But far. undetermined that we'll spent expecting benefits in reduction have come out some to yet the quarter. very our year, was probably take when a it guidance. there. down next-generation aided lot by start some with for done cash external January this interest we for a which burn But burn, degree work of engineering level the deeper we on our it thus convert also on been and

Connor Stevenson

it. Got

is Okay. on products kind the going planning into also maybe can Accelerate a bit to portfolio? their AXDX speak is incorporate portfolio microbiology internal maybe prep BD's prioritization channels. how to any of the initiatives own their kind into sense. That on of all just And to to to against stack BD to getting up speak going BD workflow you makes at products just Accelerate's speak little Maybe how

Jack Phillips

No Connor. problem, Sure.

guess, I'll take couple one last of So the things. first. I a

new excitement been very together and are prior has way team, to As Accelerate they're the effort, really like sell I great things putting here, their something with and product mentioned overall and but bullish all to to be partnering having plans in leading products new sales for having with the excited very our BD that important something incorporate also that most for any portfolio. and -- the sales into BD, commission We're targets organization. through

this have far the Pheno, into story, the Bruker. will to as then with as is ability And that as starts end-to-end together And incorporation which brings type AST that and with to distribution As BD's as But well frankly. improving headline be for that focused for that big overall solutions them. and that's world partnership, something It will in their through their are Arc. the solution. a areas helpful that, BD's mean they microbiology culture identification, areas solutions. rapid with products, The the will of AST, have in EMEA. blood they I is bring are up MALDI with fit solution, Phoenix billion -- shoring Accelerate rapid largest with Again, well slower It that, again, nicely their in player the great very were they $X.X products focused is very in tremendous revenue. the that BD be

Class conjunction we MALDI going their As to II filing into for to platform. with be through clearly likely we're to the a with working used go be in a going Arc the get U.S., through FDA

at much of say something overall I that with are that This again, solutions working and BD anyway, would now. story. right part looking total very is is year, bloodstream recrafting and part Accelerate infection that on launching their be that, the they're that they'll So first solution refresh of of our the a

Connor Stevenson

Got it.

Okay. quick That's more just guess one then helpful. I And one.

at straightforward. On needs kind pulling the pretty the RUO. those like those used be you off And of done mean, are clinical get the what relabeled of to kind Those Use can are where Arcs I to kind market? on being is of just as stay then that academia, arcs with market. in that

Jack Phillips

Yes.

to They So for already the systems properly now need straightforward of be process we're relabeled, be right likely all sites forward kits we'll those products to that and that sites is well as of kits. RUO those product. Internally, systems answer And repurpose will any the RUO. the it's not with be kind the fairly clinical on, to maintaining to and remove relabeling RUO already shipping moving we'll RUO be in prior as started clinical which them. complete be that our we've from pausing will to then

Operator

I closing remarks. This concludes Mr. and to would back any for question answer like conference turn to the over Phillips our session.

Jack Phillips

for with in to the close and thank the shareholders Thank for Yes. for you and well very doing much, dialing our customers, you our Pheno all the thanking the marketplace. by questions. that dedicated like they're are and as analysts today in first I'd just customers committed work the

we make tremendous rapid testing. up want impact day as to shareholders day to to through a continue they're lives build of great for ID a be showing committed every and employees on a great company. work the of susceptibility our out, recognize day, We to patients We And have the really difference. in and continue our to

is to BD. The my to tremendous way on well our more the have We're wild a globally. successful innovation a milestones. -- really deliver on launched area We is priorities. BD our plan getting we're and make success We next with next-generation a One partner for than remarks, clear commercial I've to that. couldn't X on partnership said as to BD our we're doing way in ask well

really continue to make We progress there. good

alpha will soon. very And progress, We're development moving, assay to and debt here to hope be year. be as overhang, near-term continues work We lastly, resolution in to alpha that be X look bring our and hopefully, to the over about and next running and have Steve to are units. a Tucson. up we we that clinical mentioned, units here in We studies to addressing then

So Bye-bye. a I'll forward moving for Accelerate. forward here that, to support, anyway, again Thank with you things and end lot. with good the Thanks your look call.

Operator

today's attending The conference presentation. has Thank for now you concluded.

now disconnect. may You

Accelerate Diagnostics (AXDX) 15 Nov 222022 Q3 Earnings call transcript