Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the Accelerate Diagnostics Incorporated 2023 Q1 Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be a question-and-answer session. Please note, this event is being recorded.

I would now like to turn the conference over to Laura Pierson of Accelerate Diagnostics. 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

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

pleasure now CEO, company's President my is the to and introduce Phillips. Jack It

Jack Phillips

you, quarter first important commentary our several to quarter. during Good earnings focus strategic afternoon, quarter the call. updates results, Thank and on welcome our three will include focus on and progress first call our priorities. Laura. on will Today's My

and strength. financial obligation current debt while our operational cash restructuring burn, our building This improving includes our First, reducing efficiency.

priority is Dickinson And delivering market we share to through partnership. generation on advancing our on Wave. are Becton focused our by grow thirdly, innovation next second platform, Our susceptibility

of David? Before David results. Patience, Officer, Financial areas, providing our hand I quarter detail to on financial our Chief these it to additional each would over like to first review

David Patience

XX revenue-generating implementation. another of three ended Pheno afternoon, pending Pheno We good install Pheno instruments and Jack, the a brought backlog and quarter, a XXX quarter US you, In XX with base the of instruments new Thank instruments first the instruments and everyone. contracted live.

were was by contracted our period million was to new $X.X year-over-year the Becton decrease we the approximately This approximately compared in soft activity a quarter sales contracting $X million driven ramp to for first of with As up. the in Pheno XXXX. quarter, quarter. in accounts Net slight the first as new Dickinson continues for commercial lack expected, same current

were a the $X.X sold sold margin cost period of Cost or in of million the of XX%. quarter, resulting million in first XXXX. XX% $X.X same margin gross in a of goods in of This compares goods the gross

in from several instrument with acquisitions product resulted gross increase Our margin with associated the capital quarter inventory. mix, during zero-cost

of compared administrative $XX.X related expense compensation debt to $XXX,XXX over Selling, $X.X increased expenses. million, was non-cash Non-cash stock-based SG&A million of in forfeiture general for million the in period quarter This and due period, same expenses, XXXX. to for and compensation the $X.X expense first restructuring executive compared compensation. prior the a to excluding SG&A for benefit to XXXX. stock-based quarter non-cash expenses due was in subsequent turnover was the

instrument, $X.X the was million compensation in and This expense Wave. of susceptibility Research to from non-cash period $X.X compared result in in as the the compensation prior million R&D, stock-based first costs, XXXX, of was for quarter for to same excluding quarter compared million Non-cash million the same stock-based next our investment period XXXX. expense increased for the $X.X further the $X.X increase in development to year. generation

Our expense. non-cash million net $XX.X stock-based loss was excluding compensation

expenses ended quarter, of The first was during the $XX.X loss cash $X.XX. in the net company net with GAAP for per included loss cash $XX.X quarter of which quarter, debt the for resulting million and million quarter. investments a Our $XX.X the was share million. use Net restructuring

to Jack. Now, back you,

Jack Phillips

make Starting notes, XX% shareholder. strategic strength, Agreement, continue through important as Restructuring David. a of our we now this debt to our with matured which by would our like to growth partnership, and financial share an largest strength, on became priorities, our Thanks, innovation with as market Dickinson which and of turn on Wave. XX, restructuring, I Becton well March payable XX three delivering senior agreement year, on secured to on April Support progress is financial and with due convertible RSA, or announcing our recently X.X% advancing

of we structure. our part able the have been simplify our outstanding debt and lower to proposed As transaction, capital overall

Secondly, convertible to debt years. our we And extend our efforts. development outstanding in secured million new another $XX finally, capital X.X fund

are on approval transaction. soon debt close expecting seek We sign this remaining and shareholder the we facilitate transaction as to to the holders

our operational our In reducing continue. our restructuring, burn and debt finalizing addition on efficiency to cash focus will improving

our quarter of in March. now launch we are the EMEA partnership. partnership four encouraged. growing Becton of Last priority, January very in market Dickinson to commercial and share an about through US months selling US we the next the starting Moving on discussed our call, After activities,

the Arc and complete the Pheno our successful with of market. integration opportunities, to near-term the bloodstream only the launched into portfolio, decision ensure into led existing was partnership. combating microbiology of was the the focus infections BD workflow right it With launch Pheno for to delays This some but end-to-end

commercial BD. progress our to on with Moving

As future a to our drivers principal for effectiveness First, abroad; reach, in by the close with offerings US joining BD improve commercial to forces the BD: accounts; are with second, lastly, quick there innovation. us both and improve to combining reminder, and portfolio our selling three collaborate to more on significantly our

EMEA. as being first reach days in with of US as We months launched early commercial within with several well are pleased partnership the in the our improved the the

We as the the commercial during US XXXX. opportunities Pheno the throughout the as all as reach new those are turning In calls quarter, did seeing volume as with first and well new improvements we nearly of of are funnel we alone, Pheno opportunities. into to calls tracking closely added sales many big

sales effectiveness, through capture. account and are measuring Turning progression, ultimately effectiveness to funnel funnel selling we velocity

led a prior and We funnel stage meaningful year. increase and in the contracts progression, has which quotes to seeing presented are significant developed compared to being

long-term entered In with quarter to in since why significant partnership a pandemic. beyond, and Dickinson. exactly expecting not are into seen the two prior a is increase placements deliver we Becton to This we

enthusiasm at the in ECCMID, portfolio, microbiology congress, workflow with month. was In of Copenhagen for campaign end-to-end customer solutions. global largest By breadth the we Pheno clear with last and Accelerate's launched Arc EMEA, BD's bloodstream showcasing BD along infection complete microbiology the

prospective Many were implementing offering and which contract to eager the contracting to simplified BSI customer led ease BSI has will current for a include improve to discuss speed adoption. ordering portfolio, This customers combined the solution. of and and

to to June. specifically Italy more journal. will in coming peer-reviewed Arc, customer author Arc presenting full publish a Microbe on from also poster European a Turning a workflow the study up a readout ASM at in The intends be

in our US for will an clear We leverage customer's a as cultures. efforts selling EMEA the future. Bringing there are for remains this cost-effective as positive blood sample part priority to preparation of the automated, demand in work market good Arc solution

a As continue remain Class XXX(k) discussed the on FDA pursue and Arc II to we active our as device with dialogue. in prior calls,

begin We until will not have trials. the in forecasted we clinical a US launch date

efforts BD future product development early a is of collaboration Lastly, on partnership, and with on progress our made remains being number focus fronts. a

to our innovation comments generation my next priority, strategic our platform, turning with delivering Wave. third Now

We make very good progress our to continue with program. Wave development

over quite development in and has previously, and up reliability exciting As lab. discussed of the have Early our very promising. we and XX sped significantly instruments, produced data running which good alpha core is instrument our up being is is efforts. are This taken very delivery

sample a and rapid the test system susceptibility a on isolated positive Pheno. blood reminder, and culture with other samples As to results platform platform for able improved types significantly colony Wave provide will economics both single over be

which labs fully has Wave The scalable, is and a multiple from access The modules by system and to a module. is volume all and samples integrate system complete can in running XX larger random into small medium adoption allows system manage while single needs. of one capable shift labs workflow necessary single easy

advantage traditional today. susceptibility isolated-based confirmed platforms a have superior have approach over market on Our will customers a consolidated the

Wave expands our Accelerate, restating For platform wallet customer, revenue and share our economics. significantly per while

by pre-clinical the clinical is start target year of shortly end and to trials deliver our Our the a readout thereafter. data

summary, QX our our were can optimistic beyond. capital, restructuring the core of In XXXX expectations solely we securing line business additional in focus and very By and we remainder debt driving with on about are priorities. and our results new

Our BD good to and off continue start to partnership is momentum. gain with a will

are R&D, Wave and regulatory, achieving milestones. organizations key laser-focused manufacturing on and Our development

Thank we to send the call on support you. future scale answer I on be and our not would happy you course, Should meeting now focus or questions a of And business to to to growth. to request we and today, others up continue analysts. welcome processes have infrastructure, organizational investors@axdx.com. talent, questions our addressed for follow-up these will from would questions

Operator

We'll now the question-and-answer session. begin

comes question go ahead. first Brackmann Blair. Please from The William with Andrew

Andrew Brackmann

us back of exactly the that BD the some and Good types momentum see a you're on talked momentum? to here Can taking starting to you bit tell little customer in starting guys. Jack, where onion you're terms maybe interest commercialization front. the specific afternoon, there increased question. for Anything about peel with seeing the Hi, that you see there? where thanks you're

Jack Phillips

Sure. the is Yes, Andrew good opening the in with question. I as my momentum remarks, building said and activity really appreciate BD.

entire mentioned, so forth. a I large and As organization January. an people, been sales We've trained of since regions, we've of number live

And now is so into what and more the we're starting to more see funnel. accounts coming

system see really, Specifically, relationship we're they or getting BD some where getting accounts, starting blood have those systems they We're entry. be already accounts in place, naturally strong cases, access. I success We're culture US. with the reach. mean, as With getting we're has even, that they're early, where systems I the Phoenix be across whether it is it a systems the to BD have very susceptibility whether or MALDI in well. They're in really mean, where early

just support of those very we're calls, to quickly built sales through team our and that of And go accounts where the in are the only because We're already to in into the trust also starting introductory been immediately, people, get advancing the not small are with BD BD. funnel because specialists the relationships, rapidly but very sales able of that's become dialogue.

and we're halfway we're the so, and what happen as what And we here, seeing is two quarter believe what quarter, we will talked I've about into and we're almost is through more move the funnel more throughout year. and more and progression the account QX then, then and QX, funnel through we and start going progress ultimately, funnel, closes more seeing to as growth, again,

Andrew Brackmann

step the That's critical a back sounds what get about just of progressing to are to of successful And efforts to high take are good does Wave with just and customers? here, of just sort the market? your Maybe that steps perfect talk size like just sort a then with maybe things if that this to hear. you're there, about it you Thanks. here Can sort talk to level needed opportunity there. and nicely turning development to

Jack Phillips

Yes, absolutely.

we've of a that and learned that and in Wave? different So, innovative AI why second relative but on capture, a part combination, Let Pheno. -- And is years. we've builds already. Wave first. me using that take all platform actual great that on is the Wave throughput, that the technology We're over to that to reminder built new it's organism that mean, ID and we're a just testing to rapid the the of significant experience AST I completely or bug-drug using image access, of we our have relative random the learnings unique system and than amount

standpoint, that our a of and we're will And model position way sold able overall the because cost capture then to of business from images. cost change also goods dramatically Wave

within allow but segment also samples today they much will allow broader rapid positive much higher acuity, our segment. will Wave, then, will volume that the have and that which their future within also open isolate level, higher other that only we So is have us market much culture, testing to it only is is we're It significantly not the Wave, compete with but much microbiology, happen clearly consolidate It bring blood which volume we a with will footprint culture, in in customers with next to on will not expand much, it up laboratory this be will believe testing the together. to take that doing microbiology. lower the also instrumentation in blood the to Pheno, but today which positive and available opportunity what

the as the with way goes, far program progressing. is very As the program we're happy

good. we'll we're We look we have today, getting the units we'll doing. expect those -- QX. already studies there, to the The today pre-clinical as in that well. then very is started over on samples we'll prepare pre-clinical on over on the that And working live readout XX thereafter. for be trial Andrew, at our produce really be to We'll our good is, coming we from prepare getting And sometime clinical systems trial having looks phase be prepare very laboratory, that next That From work looking but that clinical units our months. get results. in here we'll running beta there, on. We're clinical live and we're track. Reliability

Andrew Brackmann

get on just detail too, that, of then sounds that's done. confidence? that And to going say a for around recognize too last to that like one Perfect. that I sort the weeks announced high-level Okay. you ago, much you're increasingly few me, don't RSA Thanks. was it sort just you but maybe probably want a can of driving provide just what's on confident

Jack Phillips

Great. one. turn him over it let Yeah. I'll David that and to take

David Patience

thank Andrew, Sure. for you the question.

there question a the days, to want so I these is this and finalized that we're it's proposal. nothing's a So and lot pending a getting is start it transaction, that been

note restructuring support our with holders. what we is so vast have of we've as a And you to majority agreement a know, agreed here

once we on to And that announced, got three main was priorities. work really so subsequently

documentation we're holders to working was with us that note one to first transaction agreements both The the the the bring closure. this and on and subsequent

day. And said, the purchase so that so working as subsequent transactions part includes many every on we're that securities this agreements, there's proposal, I of as a and many

We RSA folks and is really, get active working getting go and that going deal. signers, on. It's more folks signed single will, work every day, our aren't current Secondarily, to that with you we're we're twofold. and signed on the this there progress on on ongoing yet dialogues with if to the

walking done. the them speed up conditions of Additionally, terms holders why the were it things transaction, of transactions, bringing certain on note kind are is the to of up going through the and those what series to

And have been so and dialogues. those good productive

our the is we are we proxy is as out next thirdly, well, several of proposal. Friday, there outstanding meeting help that May have transactions within will is And have the shareholder a facilitate and which proposals statement that RSA XX, part

streams of great keep to all we every every working from day. and dialogue it working we're day we've and of so so single on work three and And those work continue a lot had there,

Andrew Brackmann

Very clear. Thanks guys.

Operator

The Craig-Hallum. next Alex from Nowak with question ahead. comes go Please

Unidentified Analyst

some is little you This spend of, quarter, I OpEx know, on you kind I'll what guys. guys. Chase through sequentially? Kind of we expenses thinking mean, with up And guess, the Alex. then from for I me through afternoon in bit then debt walk one at, that and the focus you had of optimization mentioned should certainly out, the moving I is Good sequentially, for pieces the for comes restructuring. Opex start know about David. increase be me on what one-time looking forward? a now walk big for a the go of

David Patience

Thank much, Great you Chase. question. very

we restructuring laser Jack Once that OpEx, and work to about strength. proposed the our at focuses, be is this going the as is forward. debt look we one financial when So, transaction, focus talks moving through the of

as in into a amount That to bit work we organization last debt And of to associated quarter do restructuring to of also well. that are so, the savings quarter. back continue close have we did bleed seeing restructuring the and hefty as We that our anticipate a professional we this transaction with the commercial will said, so as from the year previously streamline discussed. fees

the So will overall, for streamline SG&A reasons. quarters subsequent those over

to R&D, the making another importantly, most with we're us focus Moving progress and laser is for great Wave.

that units, very a mentioned, be ordering as we'll setting. close to beta our post-FDA units just we Jack So, which in using production will essentially began be

actually purchasing be will clinical So, these beta units we're the in used trial.

-- from also cost. but bringing the lot that getting there, from brings in project a so in that timeline And we're of we're standpoint,

to anticipated. some for very And has for year project in exciting exciting. the us, very led in but of costs we the also incurred higher a than earlier that's costs us, time, So it's bringing

the B&D, with sold, a development significantly reduced, be Pheno goods and trial we're But lower and clinical the because entering that's see as and exiting entering we'll we're it'll costs more was. cost-effective much trial of than be cost

quarters down with that, R&D in coming the this so subsequent and And year. anticipate SG&A both we

Unidentified Analyst

it another relaying Got OpEx And everything I in squared assuming raise our Jack, the that capital at mean, RSA away maybe and we've question gets drastic a to I there, perspective able some with kind BD, you'll got in model going that of pushed Certainly, out where get restructuring for with the this it. capital here. traction, meaningfully. future flow be that's mean, point business cuts, closes to without from into to though, investors needed and a update with into model? the additional gets

Jack Phillips

Yes. you. Thank

on couple things So, I a mean, front. that

we're to and fronts, that. job good on I actively cash our David We're going all, cash we're First as a that doing burn do at highlighted, continue wherever many mean, with and looking to continuing possible. of to conserve

The you doing commercial mentioned business our through second absolutely getting the cranking BD. is that with thing that and partnership

we're going. look organization, new as placements we're take you account going for growth leading and mentioned, entirely sales the I It about starting revenue new it's how As what the very future. see places, things closes, that's training -- an revenue account growth, new opportunity is into at just the happy But encouraged these to time.

So we're different will make And capital. at levers. and as should these decision all put of those all to that we look in lead together looking us things at that to the closely additional at future ultimately what we'll we clearly, raise need point

Unidentified Analyst

with is that of or cross-sold much bit from devices more But might There's BD an your I that your that going that's digging let's funnel. with the of different kind of certain but going out separate kind they're existing instruments into is not place. it be doing to customer point, a mean, build-outs kind Got upfront be on need cross-sold out being and BD. in now to capital them, of at started being and existing solutions? it. funnel customers kind that RFPs lab, I for the Is attraction. expansions guess, of BD there a it the are coming to in BD base kind little where currently or is customers grow

Jack Phillips

Yeah. the It's a combination of above. of all

for was EMEA, group the tenders just Pheno and week large that example, by a for in but well. just very driven much BD. were it alone, product and Arc, Arc Pheno It than several as participated in key, So this of offerings a bigger very we completely tender included

or happening definitely rapid renewing Pheno where BD we've very the to relative gap part in in, that's as U.S., Pheno got along where and in in upgrading customers that solutions. the EMEA. we interested susceptibility. so combining specific And that's effectively And contracts, the And closing are that, have of very they're and other comes then accounts with we are where

traditional call standalone continuing had would known and solution. for And before that's looking I are have along say and only, them they're that or we've equally, an accounts to things, where that They're customers ID These interested pointed AST BD more we I drive combination accounts accounts opportunities looking be working rapid we're or as AST. only previously, that those working along a rapid more that solely BD that partnership BD. in now we AST our we're for are looking are with and with of those very specific well. would were our may are that then ID/AST, with are, And for that

Unidentified Analyst

Appreciate guys. helpful. the That’s question, it. Got

Jack Phillips

you. Thank Okay.

Operator

remarks. This Jack any will question-and-answer Phillips session. back over conference turn conclude closing our for to the I'll Mr.

Jack Phillips

the and in everyone to for thanks call dialing you, Thank today. to

the much today, create things solutions BD combining end-to-end inflection few the then and our ultimately partnership customers, the mentioned side, ID/AST selling broader we to really globally, a innovation to came few reach, collaborate to by a to our grow create partnership, as for on along my share reason to bloodstream for from improve other to summary, future. an with in this why solution times rapid was great Just market I effectiveness

closes, now that and what would I looking the to Accelerate, of to, legwork key sales take the We've partnership say, for continues et done we're I regional and it's much relates sales change along and bringing took speed, And big future so of managers, lot it effort stakeholders more to of ultimately here, BD, training, effective and stepwise people, going would reagent and speed. this effort future a well, account managers, while a say marketing opportunities, all growth cetera, up more with extremely it starting the more penetration. from was a to into for we're up right to for as look lot to

on our then, about rapid be testing could positive It add susceptibility but the happier microbiology. that innovation that Wave not as customers footprint And next generation front, isolate blood how consolidate in advancing will culture and only high-volume also allow is to improve we consolidate our dramatically not well. will

We our are with on track program.

continue innovation the every and We to very this important we go expect continue day, update to as to on throughout we innovate program year.

debt today, continues about as to then, And our go David talked restructuring along.

this to clearly coming et over as all to and up We share aspects to of the plan business well, be around on innovation, the we the cetera. us update open growth that will closed and expect key and on weeks, out other that focus truly market

bring this your support I'll we'll call to for you you. Diagnostics, So a Thank and to Accelerate all talk of Thank soon. close. you with that, earnings

Operator

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

You may disconnect. now

Accelerate Diagnostics (AXDX) 11 May 232023 Q1 Earnings call transcript