Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Accelerate Diagnostics, Inc. 2023 Q2 Results Conference Call. [Operator Instructions].

I would now like to turn the conference over to Laura Pierson, of Accelerate Diagnostics. Please go ahead.

Laura Pierson

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

results that those and XX-K are statements actual These statements made that XX, could discussed year Forward-looking and during our we projections, other materially. subject historical not this about statements are cause to include 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 future 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 Second strategic will our several to My strategic Good Earnings focus priorities. afternoon, quarter priorities. Call. updates results Thank and on welcome top X will include on our and our second call our Laura. on focus Today's commentary

First, review advancements susceptibility next-generation our our Wave. to I with platform innovation would like

sample Our instrument to is to our share market our ARC. Dickinson priority partnership Pheno and grow Becton with second through continue preparation

financial build finally, continuing will and closing touch on our which And to debt our burn. strength, I cash out reducing transaction restructuring

results. second financial our over Before Officer, I quarter discuss these David our important I'd like Chief Financial to preliminary to strategic hand it further, to priorities Patience, review David?

David Patience

quarter the for compares year-to-date. $X.X This and to $X.X XXX and quarter, period backlog were approximately U.S. instruments. ended million of XX a We instruments you, million base implementation. pending revenue-generating with $X.X and Jack. afternoon, same Pheno XXXX. $X.X Pheno million new million a Thank in approximately contracted the XX in the instruments the sales good In of the And everyone. quarter second second installed Net

XX% current and quarter. of goods of sold were for million million to margin which in in and the gross resulting were sold prior not Cost the of few the for gross $X.X year-to-date. This compares driven XX% large period, of $X.X period. prior XX% margin and quarter by million did deals repeat in decrease million of and the in goods $X.X a a cost revenues $X.X The capital year-to-date,

The equity-based discussed and year-to-date. was by million compensation. decline expenses of cost in reduction million driven a Pheno were quarter goods in for and fewer general instruments well sold Selling, capital as as as the administrative $X.X $XX.X

million million compensation, This $XX.X period. $X.X the quarter $XX.X to noncash and the compares period. $XX.X stock-based $XX.X for were $X.X for million million prior for and the million prior This expenses, year-to-date. million and excluding SG&A to compared

for while SG&A expense for to Research $X.X were million transaction restructuring and decrease and due figures $XX.X development expenses was included million employee-related This $X.X million debt lower quarter year-to-date for The and $XX.X period. current to expenses. the in prior quarter the related expenses, year-to-date. nonrecurring the million compared

was expenses our R&D for R&D $X.X expenses, million driven continues year-to-date. period. $XX.X was consulting and million to to million reductions Wave compensation spend This compares by in development. prior The primarily decrease $X.X noncash million program advance $XX.X as the excluding through stock-based and in

per shares been the to stock have reflect share July of company's XX, and and shares stock. retroactively amounts periods $XX net a on year-to-date, effected outstanding XX-for-X reverse note, All $X.XX quarter in the split. per was Our for Please presented for share all respectively. $XX.X adjusted net a of the $X.XX, million common loss resulting GAAP and loss we reverse million stock split of

debt related restructuring included which expenses our expenses approximately Our were quarter several for the nonoperating noncash for million, transaction. $XX.X notable

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

our with excluding reduce cash We related year-to-date financing. of transactions. were debt and year-to-date, quarterly million $XX.X was cash burn restructuring $XX.X Notable ended to the for quarter cash $XX.X legal quarter of increased in drivers for quarter flows used and our and equivalents the burn and to cash from Net million. fees professional anticipate the million the thereafter. third We quarter and

Now back to Jack. you,

Jack Phillips

David. Thanks,

Now turning priorities. strength. Wave innovation building Delivering with share market to our our through finally, our with BD financial platform, our partnership strategic growing and

total isolated the overall susceptibility next-generation First, with colonies best market positive importance to our opportunity, on understand I our market. will to innovation will it's referred sometimes susceptibility testing Wave be or understand blood Wave. isolates. as or PBC performing To the review and of available platform, testing important antibiotic our cultures

X% are PBC from which cultures, given any of blood taken to a labs directly approximately Positive X% volume. bottle are testing

arguably are microbiology samples samples are in a condition the provide PBC patients critical are to because the in actionable bloodstream lower volume, results critical samples these who most infection. due for they While

hand, just within the are be the other represent any other both high acuity susceptibility antibiotic from or urine, testing such to from can come which are Isolates respiratory, sample clinical name Isolates, a lab. few. low as on microorganisms, nearly all isolated samples acuity and GI, separated and and samples,

performed PBC customers include Annually, colonies isolate in next-generation segment testing are much platform, PBC and susceptibility worked we testing deep million from platform. on develop volume from our there the menu testing, to of globally. samples over over to rapid on X a tests our experience Wave, higher with build XXX single isolated and Leveraging susceptibility tests our

addresses The settings Wave Wave antibiotic to susceptibility to formularies of With features large to test covering community from sample full a centers essential the random offer samples reference workflow diverse labs. small across care hospitals for all needs system academic health will optimize hospital laboratories. access and menu catering incorporating loading, and scalability various comprehensive continuous

results establish budgets. shift. incumbent of to Speed compete susceptibility testing competitive in sold Moreover, new turnaround standard same time, and ensures swift will platforms, cost Wave's existing for goods will paramount Wave's respond is a effectively clinicians with it within the empowering aligning lab with

to critical validate Wave's stakeholders. and continued product have specifications clinical we key year, past the with Over lab

shift rapid planned same menu enable approach, formulary our extensive confirmed turnaround results times our requirements. addresses and Prospective customers platform

Our completion. are near PBC gram-negative algorithms

images modules more with than of are week is our XXX a date We our AST Wave support running million taken X,XXX to performance on cards development, algorithm expectations. meeting to alpha fleet

Our growth morphological response, timely but of proprietary contributions metrics by each which approach and also enables resistant holographic ensures our microorganisms, not drug This and imaging. reporting. identification dynamic algorithms enabled clones, both only to accurate of comprehend susceptibility test early real-time

to These to on susceptibility achieved our program testing real-time. single this cell in in ability with morphology ability deliver We focus labs. confirm exciting developments Wave's microbiology technology's a comprehensive

initiation closely Wave to FDA commitment program clinical Our our recent by by study for preclinical subsequent of studies the the providing reinforces readouts submissions. progress year-end, with followed

to share second continue through Now our Becton, to is priority, Dickinson turning to which strategic grow our market partnership.

commercial by reach, and is continue to track sales progress eventual number is funnel tracked opportunities X velocity close. key through We which of the our the funnel; into progression effectiveness, which new measured metrics: by and to sales'

partnership to portfolio. The of commercial breadth evidenced continues to integrate bloodstream After the with strength a be U.S. funnel. the coming with commercial consistent new being X growth teams a opportunities Pheno the by ability continue Thus, new of commercial of position growth the infection reach just as portfolio's the the months progress launched, to combined opportunities. of we within combined team's the BD into pleased are into

less days a the Additionally, funnel. sales the in XX couple notably further we closes more opportunity with in account Sales second quarter, increasing velocity created. of than being the saw advance in of is opportunities

to We are the leveraged for being quick BD's encouraged see relationships into wins strong partnership.

incremental to and XX deliver since continue quarter newly contracted Phenos XXXX, was the we to quarter The growth. for quarterly expect our strongest placement

given As markets our our to tender-driven quarter complicated EMEA a which calls, more has led mentioned delay. in effort prior is earnings commercial

but work approach full portfolio adoption should We continue BD rates improve existing collectively tenders. tenders. This it allow be also to only added tender out new to to which a allow simplified win both to contracting will represent to as in will roll not the us product contract, and opportunities,

enthusiastic System, remain automated which culture MALDI eliminate about the We direct enable up overnight samples rapidly step. PBC cleans our identification to to microbial Arc

through currently to launched trials initiate to short EMEA in are Class growing interest the clinical in the are year. in we poised ensure the BD is system partnership. XXX(k) seeing We U.S., Further, II market next a our term

strong remain improved the progressing, quarter. closes in the BD we metrics In by and summary, partnership and the is encouraged sales

continue expect We increased and revenues we placements as customers future into new bring live. to to translate momentum this

late Lastly, years. capital. X.X and on debt the our second extend financial restructuring which strength, our in out quarter, our allowed capital in our brought us to we announced new closing the maturities of debt It convertible structure simplified

these not improving questions prior be should Thank analysts. our we have questions any follow-up quarter, on cash others focusing welcome reducing efficiency addressed, to a are investors@axdx.com. would Moving would now to burn. and And discussed meeting call to you send our questions from I answer you. further operational we forward, or the happy request on in as

Operator

question first with comes today's Craig-Hallum. Alex And from Nowak Instructions]. [Operator

Conner Chamberlain

Conner This Chamberlain is on Alex. for

us for that, are on as I'm assuming -- feeding the update well. and a some XXX(k), off First but novo the you with off, latest this can studies you to what pathway Arc give run need de approval?

Jack Phillips

the sure Conner, thanks question, for thing.

for So trial for clinical we started with well The in U.S. the underway are hasn't clinical planning a our yet. Arc trial

sites. But identifying of the we're process the in

a us place to manage clinical in trial clinical help partner have as trial well. We that

past that as over of to move reviewed we're the and weeks, clinical the In ready addition, couple well with. design trial just I've forward

do place into embark we to So to a on fairly trial. coming everything things are with rapidly clinical basically need

a to trial going frankly, we're rapid And be study successful given MALDI. FDA clinical is actually then to by submit to And pretty the straightforward study, the year-end. and downstream on, we're doing to expect shortly be looking which We clinical the hopefully, the what approval a clinical thereafter. submission successful still

Conner Chamberlain

do for that? clinical you line studies have that on do pathway on approval? as time Wave any the well? need What What's And we

Jack Phillips

Yes.

sure. So

as regard in progress really making Wave. WAVE, areas in on to prepared our So many good with mentioned remarks, we we're

that study mention confirm trial As we we algorithm with we're first forward be expect that. going to first happen to is be happening. proceeding seeing with right studies trial, get the the the clinical now of study that's that would we're preclinical the to that a preclinical results just relative to we're of complete I closer year, ahead doing or thing The end before to development, in a

study. be -- clinical that then clinical will And to a shortly preclinical We manage again, the thereafter to our have, expect help partner study. we already study we start also secured

in then positive likely preparing shooting will we're be gram-positive a So thereafter, a QX culture in isolates. study say, It submission shortly of the start and clinical on also I for. parallel what is blood culture gram-negative-focused 'XX for positive will blood trial, we'll be should and then

Wave As for those all system do type be a is well will to do rapidly and -- as get combinations. culture, isolates of positive really reminder, approval as we'll will blood for to the set seeking

Conner Chamberlain

systems? microbiology And update on rapid give an competitive then just us for one more. environment Can you the these

Jack Phillips

up think bit I broke competitive what you're Is arena. little a there, about? said You that but talking the you

Conner Chamberlain

Just systems. the an update on microbiology competitive for rapid these environment

Jack Phillips

Sure. what no I thought That's Sure, you problem. said.

mean, I And the that infection with the in U.S., where of Pheno partnership very rapid a our and now, positive we're rapid have to well the with complete very embedded continues well. very from end-to-end, only So AST and -- not that AST, as well. -- course, mean, market, clearly, BD well, I in but right resonate go and continues to in bloodstream as with Europe, is Arc selling to continues resonate identification that at going solution we solution launched

because And emerging of that our we lines. so seen that the We've Europe our Yes, We're confident we XX-plus not Pheno, -- a customers are in much confidence have Pheno. just bit, expected, studies already confident have the them coming. in menu. current on very in in very the in we clearance we're time competitors U.S. published as

a partnership to stronger. BD well think make competitors. good any is with while compete the competition, our make especially very And thing market in I It better, suited, think, emerging with I So us actually. essence, overall, will for us we're with

Operator

The Brackmann with is Andrew next question Blair. from William

Dustin Scaringe

for This is Dustin on Andrew.

question BD on the First partnership.

those there the are the the reductions in what of expenses into partnership. is sales thoughts is operating cross-training on some sales the how and tracking there the start team to and Just synergies at your wondering in translating team status if of the

Jack Phillips

first the take I'll forth. that so take David and cash part reductions of the Perfect. question the end of let around second burn and

touch me U.S. let all, of first the on first So

mean, just We trained largest in organization the we and microbiology companies Dickinson fully And the U.S. diagnostic the Becton reminder, trained BD. -- one are is I entire world. of within a fully

marketing, of have they So a cetera. sales of lot a lot reps, regions, et

So comprehensive a organization. it's

the trainings had U.S. We've a very successful in

We have marketing materials all their the hands. in

have as We ongoing training well.

out done field. a initial training So training we're we've doing and then ongoing regular on in the basis

sessions well learning very going online overall, also have We and as well.

really et just it's many et and countries, cetera. longer, bit languages, Europe, with of a because cetera, taken the it's Europe, In many of the the nature different

Europe in that's initial we'll the in training on training all be we're X So for complete. Wave and we've focused been the the that in in almost about countries Europe, cycle complete and

collection to ramping the up Pheno. that is really bloodstream only also very training the susceptibility overarching BD, follow-up in Pheno all again, of plan well solution start been infections which our speed But the identification strategy culture, blood ultimately, strategy not for think also a for those through for then through care, countries as but training We focuses overall, their Arc, on has and come entire well, I bloodstream infection up we ongoing and with do as from going to sample comprehensive across and continuum rapid efforts.

to really Pheno for got we're with -- BD and as new off I That's well. of activity see while activity team while as well good it's mentioned together got really coming that's in of as say great we've the we're remarks, I get sales ground, the as happy the to to it really all taken So I starting going mean, a on. some

definitely but cash I'll had of on quarters this board, we've we then your look the We in QX, more and question a it had long the burn, closes time part one. we David -- over second quarter quite on best better is for And to in turn how put to to for that forward. doing relative moving the need the

David Patience

Yes.

last SG&A, year we when selling burn States, our we're As United it commercial organization a to reductions time is implement about in with BD. and relates this to strategy cash of to announced in the restructuring reflect the thereof the going the

selling Accelerate in to the commercial And support so organization into with further funnel and bring that BD further Accelerate brings effort close. the focused commercial opportunities bring to the that, it to would the on have be a and to commercial effectiveness and reach

August so to into the costs. those The the And with bit quarter legal restructuring, had due that, muddied but And of to debt that, fees we XXXX. for the first back transaction. of expenses a in restructuring a related in debt those restructuring were year this went SG&A-related did with restructuring of numbers debt debt the fees in quarter, accounting close and professional issuance second transaction and the to equity

the then more professional you And a reflect adjusted services you our so run second transaction, and will, are if quarter further the and figures noncash from figures give a but that year-to-date basis stock legal SG&A cleaned, to rate of spend.

a And a are understanding to so it. then looking at the second you quarter number way looking number the cleaner these expenses to forward-looking improve of a go-forward we're onetime to that is look give operationally on kind that And nonrecurring at transaction, basis.

us Wave step so back, and spend a the allows behind having And that, the our transaction furthering taking us third development program parties. with to with lower

as over we come the forward, moving into year down of well so the XXXX. as just materially burn quarter, And anticipate to next the rest cash our

Dustin Scaringe

And terms there. from staffing. question, at turnover of a labs in on competitors and color the lot second hearing hospitals Appreciate Understood. we've been

derivative Just with exposed impact the wondering, there? conversations lab that much? having and as you not any is guys are to Or to there really directors you you're

Jack Phillips

is So level. And great see an well. definitely in incredible staffing the care, point. both within amount laboratories, as health the post-COVID We general, the in yes. that of and There's turnover answer

And there. it's also lab management and level. it's the and technicians, other So microbiologists the senior management the at

with of challenging were It's quarter it and track. or the go-lives. just BD It's management manager slows for of sure. microbiology have key because the going not go-lives still new had a champions And live couple that part so or in to those implementation replaced lab a We've that down go Pheno change on did is that being something but in that changed, or of definitely delayed be director are of us a the Accelerate leaving. because

to it and BD, Pheno we're from something to -- I be In immediately expect susceptibility create change we've as seen So to move lab happens, where address. to opportunities do seen I in new are -- rapid to directors turnover. this opportunity cetera, for of examples we within that expect what to us of of mean their normal, we proponents really where it's the value have seeing I I that good, typically overnight. have and sales those more and in that's where it cases, in we've susceptibility a and back know can site Pheno the change et does also as laboratory but continue and positive some that new come get site directors some down. well, it that and rapid settle

but I field. basis we ways, continue think address out something it in both to So that on daily it a is definitely goes the

Dustin Scaringe

for to impactful on market. this momentum How on reintroduction question this be Last the that occurs. could comes eventually the once Arc driving just you us, think do U.S. of BD when eventually with

Jack Phillips

I proposition in that mean, reminder Arc is, real addresses well we're sector. on Dickinson very for a other MALDI microbiology. bullish Arc within a as and so focused it's Becton as just what the and mean I are medical Arc value unmet of people a is need the

It's easy was in I good effective platforms They're MALDI over very there's number for -- thousands a wide produces. about mean, cost range today. Fairly menu placed in and use, MALDI of It's great technology results. a reasons. -- globally microbiology that a to very, to laboratories It run advancement very MALDI. XX,XXX

so in And it's microbiology. well planted

is X not identification to X and then a plate the there. that process entire in current MALDI to automates through MALDI run and the if drawbacks Arc it's allows Because state doing an from just X the of you Arc rapid want run identification about What been without that's and spotting does result something of real in is isolated same one from then today, platform MALDI steps in get Day your possible in off is hour you But drawback MALDI performing the shift. a a colony different. first

on when only talked, and significant so the FDA. market had number came up. And the in II back We signed as And of that's claim mean, a immediate Class getting going the the -- uptake. we we saw I we're -- we've interest U.S., evaluations while from

the mentioned thing, be are off out believe the ultimately then In have, end, claim be clearance. and favorable that as more earlier and time validated will to The favorable good through here, FDA market. actually about customers, we unfortunate clinical excited trials, the through be a to I going are identification go for of a in will feature takes -- MALDI. But to we have seeking that of a a rapid it a alternative just this, very really to that to globally, it's platform

Operator

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

Jack Phillips

I Thanks. it, Chris. Yes. appreciate

from things of couple my a side closing. in just So

First dialing It's of into all, thanks greatly our Earnings Call. appreciated. for QX

of our a highlight things we imperatives today. Just couple that as we've strategic to highlighted about think

all, we tests is a It will platform much, to -- our isolates, very for progress Wave the segment milestones that's going which, to mentioned, It continues us XXX over this up a million important larger as our I market microbiology. very will globally, and to be platform be address. is important within platform. perform and platform, really on that next-generation continue a to make First good hit and much will of that open

only very isolates have to on the well go single scalable. also mentioned, have we on platform, Wave. Things platform. access, And positive I with blood We'll not a continue random as

labs labs hospitals, will also in So academic well fit regional centers. community this reference as platform and as but

that's entire as a scalable the at so look health it's system. truly important So platform you

continue going performance are that here that come to images our more our very Tucson. day of night studies alpha laboratory now And over see initial So taken there. quality on been through off good million we've we XXX and XX to finally, running in our in units

Dickinson I'd and the with our second then our with commercial And effectiveness. thing partnership Becton say

confident it's microbiology They're large reps in getting BD. selling a in through training, get in comfortable in company very to out mentioned, get got better We're taken I is And identification day -- rapid there. partner. Every and susceptibility. the and a a and As terrific day while field the to us we've market.

continues coming that funnel to reach grow. the continues and new accounts to into means grow, Our

with as bloodstream hospital. Our much, we're the sales actually portfolio a at infection well. to result, is shops improving ability quicker. the effectiveness as the to sales is within we're we're And getting with Pheno into really overall advance And bring where what much also we're BD, seeing BD labs our starting better that opportunities in

I mean, advancing these much, quicker. much we're opportunities

we expect success good this to progress to we and every work on So make see, continue that there. is progress in again, day, continued

frequently then burn focused something debt is really We're And the we a David thing strength We as reducing now last everywhere us. That's focused I focus I'd on company. can. rate. financial cash have preserving mention on and We're on day. restructuring our every behind our

as we And to continue then line. drop will that as obviously, bottom take margin revenues care well of revenues the to and increase

more and appreciate So with call I to come, QX earnings you into that, tuning today. the

questions, should please to schedule you further on you happy meeting. any again, have contact much. Thank follow-on very a at axdx.com and we're us And

Operator

for disconnect. The now Thank concluded. may presentation, now conference attending and you today's has you

Accelerate Diagnostics (AXDX) 10 Aug 232023 Q2 Earnings call transcript