Standard BioTools Inc.

Greetings, and welcome to the Standard BioTools, Inc. First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press Start Zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Peter DiNardo, Investor Relations. Thank you, Mr. DiNardo. You may begin.

Thank you, Operator. Good afternoon, everyone. Welcome to Standard BioTools' first quarter 2022 earnings conference call. At the close of the market today, Standard BioTools released its financial results for the quarter ended March 31, 2022. During this call, we will review our results and provide commentary on our financial and operational performance, market trends, and strategic initiatives. Presenting for Standard BioTools today, will be Michael Eggholm, PhD, Chief Executive Officer and President, and Vikram Jha, our CFO. During the call, we will make forward-looking statements about events and circumstances that have not yet occurred, including plans or projections for our business, future financial results, and market trends and opportunities. Examples include statements about expected financial performance, strategic initiatives, acquisition strategies, market trends, product releases, customer demand, collaborations and partnerships, and revenue expectations. These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations. Information on these risks and uncertainties and other information affecting our business and operating results is contained in our annual report on Form 10-K for the year ended December 31, 2021, as well as our other pilots with the SEC. The forward-looking statements in this call are based on information currently available to us, and Standard Biotools disclaims any obligation to update these forward-looking statements, except as may be required by law. During the call, we will also present some financial information on a non-GAAP basis. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the company's operating results as reported under U.S. GAAP. We encourage you to carefully consider our results under GAAP as well as our supplemental non-GAAP information and the reconciliation between these presentations. Reconciliations between GAAP and non-GAAP operating results are presented in a table accompanying our earnings release, which can be found in the Investors section of our website. Please note that management will be referring to a slide presentation within the webcast today This presentation is also posted on our website. As a reminder, I would also like to note that due to the appointment in April of new management team members who are focused on completing a 90-day assessment following the closing of a $250 million strategic capital infusion, the company will not be hosting a Q&A session following prepared remarks during today's conference call. I will now turn the call over to Vikram Jha, our CFO. Vikram?

Thanks, Peter, and good afternoon, everyone. Before turning to our first quarter financial results, I would like to note that we have posted this presentation, including updated supplemental financial information, on our website. I will review the performance of our business units and geographic regions. Michael will then discuss our growth strategy going forward. Let me begin with a review of financial and geographic highlights for the first quarter of 2022. Total revenue for the quarter was $26.5 million as compared to $32.8 million for Q1 2021. The year-over-year decline was primarily driven by lower COVID-19 revenue. Base product and service revenue, which excludes COVID-19 testing revenue and other revenue, was $23.9 million, approximately 2% lower than a year ago. Our first quarter results were impacted by our pending and now closed strategic capital infusion transaction. This process created some disruptions in our US sales force and was an impediment to growth. Moreover, our business continued to be adversely impacted by COVID related disruptions, primarily in Mass cytometry product and service revenue of $13.5 million for the quarter was down 4% compared to the first quarter of 2021. Revenue from the CyTOF XT instrument, which was launched in mid-2021, was more than offset by lower sales of legacy Hyperion and Helios instruments. Please note that in April, we launched Hyperion Plus, our new HyPlex spatial imaging system with lower limits of detection as well as improved sample capacity and time-to-results. Base microfluidics product and service revenue, which excludes COVID-19 testing revenue, was $10.4 million, basically unchanged year-over-year. We are encouraged by the early adoption of our new Biomark X instrument, and our O-Link OEM partnership remains an important growth driver, offsetting weakness in other microfluidics consumables. COVID-19 revenue of $2.3 million declined by 65% relative to $6.5 million reported for Q1 2021. Other revenue, which consists of NRE, grant, and license revenue, was $1.4 million lower year over year due to the completion of certain NRE and development contracts in 2021, partially offset by an increase in license revenue resulting from a litigation settlement. We believe our base product and service revenue, excluding COVID and other revenue, is the appropriate indicator of our top line performance. Now looking at first quarter revenue compared to the prior year period from a regional perspective. America's revenue was $12.9 million, down 30% year over year, driven almost entirely by lower COVID testing and NRE and grant revenues. The base business in the Americas was unchanged year over year. EMEA revenue was 8.6 million, down 6% year-over-year, primarily driven by lower mass cytometry instrument revenues. Changes in foreign exchange rates reduced the year-over-year growth by approximately 4 percentage points. The negative impact of the conflict in Ukraine on the European economy and related funding headwinds, together with COVID-related pressures on public healthcare systems, remain challenges for growth in this region. Asia Pacific revenue decreased 3% to $5 million, primarily due to lower microfluidics consumables revenues. We experienced challenges in this region from lockdowns, such as those widely publicized in China, and travel restrictions and disruptions. In Japan, we were also affected by the diversion of government funding for research instruments for other purposes. Moving now to our operating performance. I will focus my comments on non-GAAP results, which exclude certain non-recurring and non-cash items. Please note that the reconciliation tables between our GAAP and non-GAAP measures are provided at the end of our earnings press release that was issued earlier today and in this presentation. Non-GAAP net loss was 19.5 million compared to a non-GAAP net loss of 11.1 million for the first quarter of 2021. The increase in net loss for the first quarter of 2022 over the first quarter of 2021 was driven primarily by lower total revenue and lower product and service margin. Non-GAAP product and service margin was 58.5% for the first quarter, down from 66.4% for the same period a year ago. This was primarily driven by unfavorable product mix and to a lesser extent by lower factory utilization. Non-GAAP operating expenses were $35.1 million compared to $34.1 million for the first quarter of 2021. The increase versus the year-ago period was primarily driven by one-time costs related to the strategic capital infusion transaction that closed in early Q2 2022. Moving on now to cash flow and the balance sheet. Cash and cash equivalents and restricted cash at the end of the first quarter totaled $31 million, compared with $29.5 million as of December 31, 2021. Immediately following the completion of the strategic cash infusion by Kasten Capital and Viking Global on April 4, 2022, our cash, cash equivalents, and restricted cash balance was $256.2 million before transaction costs. Operating cash burn was $15.6 million during the quarter, an increase of approximately $2.7 million compared to the first quarter of 2021. The increase in cash burn was primarily due to higher operating losses, partially offset by favorable working capital changes relative to the first quarter of 2021. Financing cash flows during the quarter were $18.1 million, including $25 million of proceeds from a bridge loan and repayment of advances under a revolving line of credit of $6.8 million. Following the completion of the strategic capital infusion transaction, the outstanding balance under the bridge loan was converted into shares of Series B preferred stock. Accounts receivable day sales outstanding were 53 compared with 43 days at the end of the fourth quarter of 2021. This concludes my remarks on the quarter. I'll now turn the call over to Michael. Thank you, Vikram.