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Akoya Biosciences Inc (AKYA) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...

  • Total Revenue: $18.4 million, a 14% decline year-over-year.

  • Reagent Revenue: $7 million, up 23% from the previous year.

  • Instrument Revenue: $4.9 million.

  • Services Revenue: $6.2 million, a 5% increase year-over-year.

  • Gross Margin: Reported at 46%; non-GAAP adjusted gross margin at 57%.

  • Operating Expenses: $30 million; non-GAAP operating expenses at $25.6 million.

  • Net Income: Not explicitly mentioned, focus on operational and gross margin details provided.

  • Free Cash Flow: Not directly mentioned, but emphasis on achieving operating cash flow breakeven by end of 2024.

  • Market Capitalization: Not discussed; focus on financial operational metrics.

  • Installed Base: 1,213 instruments, including 354 PhenoCyclers and 859 PhenoImagers.

Release Date: May 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Akoya Biosciences Inc (NASDAQ:AKYA) reported a 23% increase in reagent revenue from the previous year, totaling $7 million, driven by strong sales and an industry-leading installed base of 1,213 instruments.

  • Services revenue grew by 5% to $6.2 million, indicating steady growth in lab services business.

  • The company successfully launched a new manufacturing center of excellence in Marlboro, Massachusetts, which is now fully operational and expected to drive increased margins and expand available applications on platforms.

  • Akoya Biosciences Inc (NASDAQ:AKYA) announced strategic partnerships with Shanghai KR Pharmtech and NaraCare, enhancing its market presence in China and providing personalized therapy selection for melanoma patients.

  • The company has maintained a strong focus on operational and clinical objectives, including receiving Fast Track and breakthrough device designations for ACR-368 therapy, which shows promise in addressing significant unmet treatment needs.

Negative Points

  • First quarter results fell short of expectations with total revenue of $18.4 million, a 14% decline compared to the previous year, primarily due to weak instrument placements.

  • Systemic pressure on capital expenditures continued to affect the business, including elongated sales cycles and increased scrutiny on capital purchases.

  • Revenue shortfall was also impacted by temporary product availability issues due to the transition to the new manufacturing center, affecting reagent fulfillment times and delaying instrument purchases.

  • Certain pharmaceutical partner lab services revenue recognition was deferred to the second half of 2024, contributing to the revenue shortfall.

  • Despite efforts to streamline operations, Akoya Biosciences Inc (NASDAQ:AKYA) faced challenges with inventory management, leading to a $2 million inventory write-off from discontinued legacy instruments.

Q & A Highlights

Q: Can you quantify or at least qualitatively help us think about the biopharma revenue that was shifted to the second half of the year? A: Brian McKelligon, CEO of Akoya Biosciences, explained that the shift in biopharma revenue to the second half of the year was due to a slight shift in clinical trial partner milestones, resulting in a shift in revenue recognition. The impact was in the low single-digit millions.

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Q: Why did the imager line underperform compared to expectations? A: Brian McKelligon noted that the underperformance was more about focusing on supporting PCF customers through transitions and challenges in Q1, rather than a decrease in demand or market presence for the PhenoImager.

Q: Can you discuss the reiteration of being cash flow breakeven this year despite the lower guidance? A: Johnny Ek, CFO of Akoya, provided a scenario where achieving cash flow breakeven by the end of the year is plausible, assuming a return to normal growth rates and effective cost management, including the impact of a 15% workforce reduction.

Q: How are you addressing the temporary loss of customers due to the opening of the new manufacturing facility? A: Brian McKelligon assured that the issue was temporary and mainly affected CROs and core labs that required high plex assays. He confirmed that product availability issues have been resolved, and they are working to regain customer confidence and orders.

Q: Could you provide insights into the revenue pacing throughout the year and how you plan to recover from a weak Q1? A: Brian McKelligon indicated a sequential improvement throughout the year, expecting to return to normal growth rates by Q4. He highlighted the importance of resolving reagent issues and recovering delayed instrument purchases.

Q: What are the long-term margin opportunities from bringing reagent manufacturing in-house? A: Johnny Ek discussed that internal manufacturing of reagents is expected to improve margins significantly as it increases control over production and reduces dependency on external suppliers, contributing to long-term gross margin expansion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.