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NanoString Technologies Releases Operating Results for Second Quarter of 2022

Generated Orders for ~ 50 Spatial Biology Instruments, Representing 65% Growth Year-over-Year, Including Orders for More than 25 CosMx Spatial Molecular Imagers

SEATTLE, August 04, 2022--(BUSINESS WIRE)--NanoString Technologies, Inc. (NASDAQ:NSTG), a leading provider of life science tools for discovery and translational research, today reported financial results for the second quarter ended June 30, 2022.

Second Quarter Financial Highlights

  • Product and service revenue of $32.0 million

  • GeoMx® Digital Spatial Profiler (DSP) revenue of $10.9 million. GeoMx DSP revenue includes:

    • Instrument revenue of $5.2 million

    • Consumables revenue of $5.7 million, annualized pull-through of approximately $77,000 per installed system

  • nCounter® revenue, inclusive of all service revenue, of $21.1 million. nCounter revenue includes:

    • Instrument revenue of $4.3 million

    • Consumables revenue of $12.2 million, annualized pull-through of approximately $45,000 per installed system

    • Service revenue of $4.6 million

  • Cash, cash equivalents and short-term investments balance of $272.3 million

"NanoString had an excellent second quarter, as our commercial execution continued to improve, and laboratories adopting our solutions drove a 65% year-on-year increase in orders for new spatial biology instruments. Orders for our CosMx Spatial Molecular Imager are ahead of our expectations, and are helping us build a large revenue backlog that we expect will set us up for significant growth in 2023," said Brad Gray, president & CEO of NanoString. "With complementary instrument platforms, our new AtoMx Spatial Informatics Platform, and blue-chip partnerships, we believe we are ideally positioned to win the spatial biology land-grab currently underway."

Operational Highlights

Spatial Biology

  • CosMx Orders: Secured customer orders for more than 25 CosMx™ Spatial Molecular Imager (SMI) systems, bringing total orders to date to more than 60 systems

  • Commercial Status: First CosMx beta instrument was shipped to a customer during the first week of August, with two additional beta instruments scheduled for shipments to customers later in August

  • Advances in Genome Biology and Technology (AGBT) Conference: Unveiled the AtoMx Spatial Informatics Platform and showcased data from 20 spatial biology studies, including 15 for CosMx SMI

  • Introduced Integrated Informatics Platform for GeoMx Using NGS: Began offering a streamlined end-to-end solution to fully integrate GeoMx with Illumina NextSeq sequencers

  • GeoMx Installed Base: Grew installed base to approximately 315 GeoMx DSP Systems at June 30, 2022, representing 66% growth over the prior year

  • Publications: Continued growth of peer-reviewed publications utilizing GeoMx DSP technology, with approximately 20 new publications in the second quarter, bringing the cumulative total to approximately 130 peer-reviewed publications as of June 30, 2022

nCounter

  • nCounter Installed Base: Grew installed base to approximately 1,085 nCounter Analysis Systems at June 30, 2022, representing 7% growth over the prior year

  • Publications: Surpassed 5,800 cumulative peer-reviewed publications utilizing nCounter technology at June 30, 2022

2022 Outlook

The company updated its 2022 outlook, with results expected as follows:

  • Orders for about 200 spatial biology systems, consistent with previous guidance, with an expected mix now comprised of approximately 50% GeoMx system orders and approximately 50% CosMx system orders

  • Cumulative orders for approximately 120 CosMx systems expected by the end of 2022, providing a revenue backlog valued at approximately $30 million

  • Total product and service revenue of $140 to $150 million, as compared to previous guidance of $150 to $160 million, reflecting an order mix that is weighted more heavily to CosMx, with material CosMx revenue recognition expected to begin in 2023

  • nCounter revenue, inclusive of all service revenue, of $90 to $95 million, consistent with previous guidance

  • Adjusted EBITDA loss of $75 to $85 million, as compared to previous guidance of $65 to $75 million

Financial Results

We have elected to present selected non-GAAP, or adjusted, financial measures, including Adjusted EBITDA. These adjusted financial measures are calculated excluding certain items that may make it more challenging to compare our GAAP operating results across periods. Such items may include collaboration revenue, stock-based compensation, depreciation and amortization, or one-time charges such as transaction related fees and expenses or restructuring charges and severance costs. A reconciliation of adjusted financial measures to the nearest comparable GAAP financial measure can be found in the tables at the end of this press release.

(dollars in thousands)

Three Months Ended June 30,

GAAP

Non-GAAP Adjusted

2022

2021

2022

2021

Product and service revenue

$

31,998

$

33,632

$

31,998

$

33,632

Collaboration revenue

221

231

Total revenue

32,219

33,863

31,998

33,632

Cost of product and service revenue

15,852

15,481

14,756

14,735

Gross Margin

50

%

54

%

54

%

56

%

Research and development

17,346

17,162

14,474

14,469

Selling, general and administrative

36,112

26,855

30,224

21,717

Adjusted EBITDA

N / A

N / A

$

(27,456

)

$

(17,289

)

Non-operating expense, net

(2,148

)

(1,385

)

(2,148

)

(1,385

)

Net loss

$

(39,239

)

$

(27,020

)

$

(29,604

)

$

(18,674

)

Six Months Ended June 30,

GAAP

Non-GAAP Adjusted

2022

2021

2022

2021

Product and service revenue

$

62,839

$

65,026

$

62,839

$

65,026

Collaboration revenue

460

454

Total revenue

63,299

65,480

62,839

65,026

Cost of product and service revenue

30,630

31,104

28,545

29,762

Gross Margin

51

%

52

%

55

%

54

%

Research and development

34,763

32,225

29,430

27,042

Selling, general and administrative

72,467

53,654

59,621

42,675

Adjusted EBITDA

N / A

N / A

$

(54,757

)

$

(34,453

)

Non-operating expense, net

(4,178

)

(3,229

)

(4,178

)

(3,229

)

Net loss

$

(78,739

)

$

(54,732

)

$

(58,935

)

$

(37,682

)

Supplemental Information

As a supplement to the table above, we have posted to the investor relations section of our website, at www.nanostring.com/Investor Relations/Financials/Quarterly Results, supplemental financial data that include our adjusted financial measures as compared to the nearest comparable GAAP financial measures, for the second quarter and the six months ended June 30, 2022 and for each quarter of and the full year of 2021.

Conference Call

Management will host a conference call today beginning at 1:30 pm PT / 4:30 pm ET to discuss these results and answer questions. Investors and other interested parties can register for the call in advance by visiting https://ige.netroadshow.com/registration/q4inc/11218/nanostring-second-quarter-operating-results/. After registering, an email confirmation will be sent including dial-in details and unique conference call codes for entry. Registration is open throughout the call, but to ensure connection for the full call, registration in advance is recommended. The link to the webcast and audio replay will be made available at the Investor Relations website: www.nanostring.com. A replay of the call will be available beginning August 4, 2022 at 7:30pm ET through midnight ET on August 11, 2022. To access the replay, dial (866) 813-9403 or (929) 458-6194 and reference Conference ID: 426771. The webcast will also be available on our website for one year following the completion of the call.

Non-GAAP, or Adjusted, Financial Information

We believe that the presentation of non-GAAP, or adjusted, financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. Reconciliation of adjusted financial measures to the most directly comparable financial result as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. A reconciliation of adjusted guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding certain expenses that may be incurred in the future. For further information regarding why we believe that these adjusted measures provide useful information to investors, the specific manner in which management uses these measures and some of the limitations associated with the use of these measures, please refer to "Notes Regarding Non-GAAP Financial Information" at the end of this press release.

About NanoString Technologies, Inc.

NanoString Technologies is a leading provider of life science tools for discovery and translational research. The company provides three platforms that allow researchers to map the universe of biology. The nCounter® Analysis System, cited in more than 5,800 peer-reviewed publications, offers a way to easily profile the expression of hundreds of genes, proteins, miRNAs, or copy number variations, simultaneously with high sensitivity and precision. NanoString’s GeoMx® Digital Spatial Profiler enables highly multiplexed spatial profiling of RNA and protein targets in various sample types, including FFPE tissue sections, and has been cited in approximately 130 peer-reviewed publications. The CosMx™ Spatial Molecular Imager, with commercial availability expected in 2022, enables highly sensitive, high-resolution imaging of hundreds to thousands of RNAs or proteins directly from single cells within morphologically intact whole tissue sections. For more information, visit www.nanostring.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expectations for demand for our products and growth in our business, future revenue growth, the impact of the COVID-19 pandemic on our operations and future financial performance, the impact of new products and expansion into new markets, the growth trajectory of our nCounter, GeoMx and CosMx franchises, the anticipated launch of new products and technology and our estimated 2022 operating results and our anticipated GAAP and non-GAAP operating results. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include market acceptance of our products; delays or denials of regulatory approvals or clearances for products or applications; the extent and duration of the impact of the COVID-19 pandemic and adverse conditions in the general domestic and global economic markets; the effects of ongoing litigation; the impact of competition; the impact of expanded sales, marketing, product development and clinical activities on operating expenses; delays or other unforeseen problems with respect to manufacturing and product development; as well as the other risks set forth in our filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. NanoString Technologies disclaims any obligation to update these forward-looking statements.

The NanoString logo, NanoString, NanoString Technologies, GeoMx, CosMx, and nCounter are trademarks or registered trademarks of NanoString Technologies, Inc., in the United States and/or other countries.

NANOSTRING TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Revenue:

Instruments

$

9,538

$

11,816

$

18,641

$

23,561

Consumables

17,847

17,981

35,315

33,944

Services

4,613

3,835

8,883

7,521

Total product and service revenue

31,998

33,632

62,839

65,026

Collaboration

221

231

460

454

Total revenue

32,219

33,863

63,299

65,480

Costs and expenses:

Cost of product and service revenue

15,852

15,481

30,630

31,104

Research and development

17,346

17,162

34,763

32,225

Selling, general and administrative

36,112

26,855

72,467

53,654

Total costs and expenses (a) (b)

69,310

59,498

137,860

116,983

Loss from operations

(37,091

)

(25,635

)

(74,561

)

(51,503

)

Other income (expense):

Interest income

406

231

557

349

Interest expense

(1,880

)

(1,868

)

(3,763

)

(3,738

)

Other income expense, net

(490

)

334

(707

)

302

Total other expense, net

(1,964

)

(1,303

)

(3,913

)

(3,087

)

Net loss before provision for income taxes

(39,055

)

(26,938

)

(78,474

)

(54,590

)

Provision for income taxes

(184

)

(82

)

(265

)

(142

)

Net loss

$

(39,239

)

$

(27,020

)

$

(78,739

)

$

(54,732

)

Net loss per share, basic and diluted

$

(0.85

)

$

(0.60

)

$

(1.70

)

$

(1.22

)

Weighted average shares used in computing basic and diluted net loss per share

46,427

45,274

46,201

44,973

(a) Includes $6.5 million and $8.0 million of stock-based compensation expense for the three months ended June 30, 2022 and 2021, respectively, and $14.1 million and $15.4 million for the six months ended June 30, 2022 and 2021, respectively.

(b) Includes $2.0 million and $1.4 million of depreciation and amortization expense for the three months ended June 30, 2022 and 2021, respectively, and $3.5 million and $2.9 million for the six months ended June 30, 2022 and 2021, respectively.

NANOSTRING TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

June 30,
2022

December 31,
2021

Assets

Current assets:

Cash and cash equivalents

$

126,027

$

107,068

Short-term investments

146,315

241,821

Accounts receivable, net

31,404

40,130

Inventory, net

41,524

31,486

Prepaid expenses and other

9,427

7,115

Total current assets

354,697

427,620

Property and equipment, net

35,414

27,043

Operating lease right-of-use assets

17,645

19,226

Other assets

5,623

5,592

Total assets

$

413,379

$

479,481

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

16,292

$

14,283

Accrued liabilities

6,999

6,765

Accrued compensation and other employee benefits

13,729

17,466

Customer deposits

1,588

1,278

Deferred revenue and other liabilities, current portion

7,987

7,474

Operating lease liabilities, current portion

5,249

4,889

Total current liabilities

51,844

52,155

Deferred revenue and other liabilities, net of current portion

3,857

3,527

Long-term debt, net

225,877

225,144

Operating lease liabilities, net of current portion

19,136

21,693

Total liabilities

300,714

302,519

Total stockholders’ equity

112,665

176,962

Total liabilities and stockholders’ equity

$

413,379

$

479,481

Notes Regarding Non-GAAP Financial Information. In addition to our results reported in accordance with U.S. generally accepted accounting principles ("GAAP"), we believe certain non-GAAP, or adjusted, measures are useful in evaluating our operating performance. We use adjusted financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that adjusted financial measures, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, adjusted financial information has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In particular, other companies, including companies in our industry, may calculate similarly titled non-GAAP or adjusted measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our adjusted financial measures as tools for comparison. A reconciliation is provided below for adjusted financial measures to the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP, or adjusted, financial measures as analytical tools. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these adjusted financial measures to their most directly comparable U.S. GAAP financial measure, and not to rely on any single financial measure to evaluate our business.

Expenses excluded from non-GAAP, or adjusted, cost of product and service revenue, research and development expense and selling, general and administrative expense and net loss. We exclude stock-based compensation expense and depreciation and amortization expense, which are non-cash expenses, from certain of our adjusted financial measures because we believe that excluding such items provides meaningful supplemental information regarding operational performance. We exclude certain expenses related to collaborations, recoveries of certain previously remitted state and local taxes, cloud computing arrangement implementation expenses, litigation expenses, and other business development expenses from certain of our adjusted financial measures because such expenses have no direct correlation to the continuing operation of our business as such expenses are non-recurring or non-operating in nature, and therefore we believe excluding these items provides meaningful supplemental information regarding operational performance.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure defined as GAAP net loss adjusted for collaboration revenue, stock-based compensation expense, depreciation and amortization, net interest expense, other non-operating expense or income, provision for income tax and other special items as determined by management, including certain expenses related to collaborations, recoveries of certain previously remitted state and local taxes, cloud computing arrangement implementation expenses, litigation expenses, and other business development expenses.

The following tables reflect the reconciliation between GAAP and non-GAAP measures (in thousands).

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Net loss - GAAP

$

(39,239

)

$

(27,020

)

$

(78,739

)

$

(54,732

)

Collaboration revenue

(221

)

(231

)

(460

)

(454

)

Stock-based compensation

6,458

7,989

14,125

15,405

Depreciation and amortization

1,961

1,439

3,504

2,880

Interest expense, net

1,474

1,637

3,206

3,389

Other (income) expense, net

490

(334

)

707

(302

)

Provision for income taxes

184

82

265

142

Other business development expenses

44

45

393

115

Litigation expenses

1,237

1,930

Recovery of certain previously remitted state and local taxes

(896

)

(896

)

Cloud computing arrangement implementation expenses

156

312

Adjusted EBITDA - non-GAAP

(27,456

)

(17,289

)

(54,757

)

(34,453

)

Non-operating expense, net

(2,148

)

(1,385

)

(4,178

)

(3,229

)

Net loss - non-GAAP

$

(29,604

)

$

(18,674

)

$

(58,935

)

$

(37,682

)

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

GAAP Total revenue

$

32,219

$

33,863

$

63,299

$

65,480

Collaboration revenue

(221

)

(231

)

(460

)

(454

)

Non-GAAP Total revenue

$

31,998

$

33,632

$

62,839

$

65,026

GAAP Cost of product and service revenue

$

15,852

$

15,481

$

30,630

$

31,104

Stock-based compensation

(699

)

(585

)

(1,275

)

(1,025

)

Depreciation and amortization

(397

)

(161

)

(810

)

(317

)

Non-GAAP Cost of product and service revenue

$

14,756

$

14,735

$

28,545

$

29,762

GAAP Gross Margin

50

%

54

%

51

%

52

%

Non-GAAP Gross Margin

54

%

56

%

55

%

54

%

GAAP Research and development

$

17,346

$

17,162

$

34,763

$

32,225

Stock-based compensation

(1,818

)

(1,658

)

(3,561

)

(3,041

)

Depreciation and amortization

(1,054

)

(990

)

(1,772

)

(2,027

)

Other business development activities

(45

)

(115

)

Non-GAAP Research and development

$

14,474

$

14,469

$

29,430

$

27,042

GAAP Selling, general and administrative

$

36,112

$

26,855

$

72,467

$

53,654

Stock-based compensation

(3,941

)

(5,746

)

(9,289

)

(11,339

)

Depreciation and amortization

(510

)

(288

)

(922

)

(536

)

Other business development activities

(44

)

(393

)

Litigation expenses

(1,237

)

(1,930

)

Recovery of certain previously remitted state and local taxes

896

896

Cloud computing arrangements implementation expense

(156

)

(312

)

Non-GAAP Selling, general and administrative

$

30,224

$

21,717

$

59,621

$

42,675

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005806/en/

Contacts

Doug Farrell
Vice President, Investor Relations & Corporate Communications
dfarrell@nanostring.com
Phone: 206-602-1768